UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2018~~

2019

Commission file number 001-2979

WELLS FARGO & COMPANY

(Exact name of registrant as specified in its charter)



Delaware		No. 41-0449260
(State of incorporation)		(I.R.S. Employer Identification No.)

420 Montgomery Street, San Francisco, California 94163

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 1-866-249-3302

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨



~~Yes~~ þ		No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).



Yes þ No ¨þ		No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨



	~~Large accelerated~~Non-accelerated filer ¨Smaller reporting company ¨þ		~~Accelerated filer~~ o

	~~Non-accelerated filer~~ o ~~(Do not check if a smaller reporting company)~~		~~Smaller reporting company~~ o
			~~Emerging growth company~~ o

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Securities registered pursuant to Section 12(b) of the Act:



~~Yes~~ o Title of Each Class	Trading Symbol	No þ Name of Each Exchange on Which Registered
Common Stock, par value $1-2/3	WFC	New York Stock Exchange (NYSE)
7.5% Non-Cumulative Perpetual Convertible Class A Preferred Stock, Series L	WFC.PRL	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series N	WFC.PRN	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series O	WFC.PRO	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series P	WFC.PRP	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of 5.85% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series Q	WFC.PRQ	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of 6.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series R	WFC.PRR	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series T	WFC.PRT	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series V	WFC.PRV	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series W	WFC.PRW	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series X	WFC.PRX	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series Y	WFC.PRY	NYSE
Guarantee of 5.80% Fixed-to-Floating Rate Normal Wachovia Income Trust Securities of Wachovia Capital Trust III	WBTP	NYSE
Guarantee of Medium-Term Notes, Series A, due October 30, 2028 of Wells Fargo Finance LLC	WFC/28A	NYSE

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



		Shares Outstanding
		April ~~25, 2018~~24, 2019
Common stock, $1-2/3 par value		~~4,872,873,834~~4,494,342,882


FORM 10-Q	FORM 10-Q				FORM 10-Q
CROSS-REFERENCE INDEX	CROSS-REFERENCE INDEX				CROSS-REFERENCE INDEX
PART I	Financial Information				Financial Information
Item 1.	Financial Statements			Page	Financial Statements			Page
					Consolidated Statement of Income			61
	Consolidated Statement of Income			63	Consolidated Statement of Comprehensive Income			62
	Consolidated Statement of Comprehensive Income			64	Consolidated Balance Sheet			63
	Consolidated Balance Sheet			65	Consolidated Statement of Changes in Equity			64
	Consolidated Statement of Changes in Equity			66	Consolidated Statement of Cash Flows			66
	Consolidated Statement of Cash Flows			68	Notes to Financial Statements
	Notes to Financial Statements				1	—	Summary of Significant Accounting Policies	67
	1	—	Summary of Significant Accounting Policies	69	2	—	Business Combinations	69
	2	—	Business Combinations	72	3	—	Cash, Loan and Dividend Restrictions	70
	3	—	Cash, Loan and Dividend Restrictions	73	4	—	Trading Activities	71
	4	—	Trading Activities	74	5	—	Available-for-Sale and Held-to-Maturity Debt Securities	72
	5	—	Available-for-Sale and Held-to-Maturity Debt Securities	76	6	—	Loans and Allowance for Credit Losses	78
	6	—	Loans and Allowance for Credit Losses	83	7	—	Leasing Activity	91
	7	—	Equity Securities	99	8	—	Equity Securities	93
	8	—	Other Assets	101	9	—	Other Assets	95
	9	—	Securitizations and Variable Interest Entities	102	10	—	Securitizations and Variable Interest Entities	96
	10	—	Mortgage Banking Activities	109	11	—	Mortgage Banking Activities	103
	11	—	Intangible Assets	112	12	—	Intangible Assets	105
	12	—	Guarantees, Pledged Assets and Collateral, and Other Commitments	114	13	—	Guarantees, Pledged Assets and Collateral, and Other Commitments	106
	13	—	Legal Actions	118	14	—	Legal Actions	110
	14	—	Derivatives	122	15	—	Derivatives	115
	15	—	Fair Values of Assets and Liabilities	131	16	—	Fair Values of Assets and Liabilities	124
	16	—	Preferred Stock	148	17	—	Preferred Stock	140
	17	—	Revenue from Contracts with Customers	151	18	—	Revenue from Contracts with Customers	143
	18	—	Employee Benefits	154	19	—	Employee Benefits	146
	19	—	Earnings Per Common Share	155	20	—	Earnings Per Common Share	147
	20	—	Other Comprehensive Income	156	21	—	Other Comprehensive Income	148
	21	—	Operating Segments	158	22	—	Operating Segments	150
	22	—	Regulatory and Agency Capital Requirements	159	23	—	Regulatory and Agency Capital Requirements	151
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)				Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)
	Summary Financial Data			2	Summary Financial Data			2
	Overview			3	Overview			3
	Earnings Performance			6	Earnings Performance			7
	Balance Sheet Analysis			19	Balance Sheet Analysis			19
	Off-Balance Sheet Arrangements			22	Off-Balance Sheet Arrangements			22
	Risk Management			23	Risk Management			23
	Capital Management			49	Capital Management			48
	Regulatory Matters			56	Regulatory Matters			54
	Critical Accounting Policies			57	Critical Accounting Policies			55
	Current Accounting Developments			58	Current Accounting Developments			56
	Forward-Looking Statements			59	Forward-Looking Statements			58
	Risk Factors			61	Risk Factors			59
	Glossary of Acronyms			160	Glossary of Acronyms			152
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			43	Quantitative and Qualitative Disclosures About Market Risk			42
Item 4.	Controls and Procedures			62	Controls and Procedures			60

PART II	Other Information				Other Information
Item 1.	Legal Proceedings			161	Legal Proceedings			153
Item 1A.	Risk Factors			161	Risk Factors			153
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			161	Unregistered Sales of Equity Securities and Use of Proceeds			153
Item 6.	Exhibits			162	Exhibits			154

Signature	Signature			163	Signature			155

PART I - FINANCIAL INFORMATION

FINANCIAL REVIEW


Summary Financial Data
						% Change									% Change
	Quarter ended					Mar 31, 2018 from				Quarter ended					Mar 31, 2019 from
($ in millions, except per share amounts)	Mar 31, 2018			Dec 31, 2017	Mar 31, 2017	Dec 31, 2017		Mar 31, 2017		Mar 31, 2019			Dec 31, 2018	Mar 31, 2018	Dec 31, 2018		Mar 31, 2018
For the Period
Wells Fargo net income	$	5,136		6,151	5,634	(17	)%	(9	)	$	5,860		6,064	5,136	(3	)%	14
Wells Fargo net income applicable to common stock	4,733			5,740	5,233	(18	)	(10	)	5,507			5,711	4,733	(4	)	16
Diluted earnings per common share	0.96			1.16	1.03	(17	)	(7	)	1.20			1.21	0.96	(1	)	25
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA)	1.09		%	1.26	1.18	(13	)	(8	)	1.26		%	1.28	1.09	(2	)	16
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders' equity (ROE)	10.58			12.47	11.96	(15	)	(12	)
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)										12.71			12.89	10.58	(1	)	20
Return on average tangible common equity (ROTCE) (1)	12.62			14.85	14.35	(15	)	(12	)	15.16			15.39	12.62	(1	)	20
Efficiency ratio (2)	68.6			76.2	62.0	(10	)	11		64.4			63.6	68.6	1		(6	)
Total revenue	$	21,934		22,050	22,255	(1	)	(1	)	$	21,609		20,980	21,934	3		(1	)
Pre-tax pre-provision profit (PTPP) (3)	6,892			5,250	8,463	31		(19	)	7,693			7,641	6,892	1		12
Dividends declared per common share	0.39			0.39	0.38	—		3		0.45			0.43	0.39	5		15
Average common shares outstanding	4,885.7			4,912.5	5,008.6	(1	)	(2	)	4,551.5			4,665.8	4,885.7	(2	)	(7	)
Diluted average common shares outstanding	4,930.7			4,963.1	5,070.4	(1	)	(3	)	4,584.0			4,700.8	4,930.7	(2	)	(7	)
Average loans	$	951,024		951,822	963,645	—		(1	)	$	950,010		946,336	951,024	—		—
Average assets	1,915,896			1,935,318	1,931,040	(1	)	(1	)	1,883,091			1,879,047	1,915,896	—		(2	)
Average total deposits	1,297,178			1,311,592	1,299,191	(1	)	—		1,262,062			1,268,948	1,297,178	(1	)	(3	)
Average consumer and small business banking deposits (4)	755,483			757,541	758,754	—		—		739,654			736,295	755,483	—		(2	)
Net interest margin	2.84		%	2.84	2.87	—		(1	)	2.91		%	2.94	2.84	(1	)	2
At Period End
Debt securities ~~(5)~~	$	472,968		473,366	456,969	—		4		$	483,467		484,689	472,968	—		2
Loans	947,308			956,770	958,405	(1	)	(1	)	948,249			953,110	947,308	(1	)	—
Allowance for loan losses	10,373			11,004	11,168	(6	)	(7	)	9,900			9,775	10,373	1		(5	)
Goodwill	26,445			26,587	26,666	(1	)	(1	)	26,420			26,418	26,445	—		—
Equity securities ~~(5)~~	58,935			62,497	56,991	(6	)	3		58,440			55,148	58,935	6		(1	)
Assets	1,915,388			1,951,757	1,951,501	(2	)	(2	)	1,887,792			1,895,883	1,915,388	—		(1	)
Deposits	1,303,689			1,335,991	1,325,444	(2	)	(2	)	1,264,013			1,286,170	1,303,689	(2	)	(3	)
Common stockholders' equity	181,150			183,134	178,209	(1	)	2
Wells Fargo stockholders' equity	204,952			206,936	201,321	(1	)	2
Common stockholders’ equity										176,025			174,359	181,150	1		(3	)
Wells Fargo stockholders’ equity										197,832			196,166	204,952	1		(3	)
Total equity	205,910			208,079	202,310	(1	)	2		198,733			197,066	205,910	1		(3	)
Tangible common equity (1)	151,878			153,730	148,671	(1	)	2		147,723			145,980	151,878	1		(3	)
Capital ratios (6)(7):
Capital ratios (5):
Total equity to assets	10.75		%	10.66	10.37	1		4		10.53		%	10.39	10.75	1		(2	)
Risk-based capital:
Common Equity Tier 1	11.92			12.28	11.52	(3	)	3		11.92			11.74	11.92	2		—
Tier 1 capital	13.76			14.14	13.27	(3	)	4		13.64			13.46	13.76	1		(1	)
Total capital	16.92			17.46	16.41	(3	)	3		16.74			16.60	16.92	1		(1	)
Tier 1 leverage	9.32			9.35	9.07	—		3		9.15			9.07	9.32	1		(2	)
Common shares outstanding	4,873.9			4,891.6	4,996.7	—		(2	)	4,511.9			4,581.3	4,873.9	(2	)	(7	)
Book value per common share ~~(8)~~(6)	$	37.17		37.44	35.67	(1	)	4		$	39.01		38.06	37.17	2		5
Tangible book value per common share ~~(8)~~(6)	31.16			31.43	29.75	(1	)	5		32.74			31.86	31.16	3		5
Common stock price:
High	66.31			62.24	59.99	7		11
Low	50.70			52.84	53.35	(4	)	(5	)
Period end	52.41			60.67	55.66	(14	)	(6	)
Team members (active, full-time equivalent)	265,700			262,700	272,800	1		(3	)	262,100			258,700	265,700	1		(1	)

(1)

Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, and goodwill and certain identifiable intangible assets (including goodwill and intangible assets associated with certain of our nonmarketable equity 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~~Company’s use of equity. For additional information, including a corresponding reconciliation to GAAP financial measures, see the “Capital Management – Tangible Common Equity” section in this Report.


(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~~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 prior quarters has been revised to reflect the impact of the adoption of Accounting Standards Update (ASU) 2016-01~~ – ~~Financial Instruments – Overall (Subtopic 825-10):~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities, which amends the presentation and accounting for certain financial instruments, including equity securities.See Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report for more information.~~

~~(6)~~

The risk-based capital ratios were calculated under the lower of Standardized or Advanced Approach determined pursuant to Basel ~~III~~III. Beginning January 1, 2018, the requirements for calculating common equity tier 1 and tier 1 capital, along with risk-weighted assets, became fully phased-in; accordingly, the information presented reflects fully phased-in common equity tier 1 capital, tier 1 capital and risk-weighted assets but reflects total capital still in accordance with Transition Requirements. For March 31, 2018 and December 31, 2017, the risk-based capital ratios were all lower under the Standardized Approach. The total capital ratio was lower under the Advanced Approach and the other ratios were lower under the Standardized Approach, for March 31, 2017.


~~(7)~~	See the “Capital Management” section and Note 2223 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report for additional information.


~~(8)~~(6)	Book value per common share is common ~~stockholders'~~stockholders’ equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares outstanding.

Overview (continued)

This Quarterly Report, including the Financial Review and the Financial Statements and related Notes, contains forward-looking statements, which may include forecasts of our financial results and condition, expectations for our operations and business, and our assumptions for those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results may differ materially from our forward-looking statements due to several factors. Factors that could cause our actual results to differ materially from our forward-looking statements are described in this Report, including in the “Forward-Looking Statements” section, and in the “Risk Factors” and “Regulation and Supervision” sections of our Annual Report on Form 10-K for the year ended December 31, ~~2017 (2017~~2018 (2018 Form 10-K).

When we refer to “Wells Fargo,” “the Company,” “we,” ~~“our”~~“our,” or “us” in this Report, we mean Wells Fargo & Company and Subsidiaries (consolidated). When we refer to the “Parent,” we mean Wells Fargo & Company. See the Glossary of Acronyms for definitions of terms used throughout this Report.

Financial Review¹

Overview

Wells Fargo & Company is a diversified, community-based financial services company with ~~$1.92~~$1.89 trillion in assets. Founded in 1852 and headquartered in San Francisco, we provide banking, ~~investments,~~investment and mortgage products and services, as well as consumer and commercial finance, through ~~8,200~~7,700 locations, more than 13,000 ATMs, digital (online, mobile and social), and contact centers (phone, email and correspondence), and we have offices in 4232 countries and territories to support customers who conduct business in the global economy. With approximately ~~265,000~~262,000 active, full-time equivalent team members, we serve one in three households in the United States and ranked No. 2526 on Fortune’s ~~2017~~2018 rankings of America’s largest corporations. We ranked fourth in assets and third in the market value of our common stock among all U.S. banks at March 31, ~~2018.~~2019.

We use our Vision, Values ~~and~~& Goals to guide us toward growth and success. Our vision is to satisfy our customers’ financial needs and help them succeed financially. We aspire to create deep and enduring relationships with our customers by providing them with an exceptional experience and by understanding their needs and delivering the most relevant products, services, advice, and guidance.

We have five primary values, which are based on our vision and guide the actions we take. First, we place customers at the center of everything we do. We want to exceed customer expectations and build relationships that last a lifetime. Second, we value and support our people as a competitive advantage and strive to attract, develop, motivate, and retain the best team members. Third, we strive for the highest ethical standards of integrity, transparency, and principled performance. Fourth, we value and promote diversity and inclusion in all aspects of business and at all levels. Fifth, we look to each of our team members to be a leader in establishing, sharing, and communicating our vision for our customers, communities, team members, and shareholders. In addition to our five primary values, one of our key day-to-day priorities is to make risk management a competitive advantage by working hard to ensure that appropriate controls are in place to reduce risks to our customers, maintain and increase our competitive market position, and protect Wells Fargo’s long-term safety, soundness, and reputation.


¹	~~Prior period financial information has been revised to reflect our adoption of Accounting Standards Update (ASU) 2016-01 Financial Instruments – Overall (Subtopic 825-10):~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities. See Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report for more information.~~

In keeping with our primary values and risk management priorities, we have six long-term goals for the Company, which entail becoming the financial services leader in the following areas:

Customer service and advice – provide exceptional service and guidance to our customers to help them succeed financially.

Team member engagement – be a company where people feel included, valued, and supported; everyone is respected; and we work as a team.

Innovation – create lasting value for our customers and increased efficiency for our operations through innovative thinking, industry-leading technology, and a willingness to test and learn.

Risk management – set the global standard in managing all forms of risk.

Corporate citizenship – make a positive contribution to communities through philanthropy, advancing diversity and inclusion, creating economic opportunity, and promoting environmental sustainability.

Shareholder value – deliver long-term value for shareholders.

~~Over~~On March 28, 2019, the ~~past year and a half, our~~Company announced that Timothy J. Sloan had informed the Company’s Board of Directors (Board) ~~has taken, and continues~~of his decision to ~~take, actions to enhance Board oversight and governance. These actions, many of which reflected results~~retire from the ~~Board’s 2017 self-assessment, which was facilitated by~~Company, effective June 30, 2019, and to step down as the Company’s Chief Executive Officer and President and as a ~~third party,~~member of the Company’s Board effective March 28, 2019. The Board elected C. Allen Parker as interim CEO and ~~the feedback we received from our shareholders~~President and ~~other stakeholders, included:~~

~~Separating the roles of Chairman~~as a member of the Board effective March 28, 2019. The Board is conducting an external search for a permanent CEO. During the search period, the Board will work closely with Mr. Parker and ~~Chief Executive Officer.~~

~~Amending~~the Company’s leadership team to continue to move forward on Wells Fargo’s ~~By-Laws to require that the Chairman be an independent director.~~

~~Electing Elizabeth A. “Betsy” Duke as our new independent Board Chair, effective January 1, 2018.~~

~~Making changes to the leadership~~goals and ~~composition of key Board committees, including appointing new chairs of the Board’s Risk Committee and Governance and Nominating Committee.~~

~~Amending Board committee charters and working with management to improve reporting to the Board in order to enhance the Board's risk oversight.~~

Electing six new independent directors, including directors with financial services, risk management, regulatory, technology, human capital management, social responsibility, and other relevant experience, with five directors retiring in 2017 and four more retiring at our 2018 annual meeting of shareholders. At the 2018 annual meeting, shareholders elected the 12 director nominees named in the Company’s proxy statement.

~~As has been our practice, we will continue our engagement efforts with our shareholders and other stakeholders while the Board maintains its focus on enhancing oversight and governance.~~commitments.

Federal Reserve Board Consent Order Regarding Governance Oversight and Compliance and Operational Risk Management

On February 2, 2018, the Company entered into a consent order with the Board of Governors of the Federal Reserve System (FRB). As required by the consent order, the Board submitted to the FRB a plan to further enhance the Board’s governance and oversight of the Company, and the Company submitted to the FRB a plan to further improve the Company’s compliance and operational risk management program. As part of the review and approval process contemplated by the consent order, the Company will respond to any feedback provided by the FRB regarding the plans, including by making any necessary changes to the plans. The consent order also requires the Company, following the FRB’s acceptance and approval of the plans and the Company’s adoption and implementation of the plans, to complete ~~by September 30, 2018,~~an initial third-party ~~reviews~~review of the enhancements and improvements provided for in the plans. Until ~~these~~this third-party ~~reviews are~~review is complete and the plans are approved and implemented to the satisfaction of the FRB, the Company’s total consolidated assets will be limited to the level as of December 31, 2017. Compliance with this asset cap will be measured on a two-quarter daily average basis to allow for

management of temporary fluctuations. ~~Once the asset cap limitation is removed, a second third-party review must be conducted to assess the efficacy and sustainability~~As of the ~~improvements. During~~end of first quarter ~~2018~~2019, our ~~average~~total consolidated assets, as calculated pursuant to the requirements of the consent order, were below our level of total assets as of December 31, 2017. Additionally, after removal of the asset cap, a second third-party review must also be conducted to assess the efficacy and sustainability of the enhancements and improvements.

Consent Orders with the Consumer Financial Protection Bureau ~~(CFPB)~~ and Office of the Comptroller of the Currency ~~(OCC)~~ Regarding Compliance Risk Management Program, Automobile Collateral Protection Insurance Policies, and Mortgage Interest Rate Lock Extensions

On April 20, 2018, wethe Company entered into consent orders with the ~~CFPB~~Consumer Financial Protection Bureau (CFPB) and ~~OCC~~the Office of the Comptroller of the Currency (OCC) to pay an aggregate of $1 billion in civil money penalties to resolve matters regarding ~~our~~the Company’s compliance risk management program and past practices involving certain automobile collateral protection insurance policies and certain mortgage interest rate lock extensions. ~~The~~As required by the consent orders, ~~require that~~ the Company ~~submit~~submitted to the CFPB and OCC ~~within 60 days of the date of the consent orders,~~ an ~~acceptable~~ enterprise-wide compliance risk management plan and a plan to enhance the ~~Company's~~Company’s internal audit program with respect to federal consumer financial law and the terms of the consent orders. ~~The consent orders also require the Company to submit for non-objection, within 120 days of the date of~~In addition, as required by the consent orders, ~~plans~~the Company submitted for ~~a remediation program regarding ongoing compliance with federal consumer financial law and, within 60 days of the date of the consent orders,~~non-objection plans to remediate customers affected by the automobile collateral protection insurance and mortgage interest rate lock ~~matters.~~matters, as well as a plan for the management of remediation activities conducted by the Company.

Retail Sales Practices Matters

As we have previously reported, in September 2016 we announced settlements with the ~~Consumer Financial Protection Bureau (CFPB),~~CFPB, the ~~Office of the Comptroller of the Currency (OCC),~~OCC, and the Office of the Los Angeles City Attorney, and entered into consent orders with the CFPB and the OCC, in

connection with allegations that some of our retail customers received products and services they did not request. As a result, it remains our top priority to rebuild trust through a comprehensive action plan that includes making things right for our customers, team members, and other stakeholders, and building a better Company for the future.

Our priority of rebuilding trust has included numerous actions focused on identifying potential financial harm and customer remediation. The Board and management are conducting company-wide reviews of sales practices issues. These reviews are ongoing. In August 2017, a third-party consulting firm completed an expanded data-driven review of retail banking accounts opened from January 2009 to September 2016 to identify financial harm stemming from potentially unauthorized accounts. We have ~~provided customer~~completed financial remediation ~~based on~~for the customers identified through the expanded account analysis. Additionally, customer outreach under the $142 million class-action lawsuit settlement concerning improper retail sales practices (Jabbari v. Wells Fargo Bank, N.A.) into which the Company entered to provide further remediation to customers, concluded in June 2018 and the period for customers to submit claims closed on July 7, 2018. The settlement administrator will pay claims following the calculation of compensatory damages and favorable resolution of pending appeals in the case.

For additional information regarding sales practices matters, including related legal matters, see the “Risk Factors” section in our ~~2017~~2018 Form 10-K and Note 1314 (Legal Actions) to Financial Statements in this Report.

Additional Efforts to Rebuild Trust

Our priority of rebuilding trust has also included an effort to identify other areas or instances where customers may have experienced financial harm. We are working with our regulatory agencies in this ~~effort.~~effort, and we have accrued for the reasonably estimable remediation costs related to these matters, which amounts may change based on additional facts and information, as well as ongoing reviews and communications with our regulators. As part of this effort, we are focused on the following key areas:

Automobile Lending Business ~~Practices~~The Company is reviewing practices concerning the origination, servicing, ~~and/or~~and collection of consumer automobile loans, including matters related to certain insurance products. ~~For example:~~

◦

In July 2017, the Company announced a plan to remediate customers who may have been financially harmed due to issues related to automobile collateral protection insurance (CPI) policies purchased through a third-party vendor on their behalf. The practice of placing CPI was discontinued by the Company on September 30, 2016. Commencing in August 2017, the Company began sending refund checks and/or letters to affected customers through which they may claim or otherwise receive remediation compensation for policies placed between October 15, 2005, and September 30, 2016. The Company currently estimates that it will provide approximately $158 million in cash remediation and $29 million in account adjustments under the plan. The amount of remediation may be affected by the requirements of the consent orders entered into with the CFPB and OCC described above.


◦	The Company has identified certain issues related to the unused portion of guaranteed automobile protection waiver or insurance agreements between the dealer and, by assignment, the lender, which may result in refunds to customers in certain states.

~~Mortgage Interest Rate Lock ExtensionsIn October~~ 2017, the Company announced ~~plans to reach out to all home lending~~it would remediate customers who ~~paid fees~~may have been financially harmed due to issues related to automobile collateral protection insurance (CPI) policies purchased through a third-party vendor on their behalf (based on an understanding that the borrowers did not have physical damage insurance coverage on their automobiles as required during the term of their automobile loans). The Company is in the process of providing remediation to affected customers and/or letters to affected customers through which they may claim or otherwise receive remediation compensation for ~~mortgage rate lock extensions requested from~~policies placed between October 15, 2005, and September ~~16, 2013, through February 28, 2017,~~30, 2016. In addition, the Company has identified certain issues related to the unused portion of guaranteed automobile protection waiver or insurance agreements between the customer and ~~to provide refunds, with interest,~~dealer and, by assignment, the lender, which will result in remediation to customers ~~who believe they should not have paid those fees.~~in certain states. The ~~plan~~Company is in the process of providing remediation to ~~issue refunds follows an internal review that determined a rate lock extension policy implemented~~affected customers. The Company has also identified certain issues related to its consumer automobile collections processes for customers in ~~September 2013 was, at times, not consistently applied, resulting~~default, including legal notice practices in ~~some borrowers being~~certain states and expenses charged ~~fees~~ in ~~cases where the Company was primarily responsible for the delays that made the extensions necessary. Effective March 1, 2017,~~

~~Overview~~ ~~(continued)~~

~~the Company changed how it manages the mortgage rate lock extension process by establishing a centralized review team that reviews all rate lock extension requests for consistent application~~connection with certain repossessions. We expect remediation of the policy. A total of approximately $98 million in rate lock extension fees was assessed on approximately 110,000 accounts during the period in question. Although the Company believes a substantial number of these fees were appropriately charged under its policy, we estimate refundsaffected customers will be ~~issued to a majority of our customers who paid rate lock extension fees during this time period due to our customer-oriented remediation approach.~~required.

Add-on Products ~~Practices~~The Company is reviewingpractices related to certain consumer “add-on” products, including identity theft and debt protection products that were subject to an OCC consent order entered into in June ~~2015. An ongoing~~2015, as well as home and automobile warranty products, and memberships in discount programs. The products were sold to customers through a number of distribution channels and, in some cases, were acquired by the Company in connection with the purchase of loans. Sales of certain of these products have been discontinued over the past few years primarily due to decisions made by the Company in the normal course of business, and by mid-2017, the Company had ceased selling any of these products to consumers. We are in the process of providing remediation where we identify affected customers, and are also providing refunds to customers who purchased certain products. The review of ~~“add-on”~~the Company’s historical practices with respect to these products ~~across the Company~~ is ~~occurring,~~ongoing, focusing on, among other topics, sales practices, adequacy of disclosures, customer servicing, and ~~we have begun remediation efforts where we have identified impacted customers.~~volume and type of customer complaints.

Consumer Deposit Account Freezing/Closing~~Procedures regarding~~ The Company is reviewing certain historical practices associated with the freezing (and, in many cases, closing) of consumer deposit accounts after the Company detected suspected fraudulent activity (by third-parties or account holders) that affected those accounts. Based on our ongoing review, we expect remediation of affected customers will be required.

Overview (continued)

Review of Certain Activities Within Wealth and Investment Management A review of certain activities within Wealth and Investment Management (WIM) being conducted by the Board, in response to inquiries from federal government agencies, is assessing whether there have been inappropriate referrals or recommendations, including with respect to rollovers for 401(k) plan participants, certain alternative investments, or referrals of brokerage customers to the Company’s investment and fiduciary services business. The Board’s review is ~~ongoing.~~substantially completed and has not, to date, uncovered evidence of systemic or widespread issues in these businesses. Federal government agencies continue to review this matter.

Fiduciary and Custody Account Fee Calculations The Company is reviewing fee calculations within certain fiduciary and custody accounts in its investment and fiduciary services business, which is part of the wealth management business in WIM. The Company has determined that there have been instances of incorrect fees being applied to certain assets and accounts, resulting in ~~overcharges.~~both overcharges and undercharges to customers. These issues ~~include~~included the incorrect set-up and maintenance in the system of record of the values associated with certain assets. Systems, operations, and account-level reviews are underway to determine the extent of any assets and accounts affected, and root cause analyses are being performed with the assistance of third parties. These reviews are ongoing and, as a result of its reviews to date, the Company has suspended the charging of fees on some assets and accounts, has notified the affected customers, and is continuing its analysis of those assets and accounts. ~~As these reviews continue, the Company will consider suspending fees on additional assets and accounts, while continuing~~We have begun the process of ~~analyzing those assets~~providing remediation to affected customers and ~~accounts.~~continue to review customer accounts to determine the extent of any necessary remediation, including with respect to additional accounts not yet reviewed, which may lead to additional accruals and fee suspensions.

Foreign Exchange Business The Company ~~is reviewing~~has completed an assessment, with the assistance of a third party, of its policies, practices, and procedures in its foreign exchange (FX) business. The FX business continues to revise and implement new policies, practices, and procedures, including those related to pricing. The Company has begun providing remediation to customers that may have received pricing inconsistent with commitments made to those customers, and rebates to customers where historic pricing, while consistent with contracts entered into with those customers, does not conform to recently implemented pricing review standards for prior periods. The Company’s review of affected customers is ongoing.

Mortgage Loan Modifications An internal review of the Company’s use of a mortgage loan modification underwriting tool identified a calculation error regarding foreclosure attorneys’ fees affecting certain accounts that were in the foreclosure process between April 13, 2010, and October 2, 2015, when the error was corrected. A subsequent expanded review identified related errors regarding the maximum allowable foreclosure attorneys’ fees permitted for certain accounts that were in the foreclosure process between March 15, 2010, and April 30, 2018, when new controls were implemented. Similar to the initial calculation error, these errors caused an overstatement of the attorneys’ fees that were included for purposes of determining whether a customer qualified for a mortgage loan modification or repayment plan pursuant to the requirements of government-sponsored enterprises (such as Fannie Mae and

Freddie Mac), the Federal Housing Administration (FHA), and the U.S. Department of Treasury’s Home Affordable Modification Program. Customers were not actually charged the incorrect attorneys’ fees. As previously disclosed, the Company has identified customers who, as a result of these errors, were incorrectly denied a loan modification or were not offered a loan modification or repayment plan in cases where they otherwise would have qualified, as well as instances where a foreclosure was completed after the loan modification was denied or the customer was deemed ineligible to be offered a loan modification or repayment plan. The number of previously disclosed customers affected by these errors may change as a result of ongoing validation, but is not expected to change materially upon completion of this validation. The Company has contacted substantially all of the identified customers affected by these errors and has provided remediation as well as the option to pursue no-cost mediation with an independent mediator. The Company’s review of its mortgage loan modification practices is ongoing, and we are providing remediation to the extent we identify additional affected customers as a result of this review.

Consumer Deposit Account DisclosuresThe Company is ~~also responding~~reviewing certain past disclosures to ~~inquiries from government agencies in connection with their reviews~~customers regarding the minimum qualifying debit card usage required to waive monthly service fees on certain consumer deposit accounts. Based on the possibility of confusion by some customers regarding the types of transactions that counted toward the waiver, we expect to refund certain ~~aspects of our FX business.~~monthly service and related fees to affected customers.

To the extent issues are identified, we will continue to assess any customer harm and provide remediation as appropriate. This effort to identify other instances in which customers may have experienced harm is ongoing, and it is possible that we may identify other areas of potential concern. For more information,

including related legal and regulatory risk, see the “Risk Factors” section in our ~~2017~~2018 Form 10-K and Note 1314 (Legal Actions) to Financial Statements in this Report.

Financial Performance

Wells Fargo net income was ~~$5.1~~$5.9 billion in first quarter ~~2018~~2019 with diluted earnings per common share (EPS) of ~~$0.96,~~$1.20, compared with ~~$5.6~~$5.1 billion and ~~$1.03,~~$0.96, respectively, a year ago. ~~First~~In first quarter ~~2018 results reflected an $800 million discrete litigation accrual in connection with entering into the consent orders with the CFPB and OCC on April 20, 2018, and also included:~~2019:

revenue was $~~21.9~~21.6 billion, down $~~321~~325 million compared with a year ago, with net interest income ~~down 1%~~up $73 million and noninterest income down 2%$398 million;

average loans were $950.0 billion, down $1.0 billion from a year ago;

~~average loans were $951.0 billion, down $12.6 billion, or 1%, from a year ago;~~

~~total~~average deposits were $1.3 trillion, down $~~21.8~~35.1 billion, or 2%3%, from a year ago;

return on assets (ROA) of ~~1.09%~~1.26% and return on equity (ROE) of ~~10.58%~~12.71%, ~~down~~were up from ~~1.18%~~1.09% and ~~11.96%~~10.58%, respectively, ~~compared with~~ a year ago;

our credit results ~~improved~~remained strong with a net charge-off rate of ~~0.32%~~0.30% (annualized) of average loans in first quarter ~~2018,~~2019, compared with ~~0.34%~~0.32% (annualized) a year ago;

nonaccrual loans of ~~$7.7~~$6.9 billion were down ~~$2.0 billion,~~$434 million, or ~~21%~~6%, from a year ago; and

we returned ~~$4.0~~$6.0 billion to shareholders through common stock dividends and net share repurchases, ~~which was~~an increase of 49% from the ~~11th~~$4.0 billion we returned in first quarter 2018 and the 15th consecutive quarter of returning more than $3 billion.

Balance Sheet and Liquidity

~~Despite the asset cap placed on us from the consent order with the FRB, our~~Our balance sheet remained strong during first quarter ~~2018~~2019 with strong credit quality and solid levels of liquidity and capital. Our total assets were ~~$1.92~~$1.89 trillion at March 31, ~~2018.~~2019. Cash and other short-term investments decreased ~~$20.0~~$5.9 billion from December 31, ~~2017,~~2018, reflecting lower deposit balances. Debt securities were ~~$473.0~~$483.5 billion at March 31, 2019, a decrease of $1.2 billion from December 31, 2018, ~~with approximately $13 billion of gross purchases during first quarter 2018, more than offset by run-off and sales.~~predominantly due to a decrease in available-for-sale debt securities. Loans were down ~~$9.5~~$4.9 billion, or 1%, from December 31, ~~2017, primarily due to a decline~~2018, driven by declines in ~~automobile~~real estate 1-4 family junior lien mortgage, commercial and ~~junior lien~~industrial, and other revolving credit and installment loans, partially offset by an increase in commercial real estate mortgage loans.

Average deposits in first quarter ~~2018~~2019 were ~~$1.30~~$1.3 trillion, down ~~$2.0~~$35.1 billion from first quarter ~~2017 as~~2018. The decline was driven by lower ~~commercial~~Wholesale Banking and Wealth and Investment Management deposits, ~~from financial institutions were~~ partially offset by higher ~~interest-bearing checking~~retail banking deposits. Our average deposit cost in first quarter ~~2018~~2019 was 3465 basis points, up 1731 basis points from a year ago, ~~primarily~~ driven by an increase in ~~commercial~~Wholesale Banking and Wealth and Investment Management deposit rates.

Credit Quality

Solid overall credit results continued in first quarter ~~2018~~2019 as losses remained low and we continued to originate high quality loans, reflecting our long-term risk focus. Net charge-offs were ~~$741~~$695 million, or ~~0.32%~~0.30% (annualized) of average loans, in first quarter ~~2018,~~2019, compared with ~~$805~~$741 million a year ago ~~(0.34%~~(0.32%) (annualized). The decrease in net charge-offs in first quarter ~~2018,~~2019, compared with a year ago, was predominantly driven by lower losses in the automobile portfolio, partially offset by increases in the commercial and industrial ~~loan~~ portfolio ~~including in~~and the ~~oil and gas~~credit card portfolio.

Our commercial portfolio net charge-offs were ~~$78~~$145 million, or 611 basis points (annualized) of average commercial loans, in first quarter ~~2018,~~2019, compared with net charge-offs of ~~$143~~$78 million, or 116 basis points (annualized), a year ago. Net consumer credit losses ~~increased~~decreased to 6051 basis points (annualized) of average consumer loans in first quarter ~~2018~~2019 from 5960 basis points (annualized) in first quarter

2017. Our commercial real estate portfolios were in a net recovery position for the 21st consecutive quarter, reflecting our conservative risk discipline and improved market conditions. Net losses on our consumer real estate portfolios improved by $56 million, or 187%, to a net recovery of $26 million from a year ago, reflecting the benefit of the continued improvement in the housing market and our continued focus on originating high quality loans. Approximately 80% of the consumer first mortgage loan portfolio outstanding at March 31, 2018, was originated after 2008, when more stringent underwriting standards were implemented. 2018.

The allowance for credit losses as of March 31, ~~2018,~~2019, decreased ~~$974~~$492 million compared with a year ago and ~~decreased $647~~increased $114 million from December 31, ~~2017.~~2018. We had a ~~$550~~$150 million ~~release~~build in the allowance for credit losses in first quarter ~~2018,~~2019, compared with ~~approximately $400~~a $550 million ~~driven by an improvement in our outlook for 2017 hurricane-related losses.~~release a year ago. The allowance coverage for total loans was ~~1.19%~~1.14% at March 31, ~~2018,~~2019, compared with ~~1.28%~~1.19% a year ago and ~~1.25%~~1.12% at December 31, ~~2017.~~2018. The allowance covered 3.8 times annualized first quarter net charge-offs, compared with 3.8 times a year ago. Future allowance levels will be based on a variety of factors, including loan growth, portfolio performance and general economic conditions. Our provision for loan losses was ~~$191~~$845 million in first quarter ~~2018, down~~2019, up from ~~$605~~$191 million a year ~~ago, primarily~~ago. The increase was predominantly due to an allowance build in first quarter 2019 reflecting a higher probability of slightly less favorable economic conditions, compared with an allowance release for the same period last year, reflecting improvement in our outlook for 2017 ~~hurricane-related losses, as well as continued improvement in residential real estate and lower loan balances.~~hurricane–related losses.

Nonperforming assets ~~decreased $388~~increased $394 million, or 4%6%, from December 31, ~~2017, the eighth consecutive quarter of decreases, with improvement across our consumer~~2018 and ~~commercial portfolios and lower foreclosed assets. Nonperforming assets were 0.88%~~represented 0.77% of total ~~loans, the lowest level since the merger with Wachovia in 2008.~~loans. Nonaccrual loans ~~decreased $317~~increased $409 million from December 31, 2018, driven in part by a borrower in the ~~prior quarter largely due to a decrease~~utility sector, as well as increases in ~~commercial nonaccruals. In addition, foreclosed~~oil and gas. Foreclosed assets ~~were down $71~~declined $15 million from ~~the prior quarter.~~December 31, 2018.

Capital

Our financial performance in first quarter ~~2018~~2019 allowed us to maintain a solid capital position, with total equity of ~~$205.9~~$198.7 billion at March 31, ~~2018,~~2019, compared with ~~$208.1~~$197.1 billion at December 31, ~~2017.~~2018. We returned ~~$4.0~~$6.0 billion to shareholders in first quarter ~~2018~~2019 through common stock dividends and net share repurchases, ~~an increase of 30% from a year ago.~~which was 49% more than the $4.0 billion we returned in first quarter 2018. Our net payout ratio (which is the ratio of (i) common stock dividends and share repurchases less issuances and stock compensation-related items, divided by (ii) net income applicable to common stock) was ~~85%~~109%. We continued to reduce our common shares outstanding through the repurchase of ~~50.6~~97.4 million common shares in the quarter. ~~We entered into a $1 billion forward repurchase contract with an unrelated third party in April 2018 that is expected to settle in third quarter 2018 for approximately 20 million shares.~~ We expect to reduce our common shares outstanding through share repurchases throughout the remainder of ~~2018.~~2019.

We believe an important measure of our capital strength is the Common Equity Tier 1 (CET1) ratio under Basel III, fully phased-in, which was 11.92% at March 31, 2019, up from 11.74% at December 31, 2018, but well above our internal target of 10%. ~~The decline in~~As of March 31, 2019, our ~~CET1 ratio from December 31, 2017, reflected other comprehensive income resulting from higher interest rates and capital distributions, partially offset by capital generation from earnings, lower~~eligible external total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets ~~(RWA) driven by lower loan balances and improved RWA efficiency.~~was 23.85%, compared with the required minimum of 22.0%. Likewise, our other regulatory capital ratios remained strong. See the “Capital Management” section in this Report for more information regarding our capital, including the calculation of our regulatory capital amounts.

Earnings Performance (continued)

Earnings Performance

Wells Fargo net income for first quarter ~~2018~~2019 was $5.9 billion ($1.20 diluted earnings per common share), compared with $5.1 billion ($~~0.96), compared with $5.6 billion ($1.03)~~0.96 diluted per share) for the same period a year ago. Our financial performance in first quarter ~~2018, compared with the same period a year ago,~~2019 benefited from a ~~$414~~$73 million ~~decrease in our provision for credit losses, offset by a $86 million decrease~~increase in net interest income, a ~~$235~~$1.1 billion decrease in noninterest expense, and a $493 million decline in income tax expense, partially offset by a $398 million decrease in noninterest income, and a ~~$1.3 billion~~$654 million increase in ~~noninterest expense. First quarter 2018 results also benefited from the lower~~our provision for credit losses. Net income ~~tax rate. Net interest income represented 56% of revenue, compared with 55% for the same period a year ago. Noninterest income was $9.7 billion~~ in first quarter ~~2018, representing 44%~~2019 included net discrete income tax benefits of ~~revenue, compared with $9.9 billion (45%) in first quarter 2017.~~$297 million related mostly to the results of U.S. federal and state income tax examinations and the accounting for stock compensation activity.

Revenue, the sum of net interest income and noninterest income, was ~~$21.9~~$21.6 billion in first quarter ~~2018,~~2019, compared with ~~$22.3~~$21.9 billion ~~for first quarter 2017.~~in the same period a year ago. The decrease in revenue ~~for~~in first quarter ~~2018,~~2019, compared with the same period ~~in 2017,~~a year ago, was due to a ~~decline~~decrease in ~~both~~noninterest income, partially offset by an increase in net interest income. Our diversified sources of revenue generated by our businesses continued to be balanced between net interest income and in noninterest income.

~~Earnings Performance (continued~~ In first quarter 2019, net interest income represented 57% of revenue, compared with 56% for the same period a year ago. Noninterest income was $9.3 billion in first quarter 2019, representing 43% of revenue, compared with $9.7 billion (44%) in first quarter 2018.

Net Interest Income

Net interest income is the interest earned on debt securities, loans (including yield-related loan fees) and other interest-earning assets minus the interest paid on deposits, short-term borrowings and long-term debt. The net interest margin is the average yield on earning assets minus the average interest rate paid for deposits and our other sources of funding. Net interest income and the net interest margin are presented on a taxable-equivalent basis in Table 1 to consistently reflect income from taxable and tax-exempt loans and debt and equity securities based on a 21% ~~and 35%~~ federal statutory tax rate for ~~first quarter 2018~~the periods ending

March 31, 2019 and ~~first quarter 2017, respectively.~~2018.

Net interest income and the net interest margin in any one period can be significantly affected by a variety of factors including the mix and overall size of our earning assets portfolio and the cost of funding those assets. In addition, ~~some~~ variable sources of interest income, such as ~~resolutions from purchased credit-impaired (PCI) loans,~~ loan fees, periodic dividends, and collection of interest on nonaccrual loans, can ~~vary~~fluctuate from period to period.

Net interest income on a taxable-equivalent basis was ~~$12.4~~$12.5 billion in first quarter ~~2018,~~2019, compared with ~~$12.6~~$12.4 billion for the same period a year ago. ~~The net~~Net interest margin on a taxable-equivalent basis was ~~2.84% for~~2.91% in first quarter ~~2018, down from 2.87%~~2019, compared with 2.84% for the same period a year ago. The ~~decrease~~increase in net interest income and net interest margin in first quarter ~~2018,~~2019, compared with the same period a year ago, was driven by:

the repricing benefits from higher interest rates;

favorable hedge ineffectiveness accounting results; and

a reduction in securities premium amortization driven by a refinement of our methodology to determine the remaining contractual life of our agency mortgage-backed securities portfolio;

partially offset by:

a smaller balance sheet and an unfavorable shift of yields on earnings assets compared with funding sources;

lower variable sources of interest income, primarily driven by a decrease in interest income received on nonaccrual loans; and

lower loan swap income due to unwinding the ~~receive-fixed~~received-fixed loan swap portfolio, unfavorable hedge ineffectiveness accounting, lower tax-equivalent net interest income from updated tax-equivalent factors, lower loan balances, and higher premium amortization, partially offset by the net repricing benefit of higher interest rates, growth in interest income from debt and equity securities, lower long-term debt balances, and higher variable income.portfolio.

Average earning assets decreased ~~$15.9~~$30.0 billion in first quarter ~~2018,~~2019, compared with the same period a year ago. ~~Compared with the same period a year ago:~~The change was driven by decreases in:

average ~~loans decreased~~interest-earning deposits of $~~12.6~~31.5 billion;

average ~~interest-earning deposits decreased $~~equity securities of ~~36.2~~$6.7 billion;

average mortgage loans held for sale of $4.5 billion;

other earning assets of $1.6 billion and

average loans of $1.0 billion;

partially offset by increases in:

average debt securities of $10.0 billion; and

average federal funds sold and securities purchased under resale agreements ~~increased~~of $~~2.9 billion~~;

~~average debt securities increased~~ ~~$19.3 billion~~;

~~average equity securities increased~~ ~~$5.8 billion; and~~

~~other earning assets increased~~ ~~$6.0~~5.4 billion.

Deposits are an important low-cost source of funding and affect both net interest income and the net interest margin. Deposits include noninterest-bearing deposits, interest-bearing checking, market rate and other savings, savings certificates, other time deposits, and deposits in foreign offices. Average deposits ~~of $1.30~~were $1.26 trillion in first quarter ~~2018 were relatively stable~~2019, compared with $1.30 trillion for the same period a year ago, and represented ~~136%~~133% of average loans in first quarter ~~2018,~~2019, compared with ~~135%~~136% in first quarter ~~2017.~~2018. Average deposits were ~~74%~~73% of average earning assets in first quarter ~~2018,~~2019, compared with ~~73%~~74% in first quarter ~~2017.~~2018. The average deposit cost for first quarter ~~2018~~2019 was 3465 basis points, up 1731 basis points from a year ago, ~~primarily~~ driven by an increase in ~~commercial~~Wholesale Banking and Wealth and Investment Management deposit rates.

Table 1: Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) (1)(2)


	Quarter ended March 31,													Quarter ended March 31,
						2018						2017							2019						2018
(in millions)	Average balance			Yields/ rates		Interest income/ expense		Average balance		Yields/ rates		Interest income/ expense		Average balance			Yields/ rates		Interest income/ expense		Average balance		Yields/ rates		Interest income/ expense
Earning assets
Interest-earning deposits with banks ~~(3)~~	$	172,291		1.49	%	$	632	208,486		0.79	%	$	405	$	140,784		2.33	%	$	810	172,291		1.49	%	$	632
Federal funds sold and securities purchased under resale agreements ~~(3)~~	78,135			1.40		271		75,281		0.68		127		83,539			2.40		495		78,135		1.40		271
Debt securities (4):
Debt securities (3):
Trading debt securities	78,715			3.24		637		69,120		3.03		523		89,378			3.58		798		78,715		3.24		637
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	6,426			1.66		26		25,034		1.54		95		14,070			2.14		74		6,426		1.66		26
Securities of U.S. states and political subdivisions ~~(7)~~	49,956			3.37		421		52,248		3.93		513		48,342			4.02		486		49,956		3.37		421
Mortgage-backed securities:
Federal agencies	158,472			2.72		1,076		156,617		2.58		1,011		151,494			3.10		1,173		158,472		2.72		1,076
Residential and commercial ~~(7)~~	8,871			4.12		91		14,452		5.34		193		5,984			4.31		64		8,871		4.12		91
Total mortgage-backed securities ~~(7)~~	167,343			2.79		1,167		171,069		2.81		1,204		157,478			3.14		1,237		167,343		2.79		1,167
Other debt securities ~~(7)~~	48,094			3.73		444		50,149		3.61		447		46,788			4.46		517		48,094		3.73		444
Total available-for-sale debt securities ~~(7)~~	271,819			3.04		2,058		298,500		3.04		2,259		266,678			3.48		2,314		271,819		3.04		2,058
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	44,723			2.20		243		44,693		2.20		243		44,754			2.20		243		44,723		2.20		243
Securities of U.S. states and political subdivisions	6,259			4.34		68		6,273		5.30		83		6,158			4.03		62		6,259		4.34		68
Federal agency and other mortgage-backed securities	90,789			2.38		541		51,786		2.51		324		96,004			2.74		656		90,789		2.38		541
Other debt securities	695			3.23		5		3,329		2.34		19		61			3.96		1		695		3.23		5
Total held-to-maturity debt securities	142,466			2.42		857		106,081		2.54		669		146,977			2.63		962		142,466		2.42		857
Total debt securities ~~(7)~~	493,000			2.89		3,552		473,701		2.92		3,451		503,033			3.25		4,074		493,000		2.89		3,552
Mortgages held for sale (5)(7)	18,406			3.89		179		19,893		3.67		182
Mortgage loans held for sale (4)														13,898			4.37		152		18,406		3.89		179
Loans held for sale ~~(5)~~(4)	2,011			4.92		24		1,600		2.50		10		1,862			5.25		24		2,011		4.92		24
Loans:
Commercial loans:
Commercial and industrial – U.S.	272,040			3.85		2,584		274,749		3.59		2,436		286,577			4.48		3,169		272,040		3.85		2,584
Commercial and industrial – Non U.S.	60,216			3.23		479		55,347		2.73		373		62,821			3.90		604		60,216		3.23		479
Real estate mortgage	126,200			4.05		1,262		132,449		3.56		1,164		121,417			4.58		1,373		126,200		4.05		1,262
Real estate construction	24,449			4.54		274		24,591		3.72		225		22,435			5.43		301		24,449		4.54		274
Lease financing	19,265			5.30		255		19,070		4.94		235		19,391			4.61		224		19,265		5.30		255
Total commercial loans	502,170			3.91		4,854		506,206		3.54		4,433		512,641			4.48		5,671		502,170		3.91		4,854
Consumer loans:
Real estate 1-4 family first mortgage	284,207			4.02		2,852		275,480		4.02		2,766		285,214			3.96		2,821		284,207		4.02		2,852
Real estate 1-4 family junior lien mortgage	38,844			5.13		493		45,285		4.60		515		33,791			5.75		481		38,844		5.13		493
Credit card	36,468			12.75		1,147		35,437		11.97		1,046		38,182			12.88		1,212		36,468		12.75		1,147
Automobile	51,469			5.16		655		61,510		5.46		828		44,833			5.19		574		51,469		5.16		655
Other revolving credit and installment	37,866			6.46		604		39,727		6.02		590		35,349			7.14		623		37,866		6.46		604
Total consumer loans	448,854			5.16		5,751		457,439		5.06		5,745		437,369			5.26		5,711		448,854		5.16		5,751
Total loans (5)	951,024			4.50		10,605		963,645		4.26		10,178
Total loans (4)														950,010			4.84		11,382		951,024		4.50		10,605
Equity securities	39,754			2.35		233		33,926		2.11		179		33,080			2.56		211		39,754		2.35		233
Other	6,015			1.21		19		—		—		—		4,416			1.63		18		6,015		1.21		19
Total earning assets (7)	$	1,760,636		3.55	%	$	15,515	1,776,532		3.30	%	$	14,532
Total earning assets														$	1,730,622		4.00	%	$	17,166	1,760,636		3.55	%	$	15,515
Funding sources
Deposits:
Interest-bearing checking	$	67,774		0.77	%	$	129	50,686		0.29	%	$	37	$	56,253		1.42	%	$	197	67,774		0.77	%	$	129
Market rate and other savings	679,068			0.22		368		684,175		0.09		157		688,568			0.50		847		679,068		0.22		368
Savings certificates	20,018			0.34		17		23,466		0.29		17		25,231			1.26		78		20,018		0.34		17
Other time deposits (7)	76,589			1.84		347		54,915		1.30		177
Other time deposits														97,830			2.67		645		76,589		1.84		347
Deposits in foreign offices	94,810			0.98		229		122,200		0.49		148		55,443			1.89		259		94,810		0.98		229
Total interest-bearing deposits (7)	938,259			0.47		1,090		935,442		0.23		536
Total interest-bearing deposits														923,325			0.89		2,026		938,259		0.47		1,090
Short-term borrowings	101,779			1.24		312		98,549		0.47		115		108,651			2.23		597		101,779		1.24		312
Long-term debt (7)	226,062			2.80		1,576		260,130		1.77		1,147
Long-term debt														233,172			3.32		1,927		226,062		2.80		1,576
Other liabilities	27,927			1.92		132		16,806		2.22		92		25,292			2.28		143		27,927		1.92		132
Total interest-bearing liabilities (7)	1,294,027			0.97		3,110		1,310,927		0.58		1,890
Portion of noninterest-bearing funding sources (7)	466,609			—		—		465,605		—		—
Total funding sources (7)	$	1,760,636		0.71		3,110		1,776,532		0.43		1,890
Net interest margin and net interest income on a taxable-equivalent basis (6)(7)				2.84	%	$	12,405			2.87	%	$	12,642
Total interest-bearing liabilities														1,290,440			1.47		4,693		1,294,027		0.97		3,110
Portion of noninterest-bearing funding sources														440,182			—		—		466,609		—		—
Total funding sources														$	1,730,622		1.09		4,693		1,760,636		0.71		3,110
Net interest margin and net interest income on a taxable-equivalent basis (5)																	2.91	%	$	12,473			2.84	%	$	12,405
Noninterest-earning assets
Cash and due from banks	$	18,853						18,706						$	19,614						18,853
Goodwill	26,516							26,673						26,420							26,516
Other (7)	109,891							109,129
Total noninterest-earning assets (7)	$	155,260						154,508
Other														106,435							109,891
Total noninterest-earning assets														$	152,469						155,260
Noninterest-bearing funding sources
Deposits	$	358,919						363,749						$	338,737						358,919
Other liabilities (7)	56,770							54,805
Total equity (7)	206,180							201,559
Noninterest-bearing funding sources used to fund earning assets (7)	(466,609		)					(465,605	)
Net noninterest-bearing funding sources (7)	$	155,260						154,508
Total assets (7)	$	1,915,896						1,931,040
Other liabilities														55,565							56,770
Total equity														198,349							206,180
Noninterest-bearing funding sources used to fund earning assets														(440,182		)					(466,609	)
Net noninterest-bearing funding sources														$	152,469						155,260
Total assets														$	1,883,091						1,915,896


(1)	Our average prime rate was ~~4.52%~~5.50% and ~~3.80%~~4.52% for the quarters ended March 31, ~~2018~~2019 and ~~2017~~,2018, respectively. The average three-month London Interbank Offered Rate (LIBOR) was ~~1.93%~~2.69% and ~~1.07%~~1.93% for the quarters ended March 31, ~~2018~~2019 and ~~2017~~,2018, 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 has been revised to reflect the impact of the adoption of Accounting Standards Update (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~~ Yields/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)~~(4)	Nonaccrual loans and related income are included in their respective loan categories.


~~(6)~~(5)	Includes taxable-equivalent adjustments of ~~$167~~$162 million and ~~$318~~$167 million for the quarters ended March 31, ~~2018~~2019 and ~~2017~~,2018, respectively, predominantly related to tax-exempt income on certain loans and securities. The federal statutory tax rate utilized was 21% ~~and 35%~~ for ~~quarters ended~~ ~~March 31, 2018~~ ~~and~~ ~~2017, respectively.~~


~~(7)~~	~~Financial information for the prior quarter 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~~. periods presented.

Earnings Performance (continued)

Noninterest Income

Table 2: Noninterest Income


	Quarter ended March 31,			%		Quarter ended March 31,			%
(in millions)	2018		2017	Change		2019		2018	Change
Service charges on deposit accounts	$	1,173	1,313	(11	)%	$	1,094	1,173	(7	)%
Trust and investment fees:
Brokerage advisory, commissions and other fees	2,403		2,324	3		2,193		2,403	(9	)
Trust and investment management	850		829	3		786		850	(8	)
Investment banking	430		417	3		394		430	(8	)
Total trust and investment fees	3,683		3,570	3		3,373		3,683	(8	)
Card fees	908		945	(4	)	944		908	4
Other fees:
Charges and fees on loans	301		307	(2	)
Lending related charges and fees (1)						347		380	(9	)
Cash network fees	126		126	—		109		126	(13	)
Commercial real estate brokerage commissions	85		81	5		81		85	(5	)
Letters of credit fees	79		74	7
Wire transfer and other remittance fees	116		107	8		113		116	(3	)
All other fees	93		170	(45	)	120		93	29
Total other fees	800		865	(8	)	770		800	(4	)
Mortgage banking:
Servicing income, net	468		456	3		364		468	(22	)
Net gains on mortgage loan origination/sales activities	466		772	(40	)	344		466	(26	)
Total mortgage banking	934		1,228	(24	)	708		934	(24	)
Insurance	114		277	(59	)	96		114	(16	)
Net gains from trading activities	243		272	(11	)	357		243	47
Net gains on debt securities	1		36	(97	)	125		1	NM
Net gains from equity securities	783		570	37		814		783	4
Lease income	455		481	(5	)	443		455	(3	)
Life insurance investment income	164		144	14		159		164	(3	)
All other	438		230	90		415		438	(5	)
Total	$	9,696	9,931	(2	)	$	9,298	9,696	(4	)

NM – Not meaningful


(1)	Represents combined amount of previously reported “Charges and fees on loans” and “Letters of credit fees”.

Noninterest income was ~~$9.7~~$9.3 billion ~~for~~in first quarter ~~2018,~~2019, compared with ~~$9.9~~$9.7 billion for the same period a year ago. This income represented ~~44%~~43% of revenue for first quarter ~~2018,~~2019, compared with ~~45%~~44% for the same period a year ago. The decline in noninterest income in first quarter ~~2018,~~2019, compared with the same period a year ago, was predominantly due to lower trust and investment fees, mortgage banking income, ~~lower insurance income due to the sale of Wells Fargo Insurance Services in fourth quarter 2017,~~net gains on nonmarketable equity securities, and ~~lower~~ service charges on deposit accounts. These decreases were partially offset by ~~growth~~higher deferred compensation gains (offset in ~~trust~~employee benefits expense) and ~~investment fees,~~ higher ~~net~~ gains from ~~equity securities,~~trading and ~~higher all other income.~~debt securities. For more information on our performance obligations and the nature of services performed for certain of our revenues discussed below, see Note 1718 (Revenue from Contracts with Customers) to Financial Statements in this Report.

Service charges on deposit accounts were ~~$1.2~~$1.1 billion in first quarter ~~2018,~~2019, compared with ~~$1.3~~$1.2 billion for the same period a year ago. The decrease in first quarter ~~2018,~~2019, compared with the same period a year ago, was due to lower ~~overdraft~~monthly service fees ~~driven by customer-friendly changes including~~and lower treasury management fees. A significant portion of the ~~first full quarter impact of Overdraft Rewind~~^SM~~, and~~lower treasury management fees were due to the impact of a higher earnings credit rate applied to commercial accounts due to increased interest rates. The decrease in service charges on deposit accounts also reflected $35 million in fee waivers and reversals for customers including those affected by our data

center system outage in February 2019, and the government shutdown in first quarter 2019.

Brokerage advisory, commissions and other fees ~~increased to $2.4~~were $2.2 billion in first quarter ~~2018,~~2019, compared with ~~$2.3~~$2.4 billion for the same period in ~~2017.~~2018. The ~~increase~~decrease in first quarter ~~2018,~~2019, compared with the same period ~~in 2017,~~a year ago, was predominantly due to ~~higher asset-~~

~~based~~lower asset-based fees ~~partially offset by~~as well as lower transactional commission revenue. Retail brokerage client assets totaled $1.6 trillion at both March 31, ~~2018~~2019 and ~~2017, with all~~2018. All retail brokerage services are provided by our ~~Wealth and Investment Management (WIM)~~WIM operating segment. For additional information on retail brokerage client assets, see the discussion and Tables 4d and 4e in the “Operating Segment Results – Wealth and Investment Management – Retail Brokerage Client Assets” section in this Report.

Trust and investment management fee income is largely from client assets under management (AUM) for which fees are based on a tiered scale relative to market value of the assets, and client assets under administration (AUA), for which fees are generally based on the extent of services to administer the assets. Trust and investment management fees ~~modestly increased~~declined to ~~$850~~$786 million in first quarter ~~2018,~~2019, from ~~$829~~$850 million ~~in first quarter 2017, largely~~for the same period a year ago, due to ~~growth~~decreases in trust fees, investment management fees ~~for investment advice on~~, and mutual ~~funds.~~fund asset fees, driven by lower average assets under management. Our AUM totaled $661.1 billion at March 31, 2019, compared with $680.4 billion at March 31, 2018, ~~compared with $654.9 billion at March 31, 2017,~~ with substantially all of our AUM managed by our WIM operating

segment. Additional information regarding our WIM operating segment AUM is provided in Table 4f and the related discussion in the “Operating Segment Results – Wealth and Investment Management – Trust and Investment Client Assets Under Management” section in this Report. Our AUA totaled $1.7 trillion at both March 31, ~~2018, compared with $1.6 trillion at March 31, 2017.~~2019 and 2018.

Investment banking fees ~~increased~~declined to ~~$430~~$394 million in first quarter ~~2018,~~2019, from ~~$417~~$430 million for the same period in ~~2017, reflecting the impact of the new accounting standard for revenue recognition, which increased investment banking fees and increased noninterest expense by an equal amount~~2018, predominantly due to ~~the underwriting expenses of our broker-dealer business that were previously netted against revenue are now included in noninterest expense. The increase in fees was~~lower equity and debt originations, partially offset by ~~lower~~higher advisory ~~fees and equity originations.~~fees.

Card fees were ~~$908~~$944 million in first quarter 2019, compared with $908 million for the same period in 2018, ~~down from $945~~predominantly due to higher interchange fees driven by increased purchase activity, partially offset by higher rewards costs.

Other fees decreased to $770 million in first quarter ~~2017, reflecting higher rewards costs~~2019, from $800 million for the same period in 2018, driven by lower lending related charges and ~~the impact of the new accounting standard for revenue recognition, which lowered card~~ fees and ~~reduced noninterest expense by an equal amount due to the netting of card payment~~lower cash network ~~charges against related interchange and network revenues in card fees. These decreases were~~fees, partially offset by an increase in ~~interchange fees due to higher purchase activity.~~all other fees.

~~Other fees~~Mortgage banking noninterest income decreased to ~~$800~~$708 million in first quarter ~~2018,~~2019, from ~~$865~~$934 million for the same period ~~in 2017, predominantly~~a year ago, driven by ~~lower all other fees. All other fees were $93 million~~decreases in ~~first quarter 2018, compared with $170 million for the same period in 2017, driven by lower other fees from discontinued products.~~

~~Mortgage banking noninterest income, consisting of~~both net servicing income and net gains on mortgage loan origination/sales ~~activities, totaled $934 million in first quarter 2018, compared with $1.2 billion for the same period a year ago.~~activities.

In addition to servicing fees, net ~~mortgage loan~~ servicing income includes amortization of commercial mortgage servicing rights (MSRs), changes in the fair value of residential MSRs during the period, as well as changes in the value of derivatives (economic hedges) used to hedge the residential MSRs. Net servicing income of $364 million for first quarter 2019 included a $71 million net MSR valuation gain ($891 million decrease in the fair value of the MSRs and a $962 million hedge gain). Net servicing income of $468 million for first quarter 2018 included a $110 million net MSR valuation gain ($1.3 billion increase in the fair value of the MSRs and a $1.2 billion hedge loss). ~~Net servicing income of $456 million for first quarter 2017 included a $102 million net MSR valuation gain ($174 million increase in the fair value of the MSRs and a $72 million hedge loss).~~

Our portfolio of ~~mortgage~~ loans serviced for others was ~~$1.71~~$1.68 trillion at March 31, ~~2018,~~2019, and ~~$1.70~~$1.71 trillion at December 31, ~~2017.~~2018. At March 31, ~~2018,~~2019, the ratio of combined residential and commercial MSRs to related loans serviced for others was ~~0.96%~~0.88%, compared with ~~0.88%~~0.94% at December 31, ~~2017.~~2018. See the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section in this Report for additional information regarding our MSRs risks and hedging approach.

Net gains on mortgage loan origination/sales activities were ~~$466~~$344 million in first quarter ~~2018,~~2019, compared with ~~$772~~$466 million for the same period a year ago. The decrease in first quarter ~~2018,~~2019, compared with the same period a year ago, ~~was largely~~was predominantly due to lower ~~production margins.~~mortgage loan originations. Total mortgage loan originations were ~~$43~~$33 billion for first quarter ~~2018,~~2019, compared with ~~$44~~$43 billion for the same period a year ago. The production margin on residential held-for-sale mortgage loan originations, which represents net gains on residential mortgage loan origination/sales activities divided by total residential held-for-sale mortgage loan originations, provides a measure of the profitability of our residential mortgage origination activity. Table 2a presents the information used in determining the production margin.

Table 2a: Selected Mortgage Production Data


		Quarter ended March 31,					Quarter ended March 31,
		2018			2017		2019			2018
Net gains on mortgage loan origination/sales activities (in millions):
Residential	(A)	$	324		569	(A)	$	232		324
Commercial		76			101		47			76
Residential pipeline and unsold/repurchased loan management (1)		66			102		65			66
Total		$	466		772		$	344		466
Residential real estate originations (in billions):
Held-for-sale	(B)	$	34		34	(B)	$	22		34
Held-for-investment		9			10		11			9
Total		$	43		44		$	33		43
Production margin on residential held-for-sale mortgage originations	(A)/(B)	0.94		%	1.68
Production margin on residential held-for-sale mortgage loan originations						(A)/(B)	1.05		%	0.94


(1)	Predominantly includes the results of ~~GNMA~~Government National Mortgage Association (GNMA) loss mitigation activities, interest rate management activities and changes in estimate to the liability for mortgage loan repurchase losses.

~~Earnings Performance (continued~~)

The production margin was ~~0.94%~~1.05% for first quarter ~~2018,~~2019, compared with ~~1.68%~~0.94% for the same period in ~~2017.~~2018. The ~~decline~~increase in the production margin in first quarter 2019, compared with the same period in 2018, ~~was~~was largely attributable to ~~lower margins in both our retail and correspondent production channels as well as~~ a shift to more ~~correspondent~~retail origination volume, which has a ~~lower~~higher production margin. Mortgage applications were ~~$58~~$64 billion for first quarter ~~2018,~~2019, compared with ~~$59~~$58 billion for the same period a year ago. The 1-4 family first mortgage unclosed application pipeline was $32 billion at March 31, 2019, compared with $24 billion at March 31, ~~2018, compared with $28 billion at March 31, 2017.~~2018. For additional information about our mortgage banking activities and results, see the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section and Note 1011 (Mortgage Banking Activities) and Note 1516 (Fair Values of Assets and Liabilities) to Financial Statements in this Report.

Net gains on mortgage loan origination/sales activities include adjustments to the mortgage repurchase liability. Mortgage loans are repurchased from third parties based on standard representations and warranties, and early payment default clauses in mortgage sale contracts. For additional information about mortgage loan repurchases, see the “Risk Management – Credit Risk Management – Liability for Mortgage Loan Repurchase Losses” section and Note 10 (Mortgage Banking Activities) to Financial Statements in this Report.

Insurance income was ~~$114~~$96 million in first quarter ~~2018,~~2019, compared with ~~$277~~$114 million in the same period a year ago. The decrease in first quarter ~~2018,~~2019, compared with the same period a year ago, was primarily driven by reduced commission income related to the sale of ~~Wells Fargo Insurance Services~~certain personal insurance agency relationships in ~~fourth~~second quarter ~~2017.~~2018.

Net gains from trading activities, which reflect unrealized changes in fair value of our trading positions and realized gains and losses, were ~~$243~~$357 million in first quarter ~~2018,~~2019, compared with ~~$272~~$243 million in the same period a year ago. The ~~decrease~~increase in first quarter ~~2018,~~2019, compared with the same period a year ago, was due to growth in asset-backed securities trading driven by ~~lower customer accommodation~~higher residential mortgage-backed securities (RMBS) trading ~~activity within our capital markets trading business.~~volumes, as well as higher credit trading. Net gains from trading activities do not include interest and dividend income and expense on trading securities. Those amounts are reported within interest income from ~~debt and equity securities~~trading assets and other interest ~~expense.~~expense from trading liabilities. For additional information about trading activities, see the ~~"Risk~~“Risk Management – Asset/Liability Management – Market ~~Risk-Trading~~Risk – Trading Activities” section and Note 4 (Trading Activities) to Financial Statements in this Report.

Earnings Performance (continued)

Net gains on debt and equity securities totaled ~~$784~~$939 million in first quarter ~~2018,~~2019, compared with ~~$606~~$784 million for the same period in ~~first quarter 2017,~~2018, after other-than-temporary impairment (OTTI) write-downs of ~~$30~~$81 million for first quarter ~~2018,~~2019, compared with ~~$128~~$30 million for the same period in ~~2017.~~2018. The increase in net gains on debt and equity securities in first quarter ~~2018,~~2019, compared with the same period a year ago, was ~~driven by~~predominantly due to higher deferred compensation plan investment results (offset in employee benefits expense – see Table 3a in this Report for more information) and higher net gains ~~from nonmarketable equity~~on debt securities, and $250 million of unrealized gains from the impact of the new accounting standard for financial instruments which requires any gain or loss associated with the fair value measurement of equity securities to be reflected in earnings. These increases were partially offset by lower net gains onfrom nonmarketable equity securities. The increase in OTTI in first quarter 2019, compared with the same period a year ago, was predominantly driven by higher write-downs in municipal debt securities and ~~lower deferred compensation gains (offset in employee benefits expense).~~commercial mortgage-backed securities.

Lease income was ~~$455~~$443 million in first quarter ~~2018,~~2019, compared with ~~$481~~$455 million for the same period a year ago. The decrease ~~in first quarter 2018, compared with the same period a year ago,~~ was driven by lower ~~rail and~~ equipment lease income.

All other income was ~~$438~~$415 million in first quarter ~~2018,~~2019, compared with ~~$230~~$438 million for the same period a year ago. All other income includes ~~ineffectiveness recognized on derivatives that qualify for hedge accounting, the results of certain economic hedges,~~ losses on low income housing tax credit investments, foreign currency adjustments, ~~and~~ income from investments accounted for under the equity method, hedge accounting results related to hedges of foreign currency risk, and the results of certain economic hedges, any of which can cause ~~decreases and~~lower net gains or increased net losses, resulting in a decrease to all other income. The ~~increase~~decrease in all other income in first quarter ~~2018,~~2019, compared with the same period a year ago, ~~was predominantly driven by~~reflected a ~~$643 million pre-tax gain from the sale of $1.6 billion of purchased credit-impaired Pick-a-Pay loans and a $202 million~~ pre-tax gain from the sale of Wells Fargo Shareowner Services in first quarter ~~2018. These gains were~~2018 and a lower benefit from hedge ineffectiveness accounting results in first quarter 2019, partially offset by ~~an unrealized~~a $148 million pre-tax gain from the sale of Business Payroll Services in first quarter 2019 and a loss ~~of $(176) million for a lower of cost or market (LOCOM) adjustment~~ related to the ~~previously announced~~ sale of certain assets and liabilities of Reliable Financial Services, Inc. (a subsidiary of Wells ~~Fargo's~~Fargo’s automobile financing business), in first quarter 2018. All other income also included a $608 million and ~~lower income~~a $643 million gain from ~~equity method investments.~~the sales of purchased credit-impaired Pick-a-Pay loans for first quarter 2019 and 2018, respectively.

Noninterest Expense

Table 3: Noninterest Expense


	Quarter ended March 31,			%		Quarter ended Mar 31,			%
(in millions)	2018		2017	Change		2019		2018	Change
Salaries	$	4,363	4,261	2	%	$	4,425	4,363	1	%
Commission and incentive compensation	2,768		2,725	2		2,845		2,768	3
Employee benefits	1,598		1,686	(5	)	1,938		1,598	21
Equipment	617		577	7		661		617	7
Net occupancy(1)	713		712	—		717		713	1
Core deposit and other intangibles	265		289	(8	)	28		265	(89	)
FDIC and other deposit assessments	324		333	(3	)	159		324	(51	)
Outside professional services						678		821	(17	)
Contract services						563		447	26
Operating losses	1,468		282	421		238		1,468	(84	)
Outside professional services	821		804	2
Contract services (1)	447		397	13
Operating leases(2)	320		345	(7	)	286		320	(11	)
Advertising and promotion						237		153	55
Outside data processing	162		220	(26	)	167		162	3
Travel and entertainment	152		179	(15	)	147		152	(3	)
Advertising and promotion	153		127	20
Postage, stationery and supplies	142		145	(2	)	122		142	(14	)
Telecommunications	92		91	1		91		92	(1	)
Foreclosed assets	38		86	(56	)	37		38	(3	)
Insurance	26		24	8		25		26	(4	)
All other ~~(1)~~	573		509	13		552		573	(4	)
Total	$	15,042	13,792	9		$	13,916	15,042	(7	)


(1)	~~The prior period has been revised~~Represents expenses for both leased and owned properties.


(2)	Represents expenses for assets we lease to ~~conform with the current period presentation whereby temporary help is included in contract services rather than in all other noninterest expense.~~customers.

Noninterest expense was ~~$15.0~~$13.9 billion in first quarter ~~2018, up 9%~~2019, down 7% from ~~$13.8~~$15.0 billion a year ago. The decrease in first quarter 2019, compared with the same period a year ago, ~~predominantly driven by higher~~was substantially due to lower operating losses.

Personnel expenses, which include salaries, commissions, incentive compensation, and employee benefits, were up ~~$57~~$479 million, or 1%5%, in first quarter ~~2018~~2019, compared with the

same period a year ago. The increase was due to ~~annual salary increases,~~ higher ~~incentive compensation, and higher employee benefits expense, partially offset by lower~~ deferred compensation costs (offset in net gains from equity securities), higher stock incentive compensation expense, and annual salary increases, partially offset by lower revenue-related incentive compensation. Table 3a presents deferred compensation plan investment results.

Table 3a:Deferred Compensation Plan Investment Results



	Quarter ended
(in millions)	Mar 31, 2019		Mar 31, 2018
Net interest income	$	13	10
Net gains (losses) from equity securities	345		(6	)
Total revenue from deferred compensation plan investments	358		4
Employee benefits expense	357		4
Income before income tax expense	$	1	—

Equipment expense was up $44 million, or 7%, in first quarter 2019, compared with the ~~impact~~same period a year ago, due to higher computer software licensing and maintenance and depreciation expense.

Core deposit and other intangibles expense was down $237 million, or 89%, in first quarter 2019, compared with the same period a year ago, due to lower amortization expense reflecting the end of the ~~sale~~10-year amortization period on Wachovia intangibles.

Federal Deposit Insurance Corporation (FDIC) and other deposit assessments were down $165 million, or 51%, in first quarter 2019, compared with the same period a year ago, due to the completion of ~~Wells Fargo Insurance Services in fourth quarter 2017.~~the FDIC temporary surcharge which ended September 30, 2018.

Outside professional and contract services expense was ~~up $67~~down $27 million, or 6%2%, in first quarter ~~2018, compared with the same period a year ago. The increase reflected higher project and technology spending on regulatory and compliance related initiatives, partially offset by lower legal expense.~~

~~Outside data processing was down $58 million in first quarter 2018, or 26%,~~2019, compared with the same period a year ago, reflecting lower data processing expense related to the GE Capital business acquisitions and the impact of the new revenue recognition accounting standard, which reduced noninterest expense and lowered card fees by an equal amount due to the netting of card payment network charges against related interchange and network revenuesa reduction in ~~card fees.~~remediation-related project spending.

Operating losses were updown $1.2 billion, or ~~421%~~84%, in first quarter ~~2018,~~2019, compared with the same period a year ago, ~~predominantly~~ driven by ~~the~~lower litigation accruals. First quarter 2018 included an $800 million discrete litigation accrual in connection with entering into the consent orders with the CFPB and OCC on April 20, 2018. ~~See Note 1 (Summary of Significant Accounting Policies – Subsequent Events) for additional information.~~

~~Foreclosed assets~~Advertising and promotion expense was ~~down $48~~up $84 million, or ~~56%~~55%, in first quarter ~~2018,~~2019, compared with the same period a year ago, due to ~~lower foreclosed properties operating expenses~~increases in marketing and ~~higher gains on sale of foreclosed properties.~~branding campaign volumes.

~~All other noninterest expense was up $64 million, or 13%, in first quarter 2018, compared with the same period a year ago. The increase was primarily driven by higher donations expense.~~

Earnings Performance (continued)

Our efficiency ratio was 64.4% in first quarter 2019, compared with 68.6% in first quarter ~~2018, compared with 62.0% in first quarter 2017.~~2018.

Income Tax Expense

Our effective income tax rate was ~~21.1%~~13.1% and ~~27.4%~~21.1% for first quarter ~~2018~~2019 and ~~2017,~~2018, respectively. The ~~decrease~~lower rate in ~~the effective~~first quarter 2019 was related to net discrete income tax ~~rate~~benefits of $297 million related mostly to the results of U.S. federal and state income tax examinations and the accounting for stock compensation activity. The first quarter 2018 ~~reflected the reduced U.S federal tax~~ rate ~~as part of the Tax Cuts & Jobs Act (the Tax Act) that was enacted in 2017, partially offset by~~reflected the non-tax deductible treatment of ~~the~~an $800 million discrete litigation accrual in connection with entering into the consent orders with the CFPB and OCC on April 20, 2018. We continue to collect and analyze data related to provisional tax estimates recorded in fourth quarter 2017 and monitor interpretations that emerge for various provisions of the Tax Act. We anticipate these items will be finalized upon completion of our U.S. tax filings in 2018.

~~Earnings Performance (continued~~)

Operating Segment Results

We are organized for management reporting purposes into three operating segments: Community Banking; Wholesale Banking; and ~~WIM.~~Wealth and Investment Management (WIM). These segments are defined by product type and customer segment and their results are based on our management accounting process, for which there is no comprehensive, authoritative financial accounting guidance equivalent to generally accepted accounting principles (GAAP). Effective first quarter 2018, assets and liabilities now receive a funding charge or credit that considers interest rate risk, liquidity risk, and other product characteristics on a more granular level. This methodology change affects results across all three of our

reportable operating segments and prior period operating segment results have been revised to reflect this methodology change. Our previously reported consolidated financial results were not impacted by the methodology change; however, in connection with the adoption of ASU 2016-01 in first quarter 2018, certain reclassifications have occurred within noninterest income. Table 4 and the following discussion present our results by operating segment. For additional description of our operating segments, including additional financial information and the underlying management accounting process, see Note 2122 (Operating Segments) to Financial Statements in this Report.

Table 4: Operating Segment Results – Highlights


(income/expense in millions,	Community Banking			Wholesale Banking				Wealth and Investment Management				Other (1)				Consolidated Company		Community Banking			Wholesale Banking			Wealth and Investment Management			Other (1)				Consolidated Company
average balances in billions)	2018		2017	2018		2017		2018		2017		2018		2017		2018	2017	2019		2018	2019	2018		2019	2018		2019		2018		2019	2018
Quarter ended March 31,
Revenue	$	11,830	11,823	7,279		7,577		4,242		4,257		(1,417	)	(1,402	)	21,934	22,255	$	11,750	11,830	7,111	7,279		4,079	4,242		(1,331	)	(1,417	)	21,609	21,934
Provision (reversal of provision) for credit losses	218		646	(20	)	(43	)	(6	)	(4	)	(1	)	6		191	605	710		218	134	(20	)	4	(6	)	(3	)	(1	)	845	191
Noninterest expense	8,702		7,281	3,978		4,167		3,290		3,204		(928	)	(860	)	15,042	13,792	7,689		8,702	3,838	3,978		3,303	3,290		(914	)	(928	)	13,916	15,042
Net income (loss)	1,913		2,824	2,875		2,485		714		665		(366	)	(340	)	5,136	5,634	2,823		1,913	2,770	2,875		577	714		(310	)	(366	)	5,860	5,136
Average loans	$	470.5	480.7	465.1		468.3		73.9		70.7		(58.5	)	(56.1	)	951.0	963.6	$	458.2	470.5	476.4	465.1		74.4	73.9		(59.0	)	(58.5	)	950.0	951.0
Average deposits	747.5		717.8	446.0		465.3		177.9		197.5		(74.2	)	(81.4	)	1,297.2	1,299.2	765.6		747.5	409.8	446.0		153.2	177.9		(66.5	)	(74.2	)	1,262.1	1,297.2


(1)	Includes the elimination of certain items that are included in more than one business segment, ~~most of~~ which predominantly represents products and services for WIM customers served through Community Banking distribution channels.

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 WIM 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 the other operating segments and

results of investments in our affiliated venture capital and private equity partnerships. We ~~announced on November 28, 2017, that we will exit~~continue to wind down the personal insurance business and ~~we have begun winding down~~expect to substantially complete these activities ~~and ceased offering personal insurance products, effective February 1, 2018. Effective April 2, 2018, we sold~~in the ~~majority~~first half of ~~our interests in our personal insurance business to a third party.~~2019. Table 4a provides additional financial information for Community Banking.

Table 4a: Community Banking


	Quarter ended March 31,							Quarter ended March 31,
(in millions, except average balances which are in billions)	2018			2017		% Change		2019			2018		% Change
Net interest income	$	7,195		7,132		1	%	$	7,248		7,195		1	%
Noninterest income:
Service charges on deposit accounts	639			742		(14	)	610			639		(5	)
Trust and investment fees:
Brokerage advisory, commissions and other fees (1)	478			444		8		449			478		(6	)
Trust and investment management (1)	233			218		7		210			233		(10	)
Investment banking (2)	(10		)	(27	)	63		(20		)	(10	)	(100	)
Total trust and investment fees	701			635		10		639			701		(9	)
Card fees	821			865		(5	)	858			821		5
Other fees	327			395		(17	)	332			327		2
Mortgage banking	842			1,106		(24	)	641			842		(24	)
Insurance	28			34		(18	)	11			28		(61	)
Net losses from trading activities	(1		)	(52	)	98
Net gains (losses) from trading activities								5			(1	)	600
Net gains on debt securities	—			102		(100	)	37			—		NM
Net gains from equity securities (3)	684			468		46		601			684		(12	)
Other income of the segment	594			396		50		768			594		29
Total noninterest income	4,635			4,691		(1	)	4,502			4,635		(3	)

Total revenue	11,830			11,823		—		11,750			11,830		(1	)

Provision for credit losses	218			646		(66	)	710			218		226
Noninterest expense:
Personnel expense	5,511			5,201		6		5,981			5,511		9
Equipment	596			551		8		641			596		8
Net occupancy	534			526		2		542			534		1
Core deposit and other intangibles	101			112		(10	)	1			101		(99	)
FDIC and other deposit assessments	181			192		(6	)	106			181		(41	)
Outside professional services	397			349		14		316			397		(20	)
Operating losses	1,440			261		452		219			1,440		(85	)
Other expense of the segment	(58		)	89		NM		(117		)	(58	)	NM
Total noninterest expense	8,702			7,281		20		7,689			8,702		(12	)
Income before income tax expense and noncontrolling interests	2,910			3,896		(25	)	3,351			2,910		15
Income tax expense	809			982		(18	)	424			809		(48	)
Net income from noncontrolling interests (4)	188			90		109		104			188		(45	)
Net income	$	1,913		2,824		(32	)	$	2,823		1,913		48
Average loans	$	470.5		480.7		(2	)	$	458.2		470.5		(3	)
Average deposits	747.5			717.8		4		765.6			747.5		2

NM -– Not meaningful


(1)	Represents income on products and services for WIM customers served through Community Banking distribution channels which is offset in our WIM segment and is eliminated in consolidation.


(2)	Includes syndication and underwriting fees paid to Wells Fargo Securities which are offset in our Wholesale Banking ~~segment.~~segment and eliminated in consolidation.


(3)	~~Predominantly~~Primarily represents gains resulting from venture capital investments.


(4)	Reflects results attributable to noncontrolling interests predominantly associated with the Company’s consolidated venture capital investments.

Community Banking reported net income of ~~$1.9~~$2.8 billion ~~down $911~~for first quarter 2019, up $910 million, or ~~32%~~48%, compared with the same period a year ago. Revenue was $11.8 billion for first quarter ~~2018, stable compared with~~2019, down $80 million, or 1%, from the same period ~~last~~a year ~~as higher net interest~~ago. The decrease in revenue from first quarter 2018 was due to lower mortgage banking income, ~~a gain on the sale of Pick-a-Pay loans, higher market sensitive revenue, and higher~~ trust and investment fees, ~~were~~and market sensitive revenue (consists of net gains from trading activities, debt securities and equity securities), partially offset by ~~lower mortgage banking revenue~~higher card fees, other income and ~~lower service charges on deposit accounts.~~ net interest income. Average loans of ~~$470.5~~$458.2 billion in first quarter 2019 decreased $12.3 billion, or 3%, from first quarter 2018, ~~decreased $10.2~~as growth in nonconforming mortgage loan originations and consumer credit card loans was more than offset by declines in automobile loans and legacy consumer real estate portfolios, including purchased credit-impaired (PCI) Pick-a-Pay and junior lien mortgage loans due to run-off and sales. Average deposits of $765.6 billion in

first quarter 2019 increased $18.1 billion, or 2%, from first quarter ~~2017. The decline~~2018.

Noninterest expense was $7.7 billion in ~~average loans was~~ first quarter 2019, down $1.0 billion, or 12%, from first quarter 2018, predominantly due to lower ~~automobile loans~~operating losses, core deposit and ~~junior lien mortgages,~~other intangibles amortization expense, outside professional services, and FDIC expense, partially offset by higher real estate 1-4 family first mortgages. Average deposits of $747.5 billion in first quarter 2018 increased $29.7 billion, or 4%, from first quarter 2017. Primary consumer checking customers (customers who actively use their checking account with transactions such as debit card purchases, online

bill payments, and direct deposit) as of February 2018 were up 0.9% from February 2017. Noninterest expense increased $1.4 billion, or 20%, from first quarter 2017. The increase in noninterest expense from first quarter 2017 was predominantly due to higher operating losses, including the $800 million discrete litigation accrual, and personnel expense. The provision for credit losses ~~decreased $428~~increased $492 million from first quarter ~~2017~~2018, predominantly due to an allowance build in first quarter 2019, reflecting a higher probability of slightly less favorable economic conditions, compared with an allowance release in first quarter 2018 primarily ~~reflecting an~~due to improvement in our outlook for 2017 ~~hurricane-related losses, as well as continued improvement~~hurricane–related losses. The allowance build was partially offset by lower net charge-offs in ~~residential real estate~~the automobile portfolio. Income tax expense decreased $385 million from first quarter 2018, and ~~lower loan balances.~~

included net discrete income tax benefits

Earnings Performance (continued)

related mostly to the results of U.S. federal and state income tax examinations and the accounting for stock compensation activity.

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~~

Commercial Banking, Commercial Real Estate, Corporate and Investment Banking, ~~Financial Institutions Group, Government and Institutional Banking,~~

~~Middle Market Banking, Principal Investments,~~Credit Investment Portfolio, Treasury Management, ~~Wells Fargo~~and Commercial ~~Capital, and Wells Fargo Securities.~~Capital. Table 4b provides additional financial information for Wholesale Banking.

Table 4b: Wholesale Banking


	Quarter ended March 31,							Quarter ended March 31,
(in millions, except average balances which are in billions)	2018			2017		% Change		2019		2018		% Change
Net interest income	$	4,532		4,681		(3	)%	$	4,534	4,532		—	%
Noninterest income:
Service charges on deposit accounts	534			570		(6	)	483		534		(10	)
Trust and investment fees:
Brokerage advisory, commissions and other fees	67			84		(20	)	78		67		16
Trust and investment management	113			129		(12	)	114		113		1
Investment banking	440			445		(1	)	412		440		(6	)
Total trust and investment fees	620			658		(6	)	604		620		(3	)
Card fees	87			80		9		86		87		(1	)
Other fees	472			468		1		437		472		(7	)
Mortgage banking	93			123		(24	)	68		93		(27	)
Insurance	79			234		(66	)	78		79		(1	)
Net gains from trading activities	225			290		(22	)	333		225		48
Net gains (losses) on debt securities	1			(66	)	102
Net gains on debt securities								88		1		NM
Net gains from equity securities	93			36		158		77		93		(17	)
Other income of the segment	543			503		8		323		543		(41	)
Total noninterest income	2,747			2,896		(5	)	2,577		2,747		(6	)

Total revenue	7,279			7,577		(4	)	7,111		7,279		(2	)

Provision (reversal of provision) for credit losses	(20		)	(43	)	53		134		(20	)	770
Noninterest expense:
Personnel expense	1,536			1,804		(15	)	1,510		1,536		(2	)
Equipment	12			16		(25	)	9		12		(25	)
Net occupancy	100			108		(7	)	95		100		(5	)
Core deposit and other intangibles	95			105		(10	)	24		95		(75	)
FDIC and other deposit assessments	122			118		3		45		122		(63	)
Outside professional services	233			241		(3	)	184		233		(21	)
Operating losses	8			6		33		1		8		(88	)
Other expense of the segment	1,872			1,769		6		1,970		1,872		5
Total noninterest expense	3,978			4,167		(5	)	3,838		3,978		(4	)
Income before income tax expense and noncontrolling interests	3,321			3,453		(4	)	3,139		3,321		(5	)
Income tax expense	448			973		(54	)	369		448		(18	)
Net loss from noncontrolling interests	(2		)	(5	)	60		—		(2	)	100
Net income	$	2,875		2,485		16		$	2,770	2,875		(4	)
Average loans	$	465.1		468.3		(1	)	$	476.4	465.1		2
Average deposits	446.0			465.3		(4	)	409.8		446.0		(8	)

NM – Not meaningful

Wholesale Banking reported net income of ~~$2.9~~$2.8 billion in first quarter ~~2018, up $390~~2019, down $105 million, or ~~16%~~4%, from the same period a year ago. ~~First quarter 2018 results benefited from the reduced income tax rate.~~ Revenue decreased ~~$298~~$168 million, or 4%2%, from first quarter ~~2017 primarily~~2018, largely due to the impact of the sale of Wells Fargo Insurance Services (WFIS) in fourth quarter 2017, as well as lower net interest income. Net interest income decreased $149 million, or 3%, from first quarter 2017 as lower average loan and deposit balances and lower income on tax advantaged products were partially offset by higher interest rates. Noninterest income decreased $149 million, or 5%, from first quarter 2017 as the impact of the sale of WFIS, lower mortgage banking fees, and lower operating lease income was partially offset by a gain onrelated to the sale of Wells Fargo Shareowner ~~Services.~~

~~Average loans~~Services in first quarter 2018, a decrease in service charges on deposit accounts driven by lower treasury management fees, and lower mortgage banking income, partially offset by higher market sensitive revenue. Net interest income of ~~$465.1~~$4.5 billion in first quarter ~~2018 decreased $3.2~~2019 was relatively stable compared with the same period a year ago. Average loans of $476.4 billion in first quarter 2019, increased $11.3 billion, or 1%2%, from first quarter ~~2017~~2018, as growth in commercial and industrial loans in Corporate and Investment Banking and Commercial Capital were partially offset by lower commercial real estate ~~was partially offset by growth in asset backed finance, capital finance, and commercial distribution finance.~~lending. Average deposits of ~~$446.0~~$409.8 billion in first quarter 2019 decreased ~~$19.3~~$36.2 billion, or 4%8%, from first quarter ~~2017 reflecting declines across many businesses as well as~~2018. The decline in average deposits in first quarter 2019, compared with the same period a year ago, was driven by actions taken in the first half of 2018 in response to ~~comply with~~ the asset cap included in the FRB consent order on February 2, ~~2018.~~2018, and declines across many businesses as commercial customers allocated more cash to higher-rate

alternatives. Noninterest expense decreased ~~$189~~$140 million, or 5%4%, from first quarter ~~2017, reflecting the sale of WFIS,~~2018, mostly due to lower FDIC assessments, core deposit and other intangibles amortization, personnel expenses and operating lease expense. This decrease was partially offset by higher regulatory, risk, ~~cyber~~ and technology expenses. The provision for credit losses increased ~~$23~~$154 million from first quarter ~~2017 driven by a~~2018 predominately due to an allowance build in first quarter 2019, reflecting higher nonaccrual loans, compared with an allowance release in first quarter 2018, as well as lower ~~allowance for loan losses release.~~recoveries in first quarter 2019.

Wealth and Investment Management 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. On April 9, 2019, we announced an agreement to sell our Institutional Retirement and Trust

business. The transaction is expected to close in third quarter 2019. Table 4c provides additional financial information for WIM.

Table 4c: Wealth and Investment Management


	Quarter ended March 31,							Quarter ended March 31,
(in millions, except average balances which are in billions)	2018			2017		% Change		2019			2018		% Change
Net interest income	$	1,112		1,141		(3	)%	$	1,101		1,112		(1	)%
Noninterest income:
Service charges on deposit accounts	4			5		(20	)	4			4		—
Trust and investment fees:
Brokerage advisory, commissions and other fees	2,344			2,245		4		2,124			2,344		(9	)
Trust and investment management	743			707		5		676			743		(9	)
Investment banking ~~(1)~~	—			(1	)	100		5			—		NM
Total trust and investment fees	3,087			2,951		5		2,805			3,087		(9	)
Card fees	1			1		—		1			1		—
Other fees	4			5		(20	)	4			4		—
Mortgage banking	(3		)	(2	)	(50	)	(3		)	(3	)	—
Insurance	18			20		(10	)	17			18		(6	)
Net gains from trading activities	19			34		(44	)	19			19		—
Net gains on debt securities	—			—		NM		—			—		NM
Net gains from equity securities	6			66		(91	)	136			6		NM
Other income of the segment	(6		)	36		NM		(5		)	(6	)	17
Total noninterest income	3,130			3,116		—		2,978			3,130		(5	)

Total revenue	4,242			4,257		—		4,079			4,242		(4	)

Provision (reversal of provision) for credit losses	(6		)	(4	)	(50	)	4			(6	)	167
Noninterest expense:
Personnel expense	2,165			2,104		3		2,197			2,165		1
Equipment	10			11		(9	)	11			10		10
Net occupancy	109			107		2		112			109		3
Core deposit and other intangibles	69			72		(4	)	3			69		(96	)
FDIC and other deposit assessments	36			40		(10	)	14			36		(61	)
Outside professional services	198			222		(11	)	184			198		(7	)
Operating losses	22			17		29		21			22		(5	)
Other expense of the segment	681			631		8		761			681		12
Total noninterest expense	3,290			3,204		3		3,303			3,290		—
Income before income tax expense and noncontrolling interests	958			1,057		(9	)	772			958		(19	)
Income tax expense	239			386		(38	)	192			239		(20	)
Net income from noncontrolling interests	5			6		(17	)	3			5		(40	)
Net income	$	714		665		7		$	577		714		(19	)
Average loans	$	73.9		70.7		5		$	74.4		73.9		1
Average deposits	177.9			197.5		(10	)	153.2			177.9		(14	)

NM – Not meaningful


~~(1)~~	~~Includes syndication and underwriting fees paid to Wells Fargo Securities which are offset in our Wholesale Banking segment.~~

WIM reported net income of ~~$714~~$577 million in first quarter ~~2018, up $49~~2019, down $137 million, or 7%19%, ~~compared with~~from the same period a year ago. ~~First quarter 2018 results benefited from the lower income tax rate.~~ Revenue ~~was down $15~~declined $163 million, or 4%, from first quarter ~~2017,~~2018, predominantly due to lower ~~net interest income,~~asset-based fees and brokerage transaction revenue, partially offset by ~~higher noninterest income. Net interest income decreased 3%~~net gains from ~~first quarter 2017, primarily driven by lower deposit balances. Noninterest income increased $14 million from first quarter 2017 predominantly driven by~~equity securities on higher ~~asset-based fees, partially offset by~~ deferred compensation plan ~~investments~~investment results (offset in employee benefits expense)~~, and lower brokerage transaction revenue.~~. Asset-based fees ~~increased predominantly~~decreased largely due to ~~higher~~lower retail brokerage advisory ~~account client assets driven by higher market valuations and positive net flows.~~

fees . Average loans of ~~$73.9~~$74.4 billion in first quarter ~~2018~~2019 increased 5%1% from the same period a year ago, driven by growth in ~~non-conforming~~nonconforming mortgage loans. Average deposits in first quarter ~~2018 of $177.9~~2019 decreased $24.7 billion, ~~decreased 10%~~or 14%, from the same period a year ago, as customers ~~moved deposits~~continued to allocate more cash into ~~other investment~~higher yielding liquid alternatives. Noninterest expense of $3.3 billion was ~~up 3% from~~relatively stable in first quarter ~~2017, driven by~~2019, compared with first quarter 2018, as higher ~~broker commissions and higher project and technology spending on regulatory and compliance related initiatives, partially offset by lower~~employee benefits expense from deferred compensation plan expense (offset in net gains from equity securities). and higher regulatory, risk, and technology expense was partially offset by lower broker commissions and core deposit and other intangibles amortization expense. The provision for credit losses ~~decreased $2~~increased $10 million from the first quarter ~~2017 driven by lower net charge-offs.~~

~~Earnings Performance (continued~~)

2018.

The following discussions provide additional information for client assets we oversee in our retail brokerage advisory and trust and investment management business lines.

Retail Brokerage Client Assets Brokerage advisory, commissions and other fees are received for providing full-service and discount brokerage services predominantly to retail brokerage clients. Offering advisory account relationships to our brokerage clients is an important component of our broader strategy of meeting their financial needs. Although a majority of our retail brokerage client assets are in accounts that earn

brokerage commissions, the fees from those accounts generally represent transactional commissions based on the number and size of transactions executed at the client’s direction. Fees earned from advisory accounts are asset-based, are priced at the beginning of the quarter and depend on changes in the value of the client’s assets as well as the level of assets resulting from inflows and outflows. A majority of our brokerage advisory, commissions and other fee income is earned from advisory accounts. Table 4d shows advisory account client assets as a percentage of total retail brokerage client assets at March 31, ~~2018~~2019 and ~~2017.~~2018.

Earnings Performance (continued)

Table 4d: Retail Brokerage Client Assets


	March 31,				March 31,
($ in billions)	2018			2017	2019			2018
Retail brokerage client assets	$	1,623.0		1,555.5	$	1,600.6		1,623.0
Advisory account client assets	540.4			490.1	546.7			540.4
Advisory account client assets as a percentage of total client assets	33		%	32	34		%	33

Retail Brokerage advisory accounts include assets that are financial advisor-directed and separately managed by third-party managers, as well as certain client-directed brokerage assets where we earn a fee for advisory and other services, but do not have investment discretion. These advisory accounts generate fees as a percentage of the market value of the assets as of the beginning of the quarter, which vary across the account types

based on the distinct services provided,

and are affected by investment performance as well as asset inflows and outflows. For ~~the~~ first quarter of2019 and 2018, ~~and 2017,~~ the average fee rate by account type ranged from 80 to 120 basis points. Table 4e presents retail brokerage advisory account client assets activity by account type for ~~the~~ first quarter ~~of 2018~~2019 and ~~2017.~~2018.

Table 4e: Retail Brokerage Advisory Account Client Assets


	Quarter ended								Quarter ended
(in billions)	Balance, beginning of period		Inflows (1)	Outflows (2)		Market impact (3)		Balance, end of period	Balance, beginning of period		Inflows (1)	Outflows (2)		Market impact (3)		Balance, end of period
March 31, 2019
Client directed (4)									$	151.5	7.9	(9.3	)	13.5		163.6
Financial advisor directed (5)									141.9		7.5	(7.7	)	15.2		156.9
Separate accounts (6)									136.4		5.6	(6.9	)	13.2		148.3
Mutual fund advisory (7)									71.3		2.8	(3.2	)	7.0		77.9
Total advisory client assets									$	501.1	23.8	(27.1	)	48.9		546.7
March 31, 2018
Client directed (4)	$	170.9	9.4	(9.2	)	(2.7	)	168.4	$	170.9	9.4	(9.2	)	(2.7	)	168.4
Financial advisor directed (5)	147.0		8.1	(7.0	)	0.5		148.6	147.0		8.1	(7.0	)	0.5		148.6
Separate accounts (6)	149.1		6.8	(7.3	)	(2.0	)	146.6	149.1		6.8	(7.3	)	(2.0	)	146.6
Mutual fund advisory (7)	75.8		4.0	(3.0	)	—		76.8	75.8		4.0	(3.0	)	—		76.8
Total advisory client assets	542.8		28.3	(26.5	)	(4.2	)	540.4	$	542.8	28.3	(26.5	)	(4.2	)	540.4
March 31, 2017
Client directed (4)	159.1		12.0	(11.6	)	3.8		163.3
Financial advisor directed (5)	115.7		9.4	(6.0	)	7.1		126.2
Separate accounts (6)	125.7		8.2	(6.2	)	6.0		133.7
Mutual fund advisory (7)	63.3		3.8	(3.0	)	2.8		66.9
Total advisory client assets	463.8		33.4	(26.8	)	19.7		490.1


(1)	Inflows include new advisory account assets, contributions, dividends and interest.


(2)	Outflows include closed advisory account assets, withdrawals, and client management fees.


(3)	Market impact reflects gains and losses on portfolio investments.


(4)	Investment advice and other services are provided to client, but decisions are made by the client and the fees earned are based on a percentage of the advisory account assets, not the number and size of transactions executed by the client.


(5)	Professionally managed portfolios with fees earned based on respective strategies and as a percentage of certain client assets.


(6)	Professional advisory portfolios managed by Wells Fargo Asset Management or third-party asset managers. Fees are earned based on a percentage of certain client assets.


(7)	Program with portfolios constructed of load-waived, no-load and institutional share class mutual funds. Fees are earned based on a percentage of certain client assets.

Trust and Investment Client Assets Under Management We earn trust and investment management fees from managing and administering assets, including mutual funds, institutional separate accounts, personal trust, employee benefit trust and agency assets through our asset management, wealth and retirement businesses. Our asset management business is conducted by Wells Fargo Asset Management (WFAM), which offers Wells Fargo proprietary mutual funds and manages institutional separate accounts. Our wealth business manages

assets for high net worth clients, and our retirement business provides total retirement management, investments, and trust

and custody solutions tailored to meet the needs of institutional clients. Substantially all of our trust and investment management fee income is earned from AUM where we have discretionary management authority over the investments and generate fees as a percentage of the market value of the AUM. On April 9, 2019, we announced an agreement to sell our Institutional Retirement and Trust business. The transaction is expected to close in third quarter 2019. Table 4f presents AUM activity for the first quarter of ~~2018~~2019 and ~~2017.~~2018.

Table 4f: WIM Trust and Investment – Assets Under Management


	Quarter ended								Quarter ended
(in billions)	Balance, beginning of period		Inflows (1)	Outflows (2)		Market impact (3)		Balance, end of period	Balance, beginning of period		Inflows (1)	Outflows (2)		Market impact (3)		Balance, end of period
March 31, 2019
Assets managed by WFAM (4):
Money market funds (5)									$	112.4	—	(2.9	)	—		109.5
Other assets managed									353.5		19.3	(21.9	)	16.1		367.0
Assets managed by Wealth and Retirement (6)									170.7		9.2	(10.4	)	11.9		181.4
Total assets under management									$	636.6	28.5	(35.2	)	28.0		657.9
March 31, 2018
Assets managed by WFAM (4):
Money market funds (5)	$	108.2	—	(3.2	)	—		105.0	$	108.2	—	(3.2	)	—		105.0
Other assets managed	395.7		25.7	(29.2	)	(0.4	)	391.8	395.7		25.7	(29.2	)	(0.4	)	391.8
Assets managed by Wealth and Retirement (6)	186.2		10.4	(11.4	)	(1.9	)	183.3	186.2		10.4	(11.4	)	(1.9	)	183.3
Total assets under management	690.1		36.1	(43.8	)	(2.3	)	680.1	$	690.1	36.1	(43.8	)	(2.3	)	680.1
March 31, 2017
Assets managed by WFAM (4):
Money market funds (5)	102.6		—	(5.9	)	—		96.7
Other assets managed	379.6		29.4	(34.2	)	9.6		384.4
Assets managed by Wealth and Retirement (6)	168.5		9.4	(9.4	)	5.0		173.5
Total assets under management	650.7		38.8	(49.5	)	14.6		654.6


(1)	Inflows include new managed account assets, contributions, dividends and interest.


(2)	Outflows include closed managed account assets, withdrawals and client management fees.


(3)	Market impact reflects gains and losses on portfolio investments.


(4)	Assets managed by WFAM consist of equity, alternative, balanced, fixed income, money market, and stable value, and include client assets that are managed or sub-advised on behalf of other Wells Fargo lines of business.


(5)	Money Market funds activity is presented on a net inflow or net outflow basis, because the gross flows are not meaningful nor used by management as an indicator of performance.


(6)	Includes ~~$5.7~~$4.8 billion and ~~$6.3~~$5.7 billion as of March 31, ~~2018~~2019 and ~~2017~~,2018, respectively, of client assets invested in proprietary funds managed by WFAM.

Balance Sheet Analysis (continued)

Balance Sheet Analysis

At March 31, ~~2018,~~2019, our assets totaled ~~$1.92~~$1.89 trillion, down ~~$36.4~~$8.1 billion from December 31, ~~2017.~~2018. Asset decline was driven by declines in ~~loans, federal funds sold, securities purchased under resale agreements and other short-term investments, and~~ cash and due from banks, interest-earning deposits with banks, available-for-sale debt securities, loans, and mortgage servicing rights (MSRs), which decreased by ~~$9.5~~$2.9 billion ~~$6.5~~, $21.4 billion, $1.8 billion, $4.9 billion, and ~~$5.2~~$1.3 billion, respectively, from December 31, ~~2017. Total equity decreased by $2.2~~2018. Liabilities totaled $1.69 trillion, down $9.8 billion from December 31, ~~2017,~~ 2018. The decline in liabilities was due to declines in total deposits, which decreased by $22.2 billion from December 31, 2018. Total equity increased by $1.7 billion from December 31, 2018,

predominantly due to a ~~$2.8~~$2.7 billion ~~decline~~increase in cumulative other comprehensive income, and a ~~$1.4 billion decline in~~

~~treasury stock, partially offset by a $2.7~~$2.6 billion increase in retained earnings, net of dividends ~~paid.~~paid, partially offset by a $3.3 billion increase in treasury stock.

The following discussion provides additional information about the major components of our balance sheet. Information regarding our capital and changes in our asset mix is included in the “Earnings Performance – Net Interest Income” and “Capital Management” sections and Note 2223 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.

Available-for-Sale and Held-to-Maturity Debt Securities

Table 5: Available-for-Sale and Held-to-Maturity Debt Securities


	March 31, 2018					December 31, 2017				March 31, 2019					December 31, 2018
(in millions)	Amortized Cost		Net unrealized gain (loss)		Fair value	Amortized Cost	Net unrealized gain (loss)		Fair value	Amortized cost		Net unrealized gain (loss)		Fair value	Amortized cost	Net unrealized gain (loss)		Fair value
Available-for-sale	273,588		(1,932	)	271,656	275,096	1,311		276,407	267,246		853		268,099	272,471	(2,559	)	269,912
Held-to-maturity	141,446		(3,123	)	138,323	139,335	(350	)	138,985	144,990		(291	)	144,699	144,788	(2,673	)	142,115
Total (1)	$	415,034	(5,055	)	409,979	414,431	961		415,392	$	412,236	562		412,798	417,259	(5,232	)	412,027


(1)	Available-for-sale debt securities are carried on the balance sheet at fair value. Held-to-maturity debt securities are carried on the balance sheet at amortized cost.

Table 5 presents a summary of our available-for-sale and held-to-maturity debt securities, which decreased ~~$2.6~~$1.6 billion in balance sheet carrying value from December 31, ~~2017,~~2018, largely due to ~~sales and paydowns of~~net declines in federal agency mortgage-backed securities ~~collateralized loan obligations~~ and ~~other asset-based~~residential mortgage-backed securities, partially offset by net purchases of U.S. Treasury and federal agency ~~mortgage-backed~~debt securities.

The total net unrealized ~~losses~~gains on available-for-sale debt securities were ~~$1.9 billion~~$853 million at March 31, ~~2018, down~~2019, up from net unrealized ~~gains~~losses of ~~$1.3~~$2.6 billion at December 31, ~~2017,~~2018, primarily due to ~~higher long-term~~lower U.S. interest ~~rates.~~rates and tighter credit and mortgage spreads. For a discussion of our investment management objectives and practices, see the “Balance Sheet Analysis” section in our ~~2017~~2018 Form 10-K. Also, see the “Risk Management – Asset/Liability Management” section in this Report for information on our use of investments to manage liquidity and interest rate risk.

We analyze debt securities for ~~other-than-temporary impairment (OTTI)~~OTTI quarterly or more often if a potential loss-triggering event occurs. In first quarter ~~2018,~~2019, we recognized ~~$10~~$45 million of OTTI write-downs on debt securities. For a discussion of our OTTI accounting policies and underlying considerations and analysis see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2017~~2018 Form 10-K and Note 5 ~~(Debt~~(Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report.

At March 31, ~~2018,~~2019, debt securities included ~~$56.0~~$55.9 billion of municipal bonds, of which ~~95.7%~~93.3% were rated “A-” or better based ~~largely~~predominantly on external and, in some cases, internal ratings. Additionally, some of the debt securities in our total municipal bond portfolio are guaranteed against loss by bond insurers. These guaranteed bonds are predominantly investment grade and were generally underwritten in accordance with our own investment standards prior to the determination to purchase, without relying on the bond insurer’s guarantee in making the investment decision. The credit quality of our municipal bond holdings are monitored as part of our ongoing impairment analysis.

The weighted-average expected maturity of debt securities available-for-sale was ~~6.6~~5.6 years at March 31, ~~2018.~~2019. The expected remaining maturity is shorter than the remaining contractual maturity for the ~~61%~~58% of this portfolio that is ~~MBS~~mortgage-backed securities (MBS) because borrowers generally have the right to prepay obligations before the underlying mortgages mature. The estimated effects of a 200 basis point increase or decrease in interest rates on the fair value and the expected remaining maturity of the MBS available-for-sale portfolio are shown in Table 6.

Table 6: Mortgage-Backed Securities Available for Sale


(in billions)	Fair value		Net unrealized gain (loss)		Expected remaining maturity (in years)	Fair value		Net unrealized gain (loss)		Expected remaining maturity (in years)
At March 31, 2018
At March 31, 2019
Actual	$	166.1	(3.1	)	6.4	$	156.5	(0.5	)	5.1
Assuming a 200 basis point:
Increase in interest rates	147.3		(21.9	)	8.8	141.0		(16.0	)	7.3
Decrease in interest rates	178.4		9.2		4.0	166.7		9.7		3.3

The weighted-average expected maturity of debt securities held-to-maturity (HTM) was ~~6.4~~5.1 years at March 31, ~~2018.~~2019. HTM debt securities are measured at amortized cost and, therefore, changes in the fair value of our held-to-maturity MBS resulting from changes in interest rates are not recognized in our financial results. See Note 5 ~~(Debt~~(Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report for a summary of debt securities by security type.

Loan Portfolios

Table 7 provides a summary of total outstanding loans by portfolio segment. Total loans decreased ~~$9.5~~$4.9 billion from December 31, ~~2017, reflecting paydowns,~~2018, with a decline in both commercial and consumer loans. Consumer loans were down $3.7 billion from December 31, 2018, and included sales of $1.6 billion of 1-4 family first mortgage PCI Pick-a-Pay loans, a continued decline in ~~junior lien~~

junior lien mortgage loans, ~~seasonal~~and a decline in other revolving credit and installment loans reflecting higher short-term rates and market volatility. Commercial loans were down $1.2 billion, reflecting declines in corporate and investment banking, government and institutional banking, and business banking loans, partially offset by growth in the commercial real estate, commercial capital finance and credit card balances, reclassification of automobile loans of Reliable Financial Services, Inc. to loans held for sale, and an expected decline in automobile loans as the effect of tighter underwriting standards resulted in lower origination volume.investment portfolios.

Table 7: Loan Portfolios


(in millions)	March 31, 2018			December 31, 2017		March 31, 2019			December 31, 2018
Commercial	$	503,396		503,388		$	512,226		513,405
Consumer	443,912			453,382		436,023			439,705
Total loans	$	947,308		956,770		$	948,249		953,110
Change from prior year-end	$	(9,462	)	(10,834	)	$	(4,861	)	(3,660	)

A discussion of average loan balances and a comparative detail of average loan balances is included in Table 1 under “Earnings Performance – Net Interest Income” earlier in this Report. Additional information on total loans outstanding by portfolio segment and class of financing receivable is included in the “Risk Management – Credit Risk Management” section in this Report. Period-end balances and other loan related

information are in Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Table 8 shows contractual loan maturities for loan categories normally not subject to regular periodic principal reduction and the contractual distribution of loans in those categories to changes in interest rates.

Table 8: Maturities for Selected Commercial Loan Categories


	March 31, 2018					December 31, 2017				March 31, 2019					December 31, 2018
(in millions)	Within one year		After one year through five years	After five years	Total	Within one year	After one year through five years	After five years	Total	Within one year		After one year through five years	After five years	Total	Within one year	After one year through five years	After five years	Total
Selected loan maturities:
Commercial and industrial	$	102,900	206,812	24,966	334,678	105,327	201,530	26,268	333,125	$	104,906	217,761	26,467	349,134	109,566	213,425	27,208	350,199
Real estate mortgage	18,326		64,889	42,328	125,543	20,069	64,384	42,146	126,599	16,871		63,534	41,708	122,113	16,413	63,648	40,953	121,014
Real estate construction	9,745		12,770	1,367	23,882	9,555	13,276	1,448	24,279	9,867		10,901	1,089	21,857	9,958	11,343	1,195	22,496
Total selected loans	$	130,971	284,471	68,661	484,103	134,951	279,190	69,862	484,003	$	131,644	292,196	69,264	493,104	135,937	288,416	69,356	493,709
Distribution of loans to changes in interest rates:
Loans at fixed interest rates	$	16,698	29,202	26,906	72,806	18,587	30,049	26,748	75,384	$	16,694	28,117	28,527	73,338	17,619	28,545	28,163	74,327
Loans at floating/variable interest rates	114,273		255,269	41,755	411,297	116,364	249,141	43,114	408,619	114,950		264,079	40,737	419,766	118,318	259,871	41,193	419,382
Total selected loans	$	130,971	284,471	68,661	484,103	134,951	279,190	69,862	484,003	$	131,644	292,196	69,264	493,104	135,937	288,416	69,356	493,709

Balance Sheet Analysis (continued)

Deposits

Deposits were $1.3 trillion at March 31, ~~2018,~~2019, down ~~$32.3~~$22.2 billion from December 31, ~~2017,~~2018, due to a decrease in commercial deposits primarily reflecting seasonality from ~~financial institutions reflecting seasonal outflows~~typically higher fourth quarter levels, partially offset by an increase in consumer and ~~market-driven changes~~small business banking deposits. The increase in consumer and small business banking deposits was due to ~~movements in interest rates,~~higher retail banking deposits reflecting seasonality as well as ~~actions to comply with the asset cap included~~growth in ~~the consent order issued by the Board of Governors of the Federal~~

~~Reserve System on February 2, 2018.~~certificates of deposit (CDs) and high-yield savings, partially offset by higher balance customers moving a portion of those balances to other higher rate liquid alternatives. Table 9 provides additional information regarding deposits. Information regarding the impact of deposits on net interest income and a comparison of average deposit balances is provided in the “Earnings Performance – Net Interest Income” section and Table 1 earlier in this Report.

Table 9: Deposits


($ in millions)	Mar 31, 2018		% of total deposits		Dec 31, 2017		% of total deposits		% Change		Mar 31, 2019		% of total deposits		Dec 31, 2018		% of total deposits		% Change
Noninterest-bearing	$	370,085	28	%	$	373,722	28	%	(1	)	$	341,399	27	%	$	349,534	27	%	(2	)
Interest-bearing checking	95,123		7		51,928		4		83		56,372		4		56,797		4		(1	)
Market rate and other savings	682,037		53		690,168		52		(1	)	691,117		55		703,338		55		(2	)
Savings certificates	19,930		2		20,415		2		(2	)	28,313		2		22,648		2		25
Other time deposits	79,976		6		71,715		4		12		99,401		8		95,602		7		4
Deposits in foreign offices (1)	56,538		4		128,043		10		(56	)	47,411		4		58,251		5		(19	)
Total deposits	$	1,303,689	100	%	$	1,335,991	100	%	(2	)	$	1,264,013	100	%	$	1,286,170	100	%	(2	)


(1)	Includes Eurodollar sweep balances of ~~$27.9~~$25.6 billion and ~~$80.1~~$31.8 billion at March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, respectively.

Fair Value of Financial Instruments

We use fair value measurements to record fair value adjustments to certain financial instruments and to determine fair value disclosures. See the “Critical Accounting Policies” section in our ~~2017~~2018 Form 10-K and Note 1516 (Fair Values of Assets and Liabilities) to Financial Statements in this Report for a description of our critical accounting policy related to fair value of financial instruments and a discussion of our fair value measurement techniques.

Table 10 presents the summary of the fair value of financial instruments recorded at fair value on a recurring basis, and the amounts measured using significant Level 3 inputs (before derivative netting adjustments). The fair value of the remaining assets and liabilities were measured using valuation methodologies involving market-based or market-derived information (collectively Level 1 and 2 measurements).

Table 10: Fair Value Level 3 Summary


	March 31, 2018				December 31, 2017		March 31, 2019				December 31, 2018
($ in billions)	Total balance			Level 3 (1)	Total balance	Level 3 (1)	Total balance			Level 3 (1)	Total balance	Level 3 (1)
Assets carried at fair value	$	409.5		26.3	416.6	24.9	$	408.0		25.2	408.4	25.3
As a percentage of total assets	21		%	1	21	1	22		%	1	22	1
Liabilities carried at fair value	$	31.2		2.0	27.3	2.0	$	29.0		1.9	28.2	1.6
As a percentage of total liabilities	2		%	*	2	*	2		%	*	2	*

* Less than 1%.


(1)	Before derivative netting adjustments.

See Note 1516 (Fair Values of Assets and Liabilities) to Financial Statements in this Report for additional information on fair value measurements and a description of the Level 1, 2 and 3 fair value hierarchy.

Equity

Total equity was ~~$205.9~~$198.7 billion at March 31, ~~2018,~~2019, compared with ~~$208.1~~$197.1 billion at December 31, ~~2017.~~2018. The ~~decrease~~increase was driven by a ~~$2.8~~$2.7 billion ~~decrease~~increase in cumulative other comprehensive income ~~predominantly~~primarily due to ~~fair value adjustments to available-for-sale securities caused by~~a decrease in long-term yields along with tightening credit spreads resulting in an increase in ~~long-term interest rates,~~the value of available-for-sale debt securities, and a ~~$1.4 billion decrease in treasury stock, partially offset by a $2.7~~$2.6 billion increase in retained earnings net of dividends ~~paid.~~

paid, partially offset by a $3.3 billion increase in treasury stock.

Off-Balance Sheet Arrangements

In the ordinary course of business, we engage in financial transactions that are not recorded on the balance sheet, or may be recorded on the balance sheet in amounts that are different from the full contract or notional amount of the transaction. Our off-balance sheet arrangements include commitments to lend and purchase debt and equity securities, transactions with unconsolidated entities, guarantees, derivatives, and other commitments. These transactions are designed to (1) meet the financial needs of customers, (2) manage our credit, market or liquidity risks, and/or (3) diversify our funding sources.

Commitments to Lend and Purchase Debt and Equity Securities

We enter into commitments to lend funds to customers, which are usually at a stated interest rate, if funded, and for specific purposes and time periods. When we make commitments, we are exposed to credit risk. However, the maximum credit risk for these commitments will generally be lower than the contractual amount because a significant portion of these commitments is expected to expire without being used by the customer. For more information on lending commitments, see Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report. We also enter into commitments to purchase securities under resale agreements. For more information on commitments to purchase securities under resale agreements, see Note 1213 (Guarantees, Pledged Assets and Collateral, and Other Commitments) to Financial Statements in this Report. We also may enter into commitments to purchase debt and equity securities to provide capital for ~~customers'~~customers’ funding, liquidity or other future needs. For more information, see the “Off-Balance Sheet Arrangements – Contractual Cash Obligations” section in our ~~2017~~2018 Form 10-K and Note 1213 (Guarantees, Pledged Assets and Collateral, and Other Commitments) to Financial Statements in this Report.

Transactions with Unconsolidated Entities

In the normal course of business, we enter into various types of on- and off-balance sheet transactions with special purpose entities (SPEs), which are corporations, trusts, limited liability companies or partnerships that are established for a limited purpose. Generally, SPEs are formed in connection with securitization transactions and are considered variable interest entities (VIEs). For more information on securitizations, including sales proceeds and cash flows from securitizations, see Note 910 (Securitizations and Variable Interest Entities) to Financial Statements in this Report.

Guarantees and Certain Contingent Arrangements

Guarantees are contracts that contingently require us to make payments to a guaranteed party based on an event or a change in an underlying asset, liability, rate or index. Guarantees are generally in the form of standby letters of credit, securities lending and other indemnifications, written put options, recourse obligations and other types of similar arrangements. For more information on guarantees and certain contingent arrangements, see Note 1213 (Guarantees, Pledged Assets and Collateral, and Other Commitments) to Financial Statements in this Report.

Derivatives

We use derivatives to manage exposure to market risk, including interest rate risk, credit risk and foreign currency risk, and to assist customers with their risk management objectives. Derivatives are recorded on the balance sheet at fair value, and volume can be measured in terms of the notional amount, which is generally not exchanged but is used only as the basis on which interest and other payments are determined. The notional amount is not recorded on the balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. For more information on derivatives, see Note 1415 (Derivatives) to Financial Statements in this Report.

~~Other Commitments~~

We also have other off-balance sheet transactions, including obligations to make rental payments under noncancelable operating leases. Our operating lease obligations are discussed in Note 7 (Premises, Equipment, Lease Commitments and Other Assets) to Financial Statements in our 2017 Form 10-K.

Risk Management

Wells Fargo manages a variety of risks that can significantly affect our financial performance and our ability to meet the expectations of our customers, ~~stockholders,~~shareholders, regulators and other stakeholders. Among the significant risks that we manage are conduct risk, operational risk, compliance risk, credit risk, and asset/liability management related risks, which include interest rate risk, market risk, liquidity risk, and funding related risks. We operate under a ~~Board-level~~Board approved risk management framework which outlines our company-wide approach to risk management and oversight and describes the structures and practices employed to manage current and emerging risks inherent to Wells Fargo. For more information about how we manage ~~these risks,~~risk, see the “Risk Management” section in our ~~2017~~2018 Form 10-K. The discussion that follows ~~provides an update regarding these risks.~~

~~Conduct Risk Management~~

~~Conduct risk is the risk resulting from behavior that does not~~

~~comply with the Company’s values or ethical principles.~~

~~Our Board has enhanced its oversight of conduct risk to~~

~~oversee the alignment of team member conduct to the~~

~~Company’s risk appetite (which the Board approves annually)~~

~~and culture as reflected in~~supplements our ~~Vision, Values and Goals~~ ~~and~~

~~Code of Ethics and Business Conduct. The Board’s Risk~~

~~Committee has primary oversight responsibility for company- wide conduct risk, while certain other Board committees have~~

~~primary oversight responsibility for specific components of~~

~~conduct risk. For example, the conduct risk oversight~~

~~responsibilities~~discussion of the ~~Board’s Human Resources Committee~~

~~include the Company’s human capital~~ management ~~company-wide culture, the Ethics Oversight program (including the~~

~~Company’s Code~~ of ~~Ethics and Business Conduct), and oversight~~

~~of our company-wide incentive compensation risk management~~

~~program.~~

~~At the management level, the Conduct Management~~

~~Office has primary oversight responsibility for key elements of~~

~~conduct risk, including internal investigations, sales practices~~

~~oversight, complaints oversight, and ethics oversight. This office~~

reports and is accountable to the Chief Risk Officer (CRO) and the Enterprise Risk Management Committee and also has direct escalation and informational reporting paths to the relevant Board committees.

~~Operational Risk Management~~

~~Operational risk is the risk resulting from inadequate or failed~~

~~internal controls and processes, people and systems, or resulting~~

~~from external events. Operational risk is inherent in all Wells~~

~~Fargo products and services as it often arises~~certain risks contained in the ~~presence of~~

~~other risk types.~~

~~The Board’s Risk Committee has primary oversight~~

~~responsibility for all aspects of operational risk. In this capacity,~~

~~it reviews and approves significant supporting operational risk~~

~~policies and programs, including the Company’s business~~

~~continuity, financial crimes, information security, privacy,~~

~~technology, and third-party risk management policies and~~

~~programs. In addition, it periodically reviews updates from~~

~~management on the overall state of operational risk, including~~

~~all related programs and risk types.~~

~~At the management level, the Operational Risk Group has~~

~~primary oversight responsibility for operational risk. This group~~

~~reports and is accountable to the CRO and the Enterprise Risk~~

~~Management Committee, and existing management-level~~

~~committees with primary oversight responsibility for key~~

~~elements of operational risk report to it while maintaining~~

~~relevant dual escalation and informational reporting paths to~~

~~Board-level committees.~~

~~Information security is a significant operational risk for~~

~~financial institutions such as Wells Fargo, and includes the risk~~

of losses resulting from cyber attacks. Our Board is actively engaged in the oversight of our Company’s information security risk management and cyber defense programs. The Board’s Risk Committee has primary oversight responsibility for information security and receives regular updates and reporting from management on information and cyber security matters, including information related to any third-party assessments of the Company’s cyber program. In addition, the Risk Committee annually approves the Company’s information security program, which includes the cyber defense program and information security policy. In 2017, the Risk Committee also formed a Technology Subcommittee to provide focused oversight of technology, information security and cyber risks as well as data governance and management. The Technology Subcommittee reports to the Risk Committee and updates are provided by the Risk Committee to the full Board.

Wells Fargo and other financial institutions continue to be the target of various evolving and adaptive cyber attacks, including malware and denial-of-service, as part of an effort to disrupt the operations of financial institutions, potentially test their cybersecurity capabilities, commit fraud, or obtain confidential, proprietary or other information. Cyber attacks have also focused on targeting online applications and services, such as online banking, and have targeted the infrastructure of the internet causing the widespread unavailability of websites and degrading website performance. Wells Fargo has not experienced any material losses relating to these or other cyber attacks. Addressing cybersecurity risks is a priority for Wells Fargo, and we continue to develop and enhance our controls, processes and systems in order to protect our networks, computers, software and data from attack, damage or unauthorized access. We are also proactively involved in industry cybersecurity efforts and working with other parties, including our third-party service providers and governmental agencies, to continue to enhance defenses and improve resiliency to cybersecurity threats. See the “Risk ~~Factors”~~Management” section in our ~~2017~~2018 Form ~~10-K for additional information regarding the risks associated with a failure or breach of our operational or security systems or infrastructure, including as a result of cyber attacks.~~

~~Compliance Risk Management~~

Compliance risk is the risk resulting from the failure to comply with applicable laws, regulations, rules, or other regulatory requirements, or the failure to appropriately address and limit violations of law and any associated harm to customers. Compliance risk encompasses compliance with the applicable standards of self-regulatory organizations as well as with internal policies and procedures.

The Board’s Risk Committee has primary oversight responsibility for compliance risk. In 2017, the Risk Committee also formed a Compliance Subcommittee to provide focused oversight of compliance risk. The Compliance Subcommittee reports to the Risk Committee and updates are provided by the Risk Committee to the full Board.

~~At the management level, Wells Fargo Compliance has primary oversight responsibility for compliance risk. This management-level organization reports and is accountable to the~~

CRO and the Enterprise Risk Management Committee and also has a direct escalation and information reporting path to the Board's Risk Committee. We continue to enhance our oversight of operational and compliance risk management, including as required by the FRB’s February 2, 2018, and the CFPB/OCC's April 20, 2018, consent orders.

10-K.

Credit Risk Management

We define credit risk as the risk of loss associated with a borrower or counterparty default (failure to meet obligations in accordance with agreed upon terms). Credit risk exists with many of our assets and exposures such as debt security holdings, certain derivatives, and loans.

The Board’s Credit Committee has primary oversight responsibility for credit risk. At the management level, the Corporate Credit function, which is part of Corporate Risk, has primary oversight responsibility for credit risk. The Corporate Credit function reports to the CRO and also provides periodic reporting related to credit risk to the Board’s Credit Committee. In addition, the Risk & Control Committee for each business group and enterprise function reports credit risk matters to the Enterprise Risk & Control Committee.

The following discussion focuses on our loan portfolios, which represent the largest component of assets on our balance sheet for which we have credit risk. Table 11 presents our total loans outstanding by portfolio segment and class of financing receivable.

Table 11: Total Loans Outstanding by Portfolio Segment and Class of Financing Receivable


(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2019		Dec 31, 2018
Commercial:
Commercial and industrial	$	334,678	333,125	$	349,134	350,199
Real estate mortgage	125,543		126,599	122,113		121,014
Real estate construction	23,882		24,279	21,857		22,496
Lease financing	19,293		19,385	19,122		19,696
Total commercial	503,396		503,388	512,226		513,405
Consumer:
Real estate 1-4 family first mortgage	282,658		284,054	284,545		285,065
Real estate 1-4 family junior lien mortgage	37,920		39,713	33,099		34,398
Credit card	36,103		37,976	38,279		39,025
Automobile	49,554		53,371	44,913		45,069
Other revolving credit and installment	37,677		38,268	35,187		36,148
Total consumer	443,912		453,382	436,023		439,705
Total loans	$	947,308	956,770	$	948,249	953,110

We manage our credit risk by establishing what we believe are sound credit policies for underwriting new business, while monitoring and reviewing the performance of our existing loan portfolios. We employ various credit risk management and monitoring activities to mitigate risks associated with multiple

risk factors affecting loans we hold, could acquire or originate including:

Loan concentrations and related credit quality

Counterparty credit risk

Economic and market conditions

Legislative or regulatory mandates

Changes in interest rates

Merger and acquisition activities

Reputation risk

Our credit risk management oversight process is governed centrally, but provides for decentralized management and accountability by our lines of business. Our overall credit process includes comprehensive credit policies, disciplined credit underwriting, frequent and detailed risk measurement and modeling, extensive credit training programs, and a continual loan review and audit process.

A key to our credit risk management is adherence to a well-controlled underwriting process, which we believe is appropriate

for the needs of our customers as well as investors who purchase the loans or securities collateralized by the loans.

Credit Quality Overview Solid credit quality continued in first quarter ~~2018,~~2019, as our net charge-off rate remained low at ~~0.32%~~0.30% (annualized) of average total loans. ~~We continued to benefit from improvements in the performance of our residential real estate portfolio as well as reduced losses in our oil and gas portfolio. In particular:~~First quarter 2019 results reflected:

Nonaccrual loans were $~~7.7~~6.9 billion at March 31, ~~2018~~2019, ~~down~~up from $~~8.0~~6.5 billion at December 31, ~~2017~~2018. Commercial nonaccrual loans ~~declined~~increased to $~~2.4~~2.8 billion at March 31, ~~2018~~2019, compared with $~~2.6~~2.2 billion at December 31, ~~2017~~2018, and consumer nonaccrual loans declined to $~~5.3~~4.1 billion at March 31, ~~2018~~2019, compared with $~~5.4~~4.3 billion at December 31, ~~2017~~2018. The ~~decline~~overall increase in nonaccrual loans reflected an ~~improved housing market~~increase in commercial nonaccrual loans driven in part by a customer in the utilities industry, as well as increases in the oil, gas and ~~continued improvement in our oil and gas~~pipelines portfolio. Nonaccrual loans represented ~~0.81%~~0.73% of total loans at March 31, ~~2018~~2019, compared with ~~0.84%~~0.68% at December 31, ~~2017~~2018.

Net charge-offs (annualized) as a percentage of average total loans decreased to ~~0.32%~~0.30% in first quarter ~~2018~~2019, compared with ~~0.34%~~0.32% a year ago. Net charge-offs (annualized) as a percentage of our average commercial and consumer portfolios were 0.11% and 0.51%, respectively, in first quarter 2019, compared with 0.06% and 0.60% in first quarter 2018~~, respectively, compared with~~ ~~0.11%~~ ~~and~~ ~~0.59%~~ in ~~first quarter 2017~~.

Loans that are not government insured/guaranteed and 90 days or more past due and still accruing were $6467 million and $~~903~~807 million in our commercial and consumer portfolios, respectively, at March 31, ~~2018~~2019, compared with $4994 million and $~~1.0 billion~~885 million at December 31, ~~2017~~2018.

Our provision for credit losses was $845 million in first quarter 2019, compared with $191 million in first quarter 2018,. The increase in provision for credit losses was due to an allowance build in first quarter 2019 reflecting a higher probability of slightly less favorable economic conditions, compared with ~~$605 million~~an allowance release in first quarter 2018, reflecting improvement in our outlook for ~~the same period a year ago.~~2017 hurricane-related losses.

The allowance for credit losses totaled $~~11.3~~10.8 billion, or ~~1.19%~~1.14% of total loans, at March 31, ~~2018~~2019, ~~down~~up from $~~12.0~~10.7 billion, or ~~1.25%~~1.12%, at December 31, ~~2017~~2018.

Additional information on our loan portfolios and our credit quality trends follows.

PURCHASED CREDIT-IMPAIRED (PCI) LOANS Loans acquired with evidence of credit deterioration since their origination and where it is probable that we will not collect all contractually required principal and interest payments are PCI loans. Substantially all of our PCI loans were acquired in the Wachovia acquisition on December 31, 2008. PCI loans are recorded at fair value at the date of acquisition, and the historical allowance for credit losses related to these loans is not carried over. The carrying value of PCI loans at March 31, 2018, totaled $10.7 billion, compared with $12.8 billion at December 31, 2017, and $58.8 billion at December 31, 2008. The decrease from December 31, 2017, was due in part to prepayments observed in our Pick-a-Pay PCI portfolio, as well as the sale of $1.6 billion of Pick-a-Pay PCI loans. PCI loans are considered to be accruing due to the existence of the accretable yield amount, which represents the cash expected to be collected in excess of their carrying value, and not based on consideration given to contractual interest payments. The accretable yield at March 31, 2018, was $6.9 billion.

A nonaccretable difference is established for PCI loans to absorb losses expected on the contractual amounts of those ~~loans in excess of the fair value recorded at the date of acquisition.~~loans. Amounts absorbed by the nonaccretable difference do not affect

the income statement or the allowance for credit losses. AtThe carrying value of PCI loans at March 31, ~~2018, $293 million~~2019, totaled $3.2 billion, compared with $5.0 billion at December 31, 2018. The decline in ~~nonaccretable difference remained~~carrying value was due to ~~absorb losses on~~the sale of $1.6 billion of Pick-a-Pay PCI ~~loans.~~loans in first quarter 2019 and paydowns.

For additional information on PCI loans, see the “Risk Management – Credit Risk Management – Real Estate 1-4 Family First and Junior Lien Mortgage Loans – Pick-a-Pay Portfolio” section in this Report, Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2017~~2018 Form 10-K, and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Significant Loan Portfolio Reviews Measuring and monitoring our credit risk is an ongoing process that tracks delinquencies, collateral values, Fair Isaac Corporation (FICO) scores, economic trends by geographic areas, loan-level risk grading for certain portfolios (typically commercial) and other indications of credit risk. Our credit risk monitoring process is designed to enable early identification of developing risk and to support our determination of an appropriate allowance for credit losses. The following discussion provides additional characteristics and analysis of our significant portfolios. See Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for more analysis and credit metric information for each of the following portfolios.

COMMERCIAL AND INDUSTRIAL LOANS AND LEASE FINANCING For purposes of portfolio risk management, we aggregate commercial and industrial loans and lease financing according to market segmentation and standard industry codes. We generally subject commercial and industrial loans and lease financing to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to regulatory definitions of pass and criticized categories with criticized ~~divided between~~segmented among special mention, substandard, doubtful and loss categories.

The commercial and industrial loans and lease financing portfolio totaled ~~$354.0~~$368.3 billion, or ~~37%~~39% of total loans, at March 31, ~~2018.~~2019. The ~~annualized~~ net charge-off rate (annualized) for this portfolio was 0.16% in first quarter 2019, compared with 0.11% in first quarter ~~2018, compared with 0.20% in first quarter 2017.~~2018. At March 31, ~~2018, 0.45%~~2019, 0.56% of this portfolio was nonaccruing, compared with ~~0.56%~~0.43% at December 31, ~~2017,~~2018, reflecting ~~a decrease~~an increase of ~~$366~~$486 million in nonaccrual loans, ~~mostly~~predominantly due to ~~improvement~~a customer in the utilities industry, as well as increases in the oil, gas and ~~gas~~pipelines portfolio. Also, ~~$17.5~~$16.6 billion of the commercial and industrial loan and lease financing portfolio was internally classified as criticized in accordance with regulatory guidance at March 31, ~~2018,~~2019, compared with ~~$17.9~~$15.8 billion at December 31, ~~2017.~~2018. The ~~decrease~~increase in criticized loans, which also includes the ~~decrease~~increase in nonaccrual loans, was ~~predominantly~~mostly due to ~~improvement~~increases in the oil, gas and ~~gas portfolio.~~pipelines, and entertainment and recreation portfolios.

Most of our commercial and industrial loans and lease financing portfolio is secured by short-term assets, such as accounts receivable, inventory and debt securities, as well as long-lived assets, such as equipment and other business assets. Generally, the collateral securing this portfolio represents a secondary source of repayment.

Table 12 provides a breakout of commercial and industrial loans and lease financing by industry, and includes ~~$60.8~~foreign loans of $64.3 billion and $63.7 billion at March 31, 2019, and December 31, 2018, respectively. Significant industry concentrations of foreign loans include $26.3 billion and $25.6 billion in the financials except banks category, $17.0 billion and $18.1 billion in the banks category, and $1.4 billion and $1.2 billion in the oil, gas and pipelines category at March 31, 2019, and December 31, 2018, respectively. The industry categories were updated in first quarter 2019, to align with industry groupings that our regulators use to monitor industry concentration risks.

Loans in the financials except banks category, which include investment firms and financial vehicles, non-bank creditors and other financial companies, were $103.6 billion, or 11% of total outstanding loans, at March 31, ~~2018. Foreign loans totaled $18.4 billion within the investor~~2019. A significant portion of this industry category ~~$17.4 billion within the financial institutions category and $1.5 billion within the oil and gas category.~~

~~The investors category includes~~consists of loans to special purpose vehicles (SPVs) formed by sponsoring entities to invest in financial assets backed predominantly by commercial and residential real estate or corporate cash flow, and are repaid from the asset cash flows or the sale of assets by the SPV. We limit our loan amounts to a percentage of the value of the underlying assets ~~as determined by us,~~ based on analysis of underlying credit risk and other factors such as asset duration and ongoing performance.

~~We provide financial institutions with a variety of relationship focused products~~Oil, gas and ~~services, including~~pipelines loans ~~supporting short-term trade finance and working capital needs. The $17.4 billion of foreign loans in the financial institutions category~~ were ~~predominantly originated by our Financial Institutions business.~~

~~The oil and gas loan portfolio totaled $12.2~~$13.3 billion, or 1% of total outstanding loans, at March 31, ~~2018,~~2019, compared with ~~$12.5~~$12.2 billion, or 1% of total outstanding loans, at December 31, ~~2017.~~2018. Oil, gas and ~~gas~~pipelines nonaccrual loans ~~decreased~~increased to ~~$823~~$701 million at March 31, ~~2018,~~2019, compared with ~~$1.1 billion~~$416 million at December 31, ~~2017, due to improved portfolio performance.~~2018.

Risk Management - Credit Risk Management (continued)

Table 12: Commercial and Industrial Loans and Lease Financing by Industry (1)

March 31, 2018
(in millions)
Nonaccrual
loans

Total
portfolio

(2)
% of
total
loans

Investors $ 11
61,921
7 %
Financial institutions 2
38,837
4
Cyclical retailers 71
27,934
3
Healthcare 48
17,177
2
Food and beverage 7
16,925
2
Industrial equipment 107
14,555
2
Real estate lessor 7
14,532
2
Technology 29
13,535
1
Oil and gas 823
12,223
1
Transportation 117
8,785
1
Business services 34
8,638
1
Public administration 9
8,297
1
Other 344
110,612
(3) 10
Total $ 1,609
353,971
37 %



	March 31, 2019					December 31, 2018
(in millions)	Nonaccrual loans		Total portfolio	% of total loans		Nonaccrual loans		Total portfolio		% of total loans
Financials except banks	$	207	103,567	11	%	$	305	105,925		11	%
Technology, telecom and media	76		25,580	3		26		25,681		3
Real estate and construction	36		22,932	2		31		23,380		2
Equipment, machinery and parts manufacturing	56		21,500	2		47		20,850		2
Materials and commodities	156		20,345	2		136		18,688		2
Retail	65		20,107	2		87		19,541		2
Banks	—		17,123	2		—		18,407		2
Automobile related	22		16,934	2		16		16,801		2
Food and beverage manufacturing	48		15,216	2		48		15,448		2
Health care and pharmaceuticals	105		15,123	2		124		15,529		2
Entertainment and recreation	32		14,460	2		33		14,045		1
Oil, gas and pipelines	701		13,349	1		417		12,840		1
Transportation services	160		12,118	1		176		12,029		1
Commercial services	51		10,378	1		48		10,591		1
Agribusiness	57		7,360	1		46		7,996		1
Government and education	2		6,410	1		3		6,160		1
Utilities	247		5,587	1		6		5,756		1
Other (2)	41		20,167	1		27		20,228		2
Total	$	2,062	368,256	39	%	$	1,576	$	369,895	39	%

(1)

Industry categories are based on the North American Industry Classification System and the amounts ~~reported~~ include foreign loans. ~~See Note 6 (Loans and Allowance~~The industry categories were updated in first quarter 2019 to align with industry groupings that our regulators use to monitor industry concentration risks. The amounts for ~~Credit Losses)~~December 31, 2018, have been reclassified to ~~Financial Statements in this Report for a breakout of commercial foreign loans.~~conform with the current period presentation.


(2)	~~Includes~~ ~~$75 million~~ ~~of PCI loans, which are considered to be accruing due to the existence of the accretable yield and not based on consideration given to contractual interest payments.~~


~~(3)~~	No other single industry had total loans in excess of ~~$6.6~~$4.7 billion. and $4.5 billion at March 31, 2019 and December 31, 2018, respectively.

COMMERCIAL REAL ESTATE (CRE) We generally subject CRE loans to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to regulatory definitions of pass and criticized categories with criticized ~~divided~~segmented among special mention, substandard, doubtful and loss categories. The CRE portfolio, which included ~~$8.8~~$8.2 billion of foreign CRE loans, totaled ~~$149.4~~$144.0 billion, or ~~16%~~15% of total loans, at March 31, ~~2018,~~2019, and consisted of ~~$125.5~~$122.1 billion of mortgage loans and ~~$23.9~~$21.9 billion of construction loans.

Table 13 summarizes CRE loans by state and property type with the related nonaccrual totals. The portfolio is diversified both geographically and by property type. The largest geographic

concentrations of CRE loans are in California, New York, ~~Texas~~Florida and ~~Florida,~~Texas, which combined represented ~~49%~~50% of the total CRE portfolio. By property type, the largest concentrations are office buildings at ~~28%~~27% and apartments at ~~15%~~17% of the portfolio. CRE nonaccrual loans totaled 0.5% of the CRE outstanding balance at March 31, ~~2018,~~2019, compared with 0.4% at December 31, ~~2017.~~2018. At March 31, ~~2018,~~2019, we had ~~$4.4~~$4.8 billion of criticized CRE mortgage loans, compared with ~~$4.3~~$4.5 billion at December 31, ~~2017,~~2018, and ~~$235~~$245 million of criticized CRE construction loans, compared with ~~$298~~$289 million at December 31, ~~2017.~~2018.

Table 13: CRE Loans by State and Property Type


	March 31, 2018										March 31, 2019
	Real estate mortgage			Real estate construction		Total					Real estate mortgage			Real estate construction		Total
(in millions)	Nonaccrual loans		Total portfolio	Nonaccrual loans	Total portfolio	Nonaccrual loans	Total portfolio		% of total loans		Nonaccrual loans		Total portfolio	Nonaccrual loans	Total portfolio	Nonaccrual loans	Total portfolio		% of total loans
By state:
California	$	145	35,507	7	4,254	152	39,761		4	%	$	140	33,978	8	4,601	148	38,579		4	%
New York	12		10,143	—	2,313	12	12,456		1		24		11,559	1	2,593	25	14,152		1
Florida											28		8,209	3	1,746	31	9,955		1
Texas	211		8,684	—	2,158	211	10,842		1		67		7,859	4	1,518	71	9,377		1
Florida	43		7,882	2	2,138	45	10,020		1
North Carolina											24		3,706	5	859	29	4,565		*
Arizona	26		4,394	—	533	26	4,927		1		44		4,180	—	273	44	4,453		*
North Carolina	23		3,861	6	855	29	4,716		*
Washington											21		3,402	—	632	21	4,034		*
Georgia	15		3,765	1	858	16	4,623		*		12		3,401	—	564	12	3,965		*
Illinois	5		3,552	—	530	5	4,082		*
Virginia	12		3,121	—	891	12	4,012		*		8		2,733	—	1,003	8	3,736		*
Washington	25		3,085	3	625	28	3,710		*
Colorado											10		2,889	—	457	10	3,346		*
Other	238		41,549	26	8,727	264	50,276	(1)	5		321		40,197	15	7,611	336	47,808	(1)	5
Total	$	755	125,543	45	23,882	800	149,425		16	%	$	699	122,113	36	21,857	735	143,970		15	%
By property:
Office buildings	$	130	38,431	5	3,199	135	41,630		4	%	$	180	35,510	4	3,155	184	38,665		4	%
Apartments	17		14,937	—	7,968	17	22,905		2		14		16,535	—	7,248	14	23,783		2
Industrial/warehouse	141		16,063	5	1,990	146	18,053		2		89		15,358	2	1,281	91	16,639		2
Retail (excluding shopping center)	84		16,289	1	674	85	16,963		2		103		14,549	8	508	111	15,057		2
Shopping center	11		11,726	—	1,369	11	13,095		1		85		11,037	—	1,251	85	12,288		1
Hotel/motel	20		9,236	—	1,917	20	11,153		1		20		9,998	—	1,554	20	11,552		1
Mixed use properties (2)	209		6,556	2	170	211	6,726		1		83		6,365	2	377	85	6,742		1
Institutional	59		3,360	—	1,785	59	5,145		1		48		3,607	—	1,858	48	5,465		1
Agriculture	33		2,517	—	20	33	2,537		*		48		2,411	—	9	48	2,420		*
1-4 family structure	—		10	12	2,306	12	2,316		*
Collateral pool											—		2,300	—	4	—	2,304		*
Other	51		6,418	20	2,484	71	8,902		1		29		4,443	20	4,612	49	9,055		1
Total	$	755	125,543	45	23,882	800	149,425		16	%	$	699	122,113	36	21,857	735	143,970		15	%


*	Less than 1%.

(1)Includes 40 states; no state had loans in excess of ~~$3.5 billion~~.$3.4 billion.


(2)	Mixed use properties are primarily owner occupied real estate, including data centers, flexible space leased to multiple tenants, light manufacturing and other specialized ~~use properties.~~uses.

Risk Management - Credit Risk Management (continued)

FOREIGN LOANS AND COUNTRY RISK EXPOSURE We classify loans for financial statement and certain regulatory purposes as foreign primarily based on whether the borrower’s primary address is outside of the United States. At March 31, ~~2018,~~2019, foreign loans totaled ~~$70.0~~$72.9 billion, representing approximately 7%8% of our total consolidated loans outstanding, compared with ~~$70.4~~$71.9 billion, or approximately 7%8% of total consolidated loans outstanding, at December 31, ~~2017.~~2018. Foreign loans were approximately 4% of our consolidated total assets at both March 31, ~~2018~~2019 and at December 31, ~~2017.~~2018.

Our country risk monitoring process incorporates frequent dialogue with our financial institution customers, counterparties and regulatory agencies, enhanced by centralized monitoring of macroeconomic and capital markets conditions in the respective countries. We establish exposure limits for each country through a centralized oversight process based on customer needs, and in consideration of relevant economic, political, social, legal, and transfer risks. We monitor exposures closely and adjust our country limits in response to changing conditions.

We evaluate our individual country risk exposure based on our assessment of the borrower’s ability to repay, which gives consideration for allowable transfers of risk such as guarantees and collateral and may be different from the reporting based on the borrower’s primary address. Our largest single foreign country exposure based on our assessment of risk at March 31, ~~2018,~~2019, was the United Kingdom, which totaled ~~$29.1~~$28.4 billion, or approximately 2% of our total assets, and included ~~$3.3~~$3.5 billion of

sovereign claims. Our United Kingdom sovereign claims arise predominantly from deposits we have placed with the Bank of England pursuant to regulatory requirements in support of our London branch. The United Kingdom officially announced its intention to leave the European Union (Brexit) on March 29, 2017, ~~starting~~and the ~~two-year~~ negotiation process leading to its ~~departure.~~departure has been extended to October 31, 2019. We continue to ~~conduct assessments and are executing our implementation~~implement plans for Brexit. Our primary goal is to ~~ensure we can~~ continue to ~~prudently~~ serve our ~~customers post-Brexit.~~existing clients in the United Kingdom and the European Union as well as to continue to meet the needs of our domestic clients as they do business in the United Kingdom and the European Union. We have an existing authorized bank in Ireland and an asset management entity in Luxembourg. We are also in the process of obtaining regulatory approvals to establish a broker dealer in France. We plan to leverage these entities in order to continue to serve clients in the European Union. In addition, we are implementing actions where possible to mitigate the impact of Brexit on our supplier contracts, staffing and business operations in the European Union. For additional information on risks associated with Brexit, see the “Risk Factors” section in our 2018 Form 10-K.

Table 14 provides information regarding our top 20 exposures by country (excluding the U.S.) and our Eurozone exposure, based on our assessment of risk, which gives consideration to the country of any guarantors and/or underlying collateral. Our exposure to Puerto Rico (considered part of U.S. exposure) is primarily through automobile lending and was not material to our consolidated country exposure. In first quarter 2018, we entered into an agreement to sell certain assets and liabilities of our automobile financing business in Puerto Rico, which is expected to close in second quarter 2018. For additional information, see the “Risk Management – Credit Risk Management – Automobile” section in this Report.

Table 14: Select Country Exposures


	March 31, 2018													March 31, 2019
	Lending (1)			Securities (2)				Derivatives and other (3)		Total exposure				Lending (1)			Securities (2)				Derivatives and other (3)		Total exposure
(in millions)	Sovereign		Non- sovereign	Sovereign		Non- sovereign		Sovereign	Non- sovereign	Sovereign		Non- sovereign (4)	Total	Sovereign		Non- sovereign	Sovereign		Non- sovereign		Sovereign	Non- sovereign	Sovereign		Non- sovereign (4)	Total
Top 20 country exposures:
United Kingdom	$	3,305	22,087	—		1,807		—	1,887	3,305		25,781	29,086	$	3,460	23,132	—		1,592		2	224	3,462		24,948	28,410
Canada	30		17,523	178		276		—	517	208		18,316	18,524	32		17,288	(24	)	225		—	158	8		17,671	17,679
Cayman Islands	—		5,757	—		—		—	278	—		6,035	6,035	—		6,382	—		7		—	195	—		6,584	6,584
Ireland														49		4,384	—		241		—	153	49		4,778	4,827
Germany	2,841		1,871	180		7		14	357	3,035		2,235	5,270	1,830		1,929	(1	)	36		—	275	1,829		2,240	4,069
Ireland	—		3,918	—		96		—	192	—		4,206	4,206
Bermuda	—		3,410	—		80		—	198	—		3,688	3,688	—		3,691	—		76		—	44	—		3,811	3,811
Netherlands														—		3,051	57		307		—	18	57		3,376	3,433
Guernsey														—		2,533	—		—		—	—	—		2,533	2,533
Luxembourg														—		1,855	—		604		—	33	—		2,492	2,492
China	—		3,173	(3	)	185		19	50	16		3,408	3,424	—		2,442	(2	)	(214	)	46	15	44		2,243	2,287
Netherlands	—		2,382	—		559		—	264	—		3,205	3,205
India	—		2,314	—		50		—	—	—		2,364	2,364	—		1,940	—		142		—	—	—		2,082	2,082
Luxembourg	—		1,069	—		742		—	196	—		2,007	2,007
Brazil	—		1,605	(1	)	23		—	11	(1	)	1,639	1,638	—		2,008	1		—		—	—	1		2,008	2,009
Guernsey	—		1,626	—		8		—	4	—		1,638	1,638
Australia	—		1,413	—		51		—	62	—		1,526	1,526
Switzerland	—		1,314	—		(21	)	—	26	—		1,319	1,319
Chile	—		1,313	—		(5	)	—	—	—		1,308	1,308	1		1,754	—		(3	)	—	62	1		1,813	1,814
France	—		988	—		138		—	139	—		1,265	1,265	—		1,583	—		49		1	2	1		1,634	1,635
Japan	149		1,010	5		13		1	39	155		1,062	1,217	530		1,091	3		(60	)	—	32	533		1,063	1,596
Virgin Islands (British)	—		1,148	—		48		—	—	—		1,196	1,196
Australia														—		1,422	—		71		—	6	—		1,499	1,499
South Korea	—		1,098	(3	)	80		1	7	(2	)	1,185	1,183	—		1,210	(8	)	86		1	7	(7	)	1,303	1,296
Jersey, Channel Islands	—		570	—		455		—	8	—		1,033	1,033
United Arab Emirates														—		1,259	—		—		—	—	—		1,259	1,259
Mexico														—		1,201	(1	)	6		��	4	(1	)	1,211	1,210
Switzerland														—		1,157	—		(36	)	—	21	—		1,142	1,142
Total top 20 country exposures	$	6,325	75,589	356		4,592		35	4,235	6,716		84,416	91,132	$	5,902	81,312	25		3,129		50	1,249	5,977		85,690	91,667
Eurozone exposure:
Eurozone countries included in Top 20 above (5)	$	2,841	10,228	180		1,542		14	1,148	3,035		12,918	15,953	$	1,879	12,802	56		1,237		1	481	1,936		14,520	16,456
Austria	—		594	—		21		—	2	—		617	617
Spain	—		409	—		35		—	27	—		471	471	—		394	—		13		—	1	—		408	408
Belgium	—		351	—		(69	)	—	6	—		288	288	—		332	—		(75	)	—	2	—		259	259
Austria														—		225	—		(1	)	—	—	—		224	224
Other Eurozone exposure (6)	25		298	—		54		—	—	25		352	377	22		208	—		59		—	—	22		267	289
Total Eurozone exposure	$	2,866	11,880	180		1,583		14	1,183	3,060		14,646	17,706	$	1,901	13,961	56		1,233		1	484	1,958		15,678	17,636

(1)

Lending exposure includes funded loans and unfunded commitments, leveraged leases, and money market placements presented on a gross basis prior to the deduction of impairment allowance and collateral received under the terms of the credit agreements. ~~For the countries listed above, there are~~ ~~$561 million~~ ~~in defeased leases secured significantly by U.S. Treasury and government agency securities.~~


(2)	Represents exposure on debt and equity securities of foreign issuers. Long and short positions are netted and net short positions are reflected as negative exposure.

(3)

Represents counterparty exposure on foreign exchange and derivative contracts, and securities resale and lending agreements. This exposure is presented net of counterparty netting adjustments and reduced by the amount of cash collateral. It includes credit default swaps (CDS) predominantly used for market making activities in the U.S. ~~and London~~ based trading businesses, which sometimes results in selling and purchasing protection on the identical reference entities. Generally, we do not use market instruments such as CDS to hedge the credit risk of our investment or loan positions, although we do use them to manage risk in our trading ~~businesses~~businesses. At March 31, ~~2018~~,2019, the gross notional amount of our CDS sold that reference assets in the Top 20 or Eurozone countries that contain non-sovereign debt was ~~$355~~$366 million,, which was offset by the notional amount of CDS purchased of ~~$472 million. We~~$511 million. On a net basis we did not have any CDS purchased or sold that reference pools of assets that contain sovereign debt or where the reference asset was solely the sovereign debt of a foreign country.


(4)	For countries presented in the table, total non-sovereign exposure comprises ~~$42.0~~$42.8 billion exposure to financial institutions and ~~$44.1~~$44.0 billion to non-financial corporations at March 31, ~~2018~~. 2019.


(5)	Consists of exposure to Ireland, Germany, ~~Ireland,~~ Netherlands, Luxembourg and France included in Top 20.


(6)	Includes non-sovereign exposure to Italy, Portugal, and Greece in the amount of ~~$154~~$139 million,, ~~$23~~ $18 million and $3$6 million,, respectively. We had no sovereign ~~debt~~ exposure ~~to Portugal and Greece, and the sovereign exposure to Italy was immaterial~~in these countries at March 31, ~~2018~~. 2019.

~~Risk Management - Credit Risk Management~~ ~~(continued)~~

REAL ESTATE 1-4 FAMILY FIRST AND JUNIOR LIEN MORTGAGE LOANS Our real estate 1-4 family first and junior lien mortgage loans asare presented in Table ~~15, include loans we have made to customers and retained as part of our asset/liability management strategy, the Pick-a-Pay portfolio acquired from~~15.

~~Wachovia which is discussed later in this Report and other purchased loans, and loans included on our balance sheet as a result of consolidation of variable interest entities (VIEs).~~

Table 15: Real Estate 1-4 Family First and Junior Lien Mortgage Loans


	March 31, 2018				December 31, 2017				March 31, 2019				December 31, 2018
(in millions)	Balance		% of portfolio		Balance		% of portfolio		Balance		% of portfolio		Balance		% of portfolio
Real estate 1-4 family first mortgage	$	282,658	88	%	$	284,054	88	%	$	284,545	90	%	$	285,065	89	%
Real estate 1-4 family junior lien mortgage	37,920		12		39,713		12		33,099		10		34,398		11
Total real estate 1-4 family mortgage loans	$	320,578	100	%	$	323,767	100	%	$	317,644	100	%	$	319,463	100	%

The real estate 1-4 family mortgage loan portfolio includes some loans with adjustable-rate features and some with an interest-only feature as part of the loan terms. Interest-only loans were approximately 3% and 4% of total loans at ~~both~~ March 31, ~~2018,~~2019, and December 31, ~~2017.~~2018, respectively. We believe we have manageable adjustable-rate mortgage (ARM) reset risk across our owned mortgage loan portfolios. We do not offer option ARM products, nor do we offer variable-rate mortgage products with fixed payment amounts, commonly referred to within the financial services industry as negative amortizing mortgage loans. The option ARMs we do have are included in the Pick-a-Pay portfolio which was acquired from Wachovia. Since our acquisition of the Pick-a-Pay loan portfolio at the end of 2008, the option payment portion of the portfolio has reduced from 86% to 39% at March 31, 2018, as a result of our modification and loss mitigation efforts. For more information, see the ~~“Pick-a-Pay~~“Risk Management – Credit Risk Management – Real Estate 1-4 Family First and Junior Lien Mortgage Loans – Pick-a-Pay Portfolio” section in this Report.

We continue to modify real estate 1-4 family mortgage loans to assist homeowners and other borrowers experiencing financial difficulties. For more information on our modification programs, see the “Risk Management – Credit Risk Management – Real Estate 1-4 Family First and Junior Lien Mortgage Loans” section in our ~~2017~~2018 Form 10-K.

Part of our credit monitoring includes tracking delinquency, current FICO scores and loan/combined loan to collateral values (LTV/CLTV) on the entire real estate 1-4 family mortgage loan portfolio. These credit risk indicators, which exclude government insured/guaranteed loans, continued to improve in first quarter ~~2018~~2019 on the non-PCI mortgage portfolio. Loans 30 days or more delinquent at March 31, ~~2018,~~2019, totaled ~~$4.6~~$3.8 billion, or 1% of total non-PCI mortgages, compared with ~~$5.3~~$4.0 billion, or 2%1%, at December 31, ~~2017.~~2018. Loans with FICO scores lower than 640 totaled ~~$10.9~~$9.3 billion, or 4%3% of total non-PCI mortgages at March 31, ~~2018,~~2019, compared with ~~$11.7~~$9.7 billion, or 4%3%, at December 31, ~~2017.~~2018. Mortgages with a LTV/CLTV greater than 100% totaled ~~$5.6~~$3.7 billion at March 31, ~~2018,~~2019, or 2%1% of total non-PCI mortgages, compared with ~~$6.1~~$3.9 billion, or 2%1%, at December 31, ~~2017.~~2018. Information regarding ~~credit quality indicators, including PCI~~ credit quality indicators can be found in Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Real estate 1-4 family first and junior lien mortgage loans by state are presented in Table 16. Our real estate 1-4 family non-PCI mortgage loans to borrowers in California represented ~~12%~~13% of total loans at March 31, ~~2018,~~2019, located ~~mostly~~predominantly within the larger metropolitan areas, with no single California metropolitan area consisting of more than 4%5% of total loans. We monitor changes in real estate values and underlying economic or market conditions for all geographic areas of our real estate 1-4 family first and junior lien mortgage portfolios as part of our credit risk management process. Our underwriting and periodic review of

loans and lines secured by residential real estate collateral includes appraisals or estimates from automated valuation models (AVMs) to support property values. Additional information about AVMs and our policy for their use can be

found in Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report and the “Risk Management – Credit Risk Management – Real Estate 1-4 Family First and Junior Lien Mortgage Loans” section in our ~~2017~~2018 Form 10-K.

Table 16: Real Estate 1-4 Family First and Junior Lien Mortgage Loans by State


	March 31, 2018						March 31, 2019
(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Total real estate 1-4 family mortgage	% of total loans		Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Total real estate 1-4 family mortgage	% of total loans
Real estate 1-4 family loans (excluding PCI):
California	$	102,526	10,092	112,618	12	%	$	110,551	9,042	119,593	13	%
New York	27,275		1,876	29,151	3		29,251		1,647	30,898	3
New Jersey	13,210		3,478	16,688	2		13,828		3,039	16,867	2
Florida	12,868		3,531	16,399	2		12,212		2,992	15,204	1
Washington							9,946		739	10,685	1
Virginia	7,941		2,258	10,199	1		8,489		1,930	10,419	1
Washington	8,952		812	9,764	1
Texas	8,626		698	9,324	1		8,556		638	9,194	1
North Carolina	5,979		1,782	7,761	1		5,869		1,539	7,408	1
Pennsylvania	5,551		2,125	7,676	1		5,372		1,855	7,227	1
Other (1)	64,326		11,243	75,569	8		65,096		9,662	74,758	8
Government insured/ guaranteed loans (2)	14,795		—	14,795	1		12,191		—	12,191	1
Real estate 1-4 family loans (excluding PCI)	272,049		37,895	309,944	33		281,361		33,083	314,444	33
Real estate 1-4 family PCI loans	10,609		25	10,634	1		3,184		16	3,200	—
Total	$	282,658	37,920	320,578	34	%	$	284,545	33,099	317,644	33	%


(1)	Consists of 41 states; no state had loans in excess of ~~$6.7 billion~~. $6.8 billion.


(2)	Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA).

Risk Management - Credit Risk Management (continued)

First Lien Mortgage Portfolio Our total real estate 1-4 family first lien mortgage portfolio decreased ~~$1.4 billion~~$520 million in first quarter ~~2018, due to~~2019, as paydowns and Pick-a-Pay PCI loan sales of ~~Pick-a-Pay PCI loans,~~$1.6 billion were partially offset by ~~non-conforming~~growth in nonconforming mortgage loans. In addition, $776 million of nonconforming mortgage loan ~~growth.~~originations that would have otherwise been included in this portfolio, were designated as held for sale in first quarter 2019 in anticipation of the future issuance of residential mortgage-backed securities. We retained ~~$8.4~~$10.5 billion in ~~non-conforming~~nonconforming originations, consisting of loans that exceed conventional conforming loan amount limits established by federal government-sponsored entities (GSEs) infirst quarter ~~2018.~~2019.

The credit performance associated with our real estate 1-4 family first lien mortgage portfolio ~~continued to improve~~was stable in first quarter ~~2018,~~

2019, as measured through net charge-offs and nonaccrual loans. Net charge-offs (annualized) as a percentage of average real estate 1-4 family first lien mortgage loans ~~improved~~

towas a net recovery of ~~0.03%~~0.02% in first quarter ~~2018,~~2019, compared with a net ~~charge-off~~recovery of ~~0.01%~~0.03% for the same period a year ago. Nonaccrual loans were ~~$4.1~~$3.0 billion at March 31, ~~2018,~~2019, down ~~$69~~$157 million from December 31, ~~2017. Improvement~~2018. The decrease in ~~the credit performance~~nonaccrual loans from December 31, 2018, was driven by nonaccrual loan sales and an improving housing environment. Real estate 1-4 family first lien mortgage loans originated after 2008, which generally utilized tighter underwriting standards, comprised approximately 80% of our total real estate 1-4 family first lien mortgage portfolio as of March 31, 2018.

Table 17 shows certain delinquency and loss information for the first lien mortgage portfolio and lists the top five states by outstanding balance.

Table 17: First Lien Mortgage Portfolio Performance


	Outstanding balance			% of loans 30 days or more past due			Loss (recovery) rate (annualized) quarter ended										Outstanding balance			% of loans 30 days or more past due			Loss (recovery) rate (annualized) quarter ended
(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2018		Dec 31, 2017	Mar 31, 2018		Dec 31, 2017		Sep 30, 2017		Jun 30, 2017		Mar 31, 2017		Mar 31, 2019		Dec 31, 2018	Mar 31, 2019		Dec 31, 2018	Mar 31, 2019		Dec 31, 2018		Sep 30, 2018		Jun 30, 2018		Mar 31, 2018
California	$	102,526	101,464	0.81	%	1.06	(0.07	)	(0.05	)	(0.09	)	(0.08	)	(0.05	)	$	110,551	109,092	0.63	%	0.68	(0.03	)	(0.04	)	(0.05	)	(0.07	)	(0.07	)
New York	27,275		26,624	1.39		1.65	(0.01	)	—		0.05		0.02		0.06		29,251		28,954	1.11		1.12	0.02		0.02		0.04		0.09		(0.01	)
New Jersey	13,210		13,212	2.43		2.74	0.08		0.09		0.15		0.17		0.22		13,828		13,811	1.75		1.91	0.08		0.05		(0.02	)	0.02		0.08
Florida	12,868		13,083	3.11		3.95	(0.14	)	(0.16	)	(0.22	)	(0.18	)	(0.08	)	12,212		12,350	2.50		2.58	(0.10	)	(0.18	)	(0.22	)	(0.15	)	(0.14	)
Washington	8,952		8,845	0.70		0.85	(0.06	)	(0.05	)	(0.09	)	(0.10	)	(0.07	)	9,946		9,677	0.49		0.57	(0.04	)	(0.06	)	(0.06	)	(0.06	)	(0.06	)
Other	92,423		92,961	1.97		2.25	0.01		(0.02	)	0.03		0.02		0.05		93,382		93,261	1.57		1.70	(0.02	)	(0.03	)	(0.03	)	(0.03	)	0.01
Total	257,254		256,189	1.48		1.78	(0.03	)	(0.04	)	(0.03	)	(0.03	)	0.01		269,170		267,145	1.15		1.23	(0.02	)	(0.03	)	(0.04	)	(0.04	)	(0.03	)
Government insured/guaranteed loans	14,795		15,143														12,191		12,932
PCI	10,609		12,722														3,184		4,988
Total first lien mortgages	$	282,658	284,054														$	284,545	285,065

Pick-a-Pay Portfolio The Pick-a-Pay portfolio was one of the consumer residential first lien mortgage portfolios we acquired from Wachovia and a majority of the portfolio was identified as PCI loans.

The Pick-a-Pay portfolio includes loans that offer payment options (Pick-a-Pay option payment loans), and also includes loans that were originated without the option payment feature, loans that no longer offer the option feature as a result of our modification efforts since the acquisition, and loans where the customer voluntarily converted to a fixed-rate product. The Pick-a-Pay portfolio is included in the consumer real estate 1-4 family first mortgage class of loans throughout this

Report. Pick-a-Pay option payment loans may have fixed or adjustable rates with payment options that include a minimum payment, an interest-only payment or fully amortizing payment (both 15 and 30 year options). Table 18 provides balances by types of loans as of March 31, ~~2018. As a~~

result of our loan modification and loss mitigation efforts, Pick-a-Pay option payment loans have been reduced to $10.4 billion at March 31, 2018, from $99.9 billion at acquisition. Total adjusted unpaid principal balance of Pick-a-Pay PCI loans was $14.0 billion at March 31, 2018, compared with $61.0 billion at acquisition. Due to loan modification and loss mitigation efforts, the adjusted unpaid principal balance of option payment PCI loans has declined to 15% of the total Pick-a-Pay portfolio at March 31, 2018, compared with 51% at acquisition. We expect to close on the sale of approximately $1.9 billion of unpaid principal balance of Pick-a-Pay PCI loans in second quarter 2018.2019.

Table 18: Pick-a-Pay Portfolio ~~– Comparison to Acquisition Date~~


					December 31,
	March 31, 2018				2017				2008				March 31, 2019				December 31, 2018
(in millions)	Adjusted unpaid principal balance (1)		% of total		Adjusted unpaid principal balance (1)		% of total		Adjusted unpaid principal balance (1)		% of total		Adjusted unpaid principal balance (1)		% of total		Adjusted unpaid principal balance (1)		% of total
Option payment loans	$	10,361	39	%	$	10,891	36	%	$	99,937	86	%	$	8,084	54	%	$	8,813	50	%
Non-option payment adjustable-rate and fixed-rate loans	3,519		13		3,771		13		15,763		14		2,626		18		2,848		16
Full-term loan modifications	12,877		48		15,366		51		—		—		4,126		28		6,080		34
Total adjusted unpaid principal balance	$	26,757	100	%	$	30,028	100	%	$	115,700	100	%	$	14,836	100	%	$	17,741	100	%
Total carrying value	$	23,361			26,038				95,315				$	13,834			16,115


(1)	Adjusted unpaid principal balance includes write-downs taken on loans where severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan.

Pick-a-Pay option payment loans may have fixed or adjustable rates with payment options that include a minimum payment, an interest-only payment or fully amortizing payment (both 15 and 30 year options).

Since December 31, 2008, we have completed over 138,000 proprietary and Home Affordability Modification Program (HAMP) Pick-a-Pay loan modifications, which have resulted in over $6.1 billion of principal forgiveness. We have also provided interest rate reductions and loan term extensions to enable sustainable homeownership for our Pick-a-Pay customers. As a result of these loss mitigation programs, approximately 68% of our Pick-a-Pay PCI adjusted unpaid principal balance as of March 31, 2018 has been modified.

The predominant portion of our remaining PCI loans is included in the Pick-a-Pay portfolio. ~~Our cash flows expected to be collected have been favorably affected over time by lower expected defaults and losses as a result~~Total carrying value of observed and forecasted economic strengthening, particularly in housing prices, and our loan modification efforts. Since acquisition, we have reclassified $9.3 billion from the nonaccretable difference to the accretable yield. Fluctuations in the accretable yield are driven by changes in interest rate indices for variable ratePick-a-Pay PCI loans prepayment assumptions, and expected principal and interest payments over the estimated life of the portfolio, which will be affected by the pace and degree of improvements in the U.S. economy and housing markets and projected lifetime performance resulting from loan modification activity. Changes in the projected timing of cash flow events, including loan liquidations, modifications and short sales, can also affect the accretable yield and the estimated weighted-average life of the portfolio.

~~An increase in expected prepayments and passage of time lowered our estimated weighted-average life to approximately 5.5 years~~was $3.1 billion at March 31, ~~2018, from 6.8 years~~2019, compared with $4.9 billion at December 31, ~~2017.~~2018. During first quarter ~~2018,~~2019, we sold $1.6 billion of Pick-a-Pay PCI loans that resulted in a gain of ~~$643~~$608 million. ~~Also,~~We also expect to close on the sale of approximately $2.0 billion of Pick-a-Pay PCI loans in second quarter 2019. The accretable yield balance ~~related to~~of our Pick-a-Pay PCI loan portfolio ~~declined $2.0~~was $1.5 billion ~~during first quarter~~($1.7 billion for all PCI loans) at March 31, 2019, compared with $2.8 billion ($3.0 billion for all PCI loans) at December 31, 2018. The estimated weighted-average life was approximately 5.3 years and 5.5 years at March 31, 2019 and December 31, 2018, driven by realized accretion of $299 million, $643 million from the gain on the loan sale, a $629 million reduction in expected interest cash flows resulting from the loan sale, and a $779 million reduction in expected interest cash flows due to higher estimated prepayments, partially offset by a $340 million reclassification from nonaccretable difference.respectively. The accretable yield percentage for Pick-a-Pay PCI loans for first quarter ~~2018 increased to 9.85%. Due to an increase in the amount of accretable yield relative to the shortened weighted-average life,~~2019 was 11.49%, and we expect the ~~accretable yield~~ percentage to beincrease to approximately ~~11.47%~~11.56% for second quarter ~~2018.~~2019.

For ~~further~~additional information on ~~the judgment involved in estimating expected cash flows for~~ PCI loans, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2017~~2018 Form 10-K.

Risk Management - Credit Risk Management (continued)

Junior Lien Mortgage Portfolio The junior lien mortgage portfolio consists of residential mortgage lines and loans that are subordinate in rights to an existing lien on the same property. It is not unusual for these lines and loans to have draw periods, interest only payments, balloon payments, adjustable rates and similar features. Junior lien loan products are mostly amortizing payment loans with fixed interest rates and repayment periods between five to 30 years.

We continuously monitor the credit performance of our junior lien mortgage portfolio for trends and factors that influence the frequency and severity of loss. We have observed that the severity of loss for junior lien mortgages is high and generally not affected by whether we or a third party own or service the related first lien mortgage, but the frequency of delinquency is typically lower when we own or service the first lien mortgage. In general, we have limited information available on the delinquency status of the third party owned or serviced first lien where we also hold a junior lien. To capture this inherent loss content, our allowance process for junior lien mortgages considers the relative difference in loss experience for junior lien mortgages behind first lien mortgage loans we own or service, compared with those behind first lien mortgage loans owned or serviced by third parties. In addition, our allowance

process for junior lien mortgages ~~that are current, but are in their revolving period,~~ considers the inherent loss where the borrower is delinquent on the corresponding first lien mortgage loans.

Table 19 shows certain delinquency and loss information for the junior lien mortgage portfolio and lists the top five states by outstanding balance. The decrease in outstanding balances since December 31, ~~2017,~~2018, predominantly reflects loan paydowns. As of March 31, ~~2018, 8%~~2019, 6% of the outstanding balance of the junior lien mortgage portfolio was associated with loans that had a combined loan to value (CLTV) ratio in excess of 100%. Of those junior lien mortgages with a CLTV ratio in excess of 100%, ~~2.99%~~2.76% were 30 days or more past due. CLTV means the ratio of the total loan balance of first lien mortgages and junior lien mortgages (including unused line amounts for credit line products) to property collateral value. The unsecured portion (the outstanding amount that was in excess of the most recent property collateral value) of the outstanding balances of these loans totaled 3%2% of the junior lien mortgage portfolio at March 31, ~~2018.~~2019. For additional information on consumer loans by LTV/CLTV, see Table 6.12 in Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Table 19: Junior Lien Mortgage Portfolio Performance


	Outstanding balance			% of loans 30 days or more past due			Loss (recovery) rate (annualized) quarter ended										Outstanding balance			% of loans 30 days or more past due			Loss (recovery) rate (annualized) quarter ended
(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2018		Dec 31, 2017	Mar 31, 2018		Dec 31, 2017		Sep 30, 2017		Jun 30, 2017		Mar 31, 2017		Mar 31, 2019		Dec 31, 2018	Mar 31, 2019		Dec 31, 2018	Mar 31, 2019		Dec 31, 2018		Sep 30, 2018		Jun 30, 2018		Mar 31, 2018
California	$	10,092	10,599	1.92	%	2.09	(0.42	)	(0.35	)	(0.46	)	(0.42	)	(0.37	)	$	9,042	9,338	1.74	%	1.67	(0.39	)	(0.33	)	(0.51	)	(0.56	)	(0.42	)
New Jersey																	3,039		3,152	2.59		2.57	0.12		0.03		0.24		0.28		0.44
Florida	3,531		3,688	2.65		3.05	(0.12	)	0.13		0.06		(0.10	)	0.30		2,992		3,140	2.80		2.73	(0.05	)	0.07		0.12		(0.05	)	(0.12	)
New Jersey	3,478		3,606	2.89		2.86	0.44		0.47		0.58		0.44		1.06
Virginia	2,258		2,358	2.22		2.34	0.25		0.15		0.33		0.17		0.48		1,930		2,020	1.96		1.91	0.14		0.04		0.16		0.30		0.25
Pennsylvania	2,125		2,210	2.23		2.37	0.06		0.11		0.47		0.29		0.67		1,855		1,929	2.18		2.10	0.04		0.25		0.18		0.13		0.06
Other	16,411		17,225	2.21		2.33	(0.05	)	(0.09	)	0.06		0.05		0.28		14,225		14,802	2.04		2.12	(0.03	)	(0.11	)	(0.05	)	(0.06	)	(0.05	)
Total	37,895		39,686	2.24		2.38	(0.09	)	(0.06	)	—		(0.03	)	0.21		33,083		34,381	2.08		2.08	(0.10	)	(0.11	)	(0.10	)	(0.13	)	(0.09	)
PCI	25		27														16		17
Total junior lien mortgages	$	37,920	39,713														$	33,099	34,398

~~Risk Management - Credit Risk Management~~ ~~(continued)~~

Our junior lien, as well as first lien, lines of credit portfolios generally have draw periods of 10, 15 or 20 years with variable interest rate and payment options during the draw period of (1) interest only or (2) 1.5% of outstanding principal balance plus accrued interest. During the draw period, the borrower has the option of converting all or a portion of the line from a variable interest rate to a fixed rate with terms including interest-only payments for a fixed period between three to seven years or a fully amortizing payment with a fixed period between five to 30 years. At the end of the draw period, a line of credit generally converts to an amortizing payment schedule with repayment terms of up to 30 years based on the balance at time of conversion. Certain lines and loans have been structured with a balloon payment, which requires full repayment of the outstanding balance at the end of the term period. The conversion of lines or loans to fully amortizing or balloon payoff may result in a significant payment increase, which can affect some borrowers’ ability to repay the outstanding balance.

On a monthly basis, we monitor the payment characteristics of borrowers in our first and junior lien lines of credit portfolios. In March ~~2018,~~2019, approximately ~~42%~~43% of these borrowers paid only the minimum amount due and approximately ~~53%~~52% paid more than the minimum amount due. The rest were either delinquent or paid less than the minimum amount due. For the borrowers

with an interest only payment feature, approximately 29% paid only the minimum amount due and approximately ~~66%~~65% paid more than the minimum amount due.

The lines that enter their amortization period may experience higher delinquencies and higher loss rates than the ones in their draw or term period. We have considered this increased inherent risk in our allowance for credit loss estimate.

In anticipation of our borrowers reaching the end of their contractual commitment, we have created a program to inform, educate and help these borrowers transition from interest-only to fully-amortizing payments or full repayment. We monitor the performance of the borrowers moving through the program in an effort to refine our ongoing program strategy.

Table 20 reflects the outstanding balance of our portfolio of junior lien mortgages, including lines and loans, and first lien lines segregated into scheduled end of draw or end of term periods and products that are currently amortizing, or in balloon repayment status. It excludes real estate 1-4 family first lien line reverse mortgages, which total ~~$124~~$105 million, because they are predominantly insured by the FHA, and it excludes PCI loans, which total ~~$46~~$32 million, because their losses were generally reflected in our nonaccretable difference established at the date of acquisition.

Table 20: Junior Lien Mortgage Line and Loan and First Lien Mortgage Line Portfolios Payment Schedule


					Scheduled end of draw / term										Scheduled end of draw / term
(in millions)	Outstanding balance March 31, 2018			Remainder of 2018	2019	2020	2021	2022	2023 and thereafter (1)	Amortizing	Outstanding balance March 31, 2019			Remainder of 2019	2020	2021	2022	2023	2024 and thereafter (1)	Amortizing (3)
Junior lien lines and loans	$	37,895		962	635	619	1,289	4,462	17,217	12,711	$	33,083		295	450	1,039	3,788	2,622	14,030	10,859
First lien lines	12,907			357	227	240	566	2,106	7,354	2,057	11,376			103	180	488	1,821	1,369	5,472	1,943
Total ~~(3)~~(2)	$	50,802		1,319	862	859	1,855	6,568	24,571	14,768	$	44,459		398	630	1,527	5,609	3,991	19,502	12,802
% of portfolios	100		%	3	2	2	4	13	48	28	100		%	1	1	3	13	9	44	29
End-of-term balloon payments included in Total											$	877		130	206	343	163	7	28


(1)	Substantially all lines and loans are scheduled to convert to amortizing loans by the end of ~~2026,~~2028, with annual scheduled amounts through ~~that date~~2028 ranging from ~~$3.8~~$2.2 billion to ~~$6.6~~$5.5 billion and averaging ~~$5.3~~$3.8 billion per year.


(2)	Junior and first lien lines are primarily interest-only during their draw period. The unfunded credit commitments for junior and first lien lines totaled ~~$62.1~~$60.2 billion at March 31, ~~2018~~. 2019.

(3)

~~Includes scheduled end-of-term balloon payments for lines and loans totaling~~ ~~$151 million~~, ~~$241 million~~, ~~$271 million~~, ~~$438 million~~, ~~$217 million~~ ~~and~~ ~~$72 million~~ ~~for~~ ~~2018~~, ~~2019~~, ~~2020~~, ~~2021~~, ~~2022, and 2023 and thereafter, respectively.~~ Amortizing lines and loans include ~~$76~~$52 million of end-of-term balloon payments, which are past due. At March 31, ~~2018~~, ~~$526~~2019, $456 million,, or 4% of outstanding lines of credit that are amortizing, are 30 days or more past due compared to ~~$600~~$537 million, or 2%, for lines in their draw period.

CREDIT CARDS Our credit card portfolio totaled ~~$36.1~~$38.3 billion at March 31, ~~2018,~~2019, which represented 4% of our total outstanding loans. The net charge-off rate (annualized) for our credit card portfolio was 3.73% for first quarter 2019, compared with 3.69% for first quarter ~~2018, compared with 3.54% for first quarter 2017.~~2018.

AUTOMOBILE Our automobile portfolio, predominantly composed of indirect loans, totaled ~~$49.6~~$44.9 billion at March 31, ~~2018.~~2019. The net charge-off rate (annualized) for our automobile portfolio was 0.82% for first quarter 2019, compared with 1.64% for first quarter ~~2018, compared with 1.10% for first quarter 2017.~~2018. The ~~increase~~decrease in the net ~~charge-offs~~charge-off rate in first quarter ~~2018,~~2019, compared with ~~first quarter 2017,~~the same period in 2018, was driven by lower early losses from higher ~~severity.~~quality originations.

In February 2018, we entered into an agreement to sell certain assets and liabilities of our automobile financing business in Puerto Rico, which is expected to close in second quarter 2018. As a result, automobile loans of $1.6 billion were transferred to loans held for sale in first quarter 2018.

OTHER REVOLVING CREDIT AND INSTALLMENT Other revolving credit and installment loans totaled ~~$37.7~~$35.2 billion at March 31, ~~2018,~~2019, and primarily included student and securities-based loans. Our private student loan portfolio totaled ~~$11.9~~$11.1 billion at March 31, ~~2018.~~2019. The net charge-off rate (annualized) for other revolving credit and installment loans was 1.47% for first quarter 2019, compared with 1.60% for ~~both~~ first quarter ~~2018 and first quarter 2017.~~2018.

Risk Management - Credit Risk Management (continued)

NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS) Table 21 summarizes nonperforming assets (NPAs) for each of the last four quarters. Total NPAs ~~decreased $388~~increased $394 million from fourth quarter ~~2017~~2018 to ~~$8.3 billion with improvement across our consumer and commercial portfolios.~~$7.3 billion. Nonaccrual loans ~~decreased $317~~increased $409 million from fourth quarter ~~2017~~2018 to ~~$7.7~~$6.9 billion, ~~primarily driven by lower~~reflecting higher commercial ~~and industrial~~ nonaccruals ~~reflecting continued improvement~~predominantly in the oil, gas and ~~gas portfolio, as well as continued declines in consumer real estate nonaccruals.~~pipelines, and utilities portfolios. Foreclosed assets of ~~$571~~$436 million were down ~~$71~~

$15 million from fourth quarter ~~2017.~~

We2018. For information about when we generally place loans on nonaccrual status, ~~when:~~

~~the full and timely collection~~see Note 1 (Summary of ~~interest or principal becomes uncertain (generally based on an assessment of the borrower’s financial condition and the adequacy of collateral, if any);~~

~~they are 90 days (120 days with respect~~Significant Accounting Policies) to ~~real estate 1-4 family first and junior lien mortgages) past due for interest or principal, unless both well-secured and~~Financial Statements in ~~the process of collection;~~

~~part of the principal balance has been charged off;~~

~~for junior lien mortgages, we have evidence that the related first lien mortgage may be 120 days past due or in the process of foreclosure regardless of the junior lien delinquency status; or~~

~~consumer real estate and automobile loans receive notification of bankruptcy, regardless of their delinquency status.~~

our 2018 Form 10-K. Credit card loans are not placed on nonaccrual status, but are generally fully charged off when the loan reaches 180 days past due.

Table 21: Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)


	March 31, 2018					December 31, 2017					September 30, 2017					June 30, 2017					March 31, 2019				December 31, 2018					September 30, 2018					June 30, 2018
($ in millions)	Balance			% of total loans		Balance			% of total loans		Balance			% of total loans		Balance			% of total loans		Balance		% of total loans		Balance			% of total loans		Balance			% of total loans		Balance			% of total loans
Nonaccrual loans:
Commercial:
Commercial and industrial	$	1,516		0.45	%	$	1,899		0.57	%	$	2,397		0.73	%	$	2,632		0.79	%	$	1,986	0.57	%	$	1,486		0.42	%	$	1,555		0.46	%	$	1,559		0.46	%
Real estate mortgage	755			0.60		628			0.50		593			0.46		630			0.48		699		0.57		580			0.48		603			0.50		765			0.62
Real estate construction	45			0.19		37			0.15		38			0.15		34			0.13		36		0.16		32			0.14		44			0.19		51			0.22
Lease financing	93			0.48		76			0.39		81			0.42		89			0.46		76		0.40		90			0.46		96			0.49		80			0.41
Total commercial	2,409			0.48		2,640			0.52		3,109			0.62		3,385			0.67		2,797		0.55		2,188			0.43		2,298			0.46		2,455			0.49
Consumer:
Real estate 1-4 family first mortgage ~~(1)~~	4,053			1.43		4,122			1.45		4,213			1.50		4,413			1.60		3,026		1.06		3,183			1.12		3,267			1.15		3,469			1.23
Real estate 1-4 family junior lien mortgage	1,087			2.87		1,086			2.73		1,101			2.68		1,095			2.56		916		2.77		945			2.75		983			2.78		1,029			2.82
Automobile	117			0.24		130			0.24		137			0.25		104			0.18		116		0.26		130			0.29		118			0.26		119			0.25
Other revolving credit and installment	53			0.14		58			0.15		59			0.15		59			0.15		50		0.14		50			0.14		48			0.13		54			0.14
Total consumer ~~(2)~~	5,310			1.20		5,396			1.19		5,510			1.22		5,671			1.26		4,108		0.94		4,308			0.98		4,416			1.00		4,671			1.06
Total nonaccrual loans ~~(5)~~(3)	7,719			0.81		8,036			0.84		8,619			0.91		9,056			0.95		6,905		0.73		6,496			0.68		6,714			0.71		7,126			0.75
Foreclosed assets:
Government insured/guaranteed ~~(6)~~(4)	103					120					137					149					75				88					87					90
Non-government insured/guaranteed	468					522					569					632					361				363					435					409
Total foreclosed assets	571					642					706					781					436				451					522					499
Total nonperforming assets	$	8,290		0.88	%	$	8,678		0.91	%	$	9,325		0.98	%	$	9,837		1.03	%	$	7,341	0.77	%	$	6,947		0.73	%	$	7,236		0.77	%	$	7,625		0.81	%
Change in NPAs from prior quarter	$	(388	)			(647		)			(512		)			(827		)			$	394			(289		)			(389		)			(285		)


(1)	~~Includes MHFS of~~ ~~$137 million, $136 million, $133 million, and $140 million at~~ ~~March 31, 2018, and~~ ~~December 31,September 30~~ ~~and~~ ~~June 30, 2017, respectively.~~


~~(2)~~	~~Includes an incremental $171 million of nonaccrual loans at September 30, 2017, reflecting updated industry regulatory guidance related to loans in bankruptcy.~~


~~(3)~~	Excludes PCI loans because they continue to earn interest income from accretable yield, independent of performance in accordance with their contractual terms.


~~(4)~~(2)	Real estate 1-4 family mortgage loans predominantly insured by the FHA or guaranteed by the VA are not placed on nonaccrual status because they are insured or guaranteed.


~~(5)~~(3)	See Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for further information on impaired loans.

~~(6)~~(4)

Consistent with regulatory reporting requirements, foreclosed real estate resulting from government insured/guaranteed loans are classified as nonperforming. However, both principal and interest related to these foreclosed real estate assets are collectible because the loans were predominantly insured by the FHA or guaranteed by the VA. Foreclosure of certain government guaranteed residential real estate mortgage loans that meet criteria specified by Accounting Standards Update (ASU) 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure, effective as of January 1, 2014, are excluded from this table and included in Accounts Receivable in Other Assets. For more information on the ~~changes in foreclosures for government guaranteed residential real estate~~classification of certain government-guaranteed mortgage loans upon foreclosure, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2017~~2018 Form 10-K.

~~Risk Management - Credit Risk Management~~ ~~(continued)~~

Table 22 provides an analysis of the changes in nonaccrual loans.

Table 22: Analysis of Changes in Nonaccrual Loans

Quarter ended
(in millions) Mar 31,
2018
Dec 31,
2017
Sep 30,
2017
Jun 30,
2017
Mar 31,
2017
Commercial nonaccrual loans
Balance, beginning of period $ 2,640
3,109
3,385
3,706
4,059
Inflows 605
617
627
704
945
Outflows:
Returned to accruing (113 ) (126 ) (97 ) (61 ) (133 )
Foreclosures —
(1 ) (3 ) (15 ) (1 )
Charge-offs (119 ) (139 ) (173 ) (116 ) (202 )
Payments, sales and other (604 ) (820 ) (630 ) (833 ) (962 )
Total outflows (836 ) (1,086 ) (903 ) (1,025 ) (1,298 )
Balance, end of period 2,409

2,640

3,109

3,385

3,706
Consumer nonaccrual loans
Balance, beginning of period 5,396
5,510
5,671
6,053
6,325
Inflows (1) 738
845
887
676
814
Outflows:
Returned to accruing (376 ) (345 ) (397 ) (425 ) (428 )
Foreclosures (62 ) (72 ) (56 ) (72 ) (81 )
Charge-offs (88 ) (94 ) (109 ) (117 ) (151 )
Payments, sales and other (298 ) (448 ) (486 ) (444 ) (426 )
Total outflows (824 ) (959 ) (1,048 ) (1,058 ) (1,086 )
Balance, end of period 5,310

5,396

5,510

5,671

6,053
Total nonaccrual loans $ 7,719
8,036
8,619
9,056
9,759


~~(1)~~	~~Quarter ended September 30, 2017, includes an incremental $171 million of nonaccrual loans, reflecting updated industry regulatory guidance related to loans in bankruptcy.~~



	Quarter ended
(in millions)	Mar 31, 2019			Dec 31, 2018		Sep 30, 2018		Jun 30, 2018		Mar 31, 2018
Commercial nonaccrual loans
Balance, beginning of period	$	2,188		2,298		2,455		2,409		2,640
Inflows	1,238			662		774		726		605
Outflows:
Returned to accruing	(43		)	(45	)	(122	)	(43	)	(113	)
Foreclosures	(15		)	(12	)	—		—		—
Charge-offs	(158		)	(193	)	(191	)	(133	)	(119	)
Payments, sales and other	(413		)	(522	)	(618	)	(504	)	(604	)
Total outflows	(629		)	(772	)	(931	)	(680	)	(836	)
Balance, end of period	2,797			2,188		2,298		2,455		2,409
Consumer nonaccrual loans
Balance, beginning of period	4,308			4,416		4,671		4,930		5,006
Inflows	552			569		572		578		714
Outflows:
Returned to accruing	(248		)	(269	)	(319	)	(342	)	(374	)
Foreclosures	(42		)	(35	)	(41	)	(40	)	(50	)
Charge-offs	(49		)	(57	)	(65	)	(84	)	(86	)
Payments, sales and other	(413		)	(316	)	(402	)	(371	)	(280	)
Total outflows	(752		)	(677	)	(827	)	(837	)	(790	)
Balance, end of period	4,108			4,308		4,416		4,671		4,930
Total nonaccrual loans	$	6,905		6,496		6,714		7,126		7,339

Typically, changes to nonaccrual loans period-over-period represent inflows for loans that are placed on nonaccrual status in accordance with our policy, offset by reductions for loans that are paid down, charged off, sold, foreclosed, or are no longer classified as nonaccrual as a result of continued performance and an improvement in the borrower’s financial condition and loan repayment capabilities. ~~Also, reductions can come from borrower repayments even if the loan remains on nonaccrual.~~

While nonaccrual loans are not free of loss content, we believe exposure to loss is significantly mitigated by the following factors at March 31, ~~2018:~~2019:

over ~~99%~~87% of total commercial nonaccrual loans and 99% of total consumer nonaccrual loans are secured. Of the consumer nonaccrual loans, ~~97%~~96% are secured by real estate and ~~83%~~87% have a combined LTV (CLTV) ratio of 80% or less.

losses of $~~349~~304 million and $~~1.7~~1.4 billion have already been recognized on ~~20%~~15% of commercial nonaccrual loans and ~~43%~~44% of consumer nonaccrual loans, ~~respectively. Generally, when a consumer real estate loan is 120 days past due (except when required earlier by guidance issued by bank regulatory agencies),~~respectively, in accordance with our charge-off policies. Once we ~~transfer it~~write down loans to ~~nonaccrual status. When~~ the ~~loan reaches 180 days past due, or is active or discharged in bankruptcy, it is our policy to write these loans down to~~ net realizable value (fair value of collateral less estimated costs to sell)~~. Thereafter,~~, we re-evaluate each loan regularly and record additional write-downs if needed.

~~83%~~75% of commercial nonaccrual loans were current on interest and 68% were current on both principal and interest, but were on nonaccrual status because the full or timely collection of interest or principal had become uncertain.

~~77%~~ ~~of commercial nonaccrual loans were current on both principal and interest, but will remain on nonaccrual status until the full and timely collection of principal and interest becomes certain.~~

the remaining risk of loss of all nonaccrual loans has been considered and we believe is adequately covered by the allowance for loan losses.

of $~~2.3~~1.8 billion of consumer loans in bankruptcy or discharged in bankruptcy, and classified as nonaccrual, $~~1.5~~1.3 billion were current.

We continue to work with our customers experiencing financial difficulty to determine if they can qualify for a loan modification so that they can stay in their homes. Under ~~both~~ our proprietary modification ~~programs and the Making Home Affordable (MHA)~~ programs, customers may be required to provide updated documentation, and some programs require completion of payment during trial periods to demonstrate sustained performance before the loan can be removed from nonaccrual status.

Risk Management - Credit Risk Management (continued)

Table 23 provides a summary of foreclosed assets and an analysis of changes in foreclosed assets.

Table 23: Foreclosed Assets


(in millions)	Mar 31, 2018			Dec 31, 2017		Sep 30, 2017		Jun 30, 2017		Mar 31, 2017		Mar 31, 2019			Dec 31, 2018		Sep 30, 2018		Jun 30, 2018		Mar 31, 2018
Summary by loan segment
Government insured/guaranteed	$	103		120		137		149		179		$	75		88		87		90		103
PCI loans:
Commercial	59			57		67		79		84		124			127		201		176		221
Consumer	58			62		72		67		80		237			236		234		233		247
Total PCI loans	117			119		139		146		164
All other loans:
Commercial	162			207		226		259		275
Consumer	189			196		204		227		287
Total all other loans	351			403		430		486		562
Total foreclosed assets	$	571		642		706		781		905		$	436		451		522		499		571
Analysis of changes in foreclosed assets
Balance, beginning of period	$	642		706		781		905		978		$	451		522		499		571		642
Net change in government insured/guaranteed (1)	(17		)	(17	)	(12	)	(30	)	(18	)	(13		)	1		(3	)	(13	)	(17	)
Additions to foreclosed assets (2)	185			180		198		233		288		193			193		209		191		185
Reductions:
Sales	(245		)	(231	)	(257	)	(330	)	(307	)	(205		)	(274	)	(181	)	(257	)	(245	)
Write-downs and gains (losses) on sales	6			4		(4	)	3		(36	)	10			9		(2	)	7		6
Total reductions	(239		)	(227	)	(261	)	(327	)	(343	)	(195		)	(265	)	(183	)	(250	)	(239	)
Balance, end of period	$	571		642		706		781		905		$	436		451		522		499		571


(1)	Foreclosed government insured/guaranteed loans are temporarily transferred to and held by us as servicer, until reimbursement is received from FHA or VA. The net change in government insured/guaranteed foreclosed assets is generally made up of inflows from mortgages held for investment and ~~MHFS,~~MLHFS, and outflows when we are reimbursed by FHA/VA.


(2)	Includes loans moved into ~~foreclosure~~foreclosed assets from nonaccrual status, PCI loans transitioned directly to foreclosed assets and repossessed automobiles.

Foreclosed assets at March 31, ~~2018,~~2019, included ~~$342~~$304 million of foreclosed residential real estate, of which ~~30%~~25% is predominantly FHA insured or VA guaranteed and expected to have minimal or no loss content. The remaining amount of foreclosed assets ~~balance of $229 million~~ has been written down to estimated net realizable value. Of the ~~$571~~$436 million in foreclosed assets at March 31, ~~2018, 57%~~2019, 69% have been in the foreclosed assets portfolio one year or less.

~~Risk Management - Credit Risk Management~~ ~~(continued)~~

TROUBLED DEBT RESTRUCTURINGS (TDRs)

Table 24: Troubled Debt Restructurings (TDRs)


(in millions)	Mar 31, 2018		Dec 31, 2017	Sep 30, 2017	Jun 30, 2017	Mar 31, 2017	Mar 31, 2019		Dec 31, 2018	Sep 30, 2018	Jun 30, 2018	Mar 31, 2018
Commercial:
Commercial and industrial	$	1,703	2,096	2,424	2,629	2,484	$	1,740	1,623	1,837	1,792	1,703
Real estate mortgage	939		901	953	1,024	1,090	681		704	782	904	939
Real estate construction	45		44	48	62	73	45		39	49	40	45
Lease financing	53		35	39	21	8	46		56	65	50	53
Total commercial TDRs	2,740		3,076	3,464	3,736	3,655	2,512		2,422	2,733	2,786	2,740
Consumer:
Real estate 1-4 family first mortgage	11,782		12,080	12,617	13,141	13,680	10,343		10,629	10,967	11,387	11,782
Real estate 1-4 family junior lien mortgage	1,794		1,849	1,919	1,975	2,027	1,604		1,639	1,689	1,735	1,794
Credit Card	386		356	340	316	308	473		449	431	410	386
Automobile	83		87	88	85	80	85		89	91	81	83
Other revolving credit and installment	137		126	124	118	107	156		154	146	141	137
Trial modifications	198		194	183	215	261	136		149	163	200	198
Total consumer TDRs	14,380		14,692	15,271	15,850	16,463	12,797		13,109	13,487	13,954	14,380
Total TDRs	$	17,120	17,768	18,735	19,586	20,118	$	15,309	15,531	16,220	16,740	17,120
TDRs on nonaccrual status	$	4,428	4,801	5,218	5,637	5,819	$	4,037	4,058	4,298	4,454	4,428
TDRs on accrual status:
Government insured/guaranteed	1,375		1,359	1,377	1,390	1,479	1,275		1,299	1,308	1,368	1,375
Non-government insured/guaranteed	11,317		11,608	12,140	12,559	12,820	9,997		10,174	10,614	10,918	11,317
Total TDRs	$	17,120	17,768	18,735	19,586	20,118	$	15,309	15,531	16,220	16,740	17,120

Table 24 provides information regarding the recorded investment of loans modified in TDRs. The allowance for loan losses for TDRs was ~~$1.4 billion and $1.6~~$1.2 billion at both March 31, ~~2018,~~2019, and December 31, ~~2017, respectively.~~2018. See Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for additional information regarding TDRs. In those situations where principal is forgiven, the entire amount of such forgiveness is immediately charged ~~off to the extent not done so prior to the modification.~~off. When we delay the timing on the repayment of a portion of principal (principal forbearance), we charge off the amount of forbearance if that amount is not considered fully collectible.

For more information on our nonaccrual policies when a restructuring is involved, see the “Risk Management – Credit Risk Management – Troubled Debt Restructurings (TDRs)” section in our ~~2017~~2018 Form 10-K.

Table 25 provides an analysis of the changes in TDRs. Loans modified more than once are reported as TDR inflows only in the period they are first modified. Other than resolutions such as foreclosures, sales and transfers to held for sale, we may remove loans held for investment from TDR classification, but only if they have been refinanced or restructured at market terms and qualify as a new ~~loan.~~loans.

Risk Management - Credit Risk Management (continued)

Table 25: Analysis of Changes in TDRs


						Quarter ended											Quarter ended
(in millions)	Mar 31, 2018			Dec 31, 2017		Sep 30, 2017		Jun 30, 2017		Mar 31, 2017		Mar 31, 2019			Dec 31, 2018		Sep 30, 2018		Jun 30, 2018		Mar 31, 2018
Commercial TDRs
Balance, beginning of quarter	$	3,076		3,464		3,736		3,655		3,800		$	2,422		2,733		2,786		2,740		3,076
Inflows (1)	321			412		333		730		642
Inflows (1)(2)												539			374		588		481		321
Outflows
Charge-offs	(63		)	(65	)	(74	)	(59	)	(108	)	(44		)	(88	)	(92	)	(41	)	(63	)
Foreclosures	—			(1	)	(2	)	(12	)	—		—			(2	)	(13	)	—		—
Payments, sales and other ~~(2)~~(3)	(594		)	(734	)	(529	)	(578	)	(679	)	(405		)	(595	)	(536	)	(394	)	(594	)
Balance, end of quarter	2,740			3,076		3,464		3,736		3,655		2,512			2,422		2,733		2,786		2,740
Consumer TDRs
Balance, beginning of quarter	14,692			15,271		15,850		16,463		16,993		13,109			13,487		13,954		14,380		14,692
Inflows (1)	487			395		461		444		517		439			379		414		467		487
Outflows
Charge-offs	(54		)	(52	)	(51	)	(51	)	(51	)	(60		)	(57	)	(56	)	(56	)	(54	)
Foreclosures	(131		)	(135	)	(146	)	(159	)	(179	)	(86		)	(90	)	(116	)	(133	)	(131	)
Payments, sales and other ~~(2)~~(3)	(618		)	(798	)	(811	)	(801	)	(779	)	(593		)	(595	)	(672	)	(706	)	(618	)
Net change in trial modifications ~~(3)~~(4)	4			11		(32	)	(46	)	(38	)	(12		)	(15	)	(37	)	2		4
Balance, end of quarter	14,380			14,692		15,271		15,850		16,463		12,797			13,109		13,487		13,954		14,380
Total TDRs	$	17,120		17,768		18,735		19,586		20,118		$	15,309		15,531		16,220		16,740		17,120


(1)	Inflows include loans that modify, even if they resolve within the period, as well as gross advances on term loans that modified in a prior period and net advances on revolving commercial TDRs that modified in a prior period.


(2)	Information for the quarter ended June 30, 2018 has been revised to offset payments and advances (i.e. inflows) on revolving commercial TDRs, for consistent presentation of this activity for all periods.

(3)

Other outflows ~~include~~consist of normal amortization/accretion of loan basis adjustments and loans transferred to held-for-sale. ~~It also includes~~ ~~$5 million~~ ~~and~~ ~~$6 million~~ ofOccasionally, loans that have been refinanced or restructured at market terms ~~and qualifying~~qualify as new loans, ~~and removed from TDR classification for the quarters ended March 31, 2018 and September 30, 2017, respectively, while~~ no ~~loans were removed from TDR classification for the quarters ended December 31, June 30 and March 31,~~ ~~2017~~.which are also included as other outflows.


~~(3)~~(4)	Net change in trial modifications includes: inflows of new TDRs entering the trial payment period, net of outflows for modifications that either (i) successfully perform and enter into a permanent modification, or (ii) did not successfully perform according to the terms of the trial period plan and are subsequently charged-off, foreclosed upon or otherwise resolved.

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING

Loans 90 days or more past due as to interest or principal are still accruing if they are (1) well-secured and in the process of collection or (2) real estate 1-4 family mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. PCI loans are not included in past due and still accruing loans even when they are 90 days or more contractually past due. These PCI loans are considered to be accruing because they continue to earn interest from accretable yield, independent of performance in accordance with their contractual terms.

Excluding insured/guaranteed loans, loans 90 days or more past due and still accruing at March 31, ~~2018,~~2019, were down ~~$96~~$105 million, or 9%11%, from December 31, ~~2017,~~2018, due to payoffs and

~~modifications and other loss mitigation activities and~~overall credit stabilization. Also, fluctuations from quarter to quarter are influenced by seasonality.

Loans 90 days or more past due and still accruing whose repayments are predominantly insured by the FHA or guaranteed by the VA for mortgages were ~~$9.8~~$7.0 billion at March 31, ~~2018,~~2019, down from ~~$10.9~~$7.7 billion at December 31, ~~2017,~~2018, due to ~~improving credit trends and seasonality.~~an improvement in delinquencies as well as a reduction in the portfolio.

Table 26 reflects non-PCI loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed. For additional information on delinquencies by loan class, see Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Table 26: Loans 90 Days or More Past Due and Still Accruing


(in millions)	Mar 31, 2018		Dec 31, 2017	Sep 30, 2017	Jun 30, 2017	Mar 31, 2017	Mar 31, 2019		Dec 31, 2018	Sep 30, 2018	Jun 30, 2018	Mar 31, 2018
Total (excluding PCI (1)):	$	10,753	11,997	10,227	9,716	10,525	$	7,870	8,704	8,838	9,087	10,351
Less: FHA insured/VA guaranteed ~~(3)~~(2)	9,786		10,934	9,266	8,873	9,585	6,996		7,725	7,906	8,246	9,385
Total, not government insured/guaranteed	$	967	1,063	961	843	940	$	874	979	932	841	966
By segment and class, not government insured/guaranteed: Commercial:
Commercial and industrial	$	40	26	27	42	88	$	42	43	42	23	40
Real estate mortgage	23		23	11	2	11	20		51	56	26	23
Real estate construction	1		—	—	10	3	5		—	—	—	1
Total commercial	64		49	38	54	102	67		94	98	49	64
Consumer:
Real estate 1-4 family first mortgage ~~(3)~~	164		219	190	145	149	117		124	128	132	163
Real estate 1-4 family junior lien mortgage ~~(3)~~	48		60	49	44	42	28		32	32	33	48
Credit card	473		492	475	411	453	502		513	460	429	473
Automobile	113		143	111	91	79	68		114	108	105	113
Other revolving credit and installment	105		100	98	98	115	92		102	106	93	105
Total consumer	903		1,014	923	789	838	807		885	834	792	902
Total, not government insured/guaranteed	$	967	1,063	961	843	940	$	874	979	932	841	966


(1)	PCI loans totaled ~~$1.0~~$243 million, $370 million, $567 million, $811 million, and $1.0 billion, ~~$1.4 billion~~, ~~$1.4 billion~~, ~~$1.5 billion~~, at March 31, 2019, and ~~$1.8 billion~~ at December 31, September 30, June 30, and March 31, 2018,~~, and~~ ~~December 31~~, ~~September 30~~, ~~June 30~~ ~~and~~ ~~March 31,2017~~, respectively.


(2)	Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.


~~(3)~~	~~Includes mortgages held for sale 90 days or more past due and still accruing.~~

Risk Management - Credit Risk Management (continued)

NET CHARGE-OFFS

Table 27: Net Charge-offs


																					Quarter ended																									Quarter ended
	Mar 31, 2018					Dec 31, 2017					Sep 30, 2017					Jun 30, 2017					Mar 31, 2017					Mar 31, 2019					Dec 31, 2018					Sep 30, 2018					Jun 30, 2018					Mar 31, 2018
($ in millions)	Net loan charge- offs			% of avg. loans(1)		Net loan charge- offs			% of avg. loans (1)		Net loan charge- offs			% of avg. loans (1)		Net loan charge-offs			% of avg. loans (1)		Net loan charge-offs			% of avg. loans (1)		Net loan charge- offs			% of avg. loans(1)		Net loan charge- offs			% of avg. loans (1)		Net loan charge- offs			% of avg. loans (1)		Net loan charge-offs			% of avg. loans (1)		Net loan charge-offs			% of avg. loans (1)
Commercial:
Commercial and industrial	$	85		0.10	%	$	118		0.14	%	$	125		0.15	%	$	78		0.10	%	$	171		0.21	%	$	133		0.15	%	$	132		0.15	%	$	148		0.18	%	$	58		0.07	%	$	85		0.10	%
Real estate mortgage	(15		)	(0.05	)	(10		)	(0.03	)	(3		)	(0.01	)	(6		)	(0.02	)	(25		)	(0.08	)	6			0.02		(12		)	(0.04	)	(1		)	—		—			—		(15		)	(0.05	)
Real estate construction	(4		)	(0.07	)	(3		)	(0.05	)	(15		)	(0.24	)	(4		)	(0.05	)	(8		)	(0.15	)	(2		)	(0.04	)	(1		)	(0.01	)	(2		)	(0.04	)	(6		)	(0.09	)	(4		)	(0.07	)
Lease financing	12			0.25		10			0.20		6			0.12		7			0.15		5			0.11		8			0.17		13			0.26		7			0.14		15			0.32		12			0.25
Total commercial	78			0.06		115			0.09		113			0.09		75			0.06		143			0.11		145			0.11		132			0.10		152			0.12		67			0.05		78			0.06
Consumer:
Real estate 1-4 family first mortgage	(18		)	(0.03	)	(23		)	(0.03	)	(16		)	(0.02	)	(16		)	(0.02	)	7			0.01		(12		)	(0.02	)	(22		)	(0.03	)	(25		)	(0.04	)	(23		)	(0.03	)	(18		)	(0.03	)
Real estate 1-4 family junior lien mortgage	(8		)	(0.09	)	(7		)	(0.06	)	1			—		(4		)	(0.03	)	23			0.21		(9		)	(0.10	)	(10		)	(0.11	)	(9		)	(0.10	)	(13		)	(0.13	)	(8		)	(0.09	)
Credit card	332			3.69		336			3.66		277			3.08		320			3.67		309			3.54		352			3.73		338			3.54		299			3.22		323			3.61		332			3.69
Automobile	208			1.64		188			1.38		202			1.41		126			0.86		167			1.10		91			0.82		133			1.16		130			1.10		113			0.93		208			1.64
Other revolving credit and installment	149			1.60		142			1.46		140			1.44		154			1.58		156			1.60		128			1.47		150			1.64		133			1.44		135			1.44		149			1.60
Total consumer	663			0.60		636			0.56		604			0.53		580			0.51		662			0.59		550			0.51		589			0.53		528			0.47		535			0.49		663			0.60
Total	$	741		0.32	%	$	751		0.31	%	$	717		0.30	%	$	655		0.27	%	$	805		0.34	%	$	695		0.30	%	$	721		0.30	%	$	680		0.29	%	$	602		0.26	%	$	741		0.32	%


(1)	Quarterly net charge-offs (recoveries) as a percentage of average respective loans are annualized.

Table 27 presents net charge-offs for first quarter ~~2018~~2019 and the previous four quarters. Net charge-offs in first quarter ~~2018~~2019 were ~~$741~~$695 million ~~(0.32%~~(0.30% of average total loans outstanding), compared with ~~$805~~$741 million ~~(0.34%~~(0.32%) in first quarter ~~2017.~~2018.

The ~~decrease~~increase in commercial ~~and industrial~~ net charge-offs from first quarter ~~2017 reflected continued improvement~~2018 was due to higher commercial and industrial loan charge-offs and lower recoveries in ~~our oil~~the commercial and ~~gas~~industrial portfolio. ~~Our commercial real estate portfolios were in a net recovery position. Total consumer~~Consumer net charge-offs ~~increased slightly~~decreased from the prior year ~~as increases~~predominantly due to a decrease in automobile net charge-offs, partially offset by an increase in credit card ~~and automobile net charge-offs were substantially all offset by decreases in residential real estate and other revolving credit and installment~~ net charge-offs.

ALLOWANCE FOR CREDIT LOSSES The allowance for credit losses, which consists of the allowance for loan losses and the allowance for unfunded credit commitments, is management’s estimate of credit losses inherent in the loan portfolio and unfunded credit commitments at the balance sheet date, excluding loans carried at fair value. The detail of the changes in the allowance for credit losses by portfolio segment (including charge-offs and recoveries by loan class) is in Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

We apply a disciplined process and methodology to establish our allowance for credit losses each quarter. This process takes into consideration many factors, including historical and forecasted loss trends, loan-level credit quality ratings and loan grade-specific characteristics. The process involves subjective and complex judgments. In addition, we review a variety of credit metrics and trends. These credit metrics and trends, however, do not solely determine the amount of the allowance as we use several analytical tools. Our estimation approach for the commercial portfolio reflects the estimated probability of default in accordance with the borrower’s financial strength, and the severity of loss in the event of default, considering the quality of any underlying collateral. Probability of default and severity at the time of default are statistically derived through historical observations of defaults and losses after default within each credit risk rating. Our estimation approach for the consumer portfolio uses forecasted losses that represent our best estimate of inherent loss based on historical experience, quantitative and other mathematical techniques. For additional information on our allowance for credit losses, see the “Critical Accounting Policies – Allowance for Credit Losses” section in our ~~2017~~2018 Form 10-K and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Table 28 presents the allocation of the allowance for credit losses by loan segment and class for the most recent quarter end and last four year ends.

~~Risk Management - Credit Risk Management~~ ~~(continued)~~

Table 28: Allocation of the Allowance for Credit Losses (ACL)


	Mar 31, 2018				Dec 31, 2017				Dec 31, 2016				Dec 31, 2015				Dec 31, 2014				Mar 31, 2019				Dec 31, 2018				Dec 31, 2017				Dec 31, 2016				Dec 31, 2015
(in millions)	ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans
Commercial:																																	��
Commercial and industrial	$	3,789	35	%	$	3,752	35	%	$	4,560	34	%	$	4,231	33	%	$	3,506	32	%	$	3,650	37	%	$	3,628	37	%	$	3,752	35	%	$	4,560	34	%	$	4,231	33	%
Real estate mortgage	1,361		13		1,374		13		1,320		14		1,264		13		1,576		13		1,307		13		1,282		13		1,374		13		1,320		14		1,264		13
Real estate construction	1,274		3		1,238		3		1,294		2		1,210		3		1,097		2		1,165		2		1,200		2		1,238		3		1,294		2		1,210		3
Lease financing	284		2		268		2		220		2		167		1		198		1		306		2		307		2		268		2		220		2		167		1
Total commercial	6,708		53		6,632		53		7,394		52		6,872		50		6,377		48		6,428		54		6,417		54		6,632		53		7,394		52		6,872		50
Consumer:
Real estate 1-4 family first mortgage	869		30		1,085		30		1,270		29		1,895		30		2,878		31		780		30		750		30		1,085		30		1,270		29		1,895		30
Real estate 1-4 family junior lien mortgage	530		4		608		4		815		5		1,223		6		1,566		7		317		3		431		3		608		4		815		5		1,223		6
Credit card	1,969		4		1,944		4		1,605		4		1,412		4		1,271		4		2,201		4		2,064		4		1,944		4		1,605		4		1,412		4
Automobile	671		5		1,039		5		817		6		529		6		516		6		514		5		475		5		1,039		5		817		6		529		6
Other revolving credit and installment	566		4		652		4		639		4		581		4		561		4		581		4		570		4		652		4		639		4		581		4
Total consumer	4,605		47		5,328		47		5,146		48		5,640		50		6,792		52		4,393		46		4,290		46		5,328		47		5,146		48		5,640		50
Total	$	11,313	100	%	$	11,960	100	%	$	12,540	100	%	$	12,512	100	%	$	13,169	100	%	$	10,821	100	%	$	10,707	100	%	$	11,960	100	%	$	12,540	100	%	$	12,512	100	%

	Mar 31, 2018				Dec 31, 2017				Dec 31, 2016				Dec 31, 2015				Dec 31, 2014				Mar 31, 2019				Dec 31, 2018				Dec 31, 2017				Dec 31, 2016				Dec 31, 2015
Components:
Allowance for loan losses	$	10,373			11,004				11,419				11,545				12,319				$	9,900			9,775				11,004				11,419				11,545
Allowance for unfunded credit commitments	940				956				1,121				967				850				921				932				956				1,121				967
Allowance for credit losses	$	11,313			11,960				12,540				12,512				13,169				$	10,821			10,707				11,960				12,540				12,512
Allowance for loan losses as a percentage of total loans	1.10			%	1.15				1.18				1.26				1.43				1.04			%	1.03				1.15				1.18				1.26
Allowance for loan losses as a percentage of total net charge-offs (1)	345				376				324				399				418				351				356				376				324				399
Allowance for credit losses as a percentage of total loans	1.19				1.25				1.30				1.37				1.53				1.14				1.12				1.25				1.30				1.37
Allowance for credit losses as a percentage of total nonaccrual loans	147				149				121				110				103				157				165				156				126				115


(1)	Total net charge-offs are annualized for quarter ended March 31, ~~2018~~. 2019.

In addition to the allowance for credit losses, there was ~~$293~~$518 million at March 31, ~~2018,~~2019, and ~~$474~~$480 million at December 31, ~~2017~~2018, of nonaccretable difference to absorb losses ~~for~~on PCI loans ~~which totaled $10.7~~of $3.2 billion at March 31, 2019 and $5.0 billion at December 31, 2018. The allowance for credit losses is lower than otherwise would have been required without PCI loan accounting. As a result of PCI loans, certain ratios of the Company may not be directly comparable with credit-related metrics for other financial institutions. Additionally, loans purchased at fair value, including loans from the GE Capital business acquisitions in 2016, generally reflect a lifetime credit loss adjustment and therefore do not initially require additions to the allowance as is typically associated with loan growth. For additional information on PCI loans, see the “Risk Management – Credit Risk Management – Purchased Credit-Impaired Loans” section and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

The ratio of the allowance for credit losses to total nonaccrual loans may fluctuate significantly from period to period due to such factors as the mix of loan types in the portfolio, borrower credit strength and the value and marketability of collateral.

The allowance for credit losses ~~decreased$647~~increased $114 million, or 5%1%, from December 31, ~~2017,~~2018, primarily due to a higher probability of slightly less favorable economic conditions. Total provision for credit losses was $845 million in first quarter 2019, compared with $191 million in first quarter 2018. The increase in the provision for credit losses of $654 million was due to an

allowance increase in first quarter 2019, reflecting a higher probability of slightly less favorable economic conditions, compared with an allowance decrease in first quarter 2018, predominantly due to improvement in our outlook for 2017 hurricane-related losses, as well as continued improvement in residential real estate and lower loan balances. Total provision for credit losses was $191 million in first quarter 2018, compared with $605 million in first quarter 2017, reflecting the same changes mentioned above for the allowance for credit losses.

We believe the allowance for credit losses of ~~$11.3~~$10.8 billion at March 31, ~~2018,~~2019, was appropriate to cover credit losses inherent in the loan portfolio, including unfunded credit commitments, at that date. The entire allowance is available to absorb credit losses inherent in the total loan portfolio. The allowance for credit losses is subject to change and reflects existing factors as of the date of determination, including economic or market conditions and ongoing internal and external examination processes. Due to the sensitivity of the allowance for credit losses to changes in the economic and business environment, it is possible that we will incur incremental credit losses not anticipated as of the balance sheet date. Future allowance levels will be based on a variety of factors, including loan growth, portfolio performance and general

economic conditions. Our process for determining the allowance for credit losses is discussed in the “Critical Accounting Policies – Allowance for Credit Losses” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2017~~2018 Form 10-K.

LIABILITY FOR MORTGAGE LOAN REPURCHASE LOSSES

In connection with our sales and securitization of residential mortgage loans to various parties, we have established a mortgage repurchase liability, initially at fair value, related to various representations and warranties that reflect management’s estimate of losses for loans for which we could have a repurchase obligation, whether or not we currently service those loans, based on a combination of factors. Our mortgage repurchase liability estimation process also incorporates a forecast of repurchase demands associated with mortgage insurance rescission activity.

Because we typically retain the servicing for the mortgage loans we sell or securitize, we believe the quality of our residential mortgage loan servicing portfolio provides helpful information in evaluating our repurchase liability. Of the $1.5 trillion in the residential mortgage loan servicing portfolio at March 31, 2018, 96% was current and less than 1% was subprime at origination. Our combined delinquency and foreclosure rate on this portfolio was 4.08% at March 31, 2018, compared with 5.14% at December 31, 2017. Two percent of this portfolio is private label securitizations for which we originated the loans and, therefore, have some repurchase risk.

The overall level of unresolved repurchase demands and mortgage insurance rescissions outstanding at March 31, 2018, was $217 million, representing 1,068 loans, up from a year ago both in number of outstanding loans and in total dollar balances. The increase was predominantly due to private investor demands which we expect to resolve with minimal repurchase risk.

Our liability for mortgage repurchases, included in “Accrued expenses and other liabilities” in our consolidated balance sheet, represents our best estimate of the probable loss that we expect to incur for various representations and warranties in the contractual provisions of our sales of mortgage loans. The liability was $181 million at both March 31, 2018, and December 31, 2017. In first quarter 2018, we recorded a provision of $4 million mostly due to loan sales, which decreased net gains on mortgage loan origination/sales activities, compared with no provision in first quarter 2017. We incurred net losses on repurchased loans and investor reimbursements totaling $4 million in first quarter 2018 and $7 million in first quarter 2017.

Because of the uncertainty in the various estimates underlying the mortgage repurchase liability, there is a range of losses in excess of the recorded mortgage repurchase liability that are reasonably possible. The estimate of the range of possible loss for representations and warranties does not represent a probable loss, and is based on currently available information, significant judgment, and a number of assumptions that are subject to change. The high end of this range of reasonably possible losses exceeded our recorded liability by $166 million at March 31, 2018, and was determined based upon modifying the assumptions (particularly to assume significant changes in investor repurchase demand practices) used in our best estimate of probable loss to reflect what we believe to be the high end of reasonably possible adverse assumptions.

For ~~additional~~ information on our repurchase liability, see the “Risk Management – Credit Risk Management – Liability For Mortgage Loan Repurchase Losses” section in our ~~2017~~2018 Form ~~10-K and Note 10 (Mortgage Banking Activities) to Financial Statements in this Report.~~10-K.

RISKS RELATING TO SERVICING ACTIVITIES In addition to servicing loans in our portfolio, we act as servicer and/or master servicer of residential mortgage loans included in GSE-guaranteed mortgage securitizations, GNMA-guaranteed mortgage securitizations of FHA-insured/VA-guaranteed mortgages and private label mortgage securitizations, as well as for unsecuritized loans owned by institutional investors. In connection with our servicing activities, we could become subject to consent orders and settlement agreements with federal and state regulators for alleged servicing issues and practices. In general, these can require us to provide customers with loan modification relief, refinancing relief, and foreclosure prevention and assistance, as well as can impose certain monetary penalties on us.

For additional information about the risks related to our servicing activities, see the “Risk Management – Credit Risk Management – Risks Relating to Servicing Activities” section in our ~~2017~~2018 Form 10-K.

~~Asset/Liability Management (continued~~)

Asset/Liability Management

Asset/liability management involves evaluating, monitoring and managing interest rate risk, market risk, liquidity and funding. Primary oversight of interest rate risk and market risk resides with the Finance Committee of our Board of Directors (Board), which oversees the administration and effectiveness of financial risk management policies and processes used to assess and manage these risks. Primary oversight of liquidity and funding resides with the Risk Committee of the Board. At the management level we utilize a Corporate Asset/Liability Management Committee (Corporate ALCO), which consists of senior financial, risk, and business executives, to oversee these risks and report on them periodically to the Board’s Finance Committee and Risk Committee as appropriate. As discussed in more detail for market risk activities below, we employ separate management level oversight specific to market risk.

INTEREST RATE RISK Interest rate risk, which potentially can have a significant earnings impact, is an integral part of being a financial intermediary. We are subject to interest rate risk because:

assets and liabilities may mature or reprice at different times (for example, if assets reprice faster than liabilities and interest rates are generally rising, earnings will initially increase);

assets and liabilities may reprice at the same time but by different amounts (for example, when the general level of interest rates is rising, we may increase rates paid on checking and savings deposit accounts by an amount that is less than the general rise in market interest rates);

short-term and long-term market interest rates may change by different amounts (for example, the shape of the yield curve may affect new loan yields and funding costs differently);

the remaining maturity of various assets or liabilities may shorten or lengthen as interest rates change (for example, if long-term mortgage interest rates increase sharply, MBS held in the debt securities portfolio may pay down slower than anticipated, which could impact portfolio income); or

interest rates may also have a direct or indirect effect on loan demand, collateral values, credit losses, mortgage origination volume, the fair value of MSRs and other financial instruments, the value of the pension liability and other items affecting earnings.

We assess interest rate risk by comparing outcomes under various net interest income simulations using many interest rate scenarios that differ in the direction of interest rate changes, the degree of change over time, the speed of change and the projected shape of the yield curve. These simulations require assumptions regarding drivers of earnings and balance sheet composition such as loan originations, prepayment speeds on loans and debt securities, deposit flows and mix, as well as pricing strategies.

Currently, our profile is such that we project net interest income will benefit modestly from higher interest rates as our assets would reprice faster and to a greater degree than our liabilities, while in the case of lower interest rates, our assets would reprice downward and to a greater degree than our liabilities.

Our most recent simulations estimate net interest income sensitivity over the next two years under a range of both lower and higher interest rates. Measured impacts from standardized ramps (gradual changes) and shocks (instantaneous changes) are summarized in Table 29, indicating net interest income sensitivity relative to the ~~Company's~~Company’s base net interest income

plan. Ramp scenarios assume interest rates move gradually in parallel across the yield curve relative to the base scenario in year one, and the full amount of the ramp is held as a constant differential to the base scenario in year two. The following describes the simulation assumptions for the scenarios presented in Table 29:

Simulations are dynamic and reflect anticipated growth across assets and liabilities.

Other macroeconomic variables that could be correlated with the changes in interest rates are held constant.

Mortgage prepayment and origination assumptions vary across scenarios and reflect only the impact of the higher or lower interest rates.

Our base scenario deposit forecast incorporates mix changes consistent with the base interest rate trajectory. Deposit mix is modeled to be the same as in the base scenario across the alternative scenarios. In higher interest rate scenarios, customer activity that shifts balances into higher-yielding products could reduce expected net interest income.

We hold the size of the projected debt and equity securities portfolios constant across scenarios.

Table 29: Net Interest Income Sensitivity Over Next Two-Year Horizon Relative to Base Expectation


			Lower Rates	Higher Rates				Lower Rates	Higher Rates
($ in billions)	Base		100 bps Ramp Parallel Decrease	100 bps Instantaneous Parallel Increase	200 bps Ramp Parallel Increase	Base		100 bps Ramp Parallel Decrease	100 bps Instantaneous Parallel Increase	200 bps Ramp Parallel Increase
First Year of Forecasting Horizon
Net Interest Income Sensitivity to Base Scenario		$	(1.4) - (0.9)	1.7 - 2.2	1.6 - 2.1		$	(1.2) - (0.7)	1.0 - 1.5	0.8 - 1.3
Key Rates at Horizon End
Fed Funds Target	2.59	%	1.59	3.59	4.59	2.75	%	1.75	3.75	4.75
10-year CMT (1)	3.56		2.56	4.56	5.56	3.02		2.02	4.02	5.02
Second Year of Forecasting Horizon
Net Interest Income Sensitivity to Base Scenario		$	(2.7) - (2.2)	2.2 - 2.7	4.0 - 4.5		$	(2.9) - (2.4)	1.4 - 1.9	2.1 - 2.6
Key Rates at Horizon End
Fed Funds Target	2.75	%	1.75	3.75	4.75	2.75	%	1.75	3.75	4.75
10-year CMT (1)	3.83		2.83	4.83	5.83	3.28		2.28	4.28	5.28


(1)	U.S. Constant Maturity Treasury Rate

The sensitivity results above do not capture interest rate sensitive noninterest income and expense impacts. Our interest rate sensitive noninterest income and expense is primarily driven by mortgage activity, and may move in the opposite direction of our net interest income. Typically, in response to higher interest rates, mortgage activity, primarily refinancing activity, generally declines. And in response to lower interest rates, mortgage activity generally increases. Mortgage results are also impacted by the valuation of MSRs and related hedge positions. See the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section in this Report for more information.

Interest rate sensitive noninterest income also results from changes in earnings credit for non-interest bearing deposits that reduce treasury management deposit service fees. Furthermore, for the trading portfolio, interest rate changes may result in net interest income compression (generally as interest rates rise) or expansion (generally as interest rates fall) that does not reflect the offsetting effects of certain economic hedges. Instead, as a result of GAAP requirements, the effects of such economic hedges are recorded in noninterest income.

Asset/Liability Management (continued)

We use the debt securities portfolio and exchange-traded and over-the-counter (OTC) interest rate derivatives to hedge our interest rate exposures. See the “Balance Sheet Analysis – Available-for-Sale and Held-to-Maturity Debt Securities” section in this Report for more information on the use of the available-for-sale and held-to-maturity securities portfolios. The notional or contractual amount, credit risk amount and fair value of the derivatives used to hedge our interest rate risk exposures as of

March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, are presented in Note 1415 (Derivatives) to Financial Statements in this Report. We use derivatives for asset/liability management in two main ways:

to convert the cash flows from selected asset and/or liability instruments/portfolios including investments, commercial loans and long-term debt, from fixed-rate payments to floating-rate payments, or vice versa; and

to economically hedge our mortgage origination pipeline, funded mortgage loans and MSRs using interest rate swaps, swaptions, futures, forwards and options.

MORTGAGE BANKING INTEREST RATE AND MARKET RISK We originate, fund and service mortgage loans, which subjects us to various risks, including credit, liquidity and interest rate risks. For more information on mortgage banking interest rate and market risk, see the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section in our ~~2017~~2018 Form 10-K.

While our hedging activities are designed to balance our mortgage banking interest rate risks, the financial instruments we use may not perfectly correlate with the values and income being hedged. For example, the change in the value of ARM production held for sale from changes in mortgage interest rates may or may not be fully offset by ~~LIBOR~~ index-based financial instruments used as economic hedges for such ARMs. Additionally, hedge-carry income on our economic hedges for the MSRs may not continue at recent levels if the spread between short-term and long-term interest rates decreases, the overall level of hedges changes as interest rates change, or there are other changes in the market for mortgage forwards that affect the implied carry.

The total carrying value of our residential and commercial MSRs was ~~$16.5~~$14.8 billion at March 31, ~~2018,~~2019, and ~~$15.0~~$16.1 billion at December 31, ~~2017.~~2018. The weighted-average note rate on our portfolio of loans serviced for others was ~~4.24%~~4.34% at March 31, ~~2018,~~2019, and ~~4.23%~~4.32% at December 31, ~~2017.~~2018. The carrying value of our total MSRs represented ~~0.96%~~0.88% of mortgage loans serviced for others at March 31, ~~2018,~~2019, and ~~0.88%~~0.94% of mortgage loans serviced for others at December 31, ~~2017.~~2018.

MARKET RISK Market risk is the risk of possible economic loss ~~in the trading book associated with~~from adverse changes in market risk factors such as interest rates, credit spreads, foreign exchange rates, equity and commodity ~~prices.~~prices, and the risk of possible loss due to counterparty risk. This includes implied volatility risk, basis risk, and market liquidity risk. Market risk also includes counterparty credit risk, price risk in the trading book, mortgage servicing rights and the associated hedge effectiveness risk associated with the mortgage book, and impairment on private equity investments.

The Board’s Finance Committee has primary oversight responsibility for market risk and oversees the Company’s market risk exposure and market risk management strategies. In addition, the Board’s Risk Committee has certain oversight responsibilities with respect to market risk, including adjusting the Company’s market risk appetite with input from the Finance Committee. The Finance Committee ~~of our Board reviews the acceptable~~also reports key market risk ~~appetite~~matters to the Risk Committee.

At the management level, the Market and Counterparty Risk Management function, which is part of Corporate Risk, has primary oversight responsibility for ~~our trading activities.~~market risk. The Market and Counterparty Risk Management function reports into the CRO and also provides periodic reporting related to market risk to the Board’s Finance Committee. In addition, the Risk & Control Committee for each business group and enterprise function reports market risk matters to the Enterprise Risk & Control Committee.

MARKET RISK – TRADING ACTIVITIES We engage in trading activities to accommodate the investment and risk management activities of our customers and to execute economic hedging to manage certain balance sheet risks. These trading activities predominantly occur within our Wholesale Banking businesses and to a lesser extent other divisions of the Company. Debt securities held for trading, equity securities held for trading, trading loans and trading derivatives are financial instruments used in our trading activities, and all are carried at fair value. Income earned on the financial instruments used in our trading activities include net interest income, changes in fair value and realized gains and losses. Net interest income earned from our trading activities is reflected in the interest income and interest expense components of our income statement. Changes in fair value of the financial instruments used in our trading activities are reflected in net gains on trading activities, a component of noninterest income in our income statement. For more information on the financial instruments used in our trading activities and the income from these trading activities, see Note 4 (Trading Activities) to Financial Statements in this Report.

~~The Company uses value-at-risk~~Value-at-risk (VaR) ~~metrics complemented with sensitivity analysis and stress testing in measuring and monitoring market risk. VaR~~ is a statistical risk measure used to estimate the potential loss from adverse moves in the financial markets. The Company uses VaR metrics complemented with sensitivity analysis and stress testing in measuring and monitoring market risk. For more information, including information regarding our monitoring activities, sensitivity analysis and stress testing, see the “Risk Management – Asset/Liability Management – Market Risk – Trading Activities” section in our ~~2017~~2018 Form 10-K.

Trading VaR is the measure used to provide insight into the market risk exhibited by the Company’s trading positions. The

Company calculates Trading VaR for risk management purposes to establish line of business and Company-wide risk limits. Trading VaR is calculated based on all trading positions on our balance sheet.

~~Asset/Liability Management (continued~~)

Table 30 shows the Company’s Trading General VaR by risk category. As presented in Table 30, average Company Trading General VaR was ~~$17~~$15 million for the quarter ended March 31, ~~2018,~~2019, compared with ~~$13~~$16 million for the quarter ended December 31, ~~2017,~~2018, and ~~$26~~$17 million for the quarter ended

March 31, ~~2017.~~2018. The ~~increase~~decrease in average Company Trading General VaR for the quarter ended March 31, 2019, compared with the quarter ended March 31, 2018, was mainly driven by ~~market volatility entering into the 1-year historical lookback period.~~changes in portfolio composition.

Table 30: Trading 1-Day 99% General VaR by Risk Category


				Quarter ended																			Quarter ended
	March 31, 2018							December 31, 2017						March 31, 2017						March 31, 2019							December 31, 2018						March 31, 2018
(in millions)	Period end			Average		Low	High	Period end		Average		Low	High	Period end		Average		Low	High	Period end			Average		Low	High	Period end		Average		Low	High	Period end		Average		Low	High
Company Trading General VaR Risk Categories
Credit	$	14		14		10	18	12		16		11	28	27		25		19	30	$	15		15		11	19	18		16		13	24	14		14		10	18
Interest rate	15			13		7	21	13		10		6	17	22		18		13	23	42			34		22	44	28		20		14	28	15		13		7	21
Equity	14			13		10	16	10		11		10	14	10		12		9	17	5			5		4	7	5		5		2	7	14		13		10	16
Commodity	1			1		1	1	1		1		1	2	1		1		1	2	2			2		1	4	2		2		1	4	1		1		1	1
Foreign exchange	0			1		0	3	0		0		0	1	1		1		0	1	1			1		1	1	1		1		0	2	0		1		0	3
Diversification benefit (1)	(22		)	(25	)			(24	)	(25	)			(35	)	(31	)			(46		)	(42	)			(33	)	(28	)			(22	)	(25	)
Company Trading General VaR	$	22		17				12		13				26		26				$	19		15				21		16				22		17

(1)

The period-end VaR was less than the sum of the VaR components described above, which is due to portfolio diversification. The diversification effect arises because the risks are not perfectly correlated causing a portfolio of positions to usually be less risky than the sum of the risks of the positions alone. The diversification benefit is not meaningful for low and high metrics since they may occur on different days.

~~Market Risk Governance,Measurement, Monitoring and Model Risk Management~~ We employ a well-defined and structured market risk governance process and market risk measurement process, which incorporates VaR measurements combined with sensitivity analysis and stress testing to help us monitor our market risk. These monitoring measurements require the use of market risk models, which we govern by our Corporate Model Risk policies and procedures. For more information on our governance, measurement, monitoring, and model risk management practices, see the “Risk Management – Asset/Liability Management – Market Risk – Trading Activities” section in our 2017 Form 10-K.

MARKET RISK – EQUITY SECURITIES We are directly and indirectly affected by changes in the equity markets. We make and manage direct investments in start-up businesses, emerging growth companies, management buy-outs, acquisitions and corporate recapitalizations. We also invest in non-affiliated funds that make similar private equity investments. These private equity investments are made within capital allocations approved by management and the Board. The Board’s policy is to review business developments, key risks and historical returns for the private equity investment portfolio at least annually. Management reviews these investments at least quarterly and assesses them for possible OTTI and observable price changes. For nonmarketable equity securities, the analysis is based on facts and circumstances of each individual investment and the expectations for that investment’s cash flows, capital needs, the viability of its business model, our exit strategy, and observable price changes that are similar to the investment held. Investments in nonmarketable equity securities include private equity investments accounted for under the equity method, fair value through net income, and the measurement alternative.

In conjunction with the March 2008 initial public offering (IPO) of Visa, Inc. (Visa), we received approximately 20.7 million shares of Visa Class B common stock, the class which was apportioned to member banks of Visa at the time of the IPO. To manage our exposure to Visa and realize the value of the appreciated Visa shares, we incrementally sold these shares

through a series of sales, thereby eliminating this position as of September 30, 2015. As part of these sales, we agreed to compensate the buyer for any additional contributions to a litigation settlement fund for the litigation matters associated with the Class B shares we sold. Our exposure to this retained litigation risk has been updated quarterly and is reflected on our balance sheet. For additional information about the associated litigation matters, see the “Interchange Litigation” section in Note 1314 (Legal Actions) to Financial Statements in this Report.

As part of our business to support our customers, we trade public equities, listed/OTC equity derivatives and convertible bonds. We have parameters that govern these activities. We also have marketable equity securities that include investments relating to our venture capital activities. We manage these marketable equity securities within capital risk limits approved by management and the Board and monitored by Corporate ALCO and the Market Risk Committee. The fair value changes in these marketable equity securities are recognized in net income. For more information, see Note 78 (Equity Securities) to Financial Statements in this Report.

Changes in equity market prices may also indirectly affect our net income by (1) the value of third party assets under management and, hence, fee income, (2) borrowers whose ability to repay principal and/or interest may be affected by the stock market, or (3) brokerage activity, related commission income and other business activities. Each business line monitors and manages these indirect risks.

Asset/Liability Management (continued)

LIQUIDITY AND FUNDING The objective of effective liquidity management is to ensure that we can meet customer loan requests, customer deposit maturities/withdrawals and other cash commitments efficiently under both normal operating conditions and under periods of Wells Fargo-specific and/or market stress. To achieve this objective, the Board of Directors establishes liquidity guidelines that require sufficient asset-based liquidity to cover potential funding requirements and to avoid over-dependence on volatile, less reliable funding markets. These guidelines are monitored on a monthly basis by the Corporate ALCO and on a quarterly basis by the Board of Directors. These guidelines are established and monitored for both the consolidated company and for the Parent on a stand-alone basis to ensure that the Parent is a source of strength for its regulated, deposit-taking banking subsidiaries.

Liquidity Standards ~~In September 2014,~~We are subject to a rule, issued by the FRB, OCC and FDIC, ~~issued a final rule~~ that ~~implements~~implemented a quantitative liquidity requirement consistent with the liquidity coverage ratio (LCR) established by the Basel Committee on Banking Supervision (BCBS). The rule requires banking institutions, such as Wells Fargo, to hold high-quality liquid assets (HQLA), such as central bank reserves and government and corporate debt that can be converted easily and quickly into cash, in an amount equal to or greater than its projected net cash outflows during a 30-day stress period. The rule is applicable to the Company on a consolidated basis and to our insured depository institutions with total assets greater than $10 billion. In addition, rules issued by the FRB ~~finalized rules imposing~~impose enhanced liquidity management standards on large bank holding companies (BHC) such as Wells ~~Fargo, and has finalized a rule that requires large bank holding companies to publicly disclose on a quarterly basis certain quantitative and qualitative information regarding their LCR calculations.~~Fargo.

The FRB, OCC and FDIC have proposed a rule that would implement a stable funding requirement, the net stable funding ratio (NSFR), which would require large banking organizations, such as Wells Fargo, to maintain a sufficient amount of stable funding in relation to their assets, derivative exposures and commitments over a one-year horizon period.

Liquidity Coverage Ratio As of March 31, ~~2018,~~2019, the consolidated Company and Wells Fargo Bank, N.A. were above

the minimum LCR requirement of 100%, which is calculated as

HQLA divided by projected net cash outflows, as each is defined under the LCR rule. Table 31 presents the Company’s quarterly average values for the daily-calculated LCR and its components calculated pursuant to the LCR rule requirements.

Table 31: Liquidity Coverage Ratio


(in millions)	Average for Quarter ended March 31, 2018
(in millions, except ratio)				Average for Quarter ended March 31, 2019
HQLA (1)(2)	$	380,570		$	358,190
Projected net cash outflows	309,578			290,651
LCR	123		%	123		%
HQLA in excess of projected net cash outflows	$	70,992

(1) Excludes excess HQLA at Wells Fargo Bank, N.A.

(2) Net of applicable haircuts required under the LCR rule.

Liquidity Sources We maintain liquidity in the form of cash, cash equivalents and unencumbered high-quality, liquid debt securities. These assets make up our primary sources of liquidity which are presented in Table 32. Our primary sources of liquidity are substantially the same in composition as HQLA under the LCR rule; however, our primary sources of liquidity will generally exceed HQLA calculated under the LCR rule due to the applicable haircuts to HQLA and the exclusion of excess HQLA at our subsidiary insured depository institutions required under the LCR rule.

Our cash is predominantly on deposit with the Federal Reserve. Debt securities included as part of our primary sources of liquidity are comprised of U.S. Treasury and federal agency debt, and mortgage-backed securities issued by federal agencies within our debt securities portfolio. We believe these debt securities provide quick sources of liquidity through sales or by pledging to obtain financing, regardless of market conditions. Some of these debt securities are within the held-to-maturity portion of our debt securities portfolio and as such are not intended for sale but may be pledged to obtain financing. Some of the legal entities within our consolidated group of companies are subject to various regulatory, tax, legal and other restrictions that can limit the transferability of their funds. We believe we maintain adequate liquidity for these entities in consideration of such funds transfer restrictions.

Table 32: Primary Sources of Liquidity


	March 31, 2018				December 31, 2017				March 31, 2019				December 31, 2018
(in millions)	Total		Encumbered	Unencumbered	Total		Encumbered	Unencumbered	Total		Encumbered	Unencumbered	Total	Encumbered	Unencumbered
Interest-earning deposits with banks	$	184,250	—	184,250	$	192,580	—	192,580	$	128,318	—	128,318	149,736	—	149,736
Debt securities of U.S. Treasury and federal agencies	50,458		780	49,678	51,125		964	50,161	59,799		2,160	57,639	57,688	1,504	56,184
Mortgage-backed securities of federal agencies ~~(1)~~	243,664		38,517	205,147	246,894		46,062	200,832	243,827		30,001	213,826	244,211	35,656	208,555
Total	$	478,372	39,297	439,075	$	490,599	47,026	443,573	$	431,944	32,161	399,783	451,635	37,160	414,475


~~(1)~~	~~Included in encumbered debt securities at~~ ~~March 31, 2018, were debt securities with a fair value of~~ ~~$187 million~~ ~~which were purchased in March 2018, but settled in April 2018.~~

In addition to our primary sources of liquidity shown in Table 32, liquidity is also available through the sale or financing of other debt securities including trading and/or available-for-sale debt securities, as well as through the sale, securitization or financing of loans, to the extent such debt securities and loans are not encumbered. In addition, other debt securities in our held-to-maturity portfolio, to the extent not encumbered, may be pledged to obtain financing.

Deposits have historically provided a sizable source of relatively low-cost funds. Deposits were ~~138%~~133% of total loans at March 31, ~~2018~~2019, and ~~140%~~135% at December 31, ~~2017.~~2018.

Additional funding is provided by long-term debt and short-term borrowings. We access domestic and international capital markets for long-term funding (generally greater than one year) through issuances of registered debt securities, private placements and asset-backed secured funding.

~~Asset/Liability Management (continued~~)

Table 33 shows selected information for short-term borrowings, which generally mature in less than 30 days.

Table 33: Short-Term Borrowings


	Quarter ended						Quarter ended
(in millions)	Mar 31 2018		Dec 31, 2017	Sep 30, 2017	Jun 30, 2017	Mar 31, 2017	Mar 31 2019		Dec 31, 2018	Sep 30, 2018	Jun 30, 2018	Mar 31, 2018
Balance, period end
Federal funds purchased and securities sold under agreements to repurchase	$	80,916	88,684	79,824	78,683	76,366	$	93,896	92,430	92,418	89,307	80,916
Commercial paper	—		—	—	11	10
Other short-term borrowings	16,291		14,572	13,987	16,662	18,495	12,701		13,357	13,033	15,189	16,291
Total	$	97,207	103,256	93,811	95,356	94,871	$	106,597	105,787	105,451	104,496	97,207
Average daily balance for period
Federal funds purchased and securities sold under agreements to repurchase	$	86,535	88,197	81,980	79,826	79,942	$	95,721	93,483	92,141	89,138	86,535
Commercial paper	—		—	4	10	51
Other short-term borrowings	15,244		13,945	17,209	15,927	18,556	12,930		12,479	13,331	14,657	15,244
Total	$	101,779	102,142	99,193	95,763	98,549	$	108,651	105,962	105,472	103,795	101,779
Maximum month-end balance for period
Federal funds purchased and securities sold under agreements to repurchase (1)	$	88,121	91,604	83,260	78,683	81,284	$	97,650	93,918	92,531	92,103	88,121
Commercial paper (2)	—		—	11	11	78
Other short-term borrowings (3)	16,924		14,948	18,301	18,281	19,439
Other short-term borrowings (2)							14,129		13,357	14,270	15,272	16,924


(1)	Highest month-end balance in each of the last five quarters was in January ~~2018,~~2019, and November, ~~August, June~~July, May and ~~February 2017.~~January 2018.


(2)	~~There were no month-end balances in first quarter 2018 and fourth quarter 2017; highest month-end balance in each of the remaining three quarters was in July, June and January 2017.~~


~~(3)~~	Highest month-end balance in each of the last five quarters was in February 2019, and December, July, May and January ~~2018, and November, July, April and February 2017.~~2018.

Long-Term Debt We issue long-term debt in a variety of maturities and currencies to achieve cost-efficient funding and to maintain an appropriate maturity profile. Long-term debt of ~~$227.3~~$236.3 billion at March 31, ~~2018,~~2019, increased ~~$2.3~~$7.3 billion from December 31, ~~2017.~~2018. We issued ~~$15.5~~$17.3 billion of long-term debt in

first quarter ~~2018.~~2019. Table 34 provides the aggregate carrying value of long-term debt maturities (based on contractual payment dates) for the remainder of ~~2018~~2019 and the following years thereafter, as of March 31, ~~2018.~~2019.

Table 34: Maturity of Long-Term Debt


	March 31, 2018								March 31, 2019
(in millions)	Remaining 2018		2019	2020	2021	2022	Thereafter	Total	Remaining 2019		2020	2021	2022	2023	Thereafter	Total
Wells Fargo & Company (Parent Only)
Senior notes	$	2,457	6,810	13,364	17,970	18,369	52,651	111,621	$	4,679	13,451	17,972	17,848	10,970	48,761	113,681
Subordinated notes	627		—	—	—	—	25,591	26,218	—		—	—	—	3,583	22,583	26,166
Junior subordinated notes	—		—	—	—	—	1,609	1,609	—		—	—	—	—	1,662	1,662
Total long-term debt - Parent	$	3,084	6,810	13,364	17,970	18,369	79,851	139,448	$	4,679	13,451	17,972	17,848	14,553	73,006	141,509
Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior notes	$	23,404	30,946	5,502	11,715	41	196	71,804	$	27,595	25,786	23,471	39	2,836	180	79,907
Subordinated notes	—		—	—	—	—	5,319	5,319	—		—	—	—	1,071	4,232	5,303
Junior subordinated notes	—		—	—	—	—	345	345	—		—	—	—	—	355	355
Securitizations and other bank debt	1,795		1,056	1,160	206	114	2,713	7,044	1,677		1,666	727	281	83	2,140	6,574
Total long-term debt - Bank	$	25,199	32,002	6,662	11,921	155	8,573	84,512	$	29,272	27,452	24,198	320	3,990	6,907	92,139
Other consolidated subsidiaries
Senior notes	$	776	1,157	—	973	—	386	3,292	$	1,121	11	997	—	410	120	2,659
Securitizations and other bank debt	50		—	—	—	—	—	50	—		—	—	—	—	32	32
Total long-term debt - Other consolidated subsidiaries	$	826	1,157	—	973	—	386	3,342	$	1,121	11	997	—	410	152	2,691
Total long-term debt	$	29,109	39,969	20,026	30,864	18,524	88,810	227,302	$	35,072	40,914	43,167	18,168	18,953	80,065	236,339

Parent In ~~February 2017,~~March 2019, the ~~Parent filed a~~Securities and Exchange Commission (SEC) declared effective the Parent’s registration statement ~~with the SEC~~ for the issuance of up to $50 billion of senior and subordinated notes, preferred stock and other securities. At March 31, 2019, the Parent’s remaining authorized issuance capacity under this registration statement was $50 billion. The Parent’s overall ability to issue debt ~~and other~~ securities ~~under this registration statement~~ is limited by the debt issuance authority granted by the Board. As of March 31, ~~2018,~~2019, the Parent

was authorized by the Board to issue up to $180 billion in outstanding long-term debt. In April 2019, the Board increased this authority to $200 billion. The ~~Parent's long-term~~Parent’s long-

term debt issuance authority granted by the Board includes debt issued to affiliates and others. At March 31, ~~2018,~~2019, the Parent had available ~~$14.4~~$33.5 billion in long-term debt issuance ~~authority.~~authority, net of debt issued to affiliates. During the first three months of ~~2018,~~2019, the Parent issued ~~$109 million~~$6.6 billion of

senior notes, substantially all of which ~~$104 million~~ were registered with the SEC. In April 2019, the Parent issued EUR €1.0 billion and GDP £600 million of senior notes. The ~~Parent's~~Parent’s short-term debt issuance authority granted by the Board was limited to debt issued to affiliates, and was revoked by the Board at ~~management's~~management’s request in January 2018.

Asset/Liability Management (continued)

The Parent’s proceeds from securities issued were used for general corporate purposes, and, unless otherwise specified in the applicable prospectus or prospectus supplement, we expect the proceeds from securities issued in the future will be used for the same purposes. Depending on market conditions, we may purchase our outstanding debt securities from time to time in privately negotiated or open market transactions, by tender offer, or otherwise.

Wells Fargo Bank, N.A. As of March 31, ~~2018,~~2019, Wells Fargo Bank, N.A. was authorized by its board of directors to issue $100 billion in outstanding short-term debt and $175 billion in outstanding long-term debt and had available ~~$97.3~~$99.1 billion in short-term debt issuance authority and ~~$101.9~~$97.9 billion in long-term debt issuance authority. In April 2018, Wells Fargo Bank, N.A. ~~replaced its prior bank note program with~~established a new $100 billion bank note program under which, subject to any other debt outstanding under the limits described above, it may issue $50 billion in outstanding short-term senior notes and $50 billion in outstanding long-term senior or subordinated notes. At March 31, ~~2018,~~2019, Wells Fargo Bank, N.A. had remaining issuance capacity under the ~~prior~~new bank note program of $50.0 billion in short-term senior notes and ~~$36.0~~$39.8 billion in long-term senior or subordinated notes. During the first three months of ~~2018,~~2019, Wells Fargo Bank, N.A. issued ~~$6.8 billion~~$270 million of unregistered senior ~~notes, none of which were issued under the bank note program. In addition, during~~notes.

During the first three months of ~~2018,~~2019, Wells Fargo Bank, N.A. ~~executed advances of $10.5~~borrowed $6.3 billion ~~with~~from the Federal Home Loan Bank of Des Moines, and as of March 31, ~~2018,~~2019, Wells Fargo Bank, N.A. had outstanding advances of ~~$54.8~~$48.6 billion across the Federal Home Loan Bank

System. In addition, in April ~~2018,~~2019, Wells Fargo Bank, N.A. ~~executed $2.5 billion of~~borrowed $250 million from the Federal Home Loan Bank ~~advances.~~of Des Moines. Federal Home Loan Bank advances are reflected as short-term borrowings or long-term debt on the Company’s balance sheet.

Credit Ratings Investors in the long-term capital markets, as well as other market participants, generally will consider, among other factors, a company’s debt rating in making investment decisions. Rating agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix, the level and quality of earnings, and rating agency assumptions regarding the probability and extent of federal financial assistance or support for certain large financial institutions. Adverse changes in these factors could result in a reduction of our credit rating; however, our debt securities do not contain credit rating covenants.

On February 6, 2018, Moody’s Investors Service (Moody’s) affirmed the Company’s ratings and revised the ratings outlook from stable to negative. On February 7, 2018, Standard and Poor’s Rating Services (S&P) downgraded the Company’s ratings by one notch and revised the ratings outlook from negative to stable. There were no ~~other significant~~ actions undertaken by the rating agencies with regard to our credit ratings during first quarter ~~2018.~~2019. On April 1, 2019, S&P Global Ratings affirmed the credit ratings for both the Parent and Wells Fargo Bank, N.A., but revised the ratings outlook for the Parent to negative from stable. Both the Parent and Wells Fargo Bank, N.A. remain among the ~~top-rated~~highest-rated financial firms in the U.S.

See the “Risk Factors” section in our ~~2017~~2018 Form 10-K for additional information regarding our credit ratings and the potential impact a credit rating downgrade would have on our liquidity and operations, as well as Note 1415 (Derivatives) to Financial Statements in this Report for information regarding additional collateral and funding obligations required for certain derivative instruments in the event our credit ratings were to fall below investment grade.

The credit ratings of the Parent and Wells Fargo Bank, N.A. as of March 31, ~~2018,~~2019, are presented in Table 35.

Table 35: Credit Ratings as of March 31, ~~2018~~2019



	Wells Fargo & Company		Wells Fargo Bank, N.A.
	Senior debt	Short-term borrowings	Long-term deposits	Short-term borrowings
~~Moody's~~Moody’s	A2	P-1	Aa1	P-1
S&P Global Ratings	A-	A-2	A+	A-1
Fitch Ratings, Inc.	A+	F1	AA	F1+
DBRS	AA (low)	R-1 (middle)	AA	R-1 (high)

FEDERAL HOME LOAN BANK MEMBERSHIP The Federal Home Loan Banks (the FHLBs) are a group of cooperatives that lending institutions use to finance housing and economic development in local communities. We are a member of the FHLBs based in Dallas, Des Moines and San Francisco. Each member of the FHLBs is required to maintain a minimum investment in capital stock of the applicable FHLB. The board of directors of each FHLB can increase the minimum investment requirements in the event it has concluded that additional capital is required to allow it to meet its own regulatory capital requirements. Any increase in the minimum investment requirements outside of specified ranges requires the approval of the Federal Housing Finance ~~Board.~~Agency. Because the extent of any obligation to increase our investment in any of the FHLBs depends entirely upon the occurrence of a future event, potential future payments to the FHLBs are not determinable.

LIBOR TRANSITION During the first three months of 2019, the Company did not issue any debt securities with an interest rate indexed to the new Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. SOFR is an alternative to LIBOR and is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities. Due to the uncertainty surrounding the future of LIBOR, it is expected that a transition away from the widespread use of LIBOR to alternative benchmark rates will occur by the end of 2021. See the “Asset/Liability Management – Liquidity and Funding” section in our 2018 Form 10-K for additional information regarding our strategy to transition products and exposures away from LIBOR, and the “Risk Factors” section in our 2018 Form 10-K for additional information regarding the potential impact of a benchmark rate, such as LIBOR, or other referenced financial metric being significantly changed, replaced or discontinued.

~~Capital Management (continued~~)

Capital Management

We have an active program for managing capital through a comprehensive process for assessing the Company’s overall capital adequacy. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, and to meet both regulatory and market expectations. We primarily fund our working capital needs through the retention of earnings net of both dividends and share repurchases, as well as through the issuance of preferred stock and long and short-term debt. Retained earnings increased ~~$2.7~~$2.6 billion from December 31, ~~2017,~~2018, predominantly from Wells Fargo net income of ~~$5.1~~$5.9 billion, less common and preferred stock dividends of ~~$2.3~~$2.4 billion. During first quarter ~~2018,~~2019, we issued ~~32.8~~28.1 million shares of common stock. During first quarter ~~2018,~~2019, we repurchased ~~50.6~~97.4 million shares of common stock ~~in open market transactions, private transactions and from employee benefit plans,~~ at a cost of ~~$3.0~~$4.8 billion. ~~We entered into a $1 billion forward repurchase contract with an unrelated third party~~The amount of our repurchases are subject to various factors as discussed in ~~April 2018 that is expected to settle in third quarter 2018 for approximately 20 million shares.~~the “Securities Repurchases” section below. For additional information about ~~our forward repurchase agreements,~~share repurchases, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

Regulatory Capital Guidelines

The Company and each of our insured depository institutions are subject to various regulatory capital adequacy requirements administered by the FRB and the OCC. Risk-based capital (RBC) guidelines establish a risk-adjusted ratio relating capital to different categories of assets and off-balance sheet exposures as discussed below.

RISK-BASED CAPITAL AND RISK-WEIGHTED ASSETS The Company is subject to final and interim final rules issued by federal banking regulators to implement Basel III capital requirements for U.S. banking organizations. These rules are based on international guidelines for determining regulatory capital issued by the ~~Basel Committee on Banking Supervision (BCBS).~~BCBS. The federal banking regulators’ capital rules, among other things, require on a fully phased-in basis:

a minimum Common Equity Tier 1 (CET1) ratio of 9.0%, comprised of a 4.5% minimum requirement plus a capital conservation buffer of 2.5% and for us, as a global systemically important bank (G-SIB), a capital surcharge to be calculated annually, which is 2.0% based on our year-end ~~2016~~2017 data;

a minimum tier 1 capital ratio of 10.5%, comprised of a 6.0% minimum requirement plus the capital conservation buffer of 2.5% and the G-SIB capital surcharge of 2.0%;

a minimum total capital ratio of 12.5%, comprised of a 8.0% minimum requirement plus the capital conservation buffer of 2.5% and the G-SIB capital surcharge of 2.0%;

a potential countercyclical buffer of up to 2.5% to be added to the minimum capital ratios, which is currently not in effect but could be imposed by regulators at their discretion if it is determined that a period of excessive credit growth is contributing to an increase in systemic risk;

a minimum tier 1 leverage ratio of 4.0%; and

a minimum supplementary leverage ratio (SLR) of 5.0% (comprised of a 3.0% minimum requirement plus a supplementary leverage buffer of 2.0%) for large and internationally active ~~bank holding companies (BHCs).~~BHCs.

We were required to comply with the final Basel III capital rules beginning January 2014, with certain provisions subject to

phase-in periods. Beginning January 1, 2018, the requirements for calculating CET1 and tier 1 capital, along with ~~RWAs, were~~risk-weighted assets (RWAs), became fully phased-in. However, the requirements for calculating tier 2 and total capital are still in accordance with Transition Requirements. The entire Basel III capital rules are scheduled to be fully phased in by the end of 2021. The Basel III capital rules contain two frameworks for calculating capital requirements, a Standardized Approach, which replaced Basel I, and an Advanced Approach applicable to certain institutions, including Wells Fargo. 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.

On April 10, 2018, the FRB issued a proposed rule that would add a stress capital buffer and a stress leverage buffer to the minimum capital and tier 1 leverage ratio requirements. The buffers would be calculated based on the decrease in a financial institution’s risk-based capital and tier 1 leverage ratios under the supervisory severely adverse scenario in ~~CCAR,~~the Comprehensive Capital Analysis and Review (CCAR), plus four quarters of planned common stock dividends. The stress capital buffer would replace the 2.5% capital conservation buffer under the Standardized Approach, whereas the stress leverage buffer would be added to the current 4% minimum tier 1 leverage ratio.

Because the Company has been designated as a G-SIB, we are also subject to the FRB’s rule implementing the additional capital surcharge of between 1.0-4.5% on G-SIBs. Under the rule, we must annually calculate our surcharge under two methods and use the higher of the two surcharges. The first method (method one) considers our size, interconnectedness, cross-jurisdictional

activity, substitutability, and complexity, consistent with the methodology developed by the BCBS and the Financial Stability Board (FSB). The second (method two) uses similar inputs, but replaces substitutability with use of short-term wholesale funding and will generally result in higher surcharges than the BCBS methodology. The ~~phase-in period for the~~ G-SIB surcharge ~~began on January 1, 2016 and will become~~became fully effective on January 1, 2019. Based on year-end ~~2016~~2017 data, our ~~2018~~2019 G-SIB surcharge under method two is 2.0% of the Company’s RWAs, which is the higher of method one and method two. Because the G-SIB surcharge is calculated annually based on data that can differ over time, the amount of the surcharge is subject to change in future years. Under the Standardized Approach, ~~(fully phased-in),~~ our CET1 ratio (fully phased-in) of 11.92% exceeded the minimum of 9.0% by 292 basis points at March 31, ~~2018.~~2019.

The tables that follow provide information about our risk- based capital and related ratios as calculated under Basel III capital guidelines. For banking industry regulatory reporting purposes, we continue to report our tier 2 and total capital in accordance with Transition Requirements but are managing our capital based on a fully phased-in calculation. For information about our capital requirements calculated in accordance with Transition Requirements, see Note 2223 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.

Capital Management (continued)

Table 36 summarizes our CET1, tier 1 capital, total capital, risk-weighted assets and capital ratios on a fully phased-in basis at March 31, ~~2018~~2019 and December 31, ~~2017.~~2018. As of March 31, ~~2018,~~2019, our CET1, tier 1, and total capital ratios were lower using RWAs calculated under the Standardized Approach.

Table 36: Capital Components and Ratios (Fully Phased-In) (1)


		March 31, 2018					December 31, 2017				March 31, 2019					December 31, 2018
(in millions, except ratios)		Advanced Approach			Standardized Approach		Advanced Approach	Standardized Approach			Advanced Approach			Standardized Approach		Advanced Approach	Standardized Approach
Common Equity Tier 1	(A)	$	152,304		152,304		154,022	154,022		(A)	$	148,124		148,124		146,363	146,363
Tier 1 Capital	(B)	175,810			175,810		177,466	177,466		(B)	169,611			169,611		167,866	167,866
Total Capital ~~(1)~~	(C)	206,833			215,539		208,395	218,159		(C)	199,331			207,522		198,103	206,346
Risk-Weighted Assets	(D)	1,203,464			1,278,113		1,225,939	1,285,563		(D)	1,176,360			1,243,125		1,177,350	1,247,210
Common Equity Tier 1 Capital Ratio	(A)/(D)	12.66		%	11.92	*	12.56	11.98	*	(A)/(D)	12.59		%	11.92	*	12.43	11.74	*
Tier 1 Capital Ratio	(B)/(D)	14.61			13.76	*	14.48	13.80	*	(B)/(D)	14.42			13.64	*	14.26	13.46	*
Total Capital Ratio ~~(1)~~	(C)/(D)	17.19			16.86	*	17.00	16.97	*	(C)/(D)	16.94			16.69	*	16.83	16.54	*

*Denotes the lowest capital ratio as determined under the Advanced and Standardized Approaches.

(1)

~~Fully~~Beginning January 1, 2018, the requirements for calculating CET1 and tier 1 capital, along with RWAs, became fully phased-in. However, the requirements for calculating tier 2 and total capital are still in accordance with Transition Requirements. Accordingly, fully phased-in total capital amounts and ratios are considered non-GAAP financial measures that are used by management, bank regulatory agencies, investors and analysts to assess and monitor the Company’s capital position. See Table 37 for information regarding the calculation and components of CET1, tier 1 capital, total capital and RWAs, as well as the corresponding reconciliation of our fully phased-in regulatory capital amounts to GAAP financial measures.

~~Capital Management (continued~~)

Table 37 provides information regarding the calculation and composition of our risk-based capital under the Advanced and Standardized Approaches at March 31, ~~2018~~2019 and December 31, ~~2017.~~

2018.

Table 37: Risk-Based Capital Calculation and Components


		March 31, 2018					December 31, 2017					March 31, 2019					December 31, 2018
(in millions)		Advanced Approach			Standardized Approach		Advanced Approach		Standardized Approach			Advanced Approach			Standardized Approach		Advanced Approach		Standardized Approach
Total equity		$	205,910		205,910		208,079		208,079			$	198,733		198,733		197,066		197,066
Adjustments:
Preferred stock		(26,227		)	(26,227	)	(25,358	)	(25,358	)		(23,214		)	(23,214	)	(23,214	)	(23,214	)
Additional paid-in capital on ESOP preferred stock		(146		)	(146	)	(122	)	(122	)		(95		)	(95	)	(95	)	(95	)
Unearned ESOP shares		2,571			2,571		1,678		1,678			1,502			1,502		1,502		1,502
Noncontrolling interests		(958		)	(958	)	(1,143	)	(1,143	)		(901		)	(901	)	(900	)	(900	)
Total common stockholders' equity		181,150			181,150		183,134		183,134
Total common stockholders’ equity												176,025			176,025		174,359		174,359
Adjustments:
Goodwill		(26,445		)	(26,445	)	(26,587	)	(26,587	)		(26,420		)	(26,420	)	(26,418	)	(26,418	)
Certain identifiable intangible assets (other than MSRs)		(1,357		)	(1,357	)	(1,624	)	(1,624	)		(522		)	(522	)	(559	)	(559	)
Other assets (1)		(2,388		)	(2,388	)	(2,155	)	(2,155	)		(2,131		)	(2,131	)	(2,187	)	(2,187	)
Applicable deferred taxes (2)		918			918		962		962			771			771		785		785
Investment in certain subsidiaries and other		426			426		292		292			401			401		383		383
Common Equity Tier 1 (Fully Phased-In)		152,304			152,304		154,022		154,022			148,124			148,124		146,363		146,363
Effect of Transition Requirements (3)		—			—		743		743
Common Equity Tier 1 (Transition Requirements)		$	152,304		152,304		154,765		154,765

Common Equity Tier 1 (Fully Phased-In)		$	152,304		152,304		154,022		154,022			$	148,124		148,124		146,363		146,363
Preferred stock		26,227			26,227		25,358		25,358			23,214			23,214		23,214		23,214
Additional paid-in capital on ESOP preferred stock		146			146		122		122			95			95		95		95
Unearned ESOP shares		(2,571		)	(2,571	)	(1,678	)	(1,678	)		(1,502		)	(1,502	)	(1,502	)	(1,502	)
Other		(296		)	(296	)	(358	)	(358	)		(320		)	(320	)	(304	)	(304	)
Total Tier 1 capital (Fully Phased-In)	(A)	175,810			175,810		177,466		177,466		(A)	169,611			169,611		167,866		167,866
Effect of Transition Requirements (3)		—			—		743		743
Total Tier 1 capital (Transition Requirements)		$	175,810		175,810		178,209		178,209

Total Tier 1 capital (Fully Phased-In)		$	175,810		175,810		177,466		177,466			$	169,611		169,611		167,866		167,866
Long-term debt and other instruments qualifying as Tier 2		28,621			28,621		28,994		28,994			27,283			27,283		27,946		27,946
Qualifying allowance for credit losses (4)		2,607			11,313		2,196		11,960
Qualifying allowance for credit losses (3)												2,630			10,821		2,463		10,706
Other		(205		)	(205	)	(261	)	(261	)		(193		)	(193	)	(172	)	(172	)
Total Tier 2 capital (Fully Phased-In)	(B)	31,023			39,729		30,929		40,693		(B)	29,720			37,911		30,237		38,480
Effect of Transition Requirements		698			698		1,195		1,195			520			520		695		695
Total Tier 2 capital (Transition Requirements)		$	31,721		40,427		32,124		41,888			$	30,240		38,431		30,932		39,175

Total qualifying capital (Fully Phased-In)	(A)+(B)	$	206,833		215,539		208,395		218,159		(A)+(B)	$	199,331		207,522		198,103		206,346
Total Effect of Transition Requirements		698			698		1,938		1,938			520			520		695		695
Total qualifying capital (Transition Requirements)		$	207,531		216,237		210,333		220,097			$	199,851		208,042		198,798		207,041

Risk-Weighted Assets (RWAs) (5)(6):
Risk-Weighted Assets (RWAs) (4)(5):
Credit risk		$	855,243		1,238,517		890,171		1,249,395			$	799,801		1,200,379		803,273		1,201,246
Market risk		39,596			39,596		36,168		36,168			42,746			42,746		45,964		45,964
Operational risk		308,625			N/A		299,600		N/A			333,813			N/A		328,113		N/A
Total RWAs (Fully Phased-In) (3)		$	1,203,464		1,278,113		1,225,939		1,285,563
Credit risk		$	855,243		1,238,517		863,777		1,224,495
Market risk		39,596			39,596		36,168		36,168
Operational risk		308,625			N/A		299,600		N/A
Total RWAs (Transition Requirements)		$	1,203,464		1,278,113		1,199,545		1,260,663
Total RWAs (Fully Phased-In)												$	1,176,360		1,243,125		1,177,350		1,247,210


(1)	Represents goodwill and other intangibles on nonmarketable equity securities, which are included in other assets.


(2)	Applicable deferred taxes relate to goodwill and other intangible assets. They were 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)	~~Beginning January 1, 2018, the requirements for calculating CET1 and tier 1 capital, along with RWAs, were fully phased-in, so the effect of the transition requirements was $0 at March 31, 2018.~~

~~(4)~~

Under the Advanced Approach the allowance for credit losses that exceeds expected credit losses is eligible for inclusion in Tier 2 Capital, to the extent the excess allowance does not exceed 0.6% of Advanced credit RWAs, and under the Standardized Approach, the allowance for credit losses is includable in Tier 2 Capital up to 1.25% of Standardized credit RWAs, with any excess allowance for credit losses being deducted from total RWAs.


~~(5)~~(4)	RWAs calculated under the Advanced Approach utilize a risk-sensitive methodology, which relies upon the use of internal credit models based upon our experience with internal rating grades. Advanced Approach also includes an operational risk component, which reflects the risk of operating loss resulting from inadequate or failed internal processes or systems.

~~(6)~~(5)

Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWAs.

Capital Management (continued)

Table 38 presents the changes in Common Equity Tier 1 under the Advanced Approach for the ~~quarter~~three months ended March 31, ~~2018.~~2019.

Table 38: Analysis of Changes in Common Equity Tier 1


(in millions)
Common Equity Tier 1 (Fully Phased-In) at December 31, 2017	$	154,022
Common Equity Tier 1 (Fully Phased-In) at December 31, 2018				$	146,363
Net income applicable to common stock	4,733			5,507
Common stock dividends	(1,911		)	(2,054		)
Common stock issued, repurchased, and stock compensation-related items	(2,124		)	(3,949		)
Goodwill	142			(2		)
Certain identifiable intangible assets (other than MSRs)	267			37
Other assets (1)	(233		)	56
Applicable deferred taxes (2)	(44		)	(14		)
Investment in certain subsidiaries and other	(2,548		)	2,180
Change in Common Equity Tier 1	(1,718		)	1,761
Common Equity Tier 1 (Fully Phased-In) at March 31, 2018	$	152,304
Common Equity Tier 1 (Fully Phased-In) at March 31, 2019				$	148,124


(1)	Represents goodwill and other intangibles on nonmarketable equity securities, which are included in other assets.


(2)	Applicable deferred taxes relate to goodwill and other intangible assets. They were 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.

Table 39 presents net changes in the components of RWAs under the Advanced and Standardized Approaches for the ~~quarter~~three months ended March 31, ~~2018.~~2019.

Table 39: Analysis of Changes in RWAs


(in millions)	Advanced Approach			Standardized Approach		Advanced Approach			Standardized Approach
RWAs (Fully Phased-In) at December 31, 2017	$	1,225,939		1,285,563
RWAs (Fully Phased-In) at December 31, 2018						$	1,177,350		1,247,210
Net change in credit risk RWAs	(34,928		)	(10,878	)	(3,472		)	(867	)
Net change in market risk RWAs	3,428			3,428		(3,218		)	(3,218	)
Net change in operational risk RWAs	9,025			—		5,700			—
Total change in RWAs	(22,475		)	(7,450	)	(990		)	(4,085	)
RWAs (Fully Phased-In) at March 31, 2018	1,203,464			1,278,113
Effect of Transition Requirements (1)	—			—
RWAs (Transition Requirements) at March 31, 2018	$	1,203,464		1,278,113
RWAs (Fully Phased-In) at March 31, 2019						$	1,176,360		1,243,125


~~(1)~~	~~Beginning January 1, 2018, the requirements for calculating CET1 and tier 1 capital, along with RWAs, were fully phased-in, so the effect of the transition requirements was $0 at March 31, 2018.~~

~~Capital Management (continued~~)

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, 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. These tangible common equity ratios are as follows:

Tangible book value per common share, which represents tangible common equity divided by common shares outstanding.

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~~Company’s use of equity.

Table 40 provides a reconciliation of these non-GAAP financial measures to GAAP financial measures.

Table 40: Tangible Common Equity


		Balance at period end							Average balance								Balance at period end							Average balance
		Quarter ended							Quarter ended								Quarter ended							Quarter ended
(in millions, except ratios)		Mar 31, 2018			Dec 31, 2017		Mar 31, 2017		Mar 31, 2018			Dec 31, 2017		Mar 31, 2017			Mar 31, 2019			Dec 31, 2018		Mar 31, 2018		Mar 31, 2019			Dec 31, 2018		Mar 31, 2018
Total equity		$	205,910		208,079		202,310		206,180			207,413		201,559			$	198,733		197,066		205,910		198,349			198,442		206,180
Adjustments:
Preferred stock		(26,227		)	(25,358	)	(25,501	)	(26,157		)	(25,569	)	(25,163	)		(23,214		)	(23,214	)	(26,227	)	(23,214		)	(23,463	)	(26,157	)
Additional paid-in capital on ESOP preferred stock		(146		)	(122	)	(157	)	(153		)	(129	)	(146	)		(95		)	(95	)	(146	)	(95		)	(105	)	(153	)
Unearned ESOP shares		2,571			1,678		2,546		2,508			1,896		2,198			1,502			1,502		2,571		1,502			1,761		2,508
Noncontrolling interests		(958		)	(1,143	)	(989	)	(997		)	(998	)	(957	)		(901		)	(900	)	(958	)	(899		)	(910	)	(997	)
Total common stockholders' equity	(A)	181,150			183,134		178,209		181,381			182,613		177,491
Total common stockholders’ equity																(A)	176,025			174,359		181,150		175,643			175,725		181,381
Adjustments:
Goodwill		(26,445		)	(26,587	)	(26,666	)	(26,516		)	(26,579	)	(26,673	)		(26,420		)	(26,418	)	(26,445	)	(26,420		)	(26,423	)	(26,516	)
Certain identifiable intangible assets (other than MSRs)		(1,357		)	(1,624	)	(2,449	)	(1,489		)	(1,767	)	(2,588	)		(522		)	(559	)	(1,357	)	(543		)	(693	)	(1,489	)
Other assets (1)		(2,388		)	(2,155	)	(2,121	)	(2,233		)	(2,245	)	(2,095	)		(2,131		)	(2,187	)	(2,388	)	(2,159		)	(2,204	)	(2,233	)
Applicable deferred taxes (2)		918			962		1,698		933			1,332		1,722			771			785		918		784			800		933
Tangible common equity	(B)	$	151,878		153,730		148,671		152,076			153,354		147,857		(B)	$	147,723		145,980		151,878		147,305			147,205		152,076
Common shares outstanding	(C)	4,873.9			4,891.6		4,996.7		N/A			N/A		N/A		(C)	4,511.9			4,581.3		4,873.9		N/A			N/A		N/A
Net income applicable to common stock (3)	(D)	N/A			N/A		N/A		$	4,733		5,740		5,233		(D)	N/A			N/A		N/A		$	5,507		5,711		4,733
Book value per common share	(A)/(C)	$	37.17		37.44		35.67		N/A			N/A		N/A		(A)/(C)	$	39.01		38.06		37.17		N/A			N/A		N/A
Tangible book value per common share	(B)/(C)	31.16			31.43		29.75		N/A			N/A		N/A		(B)/(C)	32.74			31.86		31.16		N/A			N/A		N/A
Return on average common stockholders’ equity (ROE) (annualized)	(D)/(A)	N/A			N/A		N/A		10.58		%	12.47		11.96		(D)/(A)	N/A			N/A		N/A		12.71		%	12.89		10.58
Return on average tangible common equity (ROTCE) (annualized)	(D)/(B)	N/A			N/A		N/A		12.62			14.85		14.35		(D)/(B)	N/A			N/A		N/A		15.16			15.39		12.62


(1)	Represents goodwill and other intangibles on nonmarketable equity securities, which are included in other assets.


(2)	Applicable deferred taxes relate to goodwill and other intangible assets. They were 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)	Quarter ended net income applicable to common stock is annualized for the respective ROE and ROTCE ratios.

Capital Management (continued)

SUPPLEMENTARY LEVERAGE RATIO In April 2014, federal banking regulators finalized a rule that enhances the SLR requirements for BHCs, like Wells Fargo, and their insured depository institutions. The SLR consists of Tier 1 capital divided by the Company’s total leverage exposure. Total leverage exposure consists of the total average on-balance sheet assets, plus off-balance sheet exposures, such as undrawn commitments and derivative exposures, less amounts permitted to be deducted from Tier 1 capital. The rule, which became effective on January 1, 2018, requires a covered BHC to maintain a SLR of at least 5.0% (comprised of the 3.0% minimum requirement plus a supplementary leverage buffer of 2.0%) to avoid restrictions on capital distributions and discretionary bonus payments. The rule also requires that all of our insured depository institutions maintain a SLR of 6.0% under applicable regulatory capital adequacy guidelines. In April 2018, the FRB and OCC proposed rules (the “Proposed SLR Rules”) that would replace the 2% supplementary leverage buffer with a buffer equal to one-half of the firm’s G-SIB capital surcharge. The Proposed SLR Rules would similarly tailor the current 6% SLR requirement for our insured depository institutions. At March 31, ~~2018,~~2019, our SLR for the Company was ~~7.9% assuming full phase-in of~~7.8% calculated under the Advanced Approach capital framework. Based on our review, our current leverage levels would exceed the applicable requirements for each of our insured depository institutions as well. ~~The fully phased-in SLR is considered a non-GAAP financial measure that is used by management, bank regulatory agencies, investors and analysts to assess and monitor the Company’s leverage exposure.~~ See Table 41 for information regarding the calculation and components of the SLR.

Table 41: ~~Fully Phased-In SLR~~Supplementary Leverage Ratio


(in millions, except ratio)	Three Months Ended March 31, 2018			Quarter ended March 31, 2019
Tier 1 capital	$	175,810		$	169,611
Total average assets	1,915,896			1,883,091
Less: deductions from Tier 1 capital (1)	29,688			28,724
Total adjusted average assets	1,886,208			1,854,367
Adjustments:
Derivative exposures (2)	69,987			68,724
Repo-style transactions (3)	3,229			4,819
Other off-balance sheet exposures (4)	253,212			252,704
Total adjustments	326,428			326,247
Total leverage exposure	$	2,212,636		$	2,180,614
Supplementary leverage ratio	7.9		%	7.8		%


(1)	Amounts permitted to be deducted from Tier 1 capital primarily include goodwill and other intangible assets, net of associated deferred tax liabilities.


(2)	Represents adjustments for off balance sheet derivative exposures, and derivative collateral netting as defined for supplementary leverage ratio determination purposes.


(3)	Adjustments for repo-style transactions represent counterparty credit risk for all repo-style transactions where Wells Fargo & Company is the principal (i.e., principal counterparty facing the client).


(4)	Adjustments for other off-balance sheet exposures represent the notional amounts of all off-balance sheet exposures (excluding off balance sheet exposures associated with derivative and repo-style transactions) less the adjustments for conversion to credit equivalent amounts under the regulatory capital rule.

OTHER REGULATORY CAPITAL MATTERS In December 2016, the FRB finalized rules to address the amount of equity and unsecured long-term debt a U.S. G-SIB must hold to improve its resolvability and resiliency, often referred to as Total Loss Absorbing Capacity (TLAC). Under the rules, which ~~become~~became effective on January 1, 2019, U.S. G-SIBs ~~will be~~are required to have a minimum TLAC amount (consisting of CET1 capital and

additional tier 1 capital issued directly by the top-tier or covered BHC plus eligible external long-term debt) equal to the greater of (i) 18% of RWAs and (ii) 7.5% of total leverage exposure (the denominator of the SLR calculation). Additionally, U.S. G-SIBs ~~will be~~are required to maintain (i) a TLAC buffer equal to 2.5% of RWAs

plus the firm’s applicable G-SIB capital surcharge calculated under method one plus any applicable countercyclical buffer ~~that will~~to be added to the 18% minimum and (ii) an external TLAC leverage buffer equal to 2.0% of total leverage exposure ~~that will~~to be added to the 7.5% minimum, in order to avoid restrictions on capital distributions and discretionary bonus payments. The rules ~~will~~ also require U.S. G-SIBs to have a minimum amount of eligible unsecured long-term debt equal to the greater of (i) 6.0% of RWAs plus the firm’s applicable G-SIB capital surcharge calculated under method two and (ii) 4.5% of the total leverage exposure. In addition, the rules ~~will~~ impose certain restrictions on the operations and liabilities of the top-tier or covered BHC in order to further facilitate an orderly resolution, including prohibitions on the issuance of short-term debt to external investors and on entering into derivatives and certain other types of financial contracts with external counterparties. While the rules permit permanent grandfathering of a significant portion of otherwise ineligible long-term debt that was issued prior to December 31, 2016, long-term debt issued after that date must be fully compliant with the eligibility requirements of the rules in order to count toward the minimum TLAC amount. As a result of the rules, we will need to issue additional long-term debt to remain compliant with the requirements. Under the Proposed SLR Rules, the 2% external TLAC leverage buffer would be replaced with a buffer equal to one-half of the firm’s G-SIB capital surcharge. Additionally, the Proposed SLR Rules would modify the leverage component for calculating the minimum amount of eligible unsecured long-term debt from 4.5% of total leverage exposure to 2.5% of total leverage exposure plus one-half of the firm’s G-SIB capital surcharge. As of March 31, ~~2018, we estimate that~~2019, our eligible external TLAC as a percentage of total risk-weighted assets was ~~24.0%~~23.85% compared with ~~an expected January 1, 2019~~a required minimum of 22.0%. Similar to the risk-based capital requirements, we determine minimum required TLAC based on the greater of RWAs determined under the Standardized and Advanced approaches.

In addition, as discussed in the “Risk Management – Asset/ Liability Management – Liquidity and Funding – Liquidity Standards” section in this Report, federal banking regulators have issued a final rule regarding the U.S. implementation of the Basel III LCR and a proposed rule regarding the NSFR.

Capital Planning and Stress Testing

Our planned long-term capital structure is designed to meet regulatory and market expectations. We believe that our long-term targeted capital structure enables us to invest in and grow our business, satisfy our customers’ financial needs in varying environments, access markets, and maintain flexibility to return capital to our shareholders. Our long-term targeted capital structure also considers capital levels sufficient to exceed capital requirements including the G-SIB surcharge. Accordingly, based on the final Basel III capital rules under the lower of the Standardized or Advanced Approaches CET1 capital ratios, we currently target a long-term CET1 capital ratio at or in excess of 10%, which includes a 2% G-SIB surcharge. Our capital targets are subject to change based on various factors, including changes to the regulatory capital framework and expectations for large banks promulgated by bank regulatory agencies, planned capital actions, changes in our risk profile and other factors.

As discussed above in the “Capital Management – Regulatory Capital ~~Management (continued~~)Guidelines – Risk-Based Capital and Risk-Weighted Assets” section of this Report, the FRB has proposed including a stress capital buffer to replace the current 2.5% capital conservation buffer. Under the proposal, it is expected that the adoption of CECL accounting would be included in the calculation of the stress capital buffer. We expect that

implementation of the stress capital buffer may increase the level and volatility of minimum capital ratio requirements, which may cause our current long-term CET1 capital ratio target of 10% to increase.

Under the FRB’s capital plan rule, large BHCs are required to submit capital plans annually for review to determine if the FRB has any objections before making any capital distributions. The rule requires updates to capital plans in the event of material changes in a BHC’s risk profile, including as a result of any significant acquisitions. The FRB assesses, among other things, the overall financial condition, risk profile, and capital adequacy of BHCs ~~while considering both quantitative and qualitative factors~~ when evaluating capital plans.

Our ~~2018~~2019 capital plan, which was submitted on April 4, ~~2018,~~2019, as part of CCAR, included a comprehensive capital outlook supported by an assessment of expected sources and uses of capital over a given planning horizon under a range of expected and stress scenarios. As part of the ~~2018~~2019 CCAR, the FRB also generated a supervisory stress test, which assumed a sharp decline in the economy and significant decline in asset pricing using the information provided by the Company to estimate performance. The FRB is expected to review the supervisory stress results both as required under the Dodd-Frank Act using a common set of capital actions for all large BHCs and by taking into account the Company’s proposed capital actions. The FRB has indicated that it will publish its supervisory stress test results as required under the Dodd-Frank Act, and the related CCAR results taking into account the Company’s proposed capital actions, by June 30, ~~2018.~~2019.

Federal banking regulators require stress tests to evaluate whether an institution has sufficient capital to continue to operate during periods of adverse economic and financial conditions. These stress testing requirements set forth the timing and type of stress test activities large BHCs and banks must undertake as well as rules governing stress testing controls, oversight and disclosure requirements. The rules also limit a large BHC’s ability to make capital distributions to the extent its actual capital issuances were less than amounts indicated in its capital plan. As required under the FRB’s stress testing rule, we must submit a mid-cycle stress test based on second quarter data and scenarios developed by the Company. We submitted the results of the mid-cycle stress test to the FRB and disclosed a summary of the results in October ~~2017.~~2018. In October 2018, the FRB proposed a rule that would, among other things, eliminate the mid-cycle stress test requirement for banks beginning in 2020.

Securities Repurchases

From time to time the Board authorizes the Company to repurchase shares of our common stock. Although we announce when the Board authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Future stock repurchases may be private or open-market repurchases, including block transactions, accelerated or delayed block transactions, forward repurchase transactions, and similar transactions. Additionally, we may enter into plans to purchase stock that satisfy the conditions of Rule 10b5-1 of the Securities Exchange Act of 1934. Various factors determine the amount ~~and timing~~ of our share repurchases, including our capital requirements, the number of shares we expect to issue for employee benefit plans and acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations, including the FRB’s response to our capital plan and to changes in our risk profile. Due to the various factors impacting the amount of our share repurchases and the fact that we tend to be in the market regularly to satisfy repurchase considerations under our capital plan, our share repurchases occur at various price levels. We may suspend share repurchase activity at any time.

In January ~~2016,~~2018, the Board authorized the repurchase of 350 million shares of our common stock. In ~~January~~October 2018, the Board authorized the repurchase of an additional 350 million shares of our common stock. At March 31, ~~2018,~~2019, we had remaining authority to repurchase approximately ~~370~~298 million shares, subject to regulatory and legal conditions. For more information about share repurchases during first quarter ~~2018,~~2019, see Part II, Item 2 in this Report.

Historically, our policy has been to repurchase shares under the “safe harbor” conditions of Rule 10b-18 of the Securities Exchange Act of 1934 including a limitation on the daily volume of repurchases. Rule 10b-18 imposes an additional daily volume limitation on share repurchases during a pending merger or acquisition in which shares of our stock will constitute some or all of the consideration. Our management may determine that during a pending stock merger or acquisition when the safe harbor would otherwise be available, it is in our best interest to repurchase shares in excess of this additional daily volume limitation. In such cases, we intend to repurchase shares in compliance with the other conditions of the safe harbor, including the standing daily volume limitation that applies whether or not there is a pending stock merger or acquisition.

In connection with our participation in the Capital Purchase Program (CPP), a part of the Troubled Asset Relief Program (TARP), we issued to the U.S. Treasury Department warrants to purchase 110,261,688 shares of our common stock with an original exercise price of $34.01 per share expiring on October 28, 2018. The terms of the warrants require the exercise price to be adjusted under certain circumstances when the Company’s quarterly common stock dividend exceeds $0.34 per share, which began occurring in second quarter 2014. Accordingly, with each quarterly common stock dividend above $0.34 per share, we must calculate whether an adjustment to the exercise price is required by the terms of the warrants, including whether certain minimum thresholds have been met to trigger an adjustment, and notify the holders of any such change. The Board authorized the repurchase by the Company of up to $1 billion of the warrants. At March 31, 2018, there were 13,661,427 warrants outstanding, exercisable at $33.675 per share, and $452 million of unused warrant repurchase authority. Depending on market conditions, we may purchase from time to time additional warrants in privately negotiated or open market transactions, by tender offer or otherwise.

Regulatory Matters

Since the enactment of the Dodd-Frank Act in 2010, the U.S. financial services industry has been subject to a significant increase in regulation and regulatory oversight initiatives. This increased regulation and oversight has substantially changed how most U.S. financial services companies conduct business and has increased their regulatory compliance costs.

~~The following supplements our~~For a discussion of certain consent orders applicable to the Company, see the “Overview” section in this Report. For a discussion of other significant regulations and regulatory oversight initiatives that have affected or may affect our business, ~~contained in~~see the “Regulatory Matters” and “Risk Factors” sections in our ~~2017~~2018 Form 10-K.

~~REGULATION OF SWAPS AND OTHER DERIVATIVES ACTIVITIES~~ The Dodd-Frank Act established a comprehensive framework for regulating over-the-counter derivatives and authorized the CFTC and the SEC to regulate swaps and security-based swaps, respectively. The CFTC has adopted rules applicable to our provisionally registered swap dealer, Wells Fargo Bank, N.A., that require, among other things, extensive regulatory and public reporting of swaps, central clearing and trading of swaps on exchanges or other multilateral platforms, and compliance with comprehensive internal and external business conduct standards. The SEC is expected to implement parallel rules applicable to security-based swaps. In addition, federal regulators have adopted final rules establishing margin requirements for swaps and security-based swaps not centrally cleared, and rules placing restrictions on a party's right to exercise default rights under derivatives and other qualified financial contracts against applicable banking organizations. All of these new rules, as well as others being considered by regulators in other jurisdictions, may negatively impact customer demand for over-the-counter derivatives and may increase our costs for engaging in swaps and other derivatives activities.

~~INVESTMENT ADVISOR AND BROKER-DEALER STANDARDS OF CONDUCT~~ In April 2016, the U.S. Department of Labor adopted a rule under the Employee Retirement Income Security Act of 1974 (ERISA) that, among other changes and subject to certain exceptions, as of the applicability date of June 9, 2017, makes anyone, including broker-dealers, providing investment advice to retirement investors a fiduciary who must act in the best interest of clients when providing investment advice for direct or indirect compensation to a retirement plan, to a plan fiduciary, participant or beneficiary, or to an investment retirement account (IRA) or IRA holder. On March 15, 2018, the U.S. Court of Appeals for the Fifth Circuit struck down the Department of Labor's fiduciary standard rule in its entirety, holding that it exceeded the Department of Labor’s authority. Unless subject to a stay or other proceeding in the interim, the Fifth Circuit’s judgment will take effect on May 7, 2018. In addition, in April 2018, the SEC proposed a rule that would require broker-dealers to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities. Each of these rules may impact the manner in which business is conducted with customers seeking investment advice and may affect certain investment product offerings.

~~FRB CONSENT ORDER REGARDING GOVERNANCE OVERSIGHT AND COMPLIANCE AND OPERATIONAL RISK MANAGEMENT~~ On February 2, 2018, the Company entered into a consent order with the FRB. As required by the consent order, the Board submitted to the FRB a plan to further enhance the Board’s governance and oversight of the Company, and the Company submitted to the FRB a plan to further improve the Company’s compliance and operational risk management program. As part of the review and approval process contemplated by the consent order, the Company will respond to any feedback provided by the FRB regarding the plans, including by making any necessary changes to the plans. The consent order also requires the Company, following the FRB’s acceptance and approval of the plans and the Company’s adoption and implementation of the plans, to complete by September 30, 2018, third-party reviews of the enhancements and improvements provided for in the plans. Until these third-party reviews are complete and the plans are approved and implemented to the satisfaction of the FRB, the Company’s total consolidated assets will be limited to the level as of December 31, 2017. Compliance with this asset cap will be measured on a two-quarter daily average basis to allow for management of temporary fluctuations. Once the asset cap limitation is removed, a second third-party review must be conducted to assess the efficacy and sustainability of the improvements.

~~CONSENT ORDERS WITH THE CFPB AND OCC REGARDING COMPLIANCE RISK MANAGEMENT PROGRAM, AUTOMOBILE COLLATERAL PROTECTION INSURANCE POLICIES, AND MORTGAGE INTEREST RATE LOCK EXTENSIONS~~ On April 20, 2018 we entered into consent orders with the CFPB and OCC to pay an aggregate of $1 billion in civil money penalties to resolve matters regarding our compliance risk management program and past practices involving certain automobile collateral protection insurance policies and certain mortgage interest rate lock extensions. The consent orders require that the Company submit to the CFPB and OCC, within 60 days of the date of the consent orders, an acceptable enterprise-wide compliance risk management plan and a plan to enhance the Company's internal audit program with respect to federal consumer financial law and the terms of the consent orders. The consent orders also require the Company to submit for non-objection, within 120 days of the date of the consent orders, plans for a remediation program regarding ongoing compliance with federal consumer financial law and, within 60 days of the date of the consent orders, plans to remediate customers affected by the automobile collateral protection insurance and mortgage interest rate lock matters.

Critical Accounting Policies

Our significant accounting policies (see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2017~~2018 Form 10-K) are fundamental to understanding our results of operations and financial condition because they require that we use estimates and assumptions that may affect the value of our assets or liabilities and financial results. Five of these policies are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. These policies govern:

the allowance for credit losses;

the valuation of residential MSRs;

the fair value of financial instruments;

income taxes; and

liability for contingent litigation losses.

Management and the ~~Board's~~Board’s Audit and Examination Committee have reviewed and approved these critical accounting policies. These policies are described further in the ~~"Financial~~“Financial Review – Critical Accounting ~~Policies"~~Policies” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2017~~2018 Form 10-K.

Current Accounting Developments

Table 42 provides the significant accounting updates applicable to us that have been issued by the FASB but are not yet effective.

Table 42: Current Accounting Developments – Issued Standards



Standard	Description	Effective date and financial statement impact
Accounting ~~Standards~~Standard Update (ASU or Update) ~~2018-02~~2018-12 – ~~Income Statement-Reporting Comprehensive Income~~Financial Services – Insurance (Topic ~~220)~~944): ~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~Targeted Improvements to the Accounting for Long-Duration Contracts	~~Currently,~~ The Update requires all features in long-duration insurance contracts that meet the ~~effect~~definition of ~~remeasuring deferred tax assets and liabilities due~~a market risk benefit to ~~a change~~be measured at fair value through earnings with changes in tax laws or rates must be recognized in income from continuing operations in the reporting period that includes the enactment date. That guidance is applicable even in situations in which the related income tax effects were originallyfair value attributable to own credit risk recognized in other comprehensive income. Currently, two measurement models exist for these features, fair value and insurance accrual. The Update ~~permits~~requires the use of a ~~one-time reclassification from accumulated other comprehensive income to retained earnings~~standardized discount rate and routine updates for ~~these stranded tax effects resulting from~~insurance assumptions used in valuing the ~~Tax Cuts and Jobs Act.~~liability for future policy benefits for traditional long-duration contracts. The Update also simplifies the amortization of deferred acquisition costs.	The guidance isbecomes effective on January 1, ~~2019. Early application is permitted~~2021. Certain of our variable annuity reinsurance products meet the definition of market risk benefits and will be measured at fair value as of the earliest period presented. The cumulative effect of changes in ~~any interim period prior~~own credit risk will be recognized in the beginning balance of accumulated other comprehensive income. The cumulative effect of the difference between fair value and carrying value, excluding the effect of own credit, will be recognized in the opening balance of retained earnings. As of March 31, 2019, we held $993 million in insurance-related reserves of which $414 million was in scope of the Update. A total of $359 million was associated with products that meet the definition of market risk benefits, and of this amount, $17 million was measured at fair value under current accounting standards. The market risk benefits are largely indexed to U.S. equity and fixed income markets. Upon adoption, we may incur periodic earnings volatility from changes in the fair value of market risk benefits primarily due to the ~~effective date. An initial estimate~~long duration of these contracts. We plan to economically hedge this volatility, where feasible. The ultimate impact of these changes will depend on the ~~application~~composition of our market risk benefits portfolio at the ~~new guidance is expected to result in an increase in retained earnings~~date of ~~approximately $400 million.~~ We were required to recognize various tax impacts of the Tax Cuts & Jobs Act (Tax Act) as of December 31, 2017, in accordance with ASC Topic 740, Income Taxes and SEC Staff Accounting Bulletin 118. Our income tax expense for 2017 reflected $3.7 billion of net estimated tax benefits relatedadoption. Changes to the ~~Tax Act, primarily as a result~~liability for future policy benefits for traditional long-duration contracts and deferred acquisition costs will be applied to all outstanding long-duration contracts on the basis of re-measuring our deferred taxes for the federal tax rate reduction from 35% to 21%. Our initial accounting related to the re-measurement is incomplete, since the temporary difference calculations need to be finalized as we complete our U.S. tax filing during 2018. Accordingly, we expect to adopt ASU 2018-02 in fourth quarter 2018.
~~ASU 2017-08 – Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20):~~ ~~Premium Amortization on Purchased Callable Debt Securities~~	~~The Update changes the accounting for certain purchased callable debt securities held~~their existing carrying amounts at a premium to shorten the amortization period for the premium to the earliest call date rather than to the maturity date. Accounting for purchased callable debt securities held at a discount does not change. The discount would continue to amortize to the maturity date.	~~We expect to adopt the guidance in first quarter 2019 using the modified retrospective method with a cumulative-effect adjustment to retained earnings as of~~ the beginning of the ~~year of adoption. Our debt securities portfolio includes holdings of available-for-sale (AFS)~~earliest period presented, and ~~held-to-maturity (HTM) callable debt securities held at a premium. At adoption, the guidance is~~are not expected to ~~result in a cumulative effect adjustment which will~~ be primarily offset with a corresponding adjustment to other comprehensive income related to AFS securities. After adoption, the guidance will reduce interest income prior to the call date because the premium will be amortized over a shorter time period. Our implementation effort includes identifying the population of debt securities subject to the new guidance, which are primarily obligations of U.S. states and political subdivisions, and quantifying the expected impacts. The impact of the Update on our consolidated financial statements will be affected by our portfolio composition at the time of adoption, which may change between the most recent balance sheet date and the adoption date.
~~ASU 2016-13 – Financial Instruments – Credit Losses (Topic 326):~~ ~~Measurement of Credit Losses on Financial Instruments~~	The Update changes the accounting for credit losses on loans and debt securities. For loans and held-to-maturity debt securities, the Update requires a current expected credit loss (CECL) approach to determine the allowance for credit losses. CECL requires loss estimates for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts. Also, the Update eliminates the existing guidance for PCI loans, but requires an allowance for purchased financial assets with more than insignificant deterioration since origination. In addition, the Update modifies the other-than-temporary impairment model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which allows for reversal of credit impairments in future periods based on improvements in credit.	The guidance is effective in first quarter 2020 with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. While early adoption is permitted beginning in first quarter 2019, we do not expect to elect that option. We are evaluating the impact of the Update on our consolidated financial statements. We expect the Update will result in an increase in the allowance for credit losses given the change to estimated losses over the contractual life adjusted for expected prepayments with an anticipated material impact from longer duration portfolios, as well as the addition of an allowance for debt securities. The amount of the increase will be impacted by the portfolio composition and credit quality at the adoption date as well as economic conditions and forecasts at that time.material.

Current Accounting Developments (continued)



Standard	Description	Effective date and financial statement impact
ASU ~~2016-02~~2016-13 – ~~Leases~~Financial Instruments – Credit Losses (Topic ~~842)~~326): Measurement of Credit Losses on Financial Instruments and subsequent related Updates	The Update changes the accounting for credit losses measurement on loans and debt securities. For loans and held-to-maturity debt securities, the Update requires ~~lessees~~a current expected credit loss (CECL) measurement to ~~recognize leases on~~estimate the ~~balance~~allowance for credit losses (ACL) for the remaining estimated life of the financial asset (including off-balance sheet credit exposures) using historical experience, current conditions, and reasonable and supportable forecasts. The Update eliminates the existing guidance for PCI loans, but requires an allowance for purchased financial assets with ~~lease liabilities and corresponding right-of-use assets~~more than insignificant deterioration since origination. In addition, the Update modifies the other-than-temporary impairment model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which allows for reversal of credit impairments in future periods based on the present value of lease payments. Lessor accounting activities are largely unchanged from existing lease accounting. The Update also eliminates leveraged lease accounting but allows existing leveraged leases to continue their current accounting until maturity, termination or modification.improvements in credit.	We expect to adopt the guidance in first quarter ~~2019 using the modified retrospective method~~2020. Our implementation process includes loss forecasting model development, evaluation of technical accounting topics, updates to our allowance documentation, reporting processes and ~~practical expedients for transition. The practical expedients allow us to largely account~~related internal controls, and overall operational readiness for our ~~existing leases consistent with current guidance except for the incremental balance sheet recognition for lessees. We have started our implementation~~adoption of the Update, which ~~has included an initial evaluation~~will continue throughout 2019, including parallel runs for CECL alongside our current allowance process. We are in the process of developing, validating, and implementing models used to estimate credit losses under CECL. We have completed substantially all of our ~~leasing contracts~~loss forecasting models, and ~~activities. As a lessee~~ we ~~are developing~~expect to complete the validation process for our ~~methodology to estimate~~loan models during 2019. Our current planned approach for estimating expected life-time credit losses for loans and debt securities includes the ~~right-of use assets~~following key components: • An initial forecast period of one year for all portfolio segments and ~~lease liabilities, which is~~classes of financing receivables and off-balance-sheet credit exposures. This period reflects management’s expectation of losses based on forward-looking economic scenarios over that time. • A historical loss forecast period covering the remaining contractual life, adjusted for prepayments, by portfolio segment and class of financing receivables based on the ~~present~~change in key historical economic variables during representative historical expansionary and recessionary periods. • A reversion period of up to 2 years connecting the initial loss forecast to the historical loss forecast based on economic conditions at the measurement date. • We will utilize discounted cash flow (DCF) methods to measure credit impairment for loans modified in a TDR, unless they are collateral dependent and measured at the fair value of ~~lease payments (the December~~collateral. The DCF methods would obtain estimated life-time credit losses using the conceptual components described above. • For available-for-sale debt securities and certain beneficial interests classified as held-to-maturity, we plan to utilize the DCF methods to measure the ACL, which will incorporate expected credit losses using the conceptual components described above. Based on our portfolio composition as of March 31, ~~2017 future minimum lease payments~~2019, and the current economic environment, we currently estimate an overall decrease in our ACL for loans in the range of $0 to $1 billion. The reduction reflects an expected decrease for commercial loans, given their short contractual maturities, partially offset by an expected increase for longer duration consumer loans. This expected reduction to our ACL does not include the impact of recently issued FASB guidance to consider subsequent increases in fair value of collateral for collateral dependent loans. Application of this guidance is expected to result in a further reduction to our ACL of approximately $1.5 billion, substantially all of which relates to residential mortgage loans that were ~~$6.6 billion).~~previously written down below current recovery value estimates. We ~~do not expect~~will continue to evaluate and refine the results of our loss estimates throughout 2019. We will recognize an ACL for held-to-maturity and available-for-sale debt securities. The ACL on available-for-sale debt securities will be subject to a ~~material change to~~limitation based on the ~~timing~~fair value of ~~expense recognition. Given~~ the ~~limited changes to lessor accounting,~~debt securities. Based on the credit quality of our existing debt securities portfolio, we do not expect ~~material changes~~the ACL for held-to-maturity and available-for-sale debt securities to ~~recognition or measurement, but~~be significant. The ultimate effect of CECL on our ACL will depend on the size and composition of our portfolio, the portfolio’s credit quality and economic conditions at the time of adoption, as well as any refinements to our models, methodology and other key assumptions. At adoption, we ~~are early~~will have a cumulative-effect adjustment to retained earnings for our change in the ~~implementation process~~ACL, which will impact our capital. A decrease in our ACL will result in an increase to our regulatory capital amounts and ~~will continue to evaluate~~ratios. Federal banking regulatory agencies have provided relief for an initial capital decrease from the ~~impact. We are evaluating our existing disclosures and may need to provide additional information as~~Update by allowing a ~~result of~~phased adoption ~~of the Update.~~over four years, on a straight-line basis.

In addition to the list above, the following Updates are applicable to us but are not expected to have a material impact on our consolidated financial statements:

ASU 2019-04 – Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. This Update includes guidance on recoveries of financial assets, which has been included in the discussion for ASU 2016-13, above.

ASU 2018-17 – Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities

ASU 2018-15 – Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)

ASU 2018-13 – Fair Value Measurement (Topic 820):Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This Update has been partially adopted; however, the remainder of this Update will be adopted at the effective date of January 1, 2020.

ASU 2017-04 – Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

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 ~~the overall~~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;

developments in our mortgage banking business, including the extent of the success of our ~~success in our~~mortgage 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~~loan modification or foreclosure practices, ~~as well as~~and the effects of regulatory or judicial requirements or guidance impacting our mortgage banking business and any 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;~~standards;

our ability to realize ~~our~~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 ~~low~~ interest rate environment or changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and ~~mortgages~~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~~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~~2018.

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.

Forward-Looking Statements (continued)

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,~~2018, 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.

Risk Factors

An investment in the Company involves risk, including the possibility that the value of the investment could fall substantially and that dividends or other distributions on the investment could be reduced or eliminated. For a discussion of risk factors that could adversely affect our financial results and condition, and the value of, and return on, an investment in the Company, we refer you to the “Risk Factors” section in our ~~2017~~2018 Form 10-K.

Controls and Procedures

Disclosure Controls and Procedures

The Company’s management evaluated the effectiveness, as of March 31, ~~2018,~~2019, of the Company’s disclosure controls and procedures. The Company’s chief executive officer and chief financial officer participated in the evaluation. Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, ~~2018.~~2019.

Internal Control Over Financial Reporting

Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (GAAP) and includes those policies and procedures that:

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the Company;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No change occurred during first quarter ~~2018~~2019 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

							Wells Fargo & Company and Subsidiaries	Consolidated Statement of Income (Unaudited)
	Quarter ended March 31,			Quarter ended March 31,
(in millions, except per share amounts)	2018		2017	2019		2018
Interest income
Debt securities ~~(2)~~	$	3,414	3,173	$	3,941	3,414
Mortgages held for sale (2)	179		182
Mortgage loans held for sale				152		179
Loans held for sale ~~(1)~~	24		10	24		24
Loans	10,579		10,141	11,354		10,579
Equity securities ~~(1)~~	231		175	210		231
Other interest income ~~(1)~~	920		532	1,322		920
Total interest income ~~(2)~~	15,347		14,213	17,003		15,347
Interest expense
Deposits ~~(2)~~	1,090		536	2,026		1,090
Short-term borrowings	311		114	596		311
Long-term debt ~~(2)~~	1,576		1,147	1,927		1,576
Other interest expense	132		92	143		132
Total interest expense ~~(2)~~	3,109		1,889	4,692		3,109
Net interest income ~~(2)~~	12,238		12,324	12,311		12,238
Provision for credit losses	191		605	845		191
Net interest income after provision for credit losses	12,047		11,719	11,466		12,047
Noninterest income
Service charges on deposit accounts	1,173		1,313	1,094		1,173
Trust and investment fees	3,683		3,570	3,373		3,683
Card fees	908		945	944		908
Other fees	800		865	770		800
Mortgage banking	934		1,228	708		934
Insurance	114		277	96		114
Net gains from trading activities ~~(1)~~	243		272	357		243
Net gains on debt securities ~~(3)~~(1)	1		36	125		1
Net gains from equity securities ~~(4)~~(2)	783		570	814		783
Lease income	455		481	443		455
Other (2)	602		374
Other				574		602
Total noninterest income ~~(2)~~	9,696		9,931	9,298		9,696
Noninterest expense
Salaries	4,363		4,261	4,425		4,363
Commission and incentive compensation	2,768		2,725	2,845		2,768
Employee benefits	1,598		1,686	1,938		1,598
Equipment	617		577	661		617
Net occupancy	713		712	717		713
Core deposit and other intangibles	265		289	28		265
FDIC and other deposit assessments	324		333	159		324
Other	4,394		3,209	3,143		4,394
Total noninterest expense	15,042		13,792	13,916		15,042
Income before income tax expense ~~(2)~~	6,701		7,858	6,848		6,701
Income tax expense ~~(2)~~	1,374		2,133	881		1,374
Net income before noncontrolling interests ~~(2)~~	5,327		5,725	5,967		5,327
Less: Net income from noncontrolling interests	191		91	107		191
Wells Fargo net income ~~(2)~~	$	5,136	5,634	$	5,860	5,136
Less: Preferred stock dividends and other	403		401	353		403
Wells Fargo net income applicable to common stock ~~(2)~~	$	4,733	5,233	$	5,507	4,733
Per share information
Earnings per common share ~~(2)~~	$	0.97	1.05	$	1.21	0.97
Diluted earnings per common share ~~(2)~~	0.96		1.03	1.20		0.96
Dividends declared per common share	0.39		0.38
Average common shares outstanding	4,885.7		5,008.6	4,551.5		4,885.7
Diluted average common shares outstanding	4,930.7		5,070.4	4,584.0		4,930.7


(1)	~~Financial information for the prior period has been revised to reflect the impact of the adoption of Accounting Standards Update (ASU) 2016-01~~ – ~~Financial Instruments~~ – ~~Overall (Subtopic 825-10):~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities. See Note 1 (Summary of Significant Accounting Policies) for more information.~~


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

~~(3)~~

Total other-than-temporary impairment (OTTI) losses were ~~$17~~$45 million and ~~$43~~$17 million for first quarter ~~2018~~2019 and ~~2017~~,2018, respectively. Of total OTTI, losses of ~~$10~~$45 million and ~~$52~~$10 million were recognized in earnings, and losses ~~(reversal~~ of ~~losses) of~~ $7$0 million and ~~$(9)~~$7 million were recognized as non-credit-related OTTI in other comprehensive income for first quarter ~~2018~~2019 and ~~2017~~,2018, respectively.


~~(4)~~(2)	Includes OTTI losses of ~~$20~~$36 million and ~~$77~~$20 million for first quarter ~~2018~~2019 and ~~2017~~,2018, respectively.

The accompanying notes are an integral part of these statements.


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Comprehensive Income (Unaudited)	Consolidated Statement of Comprehensive Income (Unaudited)						Consolidated Statement of Comprehensive Income (Unaudited)
		Quarter ended March 31,						Quarter ended March 31,
(in millions)		2018			2017			2019			2018
Wells Fargo net income ~~(2)~~		$	5,136		5,634			$	5,860		5,136
Other comprehensive income (loss), before tax:
Debt securities (1):
Debt securities:
Net unrealized gains (losses) arising during the period		(3,443		)	369			2,831			(3,443	)
Reclassification of net (gains) losses to net income		68			(145	)		(81		)	68
Derivatives and hedging activities:
Net unrealized losses arising during the period ~~(2)~~		(242		)	(362	)		(35		)	(242	)
Reclassification of net (gains) losses to net income		60			(202	)
Reclassification of net losses to net income								79			60
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period		6			(7	)		(4		)	6
Amortization of net actuarial loss, settlements and other to net income		32			38			35			32
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period		(2		)	16			42			(2	)
Other comprehensive loss, before tax (2)		(3,521		)	(293	)
Income tax benefit related to other comprehensive income (2)		862			123
Other comprehensive loss, net of tax (2)		(2,659		)	(170	)
Other comprehensive income (loss), before tax								2,867			(3,521	)
Income tax (expense) benefit related to other comprehensive income								(694		)	862
Other comprehensive income (loss), net of tax								2,173			(2,659	)
Less: Other comprehensive income from noncontrolling interests ~~(2)~~		—			14			—			—
Wells Fargo other comprehensive loss, net of tax (2)		(2,659		)	(184	)
Wells Fargo other comprehensive income (loss), net of tax								2,173			(2,659	)
Wells Fargo comprehensive income ~~(2)~~		2,477			5,450			8,033			2,477
Comprehensive income from noncontrolling interests		191			105			107			191
Total comprehensive income ~~(2)~~		$	2,668		5,555			$	8,140		2,668


~~(1)~~	Per the adoption of ASU 2016-01, the quarter ended March 31, 2018, reflects only net unrealized gains and reclassification of net gains to net income from debt securities. The quarter ended March 31, 2017, includes net unrealized gains from equity securities of ~~$61 million~~ ~~and reclassification of gains to net income related to equity securities of~~ ~~$(116) million~~.


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

The accompanying notes are an integral part of these statements.


Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet
(in millions, except shares)	Mar 31, 2018			Dec 31, 2017		Mar 31, 2019			Dec 31, 2018
Assets	(Unaudited)					(Unaudited)
Cash and due from banks	$	18,145		23,367		$	20,650		23,551
Interest-earning deposits with banks ~~(1)~~	184,250			192,580		128,318			149,736
Total cash, cash equivalents, and restricted cash ~~(1)~~	202,395			215,947		148,968			173,287
Federal funds sold and securities purchased under resale agreements ~~(1)~~	73,550			80,025		98,621			80,207
Debt securities:
Trading, at fair value ~~(2)~~	59,866			57,624		70,378			69,989
Available-for-sale, at fair value ~~(2)~~	271,656			276,407		268,099			269,912
Held-to-maturity, at cost (fair value $138,323 and $138,985)	141,446			139,335
Mortgages held for sale (includes $13,859 and $16,116 carried at fair value) (3)	17,944			20,070
Loans held for sale (includes $1,695 and $1,023 carried at fair value) (2)	3,581			1,131
Loans (includes $352 and $376 carried at fair value) (3)	947,308			956,770
Held-to-maturity, at cost (fair value $144,699 and $142,115)						144,990			144,788
Mortgage loans held for sale (includes $11,091 and $11,771 carried at fair value) (1)						15,016			15,126
Loans held for sale (includes $998 and $1,469 carried at fair value) (1)						1,018			2,041
Loans (includes $225 and $244 carried at fair value) (1)						948,249			953,110
Allowance for loan losses	(10,373		)	(11,004	)	(9,900		)	(9,775	)
Net loans	936,935			945,766		938,349			943,335
Mortgage servicing rights:
Measured at fair value	15,041			13,625		13,336			14,649
Amortized	1,411			1,424		1,427			1,443
Premises and equipment, net	8,828			8,847		8,825			8,920
Goodwill	26,445			26,587		26,420			26,418
Derivative assets	11,467			12,228		11,238			10,770
Equity securities (includes $35,561 and $39,227 carried at fair value) (2)	58,935			62,497
Equity securities (includes $32,586 and $29,556 carried at fair value) (1)						58,440			55,148
Other assets ~~(2)~~	85,888			90,244		82,667			79,850
Total assets (4)	$	1,915,388		1,951,757
Total assets (2)						$	1,887,792		1,895,883
Liabilities
Noninterest-bearing deposits	$	370,085		373,722		$	341,399		349,534
Interest-bearing deposits	933,604			962,269		922,614			936,636
Total deposits	1,303,689			1,335,991		1,264,013			1,286,170
Short-term borrowings	97,207			103,256		106,597			105,787
Derivative liabilities	7,883			8,796		7,393			8,499
Accrued expenses and other liabilities	73,397			70,615		74,717			69,317
Long-term debt	227,302			225,020		236,339			229,044
Total liabilities (5)	1,709,478			1,743,678
Total liabilities (3)						1,689,059			1,698,817
Equity
Wells Fargo stockholders' equity:
Wells Fargo stockholders’ equity:
Preferred stock	26,227			25,358		23,214			23,214
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares	9,136			9,136		9,136			9,136
Additional paid-in capital	60,399			60,893		60,409			60,685
Retained earnings	147,928			145,263		160,776			158,163
Cumulative other comprehensive income (loss)	(4,921		)	(2,144	)	(3,682		)	(6,336	)
Treasury stock – 607,928,993 shares and 590,194,846 shares	(31,246		)	(29,892	)
Treasury stock – 969,863,644 shares and 900,557,866 shares						(50,519		)	(47,194	)
Unearned ESOP shares	(2,571		)	(1,678	)	(1,502		)	(1,502	)
Total Wells Fargo stockholders' equity	204,952			206,936
Total Wells Fargo stockholders’ equity						197,832			196,166
Noncontrolling interests	958			1,143		901			900
Total equity	205,910			208,079		198,733			197,066
Total liabilities and equity	$	1,915,388		1,951,757		$	1,887,792		1,895,883

(1)

~~Financial information has been revised to reflect the impact of the adoption 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. See Note 1 (Summary of Significant Accounting Policies) for more information.


~~(2)~~	~~Financial information for the prior period has been revised to reflect the impact of the adoption of ASU 2016-01~~ – ~~Financial Instruments~~ – ~~Overall (Subtopic 825-10):~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities. See Note 1 (Summary of Significant Accounting Policies) for more information.~~


~~(3)~~	Parenthetical amounts represent assets and liabilities ~~for which~~that we are required to carry at fair value or have elected the fair value option.

~~(4)~~(2)

Our consolidated assets at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, include the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Cash and due from banks, ~~$111~~$16 million and ~~$116 million~~;$139 million; Interest-earning deposits with banks, $8$8 million and ~~$371 million~~;$8 million; Debt securities, $0$55 million ~~at both period ends;~~ and $45 million; Net loans, ~~$13.0~~$14.4 billion and ~~$12.5 billion; Derivative assets,~~ ~~$0 million~~ ~~at both period ends;~~$13.6 billion; Equity securities, ~~$28~~$112 million and ~~$306 million~~;$85 million; Other assets, ~~$230~~$252 million and ~~$342 million~~;$221 million; and Total assets, ~~$13.4~~$14.8 billion and ~~$13.6~~$14.1 billion,, respectively.

~~(5)~~(3)

Our consolidated liabilities at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, include the following VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo: ~~Derivative liabilities,~~ ~~$4 million~~ ~~and~~ ~~$5 million~~; Accrued expenses and other liabilities, ~~$127~~$205 million and ~~$132 million~~;$191 million; Long-term debt, ~~$947~~$775 million and ~~$1.5 billion~~;$816 million; and Total liabilities, ~~$1.1~~$980 million and $1.0 billion, ~~and~~ ~~$1.6 billion~~, respectively.

The accompanying notes are an integral part of these statements.


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity (Unaudited)	Consolidated Statement of Changes in Equity (Unaudited)									Consolidated Statement of Changes in Equity (Unaudited)

	Preferred stock					Common stock				Preferred stock					Common stock
(in millions, except shares)	Shares		Amount			Shares		Amount		Shares		Amount			Shares			Amount
Balance December 31, 2016	11,532,712		$	24,551		5,016,109,326		$	9,136
Cumulative effect from change in hedge accounting (1)
Balance January 1, 2017	11,532,712		$	24,551		5,016,109,326		$	9,136
Balance December 31, 2018										9,377,216		$	23,214		4,581,253,608			$	9,136
Cumulative effect from change in accounting policies (1)
Balance January 1, 2019										9,377,216		$	23,214		4,581,253,608			$	9,136
Net income
Other comprehensive income (loss), net of tax
Noncontrolling interests
Common stock issued						33,699,497									28,057,901
Common stock repurchased						(53,074,224	)								(97,363,710	)
Preferred stock issued to ESOP	950,000		950							—		—
Preferred stock released by ESOP
Preferred stock converted to common shares	—		—			—				(5	)	—			31
Common stock warrants repurchased/exercised
Preferred stock issued	—		—							—		—
Common stock dividends
Preferred stock dividends
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change	950,000		950			(19,374,727	)	—		(5	)	—			(69,305,778	)	Balance	—
Balance March 31, 2017	12,482,712		$	25,501		4,996,734,599		$	9,136
Balance March 31, 2019										9,377,211		$	23,214		4,511,947,830			$	9,136
Balance December 31, 2017	11,677,235		$	25,358		4,891,616,628		$	9,136	11,677,235		$	25,358		4,891,616,628			$	9,136
Cumulative effect from change in accounting policies (2)
Balance January 1, 2018	11,677,235		$	25,358		4,891,616,628		$	9,136	11,677,235		$	25,358		4,891,616,628			$	9,136
Net income
Other comprehensive income (loss), net of tax
Noncontrolling interests
Common stock issued						28,425,759									28,425,759
Common stock repurchased						(50,567,457	)								(50,567,457	)
Preferred stock issued to ESOP	1,100,000		1,100							1,100,000		1,100
Preferred stock released by ESOP
Preferred stock converted to common shares	(231,000	)	(231		)	4,407,551				(231,000	)	(231		)	4,407,551
Common stock warrants repurchased/exercised
Preferred stock issued										—		—
Common stock dividends
Preferred stock dividends
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change	869,000		869			(17,734,147	)	—		869,000		869			(17,734,147	)		—
Balance March 31, 2018	12,546,235		$	26,227		4,873,882,481		$	9,136	12,546,235		$	26,227		4,873,882,481			$	9,136

(1)

Effective January 1, ~~2017,~~2019, we adopted ~~changes in hedge accounting pursuant to~~ ASU ~~2017-12~~2016-02 – Leases (Topic 842) and subsequent related Updates, ASU 2017-08 – Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): – ~~Derivatives and Hedging (Topic 815):~~ ~~Targeted Improvements to Accounting for Hedging Activities~~Premium Amortization on Purchased Callable Debt Securities. See Note 1 (Summary of Significant Accounting Policies) for more information.

(2)

Effective January 1, 2018, we adopted ASU 2016-04 – Liabilities – Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products, ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, and ASU 2014-09 –Revenue from Contracts With Customers (Topic 606) and subsequent related ~~Updates.~~Updates. See Note 1 (Summary of Significant Accounting Policies) in this Report for more information.

~~The accompanying notes are an integral part of these statements.~~



																											Quarter ended March 31,
						Wells Fargo stockholders' equity															Wells Fargo stockholders’ equity
Additional paid-in capital		Retained earnings		Cumulative other comprehensive income		Treasury stock		Unearned ESOP shares		Total Wells Fargo stockholders' equity		Noncontrolling interests		Total equity			Retained earnings		Cumulative other comprehensive income		Treasury stock		Unearned ESOP shares		Total Wells Fargo stockholders’ equity		Noncontrolling interests		Total equity
60,234		133,075		(3,137	)	(22,713	)	(1,565	)	199,581		916		200,497
60,685																	158,163		(6,336	)	(47,194	)	(1,502	)	196,166		900		197,066
		(381	)	168						(213	)			(213	)		(492	)	481						(11	)			(11	)
60,234		132,694		(2,969	)	(22,713	)	(1,565	)	199,368		916		200,284
60,685																	157,671		(5,855	)	(47,194	)	(1,502	)	196,155		900		197,055
		5,634								5,634		91		5,725			5,860								5,860		107		5,967
				(184	)					(184	)	14		(170	)				2,173						2,173		—		2,173
2										2		(32	)	(30	)
3		(184	)			1,587				1,406				1,406
750						(2,925	)			(2,175	)			(2,175	)
31								(981	)	—				—
—								—		—				—											—		(106	)	(106	)
—						—				—				—			(329	)			1,468				1,139				1,139
(44	)									(44	)			(44	)
—										—				—							(4,820	)			(4,820	)			(4,820	)
12		(1,915	)							(1,903	)			(1,903	)
—																							—		—				—
—																							—		—				—
—																					—				—				—
—																									—				—
—																									—				—
19																	(2,073	)							(2,054	)			(2,054	)
		(401	)							(401	)			(401	)		(353	)							(353	)			(353	)
389										389				389
(792	)					21				(771	)			(771	)
351		3,134		(184	)	(1,317	)	(981	)	1,953		73		2,026
60,585		135,828		(3,153	)	(24,030	)	(2,546	)	201,321		989		202,310
544																									544				544
(839																)					27				(812	)			(812	)
(276																)	3,105		2,173		(3,325	)	—		1,677		1		1,678
60,409																	160,776		(3,682	)	(50,519	)	(1,502	)	197,832		901		198,733
60,893		145,263		(2,144	)	(29,892	)	(1,678	)	206,936		1,143		208,079			145,263		(2,144	)	(29,892	)	(1,678	)	206,936		1,143		208,079
		94		(118	)					(24	)			(24	)		94		(118	)					(24	)			(24	)
60,893		145,357		(2,262	)	(29,892	)	(1,678	)	206,912		1,143		208,055			145,357		(2,262	)	(29,892	)	(1,678	)	206,912		1,143		208,055
		5,136								5,136		191		5,327			5,136								5,136		191		5,327
				(2,659	)					(2,659	)			(2,659	)				(2,659	)					(2,659	)	—		(2,659	)
7										7		(376	)	(369	)										7		(376	)	(369	)
25		(231	)			1,414				1,208				1,208			(231	)			1,414				1,208				1,208
—						(3,029	)			(3,029	)			(3,029	)						(3,029	)			(3,029	)			(3,029	)
43								(1,143	)	—				—									(1,143	)	—				—
(19	)							250		231				231		)							250		231				231
5						226				—				—							226				—				—
(157	)									(157	)			(157	)	)									(157	)			(157	)
										—				—
—																									—				—
13		(1,924	)							(1,911	)			(1,911	)		(1,924	)							(1,911	)			(1,911	)
		(410	)							(410	)			(410	)		(410	)							(410	)			(410	)
437										437				437											437				437
(848	)					35				(813	)			(813	)	)					35				(813	)			(813	)
(494	)	2,571		(2,659	)	(1,354	)	(893	)	(1,960	)	(185	)	(2,145	)	)	2,571		(2,659	)	(1,354	)	(893	)	(1,960	)	(185	)	(2,145	)
60,399		147,928		(4,921	)	(31,246	)	(2,571	)	204,952		958		205,910			147,928		(4,921	)	(31,246	)	(2,571	)	204,952		958		205,910


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
	Quarter ended March 31,					Quarter ended March 31,
(in millions)	2018			2017		2019			2018
Cash flows from operating activities:
Net income before noncontrolling interests ~~(2)~~	$	5,327		5,725		$	5,967		5,327
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	191			605		845			191
Changes in fair value of MSRs, MHFS and LHFS carried at fair value	(788		)	8
Changes in fair value of MSRs, MLHFS and LHFS carried at fair value						1,144			(788	)
Depreciation, amortization and accretion	1,431			1,237		1,449			1,431
Other net (gains) ~~(2)~~	(2,309		)	(1,158	)	(1,418		)	(2,309	)
Stock-based compensation	792			740		902			792
Originations and purchases of mortgages held for sale (1)	(38,460		)	(37,664	)
Proceeds from sales of and paydowns on mortgages held for sale (1)	31,236			25,269
Originations and purchases of mortgage loans held for sale						(25,098		)	(38,460	)
Proceeds from sales of and paydowns on mortgage loans held for sale						17,148			31,236
Net change in:
Debt and equity securities, held for trading ~~(1)~~	10,861			14,628		6,969			10,861
Loans held for sale ~~(1)~~	(602		)	202		728			(602	)
Deferred income taxes	484			1,007		312			484
Derivative assets and liabilities ~~(2)~~	(20		)	(709	)	(1,586		)	(20	)
Other assets ~~(2)~~	3,331			3,618		1,130			3,331
Other accrued expenses and liabilities ~~(2)~~	3,756			(370	)	(541		)	3,756
Net cash provided by operating activities	15,230			13,138		7,951			15,230
Cash flows from investing activities:
Net change in:
Federal funds sold and securities purchased under resale agreements ~~(3)~~	4,566			(12,395	)	(18,414		)	4,566
Available-for-sale debt securities:
Proceeds from sales ~~(1)~~	3,458			3,023		1,680			3,458
Prepayments and maturities	6,909			11,016		6,001			6,909
Purchases	(14,179		)	(14,495	)	(4,937		)	(14,179	)
Held-to-maturity debt securities:
Paydowns and maturities	2,304			1,470		2,123			2,304
Equity securities, not held for trading:
Proceeds from sales and capital returns ~~(1)~~	1,920			1,533		1,180			1,920
Purchases ~~(1)~~	(1,234		)	(698	)	(1,352		)	(1,234	)
Loans:
Loans originated by banking subsidiaries, net of principal collected ~~(4)~~	1,238			5,123		669			1,238
Proceeds from sales (including participations) of loans held for investment	3,803			2,504		3,410			3,803
Purchases (including participations) of loans	(268		)	(1,148	)	(331		)	(268	)
Principal collected on nonbank entities’ loans ~~(4)~~	2,210			2,788		899			2,210
Loans originated by nonbank entities ~~(4)~~	(1,655		)	(1,927	)	(1,318		)	(1,655	)
Net cash paid for acquisitions	—			(46	)
Proceeds from sales of foreclosed assets and short sales	935			1,519		707			935
Other, net	154			(166	)	657			154
Net cash provided (used) by investing activities	10,161			(1,899	)	(9,026		)	10,161
Cash flows from financing activities:
Net change in:
Deposits	(32,276		)	19,365		(22,161		)	(32,276	)
Short-term borrowings	(5,165		)	(1,064	)	810			(5,165	)
Long-term debt:
Proceeds from issuance	15,517			12,975		17,338			15,517
Repayment	(11,625		)	(11,937	)	(11,898		)	(11,625	)
Preferred stock:
Cash dividends paid	(418		)	(408	)	(294		)	(418	)
Common stock:
Proceeds from issuance	382			572		181			382
Stock tendered for payment of withholding taxes	(307		)	(359	)	(264		)	(307	)
Repurchased	(3,029		)	(2,175	)	(4,820		)	(3,029	)
Cash dividends paid	(1,867		)	(1,859	)	(1,997		)	(1,867	)
Net change in noncontrolling interests	(113		)	(30	)	(83		)	(113	)
Other, net	(42		)	(29	)	(56		)	(42	)
Net cash provided (used) by financing activities	(38,943		)	15,051
Net change in cash, cash equivalents, and restricted cash (3)	(13,552		)	26,290
Cash, cash equivalents, and restricted cash at beginning of period (3)	215,947			221,043
Cash, cash equivalents, and restricted cash at end of period (3)	$	202,395		247,333
Net cash used by financing activities						(23,244		)	(38,943	)
Net change in cash, cash equivalents, and restricted cash						(24,319		)	(13,552	)
Cash, cash equivalents, and restricted cash at beginning of period						173,287			215,947
Cash, cash equivalents, and restricted cash at end of period						$	148,968		202,395
Supplemental cash flow disclosures:
Cash paid for interest	$	3,002		1,612		$	4,401		3,002
Cash paid for income taxes	158			215		126			158


~~(1)~~	~~Financial information for the prior period has been revised to reflect the impact of the adoption of ASU 2016-01~~ – ~~Financial Instruments~~ – ~~Overall (Subtopic 825-10):~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities. See Note 1 (Summary of Significant Accounting Policies) for more information.~~


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

~~(3)~~


~~(4)~~	~~Prior periods have been revised to reflect classification changes due to entity restructuring activities.~~

The accompanying notes are an integral part of these statements. See Note 1 (Summary of Significant Accounting Policies) for noncash activities.

Note 1: Summary of Significant Accounting Policies (continued)

See the Glossary of Acronyms at the end of this Report for terms used throughout the Financial Statements and related Notes.

Note 1: Summary of Significant Accounting Policies

Wells Fargo & Company is a diversified financial services company. We provide banking, trust and investments, mortgage banking, investment banking, retail banking, brokerage, and consumer and commercial finance through banking locations, the internet and other distribution channels to consumers, businesses and institutions in all 50 states, the District of Columbia, and in foreign countries. When we refer to “Wells Fargo,” “the Company,” “we,” “our” or “us,” we mean Wells Fargo & Company and Subsidiaries (consolidated). Wells Fargo & Company (the Parent) is a financial holding company and a bank holding company. We also hold a majority interest in a real estate investment trust, which has publicly traded preferred stock outstanding.

Our accounting and reporting policies conform with U.S. generally accepted accounting principles (GAAP) and practices in the financial services industry. For discussion of our significant accounting policies, see Note 1 (Summary of Significant Accounting Policies) in our Annual Report on Form 10-K for the year ended December 31, ~~2017 (2017~~2018 (2018 Form 10-K). To prepare the financial statements in conformity with GAAP, management must make estimates based on assumptions about future economic and market conditions (for example, unemployment, market liquidity, real estate prices, etc.) that affect the reported amounts of assets and liabilities at the date of the financial statements, income and expenses during the reporting period and the related disclosures. Although our estimates contemplate current conditions and how we expect them to change in the future, it is reasonably possible that actual conditions could be worse than anticipated in those estimates, which could materially affect our results of operations and financial condition. Management has made significant estimates in several areas, including:

allowance for credit losses (Note 6 (Loans and Allowance for Credit Losses));

valuations of residential mortgage servicing rights (MSRs) (Note 910 (Securitizations and Variable Interest Entities) and Note 1011 (Mortgage Banking Activities)) ~~and~~;

valuations of financial instruments (Note 15 (Derivatives) and Note 16 (Fair Values of Assets and Liabilities));

liabilities for contingent litigation losses (Note 1314 (Legal Actions)); and

income taxes.

Actual results could differ from those estimates.

These unaudited interim financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the periods presented. These adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q. The results of operations in the interim financial statements do not necessarily indicate the results that may be expected for the full year. The interim financial information should be read in conjunction with our ~~2017~~2018 Form 10-K.

Accounting Standards Adopted in ~~2018~~2019

In first quarter ~~2018,~~2019, we adopted the following new accounting guidance:

Accounting Standards Update (ASU or Update) ~~2017-09~~2018-16 – ~~Compensation – Stock Compensation~~Derivatives and Hedging (Topic ~~718)~~815):~~Scope~~ Inclusion of ~~Modification Accounting;~~the

Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes

ASU ~~2017-07~~2017-08 – Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost;~~Premium Amortization on Purchased Callable Debt Securities

ASU ~~2017-05~~2016-02 – ~~Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20):~~ ~~Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets;~~

~~ASU 2017-01 – Business Combinations~~Leases (Topic ~~805):~~ ~~Clarifying the Definition of a Business;~~

~~ASU~~ ~~2016-18 –~~ ~~Statement of Cash Flows (Topic 230):~~ ~~Restricted Cash;~~

~~ASU 2016-16 – Income Taxes (Topic 740):~~ ~~Intra-Entity Transfers of Assets Other Than Inventory;~~

~~ASU 2016-15 – Statement of Cash Flows (Topic 230):~~ ~~Classification of Certain Cash Receipts and Cash Payments;~~

~~ASU 2016-04 – Liabilities – Extinguishments of Liabilities (Subtopic 405-20):~~ ~~Recognition of Breakage for Certain Prepaid Stored-Value Products;~~

~~ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10):~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities;~~ ~~and~~

~~ASU 2014-09 –~~ ~~Revenue from Contracts With Customers (Topic 606)~~842) and subsequent related ~~Updates.~~Updates, including early adoption of ASU 2019-01 – Leases (Topic 842): Codification Improvements

ASU ~~2017-09~~ 2018-16~~clarifies when to account for a change to~~ expands the ~~terms or conditions~~list of ~~a share-based payment award~~U.S. benchmark interest rates permitted in the application of hedge accounting. The Update adds the OIS rate based on SOFR as a ~~modification. Under~~U.S. benchmark interest rate to facilitate the ~~ASU, modification~~LIBOR to SOFR transition and provide sufficient lead time for entities to prepare for changes to interest rate risk hedging strategies for both risk management and hedge accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The Update is applied to awards modified on or after the adoption date and accordingly, did not have a material impact on our consolidated financial statements.

~~ASU 2017-07~~ requires that the service cost component of net benefit cost be reported in the same line item as other compensation costs arising from services rendered by employees during the period, and the other pension cost components (interest cost, expected return on plan assets and amortization of actuarial gains and losses) be presented in the income statement separate from the service cost component. The income statement line item used to present the other pension cost components must be disclosed. We adopted this change in first quarter 2018. The Update did not have a material impact on our consolidated financial statements.

~~ASU 2017-05~~ provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with non-customers. The ASU applies to nonfinancial assets, including real estate (e.g., buildings, land, windmills, solar farms), ships and intellectual property. We adopted this change in first quarter 2018. The Update did not have a material impact on our consolidated financial statements.

~~ASU 2017-01~~ ~~requires that when substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business.~~purposes. The Update is applied prospectively ~~and accordingly,~~for qualifying new or re-designated hedging relationships entered into on or after adoption date.

We adopted the guidance in first quarter 2019. The adoption did not have an impact as we did not designate SOFR OIS as a ~~material impact on our consolidated financial statements.~~

~~ASU 2016-18~~ ~~requires that restricted cash and cash equivalents are included with the total cash and cash equivalents~~benchmark interest rate in ~~the consolidated statement of cash flows. In addition, the nature of~~ any restrictions will be disclosed in the footnotes to the financial statements. We adopted this change in first quarter 2018. Our retrospective adoption includes changes to our presentation of cash and cash equivalents in our consolidated statement of cash flows to include both cash and due from banks as well as interest-earning deposits with banks. In addition, we had corresponding changes on our consolidated balance sheets.hedging relationships.

ASU ~~2016-16~~ requires us to recognize the income tax effects of intercompany sales and transfers of assets other than inventory in the period in which the transfer occurs. We adopted this change in first quarter 2018. The Update did not have a material impact on our consolidated financial statements.

~~ASU 2016-15~~ addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice for reporting in the statement of cash flows. We adopted this change in first quarter 2018. The Update did not have a material impact on our consolidated financial statements.

~~ASU 2016-04~~ modifies the accounting for certain prepaid card products to require the recognition of breakage. Breakage represents the estimated amount that will not be redeemed by the cardholder for goods or services. We adopted this change in first quarter 2018. Upon adoption, we recorded a cumulative-effect adjustment that increased retained earnings, given estimated breakage, by $20 million.

~~ASU 2016-01~~2017-08 changes the ~~accounting~~interest income recognition model for ~~certain equity~~purchased callable debt securities carried at a premium, as the premium will be amortized to ~~record~~the earliest call date rather than to the contractual maturity date. Accounting for purchased callable debt securities held at ~~fair value with unrealized gains or losses reflected in earnings,~~a discount does not change, as ~~well as improve~~ the ~~disclosures of equity securities and~~discount will continue to accrete to the ~~fair value of financial instruments.~~contractual maturity date. The Update ~~also requires that for purposes~~impacted our investments in purchased callable debt securities classified as available-for-sale (AFS) and held-to-maturity (HTM), which primarily consist of ~~disclosing the fair value~~debt securities of ~~financial instruments recorded at amortized cost, including loans~~U.S. states and ~~long-term debt, the valuation methodology is based on an exit price notion.~~political subdivisions.

We adopted the Update in first quarter ~~2018~~2019 and recorded a cumulative-effect adjustment as of January 1, 2019, that decreased total stockholders’ equity by $111 million. Retained earnings was reduced by $592 million which reflects both the incremental premium amortization under the new guidance from the acquisition date of our impacted AFS and HTM debt securities through the date of adoption and the fact that the incremental premium amortization is not deductible for federal income tax purposes. Other comprehensive income (OCI) was increased by $481 million which reflects the corresponding adjustment to the adoption date unrealized gain or loss of impacted AFS debt securities. Going forward, interest income recognized prior to the call date will be reduced because the premium will be amortized over a shorter period.

ASU 2016-02 modifies the guidance used by lessors and lessees to account for leasing transactions. For our transition to the new guidance, we elected several available practical expedients, including to not reassess the classification of our existing leases, any initial direct costs associated with our leases, or whether any existing contracts are or contain leases. In addition, we elected not to provide a comparative presentation for 2018 and 2017 financial statements.

We adopted the Update in first quarter 2019 and recorded a cumulative-effect adjustment that increased retained earnings by ~~$106~~$100 million ~~as a result of a transition adjustment to reclassify $118 million in net unrealized~~

gains from other comprehensive income to retained earnings, partially offset by a transition adjustment to decrease retained earnings by $12 million primarily to adjust the carrying value of our auction rate securities from cost to fair value. No transition adjustment was recorded for investments changed to the measurement alternative (described below), which was applied prospectively.

As a result of adopting this ASU, our investments in marketable equity securities, including those previously classified as available-for-sale, are accounted for at fair value with unrealized gains or losses reflected in earnings. Additionally, our share of unrealized gains or losses related to ~~marketable equity securities held by~~deferred gains on our ~~equity method investees are reflected in earnings. Prior to adoption, such unrealized gains~~prior sale-leaseback transactions. We also recognized operating lease right-of-use

(ROU) assets and losses were reflected in other comprehensive income. Our investments in nonmarketable equity securities previously accounted for under the cost method of accounting, except for federal bank stock, are now accounted for either at fair value with unrealized gains and losses reflected in earnings or using the measurement alternative. The measurement alternative is similar to the cost method of accounting, except the carrying value is adjusted through earnings for impairment, if any, and changes in observable and orderly transactions in the same or similar investment. We account forliabilities, substantially all of which relate to our ~~private equity securities, previously using~~leasing of real estate as a lessee, of $4.9 billion and $5.6 billion, respectively.

Leasing Activity

AS LESSOR We lease equipment to our customers under financing or operating leases.

Financing leases are presented in loans and are recorded at the ~~cost method~~discounted amounts of ~~accounting, now under~~lease payments receivable plus the ~~measurement alternative. Our auction rate securities portfolio~~estimated residual value of the leased asset. Leveraged leases, which are a form of financing leases, are reduced by related non-recourse debt from third-party investors. Lease payments receivable reflect contractual lease payments adjusted for renewal or termination options that we believe the customer is ~~now accounted~~reasonably certain to exercise. The residual value reflects our best estimate of the expected sales price for the equipment at lease termination based on sales history adjusted for recent trends in the expected exit markets. Many of our leases allow the customer to extend the lease at prevailing market terms or purchase the asset for fair value ~~with unrealized gains~~at lease termination.

Our allowance for loan losses for financing leases considers both the collectability of the lease payments receivable as well as the estimated residual value of the leased asset. We typically purchase residual value insurance on our financing leases so that our risk of loss at lease termination will be less than 10% of the initial value of the lease. Our risk to declines in residual values is further mitigated by the diversity of leased assets in our lease portfolio. In addition, we have several channels for re-leasing or ~~losses reflected in earnings.~~marketing those assets.

In connection with a lease, we may finance the customer’s purchase of other products or services from the equipment vendor and allocate the contract consideration between the use of the asset and the purchase of those products or services based on information obtained from the vendor. Amounts allocated to financing of vendor products or services are reported in loans as commercial and industrial loans, rather than as lease financing.

Our primary income from financing leases is interest income recognized using the effective interest method. Variable lease revenues, such as reimbursement for property taxes associated with the leased asset, are included in lease income within noninterest income.

Operating lease assets are presented in other assets, net of accumulated depreciation. Periodic depreciation expense is recorded on a straight-line basis to the estimated residual value over the estimated useful life of the leased asset. On a periodic basis, operating lease assets are reviewed for impairment and impairment loss is recognized if the carrying amount of operating lease assets exceeds fair value and is not recoverable. The carrying amount of leased assets is deemed not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the lease payments and the estimated residual value upon the eventual disposition of the equipment. Depreciation of leased assets and impairment loss are presented in operating leases expense within other noninterest expense.

Operating lease rental income for leased assets is recognized in lease income within noninterest income on a straight-line basis over the lease term. For leases of railcars, revenue for maintenance services provided under the lease is recognized in lease income.

We elected to exclude from revenues and expenses any sales tax incurred on lease payments which are reimbursed by the lessee. Substantially all of our ~~adoption~~leased assets are protected against casualty loss through third party insurance.

AS LESSEEWe enter into lease agreements to obtain the right to use assets for our business operations, substantially all of ~~this Update,~~which are real estate. Lease liabilities and ROU assets are recognized when we enter into operating or financing leases and represent our obligations and rights to use these assets over the period of the leases and may be re-measured for certain modifications, resolution of certain contingencies involving variable consideration, or our exercise of options (renewal, extension, or termination) under the lease.

Operating lease liabilities include fixed and in-substance fixed payments for the contractual duration of the lease, adjusted for renewals or terminations which were deemed probable of exercise when measured. The lease payments are discounted using a rate determined when the lease is recognized. As we typically do not know the discount rate implicit in the lease, we estimate a discount rate that we believe approximates a collateralized borrowing rate for the estimated duration of the lease. The discount rate is updated when re-measurement events occur. The related operating lease ROU assets may differ from operating lease liabilities due to initial direct costs, deferred or prepaid lease payments and lease incentives.

We present operating lease liabilities in accrued expenses and other liabilities and the related operating lease ROU assets in other assets. The amortization of operating lease ROU assets and the accretion of operating lease liabilities are reported together as fixed lease expense and are included in net occupancy expense within noninterest expense. The fixed lease expense is recognized on a straight-line basis over the life of the lease.

Some of our operating leases include variable lease payments which are periodic adjustments of our payments for the use of the asset based on changes in factors such as consumer price indices, fair market value, tax rates imposed by taxing authorities, or lessor cost of insurance. To the extent not included in operating lease liabilities and operating lease ROU assets, these variable lease payments are recognized as incurred in net occupancy expense within noninterest expense.

We account for amounts paid for maintenance or other services as lease payments. In addition, for certain asset classes, we have ~~modified our balance sheet~~elected to exclude leases with original terms of less than one year from the operating lease ROU assets and ~~income statement presentation to report marketable~~lease liabilities. The related short-term lease expense is included in net occupancy expense.

Finance lease (formerly capital lease) liabilities are presented in long-term debt and ~~nonmarketable equity securities~~the associated finance ROU assets are presented in premises and their results separately from debt securities by now reporting all equity securities in a new line labeled “Equity securities” in both the balance sheet and income statement. Additionally we now report loans held for trading purposes in loans held for sale and have reclassified net gains and losses on marketable equity securities used as economic hedges of deferred compensation obligations from “Net gains for trading activities” to “Net gains from equity securities”. All prior periods have been revised to conform to these changes in reporting.equipment.

~~Table 1.1 provides a summary of our reporting changes implemented in connection with our adoption of ASU 2016-01.~~

~~Table 1.1:Summary of Reporting Changes~~



~~Financial instrument or transaction type~~	~~As previously reported~~	~~Revised reporting~~
~~Balance Sheet~~
~~Marketable equity securities~~	~~Trading assets and available for sale investment securities~~	~~Equity securities (new caption)~~
~~Nonmarketable equity securities~~	~~Other assets~~	~~Equity securities (new caption)~~
~~Loans held for trading~~	~~Trading assets~~	~~Loans held for sale~~
~~Debt securities held for trading~~	~~Trading assets~~	~~Debt securities (formerly “Investment securities”)~~

~~Income Statement~~
~~Interest income:~~
~~Marketable equity securities~~	~~Trading assets and investment securities~~	~~Equity securities (new caption)~~
~~Nonmarketable equity securities~~	~~Other~~	~~Equity securities (new caption)~~
~~Loans held for trading~~	~~Trading assets~~	~~Loans held for sale~~
~~Debt securities held for trading~~	~~Trading assets~~	~~Debt securities (formerly “Investment securities”)~~
~~Noninterest income:~~
~~Deferred compensation gains (1)~~	~~Net gains from trading activities~~	~~Net gains from equity securities~~


~~(1)~~	~~Reclassification of net gains and losses on marketable equity securities economically hedging our deferred compensation obligations.~~

Note 1: Summary of Significant Accounting Policies (continued)

~~Table 1.2 summarizes financial assets and liabilities by form and measurement accounting model.~~

~~Table 1.2:Accounting Model for Financial Assets and Liabilities~~



~~Balance sheet caption~~	~~Measurement model(s)~~	~~Financial statement Note reference~~
~~Cash and due from banks~~	~~Cost~~	~~N/A~~
~~Interest-earning deposits with banks~~	~~Cost~~	~~N/A~~
~~Federal funds sold and securities purchased under resale agreements~~	~~Amortized cost~~	~~N/A~~
~~Debt securities:~~
~~Trading~~	~~FV-NI (1)~~	~~Note 4: Trading Activities~~
~~Available-for-sale~~	~~FV-OCI (2)~~	~~Note 5: Debt Securities~~ ~~Note 15: Fair Values of Assets and Liabilities~~
~~Held-to-maturity~~	~~Amortized cost~~	~~Note 5: Debt Securities~~ ~~Note 15: Fair Values of Assets and Liabilities~~
~~Mortgages held for sale~~	~~FV-NI (1)~~ ~~LOCOM (3)~~	~~Note 15: Fair Values of Assets and Liabilities~~
~~Loans held for sale~~	~~FV-NI (1)~~ ~~LOCOM (3)~~	~~Note 15: Fair Values of Assets and Liabilities~~
~~Loans~~	~~Amortized cost~~ ~~FV-NI (1)~~	~~Note 6: Loans and Allowance for Credit Losses~~ ~~Note 15: Fair Values of Assets and Liabilities~~
~~Derivative assets and liabilities~~	~~FV-NI (1)~~ ~~FV-OCI (2)~~	~~Note 4: Trading Activities~~ ~~Note 14: Derivatives~~
~~Equity securities:~~
~~Marketable~~	~~FV-NI (1)~~	~~Note 4: Trading Activities~~ ~~Note 7: Equity Securities~~ ~~Note 15: Fair Values of Assets and Liabilities~~
~~Nonmarketable~~	~~FV-NI (1)~~ ~~Cost method~~ ~~Equity method~~ ~~MA (4)~~	~~Note 4: Trading Activities~~ ~~Note 7: Equity Securities~~ ~~Note 15: Fair Values of Assets and Liabilities~~
~~Other assets~~	~~Amortized cost (5)~~	~~Note 8: Other Assets~~
~~Deposits~~	~~Amortized cost~~	~~N/A~~
~~Short-term borrowings~~	~~Amortized cost~~	~~N/A~~
~~Long-term debt~~	~~Amortized cost~~	~~N/A~~


~~(1)~~	~~FV-NI represents the fair value through net income accounting model.~~


~~(2)~~	~~FV-OCI represents the fair value through other comprehensive income accounting model.~~


~~(3)~~	~~LOCOM represents the lower of cost or market accounting model.~~


~~(4)~~	~~MA represents the measurement alternative accounting model.~~


~~(5)~~	~~Other assets are generally carried at amortized cost, except for bank-owned life insurance which is carried at cash surrender value.~~

~~ASU 2014-09~~ modifies the guidance used to recognize revenue from contracts with customers for transfers of goods or services and transfers of non-financial assets, unless those contracts are within the scope of other guidance. Upon a modified retrospective adoption, we recorded a cumulative-effect adjustment that decreased retained earnings by $32 million, due to changes in the timing of revenue for corporate trust services that are provided over the life of the associated trust. In addition, we changed the presentation of some costs such that underwriting expenses of our broker-dealer business that were previously netted against revenue are now included in noninterest expense, and card payment network charges that were previously included in noninterest expense are now netted against card fee revenue.

~~Private~~ Share Repurchases

From time to time we may enter into private forward repurchase ~~transactions with unrelated third parties~~contracts, written repurchase plans pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, or a combination of the two to complement our open-market common stock repurchase ~~strategies, to~~strategies. The stock repurchase transactions allow us to manage our share repurchases in a manner consistent with our capital plans submitted annually under the Comprehensive Capital Analysis and Review (CCAR) and to provide an economic benefit to the Company.

Our payments to the counterparties for ~~these~~the private forward repurchase contracts are recorded in permanent equity in the quarter paid and are not subject to re-measurement. The classification of the up-front payments as permanent equity assures that we have appropriate repurchase timing consistent with our capital plans, which contemplate a fixed dollar amount available per quarter for share repurchases pursuant to the Board of Governors of the Federal Reserve ~~Board~~System (FRB) supervisory

guidance. In return, the counterparty agrees to deliver a variable number of shares based on a per share discount to the volume-weighted average stock price over the contract period. There are no scenarios where the contracts would not either physically settle in shares or allow us to choose the settlement method. Our total number of outstanding shares of common stock is not reduced until settlement of the private share repurchase contract.

We did not enter into any private forward repurchase contracts in first quarter 2019 and we had no unsettled private share repurchase contracts at ~~both~~ March 31, ~~2018~~2019.

Under a Rule 10b5-1 repurchase plan, payments and ~~March 31, 2017.~~

receipt of repurchased shares settle on the same day and the shares repurchased reduce the total number of outstanding shares of common stock upon the settlement of each trade under the plan.

Supplemental Cash Flow Information

Significant noncash activities are presented in Table ~~1.3.~~1.1.

Table ~~1.3:~~1.1: Supplemental Cash Flow Information


	Quarter ended March 31,			Quarter ended March 31,
(in millions)	2018		2017	2019		2018
Trading debt securities retained from securitization of MHFS	$	8,776	20,929
Transfers from loans to MHFS	1,297		1,657
Trading debt securities retained from securitization of MLHFS				$	8,875	8,776
Transfers from loans to MLHFS				1,292		1,297
Transfers from loans to LHFS	1,973		479	3		1,973
Transfers from available-for-sale debt securities to held-to-maturity debt securities	4,451		9,897	2,407		4,451
Operating lease ROU assets acquired with operating lease liabilities (1)				5,127		—


(1)	First quarter 2019 includes $4.9 billion from adoption of ASU 2016-02 – Leases (Topic 842) and $227 million attributable to new leases and changes from modified leases.

Subsequent Events

We have evaluated the effects of events that have occurred subsequent to March 31, ~~2018,~~2019, and, except as disclosed elsewhere in the footnotes, there have been no material events that would

require recognition in our first quarter ~~2018~~2019 consolidated financial statements or disclosure in the Notes to the consolidated financial statements, except that on April 20, 2018, we reached an agreement with the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC) to pay a total of $1 billion in civil money penalties to resolve matters regarding our compliance risk management program and our past practices involving certain

automobile collateral protection insurance policies and certain mortgage interest rate lock extensions (the “CFPB/OCC matter”). This agreement was considered to be a recognizable subsequent event under GAAP and required adjustment to our first quarter 2018 consolidated financial statements. Accordingly, we provided for an additional legal accrual that increased operating losses within noninterest expense by $800 million and, as a result, reduced net income for the quarter ended March 31, 2018, by $800 million, or $0.16 per diluted common share. See Note 13 (Legal Actions) for additional information.

Note 2: Business Combinations

We regularly explore opportunities to acquire financial services companies and businesses. Generally, we do not make a public announcement about an acquisition opportunity until a definitive agreement has been signed. ~~For information on additional contingent consideration related to acquisitions, which is considered to be a guarantee, see Note 12 (Guarantees, Pledged Assets and Collateral, and Other Commitments).~~

We completed no acquisitions during first quarter ~~2018~~2019 and had no business combinations pending as of March 31, ~~2018.~~

~~In February 2018, we completed the sale of Wells Fargo Shareowner Services.~~2019.

Note 3: Cash, Loan and Dividend Restrictions

Cash and cash equivalents may be restricted as to usage or withdrawal. ~~Federal Reserve Board (FRB)~~FRB regulations require that each of our subsidiary banks maintain reserve balances on deposit with the Federal Reserve Banks. Table 3.1 provides a summary of restrictions on cash equivalents in addition to the FRB reserve cash balance requirements.

Table 3.1: Nature of Restrictions on Cash Equivalents


(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2019		Dec 31, 2018
Average required reserve balance for FRB (1)	$	12,025	12,306	$	11,164	12,428
Reserve balance for non-U.S. central banks	427		617	746		517
Segregated for benefit of brokerage customers under federal and other brokerage regulations	574		666	913		1,135
Related to consolidated variable interest entities (VIEs) that can only be used to settle liabilities of VIEs	119		487	24		147


(1)	FRB required reserve balance represents average for first quarter ~~2018~~2019 and for the year ended December 31, ~~2017~~. 2018.

~~We are subject to additional loan and dividend restrictions.~~ We have a state-chartered subsidiary bank that is subject to state regulations that limit dividends. Under these provisions and regulatory limitations, our national and state-chartered subsidiary banks could have declared additional dividends of ~~$14.2~~$7.3 billion at March 31, ~~2018,~~2019, without obtaining prior regulatory approval. Our nonbank subsidiaries are also limited by certain federal and state statutory provisions and regulations covering the amount of dividends that may be paid in any given year. In addition, under a Support Agreement dated June 28, 2017, among Wells Fargo & Company, the parent holding company (the “Parent”), WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), and Wells Fargo Bank, N.A., Wells Fargo Securities, LLC, and Wells Fargo Clearing Services, LLC, each an indirect subsidiary of the Parent, the IHC may be restricted from making dividend payments to the Parent if certain liquidity and/or capital metrics fall below defined triggers. Based on retained earnings at March 31, ~~2018,~~2019, our nonbank subsidiaries could have declared additional dividends of ~~$24.8~~$24.9 billion at March 31, ~~2018,~~2019, without obtaining prior regulatory approval. For additional information see Note 3 (Cash, Loan and Dividend Restrictions) in our ~~2017~~2018 Form 10-K.

The FRB’s Capital Plan Rule (codified at 12 CFR 225.8 of Regulation Y) establishes capital planning and prior notice and approval requirements for capital distributions including dividends by certain large bank holding companies. The FRB has also published guidance regarding its supervisory expectations for capital planning, including capital policies regarding the process relating to common stock dividend and repurchase decisions in the FRB’s SR Letter 15-18. The effect of this guidance is to require the approval of the FRB (or specifically under the Capital Plan Rule, a notice of non-objection) for the Company to repurchase or redeem common or perpetual preferred stock as well as to raise the per share quarterly dividend from its current level of ~~$0.39~~$0.45 per share as declared by the Company’s Board of Directors on April ~~24, 2018,~~23, 2019, payable on June 1, ~~2018.~~2019.

Note 4: Trading Activities

We engage in trading activities to accommodate the investment and risk management activities of our customers. These activities predominantly occur in our Wholesale Banking businesses and to a lesser extent other divisions of the Company. Assets and liabilities associated with our trading activities include debt and equity securities, derivatives, loans and short sales. Our trading

assets and liabilities are carried on the balance sheet at fair value with changes in fair value recognized in net gains from trading activities and interest income and interest expense recognized in net interest income.

Table 4.1 presents a summary of our trading assets and liabilities measured at fair value through earnings.

Table 4.1: Trading Assets and Liabilities


	Mar 31,			Dec 31,		Mar 31,			Dec 31,
(in millions)	2018			2017		2019			2018
Trading assets:
Debt securities	$	59,866		57,624		$	70,378		69,989
Equity securities	25,327			30,004		20,933			19,449
Loans held for sale	1,695			1,023		998			1,469
Gross trading derivative assets	30,644			31,340		30,002			29,216
Netting (1)	(20,112		)	(19,629	)	(20,809		)	(19,807	)
Total trading derivative assets	10,532			11,711		9,193			9,409
Total trading assets	97,420			100,362		101,502			100,316
Trading liabilities:
Short sale	23,303			18,472		21,586			19,720
Gross trading derivative liabilities	29,717			31,386		28,994			28,717
Netting (1)	(22,569		)	(23,062	)	(22,810		)	(21,178	)
Total trading derivative liabilities	7,148			8,324		6,184			7,539
Total trading liabilities	$	30,451		26,796		$	27,770		27,259


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

Table 4.2 provides a summary of the net interest income earned from trading securities, and net gains and losses due to

the realized and unrealized gains and losses from trading activities.

Table 4.2: Net Interest Income and Net Gains (Losses) on Trading Activities


	Quarter ended March 31,					Quarter ended March 31,
(in millions)	2018			2017		2019			2018
Interest income (1):
Debt securities	$	631		513		$	793		631
Equity securities	141			114		115			141
Loans held for sale	8			9		23			8
Total interest income	780			636		931			780
Less: Interest expense (2)	128			93		136			128
Net interest income	652			543		795			652

Net gains (losses) from trading activities:
Debt securities	(499		)	149		688			(499	)
Equity securities	(469		)	927		2,067			(469	)
Loans held for sale	8			24		14			8
Derivatives (3)	1,203			(828	)	(2,412		)	1,203
Total net gains from trading activities (4)	243			272		357			243
Total trading-related net interest and noninterest income	$	895		815		$	1,152		895


(1)	Represents interest and dividend income earned on trading securities.


(2)	Represents interest and dividend expense incurred on trading securities we have sold but have not yet purchased.


(3)	Excludes economic hedging of mortgage banking and asset/liability management activities, for which hedge results (realized and unrealized) are reported with the respective hedged activities.


(4)	Represents realized gains (losses) from our trading activities and unrealized gains (losses) due to changes in fair value of our trading positions, attributable to the type of asset or liability.

Customer accommodation trading activities include our actions as an intermediary to buy and sell financial instruments and market-making activities. We also take positions to manage our exposure to customer accommodation activities. We hold financial instruments for trading in long positions (assets), as well as short positions where we sold financial instruments we have not yet purchased (liabilities), to facilitate our trading activities. As an intermediary we interact with market buyers and sellers to facilitate the purchase and sale of financial instruments to meet the anticipated or current needs of our customers. For example, we may purchase or sell a derivative to a customer who wants to manage interest rate risk exposure. We typically enter into an offsetting derivative or security position to manage our exposure to the customer transaction. We earn income based on the transaction price difference between the customer transaction and the offsetting position, which is reflected in the fair value changes of the positions recorded in the net gains from trading activities.

Our market-making activities include taking long and short trading positions to facilitate customer order flow. These activities are typically executed on a short term basis. As a market-maker we earn income due to: (1) difference between the price paid or received for the purchase and sale of the security (bid-ask spread), (2) the net interest income of the positions, and (3) the changes in fair value of the trading positions held on our balance sheet. Additionally, we may enter into separate derivative or security positions to manage our exposure related to our long and short trading positions taken in our market-making activities. Income earned on these market-making activities are reflected in the fair value changes of these positions recorded in net gains from trading activities.

Note 5: Available-for-Sale and Held-to-Maturity Debt Securities

Table 5.1 provides the amortized cost and fair value by major categories of available-for-sale debt securities, which are carried at fair value, and held-to-maturity debt securities, which are carried at amortized cost. The net unrealized gains (losses) for

available-for-sale debt securities are reported on an after-tax basis as a component of cumulative OCI. Information on debt securities held for trading is included in Note 4 (Trading Activities) to Financial Statements in this Report.

Table 5.1: Amortized Cost and Fair Value


(in millions)	Amortized Cost		Gross unrealized gains	Gross unrealized losses		Fair value	Amortized Cost		Gross unrealized gains	Gross unrealized losses		Fair value
March 31, 2018
March 31, 2019
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	6,426	1	(148	)	6,279	$	15,168	4	(66	)	15,106
Securities of U.S. states and political subdivisions	49,117		939	(413	)	49,643
Securities of U.S. states and political subdivisions (1)							48,566		1,194	(60	)	49,700
Mortgage-backed securities:
Federal agencies	160,216		431	(3,833	)	156,814	151,182		749	(1,268	)	150,663
Residential	4,233		243	(2	)	4,474	1,432		24	—		1,456
Commercial	4,722		78	(10	)	4,790	4,332		50	(10	)	4,372
Total mortgage-backed securities	169,171		752	(3,845	)	166,078	156,946		823	(1,278	)	156,491
Corporate debt securities	6,918		299	(34	)	7,183	6,188		204	(38	)	6,354
Collateralized loan and other debt obligations (1)	36,360		394	(2	)	36,752
Collateralized loan and other debt obligations (2)							35,304		169	(158	)	35,315
Other ~~(2)~~(3)	5,596		131	(6	)	5,721	5,074		73	(14	)	5,133
Total available-for-sale debt securities	273,588		2,516	(4,448	)	271,656	267,246		2,467	(1,614	)	268,099
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	44,727		—	(548	)	44,179	44,758		85	(150	)	44,693
Securities of U.S. states and political subdivisions	6,307		26	(102	)	6,231	6,163		102	(15	)	6,250
Federal agency and other mortgage-backed securities ~~(3)~~(4)	89,748		35	(2,537	)	87,246	94,009		419	(732	)	93,696
Collateralized loan obligations	567		3	—		570	60		—	—		60
Other (2)	97		—	—		97
Total held-to-maturity debt securities	141,446		64	(3,187	)	138,323	144,990		606	(897	)	144,699
Total	$	415,034	2,580	(7,635	)	409,979	$	412,236	3,073	(2,511	)	412,798
December 31, 2017
December 31, 2018
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	6,425	2	(108	)	6,319	$	13,451	3	(106	)	13,348
Securities of U.S. states and political subdivisions	50,733		1,032	(439	)	51,326
Securities of U.S. states and political subdivisions (1)							48,994		716	(446	)	49,264
Mortgage-backed securities:
Federal agencies	160,561		930	(1,272	)	160,219	155,974		369	(3,140	)	153,203
Residential	4,356		254	(2	)	4,608	2,638		142	(5	)	2,775
Commercial	4,487		80	(2	)	4,565	4,207		40	(22	)	4,225
Total mortgage-backed securities	169,404		1,264	(1,276	)	169,392	162,819		551	(3,167	)	160,203
Corporate debt securities	7,343		363	(40	)	7,666	6,230		131	(90	)	6,271
Collateralized loan and other debt obligations (1)	35,675		384	(3	)	36,056
Other (2)	5,516		137	(5	)	5,648
Collateralized loan and other debt obligations (2)							35,581		158	(396	)	35,343
Other (3)							5,396		100	(13	)	5,483
Total available-for-sale debt securities	275,096		3,182	(1,871	)	276,407	272,471		1,659	(4,218	)	269,912
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	44,720		189	(103	)	44,806	44,751		4	(415	)	44,340
Securities of U.S. states and political subdivisions	6,313		84	(43	)	6,354	6,286		30	(116	)	6,200
Federal agency and other mortgage-backed securities (3)	87,527		201	(682	)	87,046
Federal agency and other mortgage-backed securities (4)							93,685		112	(2,288	)	91,509
Collateralized loan obligations	661		4	—		665	66		—	—		66
Other (2)	114		—	—		114
Total held-to-maturity debt securities	139,335		478	(828	)	138,985	144,788		146	(2,819	)	142,115
Total	$	414,431	3,660	(2,699	)	415,392	$	417,259	1,805	(7,037	)	412,027


(1)	~~Available-for-sale~~Includes investments in tax-exempt preferred debt securities ~~include~~issued by investment funds or trusts that predominantly invest in tax-exempt municipal securities. The cost basis and fair value of these types of securities was $5.6 billion each at March 31, 2019, and $6.3 billion each at December 31, 2018.


(2)	Includes collateralized debt obligations (CDOs) with a cost basis and fair value of ~~$869~~$621 million and ~~$1.0 billion~~,$755 million, respectively, at March 31, ~~2018~~,2019, and ~~$887~~$662 million and ~~$1.0 billion~~,$800 million, respectively, at December 31, ~~2017~~.

~~(2)~~

The “Other” category of available-for-sale debt securities largely includes asset-backed securities collateralized by student loans. Included in the “Other” category of held-to-maturity debt securities are asset-backed securities collateralized by automobile leases or loans and cash with a cost basis and fair value of ~~$97 million~~ ~~each at~~ ~~March 31, 2018, and~~ ~~$114 million~~ ~~each at~~ ~~December 31, 2017~~.

2018.


(3)	Primarily includes asset-backed securities collateralized by student loans.


(4)	Predominantly consists of federal agency mortgage-backed securities at both March 31, ~~2018~~2019 and December 31, ~~2017~~.2018.

Note 5: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

Gross Unrealized Losses and Fair Value

Table 5.2 shows the gross unrealized losses and fair value of available-for-sale and held-to-maturity debt securities by length of time those individual securities in each category have been in a continuous loss position. Debt securities on which we have taken credit-related ~~OTTI write-downs~~other-than-temporary impairment (OTTI) write-

downs are categorized as being “less

than 12 months” or “12 months or more” in a continuous loss position based on the point in time that the fair value declined to below the cost basis and not the period of time since the credit-related OTTI write-down.

Table 5.2: Gross Unrealized Losses and Fair Value


	Less than 12 months				12 months or more			Total			Less than 12 months				12 months or more			Total
(in millions)	Gross unrealized losses			Fair value	Gross unrealized losses		Fair value	Gross unrealized losses		Fair value	Gross unrealized losses			Fair value	Gross unrealized losses		Fair value	Gross unrealized losses		Fair value
March 31, 2018
March 31, 2019
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	(56	)	4,037	(92	)	2,203	(148	)	6,240	$	—		—	(66	)	6,220	(66	)	6,220
Securities of U.S. states and political subdivisions	(26		)	5,292	(387	)	10,526	(413	)	15,818	(13		)	4,027	(47	)	3,612	(60	)	7,639
Mortgage-backed securities:
Federal agencies	(2,211		)	103,361	(1,622	)	38,197	(3,833	)	141,558	(5		)	1,392	(1,263	)	95,706	(1,268	)	97,098
Residential	(1		)	161	(1	)	53	(2	)	214	—			—	—		—	—		—
Commercial	(9		)	430	(1	)	109	(10	)	539	(7		)	1,542	(3	)	105	(10	)	1,647
Total mortgage-backed securities	(2,221		)	103,952	(1,624	)	38,359	(3,845	)	142,311	(12		)	2,934	(1,266	)	95,811	(1,278	)	98,745
Corporate debt securities	(10		)	664	(24	)	395	(34	)	1,059	(17		)	736	(21	)	373	(38	)	1,109
Collateralized loan and other debt obligations	(1		)	1,476	(1	)	162	(2	)	1,638	(131		)	19,572	(27	)	2,513	(158	)	22,085
Other	(1		)	169	(5	)	323	(6	)	492	(7		)	1,034	(7	)	278	(14	)	1,312
Total available-for-sale debt securities	(2,315		)	115,590	(2,133	)	51,968	(4,448	)	167,558	(180		)	28,303	(1,434	)	108,807	(1,614	)	137,110
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	(494		)	42,710	(54	)	1,469	(548	)	44,179	—			—	(150	)	30,379	(150	)	30,379
Securities of U.S. states and political subdivisions	(36		)	2,967	(66	)	1,653	(102	)	4,620	—			—	(15	)	1,663	(15	)	1,663
Federal agency and other mortgage-backed securities	(1,411		)	58,073	(1,126	)	26,991	(2,537	)	85,064	—			—	(732	)	64,315	(732	)	64,315
Collateralized loan obligations	—			—	—		—	—		—	—			—	—		—	—		—
Other	—			—	—		—	—		—
Total held-to-maturity debt securities	(1,941		)	103,750	(1,246	)	30,113	(3,187	)	133,863	—			—	(897	)	96,357	(897	)	96,357
Total	$	(4,256	)	219,340	(3,379	)	82,081	(7,635	)	301,421	$	(180	)	28,303	(2,331	)	205,164	(2,511	)	233,467
December 31, 2017
December 31, 2018
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	(27	)	4,065	(81	)	2,209	(108	)	6,274	$	(1	)	498	(105	)	6,204	(106	)	6,702
Securities of U.S. states and political subdivisions	(17		)	6,179	(422	)	11,766	(439	)	17,945	(73		)	9,746	(373	)	9,017	(446	)	18,763
Mortgage-backed securities:
Federal agencies	(243		)	52,559	(1,029	)	44,691	(1,272	)	97,250	(42		)	10,979	(3,098	)	112,252	(3,140	)	123,231
Residential	(1		)	47	(1	)	58	(2	)	105	(3		)	398	(2	)	69	(5	)	467
Commercial	(1		)	101	(1	)	133	(2	)	234	(20		)	1,972	(2	)	79	(22	)	2,051
Total mortgage-backed securities	(245		)	52,707	(1,031	)	44,882	(1,276	)	97,589	(65		)	13,349	(3,102	)	112,400	(3,167	)	125,749
Corporate debt securities	(4		)	239	(36	)	503	(40	)	742	(64		)	1,965	(26	)	298	(90	)	2,263
Collateralized loan and other debt obligations	(1		)	373	(2	)	146	(3	)	519	(388		)	28,306	(8	)	553	(396	)	28,859
Other	(1		)	37	(4	)	483	(5	)	520	(7		)	819	(6	)	159	(13	)	978
Total available-for-sale debt securities	(295		)	63,600	(1,576	)	59,989	(1,871	)	123,589	(598		)	54,683	(3,620	)	128,631	(4,218	)	183,314
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	(69		)	11,255	(34	)	1,490	(103	)	12,745	(3		)	895	(412	)	41,083	(415	)	41,978
Securities of U.S. states and political subdivisions	(5		)	500	(38	)	1,683	(43	)	2,183	(4		)	598	(112	)	3,992	(116	)	4,590
Federal agency and other mortgage-backed securities	(198		)	29,713	(484	)	28,244	(682	)	57,957	(5		)	4,635	(2,283	)	77,741	(2,288	)	82,376
Collateralized loan obligations	—			—	—		—	—		—	—			—	—		—	—		—
Other	—			—	—		—	—		—
Total held-to-maturity debt securities	(272		)	41,468	(556	)	31,417	(828	)	72,885	(12		)	6,128	(2,807	)	122,816	(2,819	)	128,944
Total	$	(567	)	105,068	(2,132	)	91,406	(2,699	)	196,474	$	(610	)	60,811	(6,427	)	251,447	(7,037	)	312,258

We have assessed each debt security with gross unrealized losses included in the previous table for credit impairment. As part of that assessment we evaluated and concluded that we do not intend to sell any of the debt securities and that it is more likely than not that we will not be required to sell prior to recovery of the amortized cost basis. We evaluate, where necessary, whether credit impairment exists by comparing the present value of the expected cash flows to the debt securities’ amortized cost basis.

For descriptions of the factors we consider when analyzing debt securities for impairment, see Note 1 (Summary of Significant Accounting Policies) and Note 5 ~~(Investment~~(Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in our ~~2017~~2018 Form 10-K. There were no material changes to our methodologies for assessing impairment in ~~the~~ first quarter ~~2018.~~2019.

Table 5.3 shows the gross unrealized losses and fair value of the available-for-sale and held-to-maturity debt securities by those rated investment grade and those rated less than investment grade, according to their lowest credit rating by Standard & Poor’s Rating Services (S&P) or Moody’s Investors

Service (Moody’s). Credit ratings express opinions about the credit quality of a debt security. Debt securities rated investment grade, that is those rated BBB- or higher by S&P or Baa3 or higher by Moody’s, are generally considered by the rating agencies and market participants to be low credit risk. Conversely, debt securities rated below investment grade, labeled as “speculative grade” by the rating agencies, are considered to be distinctively higher credit risk than investment grade debt securities. We have also included debt securities not rated by S&P or Moody’s in the table below based on our internal credit grade of the debt securities (used for credit risk management purposes) equivalent to the credit rating assigned by major credit agencies. The unrealized losses and fair value of unrated debt securities categorized as investment grade based on internal credit grades were ~~$25~~$11 million and ~~$5.0~~$4.0 billion, respectively, at March 31, ~~2018,~~2019, and ~~$32~~$20 million and ~~$6.9~~$5.2 billion, respectively, at December 31, ~~2017.~~2018. If an internal credit grade was not assigned, we categorized the debt security as non-investment grade.

Table 5.3: Gross Unrealized Losses and Fair Value by Investment Grade


	Investment grade				Non-investment grade			Investment grade				Non-investment grade
(in millions)	Gross unrealized losses			Fair value	Gross unrealized losses		Fair value	Gross unrealized losses			Fair value	Gross unrealized losses		Fair value
March 31, 2018
March 31, 2019
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	(148	)	6,240	—		—	$	(66	)	6,220	—		—
Securities of U.S. states and political subdivisions	(392		)	15,551	(21	)	267	(48		)	7,412	(12	)	227
Mortgage-backed securities:
Federal agencies	(3,833		)	141,558	—		—	(1,268		)	97,098	—		—
Residential	(1		)	146	(1	)	68	—			—	—		—
Commercial	(2		)	379	(8	)	160	(8		)	1,636	(2	)	11
Total mortgage-backed securities	(3,836		)	142,083	(9	)	228	(1,276		)	98,734	(2	)	11
Corporate debt securities	(10		)	370	(24	)	689	(8		)	455	(30	)	654
Collateralized loan and other debt obligations	(2		)	1,638	—		—	(158		)	22,085	—		—
Other	(4		)	443	(2	)	49	(8		)	1,039	(6	)	273
Total available-for-sale debt securities	(4,392		)	166,325	(56	)	1,233	(1,564		)	135,945	(50	)	1,165
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	(548		)	44,179	—		—	(150		)	30,379	—		—
Securities of U.S. states and political subdivisions	(102		)	4,620	—		—	(15		)	1,663	—		—
Federal agency and other mortgage-backed securities	(2,529		)	84,695	(8	)	369	(731		)	64,185	(1	)	130
Collateralized loan obligations	—			—	—		—	—			—	—		—
Other	—			—	—		—
Total held-to-maturity debt securities	(3,179		)	133,494	(8	)	369	(896		)	96,227	(1	)	130
Total	$	(7,571	)	299,819	(64	)	1,602	$	(2,460	)	232,172	(51	)	1,295
December 31, 2017
December 31, 2018
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	(108	)	6,274	—		—	$	(106	)	6,702	—		—
Securities of U.S. states and political subdivisions	(412		)	17,763	(27	)	182	(425		)	18,447	(21	)	316
Mortgage-backed securities:
Federal agencies	(1,272		)	97,250	—		—	(3,140		)	123,231	—		—
Residential	(1		)	42	(1	)	63	(2		)	295	(3	)	172
Commercial	(1		)	183	(1	)	51	(20		)	1,999	(2	)	52
Total mortgage-backed securities	(1,274		)	97,475	(2	)	114	(3,162		)	125,525	(5	)	224
Corporate debt securities	(13		)	304	(27	)	438	(17		)	791	(73	)	1,472
Collateralized loan and other debt obligations	(3		)	519	—		—	(396		)	28,859	—		—
Other	(2		)	469	(3	)	51	(7		)	726	(6	)	252
Total available-for-sale debt securities	(1,812		)	122,804	(59	)	785	(4,113		)	181,050	(105	)	2,264
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	(103		)	12,745	—		—	(415		)	41,978	—		—
Securities of U.S. states and political subdivisions	(43		)	2,183	—		—	(116		)	4,590	—		—
Federal agency and other mortgage-backed securities	(680		)	57,789	(2	)	168	(2,278		)	81,977	(10	)	399
Collateralized loan obligations	—			—	—		—	—			—	—		—
Other	—			—	—		—
Total held-to-maturity debt securities	(826		)	72,717	(2	)	168	(2,809		)	128,545	(10	)	399
Total	$	(2,638	)	195,521	(61	)	953	$	(6,922	)	309,595	(115	)	2,663

Note 5: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

Contractual Maturities

Table 5.4 shows the ~~remaining contractual maturities~~fair value and contractual weighted-average yields (taxable-equivalent basis) of available-for-sale debt ~~securities.~~securities by contractual maturity. The remaining contractual principal maturities for ~~MBS~~mortgage-backed securities (MBS) do not ~~consider~~

consider prepayments. Remaining expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations before the underlying mortgages mature.

Table 5.4: Available-for Sale Debt Securities - Fair Value by Contractual ~~Maturities~~Maturity


					Remaining contractual maturity																				Remaining contractual maturity
	Total				Within one year				After one year through five years				After five years through ten years				After ten years				Total				Within one year				After one year through five years				After five years through ten years				After ten years
(in millions)	amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
March 31, 2018
March 31, 2019
Available-for-sale debt securities (1):
Fair value:
Securities of U.S. Treasury and federal agencies	$	6,279	1.59	%	$	117	1.60	%	$	6,114	1.59	%	$	48	1.90	%	$	—	—	%	$	15,106	1.93	%	$	2,154	1.63	%	$	12,903	1.98	%	$	49	1.89	%	$	—	—	%
Securities of U.S. states and political subdivisions	49,643		4.75		2,089		2.70		8,343		3.05		4,293		3.16		34,918		5.48		49,700		4.81		3,665		2.81		5,986		3.39		4,274		3.47		35,775		5.41
Mortgage-backed securities:
Federal agencies	156,814		3.29		7		2.06		194		3.29		5,139		2.81		151,474		3.30		150,663		3.43		—		—		152		3.50		1,819		2.57		148,692		3.44
Residential	4,474		3.61		—		—		23		5.70		8		2.36		4,443		3.60		1,456		2.97		—		—		1		5.17		—		—		1,455		2.96
Commercial	4,790		3.45		—		—		—		—		219		3.10		4,571		3.46		4,372		3.72		—		—		—		—		341		3.60		4,031		3.73
Total mortgage-backed securities	166,078		3.30		7		2.06		217		3.54		5,366		2.83		160,488		3.32		156,491		3.44		—		—		153		3.51		2,160		2.73		154,178		3.45
Corporate debt securities	7,183		5.11		335		5.08		2,658		5.48		3,280		4.73		910		5.38		6,354		5.09		430		5.78		2,509		5.25		2,795		4.70		620		5.67
Collateralized loan and other debt obligations	36,752		3.29		—		—		37		2.09		14,788		3.27		21,927		3.31		35,315		4.15		—		—		18		4.80		10,889		4.24		24,408		4.11
Other	5,721		2.85		66		4.26		582		3.06		1,480		2.34		3,593		3.00		5,133		3.17		8		5.82		751		4.04		1,482		2.08		2,892		3.50
Total available-for-sale debt securities at fair value	$	271,656	3.56	%	$	2,614	2.98	%	$	17,951	2.92	%	$	29,255	3.28	%	$	221,836	3.66	%	$	268,099	3.73	%	$	6,257	2.61	%	$	22,320	2.81	%	$	21,649	3.85	%	$	217,873	3.85	%
December 31, 2017
Available-for-sale debt securities (1):									`
Fair value:
Securities of U.S. Treasury and federal agencies	$	6,319	1.59	%	$	81	1.37	%	$	6,189	1.59	%	$	49	1.89	%	$	—	—	%
Securities of U.S. states and political subdivisions	51,326		5.88		2,380		3.47		9,484		3.42		2,276		4.63		37,186		6.75
Mortgage-backed securities:
Federal agencies	160,219		3.27		15		2.03		210		3.08		5,534		2.82		154,460		3.28
Residential	4,608		3.52		—		—		24		5.67		11		2.46		4,573		3.51
Commercial	4,565		3.45		—		—		—		—		166		2.69		4,399		3.48
Total mortgage-backed securities	169,392		3.28		15		2.03		234		3.35		5,711		2.82		163,432		3.30
Corporate debt securities	7,666		5.12		443		5.54		2,738		5.56		3,549		4.70		936		5.26
Collateralized loan and other debt obligations	36,056		2.98		—		—		50		1.68		15,008		2.96		20,998		3.00
Other	5,648		2.46		71		3.56		463		2.72		1,466		2.13		3,648		2.53
Total available-for-sale debt securities at fair value	$	276,407	3.72	%	$	2,990	3.70	%	$	19,158	3.11	%	$	28,059	3.24	%	$	226,200	3.83	%


(1)	Weighted-average yields displayed by maturity bucket are weighted based on fair value and predominantly represent contractual coupon rates without effect for any related hedging derivatives.

Table 5.5 shows the amortized cost and weighted-average yields of held-to-maturity debt securities by contractual maturity.

Table 5.5: Held-to-Maturity Debt Securities - Amortized Cost by Contractual Maturity


					Remaining contractual maturity																				Remaining contractual maturity
	Total				Within one year				After one year through five years				After five years through ten years				After ten years				Total				Within one year				After one year through five years				After five years through ten years				After ten years
(in millions)	amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
March 31, 2018
March 31, 2019
Held-to-maturity debt securities (1):
Amortized cost:
Securities of U.S. Treasury and federal agencies	$	44,727	2.12	%	$	—	—	%	$	32,336	2.04	%	$	12,391	2.32	%	$	—	—	%	$	44,758	2.12	%	$	—	—	%	$	32,362	2.04	%	$	12,396	2.32	%	$	—	—	%
Securities of U.S. states and political subdivisions	6,307		4.93		—		—		50		5.88		793		5.16		5,464		4.89		6,163		4.92		—		—		70		6.03		1,366		4.92		4,727		4.90
Federal agency and other mortgage-backed securities	89,748		3.10		—		—		15		2.70		11		2.62		89,722		3.10		94,009		3.11		—		—		15		3.82		—		—		93,994		3.11
Collateralized loan obligations	567		3.22		—		—		—		—		567		3.22		—		—		60		3.97		—		—		—		—		60		3.97		—		—
Other	97		1.83		—		—		97		1.83		—		—		—		—
Total held-to-maturity debt securities at amortized cost	$	141,446	2.87	%	$	—	—	%	$	32,498	2.05	%	$	13,762	2.52	%	$	95,186	3.20	%	$	144,990	2.88	%	$	—	—	%	$	32,447	2.05	%	$	13,822	2.58	%	$	98,721	3.19	%
December 31, 2017
Held-to-maturity debt securities (1):
Amortized cost:
Securities of U.S. Treasury and federal agencies	$	44,720	2.12	%	$	—	—	%	$	32,330	2.04	%	$	12,390	2.32	%	$	—	—	%
Securities of U.S. states and political subdivisions	6,313		6.02		—		—		50		7.18		695		6.31		5,568		5.98
Federal agency and other mortgage-backed securities	87,527		3.11		—		—		15		2.81		11		2.49		87,501		3.11
Collateralized loan obligations	661		2.86		—		—		—		—		661		2.86		—		—
Other	114		1.83		—		—		114		1.83		—		—		—		—
Total held-to-maturity debt securities at amortized cost	$	139,335	2.92	%	$	—	—	%	$	32,509	2.05	%	$	13,757	2.55	%	$	93,069	3.28	%


(1)	Weighted-average yields displayed by maturity bucket are weighted based on amortized cost and predominantly represent contractual coupon rates.

Table 5.6 shows the fair value of held-to-maturity debt securities by contractual maturity.

Table 5.6: Held-to-Maturity Debt Securities - Fair Value by Contractual Maturity

Remaining contractual maturity
Total
Within one year

After one year
through five years

After five years
through ten years

After ten years
(in millions) amount
Amount
Amount
Amount
Amount
March 31, 2018
Held-to-maturity debt securities:
Fair value:
Securities of U.S. Treasury and federal agencies $ 44,179
—
32,014
12,165
—
Securities of U.S. states and political subdivisions 6,231
—
49
788
5,394
Federal agency and other mortgage-backed securities 87,246
—
15
11
87,220
Collateralized loan obligations 570
—
—
570
—
Other 97
—
97
—
—
Total held-to-maturity debt securities at fair value $ 138,323
—
32,175
13,534
92,614
December 31, 2017
Held-to-maturity debt securities:
Fair value:
Securities of U.S. Treasury and federal agencies $ 44,806
—
32,388
12,418
—
Securities of U.S. states and political subdivisions 6,354
—
49
701
5,604
Federal agency and other mortgage-backed securities 87,046
—
15
11
87,020
Collateralized loan obligations 665
—
—
665
—
Other 114
—
114
—
—
Total held-to-maturity debt securities at fair value $ 138,985
—
32,566
13,795
92,624

~~Note 5: Available-for-Sale and Held-to-Maturity Debt Securities (continued~~)



			Remaining contractual maturity
	Total		Within one year	After one year through five years	After five years through ten years	After ten years
(in millions)	amount		Amount	Amount	Amount	Amount
March 31, 2019
Held-to-maturity debt securities:
Fair value:
Securities of U.S. Treasury and federal agencies	$	44,693	—	32,245	12,448	—
Securities of U.S. states and political subdivisions	6,250		—	70	1,403	4,777
Federal agency and other mortgage-backed securities	93,696		—	15	—	93,681
Collateralized loan obligations	60		—	—	60	—
Total held-to-maturity debt securities at fair value	$	144,699	—	32,330	13,911	98,458

Realized Gains and Losses

Table 5.7 shows the gross realized gains and losses on sales and OTTI write-downs related to available-for-sale debt securities.

Table 5.7: Realized Gains and Losses


	Quarter ended March 31,					Quarter ended March 31,
(in millions)	2018			2017		2019			2018
Gross realized gains	$	21		124		$	173		21
Gross realized losses	(10		)	(36	)	(3		)	(10	)
OTTI write-downs	(10		)	(52	)	(45		)	(10	)
Net realized gains from available-for-sale debt securities	$	1		36		$	125		1

Other-Than-Temporarily Impaired Debt Securities

Table 5.8 shows the detail of total OTTI write-downs included in earnings for available-for-sale debt securities. There were no

OTTI write-downs on held-to-maturity debt securities during first quarter ~~2018~~2019 and ~~2017~~2018.

Table 5.8: Detail of OTTI Write-downs


	Quarter ended March 31,			Quarter ended March 31,
(in millions)	2018		2017	2019		2018
Debt securities OTTI write-downs included in earnings:
Securities of U.S. states and political subdivisions	$	2	8	$	29	2
Mortgage-backed securities:
Residential	1		3	—		1
Commercial	7		25	14		7
Corporate debt securities	—		16	2		—
Total debt securities OTTI write-downs included in earnings	$	10	52	$	45	10

Table 5.9 shows the detail of OTTI write-downs on available-for-sale debt securities included in earnings and the related changes in OCI for the same securities.

Table 5.9: OTTI Write-downs Included in Earnings and the Related Changes in OCI


	Quarter ended March 31,					Quarter ended March 31,
(in millions)	2018			2017		2019			2018
OTTI on debt securities
Recorded as part of gross realized losses:
Credit-related OTTI	$	9		52		$	16		9
Intent-to-sell OTTI	1			—		29			1
Total recorded as part of gross realized losses	10			52		45			10
Changes to OCI for losses (reversal of losses) in non-credit-related OTTI (1):
Securities of U.S. states and political subdivisions	(2		)	(5	)	—			(2	)
Residential mortgage-backed securities	(1		)	3		(1		)	(1	)
Commercial mortgage-backed securities	10			(7	)	1			10
Total changes to OCI for non-credit-related OTTI	7			(9	)	—			7
Total OTTI losses recorded on debt securities	$	17		43		$	45		17

(1)

Represents amounts recorded to OCI for impairment of debt securities, due to factors other than credit, that have also had credit-related OTTI write-downs during the period. Increases represent initial or subsequent non-credit-related OTTI on debt securities. Decreases represent partial to full reversal of impairment due to recoveries in the fair value of debt securities due to non-credit factors.

Note 5: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

Table 5.10 presents a rollforward of the OTTI credit loss that has been recognized in earnings as a write-down of available-for-sale debt securities we still own (referred to as “credit-impaired” debt securities) and do not intend to sell. Recognized credit loss represents the difference between the present value of expected

future cash flows discounted using the security’s current effective interest rate and the amortized cost basis of the security prior to considering credit loss.

Table 5.10: Rollforward of OTTI Credit Loss


	Quarter ended March 31,					Quarter ended March 31,
(in millions)	2018			2017		2019			2018
Credit loss recognized, beginning of period	$	742		1,043		$	562		742
Additions:
For securities with initial credit impairments	—			6		2			—
For securities with previous credit impairments	9			46		14			9
Total additions	9			52		16			9
Reductions:
For securities sold, matured, or intended/required to be sold	(101		)	(7	)	(346		)	(101	)
For recoveries of previous credit impairments (1)	(1		)	(2	)	—			(1	)
Total reductions	(102		)	(9	)	(346		)	(102	)
Credit loss recognized, end of period	$	649		1,086		$	232		649


(1)	Recoveries of previous credit impairments result from increases in expected cash flows subsequent to credit loss recognition. Such recoveries are reflected prospectively as interest yield adjustments using the effective interest method.

~~Note 6: Loans and Allowance for Credit Losses (continued~~)

Note 6: Loans and Allowance for Credit Losses

Table 6.1 presents total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include a total net reduction of ~~$3.2 billion~~$466 million and ~~$3.9~~$1.3 billion at March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, respectively, for unearned income,

net deferred loan fees, and unamortized discounts and premiums.

Table 6.1: Loans Outstanding


(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2019		Dec 31, 2018
Commercial:
Commercial and industrial	$	334,678	333,125	$	349,134	350,199
Real estate mortgage	125,543		126,599	122,113		121,014
Real estate construction	23,882		24,279	21,857		22,496
Lease financing	19,293		19,385	19,122		19,696
Total commercial	503,396		503,388	512,226		513,405
Consumer:
Real estate 1-4 family first mortgage	282,658		284,054	284,545		285,065
Real estate 1-4 family junior lien mortgage	37,920		39,713	33,099		34,398
Credit card	36,103		37,976	38,279		39,025
Automobile	49,554		53,371	44,913		45,069
Other revolving credit and installment	37,677		38,268	35,187		36,148
Total consumer	443,912		453,382	436,023		439,705
Total loans	$	947,308	956,770	$	948,249	953,110

Our foreign loans are reported by respective class of financing receivable in the table above. Substantially all of our foreign loan portfolio is commercial loans. Loans are classified as foreign primarily based on whether the borrower’s primary

address is outside of the United States. Table 6.2 presents total commercial foreign loans outstanding by class of financing receivable.

Table 6.2: Commercial Foreign Loans Outstanding


(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2019		Dec 31, 2018
Commercial foreign loans:
Commercial and industrial	$	59,696	60,106	$	63,158	62,564
Real estate mortgage	8,082		8,033	7,049		6,731
Real estate construction	668		655	1,138		1,011
Lease financing	1,077		1,126	1,167		1,159
Total commercial foreign loans	$	69,523	69,920	$	72,512	71,465

Note 6: Loans and Allowance for Credit Losses (continued)

Loan Purchases, Sales, and Transfers

Table 6.3 summarizes the proceeds paid or received for purchases and sales of loans and transfers from loans held for investment to mortgages/loans held for sale at lower of cost or fair value. This loan activity also includes participating interests, whereby we

receive or transfer a portion of a loan. The table excludes PCI

loans and loans for which we have elected the fair value option, including loans originated for sale because their loan activity normally does not impact the allowance for credit losses.

Table 6.3: Loan Purchases, Sales, and Transfers


	2018							2017						2019							2018
(in millions)	Commercial			Consumer (1)		Total		Commercial		Consumer (1)		Total		Commercial			Consumer (1)		Total		Commercial		Consumer (1)		Total
Quarter ended March 31,
Purchases	$	256		—		256		1,159		2		1,161		$	329		3		332		256		—		256
Sales	(460		)	—		(460	)	(287	)	(62	)	(349	)	(421		)	(179	)	(600	)	(460	)	—		(460	)
Transfers to MHFS/LHFS	(420		)	(1,553	)	(1,973	)	(479	)	—		(479	)
Transfers (to) from MLHFS/LHFS														(3		)	—		(3	)	(420	)	(1,553	)	(1,973	)

(1)

Excludes activity in government insured/guaranteed real estate 1-4 family first mortgage loans. As servicer, we are able to buy delinquent insured/guaranteed loans out of the Government National Mortgage Association (GNMA) pools, and manage and/or resell them in accordance with applicable requirements. These loans are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Accordingly, these loans have limited impact on the allowance for loan losses.

Commitments to Lend

A commitment to lend is a legally binding agreement to lend funds to a customer, usually at a stated interest rate, if funded, and for specific purposes and time periods. We generally require a fee to extend such commitments. Certain commitments are subject to loan agreements with covenants regarding the financial performance of the customer or borrowing base formulas on an ongoing basis that must be met before we are required to fund the commitment. We may reduce or cancel consumer commitments, including home equity lines and credit card lines, in accordance with the contracts and applicable law.

We may, as a representative for other lenders, advance funds or provide for the issuance of letters of credit under syndicated loan or letter of credit agreements. Any advances are generally repaid in less than a week and would normally require default of both the customer and another lender to expose us to loss. ~~These~~The unfunded amount of these temporary advance arrangements totaled approximately ~~$89 billion and $85~~$91.0 billion at both March 31, ~~2018~~2019 and December 31, ~~2017, respectively.~~2018.

We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, we had ~~$1.1~~$1.2 billion and ~~$982~~$919 million, respectively, of outstanding issued commercial letters of credit. We also originate multipurpose lending commitments under which borrowers have the option to draw on the facility for different purposes in one of several forms, including a standby letter of credit. See Note 1213 (Guarantees, Pledged Assets and Collateral, and Other Commitments) for additional information on standby letters of credit.

When we make commitments, we are exposed to credit risk. The maximum credit risk for these commitments will generally be lower than the contractual amount because a significant portion of these commitments is expected to expire without being used by the customer. In addition, we manage the potential risk in commitments to lend by limiting the total amount of commitments, both by individual customer and in total, by monitoring the size and maturity structure of these commitments and by applying the same credit standards for these commitments as for all of our credit activities.

For loans and commitments to lend, we generally require collateral or a guarantee. We may require various types of collateral, including commercial and consumer real estate, automobiles, other short-term liquid assets such as accounts receivable or inventory and long-lived assets, such as equipment and other business assets. Collateral requirements for each loan or commitment may vary based on the loan product and our assessment of a customer’s credit risk according to the specific credit underwriting, including credit terms and structure.

The contractual amount of our unfunded credit commitments, including unissued standby and commercial letters of credit, is summarized by portfolio segment and class of financing receivable in Table 6.4. The table excludes the issued standby and commercial letters of credit and temporary advance arrangements described above.

Table 6.4: Unfunded Credit Commitments


(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2019		Dec 31, 2018
Commercial:
Commercial and industrial	$	325,091	326,626	$	328,156	330,492
Real estate mortgage	7,233		7,485	7,453		6,984
Real estate construction	15,612		16,621	15,748		16,400
Lease financing	—		—
Total commercial	347,936		350,732	351,357		353,876
Consumer:
Real estate 1-4 family first mortgage	32,220		29,876	39,915		29,736
Real estate 1-4 family junior lien mortgage	38,817		38,897	37,854		37,719
Credit card	111,427		108,465	112,238		109,840
Other revolving credit and installment	27,635		27,541	27,123		27,530
Total consumer	210,099		204,779	217,130		204,825
Total unfunded credit commitments	$	558,035	555,511	$	568,487	558,701

~~Note 6: Loans and Allowance for Credit Losses (continued~~)

Allowance for Credit Losses

Table 6.5 presents the allowance for credit losses, which consists of the allowance for loan losses and the allowance for unfunded credit commitments.

Table 6.5: Allowance for Credit Losses


	Quarter ended March 31,					Quarter ended March 31,
(in millions)	2018			2017		2019			2018
Balance, beginning of period	$	11,960		12,540		$	10,707		11,960
Provision for credit losses	191			605		845			191
Interest income on certain impaired loans (1)	(43		)	(48	)	(39		)	(43	)
Loan charge-offs:
Commercial:
Commercial and industrial	(164		)	(253	)	(176		)	(164	)
Real estate mortgage	(2		)	(5	)	(12		)	(2	)
Real estate construction	—			—		(1		)	—
Lease financing	(17		)	(7	)	(11		)	(17	)
Total commercial	(183		)	(265	)	(200		)	(183	)
Consumer:
Real estate 1-4 family first mortgage	(41		)	(69	)	(43		)	(41	)
Real estate 1-4 family junior lien mortgage	(47		)	(93	)	(34		)	(47	)
Credit card	(405		)	(367	)	(437		)	(405	)
Automobile	(300		)	(255	)	(187		)	(300	)
Other revolving credit and installment	(180		)	(189	)	(162		)	(180	)
Total consumer	(973		)	(973	)	(863		)	(973	)
Total loan charge-offs	(1,156		)	(1,238	)	(1,063		)	(1,156	)
Loan recoveries:
Commercial:
Commercial and industrial	79			82		43			79
Real estate mortgage	17			30		6			17
Real estate construction	4			8		3			4
Lease financing	5			2		3			5
Total commercial	105			122		55			105
Consumer:
Real estate 1-4 family first mortgage	59			62		55			59
Real estate 1-4 family junior lien mortgage	55			70		43			55
Credit card	73			58		85			73
Automobile	92			88		96			92
Other revolving credit and installment	31			33		34			31
Total consumer	310			311		313			310
Total loan recoveries	415			433		368			415
Net loan charge-offs	(741		)	(805	)	(695		)	(741	)
Other	(54		)	(5	)	3			(54	)
Balance, end of period	$	11,313		12,287		$	10,821		11,313
Components:
Allowance for loan losses	$	10,373		11,168		$	9,900		10,373
Allowance for unfunded credit commitments	940			1,119		921			940
Allowance for credit losses	$	11,313		12,287		$	10,821		11,313
Net loan charge-offs (annualized) as a percentage of average total loans	0.32		%	0.34		0.30		%	0.32
Allowance for loan losses as a percentage of total loans	1.10			1.17		1.04			1.10
Allowance for credit losses as a percentage of total loans	1.19			1.28		1.14			1.19


(1)	Certain impaired loans with an allowance calculated by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in allowance attributable to the passage of time as interest income.

Note 6: Loans and Allowance for Credit Losses (continued)

Table 6.6 summarizes the activity in the allowance for credit losses by our commercial and consumer portfolio segments.

Table 6.6: Allowance Activity by Portfolio Segment


						2018						2017							2019						2018
(in millions)	Commercial			Consumer		Total		Commercial		Consumer		Total		Commercial			Consumer		Total		Commercial		Consumer		Total
Quarter ended March 31,
Balance, beginning of period	$	6,632		5,328		11,960		7,394		5,146		12,540		$	6,417		4,290		10,707		6,632		5,328		11,960
Provision (reversal of provision) for credit losses	169			22		191		(89	)	694		605
Provision for credit losses														164			681		845		169		22		191
Interest income on certain impaired loans	(11		)	(32	)	(43	)	(15	)	(33	)	(48	)	(11		)	(28	)	(39	)	(11	)	(32	)	(43	)

Loan charge-offs	(183		)	(973	)	(1,156	)	(265	)	(973	)	(1,238	)	(200		)	(863	)	(1,063	)	(183	)	(973	)	(1,156	)
Loan recoveries	105			310		415		122		311		433		55			313		368		105		310		415
Net loan charge-offs	(78		)	(663	)	(741	)	(143	)	(662	)	(805	)	(145		)	(550	)	(695	)	(78	)	(663	)	(741	)
Other	(4		)	(50	)	(54	)	(5	)	—		(5	)	3			—		3		(4	)	(50	)	(54	)
Balance, end of period	$	6,708		4,605		11,313		7,142		5,145		12,287		$	6,428		4,393		10,821		6,708		4,605		11,313

Table 6.7 disaggregates our allowance for credit losses and recorded investment in loans by impairment methodology.

Table 6.7: Allowance by Impairment Methodology


	Allowance for credit losses				Recorded investment in loans			Allowance for credit losses				Recorded investment in loans
(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total	Commercial		Consumer	Total	Commercial	Consumer	Total
March 31, 2018
March 31, 2019
Collectively evaluated (1)	$	6,029	3,580	9,609	499,578	418,877	918,455	$	5,863	3,448	9,311	508,379	420,010	928,389
Individually evaluated (2)	669		1,025	1,694	3,743	14,401	18,144	565		945	1,510	3,847	12,813	16,660
PCI (3)	10		—	10	75	10,634	10,709	—		—	—	—	3,200	3,200
Total	$	6,708	4,605	11,313	503,396	443,912	947,308	$	6,428	4,393	10,821	512,226	436,023	948,249
December 31, 2017
December 31, 2018
Collectively evaluated (1)	$	5,927	4,143	10,070	499,342	425,919	925,261	$	5,903	3,361	9,264	510,180	421,574	931,754
Individually evaluated (2)	705		1,185	1,890	3,960	14,714	18,674	514		929	1,443	3,221	13,126	16,347
PCI (3)	—		—	—	86	12,749	12,835	—		—	—	4	5,005	5,009
Total	$	6,632	5,328	11,960	503,388	453,382	956,770	$	6,417	4,290	10,707	513,405	439,705	953,110


(1)	Represents loans collectively evaluated for impairment in accordance with Accounting Standards Codification (ASC) 450-20, Loss Contingencies (formerly ~~FAS~~Statement of Financial Accounting Standards (FAS) 5), and pursuant to amendments by ASU 2010-20 regarding allowance for non-impaired loans.


(2)	Represents loans individually evaluated for impairment in accordance with ASC 310-10, Receivables (formerly FAS 114), and pursuant to amendments by ASU 2010-20 regarding allowance for impaired loans.


(3)	Represents the allowance and related loan carrying value determined in accordance with ASC 310-30, Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality (formerly SOP 03-3) and pursuant to amendments by ASU 2010-20 regarding allowance for PCI loans.

Credit Quality

We monitor credit quality by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the allowance for credit losses. The following sections provide the credit quality indicators we most closely monitor. The credit quality indicators are generally based on information as of our financial statement date, with the exception of updated Fair Isaac Corporation (FICO) scores and updated loan-to-value (LTV)/combined LTV (CLTV). We obtain FICO scores at loan origination and the scores are generally updated at least quarterly, except in limited circumstances, including compliance with the Fair Credit Reporting Act (FCRA). Generally, the LTV and CLTV indicators are updated in the second month of each quarter, with updates no older than December 31, ~~2017. See the “Purchased Credit-Impaired Loans” section in this Note for credit quality information on our PCI portfolio.~~2018.

COMMERCIAL CREDIT QUALITY INDICATORS In addition to monitoring commercial loan concentration risk, we manage a consistent process for assessing commercial loan credit quality. Generally, commercial loans are subject to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to Pass and Criticized categories. The Criticized category includes Special Mention, Substandard, and Doubtful categories which are defined by bank regulatory agencies.

Table 6.8 provides a breakdown of outstanding commercial loans by risk category. Of the ~~$16.3~~$15.6 billion in criticized commercial and industrial loans and ~~$4.6~~$5.0 billion in criticized commercial real estate (CRE) loans at March 31, ~~2018, $1.5~~2019, $2.0 billion and ~~$800~~$735 million, respectively, have been placed on nonaccrual status and written down to net realizable collateral value.

~~Note 6: Loans and Allowance for Credit Losses (continued~~)

Table 6.8: Commercial Loans by Risk Category


(in millions)	Commercial and industrial		Real estate mortgage	Real estate construction	Lease financing	Total	Commercial and industrial		Real estate mortgage	Real estate construction	Lease financing	Total
March 31, 2018
March 31, 2019
By risk category:
Pass	$	318,334	121,151	23,647	18,120	481,252	$	333,502	117,353	21,612	18,138	490,605
Criticized	16,269		4,392	235	1,173	22,069	15,632		4,760	245	984	21,621
Total commercial loans (excluding PCI)	334,603		125,543	23,882	19,293	503,321	349,134		122,113	21,857	19,122	512,226
Total commercial PCI loans (carrying value)	75		—	—	—	75	—		—	—	—	—
Total commercial loans	$	334,678	125,543	23,882	19,293	503,396	$	349,134	122,113	21,857	19,122	512,226
December 31, 2017
December 31, 2018
By risk category:
Pass	$	316,431	122,312	23,981	18,162	480,886	$	335,412	116,514	22,207	18,671	492,804
Criticized	16,608		4,287	298	1,223	22,416	14,783		4,500	289	1,025	20,597
Total commercial loans (excluding PCI)	333,039		126,599	24,279	19,385	503,302	350,195		121,014	22,496	19,696	513,401
Total commercial PCI loans (carrying value)	86		—	—	—	86	4		—	—	—	4
Total commercial loans	$	333,125	126,599	24,279	19,385	503,388	$	350,199	121,014	22,496	19,696	513,405

Table 6.9 provides past due information for commercial loans, which we monitor as part of our credit risk management practices.

Table 6.9: Commercial Loans by Delinquency Status


(in millions)	Commercial and industrial		Real estate mortgage	Real estate construction	Lease financing	Total	Commercial and industrial		Real estate mortgage	Real estate construction	Lease financing	Total
March 31, 2018
March 31, 2019
By delinquency status:
Current-29 days past due (DPD) and still accruing	$	332,432	124,148	23,706	19,077	499,363	$	346,696	121,196	21,591	18,871	508,354
30-89 DPD and still accruing	615		617	130	123	1,485	410		198	225	175	1,008
90+ DPD and still accruing	40		23	1	—	64	42		20	5	—	67
Nonaccrual loans	1,516		755	45	93	2,409	1,986		699	36	76	2,797
Total commercial loans (excluding PCI)	334,603		125,543	23,882	19,293	503,321	349,134		122,113	21,857	19,122	512,226
Total commercial PCI loans (carrying value)	75		—	—	—	75	—		—	—	—	—
Total commercial loans	$	334,678	125,543	23,882	19,293	503,396	$	349,134	122,113	21,857	19,122	512,226
December 31, 2017
December 31, 2018
By delinquency status:
Current-29 DPD and still accruing	$	330,319	125,642	24,107	19,148	499,216	$	348,158	120,176	22,411	19,443	510,188
30-89 DPD and still accruing	795		306	135	161	1,397	508		207	53	163	931
90+ DPD and still accruing	26		23	—	—	49	43		51	—	—	94
Nonaccrual loans	1,899		628	37	76	2,640	1,486		580	32	90	2,188
Total commercial loans (excluding PCI)	333,039		126,599	24,279	19,385	503,302	350,195		121,014	22,496	19,696	513,401
Total commercial PCI loans (carrying value)	86		—	—	—	86	4		—	—	—	4
Total commercial loans	$	333,125	126,599	24,279	19,385	503,388	$	350,199	121,014	22,496	19,696	513,405

Note 6: Loans and Allowance for Credit Losses (continued)

CONSUMER CREDIT QUALITY INDICATORS We have various classes of consumer loans that present unique risks. Loan delinquency, FICO credit scores and LTV for loan types are common credit quality indicators that we monitor and utilize in our evaluation of the appropriateness of the allowance for credit losses for the consumer portfolio segment.

Many of our loss estimation techniques used for the allowance for credit losses rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality and the establishment of our allowance for credit losses. Table 6.10 provides the outstanding balances of our consumer portfolio by delinquency status.

Table 6.10: Consumer Loans by Delinquency Status


(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Credit card	Automobile	Other revolving credit and installment	Total	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Credit card	Automobile	Other revolving credit and installment	Total
March 31, 2018
March 31, 2019
By delinquency status:
Current-29 DPD	$	253,542	37,046	35,198	48,136	37,320	411,242	$	266,098	32,373	37,334	43,836	34,869	414,510
30-59 DPD	1,449		273	244	991	135	3,092	1,441		243	251	777	127	2,839
60-89 DPD	589		141	188	306	84	1,308	494		118	193	222	78	1,105
90-119 DPD	290		93	167	116	78	744	231		70	174	74	74	623
120-179 DPD	279		104	304	4	27	718	223		78	327	4	24	656
180+ DPD	1,105		238	2	1	33	1,379	683		201	—	—	15	899
Government insured/guaranteed loans (1)	14,795		—	—	—	—	14,795	11,966		—	—	—	—	11,966
Loans held at fair value								225		—	—	—	—	225
Total consumer loans (excluding PCI)	272,049		37,895	36,103	49,554	37,677	433,278	281,361		33,083	38,279	44,913	35,187	432,823
Total consumer PCI loans (carrying value)	10,609		25	—	—	—	10,634
Total consumer PCI loans (carrying value) (2)								3,184		16	—	—	—	3,200
Total consumer loans	$	282,658	37,920	36,103	49,554	37,677	443,912	$	284,545	33,099	38,279	44,913	35,187	436,023
December 31, 2017
December 31, 2018
By delinquency status:
Current-29 DPD	$	251,786	38,746	36,996	51,445	37,885	416,858	$	263,881	33,644	38,008	43,604	35,794	414,931
30-59 DPD	1,893		336	287	1,385	155	4,056	1,411		247	292	1,040	140	3,130
60-89 DPD	742		163	201	392	93	1,591	549		126	212	314	87	1,288
90-119 DPD	369		103	192	146	80	890	257		74	192	109	80	712
120-179 DPD	308		95	298	3	30	734	225		77	320	2	27	651
180+ DPD	1,091		243	2	—	25	1,361	822		213	1	—	20	1,056
Government insured/guaranteed loans (1)	15,143		—	—	—	—	15,143	12,688		—	—	—	—	12,688
Loans held at fair value								244		—	—	—	—	244
Total consumer loans (excluding PCI)	271,332		39,686	37,976	53,371	38,268	440,633	280,077		34,381	39,025	45,069	36,148	434,700
Total consumer PCI loans (carrying value)	12,722		27	—	—	—	12,749
Total consumer PCI loans (carrying value) (2)								4,988		17	—	—	—	5,005
Total consumer loans	$	284,054	39,713	37,976	53,371	38,268	453,382	$	285,065	34,398	39,025	45,069	36,148	439,705


(1)	Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA. Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled ~~$9.4~~$7.0 billion at March 31, ~~2018~~,2019, compared with ~~$10.5~~$7.7 billion at December 31, ~~2017~~. 2018.


(2)	19% of the adjusted unpaid principal balance for consumer PCI loans are 30+ DPD at March 31, 2019, compared with 18% at December 31, 2018.

Of the ~~$2.8~~$2.2 billion of consumer loans not government insured/guaranteed that are 90 days or more past due at March 31, ~~2018, $903~~2019, $807 million was accruing, compared with ~~$3.0~~$2.4 billion past due and ~~$1.0 billion~~$885 million accruing at December 31, ~~2017.~~2018.

Real estate 1-4 family first mortgage loans 180 days or more past due totaled ~~$1.1 billion,~~$683 million, or ~~0.4%~~0.2% of total first mortgages (excluding PCI), at ~~both~~ March 31, ~~2018 and~~2019, compared with $822 million, or 0.3%, at December 31, ~~2017.~~2018.

~~Note 6: Loans and Allowance for Credit Losses (continued~~)

Table 6.11 provides a breakdown of our consumer portfolio by FICO. Most of the scored consumer portfolio has an updated FICO of 680 and above, reflecting a strong current borrower credit profile. FICO is not available for certain loan types, or may not be required if we deem it unnecessary due to strong collateral

and other borrower attributes. Substantially all loans not requiring a FICO score are securities-based loans originated through retail brokerage, and totaled $8.7 billion at March 31, ~~2018,~~2019, and ~~$8.5~~$8.9 billion at December 31, ~~2017.~~2018.

Table 6.11: Consumer Loans by FICO


(in millions)	Real estate 1-4 family first mortgage (1)		Real estate 1-4 family junior lien mortgage (1)	Credit card	Automobile	Other revolving credit and installment	Total	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Credit card	Automobile	Other revolving credit and installment	Total
March 31, 2018
March 31, 2019
By FICO:
< 600	$	4,674	1,601	3,407	8,546	828	19,056	$	4,106	1,410	3,150	6,907	685	16,258
600-639	3,405		1,223	2,915	5,161	862	13,566	2,843		979	2,615	4,412	690	11,539
640-679	6,717		2,274	5,352	6,936	1,906	23,185	5,813		1,829	6,173	6,209	1,752	21,776
680-719	14,313		4,604	7,304	8,049	3,397	37,667	13,406		3,775	9,206	7,279	3,265	36,931
720-759	27,119		6,007	7,808	7,215	4,947	53,096	26,943		5,130	7,769	6,795	4,235	50,872
760-799	54,227		6,918	6,065	6,036	6,223	79,469	56,626		5,967	5,082	5,958	5,261	78,894
800+	141,351		14,506	2,922	7,399	8,252	174,430	154,956		12,724	3,759	7,239	8,242	186,920
No FICO available	5,448		762	330	212	2,525	9,277	4,477		1,269	525	114	2,371	8,756
FICO not required	—		—	—	—	8,737	8,737	—		—	—	—	8,686	8,686
Government insured/guaranteed loans (1)	14,795		—	—	—	—	14,795	12,191		—	—	—	—	12,191
Total consumer loans (excluding PCI)	272,049		37,895	36,103	49,554	37,677	433,278	281,361		33,083	38,279	44,913	35,187	432,823
Total consumer PCI loans (carrying value)(2)	10,609		25	—	—	—	10,634	3,184		16	—	—	—	3,200
Total consumer loans	$	282,658	37,920	36,103	49,554	37,677	443,912	$	284,545	33,099	38,279	44,913	35,187	436,023
December 31, 2017
December 31, 2018
By FICO:
< 600	$	5,145	1,768	3,525	8,858	863	20,159	$	4,273	1,454	3,292	7,071	697	16,787
600-639	3,487		1,253	3,101	5,615	904	14,360	2,974		994	2,777	4,431	725	11,901
640-679	6,789		2,387	5,690	7,696	1,959	24,521	5,810		1,898	6,464	6,225	1,822	22,219
680-719	14,977		4,797	7,628	8,825	3,582	39,809	13,568		3,908	9,445	7,354	3,384	37,659
720-759	27,926		6,246	8,097	7,806	5,089	55,164	27,258		5,323	7,949	6,853	4,395	51,778
760-799	55,590		7,323	6,372	6,468	6,257	82,010	57,193		6,315	5,227	5,947	5,322	80,004
800+	136,729		15,144	2,994	7,845	8,455	171,167	151,465		13,190	3,794	7,099	8,411	183,959
No FICO available	5,546		768	569	258	2,648	9,789	4,604		1,299	77	89	2,507	8,576
FICO not required	—		—	—	—	8,511	8,511	—		—	—	—	8,885	8,885
Government insured/guaranteed loans (1)	15,143		—	—	—	—	15,143	12,932		—	—	—	—	12,932
Total consumer loans (excluding PCI)	271,332		39,686	37,976	53,371	38,268	440,633	280,077		34,381	39,025	45,069	36,148	434,700
Total consumer PCI loans (carrying value)(2)	12,722		27	—	—	—	12,749	4,988		17	—	—	—	5,005
Total consumer loans	$	284,054	39,713	37,976	53,371	38,268	453,382	$	285,065	34,398	39,025	45,069	36,148	439,705


(1)	Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.


(2)	43% of the adjusted unpaid principal balance for consumer PCI loans have FICO scores less than 680 and 13% where no FICO is available to us at March 31, 2019, compared with 45% and 15%, respectively, at December 31, 2018.

LTV refers to the ratio comparing the loan’s unpaid principal balance to the property’s collateral value. CLTV refers to the combination of first mortgage and junior lien mortgage (including unused line amounts for credit line products) ratios. LTVs and CLTVs are updated quarterly using a cascade approach which first uses values provided by automated valuation models (AVMs) for the property. If an AVM is not available, then the value is estimated using the original appraised value adjusted by the change in Home Price Index (HPI) for the property location. If an HPI is not available, the original appraised value is used. The HPI value is normally the only method considered for high value properties, generally with an original value of $1 million or more, as the AVM values have proven less accurate for these properties.

Table 6.12 shows the most updated LTV and CLTV distribution of the real estate 1-4 family first and junior lien mortgage loan portfolios. We consider the trends in residential real estate markets as we monitor credit risk and establish our allowance for credit losses. In the event of a default, any loss should be limited to the portion of the loan amount in excess of the net realizable value of the underlying real estate collateral value. Certain loans do not have an LTV or CLTV due to industry data availability and portfolios acquired from or serviced by other institutions.

Note 6: Loans and Allowance for Credit Losses (continued)

Table 6.12: Consumer Loans by LTV/CLTV


	March 31, 2018				December 31, 2017			March 31, 2019				December 31, 2018
(in millions)	Real estate 1-4 family first mortgage by LTV		Real estate 1-4 family junior lien mortgage by CLTV	Total	Real estate 1-4 family first mortgage by LTV	Real estate 1-4 family junior lien mortgage by CLTV	Total	Real estate 1-4 family first mortgage by LTV		Real estate 1-4 family junior lien mortgage by CLTV	Total	Real estate 1-4 family first mortgage by LTV	Real estate 1-4 family junior lien mortgage by CLTV	Total
By LTV/CLTV:
0-60%	$	135,883	15,854	151,737	133,902	16,301	150,203	$	145,143	15,156	160,299	147,666	15,753	163,419
60.01-80%	103,368		12,274	115,642	104,639	12,918	117,557	105,991		10,784	116,775	104,477	11,183	115,660
80.01-100%	14,297		6,179	20,476	13,924	6,580	20,504	15,477		4,725	20,202	12,372	4,874	17,246
100.01-120% (1)	1,757		2,245	4,002	1,868	2,427	4,295	1,184		1,482	2,666	1,211	1,596	2,807
> 120% (1)	715		902	1,617	783	1,008	1,791	472		550	1,022	484	578	1,062
No LTV/CLTV available	1,234		441	1,675	1,073	452	1,525	903		386	1,289	935	397	1,332
Government insured/guaranteed loans (2)	14,795		—	14,795	15,143	—	15,143	12,191		—	12,191	12,932	—	12,932
Total consumer loans (excluding PCI)	272,049		37,895	309,944	271,332	39,686	311,018	281,361		33,083	314,444	280,077	34,381	314,458
Total consumer PCI loans (carrying value)(3)	10,609		25	10,634	12,722	27	12,749	3,184		16	3,200	4,988	17	5,005
Total consumer loans	$	282,658	37,920	320,578	284,054	39,713	323,767	$	284,545	33,099	317,644	285,065	34,398	319,463


(1)	Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV.


(2)	Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.


(3)	10% of the adjusted unpaid principal balance for consumer PCI loans have LTV/CLTV amounts greater than 80% at both March 31, 2019 and December 31, 2018.

NONACCRUAL LOANS Table 6.13 provides loans on nonaccrual status. PCI loans are excluded from this table because they continue to earn interest from accretable yield, independent of performance in accordance with their contractual terms.

Table 6.13: Nonaccrual Loans


(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2019		Dec 31, 2018
Commercial:
Commercial and industrial	$	1,516	1,899	$	1,986	1,486
Real estate mortgage	755		628	699		580
Real estate construction	45		37	36		32
Lease financing	93		76	76		90
Total commercial	2,409		2,640	2,797		2,188
Consumer:
Real estate 1-4 family first mortgage ~~(1)~~	4,053		4,122	3,026		3,183
Real estate 1-4 family junior lien mortgage	1,087		1,086	916		945
Automobile	117		130	116		130
Other revolving credit and installment	53		58	50		50
Total consumer	5,310		5,396	4,108		4,308
Total nonaccrual loans (excluding PCI)	$	7,719	8,036	$	6,905	6,496


~~(1)~~	~~Includes MHFS of~~ ~~$137 million~~ ~~and~~ ~~$136 million~~ at ~~March 31, 2018, and~~ ~~December 31, 2017, respectively.~~

LOANS IN PROCESS OF FORECLOSURE Our recorded investment in consumer mortgage loans collateralized by residential real estate property that are in process of foreclosure was ~~$5.9~~$4.2 billion and ~~$6.3~~$4.6 billion at March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, which included ~~$3.9~~$3.0 billion and ~~$4.0~~$3.2 billion, respectively, of loans that are government insured/guaranteed. WeUnder the Consumer Financial Protection Bureau guidelines, we do not commence the foreclosure process on consumer real estate loans ~~when a borrower becomes~~until after the loan is 120 days ~~delinquent in accordance with Consumer Finance Protection Bureau Guidelines.~~delinquent. Foreclosure procedures and timelines vary depending on whether the property address resides in a judicial or non-judicial state. Judicial states require the foreclosure to be processed through the state’s courts while non-judicial states are

processed without court intervention. Foreclosure timelines vary according to state law.

~~Note 6: Loans and Allowance for Credit Losses (continued~~)

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING Certain loans 90 days or more past due as to interest or principal are still accruing, because they are (1) well-secured and in the process of collection or (2) real estate 1-4 family mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. PCI loans of ~~$1.0 billion~~$243 million at March 31, ~~2018,~~2019, and ~~$1.4 billion~~$370 million at December 31, ~~2017,~~2018, are not included in ~~these~~ past due and still accruing loans even when they are 90 days or more contractually past due. ~~These~~ PCI loans are considered to be accruing because they continue to earn interest from accretable yield, independent of performance in accordance with their contractual terms.

Table 6.14 shows non-PCI loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed.

Table 6.14: Loans 90 Days or More Past Due and Still Accruing (1)


(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2019		Dec 31, 2018
Total (excluding PCI):	$	10,753	11,997	$	7,870	8,704
Less: FHA insured/guaranteed by the VA (1)(2)	9,786		10,934
Less: FHA insured/VA guaranteed (1)				6,996		7,725
Total, not government insured/guaranteed	$	967	1,063	$	874	979
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial	$	40	26	$	42	43
Real estate mortgage	23		23	20		51
Real estate construction	1		—	5		—
Total commercial	64		49	67		94
Consumer:
Real estate 1-4 family first mortgage ~~(2)~~	164		219	117		124
Real estate 1-4 family junior lien mortgage ~~(2)~~	48		60	28		32
Credit card	473		492	502		513
Automobile	113		143	68		114
Other revolving credit and installment	105		100	92		102
Total consumer	903		1,014	807		885
Total, not government insured/guaranteed	$	967	1,063	$	874	979


(1)	Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.


~~(2)~~	~~Includes mortgages held for sale 90 days or more past due and still accruing.~~

Note 6: Loans and Allowance for Credit Losses (continued)

IMPAIRED LOANS Table 6.15 summarizes key information for impaired loans. Our impaired loans predominantly include loans on nonaccrual status in the commercial portfolio segment and loans modified in a TDR, whether on accrual or nonaccrual status. These impaired loans generally have estimated losses which are included in the allowance for credit losses. We have impaired loans with no allowance for credit losses when loss content has been previously recognized through charge-offs and we do not anticipate additional charge-offs or losses, or certain

loans are currently performing in accordance with their terms and for which no loss has been estimated. Impaired loans exclude PCI loans. Table 6.15 includes trial modifications that totaled ~~$198~~$136 million at March 31, ~~2018,~~2019, and ~~$194~~$149 million at December 31, ~~2017.~~2018.

For additional information on our impaired loans and allowance for credit losses, see Note 1 (Summary of Significant Accounting Policies) in our ~~2017~~2018 Form 10-K.

Table 6.15: Impaired Loans Summary


			Recorded investment					Recorded investment
(in millions)	Unpaid principal balance (1)		Impaired loans	Impaired loans with related allowance for credit losses	Related allowance for credit losses	Unpaid principal balance (1)		Impaired loans	Impaired loans with related allowance for credit losses	Related allowance for credit losses
March 31, 2018
March 31, 2019
Commercial:
Commercial and industrial	$	3,182	2,231	1,978	432	$	3,493	2,569	2,271	364
Real estate mortgage	1,554		1,307	1,281	196	1,310		1,126	1,071	161
Real estate construction	105		61	54	8	87		56	56	10
Lease financing	177		144	144	33	119		96	96	30
Total commercial	5,018		3,743	3,457	669	5,009		3,847	3,494	565
Consumer:
Real estate 1-4 family first mortgage	13,692		11,934	4,888	618	11,953		10,440	4,354	526
Real estate 1-4 family junior lien mortgage	2,072		1,860	1,352	230	1,843		1,658	1,093	181
Credit card	386		386	386	139	474		473	473	188
Automobile	153		83	34	5	145		85	42	8
Other revolving credit and installment	146		138	127	33	164		157	138	42
Total consumer (2)	16,449		14,401	6,787	1,025	14,579		12,813	6,100	945
Total impaired loans (excluding PCI)	$	21,467	18,144	10,244	1,694	$	19,588	16,660	9,594	1,510
December 31, 2017
December 31, 2018
Commercial:
Commercial and industrial	$	3,577	2,568	2,310	462	$	3,057	2,030	1,730	319
Real estate mortgage	1,502		1,239	1,207	211	1,228		1,032	1,009	154
Real estate construction	95		54	45	9	74		47	46	9
Lease financing	132		99	89	23	146		112	112	32
Total commercial	5,306		3,960	3,651	705	4,505		3,221	2,897	514
Consumer:
Real estate 1-4 family first mortgage	14,020		12,225	6,060	770	12,309		10,738	4,420	525
Real estate 1-4 family junior lien mortgage	2,135		1,918	1,421	245	1,886		1,694	1,133	183
Credit card	356		356	356	136	449		449	449	172
Automobile	157		87	34	5	153		89	43	8
Other revolving credit and installment	136		128	117	29	162		156	136	41
Total consumer (2)	16,804		14,714	7,988	1,185	14,959		13,126	6,181	929
Total impaired loans (excluding PCI)	$	22,110	18,674	11,639	1,890	$	19,464	16,347	9,078	1,443


(1)	Excludes the unpaid principal balance for loans that have been fully charged off or otherwise have zero recorded investment.

(2)

Includes the recorded investment of ~~$1.4~~$1.3 billion at both March 31, ~~2018~~2019 and December 31, ~~2017~~,2018, of government insured/guaranteed loans that are predominantly insured by the FHA or guaranteed by the VA and generally do not have an allowance. Impaired loans may also have limited, if any, allowance when the recorded investment of the loan approximates estimated net realizable value as a result of charge-offs prior to a TDR modification.

~~Note 6: Loans and Allowance for Credit Losses (continued~~)

Commitments to lend additional funds on loans whose terms have been modified in a TDRamounted to ~~$559~~$570 million and ~~$579~~$513 million at March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

Table 6.16 provides the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans by portfolio segment and class.

Table 6.16: Average Recorded Investment in Impaired Loans


	Quarter ended March 31,						Quarter ended March 31,
	2018				2017		2019				2018
(in millions)	Average recorded investment		Recognized interest income		Average recorded investment	Recognized interest income	Average recorded investment		Recognized interest income		Average recorded investment	Recognized interest income
Commercial:
Commercial and industrial	$	2,404	36		3,675	33	$	2,346	23		2,404	36
Real estate mortgage	1,244		28		1,394	27	1,055		15		1,244	28
Real estate construction	58		1		84	1	52		2		58	1
Lease financing	129		—		119	—	108		—		129	—
Total commercial	3,835		65		5,272	61	3,561		40		3,835	65
Consumer:
Real estate 1-4 family first mortgage	12,073		172		14,132	190	10,624		153		12,073	172
Real estate 1-4 family junior lien mortgage	1,889		29		2,131	31	1,679		26		1,889	29
Credit card	370		10		302	8	461		15		370	10
Automobile	85		3		83	3	87		4		85	3
Other revolving credit and installment	133		2		106	2	156		4		133	2
Total consumer	14,550		216		16,754	234	13,007		202		14,550	216
Total impaired loans (excluding PCI)	$	18,385	281		22,026	295	$	16,568	242		18,385	281
Interest income:
Cash basis of accounting			$	81		78			$	59		81
Other (1)			200			217			183			200
Total interest income			$	281		295			$	242		281


(1)	Includes interest recognized on accruing TDRs, interest recognized related to certain impaired loans which have an allowance calculated using discounting, and amortization of purchase accounting adjustments related to certain impaired loans.

TROUBLED DEBT RESTRUCTURINGS (TDRs) When, for economic or legal reasons related to a borrower’s financial difficulties, we grant a concession for other than an insignificant period of time to a borrower that we would not otherwise consider, the related loan is classified as a TDR, the balance of which totaled ~~$17.1~~$15.3 billion and ~~$17.8~~$15.5 billion at March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. We do not consider loan resolutions such as foreclosure or short sale to be a TDR.

We may require some consumer borrowers experiencing financial difficulty to make trial payments generally for a period of three to four months, according to the terms of a planned permanent modification, to determine if they can perform according to those terms. These arrangements represent trial modifications, which we classify and account for as TDRs. While loans are in trial payment programs, their original terms are not considered modified and they continue to advance through delinquency status and accrue interest according to their original terms.

Note 6: Loans and Allowance for Credit Losses (continued)

Table 6.17 summarizes our TDR modifications for the periods presented by primary modification type and includes the financial effects of these modifications. For those loans that modify more than once, the table reflects each modification that occurred during the period. Loans that both modify and pay off

within the period, as well as changes in recorded investment during the period for loans modified in prior periods, are not included in the table.

Table 6.17: TDR Modifications


	Primary modification type (1)							Financial effects of modifications					Primary modification type (1)					Financial effects of modifications
(in millions)	Principal (2)		Interest rate reduction	Other concessions (3)		Total		Charge- offs (4)	Weighted average interest rate reduction		Recorded investment related to interest rate reduction (5)		Principal (2)		Interest rate reduction	Other concessions (3)	Total	Charge- offs (4)	Weighted average interest rate reduction		Recorded investment related to interest rate reduction (5)
Quarter ended March 31, 2019
Commercial:
Commercial and industrial													$	—	11	554	565	13	0.68	%	$	11
Real estate mortgage													—		2	73	75	—	0.95		2
Real estate construction													—		—	3	3	—	—		—
Lease financing													—		—	—	—	—	—		—
Total commercial													—		13	630	643	13	0.73		13
Consumer:
Real estate 1-4 family first mortgage													35		3	294	332	1	1.95		19
Real estate 1-4 family junior lien mortgage													2		11	25	38	1	2.29		12
Credit card													—		97	—	97	—	13.20		97
Automobile													2		1	12	15	6	5.38		1
Other revolving credit and installment													—		11	3	14	—	7.58		11
Trial modifications (6)													—		—	—	—	—	—		—
Total consumer													39		123	334	496	8	10.27		140
Total													$	39	136	964	1,139	21	9.44	%	$	153
Quarter ended March 31, 2018
Commercial:
Commercial and industrial	$	—	9	488		497		6	1.07	%	$	9	$	—	9	488	497	6	1.07	%	$	9
Real estate mortgage	—		6	98		104		—	1.24		6		—		6	98	104	—	1.24		6
Real estate construction	—		—	3		3		—	—		—		—		—	3	3	—	—		—
Lease financing	—		—	39		39		—	—		—		—		—	39	39	—	—		—
Total commercial	—		15	628		643		6	1.15		15		—		15	628	643	6	1.15		15
Consumer:
Real estate 1-4 family first mortgage	46		10	306		362		1	2.40		35		46		10	306	362	1	2.40		35
Real estate 1-4 family junior lien mortgage	1		8	28		37		1	2.22		9		1		8	28	37	1	2.22		9
Credit card	—		86	—		86		—	11.32		86		—		86	—	86	—	11.32		86
Automobile	1		4	14		19		9	6.48		4		1		4	14	19	9	6.48		4
Other revolving credit and installment	—		15	2		17		—	7.94		15		—		15	2	17	—	7.94		15
Trial modifications (6)	—		—	15		15		—	—		—		—		—	15	15	—	—		—
Total consumer	48		123	365		536		11	8.20		149		48		123	365	536	11	8.20		149
Total	$	48	138	993		1,179		17	7.55	%	$	164	$	48	138	993	1,179	17	7.55	%	$	164
Quarter ended March 31, 2017
Commercial:
Commercial and industrial	$	—	6	928		934		65	0.82	%	$	6
Real estate mortgage	—		14	181		195		—	1.00		14
Real estate construction	—		—	3		3		—	2.00		—
Lease financing	—		—	3		3		—	—		—
Total commercial	—		20	1,115		1,135		65	0.95		20
Consumer:
Real estate 1-4 family first mortgage	74		72	291		437		9	2.60		103
Real estate 1-4 family junior lien mortgage	13		21	23		57		6	2.95		24
Credit card	—		57	—		57		—	12.22		57
Automobile	1		3	12		16		7	6.42		3
Other revolving credit and installment	—		11	3		14		—	7.29		11
Trial modifications (6)	—		—	(17	)	(17	)	—	—		—
Total consumer	88		164	312		564		22	5.72		198
Total	$	88	184	1,427		1,699		87	5.27	%	$	218

(1)

Amounts represent the recorded investment in loans after recognizing the effects of the TDR, if any. TDRs may have multiple types of concessions, but are presented only once in the first modification type based on the order presented in the table above. The reported amounts include loans remodified of ~~$503~~$360 million and ~~$657~~$503 million for the quarters ended March 31, ~~2018~~2019 and ~~2017~~,2018, respectively.


(2)	Principal modifications include principal forgiveness at the time of the modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with a zero percent contractual interest rate.


(3)	Other concessions include loans discharged in bankruptcy, loan renewals, term extensions and other interest and noninterest adjustments, but exclude modifications that also forgive principal and/or reduce the contractual interest rate.

(4)

Charge-offs include write-downs of the investment in the loan in the period it is contractually modified. The amount of charge-off will differ from the modification terms if the loan has been charged down prior to the modification based on our policies. In addition, there may be cases where we have a charge-off/down with no legal principal modification. Modifications resulted in legally forgiving principal (actual, contingent or deferred) of $3$3 million ~~and~~ ~~$9 million~~ for both of the quarters ended March 31, ~~2018~~2019 and ~~2017, respectively.~~

2018.


(5)	Reflects the effect of reduced interest rates on loans with an interest rate concession as one of ~~their~~its concession types, which includes loans reported as a principal primary modification type that also have an interest rate concession.

(6)

Trial modifications are granted a delay in payments due under the original terms during the trial payment period. However, these loans continue to advance through delinquency status and accrue interest according to their original terms. Any subsequent permanent modification generally includes interest rate related concessions; however, the exact concession type and resulting financial effect are usually not known until the loan is permanently modified. Trial modifications for the period are presented net of previously reported trial modifications that became permanent in the current period.

~~Note 6: Loans and Allowance for Credit Losses (continued~~)

Table 6.18 summarizes permanent modification TDRs that have defaulted in the current period within 12 months of their permanent modification date. We are reporting these defaulted TDRs based on a payment default definition of 90 days past due for the commercial portfolio segment and 60 days past due for the consumer portfolio segment.

Table 6.18: Defaulted TDRs


	Recorded investment of defaults			Recorded investment of defaults
	Quarter ended March 31,				Quarter ended March 31,
(in millions)	2018		2017		2019		2018
Commercial:
Commercial and industrial	$	86	62		$	23	86
Real estate mortgage	26		21		28		26
Real estate construction	—		—		3		—
Total commercial	112		83		54		112
Consumer:
Real estate 1-4 family first mortgage	18		25		11		18
Real estate 1-4 family junior lien mortgage	5		4		5		5
Credit card	13		15		21		13
Automobile	3		3		3		3
Other revolving credit and installment	1		1		2		1
Total consumer	40		48		42		40
Total	$	152	131		$	96	152

Purchased Credit-Impaired Loans

Substantially all of our PCI loans were acquired from Wachovia on December 31, 2008, at which time we acquired commercial and consumer loans with a carrying value of $18.7 billion and $40.1 billion, respectively. The unpaid principal balance on December 31, 2008 was $98.2 billion for the total of commercial and consumer PCI loans. Table 6.19 presents PCI loans net of any remaining purchase accounting adjustments. Real estate 1-4 family first mortgage PCI loans are predominantly Pick-a-Pay loans.

Table 6.19: PCI Loans


(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2019		Dec 31, 2018
Total commercial	$	75	86	$	—	4
Consumer:
Real estate 1-4 family first mortgage	10,609		12,722	3,184		4,988
Real estate 1-4 family junior lien mortgage	25		27	16		17
Total consumer	10,634		12,749	3,200		5,005
Total PCI loans (carrying value)	$	10,709	12,835	$	3,200	5,009
Total PCI loans (unpaid principal balance)	$	15,447	18,975	$	4,765	7,348

~~ACCRETABLE YIELD~~The excess of cash flows expected to be collected over the carrying value of PCI loans is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the loan, or pools of loans. The accretable yield is affected by:

changes in interest rate indices for variable rate PCI loans – expected future cash flows are based on the variable rates in effect at the time of the regular evaluations of cash flows expected to be collected;

~~changes in prepayment assumptions – prepayments affect the estimated life of PCI loans which may change the amount of interest income, and possibly principal, expected to be collected; and~~

~~changes in the expected principal and interest payments over the estimated weighted-average life – updates to expected~~

cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected.

The change in the accretable yield related to PCI loans since the merger with Wachovia is presented in Table 6.20. Changes during first quarter 2018 reflect an expectation, as a result of our quarterly evaluation of PCI cash flows, that prepayment of modified Pick-a-Pay loans will increase over their estimated weighted-average life and that expected loss has decreased as a result of reduced loan to value ratios and sustained higher housing prices. Changes during first quarter 2018 also reflect a $643 million gain on the sale of $1.6 billion Pick-a-Pay PCI loans.

~~Table 6.20:Change in Accretable Yield~~

(in millions) Quarter
ended
March 31,
2018
2009-2017
Balance, beginning of period $ 8,887
10,447
Change in accretable yield due to acquisitions —
161
Accretion into interest income (1) (314 ) (16,983 )
Accretion into noninterest income due to sales (2) (643 ) (801 )
Reclassification from nonaccretable difference for loans with improving credit-related cash flows 340
11,597
Changes in expected cash flows that do not affect nonaccretable difference (3) (1,406 ) 4,466
Balance, end of period $ 6,864
8,887


~~(1)~~	~~Includes accretable yield released as a result of settlements with borrowers, which is included in interest income.~~


~~(2)~~	~~Includes accretable yield released as a result of sales to third parties, which is included in noninterest income.~~


~~(3)~~	Represents changes in cash flows expected to be collected due to the impact of modifications, changes in prepayment assumptions, changes in interest rates on variable rate PCI loans and sales to third parties.

~~COMMERCIAL PCI CREDIT QUALITY INDICATORSTable 6.21 provides a breakdown of commercial PCI loans by risk category.~~

~~Table 6.21:Commercial PCI Loans by Risk Category~~

(in millions) Total
March 31, 2018
By risk category:
Pass $ 6
Criticized 69
Total commercial PCI loans $ 75
December 31, 2017
By risk category:
Pass $ 8
Criticized 78
Total commercial PCI loans $ 86

~~Note 6: Loans and Allowance for Credit Losses (continued~~)

~~Table 6.22 provides past due information for commercial PCI loans.~~

~~Table 6.22:Commercial PCI Loans by Delinquency Status~~

(in millions) Total
March 31, 2018
By delinquency status:
Current-29 DPD and still accruing $ 74
30-89 DPD and still accruing 1
90+ DPD and still accruing —
Total commercial PCI loans $ 75
December 31, 2017
By delinquency status:
Current-29 DPD and still accruing $ 86
30-89 DPD and still accruing —
90+ DPD and still accruing —
Total commercial PCI loans $ 86

~~CONSUMER PCI CREDIT QUALITY INDICATORS~~Our consumer PCI loans were aggregated into several pools of loans at acquisition. Below, we have provided credit quality indicators based on the unpaid principal balance (adjusted for write-downs) of the individual loans included in the pool, but we have not

~~allocated the remaining purchase accounting adjustments, which were established at a pool level. Table 6.23 provides the delinquency status of consumer PCI loans.~~

~~Table 6.23:Consumer PCI Loans by Delinquency Status~~ -

March 31, 2018 December 31, 2017
(in millions)
Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Total

Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Total
By delinquency status:
Current-29 DPD and still accruing $ 11,310
136
11,446
13,127
138
13,265
30-59 DPD and still accruing 1,044
6
1,050
1,317
8
1,325
60-89 DPD and still accruing 496
2
498
622
3
625
90-119 DPD and still accruing 221
2
223
293
2
295
120-179 DPD and still accruing 158
1
159
219
2
221
180+ DPD and still accruing 947
4
951
1,310
4
1,314
Total consumer PCI loans (adjusted unpaid principal balance) $ 14,176
151
14,327
16,888
157
17,045
Total consumer PCI loans (carrying value) $ 10,609
25
10,634
12,722
27
12,749

~~Table 6.24 provides FICO scores forconsumer PCI loans.~~

~~Table 6.24:Consumer PCI Loans by FICO~~

March 31, 2018 December 31, 2017
(in millions)
Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Total

Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Total
By FICO:
< 600 $ 3,307
33
3,340
4,014
37
4,051
600-639 1,794
21
1,815
2,086
20
2,106
640-679 2,020
24
2,044
2,393
24
2,417
680-719 1,867
28
1,895
2,242
29
2,271
720-759 1,475
22
1,497
1,779
23
1,802
760-799 799
11
810
933
12
945
800+ 456
7
463
468
6
474
No FICO available 2,458
5
2,463
2,973
6
2,979
Total consumer PCI loans (adjusted unpaid principal balance) $ 14,176
151
14,327
16,888
157
17,045
Total consumer PCI loans (carrying value) $ 10,609
25
10,634
12,722
27
12,749

~~Table 6.25 shows the distribution of consumer PCIloans by LTV for real estate 1-4 family first mortgages and byCLTV for real estate 1-4 family junior lien mortgages.~~

~~Table 6.25:Consumer PCI Loans by LTV/CLTV~~

March 31, 2018 December 31, 2017
(in millions)
Real estate
1-4 family
first
mortgage
by LTV

Real estate
1-4 family
junior lien
mortgage
by CLTV

Total

Real estate
1-4 family
first
mortgage
by LTV

Real estate
1-4 family
junior lien
mortgage
by CLTV

Total
By LTV/CLTV:
0-60% $ 7,095
46
7,141
8,010
45
8,055
60.01-80% 5,224
61
5,285
6,510
63
6,573
80.01-100% 1,540
31
1,571
1,975
35
2,010
100.01-120% (1) 260
9
269
319
10
329
> 120% (1) 56
3
59
73
3
76
No LTV/CLTV available 1
1
2
1
1
2
Total consumer PCI loans (adjusted unpaid principal balance) $ 14,176
151
14,327
16,888
157
17,045
Total consumer PCI loans (carrying value) $ 10,609
25
10,634
12,722
27
12,749


~~(1)~~	~~Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV.~~

Note 7: Leasing Activity

The information below provides a summary of our leasing activities as a lessor and lessee.

As a Lessor

Table 7.1 presents the composition of our leasing revenue and Table 7.2 provides the components of our investment in lease financing.

Table 7.1:Leasing Revenue



(in millions)	Quarter ended March 31, 2019
Interest income on lease financing	$	223
Variable revenues on lease financing	24
Total lease financing revenue	247
Fixed revenues on operating leases	373
Variable revenues on operating leases	18
Total operating lease revenue	391
Other lease-related revenues (1)	28
Total lease revenue	$	666


(1)	Predominantly includes net gains on disposition of lease assets

Table 7.2:Investment in Lease Financing



(in millions)	Mar 31, 2019
Lease receivables	$	17,640
Residual asset values	4,169
Unearned income	(2,687		)
Lease financing	$	19,122

Our net investment in financing and sales-type leases includes $2.0 billion of leveraged leases at March 31, 2019.

As shown in Table 9.1, included in Note 9 (Other Assets), we had $8.8 billion in operating lease assets at March 31, 2019, which was net of $3.2 billion of accumulated depreciation. Depreciation expense for the lease assets was $229 million for first quarter 2019. Dispositions of operating lease assets for first quarter 2019, resulted in net gains of $14 million, included in lease income.

Table 7.3 presents future lease payments owed by our lessees.

Table 7.3:Maturities of Lease Receivables



	March 31, 2019
(in millions)	Direct financing and sales- type leases		Operating leases
Remainder of 2019	$	4,143	953
2020	4,866		862
2021	3,698		568
2022	1,857		385
2023	1,035		252
Thereafter	2,041		581
Total lease receivables	$	17,640	3,601

As a Lessee

Substantially all of our leases are operating leases. Table 7.4 presents balances for our operating leases.

Table 7.4:Operating Lease Right of Use (ROU) Assets and Lease Liabilities



(in millions)	Mar 31, 2019
ROU assets	$	4,869
Lease liabilities	5,405

Table 7.5 provides the composition of our lease costs.

Table 7.5:Lease Costs



(in millions)	Quarter ended March 31, 2019
Fixed lease expense - operating leases	297
Variable lease expense	73
Other (1)	(8		)
Total lease costs	$	362


(1)	Predominantly includes sublease rental income and gains recognized from sale leaseback transactions

Note 7: Leasing Activity (continued)

Tables 7.6 and 7.7 provide the future lease payments under operating leases as of December 31, 2018 and March 31, 2019, respectively. Table 7.7 also includes information on the remaining average lease term and discount rate.

Table 7.6:Lease Payments on Operating Leases Prior to Adoption of ASU 2016-02 - Leases



(in millions)	December 31, 2018
2019	$	1,174
2020	1,056
2021	880
2022	713
2023	577
Thereafter	1,654
Total	$	6,054

Table 7.7:Lease Payments on Operating Leases Subsequent to Adoption of ASU 2016-02 - Leases



(in millions, except for weighted averages)	March 31, 2019
Remainder of 2019	$	777
2020	1,123
2021	942
2022	770
2023	628
Thereafter	1,936
Total lease payments	6,176
Less: imputed interest	771
Total operating lease liabilities	$	5,405
Weighted average remaining lease term (in years)	7.3
Weighted average discount rate	3.2		%

Our operating leases predominantly expire within the next 15 years, with the longest lease expiring in 2105. We do not include renewal or termination options in the establishment of the lease term when we are not reasonably certain that we will exercise them. As of March 31, 2019, we had additional operating leases commitments of $164 million, predominantly for real estate, which leases had not yet commenced. These leases will commence by 2022 and have lease terms of 1 year to 11 years.

Note 8: Equity Securities (continued)

Note 8:Equity Securities

Table ~~7.1~~8.1 provides a summary of our equity securities by business purpose and accounting ~~model,~~method, including equity securities with readily determinable fair values (marketable) and those without readily determinable fair values (nonmarketable).

Table ~~7.1:~~8.1: Equity Securities


	Mar 31,		Dec 31,	Mar 31,		Dec 31,
(in millions)	2018		2017	2019		2018
Held for trading at fair value:
Marketable equity securities	$	25,327	30,004	$	20,933	19,449
Not held for trading:
Fair value:
Marketable equity securities (1)	4,931		4,356	5,135		4,513
Nonmarketable equity securities (2)	5,303		4,867	6,518		5,594
Total equity securities at fair value	10,234		9,223	11,653		10,107
Equity method:
LIHTC (3)	10,318		10,269
Low-income housing tax credit investments				10,925		10,999
Private equity	3,840		3,839	3,890		3,832
Tax-advantaged renewable energy	1,822		1,950	3,041		3,073
New market tax credit and other	268		294	305		311
Total equity method	16,248		16,352	18,161		18,215
Other:
Federal bank stock and other at cost (4)	5,780		5,828
Federal Reserve Bank stock and other at cost (3)				5,732		5,643
Private equity ~~(5)~~(4)	1,346		1,090	1,961		1,734
Total equity securities not held for trading	33,608		32,493	37,507		35,699
Total equity securities	$	58,935	62,497	$	58,440	55,148


(1)	Includes $~~3.5~~$3.5 billion and $~~3.7~~$3.2 billion at March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, respectively, related to securities held as economic hedges of our deferred compensation plan obligations.


(2)	Includes $~~5.0~~$6.4 billion and $~~4.9~~$5.5 billion at March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, respectively, related to investments infor which we elected the fair value option. See Note 1516 (Fair Value of Assets and Liabilities) for additional information.


(3)	~~Represents low-income housing tax credit investments.~~


~~(4)~~	Includes $~~5.7~~$5.7 billion and $~~5.4~~$5.6 billion at March 31, ~~2018,~~2019 and December 31, ~~2017,~~2018, respectively, related to investments in Federal Reserve Bank and Federal Home Loan Bank stock.


~~(5)~~(4)	Represents nonmarketable equity securities for which we have elected to account for the security under the measurement alternative.

Equity Securities Held for Trading

Equity securities held for trading purposes are marketable equity securities traded on organized exchanges. These securities ~~which~~ are held as part of our customer accommodation trading ~~activities, are carried at fair value with changes in fair value reflected in net gains from trading~~ activities. ~~More~~For more information on these activities, ~~can be found in~~see Note 4 (Trading Activities) ~~to Financial Statements in this Report.~~.

Equity Securities Not Held for Trading

We also hold equity securities unrelated to trading activities. These securities include private equity and tax credit investments, securities held as economic hedges or to meet regulatory requirements (for example, Federal Reserve Bank and Federal Home Loan Bank stock). Equity securities not held for trading purposes are accounted for at either fair value, equity method, cost or the measurement alternative.

FAIR VALUE~~Equity securities accounted for using the fair value method are recorded at fair value with changes in fair value reflected in net gains from equity securities.~~ Marketable equity securities held for purposes other than trading ~~mostly~~primarily consist of ~~exchange~~-~~traded~~exchange-traded equity funds held to economically hedge obligations related to our deferred compensation plans and to a lesser extent other holdings of publicly traded equity securities held for investment purposes. ~~Nonmarketable equity securities represent securities that do not have a readily determinable fair value for which we~~We have elected to account for ~~using~~certain nonmarketable equity securities under the fair value ~~method. Substantially~~method, and substantially all of these ~~nonmarketable equity~~ securities are economically hedged with equity derivatives.

EQUITY METHOD~~Under the equity method of accounting, we carry the security at cost adjusted for our share of the investee’s earnings less any impairment write-downs.~~ Our equity method investments consist of tax credit and private equity ~~securities,~~investments, the majority of which are our low-income housing tax credit (LIHTC) investments.

We invest in affordable housing projects that qualify for the LIHTC, which isare designed to promote private development of low-income housing. These investments generate a return mostly through realization of federal tax credit and other tax benefits. In first quarter ~~2018,~~2019, we recognized pre-tax losses of ~~$280~~$273 million related to our LIHTC investments, compared with ~~$230~~$280 million in first quarter ~~2017.~~2018. These losses were recognized in other noninterest income. We also recognized total tax benefits of ~~$359~~$370 million in first quarter ~~2018,~~2019, which included tax credits recorded to income taxes of ~~$290~~$302 million. In first quarter ~~2017,~~2018, total tax benefits were ~~$347~~$359 million, which included tax credits of ~~$261~~$290 million. We are periodically required to provide additional financial support during the investment period. A liability is recognized for unfunded commitments that are both legally binding and probable of funding. These commitments are predominantly funded within three years of initial investment. Our liability for these unfunded commitments was ~~$3.5~~$3.7 billion at March 31, ~~2018,~~2019, and $3.6 billion at December 31, ~~2017. Substantially all of this~~2018. This liability ~~is expected to be paid over the next three years. This liability~~for unfunded commitments is included in long-term debt.

OTHERThe remaining portion of our nonmarketable equity securities portfolio consists of securities accounted for using the cost ~~method~~ or measurement ~~alternative. Cost method securities are held at cost less impairment. If impaired, the carrying value is written down to fair value. The measurement~~ alternative is similar to the cost method of accounting, except the carrying value is adjusted up or down to fair value through net gains from equity securities upon the occurrence of orderly observable transactions in the same or similar security of the same issuer. Impairment write-downs are recorded on these securities when the carrying value of these securities exceeds the fair value of the investment or we identify possible indicators of impairment.method.

Realized Gains and Losses

Table ~~7.2~~8.2 provides a summary of the net gains and losses for equity ~~securities.~~securities not held for trading. Gains and losses for securities held for trading are reported in net gains from trading activities.

Table ~~7.2:~~8.2: Net Gains (Losses) from Equity Securities Not Held for Trading


	Quarter ended March 31,					Quarter ended March 31,
(in millions)	2018			2017		2019			2018
Net gains (losses) from equity securities carried at fair value:
Marketable equity securities	$	8		283		$	377		8
Nonmarketable equity securities	109			482		936			109
Total equity securities carried at fair value	117			765		1,313			117
Net gains (losses) from nonmarketable equity securities not carried at fair value:
Impairment write-downs	(20		)	(76	)	(36		)	(20	)
Net unrealized gains (losses) related to measurement alternative observable transactions	228			—
Net unrealized gains related to measurement alternative observable transactions						185			228
Net realized gains on sale	498			326		237			498
All other	18			29		—			18
Total nonmarketable equity securities not carried at fair value	724			279		386			724
Net gains (losses) from economic hedge derivatives (1)	(58		)	(474	)
Total net gains (losses) from equity securities	$	783		570
Net losses from economic hedge derivatives (1)						(885		)	(58	)
Total net gains from equity securities						$	814		783


(1)	Includes net gains (losses) on derivatives not designated as hedging instruments.

Measurement Alternative

Table ~~7.3~~8.3 provides additional information about the impairment write-downs and observable price adjustments related to

~~related to~~ nonmarketable equity securities accounted for under the measurement alternative. Gains and losses related to these adjustments are also included in Table ~~7.2.~~8.2.

Table ~~7.3:~~8.3: Net Gains (Losses) from Measurement Alternative Equity Securities

Quarter ended March 31,
(in millions) 2018
Net gains (losses) recognized in earnings during the period:
Gross unrealized gains due to observable price changes $ 228
Gross unrealized losses due to observable price changes —
Impairment write-downs (7 )
Realized net gains (losses) from sale 75
Total net gains (losses) recognized during the period $ 296
Cumulative gains (losses) due to observable price changes (1):
Gross unrealized gains $ 228
Gross unrealized losses —



	Quarter ended March 31,
(in millions)	2019			2018
Net gains (losses) recognized in earnings during the period:
Gross unrealized gains due to observable price changes	$	185		228
Impairment write-downs	(22		)	(7	)
Realized net gains from sale	23			75
Total net gains recognized during the period	$	186		296


~~(1)~~	~~Cumulative balances are recorded for nonmarketable equity securities accounted for under the measurement alternative that are recognized on the balance sheet as of March 31, 2018.~~

Table 8.4 presents cumulative carrying value adjustments to nonmarketable equity securities accounted for under the measurement alternative that were still held as of the balance sheet date.

Table 8.4:Measurement Alternative Cumulative Gains (Losses)



	Mar 31,			Dec 31,
(in millions)	2019			2018
Cumulative gains (losses):
Gross unrealized gains due to observable price changes	$	577		415
Gross unrealized losses due to observable price changes	(25		)	(25	)
Impairment write-downs	(55		)	(33	)

Note 8:9: Other Assets

Table ~~8.1~~9.1 presents the components of other assets.

Table ~~8.1:~~9.1: Other Assets


(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2019		Dec 31, 2018
Corporate/bank-owned life insurance	$	19,589	19,549	$	19,842	19,751
Accounts receivable (1)	37,322		39,127	32,405		34,281
Interest receivable	5,824		5,688	6,277		6,084
Core deposit intangibles	577		769
Customer relationship and other amortized intangibles	766		841	508		545
Foreclosed assets:
Residential real estate:
Government insured/guaranteed (1)	103		120	75		88
Non-government insured/guaranteed	239		252	229		229
Non-residential real estate	229		270	132		134
Operating lease assets	9,382		9,666
Operating lease assets (lessor)				8,793		9,036
Operating lease ROU assets (lessee) (2)				4,869		—
Due from customers on acceptances	196		177	243		258
Other	11,661		13,785	9,294		9,444
Total other assets	$	85,888	90,244	$	82,667	79,850

(1)

Certain government-guaranteed residential real estate mortgage loans upon foreclosure are included in Accounts receivable. Both principal and interest related to these foreclosed real estate assets are collectible because the loans were predominantly insured by the FHA or guaranteed by the VA. For more information on the classification of certain government-guaranteed mortgage loans upon foreclosure, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2017~~2018 Form 10-K.


(2)	We recognized operating lease right of use (ROU) assets effective January 1, 2019, in connection with the adoption of ASU 2016-02 – Leases. For more information, see Note 1 (Summary of Significant Accounting Policies) in this Report.

Note 9:10: Securitizations and Variable Interest Entities

Involvement with Special Purpose Entities (SPEs)

In the normal course of business, we enter into various types of on- and off-balance sheet transactions with SPEs, which are corporations, trusts, limited liability companies or partnerships that are established for a limited purpose. Generally, SPEs are formed in connection with securitization transactions and are considered variable interest entities (VIEs). For further description of our involvement with SPEs, see Note 89 (Securitizations and Variable Interest Entities) to Financial Statements in our ~~2017~~2018 Form 10-K.

We have segregated our involvement with VIEs between those VIEs which we consolidate, those which we do not consolidate and those for which we account for the transfers of financial assets as secured borrowings. Secured borrowings are transactions involving transfers of our financial assets to third parties that are accounted for as financings with the assets pledged as collateral. Accordingly, the transferred assets remain recognized on our balance sheet. Subsequent tables within this Note further segregate these transactions by structure type.

Table ~~9.1~~10.1 provides the classifications of assets and liabilities in our balance sheet for our transactions with VIEs.

Table ~~9.1:~~10.1: Balance Sheet Transactions with VIEs


(in millions)	VIEs that we do not consolidate		VIEs that we consolidate	Transfers that we account for as secured borrowings		Total	VIEs that we do not consolidate		VIEs that we consolidate	Transfers that we account for as secured borrowings		Total
March 31, 2018
Cash	$	—	111		—	111
March 31, 2019
Cash and due from banks							$	—	16		—	16
Interest-earning deposits with banks	—		8		—	8	—		8		—	8
Debt securities:
Trading debt securities	2,011		—		200	2,211	1,848		55		200	2,103
Available-for-sale debt securities (1)	3,405		—		343	3,748	2,063		—		248	2,311
Held-to-maturity debt securities	502		—		—	502	524		—		—	524
Loans	2,766		13,007		106	15,879	1,398		14,368		91	15,857
Mortgage servicing rights	14,977		—		—	14,977	13,515		—		—	13,515
Derivative assets	124		—		—	124	74		—		—	74
Equity securities	10,683		28		—	10,711	10,973		112		—	11,085
Other assets	—		230		7	237	—		252		6	258
Total assets	34,468		13,384		656	48,508	30,395		14,811		545	45,751
Short-term borrowings	—		—		512	512	—		—		427	427
Derivative liabilities	45		4	(2)	—	49	6		—	(2)	—	6
Accrued expenses and other liabilities	245		127	(2)	10	382	198		205	(2)	7	410
Long-term debt	3,507		947	(2)	107	4,561	3,750		775	(2)	90	4,615
Total liabilities	3,797		1,078		629	5,504	3,954		980		524	5,458
Noncontrolling interests	—		31		—	31	—		31		—	31
Net assets	$	30,671	12,275		27	42,973	$	26,441	13,800		21	40,262
December 31, 2017
Cash	$	—	116		—	116
December 31, 2018
Cash and due from banks							$	—	139		—	139
Interest-earning deposits with banks	—		371		—	371	—		8		—	8
Debt securities:
Trading debt securities	1,305		—		201	1,506	2,110		45		200	2,355
Available-for-sale debt securities (1)	3,288		—		358	3,646	2,686		—		317	3,003
Held-to-maturity debt securities	485		—		—	485	510		—		—	510
Loans	4,274		12,482		110	16,866	1,433		13,564		94	15,091
Mortgage servicing rights	13,628		—		—	13,628	14,761		—		—	14,761
Derivative assets	44		—		—	44	53		—		—	53
Equity securities	10,740		306		—	11,046	11,041		85		—	11,126
Other assets	—		342		6	348	—		221		6	227
Total assets	33,764		13,617		675	48,056	32,594		14,062		617	47,273
Short-term borrowings	—		—		522	522	—		—		493	493
Derivative liabilities	106		5	(2)	—	111	26		—	(2)	—	26
Accrued expenses and other liabilities	244		132	(2)	10	386	231		191	(2)	8	430
Long-term debt	3,590		1,479	(2)	111	5,180	3,870		816	(2)	93	4,779
Total liabilities	3,940		1,616		643	6,199	4,127		1,007		594	5,728
Noncontrolling interests	—		283		—	283	—		34		—	34
Net assets	$	29,824	11,718		32	41,574	$	28,467	13,021		23	41,511


(1)	Excludes certain debt securities related to loans serviced for the Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and GNMA.


(2)	There were no VIE liabilities with recourse to the general credit of Wells Fargo for the periods presented.

Note 9:10: Securitizations and Variable Interest Entities (continued)

Transactions with Unconsolidated VIEs

Our transactions with unconsolidated VIEs include securitizations of residential mortgage loans, CRE loans, student loans, automobile loans and leases, certain dealer floorplan loans; investment and financing activities involving collateralized debt obligations (CDOs) backed by asset-backed and CRE securities, tax credit structures, collateralized loan obligations (CLOs) backed by corporate loans, and other types of structured financing. We have various forms of involvement with VIEs, including servicing, holding senior or subordinated interests, entering into liquidity arrangements, credit default swaps and other derivative contracts. Involvements with these unconsolidated VIEs are recorded on our balance sheet in debt and equity securities, loans, MSRs, derivative assets and liabilities, other assets, other liabilities, and long-term debt, as appropriate.

Table ~~9.2~~10.2 provides a summary of unconsolidated VIEs with which we have significant continuing involvement, but we are not the primary beneficiary. We do not consider our continuing involvement in an unconsolidated VIE to be significant when it relates to third-party sponsored VIEs for which we were not the transferor (unless we are servicer and have other significant forms of involvement) or if we were the sponsor only or sponsor

and servicer but do not have any other forms of significant involvement.

Significant continuing involvement includes transactions where we were the sponsor or transferor and have other significant forms of involvement. Sponsorship includes transactions with unconsolidated VIEs where we solely or materially participated in the initial design or structuring of the entity or marketing of the transaction to investors. When we transfer assets to a VIE and account for the transfer as a sale, we are considered the transferor. We consider investments in securities (other than those held temporarily in trading), loans, guarantees, liquidity agreements, written options and servicing of collateral to be other forms of involvement that may be significant. We have excluded certain transactions with unconsolidated VIEs from the balances presented in the following table where we have determined that our continuing involvement is not significant due to the temporary nature and size of our variable interests, because we were not the transferor or because we were not involved in the design of the unconsolidated VIEs. We also exclude from the table secured borrowing transactions with unconsolidated VIEs (for information on these transactions, see the Transactions with Consolidated VIEs and Secured Borrowings section in this Note).

Table ~~9.2:~~10.2: Unconsolidated VIEs


			Carrying value – asset (liability)											Carrying value – asset (liability)
(in millions)	Total VIE assets		Debt and equity interests (1)		Servicing assets	Derivatives		Other commitments and guarantees		Net assets		Total VIE assets		Debt and equity interests (1)		Servicing assets	Derivatives	Other commitments and guarantees		Net assets
March 31, 2018
March 31, 2019
Residential mortgage loan securitizations:
Conforming (2)	$	1,171,619	2,851		14,044	—		(190	)	16,705		$	1,145,791	2,146		12,574	—	(137	)	14,583
Other/nonconforming	13,057		552		68	—		—		620		9,582		27		60	—	—		87
Commercial mortgage securitizations	146,886		2,350		865	(43	)	(35	)	3,137		153,770		2,193		881	17	(41	)	3,050
Collateralized debt obligations:
Debt securities	1,010		—		—	5		(20	)	(15	)	641		—		—	4	(20	)	(16	)
Loans (3)	—		—		—	—		—		—
Asset-based finance structures	2,192		1,749		—	—		—		1,749		283		173		—	—	—		173
Tax credit structures	32,270		11,345		—	—		(3,507	)	7,838		36,135		12,009		—	—	(3,750	)	8,259
Collateralized loan obligations	7		—		—	—		—		—		203		4		—	—	—		4
Investment funds	212		51		—	—		—		51		204		47		—	—	—		47
Other (4)	2,002		469		—	117		—		586
Other (3)												1,648		207		—	47	—		254
Total	$	1,369,255	19,367		14,977	79		(3,752	)	30,671		$	1,348,257	16,806		13,515	68	(3,948	)	26,441
			Maximum exposure to loss											Maximum exposure to loss
			Debt and equity interests (1)		Servicing assets	Derivatives		Other commitments and guarantees		Total exposure				Debt and equity interests (1)		Servicing assets	Derivatives	Other commitments and guarantees		Total exposure
Residential mortgage loan securitizations:
Conforming			$	2,851	14,044	—		1,257		18,152				$	2,146	12,574	—	1,101		15,821
Other/nonconforming			552		68	—		—		620				27		60	—	—		87
Commercial mortgage securitizations			2,350		865	45		10,328		13,588				2,193		881	27	11,795		14,896
Collateralized debt obligations:
Debt securities			—		—	5		20		25				—		—	4	20		24
Loans (3)			—		—	—		—		—
Asset-based finance structures			1,749		—	—		71		1,820				173		—	—	72		245
Tax credit structures			11,345		—	—		1,242		12,587				12,009		—	—	1,426		13,435
Collateralized loan obligations			—		—	—		—		—				4		—	—	—		4
Investment funds			51		—	—		—		51				47		—	—	—		47
Other (4)			469		—	134		157		760
Other (3)														207		—	48	157		412
Total			$	19,367	14,977	184		13,075		47,603				$	16,806	13,515	79	14,571		44,971

(continued on following page)

(continued from previous page)


			Carrying value – asset (liability)											Carrying value – asset (liability)
(in millions)	Total VIE assets		Debt and equity interests (1)		Servicing assets	Derivatives		Other commitments and guarantees		Net assets		Total VIE assets		Debt and equity interests (1)		Servicing assets	Derivatives		Other commitments and guarantees		Net assets
December 31, 2017
December 31, 2018
Residential mortgage loan securitizations:
Conforming (2)	$	1,169,410	2,100		12,665	—		(190	)	14,575		$	1,172,833	2,377		13,811	—		(171	)	16,017
Other/nonconforming	14,175		598		73	—		—		671		10,596		453		57	—		—		510
Commercial mortgage securitizations	144,650		2,198		890	28		(34	)	3,082		153,350		2,409		893	(22	)	(40	)	3,240
Collateralized debt obligations:
Debt securities	1,031		—		—	5		(20	)	(15	)	659		—		—	5		(20	)	(15	)
Loans (3)	1,481		1,443		—	—		—		1,443
Asset-based finance structures	2,333		1,867		—	—		—		1,867		304		205		—	—		—		205
Tax credit structures	31,852		11,258		—	—		(3,590	)	7,668		35,185		12,087		—	—		(3,870	)	8,217
Collateralized loan obligations	23		1		—	—		—		1		2		—		—	—		—		—
Investment funds	225		50		—	—		—		50		185		42		—	—		—		42
Other (4)	2,257		577		—	(95	)	—		482
Other (3)												1,688		207		—	44		—		251
Total	$	1,367,437	20,092		13,628	(62	)	(3,834	)	29,824		$	1,374,802	17,780		14,761	27		(4,101	)	28,467
			Maximum exposure to loss											Maximum exposure to loss
			Debt and equity interests (1)		Servicing assets	Derivatives		Other commitments and guarantees		Total exposure				Debt and equity interests (1)		Servicing assets	Derivatives		Other commitments and guarantees		Total exposure
Residential mortgage loan securitizations:
Conforming			$	2,100	12,665	—		1,137		15,902				$	2,377	13,811	—		1,183		17,371
Other/nonconforming			598		73	—		—		671				453		57	—		—		510
Commercial mortgage securitizations			2,198		890	42		10,202		13,332				2,409		893	28		11,563		14,893
Collateralized debt obligations:
Debt securities			—		—	5		20		25				—		—	5		20		25
Loans (3)			1,443		—	—		—		1,443
Asset-based finance structures			1,867		—	—		71		1,938				205		—	—		71		276
Tax credit structures			11,258		—	—		1,175		12,433				12,087		—	—		1,420		13,507
Collateralized loan obligations			1		—	—		—		1				—		—	—		—		—
Investment funds			50		—	—		—		50				42		—	—		—		42
Other (4)			577		—	120		157		854
Other (3)														207		—	45		158		410
Total			$	20,092	13,628	167		12,762		46,649				$	17,780	14,761	78		14,415		47,034


(1)	Includes total equity interests of ~~$10.7~~$11.0 billion at both March 31, ~~2018~~,2019, and December 31, ~~2017~~.2018. Also includes debt interests in the form of both loans and securities. Excludes certain debt securities held related to loans serviced for FNMA, FHLMC and GNMA.

(2)

Excludes assets and related liabilities with a recorded carrying value on our balance sheet of ~~$1.2~~$578 million and $1.2 billion ~~and~~ ~~$2.2 billion~~ at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, respectively, for certain delinquent loans that are eligible for repurchase from GNMA loan securitizations. The recorded carrying value represents the amount that would be payable if the Company was to exercise the repurchase option. The carrying amounts are excluded from the table because the loans eligible for repurchase do not represent interests in the VIEs.

(3)

Represents senior loans to trusts that are collateralized by asset-backed securities. The trusts invested in senior tranches from a diversified pool of U.S. asset securitizations, of which all were current and ~~100%~~ ~~were rated as investment grade by the primary rating agencies at~~ ~~December 31, 2017. These senior loans were accounted for at amortized cost and were subject to the Company’s allowance and credit charge-off policies. The securitization was terminated in first quarter 2018.~~


~~(4)~~	Includes structured financing and credit-linked note structures. ~~Also contains investments in auction rate securities (ARS) issued by VIEs that we do not sponsor and, accordingly, are unable to obtain the total assets of the entity.~~

In Table ~~9.2,~~10.2, “Total VIE assets” represents the remaining principal balance of assets held by unconsolidated VIEs using the most current information available. For VIEs that obtain exposure to assets synthetically through derivative instruments, the remaining notional amount of the derivative is included in the asset balance. “Carrying value” is the amount in our consolidated balance sheet related to our involvement with the unconsolidated VIEs. “Maximum exposure to loss” from our involvement with off-balance sheet entities, which is a required disclosure under GAAP, is determined as the carrying value of our involvement with off-balance sheet (unconsolidated) VIEs plus the remaining undrawn liquidity and lending commitments, the notional amount of net written derivative contracts, and generally the notional amount of, or stressed loss estimate for, other commitments and guarantees. It represents estimated loss that would be incurred under severe, hypothetical circumstances, for which we believe the possibility is extremely remote, such as where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. Accordingly, this required disclosure is not an indication of expected loss.

For complete descriptions of our types of transactions with unconsolidated VIEs with which we have a significant continuing involvement, but we are not the primary beneficiary, see Note 8

~~(Securitizations~~9 (Securitizations and Variable Interest Entities) to Financial Statements in our ~~2017~~2018 Form 10-K.

INVESTMENT FUNDS ~~Subsequent to adopting ASU 2015-02 (Amendments to the Consolidation Analysis) in first quarter 2016, we do not consolidate these investment funds because we do not hold variable interests that are considered significant to the funds.~~

We voluntarily waived a portion of our management fees for certain money market funds that are

exempt from the consolidation analysis to ensure the funds maintained a minimum level of daily net investment income. The amount of fees waived was ~~$13~~$10 million and ~~$14~~$13 million in first quarter ~~2018~~2019 and ~~2017,~~2018, respectively.

~~OTHER TRANSACTIONS WITH VIEs~~ Other VIEs include certain entities that issue auction rate securities (ARS) which are debt instruments with long-term maturities, that re-price more frequently, and preferred equities with no maturity. At March 31, 2018, we held $292 million of ARS issued by VIEs compared with $400 million at December 31, 2017. We acquired the ARS pursuant to agreements entered into in 2008 and 2009.

~~We do not consolidate the VIEs that issued the ARS because we do not have power over the activities of the VIEs.~~

~~Note 9: Securitizations and Variable Interest Entities (continued~~)

TRUST PREFERRED SECURITIES VIEs that we wholly own issue debt securities or preferred equity to third party investors. All of the proceeds of the issuance are invested in debt securities or preferred equity that we issue to the VIEs. The VIEs’ operations and cash flows relate only to the issuance, administration and repayment of the securities held by third parties. We do not consolidate these VIEs because the sole assets of the VIEs are receivables from us, even though we own all of the voting equity shares of the VIEs, have fully guaranteed the obligations of the VIEs and may have the right to redeem the third party securities under certain circumstances. In our consolidated balance sheet ~~at March 31, 2018, and December 31, 2017,~~ we reported the debt securities issued to the VIEs as long-term junior subordinated debt with a carrying value of $2.0 billion ~~at both dates~~ and the preferred equity securities issued to the VIEs as preferred stock with a carrying value of

~~$2.5~~ $2.5 billion at both ~~dates.~~March 31, 2019 and December 31, 2018. These amounts are in addition to the involvements in these VIEs included in the preceding table.

Loan Sales and Securitization Activity

We periodically transfer consumer and CRE loans and other types of financial assets in securitization and whole loan sale transactions. We typically retain the servicing rights from these sales and may continue to hold other beneficial interests in the

Note 10: Securitizations and Variable Interest Entities (continued)

transferred financial assets. We may also provide liquidity to investors in the beneficial interests and credit enhancements in the form of standby letters of credit. Through these transfers we may be exposed to liability under limited amounts of recourse as well as standard representations and warranties we make to

purchasers and issuers. Table ~~9.3~~10.3 presents the cash flows for our transfers accounted for as ~~sales.~~sales in which we have continuing involvement with the transferred financial assets.

Table ~~9.3:~~10.3: Cash Flows From Sales and Securitization Activity


	2018				2017			Mortgage loans
(in millions)	Mortgage loans			Other financial assets	Mortgage loans		Other financial assets	2019			2018
Quarter ended March 31,
Proceeds from securitizations and whole loan sales	$	50,587		—	58,257		21	$	36,507		50,587
Fees from servicing rights retained	845			—	854		—	780			845
Cash flows from other interests held (1)	185			—	834		—	111			185
Repurchases of assets/loss reimbursements (2):
Non-agency securitizations and whole loan transactions	1			—	2		—	—			1
Agency securitizations (3)	33			—	23		—	17			33
Servicing advances, net of repayments	(36		)	—	(142	)	—	(39		)	(36	)


(1)	Cash flows from other interests held include principal and interest payments received on retained bonds and excess cash flows received on interest-only strips.


(2)	Consists of cash paid to repurchase loans from investors and cash paid to investors to reimburse them for losses on individual loans that are already liquidated.

(3)

Represent loans repurchased from GNMA, FNMA, and FHLMC under representation and warranty provisions included in our loan sales contracts. First quarter ~~2018~~2019 and ~~2017~~2018 exclude $~~2.9~~$1.9 billion and ~~$2.3~~$2.9 billion,, respectively, in delinquent insured/guaranteed loans that we service and have exercised our option to purchase out of GNMA pools. These loans are predominantly insured by the FHA or guaranteed by the VA.

In first quarter ~~2018~~2019 and ~~2017,~~2018, we recognized net gains of ~~$700~~$61 million and ~~$132~~$58 million, respectively, from transfers accounted for as sales of financial assets, in which we have continuing involvement with the transferred assets. The first quarter 2018 net gain was revised from the amount previously reported to exclude transfers for which we do not have continuing involvement. These net gains predominantly relate to ~~whole loans sales,~~ commercial mortgage securitizations, and residential mortgage securitizations where the loans were not already carried at fair value.

Sales with continuing involvement during first quarter 2019 and 2018 ~~and 2017~~ l~~argely~~largely related to securitizations of residential mortgages that are sold to the government-sponsored entities (GSEs), including FNMA, FHLMC and GNMA (conforming residential mortgage securitizations). During first quarter ~~2018~~2019 and ~~2017,~~2018, we transferred ~~$47.3~~$34.1 billion and ~~$55.5~~$47.3 billion, respectively, in fair value of residential mortgages to unconsolidated VIEs and third-party investors and recorded the transfers as sales. Substantially all of these transfers did not result in a gain or loss because the loans were already carried at fair value. In connection with all of these transfers, in first quarter ~~2018,~~2019, we recorded a ~~$533~~$320 million servicing asset, measured at fair value using a Level 3 measurement technique, securities of ~~$3.8 billion,~~$912 million, classified as Level 2, and a $3 million liability for repurchase losses which reflects management’s estimate of probable losses related to various representations and warranties for the loans transferred, initially measured at fair value. In first quarter ~~2017,~~2018, we recorded a ~~$546~~$533 million servicing asset, securities of ~~$2.8~~$3.8 billion, and ~~an $8~~a $3 million liability.

Table ~~9.4~~10.4 presents the key weighted-average assumptions we used to measure residential mortgage servicing rights at the date of securitization.

Table ~~9.4:~~10.4: Residential Mortgage Servicing Rights


	Residential mortgage servicing rights				Residential mortgage servicing rights
	2018			2017	2019			2018
Quarter ended March 31,
Prepayment speed (1)	9.6		%	10.3	13.5		%	9.6
Discount rate	7.3			6.8	8.1			7.3
Cost to service ($ per loan) (2)	$	117		134	$	94		117


(1)	The prepayment speed assumption for residential mortgage servicing rights includes a blend of prepayment speeds and default rates. Prepayment speed assumptions are influenced by mortgage interest rate inputs as well as our estimation of drivers of borrower behavior.


(2)	Includes costs to service and unreimbursed foreclosure costs, which can vary period to period depending on the mix of modified government-guaranteed loans sold to GNMA.

During first quarter ~~2018~~ 2019and ~~2017,~~2018, we transferred ~~$3.1~~ $2.7 billion and ~~$3.3~~$3.1 billion, respectively, in carrying value of commercial mortgages to unconsolidated VIEs and third-party investors and recorded the transfers as sales. These transfers resulted in gains of $47 million and $69 million in first quarter 2019 and ~~$96 million for the same periods,~~2018, respectively, because the loans were carried at ~~lower of cost or market value (LOCOM).~~LOCOM. In connection with these transfers, in first quarter ~~2018,~~2019, we recorded a servicing asset of ~~$34~~$26 million, initially measured at fair value using a Level 3 measurement technique, and no securities. In first quarter ~~2017,~~2018, we recorded a servicing asset of ~~$45~~$34 million and no securities.

Retained Interests from Unconsolidated VIEs

Table ~~9.5~~10.5 provides key economic assumptions and the sensitivity of the current fair value of residential mortgage servicing rights and other interests held related to unconsolidated VIEs to immediate adverse changes in those assumptions. “Other interests held” relate to residential and commercial mortgage loan securitizations. Residential mortgage-backed securities retained in securitizations issued through GSEs, such as FNMA, FHLMC and GNMA, are excluded from the table because these securities have a remote risk of credit loss due to the GSE

~~the GSE~~ guarantee. These securities also have economic characteristics similar to GSE mortgage-backed securities that we purchase, which are not included in the table. Subordinated interests include only those bonds whose credit rating was below AAA by a major rating agency at issuance. Senior interests include only those bonds whose credit rating was AAA by a major rating agency at issuance. The information presented excludes trading positions held in inventory.

Table ~~9.5:~~10.5: Retained Interests from Unconsolidated VIEs


				Other interests held												Other interests held
	Residential mortgage servicing rights (1)			Interest-only strips			Commercial (2)					Residential mortgage servicing rights (1)				Interest-only strips		Commercial (2)
($ in millions, except cost to service amounts)						Subordinated bonds			Senior bonds						Subordinated bonds				Senior bonds
Fair value of interests held at March 31, 2018	$	15,041			18			611			443
Fair value of interests held at March 31, 2019												$	13,336				15		679			295
Expected weighted-average life (in years)	6.8			3.6			6.4			5.0		5.9				3.5		6.9			5.5
Key economic assumptions:
Prepayment speed assumption (3)	9.3		%	18.3								11.3		%		18.2
Decrease in fair value from:
10% adverse change	$	546		1								$	542			1
25% adverse change	1,298			2								1,280				1
Discount rate assumption	7.2		%	15.4			3.8			3.5		7.6		%		14.2		4.1			3.4
Decrease in fair value from:
100 basis point increase	$	729		—			42			18		$	548			—		38			14
200 basis point increase	1,394			1			71			36		1,049				—		74			26
Cost to service assumption ($ per loan)	136											103
Decrease in fair value from:
10% adverse change	451											290
25% adverse change	1,127											723
Credit loss assumption							8.0			—								4.5		%	—
Decrease in fair value from:
10% higher losses							13			—								$	2		—
25% higher losses							17			—								5			—
Fair value of interests held at December 31, 2017	$	13,625		19			596			468
Fair value of interests held at December 31, 2018												$	14,649			16		668			309
Expected weighted-average life (in years)	6.2			3.3			6.7			5.2		6.5				3.6		7.0			5.7
Key economic assumptions:
Prepayment speed assumption (3)	10.5		%	20.0								9.9		%		17.7
Decrease in fair value from:
10% adverse change	$	565		1								$	530			1
25% adverse change	1,337			2								1,301				1
Discount rate assumption	6.9		%	14.8			4.1			3.1		8.1		%		14.5		4.3			3.7
Decrease in fair value from:
100 basis point increase	$	652		—			32			20		$	615			—		37			14
200 basis point increase	1,246			1			61			39		1,176				1		72			28
Cost to service assumption ($ per loan)	143											106
Decrease in fair value from:
10% adverse change	467											316
25% adverse change	1,169											787
Credit loss assumption							1.8			—								5.1		%	—
Decrease in fair value from:
10% higher losses							—			—								$	2		—
25% higher losses							—			—								5			—


(1)	See narrative following this table for a discussion of commercial mortgage servicing rights.


(2)	Prepayment speed assumptions do not significantly impact the value of commercial mortgage securitization bonds as the underlying commercial mortgage loans experience significantly lower prepayments due to certain contractual restrictions, impacting the borrower’s ability to prepay the mortgage.


(3)	The prepayment speed assumption for residential mortgage servicing rights includes a blend of prepayment speeds and default rates. Prepayment speed assumptions are influenced by mortgage interest rate inputs as well as our estimation of drivers of borrower behavior.

In addition to residential ~~mortgage servicing rights (MSRs)~~MSRs included in the previous table, we have a small portfolio of commercial MSRs with a fair value of ~~$2.3~~$2.1 billion and ~~$2.0~~$2.3 billion at March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, respectively. The nature of our commercial MSRs, which are carried at LOCOM, is different from our residential MSRs. Prepayment activity on serviced loans does not significantly impact the value of commercial MSRs because, unlike residential mortgages, commercial mortgages experience significantly lower prepayments due to certain contractual restrictions, impacting the borrower’s ability to prepay the mortgage. Additionally, for our commercial MSR portfolio, we are typically master/primary servicer, but not the special servicer, ~~who is separately~~

who is separately responsible for the servicing and workout of delinquent and foreclosed loans. It is the special servicer, similar to our role as servicer of residential mortgage loans, who is affected by higher servicing and foreclosure costs due to an increase in delinquent and foreclosed loans. Accordingly, prepayment speeds and costs to service are not key assumptions for commercial MSRs as they do not significantly impact the valuation. The primary economic driver impacting the fair value of our commercial MSRs is forward interest rates, which are derived from market observable yield curves used to price capital markets instruments. Market interest rates significantly affect interest earned on custodial deposit balances. The sensitivity of

Note 10: Securitizations and Variable Interest Entities (continued)

the current fair value to an immediate adverse 25% change in the assumption about interest

~~Note 9: Securitizations and Variable Interest Entities (continued~~)

earned on deposit balances at March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, results in a decrease in fair value of ~~$325~~$292 million and ~~$278~~$320 million, respectively. See Note 1011 (Mortgage Banking Activities) for further information on our commercial MSRs.

We also have a loan to an unconsolidated third party VIE that we extended in fourth quarter 2014 in conjunction with our sale of government guaranteed student loans. The loan is carried at amortized cost and approximates fair value at March 31, 2018, and December 31, 2017. The carrying amount of the loan at March 31, 2018, and December 31, 2017, was $1.2 billion and $1.3 billion, respectively. The estimated fair value of the loan is considered a Level 3 measurement that is determined using discounted cash flows that are based on changes in the discount rate due to changes in the risk premium component (credit spreads). The primary economic assumption impacting the fair value of our loan is the discount rate. Changes in the credit loss assumption are not expected to affect the estimated fair value of the loan due to the government guarantee of the underlying collateral. The sensitivity of the current fair value to an immediate adverse increase of 200 basis points in the risk premium component of the discount rate assumption is a decrease in fair value of $19 million and $25 million at March 31, 2018, and December 31, 2017, respectively.

The sensitivities in the preceding ~~paragraphs~~paragraph and table are hypothetical and caution should be exercised when relying on

this data. Changes in value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in value may not be linear. Also, the effect of a variation in a particular assumption on the value of the other interests held is calculated independently without changing any other assumptions. In reality, changes in one factor may result in changes in others (for example, changes in prepayment speed estimates could result in changes in the credit losses), which might magnify or counteract the sensitivities.

Off-Balance Sheet Loans

Table ~~9.6~~10.6 presents information about the principal balances of off-balance sheet loans that were sold or securitized, including residential mortgage loans sold to FNMA, FHLMC, GNMA and other investors, for which we have some form of continuing involvement (including servicer). Delinquent loans include loans 90 days or more past due and loans in bankruptcy, regardless of delinquency status. For loans sold or securitized where servicing is our only form of continuing involvement, we would only experience a loss if we were required to repurchase a delinquent loan or foreclosed asset due to a breach in representations and warranties associated with our loan sale or servicing contracts.

Table ~~9.6:~~10.6: Off-Balance Sheet Loans Sold or Securitized


						Net charge-offs							Net charge-offs
	Total loans			Delinquent loans and foreclosed assets (1)		Quarter ended Mar 31,		Total loans			Delinquent loans and foreclosed assets (1)		Quarter ended March 31,
(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2018	Dec 31, 2017	2018	2017	Mar 31, 2019		Dec 31, 2018	Mar 31, 2019	Dec 31, 2018	2019	2018
Commercial:
Real estate mortgage	$	101,784	100,875	2,622	2,839	10	295	$	106,087	105,173	976	1,008	79	10
Total commercial	101,784		100,875	2,622	2,839	10	295	106,087		105,173	976	1,008	79	10
Consumer:
Real estate 1-4 family first mortgage	1,122,010		1,126,208	11,823	13,393	116	200	1,061,759		1,097,128	7,988	8,947	67	116
Total consumer	1,122,010		1,126,208	11,823	13,393	116	200	1,061,759		1,097,128	7,988	8,947	67	116
Total off-balance sheet sold or securitized loans (2)	$	1,223,794	1,227,083	14,445	16,232	126	495	$	1,167,846	1,202,301	8,964	9,955	146	126


(1)	Includes ~~$1.2 billion~~$550 million and $675 million of commercial foreclosed assets ~~at both dates~~ and ~~$892~~$575 million and ~~$879~~$582 million of consumer foreclosed assets at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, respectively.

(2)

At March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, the table includes total loans of ~~$1.1~~$1.1 trillion at both dates, delinquent loans of ~~$7.9~~$5.8 billion and ~~$9.1~~$6.4 billion,, and foreclosed assets of ~~$628~~$451 million and ~~$619~~$442 million,, respectively, for FNMA, FHLMC and GNMA. Net charge-offs exclude loans sold to FNMA, FHLMC and GNMA as we do not service or manage the underlying real estate upon foreclosure and, as such, do not have access to net charge-off information.

Transactions with Consolidated VIEs and Secured Borrowings

Table ~~9.7~~10.7 presents a summary of financial assets and liabilities for asset transfers accounted for as secured borrowings and involvements with consolidated VIEs. Carrying values of “Assets” are presented using GAAP measurement methods, which may include fair value, credit impairment or other adjustments, and

therefore in some instances will differ from “Total VIE assets.” For VIEs that obtain exposure synthetically through derivative instruments, the remaining notional amount of the derivative is included in “Total VIE assets.” On the consolidated balance sheet, we separately disclose the consolidated assets of certain VIEs that can only be used to settle the liabilities of those VIEs.

Table ~~9.7:~~10.7: Transactions with Consolidated VIEs and Secured Borrowings


			Carrying value									Carrying value
(in millions)	Total VIE assets		Assets	Liabilities		Noncontrolling interests		Net assets		Total VIE assets		Assets	Liabilities		Noncontrolling interests		Net assets
March 31, 2018
March 31, 2019
Secured borrowings:
Municipal tender option bond securitizations	$	647	550	(522	)	—		28		$	562	454	(434	)	—		20
Residential mortgage securitizations	109		106	(107	)	—		(1	)	91		91	(90	)	—		1
Total secured borrowings	756		656	(629	)	—		27		653		545	(524	)	—		21
Consolidated VIEs:
Commercial and industrial loans and leases	8,652		8,607	(420	)	(10	)	8,177		8,643		8,629	(491	)	(12	)	8,126
Nonconforming residential mortgage loan securitizations	2,386		2,092	(653	)	—		1,439		1,556		1,362	(479	)	—		883
Commercial real estate loans	2,594		2,594	—		—		2,594		4,622		4,622	—		—		4,622
Structured asset finance	7		5	(4	)	—		1
Investment funds	24		24	—		—		24		185		185	(7	)	(15	)	163
Other	70		62	(1	)	(21	)	40		13		13	(3	)	(4	)	6
Total consolidated VIEs	13,733		13,384	(1,078	)	(31	)	12,275		15,019		14,811	(980	)	(31	)	13,800
Total secured borrowings and consolidated VIEs	$	14,489	14,040	(1,707	)	(31	)	12,302		$	15,672	15,356	(1,504	)	(31	)	13,821
December 31, 2017
December 31, 2018
Secured borrowings:
Municipal tender option bond securitizations	$	658	565	(532	)	—		33		$	627	523	(501	)	—		22
Residential mortgage securitizations	113		110	(111	)	—		(1	)	95		94	(93	)	—		1
Total secured borrowings	771		675	(643	)	—		32		722		617	(594	)	—		23
Consolidated VIEs:
Commercial and industrial loans and leases	9,116		8,626	(915	)	(29	)	7,682		8,215		8,204	(477	)	(14	)	7,713
Nonconforming residential mortgage loan securitizations	2,515		2,212	(694	)	—		1,518		1,947		1,732	(521	)	—		1,211
Commercial real estate loans	2,378		2,378	—		—		2,378		3,957		3,957	—		—		3,957
Structured asset finance	10		6	(4	)	—		2
Investment funds	305		305	(2	)	(230	)	73		155		155	(5	)	(15	)	135
Other	100		90	(1	)	(24	)	65		14		14	(4	)	(5	)	5
Total consolidated VIEs	14,424		13,617	(1,616	)	(283	)	11,718		14,288		14,062	(1,007	)	(34	)	13,021
Total secured borrowings and consolidated VIEs	$	15,195	14,292	(2,259	)	(283	)	11,750		$	15,010	14,679	(1,601	)	(34	)	13,044

~~INVESTMENT FUNDS~~ ~~Subsequent to adopting ASU 2015-02 –~~ ~~Amendments to the Consolidation Analysis~~ ~~in first quarter 2016, we consolidate certain investment funds because we have both the power to manage fund assets and hold variable interests that are considered significant.~~

For complete descriptions of our accounting for transfers accounted for as secured borrowings and involvements with consolidated VIEs, see Note 89 (Securitizations and Variable Interest Entities) to Financial Statements in our ~~2017~~2018 Form 10-K.

Note ~~10:~~11: Mortgage Banking Activities (continued)

Note ~~10:~~11: Mortgage Banking Activities

Mortgage banking activities, included in the Community Banking and Wholesale Banking operating segments, consist of residential and commercial mortgage originations, sale activity and servicing.

We apply the amortization method to commercial MSRs and ~~apply~~ the fair value method to residential MSRs. Table ~~10.1~~11.1 presents the changes in MSRs measured using the fair value method.

Table ~~10.1:~~11.1: Analysis of Changes in Fair Value MSRs


	Quarter ended March 31,					Quarter ended March 31,
(in millions)	2018			2017		2019			2018
Fair value, beginning of period	$	13,625		12,959		$	14,649		13,625
Servicing from securitizations or asset transfers (1)	573			583		341			573
Sales and other (2)	(4		)	(47	)	(281		)	(4	)
Net additions	569			536		60			569
Changes in fair value:
Due to changes in valuation model inputs or assumptions:
Mortgage interest rates (3)	1,253			152		(940		)	1,253
Servicing and foreclosure costs (4)	34			27		12			34
Prepayment estimates and other (5)	43			(5	)
Discount rates (5)						100			—
Prepayment estimates and other (6)						(63		)	43
Net changes in valuation model inputs or assumptions	1,330			174		(891		)	1,330
Changes due to collection/realization of expected cash flows over time	(483		)	(461	)	(482		)	(483	)
Total changes in fair value	847			(287	)	(1,373		)	847
Fair value, end of period	$	15,041		13,208		$	13,336		15,041


(1)	Includes impacts associated with exercising our right to repurchase delinquent loans from GNMA loan securitization pools. Total reported MSRs may increase upon repurchase due to servicing liabilities associated with these loans.


(2)	Includes sales and transfers of MSRs, which can result in an increase of total reported MSRs if the sales or transfers are related to nonperforming loan portfolios or portfolios with servicing liabilities.


(3)	Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates (such as changes in estimated interest earned on custodial deposit balances).


(4)	Includes costs to service and unreimbursed foreclosure costs.


(5)	Reflects discount rate assumption change, excluding portion attributable to changes in mortgage interest rates.


(6)	Represents changes driven by other valuation model inputs or assumptions including prepayment speed estimation changes and other assumption updates. Prepayment speed estimation changes are influenced by observed changes in borrower behavior and other external factors that occur independent of interest rate changes.

Table ~~10.2~~11.2 presents the changes in amortized MSRs.

Table ~~10.2:~~11.2: Analysis of Changes in Amortized MSRs


	Quarter ended March 31,					Quarter ended March 31,
(in millions)	2018			2017		2019			2018
Balance, beginning of period	$	1,424		1,406		$	1,443		1,424
Purchases	18			18		24			18
Servicing from securitizations or asset transfers	34			45		26			34
Amortization	(65		)	(67	)	(66		)	(65	)
Balance, end of period (1)	$	1,411		1,402		$	1,427		1,411
Fair value of amortized MSRs:
Beginning of period	$	2,025		1,956		$	2,288		2,025
End of period	2,307			2,051		2,149			2,307


(1)	Commercial amortized MSRs are evaluated for impairment purposes by the following risk strata: agency (GSEs) for multi-family properties and non-agency. There was no valuation allowance recorded for the periods presented on the commercial amortized MSRs.

We present the components of our managed servicing portfolio in Table ~~10.3~~11.3 at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced.

Table ~~10.3:~~11.3: Managed Servicing Portfolio


(in billions)	Mar 31, 2018			Dec 31, 2017	Mar 31, 2019			Dec 31, 2018
Residential mortgage servicing:
Serviced for others	$	1,201		1,209	$	1,125		1,164
Owned loans serviced	337			342	331			334
Subserviced for others	5			3	26			4
Total residential servicing	1,543			1,554	1,482			1,502
Commercial mortgage servicing:
Serviced for others	510			495	552			543
Owned loans serviced	125			127	122			121
Subserviced for others	10			9	9			9
Total commercial servicing	645			631	683			673
Total managed servicing portfolio	$	2,188		2,185	$	2,165		2,175
Total serviced for others	$	1,711		1,704	$	1,677		1,707
Ratio of MSRs to related loans serviced for others	0.96		%	0.88	0.88		%	0.94

Table ~~10.4~~11.4 presents the components of mortgage banking noninterest income.

Table ~~10.4:~~11.4: Mortgage Banking Noninterest Income


		Quarter ended March 31,						Quarter ended March 31,
(in millions)		2018			2017			2019			2018
Servicing income, net:
Servicing fees:
Contractually specified servicing fees		$	916		907			$	840		916
Late charges		44			48			33			44
Ancillary fees		40			50			38			40
Unreimbursed direct servicing costs (1)		(94		)	(123	)		(70		)	(94	)
Net servicing fees		906			882			841			906
Changes in fair value of MSRs carried at fair value:
Due to changes in valuation model inputs or assumptions (2)	(A)	1,330			174		(A)	(891		)	1,330
Changes due to collection/realization of expected cash flows over time		(483		)	(461	)		(482		)	(483	)
Total changes in fair value of MSRs carried at fair value		847			(287	)		(1,373		)	847
Amortization		(65		)	(67	)		(66		)	(65	)
Net derivative losses from economic hedges (3)	(B)	(1,220		)	(72	)
Net derivative gains (losses) from economic hedges (3)							(B)	962			(1,220	)
Total servicing income, net		468			456			364			468
Net gains on mortgage loan origination/sales activities(4)		466			772			344			466
Total mortgage banking noninterest income		$	934		1,228			$	708		934
Market-related valuation changes to MSRs, net of hedge results (2)(3)	(A)+(B)	$	110		102		(A)+(B)	$	71		110


(1)	Includes costs associated with foreclosures, unreimbursed interest advances to investors, and other interest costs.


(2)	Refer to the analysis of changes in fair value MSRs presented in Table ~~10.1~~11.1 in this Note for more detail.


(3)	Represents results from economic hedges used to hedge the risk of changes in fair value of MSRs. See Note ~~14 (Derivatives Not Designated as Hedging Instruments)~~15 (Derivatives) for additional discussion and detail.


(4)	Includes losses of $(151) million and gains of $625 million for first quarter 2019 and 2018, respectively, related to derivatives used as economic hedges of mortgage loans held for sale and

derivative loan commitments.

Note ~~10: Mortgage Banking Activities~~12: Intangible Assets (continued)

Table 10.5 summarizes the changes in our liability for mortgage loan repurchase losses. This liability is in “Accrued expenses and other liabilities” in our consolidated balance sheet and adjustments to the repurchase liability are recorded in net gains on mortgage loan origination/sales activities in “Mortgage banking” in our consolidated income statement.

loss, and is based on currently available information, significant judgment, and a number of assumptions that are subject to change. The high end of this range of reasonably possible losses exceeded our recorded liability by $166 million at March 31, 2018, and was determined based upon modifying the assumptions (particularly to assume significant changes in investor repurchase demand practices) used in our best estimate of probable loss to reflect what we believe to be the high end of reasonably possible adverse assumptions.

~~Table 10.5:Analysis of Changes in Liability for Mortgage Loan Repurchase Losses~~

Quarter ended March 31,
(in millions) 2018
2017
Balance, beginning of period $ 181
229
Provision for repurchase losses:
Loan sales 3
8
Change in estimate (1) 1
(8 )
Net additions to provision 4
—
Losses (4 ) (7 )
Balance, end of period $ 181
222


~~(1)~~	~~Results from changes in investor demand and mortgage insurer practices, credit deterioration and changes in the financial stability of correspondent lenders.~~

Note ~~11:~~12: Intangible Assets

Table ~~11.1~~12.1 presents the gross carrying value of intangible assets and accumulated amortization.

Table ~~11.1:~~12.1: Intangible Assets


	March 31, 2018					December 31, 2017				March 31, 2019					December 31, 2018
(in millions)	Gross carrying value		Accumulated amortization		Net carrying value	Gross carrying value	Accumulated amortization		Net carrying value	Gross carrying value		Accumulated amortization		Net carrying value	Gross carrying value	Accumulated amortization		Net carrying value
Amortized intangible assets (1):
MSRs (2)	$	3,928	(2,517	)	1,411	3,876	(2,452	)	1,424	$	4,211	(2,784	)	1,427	4,161	(2,718	)	1,443
Core deposit intangibles	12,834		(12,257	)	577	12,834	(12,065	)	769	—		—		—	12,834	(12,834	)	—
Customer relationship and other intangibles	3,994		(3,228	)	766	3,994	(3,153	)	841	3,937		(3,429	)	508	3,994	(3,449	)	545
Total amortized intangible assets	$	20,756	(18,002	)	2,754	20,704	(17,670	)	3,034	$	8,148	(6,213	)	1,935	20,989	(19,001	)	1,988
Unamortized intangible assets:
MSRs (carried at fair value) (2)	$	15,041				13,625				$	13,336				14,649
Goodwill	26,445					26,587				26,420					26,418
Trademark	14					14				14					14


(1)	~~Excludes fully amortized intangible assets.~~Balances are excluded commencing in the period following full amortization.


(2)	See Note 1011 (Mortgage Banking Activities) for additional information on MSRs.

Table ~~11.2~~12.2 provides the current year and estimated future amortization expense for amortized intangible assets. We based our projections of amortization expense shown below on existing

asset balances at March 31, ~~2018.~~2019. Future amortization expense may vary from these projections.

Table ~~11.2:~~12.2: Amortization Expense for Intangible Assets


(in millions)		Amortized MSRs		Core deposit intangibles	Customer relationship and other intangibles (1)	Total		Amortized MSRs		Customer relationship and other intangibles	Total
Three months ended March 31, 2018 (actual)		$	65	192	75	332
Estimate for the remainder of 2018		$	202	577	223	1,002
Three months ended March 31, 2019 (actual)								$	66	30	96
Estimate for the remainder of 2019								$	202	85	287
Estimate for year ended December 31,	Estimate for year ended December 31,						Estimate for year ended December 31,
2019		229		—	116	345
2020		199		—	97	296		242		95	337
2021		172		—	82	254		206		81	287
2022		155		—	68	223		183		68	251
2023		128		—	59	187		154		59	213
2024								130		48	178


~~(1)~~	~~The~~ ~~three months endedMarch 31, 2018~~ ~~balance includes~~ ~~$2 million~~ ~~for lease intangible amortization.~~

Table ~~11.3~~12.3 shows the allocation of goodwill to our reportable operating segments.

Table ~~11.3:~~12.3: Goodwill


(in millions)	Community Banking			Wholesale Banking		Wealth and Investment Management	Consolidated Company		Community Banking			Wholesale Banking	Wealth and Investment Management	Consolidated Company
December 31, 2016	$	16,849		8,585		1,259	26,693
Reduction in goodwill related to divested businesses and other	—			(27	)	—	(27	)
March 31, 2017	$	16,849		8,558		1,259	26,666
December 31, 2017	$	16,849		8,455		1,283	26,587		$	16,849		8,455	1,283	26,587
Reduction in goodwill related to divested businesses and other	(142		)	—		—	(142	)	(142		)	—	—	(142	)
March 31, 2018	$	16,707		8,455		1,283	26,445		$	16,707		8,455	1,283	26,445
December 31, 2018									$	16,685		8,450	1,283	26,418
Foreign currency translation									—			2	—	2
March 31, 2019									$	16,685		8,452	1,283	26,420

We assess goodwill for impairment at a reporting unit level, which is one level below the operating segments. See Note 2122 (Operating Segments) for further information on management reporting.

Note ~~12:~~13: Guarantees, Pledged Assets and Collateral, and Other Commitments

complete descriptions of our guarantees, see Note 1415 (Guarantees, Pledged Assets and Collateral, and Other Commitments) to Financial Statements in our ~~2017~~2018 Form 10-K. Table ~~12.1~~13.1 shows carrying value, maximum exposure to loss on our guarantees and the related non-investment grade amounts.

Table ~~12.1:~~13.1: Guarantees – Carrying Value and Maximum Exposure to Loss


				Maximum exposure to loss									Maximum exposure to loss
(in millions)	Carrying value of obligation (asset)			Expires in one year or less	Expires after one year through three years	Expires after three years through five years	Expires after five years	Total	Non- investment grade	Carrying value of obligation (asset)			Expires in one year or less	Expires after one year through three years	Expires after three years through five years	Expires after five years	Total	Non- investment grade
March 31, 2018
March 31, 2019
Standby letters of credit (1)	$	38		14,930	7,984	2,891	554	26,359	8,501	$	38		14,919	7,276	3,609	465	26,269	7,941
Securities lending and other indemnifications (2)	—			—	—	2	1,028	1,030	2	—			—	—	—	865	865	—
Written put options (3)	(227		)	15,044	12,739	3,748	891	32,422	20,462	(394		)	12,392	10,025	3,119	359	25,895	14,808
Loans and MHFS sold with recourse (4)	51			169	537	1,172	9,208	11,086	8,289
Loans and MLHFS sold with recourse (4)										53			109	660	1,160	10,420	12,349	9,168
Factoring guarantees (5)	—			814	—	—	—	814	715	—			584	—	—	—	584	544
Other guarantees	1			4	—	2	3,828	3,834	4	1			—	—	3	3,020	3,023	1
Total guarantees	$	(137	)	30,961	21,260	7,815	15,509	75,545	37,973	$	(302	)	28,004	17,961	7,891	15,129	68,985	32,462
December 31, 2017
December 31, 2018
Standby letters of credit (1)	$	39		15,357	7,908	3,068	645	26,978	8,773	$	40		14,636	7,897	3,398	497	26,428	8,027
Securities lending and other indemnifications (2)	—			—	—	2	809	811	2	—			—	1	—	1,044	1,045	1
Written put options (3)	(455		)	14,758	12,706	3,890	1,038	32,392	19,087	(185		)	17,243	10,502	3,066	400	31,211	21,732
Loans and MHFS sold with recourse (4)	51			165	533	934	9,385	11,017	8,155
Loans and MLHFS sold with recourse (4)										54			104	653	1,207	10,163	12,127	9,079
Factoring guarantees (5)	—			747	—	—	—	747	668	—			889	—	—	—	889	751
Other guarantees	1			7	—	2	4,175	4,184	7	1			—	—	3	2,959	2,962	1
Total guarantees	$	(364	)	31,034	21,147	7,896	16,052	76,129	36,692	$	(90	)	32,872	19,053	7,674	15,063	74,662	39,591

(1)

Total maximum exposure to loss includes direct pay letters of credit (DPLCs) of ~~$7.7~~$7.2 billion and ~~$8.1~~$7.5 billion at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, respectively. We issue DPLCs to provide credit enhancements for certain bond issuances. Beneficiaries (bond trustees) may draw upon these instruments to make scheduled principal and interest payments, redeem all outstanding bonds because a default event has occurred, or for other reasons as permitted by the agreement. We also originate multipurpose lending commitments under which borrowers have the option to draw on the facility in one of several forms, including as a standby letter of credit. Total maximum exposure to loss includes the portion of these facilities for which we have issued standby letters of credit under the commitments.

(2)

Includes indemnifications provided to certain third-party clearing agents. Outstanding customer obligations under these arrangements were ~~$100~~$75 million and ~~$92~~$70 million with related collateral of ~~$929~~$790 million and ~~$717~~$974 million at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, respectively. ~~Estimated maximum exposure to loss was~~ ~~$1.0 billion~~ at ~~March 31, 2018~~ ~~and~~ ~~$809 million~~ at ~~December 31, 2017~~.


(3)	Written put options, which are in the form of derivatives, are also included in the derivative disclosures in Note 1415 (Derivatives). Carrying value net asset position is a result of certain deferred premium option trades.


(4)	Represent recourse provided, predominantly to the GSEs, on loans sold under various programs and arrangements. ~~Under these arrangements, we repurchased~~ ~~$1 million~~ ~~of loans associated with these agreements in the~~ ~~first quarter 2018, and~~ ~~$1 million~~ ~~in the same period of~~ ~~2017~~.


(5)	Consists of guarantees made under certain factoring arrangements to purchase trade receivables from third parties, generally upon their request, if receivable debtors default on their payment obligations.

“Maximum exposure to loss” and “Non-investment grade” are required disclosures under GAAP. Non-investment grade represents those guarantees on which we have a higher risk of ~~being required to perform~~performance under the terms of the guarantee. If the underlying assets under the guarantee are non-investment grade (that is, an external rating that is below investment grade or an internal credit default grade that is equivalent to a below investment grade external rating), we consider the risk of performance to be high. Internal credit default grades are determined based upon the same credit policies that we use to evaluate the risk of payment or performance when making loans and other extensions of credit. Credit quality indicators we usually consider in evaluating risk of payments or performance are described in Note 6 (Loans and Allowance for Credit Losses).

Maximum exposure to loss represents the estimated loss that would be incurred under an assumed hypothetical circumstance, despite what we believe is a remote possibility, where the value of our interests and any associated collateral declines to zero. Maximum exposure to loss estimates in Table ~~12.1~~13.1 do not reflect economic hedges or collateral we could use to offset or recover losses we may incur under our guarantee agreements. Accordingly, this required disclosure is not an indication of expected loss. We believe the carrying value, which is either fair value for derivative-related products or the allowance for lending-related commitments, is more representative of our exposure to loss than maximum exposure to loss.

Note ~~12:~~13: Guarantees, Pledged Assets and Collateral, and Other Commitments (continued)

Pledged Assets

As part of our liquidity management strategy, we pledge various assets to secure trust and public deposits, borrowings and letters of credit from the ~~FHLB~~Federal Home Loan Bank (FHLB) and FRB, securities sold under agreements to repurchase (repurchase agreements), securities lending arrangements, and for other purposes as required or permitted by law or insurance statutory requirements. The types of collateral we pledge include securities issued by federal agencies, GSEs, domestic and foreign companies and various commercial and consumer loans. Table ~~12.2~~13.2 provides the total carrying amount of pledged assets

by asset type and the fair value of pledged ~~off-~~

~~balance~~off-balance sheet securities for securities financings. The table excludes pledged consolidated VIE assets of ~~$13.4~~$14.8 billion and ~~$13.6~~$14.1 billion at March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, respectively, which can only be used to settle the liabilities of those entities. The table also excludes ~~$656~~$545 million and ~~$675~~$617 million in assets pledged in transactions with ~~VIE's~~VIE’s accounted for as secured borrowings at March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, respectively. See Note 910 (Securitizations and Variable Interest Entities) for additional information on consolidated VIE assets and secured borrowings.

Table ~~12.2:~~13.2: Pledged Assets


(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2019		Dec 31, 2018
Held for trading:
Related to trading activities:
Debt securities	$	83,742	96,993	$	102,951	96,616
Equity securities	11,662		12,161	10,349		9,695
Total pledged assets held for trading (1)	95,404		109,154
Not held for trading:
Total pledged assets related to trading activities (1)				113,300		106,311
Related to non-trading activities:
Debt securities and other (2)	66,739		73,592	57,067		62,438
Mortgages held for sale and loans (3)	450,605		469,554
Total pledged assets not held for trading	517,344		543,146
Mortgage loans held for sale and loans (3)				464,216		453,894
Total pledged assets related to non-trading activities				521,283		516,332
Total pledged assets	$	612,748	652,300	$	634,583	622,643

(1)

Consists of pledged assets ~~held for~~related to trading activities of ~~$43.3~~$42.7 billion and ~~$41.9~~$45.5 billion at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, respectively and off-balance sheet securities of ~~$52.1~~$70.6 billion and ~~$67.3~~$60.8 billion as of the same dates, respectively, that are pledged as collateral for repurchase agreements and other securities financings. Total pledged assets ~~held for~~related to trading activities includes ~~$95.3~~$113.2 billion and ~~$109.0~~$106.2 billion at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, respectively, under agreements that permit the secured parties to sell or repledge the collateral.

(2)

Includes carrying value of ~~$4.7~~$3.8 billion and ~~$5.0~~$4.2 billion (fair value of ~~$4.5~~$3.7 billion and $~~5.0 billion~~)$4.1 billion) in collateral for repurchase agreements at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, respectively, which are pledged under agreements that do not permit the secured parties to sell or repledge the collateral. Also includes $7$56 million and ~~$64~~$68 million in collateral pledged under repurchase agreements at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, respectively, that permit the secured parties to sell or repledge the collateral. Substantially all other pledged securities are pursuant to agreements that do not permit the secured party to sell or repledge the collateral.

(3)

Includes ~~mortgages~~mortgage loans held for sale of ~~$1.0~~$1.0 billion and ~~$2.6~~$7.4 billion at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, respectively. Substantially all of the total ~~mortgages~~mortgage loans held for sale and loans are pledged under agreements that do not permit the secured parties to sell or repledge the collateral. Amounts exclude ~~$1.2~~$578 million and $1.2 billion ~~and~~ ~~$2.2 billion~~ at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, respectively, of pledged loans recorded on our balance sheet representing certain delinquent loans that are eligible for repurchase from GNMA loan securitizations.

Securities Financing Activities

We enter into resale and repurchase agreements and securities borrowing and lending agreements (collectively, “securities financing activities”) typically to finance trading positions (including securities and derivatives), acquire securities to cover short trading positions, accommodate customers’ financing needs, and settle other securities obligations. These activities are conducted through our broker-dealer subsidiaries and to a lesser extent through other bank entities. Most of our securities financing activities involve high quality, liquid securities such as U.S. Treasury securities and government agency securities, and to a lesser extent, less liquid securities, including equity securities, corporate bonds and asset-backed securities. We account for these transactions as collateralized financings in which we typically receive or pledge securities as collateral. We believe these financing transactions generally do not have material credit risk given the collateral provided and the related monitoring processes.

OFFSETTING OF ~~RESALE AND REPURCHASE AGREEMENTS AND~~ SECURITIES ~~BORROWING AND LENDING AGREEMENTS~~FINANCING ACTIVITIES Table ~~12.3~~13.3 presents resale and repurchase agreements subject to master repurchase agreements (MRA) and securities borrowing and lending agreements subject to master securities lending agreements (MSLA). We account for transactions subject to these agreements as collateralized financings, and those with a single counterparty are presented net on our balance sheet, provided certain criteria are met that permit balance sheet netting. Most transactions subject to these agreements do not meet those criteria and thus are not eligible for balance sheet netting.

Collateral we pledged consists of non-cash instruments, such as securities or loans, and is not netted on the balance sheet against the related liability. Collateral we received includes securities or loans and is not recognized on our balance sheet. Collateral pledged or received may be increased or decreased over time to maintain certain contractual thresholds, as the assets underlying each arrangement fluctuate in value. Generally, these agreements require collateral to exceed the asset or liability recognized on the balance sheet. The following table includes the amount of collateral pledged or received related to exposures subject to enforceable MRAs or MSLAs. While these agreements are typically over-collateralized, U.S. GAAP requires disclosure in this table to limit the reported amount of such collateral to the amount of the related recognized asset or liability for each counterparty.

In addition to the amounts included in Table ~~12.3,~~13.3, we also have balance sheet netting related to derivatives that is disclosed in Note 1415 (Derivatives).

Table ~~12.3:~~13.3: Offsetting – ~~Resale and Repurchase Agreements~~Securities Financing Activities


(in millions)	Mar 31, 2018			Dec 31, 2017		Mar 31, 2019			Dec 31, 2018
Assets:
Resale and securities borrowing agreements
Gross amounts recognized	$	108,479		121,135		$	135,549		112,662
Gross amounts offset in consolidated balance sheet (1)	(16,574		)	(23,188	)	(19,688		)	(15,258	)
Net amounts in consolidated balance sheet (2)	91,905			97,947		115,861			97,404
Collateral not recognized in consolidated balance sheet (3)	(91,396		)	(96,829	)	(115,063		)	(96,734	)
Net amount (4)	$	509		1,118		$	798		670
Liabilities:
Repurchase and securities lending agreements
Gross amounts recognized (5)	$	96,911		111,488		$	112,993		106,248
Gross amounts offset in consolidated balance sheet (1)	(16,574		)	(23,188	)	(19,688		)	(15,258	)
Net amounts in consolidated balance sheet (6)	80,337			88,300		93,305			90,990
Collateral pledged but not netted in consolidated balance sheet (7)	(80,193		)	(87,918	)	(93,095		)	(90,798	)
Net amount (8)	$	144		382		$	210		192


(1)	Represents recognized amount of resale and repurchase agreements with counterparties subject to enforceable MRAs that have been offset in the consolidated balance sheet.

(2)

~~At March 31, 2018, and December 31, 2017, includes $73.5~~Includes $98.6 billion and ~~$78.9~~$80.1 billion ~~respectively,~~ classified on our consolidated balance sheet in federal funds sold and securities purchased under resale ~~agreements. Balance also~~agreements at March 31, 2019, and December 31, 2018, respectively. Also includes securities purchased under long-term resale agreements (generally one year or more) classified in loans, which totaled ~~$18.4~~$17.3 billion ~~and $19.0 billion,~~ at both March 31, ~~2018,~~2019, and December 31, ~~2017, respectively.~~2018.

(3)

Represents the fair value of collateral we have received under enforceable MRAs or MSLAs, limited for table presentation purposes to the amount of the recognized asset due from each counterparty. At March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, we have received total collateral with a fair value of ~~$118.2~~$146.2 billion and ~~$130.8~~$123.1 billion, respectively, all of which, we have the right to sell or repledge. These amounts include securities we have sold or repledged to others with a fair value of ~~$52.7~~$70.9 billion at March 31, ~~2018,~~2019, and ~~$66.3~~$60.8 billion at December 31, ~~2017.~~2018.


(4)	Represents the amount of our exposure that is not collateralized and/or is not subject to an enforceable MRA or MSLA.


(5)	For additional information on underlying collateral and contractual maturities, see the “Repurchase and Securities Lending Agreements” section in this Note.


(6)	Amount is classified in short-term borrowings on our consolidated balance sheet.

(7)

Represents the fair value of collateral we have pledged, related to enforceable MRAs or MSLAs, limited for table presentation purposes to the amount of the recognized liability owed to each counterparty. At March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, we have pledged total collateral with a fair value of ~~$99.2~~$115.2 billion and ~~$113.6~~$108.8 billion, respectively, of which, the counterparty does not have the right to sell or repledge ~~$4.7~~$3.8 billion as of March 31, ~~2018~~2019 and ~~$5.2~~$4.4 billion as of December 31, ~~2017.~~2018.


(8)	Represents the amount of our obligation that is not covered by pledged collateral and/or is not subject to an enforceable MRA or MSLA.

REPURCHASE AND SECURITIES LENDING AGREEMENTS Securities sold under repurchase agreements and securities lending arrangements are effectively short-term collateralized borrowings. In these transactions, we receive cash in exchange for transferring securities as collateral and recognize an obligation to reacquire the securities for cash at the ~~transaction's~~transaction’s maturity. These types of transactions create risks, including (1) the counterparty may fail to return the securities at maturity, (2) the fair value of the securities transferred may decline below the amount of our obligation to reacquire the securities, and therefore create an obligation for us to pledge additional amounts, and (3) the counterparty may accelerate the maturity on demand, requiring us to reacquire the security prior to contractual maturity. We attempt to mitigate these risks ~~by the fact that most~~in various ways. Most of our ~~securities financing activities involve~~collateral consists of highly liquid ~~securities,~~securities. In addition, we underwrite and monitor the financial strength of our counterparties, we monitor the fair value of collateral pledged relative to contractually required repurchase amounts, and we monitor that our collateral is properly returned through the clearing and settlement process in advance of our cash repayment. Table ~~12.4~~13.4 provides the ~~underlying collateral types~~gross amounts recognized on the balance sheet (before the effects of offsetting) of our ~~gross obligations under~~liabilities for repurchase and securities lending ~~agreements.~~agreements disaggregated by underlying collateral type.

Note ~~12:~~13: Guarantees, Pledged Assets and Collateral, and Other Commitments (continued)

Table ~~12.4:~~13.4: Underlying Collateral Types of Gross Obligations


(in millions)	Mar 31, 2018		Dec 31, 2017	Mar 31, 2019		Dec 31, 2018
Repurchase agreements:
Securities of U.S. Treasury and federal agencies	$	42,646	51,144	$	46,186	38,408
Securities of U.S. States and political subdivisions	29		92	61		159
Federal agency mortgage-backed securities	33,138		35,386	44,672		47,241
Non-agency mortgage-backed securities	1,194		1,324	1,767		1,875
Corporate debt securities	6,092		7,152	6,989		6,191
Asset-backed securities	2,121		2,034	2,337		2,074
Equity securities	826		838	1,033		992
Other	66		1,783	341		340
Total repurchases	86,112		99,753	103,386		97,280
Securities lending:
Securities lending arrangements:
Securities of U.S. Treasury and federal agencies	102		186	186		222
Federal agency mortgage-backed securities	1		—	—		2
Corporate debt securities	471		619	390		389
Equity securities (1)	10,225		10,930	9,011		8,349
Other				20		6
Total securities lending	10,799		11,735	9,607		8,968
Total repurchases and securities lending	$	96,911	111,488	$	112,993	106,248


(1)	Equity securities are generally exchange traded and either re-hypothecated under margin lending agreements or obtained through contemporaneous securities borrowing transactions with other counterparties.

Table ~~12.5~~13.5 provides the contractual maturities of our gross obligations under repurchase and securities lending agreements.

Table ~~12.5:~~13.5: Contractual Maturities of Gross Obligations


(in millions)	Overnight/continuous		Up to 30 days	30-90 days	>90 days	Total gross obligation	Overnight/continuous		Up to 30 days	30-90 days	>90 days	Total gross obligation
March 31, 2018
March 31, 2019
Repurchase agreements	$	72,474	5,142	3,401	5,095	86,112	$	93,042	2,696	2,844	4,804	103,386
Securities lending	10,178		—	621	—	10,799
Securities lending arrangements							9,308		—	299	—	9,607
Total repurchases and securities lending (1)	$	82,652	5,142	4,022	5,095	96,911	$	102,350	2,696	3,143	4,804	112,993
December 31, 2017
December 31, 2018
Repurchase agreements	$	83,780	7,922	3,286	4,765	99,753	$	86,574	3,244	2,153	5,309	97,280
Securities lending	9,634		584	1,363	154	11,735
Securities lending arrangements							8,669		—	299	—	8,968
Total repurchases and securities lending (1)	$	93,414	8,506	4,649	4,919	111,488	$	95,243	3,244	2,452	5,309	106,248


(1)	Securities lending is executed under agreements that allow either party to terminate the transaction without notice, while repurchase agreements have a term structure to them that technically matures at a point in time. The overnight/continuous repurchase agreements require election of both parties to roll the trade rather than the election to terminate the arrangement as in securities lending.

OTHER COMMITMENTS To meet the financing needs of our customers, we may enter into commitments to purchase debt and equity securities to provide capital for their funding, liquidity or other future needs. As of March 31, ~~2018~~2019, ~~and~~ and December 31, ~~2017,~~2018, we had commitments to purchase debt securities of ~~$375~~$224 million and ~~$194~~$335 million, respectively, and commitments to purchase equity securities of $2.5 billion ~~and $2.2 billion, respectively.~~for both periods.

As part of maintaining our memberships in certain clearing organizations, we are required to stand ready to provide liquidity ~~meant~~ to sustain market clearing activity in the event unforeseen events occur or are deemed likely to occur. ~~This includes commitments~~Certain of these obligations are guarantees of other members’ performance and accordingly are included in Other guarantees in Table 13.1.

Also, we have ~~entered into~~commitments to purchase securities under resale agreements from a central clearing ~~organization that, at its option, require us to provide funding under such agreements.~~organizations. We do not have any outstanding amounts funded, and the amount of our unfunded contractual ~~commitment~~commitments was ~~$6.3~~$9.7 billion and ~~$2.8~~$9.8 billion as of March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, respectively. Given the nature of these commitments, they are

excluded from Table 6.4 (Unfunded Credit Commitments) in Note 6 (Loans and Allowance for Credit Losses).

The Parent ~~will~~ fully and unconditionally ~~guarantee~~guarantees the payment of principal, interest, and any other amounts that may be due on securities that its 100% owned finance subsidiary, Wells Fargo Finance LLC, may issue.

These guaranteed liabilities were $229 million and $5 million at March 31, 2019 and December 31, 2018, respectively. These guarantees rank on parity with all of the Parent’s other unsecured and unsubordinated indebtedness.

Note ~~13:~~14: Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory, governmental, arbitration, and other proceedings or investigations concerning matters arising from the conduct of our business activities, and many of those proceedings and investigations expose Wells Fargo to potential financial loss. These proceedings and investigations include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate-related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant legal actions pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. We establish accruals for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. For such accruals, we record the amount we consider to be the best estimate within a range of potential losses that are both probable and estimable; however, if we cannot determine a best estimate, then we record the low end of the range of those potential losses. The actual costs of resolving legal actions may be substantially higher or lower than the amounts accrued for those actions.

ATM ACCESS FEE LITIGATION In October 2011, plaintiffs filed a putative class action, Mackmin, et al. v. Visa, Inc. et al., against Wells Fargo & Company, Wells Fargo Bank, N.A., Visa, MasterCard, and several other banks in the United States District Court for the District of Columbia. Plaintiffs allege that the Visa and MasterCard requirement that if an ATM operator charges an access fee on Visa and MasterCard transactions, then that fee cannot be greater than the access fee charged for transactions on other networks, violates antitrust rules. Plaintiffs seek treble damages, restitution, injunctive relief, and attorneys’ fees where available under federal and state law. Two other antitrust cases ~~which~~that make similar allegations were filed in the same court, but these cases did not name Wells Fargo as a defendant. On February 13, 2013, the district court granted defendants’ motions to dismiss the three actions. Plaintiffs appealed the dismissals and, on August 4, 2015, the United States Court of Appeals for the District of Columbia Circuit vacated the district court’s decisions and remanded the three cases to the district court for further proceedings. On June 28, 2016, the United States Supreme Court granted defendants’ petitions for writ of certiorari to review the decisions of the United States Court of Appeals for the District of Columbia. On November 17, 2016, the United States Supreme Court dismissed the petitions as improvidently granted, and the three cases returned to the district court for further proceedings.

AUTOMOBILE LENDING MATTERS On April 20, 2018, the Company entered into consent orders with the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB) to resolve, among other things, investigations by the agencies into the ~~Company's~~Company’s compliance risk management program and its past practices involving certain automobile collateral protection insurance (CPI) policies and, as

discussed below, certain mortgage interest rate lock extensions.

The consent orders require remediation to customers and the payment of a total of $1$1.0 billion in civil money penalties to the agencies. In July 2017, the Company announced a plan to remediate customers who may have been financially harmed due to issues related to automobile CPI policies purchased through a third-party vendor on their behalf. Multiple putative class action cases alleging, among other things, unfair and deceptive practices relating to these CPI policies, have been filed against the Company and consolidated into one multi-district litigation in the United States District Court for the Central District of California. The Company has reached an agreement in principle to resolve the multi-district litigation pursuant to which the Company has agreed to pay, consistent with its remediation obligations under the consent orders, approximately $415 million in remediation to customers with CPI policies placed between October 15, 2005, and September 30, 2016. The settlement amount is not incremental to the Company’s remediation obligations under the consent orders, but instead encompasses those obligations, including remediation payments to date. The settlement amount is subject to change as the Company finalizes its remediation activity under the consent orders. In addition, the Company has agreed to contribute $1 million to a common fund for the class. The district court has set a preliminary approval hearing for June 3, 2019. The $415 million amount of the agreement in principle was fully accrued as of March 31, 2019. A putative class of shareholders also filed a securities fraud class action against the Company and its executive officers alleging material misstatements and omissions of CPI-related information in the ~~Company's~~Company’s public disclosures. Former team members have also alleged retaliation for raising concerns regarding automobile lending practices. In addition, the Company has identified certain issues related to the unused portion of guaranteed automobile protection (GAP) waiver or insurance agreements between the customer and dealer and, by assignment, the lender, which ~~may~~will result in ~~refunds~~remediation to customers in certain states. The Company is subject to a class action lawsuit in the United States District Court for the Central District of California alleging that customers are entitled to refunds in all states. Allegations related to ~~both~~ the CPI and GAP programs are among the subjects of ~~two~~ shareholder derivative lawsuits pending in federal and state court in California. The court dismissed the state court action in September 2018, but plaintiffs filed an amended complaint in November 2018. Subject to court approval, the parties to the state court action have entered into an agreement to resolve the action pursuant to which ~~were consolidated into one lawsuit in California state court.~~the Company will pay plaintiffs’ attorneys’ fees and undertake certain business and governance practices. These and other issues related to the origination, servicing, ~~and/or~~and collection of consumer automobile loans, including related insurance products, have also subjected the Company to formal or informal inquiries, investigations, or examinations from federal and state government agencies. AsIn December 2018, the Company ~~continues~~entered into an agreement with all 50 state Attorneys General and the District of Columbia to ~~centralize operations in its automobile lending business~~resolve an investigation into the Company’s retail sales practices, CPI and ~~tighten controls~~GAP, and ~~oversight of third party risk management,~~mortgage interest rate lock matters, pursuant to which the Company ~~anticipates it may continue to identify and remediate issues related to historical practices concerning the origination, servicing and/or collection of consumer automobile loans.~~paid $575 million.

CONSUMER DEPOSIT ACCOUNT RELATED REGULATORY INVESTIGATION The CFPB is conducting an investigation into whether customers were unduly harmed by the Company’s ~~procedures regarding~~historical practices associated with the freezing (and, in many

Note 14: Legal Actions (continued)

cases, closing) of consumer deposit accounts after the Company detected suspected fraudulent activity (by third-parties or account holders) that affected those accounts. A former team member has brought a state court action alleging retaliation for raising concerns about these ~~procedures.~~practices.

~~INADVERTENT CLIENT INFORMATION DISCLOSURE~~FIDUCIARY AND CUSTODY ACCOUNT FEE CALCULATIONS ~~In July 2017,~~Federal government agencies are conducting formal or informal inquiries, investigations, or examinations regarding fee calculations within certain fiduciary and custody accounts in the ~~Company inadvertently provided certain client information in response to a third-party subpoena issued in a civil litigation. The Company obtained permanent injunctions in New Jersey~~Company’s investment and ~~New York state courts requiring~~fiduciary services business, which is part of the ~~electronic data that contained~~wealth management business within the ~~client information~~Wealth and ~~all copies to be delivered to the New Jersey state court and the Company for safekeeping. The court has now returned the data to counsel for the Company.~~Investment Management (WIM) operating segment. The Company has ~~made voluntary self-disclosures to various state and federal regulatory agencies. Notifications~~determined that there have been ~~sent~~instances of incorrect fees being applied to ~~clients whose personal identifying data was contained~~certain assets and accounts, resulting in both overcharges and undercharges to customers.

FOREIGN EXCHANGE BUSINESSFederal government agencies, including the United States Department of Justice (Department of Justice), are investigating or examining certain activities in the ~~inadvertent production.~~Company’s foreign exchange business. The Company has begun providing remediation to customers that may have received pricing inconsistent with commitments made to those customers, and rebates to customers where historic pricing, while consistent with contracts entered into with those customers, does not conform to recently implemented pricing review standards for prior periods.

INTERCHANGE LITIGATION Plaintiffs representing a putative class of merchants have filed putative class actions, and individual merchants have filed individual actions, against Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A.

~~Note 13: Legal Actions (continued~~)

, and Wachovia Corporation regarding the interchange fees associated with Visa and MasterCard payment card transactions. Visa, MasterCard, and several other banks and bank holding companies are also named as defendants in these actions. These actions have been consolidated in the United States District Court for the Eastern District of New York. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard, and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012, Visa, MasterCard, and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve the consolidated class action and reached a separate settlement in principle of the consolidated individual actions. The settlement payments to be made by all defendants in the consolidated class and individual actions totaled approximately $6.6 billion before reductions applicable to certain merchants opting out of the settlement. The class settlement also provided for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of ~~eight~~8 consecutive months. The district court granted final approval of the settlement, which was appealed to the United States Court of Appeals for the Second Circuit by settlement objector merchants. Other merchants opted out of the settlement and are pursuing several individual actions. On June 30, 2016, the

Second Circuit vacated the settlement agreement and reversed and remanded the consolidated action to the United States District Court for the Eastern District of New York for further proceedings. On November 23, 2016, prior class counsel filed a petition to the United States Supreme Court, seeking review of the reversal of the settlement by the Second Circuit, and the Supreme Court denied the petition on March 27, 2017. On November 30, 2016, the district court appointed lead class counsel for a damages class and an equitable relief class. The parties have entered into a settlement agreement to resolve the money damages class claims pursuant to which defendants will pay a total of approximately $6.2 billion, which includes approximately $5.3 billion of funds remaining from the 2012 settlement and $900 million in additional funding. The Company’s allocated responsibility for the additional funding is approximately $94.5 million. The court granted preliminary approval of the settlement in January 2019, and scheduled a final approval hearing for November 7, 2019. Several of the opt-out and direct action litigations were settled during the pendency of the Second Circuit appeal while others remain pending. Discovery is proceeding in the opt-out litigations and the ~~remanded~~equitable relief class ~~cases.~~case.

LOW INCOME HOUSING TAX CREDITSFederal government agencies have undertaken formal or informal inquiries or investigations regarding the manner in which the Company purchased, and negotiated the purchase of, certain federal low income housing tax credits in connection with the financing of low income housing developments.

MORTGAGE BANKRUPTCY LOAN MODIFICATION LITIGATION Plaintiffs, representing a putative class of mortgage borrowers who were debtors in Chapter 13 bankruptcy cases, filed a putative class action, Cotton, et al. v. Wells Fargo, et al., against Wells Fargo & Company and Wells Fargo Bank, N.A. in the United States Bankruptcy Court for the Western District of North Carolina on June 7, 2017. Plaintiffs allege that Wells Fargo improperly and unilaterally modified the mortgages of borrowers who were debtors in Chapter 13 bankruptcy cases. Plaintiffs allege that Wells Fargo implemented these modifications by improperly filing mortgage payment change notices in Chapter 13 bankruptcy cases, in violation of bankruptcy rules and process. The amended complaint asserts claims based on, among other things, alleged fraud, violations of bankruptcy rules and laws, and unfair and deceptive trade practices. The amended complaint seeks monetary damages, attorneys’ fees, and declaratory and injunctive relief. The parties have entered into a settlement agreement pursuant to which the Company will pay $13.5 million to resolve the claims. The court granted final approval of the settlement on March 15, 2019.

MORTGAGE INTEREST RATE LOCK ~~RELATED REGULATORY INVESTIGATION~~MATTERS On April 20, 2018, the Company entered into consent orders with the OCC and CFPB to resolve, among other things, investigations by the agencies into the ~~Company's~~Company’s compliance risk management program and its past practices involving certain automobile CPI policies and certain mortgage interest rate lock extensions. The consent orders require remediation to customers and the payment of a total of $1$1.0 billion in civil money penalties to the agencies. On October 4, 2017, the Company announced plans to reach out to all home lending customers who paid fees for mortgage rate lock extensions requested from September 16, 2013, through February 28, 2017, and to provide refunds, with interest, to customers who believe they should not have paid those fees. The Company iswas named in a putative class action, filed in the United States District Court for the Northern District of California, alleging violations of federal and state consumer fraud statutes relating to mortgage rate lock extension fees. The Company filed a motion to dismiss and the court granted the motion. Subsequently, a putative class action was filed in the

United States District Court for the District of Oregon, raising similar allegations. The Company filed a motion to dismiss this action and the court granted the motion. In addition, former team members have asserted claims, including in pending litigation, that they were terminated for raising concerns regarding mortgage interest rate lock extension practices. Allegations related to mortgage interest rate lock extension fees are also among the subjects of two shareholder derivative lawsuits filed in California state court. Subject to court approval, the Company has entered into an agreement to resolve the derivative lawsuits pursuant to which the Company will pay plaintiffs’ attorneys’ fees and undertake certain business and governance practices. This matter has also subjected the Company to formal or informal inquiries, investigations or examinations from other federal and state government agencies. In December 2018, the Company entered into an agreement with all 50 state Attorneys General and the District of Columbia to resolve an investigation into the Company’s retail sales practices, CPI and GAP, and mortgage interest rate lock matters, pursuant to which the Company paid $575 million.

MORTGAGE ~~RELATED~~LOAN MODIFICATION LITIGATION Plaintiffs representing a putative class of mortgage borrowers have filed separate putative class actions, Hernandez v. Wells Fargo, et al., and Coordes v. Wells Fargo, et al., against Wells Fargo Bank, N.A. in the United States District Court for the Northern District of California and the United States District Court for the District of Washington, respectively. Plaintiffs allege that Wells Fargo improperly denied mortgage loan modifications or repayment plans to customers in the foreclosure process due to the overstatement of foreclosure attorneys’ fees that were included for purposes of determining whether a customer in the foreclosure process qualified for a mortgage loan modification or repayment plan.

MORTGAGE-RELATED REGULATORY INVESTIGATIONS Federal and state government agencies, including the ~~United States~~ Department of Justice, ~~(the “Department of Justice”), continue investigations~~have been investigating or ~~examinations of~~examining certain mortgage related activities of Wells Fargo and predecessor institutions. Wells Fargo, for itself and for predecessor institutions, has responded, ~~and~~or continues to respond, to requests from these agencies seeking information regarding the origination, underwriting, and securitization of residential mortgages, including sub-prime mortgages. These agencies have advanced theories of purported liability with respect to certain of these activities. ~~The Department of Justice and Wells Fargo continue~~An agreement, pursuant to ~~discuss~~which the ~~matter, including potential settlement of the Department of Justice's concerns; however, litigation with these agencies, including with~~Company paid $2.09 billion, was reached in August 2018 to resolve the Department of Justice ~~remains~~investigation, which related to certain 2005-2007 residential mortgage-backed securities activities. In addition, the Company reached an agreement with the Attorney General of the State of Illinois in November 2018 pursuant to which the Company paid $17 million in restitution to certain Illinois state pension funds to resolve a ~~possibility.~~claim relating to certain residential mortgage-backed securities activities. Other financial institutions have entered into similar settlements with these agencies, the nature of which related to the specific activities of those financial institutions, including the imposition of significant financial penalties and remedial actions.

OFAC RELATED INVESTIGATION The Company has self-identified an issue whereby certain foreign banks utilized a Wells Fargo software-based solution to conduct import/export trade-related financing transactions with countries and entities prohibited by the Office of Foreign Assets Control ~~(“OFAC”)~~(OFAC) of the United States Department of the Treasury. We do not believe any

funds related to these transactions flowed through accounts at Wells Fargo as a result of the aforementioned conduct. The Company has made voluntary self-disclosures to OFAC and is cooperating with an inquiry from the Department of Justice.

ORDER OF POSTING LITIGATION Plaintiffs filed a series of putative class actions against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the “high to low” order in which the banks post debit card transactions to consumer deposit accounts. Most of these actions were consolidated in multi-district litigation proceedings ~~(the “MDL proceedings”)~~(MDL proceedings) in the United States District Court for the Southern District of Florida. The court in the MDL proceedings has certified a class of putative plaintiffs, and Wells Fargo moved to compel arbitration of the claims of unnamed class members. The court denied the motions to compel arbitration onin October ~~17, 2016.~~2016, and Wells Fargo ~~has~~ appealed this decision to the United States Court of Appeals for the Eleventh Circuit.

~~RMBS TRUSTEE LITIGATION~~ In ~~November 2014, a group of institutional investors (the “Institutional Investor Plaintiffs”), including funds affiliated with BlackRock, Inc.,~~May 2018, the Eleventh Circuit ruled in Wells Fargo’s favor and found that Wells Fargo had not waived its arbitration rights and remanded the case to the district court for further proceedings. Plaintiffs filed a ~~putative class action~~petition for rehearing to the Eleventh Circuit, which was denied in August 2018. Plaintiffs petitioned for certiorari from the United States ~~District~~Supreme Court, for the Southern District of New York against Wells Fargo Bank, N.A., alleging claims against the Company in its capacity as trustee for a number of residential mortgage-backed securities (RMBS) trusts (the “Federal Court Complaint”). Similar complaints have been filed against other trustees in various courts, including in the Southern District of New York, in New York state court, and ~~in other states, by RMBS investors. The Federal Court Complaint alleges~~ that Wells Fargo Bank, N.A., as trustee, caused losses to investors and asserts causes of action based upon, among other things, the trustee's alleged failure to notify and enforce repurchase obligations of mortgage loan sellers for purported breaches of representations and warranties, notify investors of alleged events of default, and abide by appropriate standards of care following alleged events of default. Plaintiffs seek money damages in an unspecified amount, reimbursement of expenses, and equitable relief. In December 2014 and December 2015, certain other investors filed four complaints alleging similar claims against Wells Fargo Bank, N.A. in the Southern District of New York (the “Related Federal Cases”), and the various cases pending against Wells Fargo are proceeding before the same judge. On January 19, 2016, the Southern District of New York entered an order in connection with the Federal Court Complaint dismissing claims related to certain of the trusts at issue (the “Dismissed Trusts”). The Company's motion to dismiss the Federal Court Complaint and the complaints for the Related Federal Casespetition was ~~granted in part and~~ denied in part in March 2017. In May 2017, the Company filed third-party complaints against certain investment advisors affiliated with the Institutional Investor Plaintiffs seeking contribution with respect to claims alleged in the Federal Court Complaint.January 2019. The ~~investment advisors have moved to dismiss those complaints. On April 17, 2018, the court denied class certification in the Related Federal Case brought by Royal Park Investments SA/NV (Royal Park).~~

~~A complaint raising similar allegations~~case has returned to the ~~Federal Court Complaint was filed in May 2016 in New York state~~district court by a different plaintiff investor. In addition, the Institutional Investor Plaintiffs subsequently filed a complaint relating to the Dismissed Trusts and certain additional trusts in California state court (the “California Action”). The California Action was subsequently dismissed in September 2016. In December 2016, the Institutional Investor Plaintiffs filed a new putative class action complaint in New York state court in respect of 261 RMBS trusts, including the Dismissed Trusts, for ~~which Wells Fargo Bank, N.A. serves or served as trustee (the “State Court Action”). The Company has moved to dismiss the State Court Action.~~

~~In July 2017, certain of the plaintiffs from the State Court Action filed a civil complaint relating to Wells Fargo Bank,~~

N.A.'s setting aside reserves for legal fees and expenses in connection with the liquidation of eleven RMBS trusts at issue in the State Court Action. The complaint seeks, among other relief, declarations that Wells Fargo Bank, N.A. is not entitled to indemnification, the advancement of funds or the taking of reserves from trust funds for legal fees and expenses it incurs in defending the claims in the State Court Action. In November 2017, the Company's motion to dismiss the complaint was granted. Plaintiffs filed a notice of appeal in January 2018. In September 2017, Royal Park filed a similar complaint in the Southern District of New York seeking declaratory and injunctive relief and money damages on an individual and class action basis.further proceedings.

RETAIL SALES PRACTICES MATTERS Federal, state, and local government agencies, including the Department of Justice, the United States Securities and Exchange Commission (SEC), and the United States Department of ~~Labor, and~~Labor; state attorneys general, including the New York Attorney General; and prosecutors’ offices, as well as Congressional committees, have undertaken formal or informal inquiries, investigations or examinations arising out of certain retail sales practices of the Company that were the subject of settlements with the ~~Consumer Financial Protection Bureau,~~CFPB, the ~~Office of the Comptroller of the Currency~~OCC, and the Office of the Los Angeles City Attorney announced by the Company on September 8, 2016. These matters are at varying stages. The Company has responded, and continues to respond, to requests from a number of the ~~foregoing~~foregoing. In October 2018, the Company entered into an agreement to resolve the New York Attorney General’s investigation pursuant to which the Company paid $65 million to the State of New York. In December 2018, the Company entered into an agreement with all 50 state Attorneys General and the District of Columbia to resolve an investigation into the Company’s retail sales practices, CPI and GAP, and mortgage interest rate lock matters, pursuant to which the Company paid $575 million. The Company has ~~discussed~~also engaged in preliminary and/or exploratory resolution discussions with the ~~resolution~~Department of ~~some~~Justice and the SEC, although there can be no assurance as to the outcome of ~~the matters.~~these discussions.

In addition, a number of lawsuits have also been filed by non-governmental parties seeking damages or other remedies related to these retail sales practices. First, various class plaintiffs purporting to represent consumers who allege that they received products or services without their authorization or consent have brought separate putative class actions against the Company in the United States District Court for the Northern District of California and various other jurisdictions. In April 2017, the Company entered into a settlement agreement in the first-filed action, Jabbari v. Wells Fargo Bank, N.A., to resolve claims regarding certain products or services provided without authorization or consent for the time period May 1, 2002 to

Note 14: Legal Actions (continued)

April 20, 2017. Pursuant to the settlement, the Company will pay $142 million for remediation, attorneys’ fees, and settlement fund claims administration. In the unlikely event that the $142 million settlement total is not enough to provide remediation, pay ~~attorneys'~~attorneys’ fees, pay settlement fund claims administration costs, and have at least $25 million left over to distribute to all class members, the Company will contribute additional funds to the settlement. In addition, in the unlikely event that the number of unauthorized accounts identified by settlement class members in the claims process and not disputed by the claims administrator exceeds plaintiffs’ 3.5 million account estimate, the Company will proportionately increase the $25 million reserve so that the ratio of reserve to unauthorized accounts is no less than what was implied by plaintiffs’ estimate at the time of the district court’s preliminary approval of the settlement in July 2017. AThe district court issued an order granting final approval ~~hearing has~~of the settlement on June 14, 2018. Several appeals of the district court’s order granting final approval of the settlement have been ~~scheduled~~filed with the United States Court of Appeals for ~~May 30, 2018.~~the Ninth Circuit. Second, Wells Fargo shareholders ~~are pursuing~~brought a consolidated securities fraud class action in the United States District Court for the Northern District of California alleging certain misstatements and omissions in the Company’s disclosures related to sales practices matters. The Company ~~has reached an~~entered into a settlement agreement ~~in principle~~ to resolve this matter pursuant to which the Company ~~will pay~~paid $480 million. The ~~amount was fully accrued as of March 31, 2018. The agreement in principle is subject to~~

~~Note 13: Legal Actions (continued~~)

~~confirmatory discovery by the plaintiff and~~district court issued an order granting final approval byof the ~~court.~~settlement on December 20, 2018. Third, Wells Fargo shareholders have brought numerous shareholder derivative lawsuits asserting breach of fiduciary duty claims, among others, against current and former directors and officers for their alleged involvement with and failure to detect and prevent sales practices ~~issues, which were consolidated into two separate~~issues. These actions are currently pending in the United States District Court for the Northern District of California and California state ~~court. Additional lawsuits~~court for coordinated proceedings. An additional lawsuit asserting similar claims ~~are~~ pending in Delaware state ~~court.~~court has been stayed. Subject to court approval, the parties have entered into settlement agreements to resolve the shareholder derivative lawsuits pursuant to which insurance carriers will pay the Company approximately $240 million for alleged damage to the Company, and the Company will pay plaintiffs’ attorneys’ fees. Fourth, multiple employment litigation matters have been brought against Wells Fargo, including an Employee Retirement Income Security Act (ERISA) class action in the United States District Court for the District of Minnesota on behalf of 401(k) plan ~~participants;~~participants that has been dismissed and is now on appeal; a class action ~~pending~~ in the United States District Court for the Northern District of California on behalf of team members who allege that they protested sales practice misconduct and/or were terminated for not meeting sales ~~goals;~~goals that has now been dismissed, and we have entered into a framework with plaintiffs’ counsel to address individual claims that have been asserted; various wage and hour class actions brought in federal and state court in California (which have been settled), New Jersey, ~~Florida,~~ and Pennsylvania on behalf of non-exempt branch based team members alleging that sales pressure resulted in uncompensated overtime; and multiple single plaintiff Sarbanes-Oxley Act complaints and state law whistleblower actions filed with the United States Department of Labor or in various state courts alleging adverse employment actions for raising sales practice misconduct issues.

RMBS TRUSTEE LITIGATION In November 2014, a group of institutional investors (Institutional Investor Plaintiffs), including funds affiliated with BlackRock, Inc., filed a putative class action in the United States District Court for the Southern

District of New York against Wells Fargo Bank, N.A., alleging claims against the Company in its capacity as trustee for a number of residential mortgage-backed securities (RMBS) trusts (Federal Court Complaint). Similar complaints have been filed against other trustees in various courts, including in the Southern District of New York, in New York state court, and in other states, by RMBS investors. The Federal Court Complaint alleges that Wells Fargo Bank, N.A., as trustee, caused losses to investors and asserts causes of action based upon, among other things, the trustee’s alleged failure to notify and enforce repurchase obligations of mortgage loan sellers for purported breaches of representations and warranties, notify investors of alleged events of default, and abide by appropriate standards of care following alleged events of default. Plaintiffs seek money damages in an unspecified amount, reimbursement of expenses, and equitable relief. In December 2014 and December 2015, certain other investors filed four complaints alleging similar claims against Wells Fargo Bank, N.A. in the Southern District of New York (Related Federal Cases), and the various cases pending against the Company are proceeding before the same judge. On January 19, 2016, the Southern District of New York entered an order in connection with the Federal Court Complaint dismissing claims related to certain of the trusts at issue (Dismissed Trusts). The Company’s motion to dismiss the Federal Court Complaint and the complaints for the Related Federal Cases was granted in part and denied in part in March 2017. In May 2017, the Company filed third-party complaints against certain investment advisors affiliated with the Institutional Investor Plaintiffs seeking contribution with respect to claims alleged in the Federal Court Complaint (Third-Party Claims). The investment advisors have moved to dismiss those complaints. On April 17, 2018, the Southern District of New York denied class certification in the Related Federal Case brought by Royal Park Investments SA/NV (Royal Park Action).

A complaint raising similar allegations to those in the Federal Court Complaint was filed in May 2016 in New York state court by a different plaintiff investor. In December 2016, the Institutional Investor Plaintiffs filed a new putative class action complaint in New York state court in respect of 261 RMBS trusts, including the Dismissed Trusts, for which Wells Fargo Bank, N.A. serves or served as trustee (State Court Action).

In July 2017, certain of the plaintiffs from the State Court Action filed a civil complaint relating to Wells Fargo Bank, N.A.’s setting aside reserves for legal fees and expenses in connection with the liquidation of eleven RMBS trusts at issue in the State Court Action (Declaratory Judgment Action). The complaint seeks, among other relief, declarations that the Company is not entitled to indemnification, the advancement of funds, or the taking of reserves from trust funds for legal fees and expenses it incurs in defending the claims in the State Court Action. In November 2017, the Company’s motion to dismiss the complaint was granted. Plaintiffs filed a notice of appeal in January 2018.

In November 2018, the Institutional Investor Plaintiffs and the Company entered into a settlement agreement pursuant to which, among other terms, the Company will pay $43 million to resolve the Federal Court Complaint and the State Court Action. The settlement will also resolve the Third Party Claims and the Declaratory Judgment Action. The New York state court has scheduled a fairness hearing on the settlement for May 6, 2019. In addition, Royal Park Investments SA/NV and the Company have reached an agreement resolving the Royal Park Action. Other than the Royal Park Action, the Related Federal Cases are not covered by these settlement agreements.

SEMINOLE TRIBE TRUSTEE LITIGATION The Seminole Tribe of Florida filed a complaint in Florida state court alleging that Wells Fargo, as trustee, charged excess fees in connection with the administration of a minor’s trust and failed to invest the assets of the trust prudently. The complaint was later amended to include three individual current and former beneficiaries as plaintiffs and to remove the Tribe as a party to the case. In December 2016, the Company filed a motion to dismiss the amended complaint on the grounds that the Tribe is a necessary party and that the individual beneficiaries lack standing to bring claims. The motion was denied in June 2018. Trial is scheduled for October 2019.

WHOLESALE BANKING CONSENT ORDER INVESTIGATIONOn November 19, 2015, the Company entered into a consent order with the OCC, pursuant to which the Wholesale Banking group was required to implement customer due diligence standards that include collection of current beneficial ownership information for certain business customers. The Company is responding to inquiries from various federal government agencies regarding potentially inappropriate conduct in connection with the collection of beneficial ownership information.

OUTLOOK As described above, the Company establishes accruals for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. The high end of the range of reasonably possible potential losses in excess of the Company’s accrual for probable and estimable losses was approximately ~~$2.6~~$3.1 billion as of March 31, ~~2018.~~2019. The increase in the high end of the range from December 31, 2018, was due to a variety of matters. The outcomes of legal actions are unpredictable and subject to significant uncertainties, and it is inherently difficult to determine whether any loss is probable or even possible. It is also inherently difficult to estimate the amount of any loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Accordingly, actual losses may be in excess of the established accrual or the range of reasonably possible loss. Wells Fargo is unable to determine whether the ultimate resolution of ~~either~~ the ~~mortgage related regulatory investigations or the~~retail sales practices matters will have a material adverse effect on its consolidated financial condition. Based on information currently available, advice of counsel, available insurance coverage, and established reserves, Wells Fargo believes that the eventual outcome of other actions against Wells Fargo and/or its subsidiaries will not, individually or in the aggregate, have a material adverse effect on Wells Fargo’s consolidated financial condition. However, it is possible that the ultimate resolution of a matter, if unfavorable, may be material to Wells Fargo’s results of operations for any particular period.

Note 15: Derivatives (continued)

Note ~~14:~~15: Derivatives

We use derivatives to manage exposure to market risk, including interest rate risk, credit risk and foreign currency risk, and to assist customers with their risk management objectives. We designate certain derivatives as hedging instruments in a qualifying hedge accounting relationship (fair value or cash flow hedge). Our remaining derivatives consist of economic hedges that do not qualify for hedge accounting, and derivatives held for customer accommodation trading or other purposes. For more information on our derivative activities, see Note 1617 (Derivatives) to Financial Statements in our ~~2017~~2018 Form 10-K.

Table ~~14.1~~15.1 presents the total notional or contractual amounts and fair values for our derivatives. Derivative transactions can be measured in terms of the notional amount, but this amount is not recorded on the balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. The notional amount is generally not exchanged but is used only as the basis on which interest and other payments are determined.

Table ~~14.1:~~15.1: Notional or Contractual Amounts and Fair Values of Derivatives


	March 31, 2018							December 31, 2017							March 31, 2019									December 31, 2018
	Notional or contractual amount					Fair value		Notional or contractual amount					Fair value		Notional or contractual amount							Fair value		Notional or contractual amount					Fair value
(in millions)	Notional or contractual amount		Derivative assets			Derivative liabilities			Derivative assets			Derivative liabilities			Notional or contractual amount		Derivative assets				Derivative liabilities			Notional or contractual amount	Derivative assets			Derivative liabilities
Derivatives designated as hedging instruments								Notional or contractual amount
Interest rate contracts ~~(1)~~	$	165,802	2,387			724		209,677		2,492			1,092		$	187,889		2,195				810		177,511		2,237			636
Foreign exchange contracts (1)	31,720		1,769			742		34,135		1,482			1,137		33,647			474				1,575		34,176		573			1,376
Total derivatives designated as qualifying hedging instruments			4,156			1,466				3,974			2,229					2,669				2,385				2,810			2,012
Derivatives not designated as hedging instruments
Economic hedges:
Interest rate contracts (2)	197,432		287			416		220,558		159			201		216,847			905				495		173,215		849			369
Equity contracts	12,978		1,058			69		12,315		716			138		16,267			1,106				450		13,920		1,362			79
Foreign exchange contracts	15,373		84			205		15,976		78			309		16,590			154				92		19,521		225			80
Credit contracts – protection purchased	211		42			—		111		37			—		200			42				—		100		27			—
Subtotal			1,471			690				990			648					2,207				1,037				2,463			528
Customer accommodation trading and
other derivatives:
Customer accommodation trading and other derivatives:
Interest rate contracts	7,560,715		14,173			14,855		6,434,673		14,979			14,179		10,242,378			17,349				15,957		9,162,821		15,349			15,303
Commodity contracts	70,455		2,575			1,457		62,530		2,354			1,335		62,763			1,528				1,160		66,173		1,588			2,336
Equity contracts	231,036		6,765			7,708		213,750		6,291			8,363		227,993			5,662				7,510		217,890		6,183			5,931
Foreign exchange contracts	349,850		6,885			6,140		362,896		7,413			7,122		331,020			5,272				5,045		364,982		5,916			5,657
Credit contracts – protection sold	8,826		118			197		9,021		147			214		13,426			135				125		11,741		76			182
Credit contracts – protection purchased	17,559		191			159		17,406		207			208		22,440			127				198		20,880		175			98
Subtotal			30,707			30,516				31,391			31,421					30,073				29,995				29,287			29,507
Total derivatives not designated as hedging instruments			32,178			31,206				32,381			32,069					32,280				31,032				31,750			30,035
Total derivatives before netting			36,334			32,672				36,355			34,298					34,949				33,417				34,560			32,047
Netting (3)			(24,867		)	(24,789	)			(24,127	)		(25,502	)				(23,711		)		(26,024	)			(23,790	)		(23,548	)
Total			$	11,467		7,883				12,228			8,796					$	11,238			7,393				10,770			8,499

(1)

~~Notional amounts presented exclude~~ ~~$0 million~~ ~~and~~ ~~$500 million~~ ~~of interest rate~~The notional amount for foreign exchange contracts at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, excludes $11.0 billion and $11.2 billion, respectively, for certain derivatives that are combined for designation as a hedge on a single instrument. ~~The notional amount for foreign exchange contracts at~~ ~~March 31, 2018, and~~ ~~December 31, 2017, excludes~~ ~~$12.0 billion~~ ~~and~~ ~~$13.5 billion, respectively, for certain derivatives that are combined for designation as a hedge on a single instrument.~~


(2)	Includes economic hedge derivatives used to hedge the risk of changes in the fair value of residential MSRs, ~~MHFS,~~MLHFS, loans, derivative loan commitments and other interests held.


(3)	Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Table ~~14.2~~15.2 for further information.

~~Note 14: Derivatives (continued~~)

Table ~~14.2~~15.2 provides information on the gross fair values of derivative assets and liabilities, the balance sheet netting adjustments and the resulting net fair value amount recorded on our balance sheet, as well as the non-cash collateral associated with such arrangements. We execute substantially all of our derivative transactions under master netting arrangements and reflect all derivative balances and related cash collateral subject to enforceable master netting arrangements on a net basis within the balance sheet. The “Gross amounts recognized” column in the following table includes ~~$31.8~~$31.6 billion and ~~$29.6~~$30.5 billion of gross derivative assets and liabilities, respectively, at March 31, ~~2018,~~2019, and ~~$30.0~~$30.9 billion and ~~$29.9~~$28.4 billion, respectively, at December 31, ~~2017,~~2018, with counterparties subject to enforceable master netting arrangements that are carried on the balance sheet net of offsetting amounts. The remaining gross derivative assets and liabilities of ~~$4.5~~$3.3 billion and ~~$3.1~~$2.9 billion, respectively, at March 31, ~~2018,~~2019, and ~~$6.4~~$3.7 billion and ~~$4.4~~$3.6 billion, respectively, at December 31, ~~2017,~~2018, include those with counterparties subject to master netting arrangements for which we have not assessed the enforceability because they are with counterparties where we do not currently have positions to offset, those subject to master netting arrangements where we have not been able to confirm the enforceability and those not subject to master netting arrangements. As such, we do not net derivative balances or collateral within the balance sheet for these counterparties.

We determine the balance sheet netting adjustments based on the terms specified within each master netting arrangement. We disclose the balance sheet netting amounts within the column titled “Gross amounts offset in consolidated balance sheet.” Balance sheet netting adjustments are determined at the counterparty level for which there may be multiple contract types. For disclosure purposes, we allocate these netting adjustments to the contract type for each counterparty proportionally based upon the “Gross amounts recognized” by counterparty. As a result, the net amounts disclosed by contract type may not represent the actual exposure upon settlement of the contracts.

We do not net non-cash collateral that we receive and pledge on the balance sheet. For disclosure purposes, we present the fair value of this non-cash collateral in the column titled “Gross amounts not offset in consolidated balance sheet (Disclosure-only netting)” within the table. We determine and allocate the Disclosure-only netting amounts in the same manner as balance sheet netting amounts.

The “Net amounts” column within Table ~~14.2~~15.2 represents the aggregate of our net exposure to each counterparty after considering the balance sheet and Disclosure-only netting adjustments. We manage derivative exposure by monitoring the credit risk associated with each counterparty using counterparty specific credit risk limits, using master netting arrangements and obtaining collateral. Derivative contracts executed in over-the-counter markets include bilateral contractual arrangements that are not cleared through a central clearing organization but are typically subject to master netting arrangements. The percentage of our bilateral derivative transactions outstanding at period end in such markets, based on gross fair value, is provided within the following table. Other derivative contracts executed in over-the-counter or exchange-traded markets are settled through a central clearing organization and are excluded from this percentage. In addition to the netting amounts included in the table, we also have balance sheet netting related to resale and repurchase agreements that are disclosed within Note 1213 (Guarantees, Pledged Assets and Collateral, and Other Commitments).

Note 15: Derivatives (continued)

Table ~~14.2:~~15.2: Gross Fair Values of Derivative Assets and Liabilities


(in millions)	Gross amounts recognized		Gross amounts offset in consolidated balance sheet (1)		Net amounts in consolidated balance sheet	Gross amounts not offset in consolidated balance sheet (Disclosure-only netting) (2)		Net amounts	Percent exchanged in over-the-counter market (3)		Gross amounts recognized		Gross amounts offset in consolidated balance sheet (1)		Net amounts in consolidated balance sheet	Gross amounts not offset in consolidated balance sheet (Disclosure-only netting) (2)		Net amounts	Percent exchanged in over-the-counter market (3)
March 31, 2018
March 31, 2019
Derivative assets
Interest rate contracts	$	16,847	(11,407	)	5,440	(91	)	5,349	98	%	$	20,449	(13,354	)	7,095	(123	)	6,972	90	%
Commodity contracts	2,575		(1,032	)	1,543	(3	)	1,540	87		1,528		(846	)	682	—		682	80
Equity contracts	7,823		(5,997	)	1,826	(559	)	1,267	77		6,768		(4,617	)	2,151	(65	)	2,086	71
Foreign exchange contracts	8,738		(6,134	)	2,604	(226	)	2,378	100		5,900		(4,642	)	1,258	(17	)	1,241	100
Credit contracts – protection sold	118		(115	)	3	—		3	11		135		(133	)	2	—		2	8
Credit contracts – protection purchased	233		(182	)	51	(1	)	50	89		169		(119	)	50	(1	)	49	82
Total derivative assets	$	36,334	(24,867	)	11,467	(880	)	10,587			$	34,949	(23,711	)	11,238	(206	)	11,032
Derivative liabilities
Interest rate contracts	$	15,995	(12,449	)	3,546	(755	)	2,791	97	%	$	17,262	(14,761	)	2,501	(576	)	1,925	92	%
Commodity contracts	1,457		(744	)	713	—		713	69		1,160		(663	)	497	(2	)	495	72
Equity contracts	7,777		(5,220	)	2,557	(247	)	2,310	82		7,960		(5,154	)	2,806	(120	)	2,686	83
Foreign exchange contracts	7,087		(6,035	)	1,052	(124	)	928	100		6,712		(5,135	)	1,577	(174	)	1,403	100
Credit contracts – protection sold	197		(192	)	5	(5	)	—	84		125		(123	)	2	(2	)	—	71
Credit contracts – protection purchased	159		(149	)	10	—		10	9		198		(188	)	10	—		10	8
Total derivative liabilities	$	32,672	(24,789	)	7,883	(1,131	)	6,752			$	33,417	(26,024	)	7,393	(874	)	6,519
December 31, 2017
December 31, 2018
Derivative assets
Interest rate contracts	$	17,630	(11,929	)	5,701	(145	)	5,556	99	%	$	18,435	(12,029	)	6,406	(80	)	6,326	90	%
Commodity contracts	2,354		(966	)	1,388	(4	)	1,384	88		1,588		(849	)	739	(4	)	735	57
Equity contracts	7,007		(4,233	)	2,774	(596	)	2,178	76		7,545		(5,318	)	2,227	(755	)	1,472	78
Foreign exchange contracts	8,973		(6,656	)	2,317	(25	)	2,292	100		6,714		(5,355	)	1,359	(35	)	1,324	100
Credit contracts – protection sold	147		(145	)	2	—		2	10		76		(73	)	3	—		3	12
Credit contracts – protection purchased	244		(198	)	46	(3	)	43	89		202		(166	)	36	(1	)	35	78
Total derivative assets	$	36,355	(24,127	)	12,228	(773	)	11,455			$	34,560	(23,790	)	10,770	(875	)	9,895
Derivative liabilities
Interest rate contracts	$	15,472	(13,226	)	2,246	(1,078	)	1,168	99	%	$	16,308	(13,152	)	3,156	(567	)	2,589	92	%
Commodity contracts	1,335		(648	)	687	(1	)	686	76		2,336		(727	)	1,609	(8	)	1,601	85
Equity contracts	8,501		(4,041	)	4,460	(400	)	4,060	85		6,010		(3,877	)	2,133	(110	)	2,023	75
Foreign exchange contracts	8,568		(7,189	)	1,379	(204	)	1,175	100		7,113		(5,522	)	1,591	(188	)	1,403	100
Credit contracts – protection sold	214		(204	)	10	(9	)	1	85		182		(180	)	2	(2	)	—	67
Credit contracts – protection purchased	208		(194	)	14	—		14	9		98		(90	)	8	—		8	11
Total derivative liabilities	$	34,298	(25,502	)	8,796	(1,692	)	7,104			$	32,047	(23,548	)	8,499	(875	)	7,624

(1)

Represents amounts with counterparties subject to enforceable master netting arrangements that have been offset in the consolidated balance sheet, including related cash collateral and portfolio level counterparty valuation adjustments. Counterparty valuation adjustments were ~~$283~~$290 million and ~~$245~~$353 million related to derivative assets and ~~$132~~$104 million and ~~$95~~$152 million related to derivative liabilities at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, respectively. Cash collateral totaled ~~$3.7~~$2.7 billion and ~~$3.7~~$5.2 billion,, netted against derivative assets and liabilities, respectively, at March 31, ~~2018~~,2019, and ~~$2.7~~$3.7 billion and ~~$4.2~~$3.6 billion,, respectively, at December 31, ~~2017~~.

2018.


(2)	Represents the fair value of non-cash collateral pledged and received against derivative assets and liabilities with the same counterparty that are subject to enforceable master netting arrangements. U.S. GAAP does not permit netting of such non-cash collateral balances in the consolidated balance sheet but requires disclosure of these amounts.

(3)

~~Represents derivatives executed in over-the-counter markets that are not settled through a central clearing organization.~~ Over-the-counter percentages are calculated based on gross amounts recognized as of the respective balance sheet date. ~~The remaining percentage represents derivatives settled through a central clearing organization, which are executed in either over-the-counter or exchange-traded markets.~~

~~Note 14: Derivatives (continued~~)

Fair Value and Cash Flow Hedges

For fair value hedges, we use interest rate swaps to convert certain of our fixed-rate long-term debt and time certificates of deposit to floating rates to hedge our exposure to interest rate risk. We also enter into cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge our exposure to foreign currency risk and interest rate risk associated with the issuance of non-U.S. dollar denominated long-term debt. In addition, we use interest rate swaps, cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge against changes in fair value of certain investments in available-for-sale debt securities due to changes in interest rates, foreign currency rates, or both. We also use interest rate swaps to hedge

against changes in fair value for certain ~~mortgages~~mortgage loans held for sale.

For cash flow hedges, we use interest rate swaps to hedge the variability in interest payments received on certain floating-rate

commercial loans and paid on certain floating-rate debt due to changes in the contractually specified interest rate.

We estimate ~~$309~~$276 million pre-tax of deferred net losses related to cash flow hedges in OCI at March 31, ~~2018,~~2019, will be reclassified into net interest income during the next twelve months. ~~Our~~The deferred losses expected to be reclassified into net interest income are predominantly related to discontinued hedges of floating rate loans. For cash flow hedges ~~matured early in the second quarter 2018 and therefore~~as of March 31, 2019, we are ~~no longer~~ hedging ~~our floating-rate loans or debt liabilities.~~the variability of future cash flows for a

maximum of 8 years. For more information on our accounting hedges, see Note 1 (Summary of Significant Accounting Policies) and Note 16 (Derivatives) to Financial Statements in our ~~2017~~2018 Form 10-K.

Table ~~14.3~~15.3 shows the net gains (losses) related to derivatives in fair value and cash flow hedging relationships.

Table ~~14.3:~~15.3: Gains (Losses) Recognized in Consolidated Statement of Income on Fair Value and Cash Flow Hedging Relationships


	Net interest income											Noninterest Income				Net interest income											Noninterest income
(in millions)	Debt securities			Loans		Mortgages held for sale		Deposits		Long-term debt		Other		Total		Debt securities			Loans		Mortgage loans held for sale		Deposits		Long-term debt		Other		Total
Quarter ended March 31, 2018
Quarter ended March 31, 2019
Total amounts presented in the consolidated statement of income	$	3,414		10,579		179		(1,090	)	(1,576	)	602		12,108		$	3,941		11,354		152		(2,026	)	(1,927	)	574		12,068

Gains (losses) on fair value hedging relationships
Interest contracts
Amounts related to interest settlements on derivatives (1)	(82		)	—		(1	)	(5	)	171		—		83		16			—		—		(23	)	(7	)	—		(14	)
Recognized on derivatives	950			1		6		(149	)	(2,393	)	—		(1,585	)	(814		)	—		(8	)	207		1,986		—		1,371
Recognized on hedged items	(968		)	(1	)	(8	)	141		2,334		—		1,498		817			—		7		(190	)	(1,947	)	—		(1,313	)
Foreign exchange contracts
Amounts related to interest settlements on derivatives (1)(2)	5			—		—		—		(80	)	—		(75	)	10			—		—		—		(142	)	—		(132	)
Recognized on derivatives (3)	4			—		—		—		(171	)	660		493		(4		)	—		—		—		292		(402	)	(114	)
Recognized on hedged items	(3		)	—		—		—		109		(627	)	(521	)	5			—		—		—		(266	)	391		130
Net income (expense) recognized on fair value hedges	(94		)	—		(3	)	(13	)	(30	)	33		(107	)	30			—		(1	)	(6	)	(84	)	(11	)	(72	)

Gains (losses) on cash flow hedging relationships
Interest contracts
Realized gains (losses) (pre-tax) reclassified from cumulative OCI into net income (4)	—			(60	)	—		—		—		—		(60	)	—			(78	)	—		—		—		—		(78	)
Foreign exchange contracts
Realized gains (losses) (pre-tax) reclassified from cumulative OCI into net income (4)																—			—		—		—		(1	)	—		(1	)
Net income (expense) recognized on cash flow hedges	$	—		(60	)	—		—		—		—		(60	)	$	—		(78	)	—		—		(1	)	—		(79	)

(continued on following page)

Note 15: Derivatives (continued)


(continued from previous page)
	Net interest income											Noninterest Income				Net interest income											Noninterest income
(in millions)	Debt securities			Loans		Mortgages held for sale		Deposits		Long-term debt		Other		Total		Debt securities			Loans		Mortgage loans held for sale		Deposits		Long-term debt		Other		Total
Quarter ended March 31, 2017
Total amounts of line items presented in the consolidated statement of income	$	3,173		10,141		182		(536	)	(1,147	)	374		12,187
Quarter ended March 31, 2018
Total amounts presented in the consolidated statement of income																$	3,414		10,579		179		(1,090	)	(1,576	)	602		12,108

Gains (losses) on fair value hedging relationships
Interest contracts
Amounts related to interest settlements on derivatives (1)	(131		)	(1	)	(1	)	12		415		—		294		(82		)	—		(1	)	(5	)	171		—		83
Recognized on derivatives	126			1		(2	)	(8	)	(556	)	—		(439	)	950			1		6		(149	)	(2,393	)	—		(1,585	)
Recognized on hedged items	(141		)	(1	)	—		10		556		—		424		(968		)	(1	)	(8	)	141		2,334		—		1,498
Foreign exchange contracts
Amounts related to interest settlements on derivatives (1)(2)	4			—		—		—		(33	)	—		(29	)	5			—		—		—		(80	)	—		(75	)
Recognized on derivatives (3)	6			—		—		—		(47	)	375		334		4			—		—		—		(171	)	660		493
Recognized on hedged items	(3		)	—		—		—		83		(340	)	(260	)	(3		)	—		—		—		109		(627	)	(521	)
Net income (expense) recognized on fair value hedges	(139		)	(1	)	(3	)	14		418		35		324		(94		)	—		(3	)	(13	)	(30	)	33		(107	)

Gains (losses) on cash flow hedging relationships
Interest contracts
Realized gains (losses) (pre-tax) reclassified from cumulative OCI into net income (4)	—			205		—		—		(3	)	—		202		—			(60	)	—		—		—		—		(60	)
Foreign exchange contracts
Realized gains (losses) (pre-tax) reclassified from cumulative OCI into net income (4)																—			—		—		—		—		—		—
Net income (expense) recognized on cash flow hedges	$	—		205		—		—		(3	)	—		202		$	—		(60	)	—		—		—		—		(60	)


(1)	Includes~~$7 million~~ ~~and~~ ~~$5 million~~ ~~for first quarter 2018 and 2017, respectively, which represents~~ changes in fair value due to the passage of time associated with the non-zero fair value amount at hedge inception.


(2)	Includes $0$7 million, and ~~$(1)~~$0 million for first quarter ~~2018~~2019 and ~~2017,~~2018, respectively, of the time value component recognized as net interest income (expense) on forward derivatives hedging foreign currency debt securities and long-term debt that were excluded from the assessment of hedge effectiveness.


(3)	For certain fair value hedges of foreign currency risk, changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income. See Note 2021 (Other Comprehensive Income) for the amounts recognized in other comprehensive income.


(4)	See Note 2021 (Other Comprehensive Income) for details of amounts reclassified to net income.

Table ~~14.4~~15.4 shows the carrying amount and associated cumulative basis adjustment related to the application of hedge

accounting that is included in the carrying amount of hedged

assets and liabilities in fair value hedging relationships.

Table ~~14.4:~~15.4: Hedged Items in Fair Value Hedging Relationship


	Hedged Items Currently Designated					Hedged Items No Longer Designated (1)			Hedged Items Currently Designated					Hedged Items No Longer Designated (1)
(in millions)	Carrying Amount of Assets/(Liabilities) (2)(4)			Hedge Accounting Basis Adjustment Assets/(Liabilities) (3)		Carrying Amount of Assets/(Liabilities) (4)		Hedge Accounting Basis Adjustment Assets/(Liabilities)	Carrying Amount of Assets/(Liabilities) (2)(4)			Hedge Accounting Basis Adjustment Assets/(Liabilities) (3)		Carrying Amount of Assets/(Liabilities) (4)		Hedge Accounting Basis Adjustment Assets/(Liabilities)
March 31, 2018
March 31, 2019
Available-for-sale debt securities (5)	$	31,023		(301	)	4,916		288	$	40,081		256		4,596		110
Loans	135			(1	)	—		—	—			—		—		—
Mortgages held for sale	822			1		—		—
Mortgage loans held for sale									316			4		228		2
Deposits	(29,564		)	298		—		—	(59,921		)	(82	)	—		—
Long-term debt	(125,876		)	265		(805	)	13	(111,404		)	(2,935	)	(25,588	)	319
December 31, 2017
December 31, 2018
Available-for-sale debt securities (5)	32,498			870		5,221		343	37,857			(157	)	4,938		238
Loans	140			(1	)	—		—	—			—		—		—
Mortgages held for sale	465			(1	)	—		—
Mortgage loans held for sale									448			7		—		—
Deposits	(23,679		)	158		—		—	(56,535		)	115		—		—
Long-term debt	(128,950		)	(2,154	)	(1,953	)	16	(104,341		)	(742	)	(25,539	)	366


(1)	Represents hedged items no longer designated in qualifying fair value hedging relationships for which an associated basis adjustment exists at the balance sheet date.

(2)

Does not include the carrying amount of hedged items where only foreign currency risk is the designated hedged risk. The carrying amount excluded $1.6 billion for debt securities is ~~$1.5~~and $(6.2) billion ~~and~~ ~~$(7.4) billion~~ for long-term debt as of March 31, ~~2018~~2019, and ~~$1.5~~$1.6 billion for debt securities and $(6.3) billion for long-term debt is ~~$(7.7) billion~~ as of December 31, ~~2017.~~

2018.

(3)

The balance includes ~~$1.7~~$1.0 billion and ~~$266~~$77 million ~~of debt securities and long-term debt cumulative basis adjustments as of March 31, 2018, respectively, and~~ ~~$2.1 billion~~ ~~and~~ ~~$297 million~~ of debt securities and long-term debt cumulative basis adjustments, respectively, as of March 31, 2019, and $1.4 billion and $66 million of debt securities and long-term debt cumulative basis adjustments,respectively, as of December 31, ~~2017,~~2018, on terminated hedges whereby the hedged items have subsequently been re-designated into existing hedges.


(4)	Represents the full carrying amount of the hedged asset or liability item as of the balance sheet date, except for circumstances in which only a portion of the asset or liability was designated as the hedged item in which case only the portion designated is presented.


(5)	Carrying amount represents the amortized cost.

~~Note 14: Derivatives (continued~~)

Derivatives Not Designated as Hedging Instruments

We use economic hedge derivatives to hedge the risk of changes in the fair value of certain residential ~~MHFS, certain loans held for investment,~~MLHFS, residential MSRs measured at fair value, derivative loan commitments and other interests held. We also use economic hedge derivatives to mitigate the periodic earnings volatility caused by mismatches between the changes in fair value of the hedged item and hedging instrument recognized on our fair value accounting hedges. The resulting gain or loss on these economic hedge derivatives is reflected in mortgage banking noninterest income, net gains (losses) from equity investments and other noninterest income.

The derivatives used to hedge MSRs measured at fair value, resulted in net derivative gains (losses) of $962 million in first quarter 2019, and $(1.2) billion in first quarter 2018, ~~and $(72) million in first quarter 2017,~~ which are included in mortgage banking noninterest income. The aggregate fair value of these derivatives was a net ~~liability~~asset of ~~$13~~$663 million at March 31, ~~2018,~~2019, and net asset of ~~$89~~$757 million at December 31,

~~2017.~~2018. The change in fair value of these derivatives for each period end is due to changes in the underlying market indices and interest rates as well as the purchase and sale of derivative financial instruments throughout the period as part of our dynamic MSR risk management process.

~~Interest rate lock~~Loan commitments for mortgage loans that we intend to sell are considered derivatives. The aggregate fair value of derivative loan commitments on the balance sheet was a net positive fair value of ~~$37~~$58 million and ~~$17~~a net positive fair value of $60 million at March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, respectively, and is included in the caption “Interest rate contracts” under “Customer accommodation trading and other derivatives” in Table ~~14.1~~15.1 in this Note.

For more information on economic hedges and other derivatives, see Note 16 (Derivatives) to Financial Statements in our ~~2017~~2018 Form 10-K. Table ~~14.5~~15.5 shows the net gains (losses) recognized by income statement lines, related to derivatives not

designated as hedging instruments.

Table ~~14.5:~~15.5: Gains (Losses) on Derivatives Not Designated as Hedging Instruments


	Noninterest income										Noninterest income
(in millions)	Mortgage banking			Net gains (losses) from equity securities		Net gains (losses) from trading activities	Other		Total		Mortgage banking		Net gains (losses) from equity securities		Net gains (losses) from trading activities		Other		Total
Quarter ended March 31, 2018
Quarter ended March 31, 2019
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	(595	)	—		—	9		(586	)	$	811	—		—		5		816
Equity contracts	—			(58	)	—	—		(58	)	—		(885	)	—		7		(878	)
Foreign exchange contracts	—			—		—	(159	)	(159	)	—		—		—		(24	)	(24	)
Credit contracts	—			—		—	4		4		—		—		—		15		15
Subtotal (2)	(595		)	(58	)	—	(146	)	(799	)	811		(885	)	—		3		(71	)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts (3)	(259		)	—		385	—		126		118		—		(284	)	—		(166	)
Commodity contracts											—		—		51		—		51
Equity contracts	—			—		459	(195	)	264		—		—		(2,149	)	(273	)	(2,422	)
Foreign exchange contracts	—			—		310	—		310		—		—		14		—		14
Credit contracts	—			—		10	—		10		—		—		(44	)	—		(44	)
Commodity contracts	—			—		39	—		39
Other	—			—		—	—		—
Subtotal	(259		)	—		1,203	(195	)	749		118		—		(2,412	)	(273	)	(2,567	)
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	(854	)	(58	)	1,203	(341	)	(50	)	$	929	(885	)	(2,412	)	(270	)	(2,638	)

(continued on following page)

Note 15: Derivatives (continued)


(continued from previous page)
	Noninterest income											Noninterest income
(in millions)	Mortgage banking			Net gains (losses) from equity securities		Net gains (losses) from trading activities		Other		Total		Mortgage banking			Net gains (losses) from equity securities		Net gains (losses) from trading activities	Other		Total
Quarter ended March 31, 2017
Quarter ended March 31, 2018
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	(9	)	—		—		6		(3	)	$	(595	)	—		—	9		(586	)
Equity contracts	—			(474	)	—		(7	)	(481	)	—			(58	)	—	—		(58	)
Foreign exchange contracts	—			—		—		(87	)	(87	)	—			—		—	(159	)	(159	)
Credit contracts	—			—		—		4		4		—			—		—	4		4
Subtotal (2)	(9		)	(474	)	—		(84	)	(567	)	(595		)	(58	)	—	(146	)	(799	)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts (3)	193			—		45		—		238		(259		)	—		385	—		126
Commodity contracts												—			—		39	—		39
Equity contracts	—			—		(1,109	)	—		(1,109	)	—			—		459	(195	)	264
Foreign exchange contracts	—			—		179		—		179		—			—		310	—		310
Credit contracts	—			—		(15	)	—		(15	)	—			—		10	—		10
Commodity contracts	—			—		60		—		60
Other	—			—		12		—		12
Subtotal	193			—		(828	)	—		(635	)	(259		)	—		1,203	(195	)	749
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	184		(474	)	(828	)	(84	)	(1,202	)	$	(854	)	(58	)	1,203	(341	)	(50	)

(1)

~~Includes~~Mortgage banking amounts for first quarter 2019 are comprised of gains ~~(losses) on the~~of $962 million related to derivatives used as economic hedges of MSRs measured at fair value ~~interest rate lock commitments and mortgages~~offset by losses of $(151) million related to derivatives used as economic hedges of mortgage loans held for ~~sale.~~sale and derivative loan commitments. The corresponding amounts for first quarter 2018 are comprised of losses of $(1.2) billion offset by gains of $625 million, respectively.


(2)	Includes hedging gains (losses) of ~~$28~~$(18) million and $2$28 million for first quarter ~~2018~~2019 and ~~2017,~~2018, respectively, which partially offset hedge accounting ineffectiveness.


(3)	Amounts presented in mortgage banking noninterest income are gains on ~~interest rate lock~~derivative loan commitments.

~~Note 14: Derivatives (continued~~)

Credit Derivatives

Credit derivative contracts are arrangements whose value is derived from the transfer of credit risk of a reference asset or entity from one party (the purchaser of credit protection) to another party (the seller of credit protection). We use credit derivatives to assist customers with their risk management objectives. We may also use credit derivatives in structured product transactions or liquidity agreements written to special purpose vehicles. The maximum exposure of sold credit derivatives is managed through posted collateral, purchased credit derivatives and similar products in order to achieve our desired credit risk profile. This credit risk management provides

an ability to recover a significant portion of any amounts that

would be paid under the sold credit derivatives. We would be

required to perform under sold credit derivatives in the event of default by the referenced obligors. Events of default include events such as bankruptcy, capital restructuring or lack of principal and/or interest payment. In certain cases, other triggers may exist, such as the credit downgrade of the referenced obligors or the inability of the special purpose vehicle for which we have provided liquidity to obtain funding.

Table ~~14.6~~15.6 provides details of sold and purchased credit derivatives.

~~derivatives.~~

Table ~~14.6:~~15.6: Sold and Purchased Credit Derivatives


			Notional amount								Notional amount
(in millions)	Fair value liability		Protection sold (A)	Protection sold – non- investment grade	Protection purchased with identical underlyings (B)	Net protection sold (A) - (B)	Other protection purchased	Range of maturities	Fair value liability		Protection sold (A)	Protection sold – non- investment grade	Protection purchased with identical underlyings (B)	Net protection sold (A) - (B)	Other protection purchased	Range of maturities
March 31, 2018
March 31, 2019
Credit default swaps on:
Corporate bonds	$	34	2,152	531	1,669	483	988	2018 - 2027	$	36	2,010	483	1,332	678	1,843	2019 - 2027
Structured products	78		184	179	166	18	124	2022 - 2047	37		102	97	90	12	113	2022 - 2047
Credit protection on:
Default swap index	—		2,225	525	395	1,830	3,458	2018 - 2028	—		4,916	585	2,773	2,143	3,690	2019 - 2028
Commercial mortgage-backed securities index	75		444	164	421	23	47	2047 - 2058	42		352	97	326	26	50	2047 - 2058
Asset-backed securities index	10		43	43	43	—	1	2045 - 2046	8		42	42	42	—	1	2045 - 2046
Other	—		3,778	3,674	—	3,778	10,458	2018 - 2031	2		6,004	5,809	—	6,004	12,380	2019 - 2048
Total credit derivatives	$	197	8,826	5,116	2,694	6,132	15,076		$	125	13,426	7,113	4,563	8,863	18,077
December 31, 2017
December 31, 2018
Credit default swaps on:
Corporate bonds	$	35	2,007	510	1,575	432	946	2018 - 2027	$	59	2,037	441	1,374	663	1,460	2019 - 2027
Structured products	86		267	252	232	35	153	2022 - 2047	62		133	128	121	12	113	2022 - 2047
Credit protection on:
Default swap index	—		2,626	540	308	2,318	3,932	2018 - 2027	1		3,618	582	1,998	1,620	2,896	2019 - 2028
Commercial mortgage-backed securities index	83		423	—	401	22	87	2047 - 2058	49		389	109	363	26	51	2047 - 2058
Asset-backed securities index	9		42	—	42	—	1	2045 - 2046	9		42	42	42	—	1	2045 - 2046
Other	1		3,656	3,306	—	3,656	9,840	2018 - 2031	2		5,522	5,327	—	5,522	12,561	2018 - 2048
Total credit derivatives	$	214	9,021	4,608	2,558	6,463	14,959		$	182	11,741	6,629	3,898	7,843	17,082

Protection sold represents the estimated maximum exposure to loss that would be incurred under an assumed hypothetical circumstance, where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. We believe this hypothetical circumstance to be a remote possibility and accordingly, this required disclosure is not an indication of expected loss. The amounts under non-investment grade represent the notional amounts of those credit derivatives on which we have a higher

risk of being required to perform under the terms of the credit derivative and are a function of the underlying assets.

We consider the risk of performance to be high if the underlying assets under the credit derivative have an external rating that is below investment grade or an internal credit default grade that is equivalent thereto. We believe the net protection sold, which is representative of the net notional amount of protection sold and purchased with identical underlyings, in combination with other protection purchased, is more representative of our exposure to loss than either non-investment grade or protection sold. Other protection purchased represents additional protection, which may offset the exposure to loss for protection sold, that was not purchased with an identical underlying of the protection sold.

Note 15: Derivatives (continued)

Credit-Risk Contingent Features

Certain of our derivative contracts contain provisions whereby if the credit rating of our debt were to be downgraded by certain major credit rating agencies, the counterparty could demand additional collateral or require termination or replacement of derivative instruments in a net liability position. The aggregate fair value of all derivative instruments with such credit-risk-related contingent features that are in a net liability position was ~~$7.3~~$8.7 billion at March 31, ~~2018,~~2019, and ~~$8.3~~$7.4 billion at December 31, ~~2017,~~2018, for which we posted ~~$5.9~~$7.2 billion and ~~$7.1~~$5.6 billion, respectively, in collateral in the normal course of business. A credit rating below investment grade is the credit-risk-related contingent feature that if triggered requires the maximum amount of collateral to be posted. If the credit rating of our debt had been downgraded below investment grade, on March 31, ~~2018,~~2019, or December 31, ~~2017,~~2018, we would have been required to post additional collateral of ~~$1.3~~$1.5 billion or ~~$1.2~~$1.8 billion, respectively, or potentially settle the contract in an amount equal to its fair value. Some contracts require that we provide more collateral than the

fair value of derivatives that are in a net liability position if a downgrade occurs.

Counterparty Credit Risk

By using derivatives, we are exposed to counterparty credit risk if counterparties to the derivative contracts do not perform as expected. If a counterparty fails to perform, our counterparty credit risk is equal to the amount reported as a derivative asset on our balance sheet. The amounts reported as a derivative asset are derivative contracts in a gain position, and to the extent subject to legally enforceable master netting arrangements, net of derivatives in a loss position with the same counterparty and cash collateral received. We minimize counterparty credit risk through credit approvals, limits, monitoring procedures, executing master netting arrangements and obtaining collateral, where appropriate. To the extent the master netting arrangements and other criteria meet the applicable requirements, including determining the legal enforceability of the arrangement, it is our policy to present derivative balances and related cash collateral amounts net on the balance sheet. We incorporate credit valuation adjustments (CVA) to reflect counterparty credit risk in determining the fair value of our derivatives. Such adjustments, which consider the effects of enforceable master netting agreements and collateral arrangements, reflect market-based views of the credit quality of each counterparty. Our CVA calculation is determined based on observed credit spreads in the credit default swap market and indices indicative of the credit quality of the counterparties to our derivatives.

~~Note 15: Fair Values of Assets and Liabilities (continued~~)

Note ~~15:~~16: Fair Values of Assets and Liabilities

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Assets and liabilities recorded at fair value on a recurring basis are presented in Table ~~15.2~~16.2 in this Note. From time to time, we may be required to record fair value adjustments on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application of LOCOM accounting, measurement alternative accounting for nonmarketable equity securities or write-downs of individual assets. Assets recorded on a nonrecurring basis are presented in Table ~~15.10~~16.9 in this Note.

See Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2017~~2018 Form 10-K for discussion of how we determine fair value. For descriptions of the valuation methodologies we use for assets and liabilities recorded at fair value on a recurring or nonrecurring basis and for estimating fair value for financial instruments that are not recorded at fair value, see Note 1718 (Fair Values of Assets and Liabilities) to Financial Statements in our ~~2017~~2018 Form 10-K.

FAIR VALUE HIERARCHY We group our assets and liabilities measured at fair value in three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 – Valuation is generated from techniques that use significant assumptions that are not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

We do not classify an equity security in the fair value hierarchy if we use the non-published net asset value (NAV) per share (or its equivalent) that has been communicated to us as an investor as a practical expedient to measure fair value. We ~~generally~~ use NAV per share as the fair value measurement for certain nonmarketable equity fund investments. Marketable equity securities with published NAVs continue to be classified in the fair value hierarchy.

Note 16: Fair Values of Assets and Liabilities (continued)

Fair Value Measurements from Vendors

For certain assets and liabilities, we obtain fair value measurements from vendors, which predominantly consist of third-party pricing services, and record the unadjusted fair value in our financial statements. For additional information, see Note 1718 (Fair Values of Assets and Liabilities) to Financial Statements in our ~~2017~~2018 Form 10-K. Table ~~15.1~~16.1 presents

unadjusted fair value measurements provided by brokers or third-party pricing services by fair value hierarchy level. Fair value measurements obtained from brokers or third-party pricing services that we have adjusted to determine the fair value recorded in our financial statements are excluded from

Table ~~15.1.~~16.1.

Table ~~15.1:~~16.1: Fair Value Measurements by Brokers or Third-Party Pricing Services


	Brokers				Third-party pricing services				Brokers				Third-party pricing services
(in millions)	Level 1		Level 2	Level 3	Level 1		Level 2	Level 3	Level 1		Level 2	Level 3	Level 1		Level 2		Level 3
March 31, 2018
March 31, 2019
Trading debt securities	$	—	—	—	105		229	—	$	—	—	—	485		310		—
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	—		—	—	3,362		2,917	—	—		—	—	12,144		2,962		—
Securities of U.S. states and political subdivisions	—		—	—	—		47,951	44	—		—	—	—		49,230		43
Mortgage-backed securities	—		33	—	—		165,656	67	—		—	—	—		156,450		41
Other debt securities (1)	—		231	1,077	—		46,288	139	—		45	130	—		44,292		771
Total available-for-sale debt securities	—		264	1,077	3,362		262,812	250	—		45	130	12,144		252,934		855
Equity securities:
Marketable	—		—	—	—		225	—	—		—	—	—		161		—
Nonmarketable	—		—	—	—		2	293	—		—	—	—		—		—
Total equity securities	—		—	—	—		227	293	—		—	—	—		161		—
Derivative assets	—		—	—	17		—	—	—		—	—	17		—		—
Derivative liabilities	—		—	—	(17	)	—	—	—		—	—	(21	)	(1	)	—
Other liabilities (2)	—		—	—	—		—	—	—		—	—	—		—		—
December 31, 2017
December 31, 2018
Trading debt securities	$	—	—	—	926		215	—	$	—	—	—	899		256		—
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	—		—	—	3,389		2,930	—	—		—	—	10,399		2,949		—
Securities of U.S. states and political subdivisions	—		—	—	—		50,401	49	—		—	—	—		48,377		43
Mortgage-backed securities	—		33	—	—		168,948	75	—		—	—	—		160,162		41
Other debt securities (1)	—		307	1,158	—		44,465	22	—		45	129	—		44,292		758
Total available-for-sale debt securities	—		340	1,158	3,389		266,744	146	—		45	129	10,399		255,780		842
Equity securities:
Marketable	—		—	—	—		227	—	—		—	—	—		158		—
Nonmarketable	—		—	—	—		—	—	—		—	—	—		1		—
Total equity securities	—		—	—	—		227	—	—		—	—	—		159		—
Derivative assets	—		—	—	19		—	—	—		—	—	17		—		—
Derivative liabilities	—		—	—	(19	)	—	—	—		—	—	(12	)	—		—
Other liabilities (2)	—		—	—	—		—	—	—		—	—	—		—		—


(1)	Includes corporate debt securities, collateralized loan and other debt obligations, asset-backed securities, and other debt securities.


(2)	Includes short sale liabilities and other liabilities.

~~Note 15: Fair Values of Assets and Liabilities (continued~~)

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Table ~~15.2~~16.2 presents the balances of assets and liabilities recorded at fair value on a recurring basis.

Table ~~15.2:~~16.2: Fair Value on a Recurring Basis


(in millions)	Level 1			Level 2		Level 3			Netting			Total			Level 1			Level 2		Level 3			Netting (1)		Total
March 31, 2018
March 31, 2019
Trading debt securities:
Securities of U.S. Treasury and federal agencies	$	13,419		2,720		—			—			16,139			$	17,584		4,971		—			—		22,555
Securities of U.S. states and political subdivisions	—			3,434		3			—			3,437			—			3,385		—			—		3,385
Collateralized loan obligations	—			645		316			—			961			—			674		275			—		949
Corporate debt securities	—			12,377		34			—			12,411			—			11,073		41			—		11,114
Mortgage-backed securities	—			25,755		—			—			25,755			—			31,162		—			—		31,162
Asset-backed securities	—			1,132		—			—			1,132			—			1,187		—			—		1,187
Other trading debt securities	—			13		18			—			31			—			11		15			—		26
Total trading debt securities	13,419			46,076		371			—			59,866			17,584			52,463		331			—		70,378
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	3,362			2,917		—			—			6,279			12,144			2,962		—			—		15,106
Securities of U.S. states and political subdivisions	—			49,026		617			—			49,643			—			49,230		470			—		49,700
Mortgage-backed securities:
Federal agencies	—			156,814		—			—			156,814			—			150,663		—			—		150,663
Residential	—			4,473		1			—			4,474			—			1,456		—			—		1,456
Commercial	—			4,723		67			—			4,790			—			4,331		41			—		4,372
Total mortgage-backed securities	—			166,010		68			—			166,078			—			156,450		41			—		156,491
Corporate debt securities	54			6,719		410			—			7,183			36			5,941		377			—		6,354
Collateralized loan and other debt obligations ~~(1)~~(2)	—			35,707		1,045			—			36,752			—			34,560		755			—		35,315
Asset-backed securities:
Automobile loans and leases	—			572		—			—			572			—			945		—			—		945
Home equity loans	—			146		—			—			146			—			14		—			—		14
Other asset-backed securities	—			4,501		501			—			5,002			—			3,811		362			—		4,173
Total asset-backed securities	—			5,219		501			—			5,720			—			4,770		362			—		5,132
Other debt securities	—			1		—			—			1			—			1		—			—		1
Total available-for-sale debt securities	3,416			265,599		2,641		(2)	—			271,656			12,180			253,914		2,005		(3)	—		268,099
Mortgages held for sale	—			12,909		950			—			13,859
Mortgage loans held for sale															—			10,093		998			—		11,091
Loans held for sale	—			1,695		—			—			1,695			—			927		71			—		998
Loans	—			—		352			—			352			—			—		225			—		225
Mortgage servicing rights (residential)	—			—		15,041			—			15,041			—			—		13,336			—		13,336
Derivative assets:
Interest rate contracts	20			16,728		99			—			16,847			67			20,254		128			—		20,449
Commodity contracts	—			2,547		28			—			2,575			—			1,503		25			—		1,528
Equity contracts	1,795			4,562		1,466			—			7,823			1,936			3,275		1,557			—		6,768
Foreign exchange contracts	17			8,707		14			—			8,738			17			5,872		11			—		5,900
Credit contracts	—			231		120			—			351			—			216		88			—		304
Netting	—			—		—			(24,867	)	(3)	(24,867		)	—			—		—			(23,711	)	(23,711	)
Total derivative assets	1,832			32,775		1,727			(24,867	)		11,467			2,020			31,120		1,809			(23,711	)	11,238
Equity securities - excluding securities at NAV:
Marketable	29,705			553		—			—			30,258			25,168			900		—			—		26,068
Nonmarketable	—			52		5,219			—			5,271			—			20		6,381			—		6,401
Total equity securities	$	29,705		605		5,219			—			35,529			25,168			920		6,381			—		32,469
Total assets included in the fair value hierarchy	$	48,372		359,659		26,301			(24,867	)		409,465			$	56,952		349,437		25,156			(23,711	)	407,834
Equity securities at NAV (4)												32													117
Total assets recorded at fair value												$	409,497												407,951
Derivative liabilities:
Interest rate contracts	$	(20	)	(15,868	)	(107	)		—			(15,995		)	$	(18	)	(17,217	)	(27	)		—		(17,262	)
Commodity contracts	—			(1,439	)	(18	)		—			(1,457		)	—			(1,117	)	(43	)		—		(1,160	)
Equity contracts	(1,391		)	(4,598	)	(1,788	)		—			(7,777		)	(1,382		)	(4,859	)	(1,719	)		—		(7,960	)
Foreign exchange contracts	(17		)	(7,057	)	(13	)		—			(7,087		)	(21		)	(6,664	)	(27	)		—		(6,712	)
Credit contracts	—			(277	)	(79	)		—			(356		)	—			(284	)	(39	)		—		(323	)
Netting	—			—		—			24,789		(3)	24,789			—			—		—			26,024		26,024
Total derivative liabilities	(1,428		)	(29,239	)	(2,005	)		24,789			(7,883		)	(1,421		)	(30,141	)	(1,855	)		26,024		(7,393	)
Short sale liabilities:
Securities of U.S. Treasury and federal agencies	(14,243		)	(570	)	—			—			(14,813		)	(12,562		)	(219	)	—			—		(12,781	)
Mortgage back securities	—			(18	)	—			—			(18		)
Mortgage-backed securities															—			(404	)	—			—		(404	)
Corporate debt securities	—			(5,962	)	—			—			(5,962		)	—			(5,075	)	—			—		(5,075	)
Equity securities	(2,459		)	(51	)	—			—			(2,510		)	(3,325		)	(1	)	—			—		(3,326	)
Other securities	—			—		—			—			—			—			—		—			—		—
Total short sale liabilities	(16,702		)	(6,601	)	—			—			(23,303		)	(15,887		)	(5,699	)	—			—		(21,586	)
Other liabilities	—			—		(2	)		—			(2		)	—			—		(2	)		—		(2	)
Total liabilities recorded at fair value	$	(18,130	)	(35,840	)	(2,007	)		24,789			(31,188		)	$	(17,308	)	(35,840	)	(1,857	)		26,024		(28,981	)


(1)	~~Includes collateralized debt obligations~~Represents balance sheet netting of ~~$1.0 billion~~. derivative asset and liability balances and related cash collateral. See Note 15 (Derivatives) for additional information.


(2)	~~Balance primarily~~Includes collateralized debt obligations of $755 million.


(3)	A significant portion of the balance consists of securities that are investment grade based on ratings received from the ratings agencies or internal credit grades categorized as investment grade if external ratings are not available. The securities are classified as Level 3 due to limited market activity.


~~(3)~~	~~Represents balance sheet netting of derivative asset and liability balances and related cash collateral. See Note 14 (Derivatives) for additional information.~~


(4)	Consists of certain nonmarketable equity securities that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.

(continued on following page)

Note 16: Fair Values of Assets and Liabilities (continued)

(continued from previous page)


(in millions)	Level 1			Level 2		Level 3			Netting			Total			Level 1			Level 2		Level 3			Netting (1)		Total
December 31, 2017
December 31, 2018
Trading debt securities:
Securities of U.S. Treasury and federal agencies	$	12,491		2,383		—			—			14,874			$	20,525		2,892		—			—		23,417
Securities of U.S. states and political subdivisions	—			3,732		3			—			3,735			—			3,272		3			—		3,275
Collateralized loan obligations	—			565		354			—			919			—			673		237			—		910
Corporate debt securities	—			11,760		31			—			11,791			—			10,723		34			—		10,757
Mortgage-backed securities	—			25,273		—			—			25,273			—			30,715		—			—		30,715
Asset-backed securities	—			993		—			—			993			—			893		—			—		893
Other trading debt securities	—			20		19			—			39			—			6		16			—		22
Total trading debt securities	12,491			44,726		407			—			57,624			20,525			49,174		290			—		69,989
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	3,389			2,930		—			—			6,319			10,399			2,949		—			—		13,348
Securities of U.S. states and political subdivisions	—			50,401		925			—			51,326			—			48,820		444			—		49,264
Mortgage-backed securities:
Federal agencies	—			160,219		—			—			160,219			—			153,203		—			—		153,203
Residential	—			4,607		1			—			4,608			—			2,775		—			—		2,775
Commercial	—			4,490		75			—			4,565			—			4,184		41			—		4,225
Total mortgage-backed securities	—			169,316		76			—			169,392			—			160,162		41			—		160,203
Corporate debt securities	56			7,203		407			—			7,666			34			5,867		370			—		6,271
Collateralized loan and other debt obligations ~~(1)~~(2)	—			35,036		1,020			—			36,056			—			34,543		800			—		35,343
Asset-backed securities:
Automobile loans and leases	—			553		—			—			553			—			925		—			—		925
Home equity loans	—			149		—			—			149			—			112		—			—		112
Other asset-backed securities	—			4,380		566			—			4,946			—			4,056		389			—		4,445
Total asset-backed securities	—			5,082		566			—			5,648			—			5,093		389			—		5,482
Other debt securities	—			—		—			—			—			—			1		—			—		1
Total available-for-sale debt securities	3,445			269,968		2,994		(2)	—			276,407			10,433			257,435		2,044		(3)	—		269,912
Mortgages held for sale	—			15,118		998			—			16,116
Mortgage loans held for sale															—			10,774		997			—		11,771
Loans held for sale	—			1,009		14			—			1,023			—			1,409		60			—		1,469
Loans	—			—		376			—			376			—			—		244			—		244
Mortgage servicing rights (residential)	—			—		13,625			—			13,625			—			—		14,649			—		14,649
Derivative assets:
Interest rate contracts	17			17,479		134			—			17,630			46			18,294		95			—		18,435
Commodity contracts	—			2,318		36			—			2,354			—			1,535		53			—		1,588
Equity contracts	1,698			3,970		1,339			—			7,007			1,648			4,582		1,315			—		7,545
Foreign exchange contracts	19			8,944		10			—			8,973			17			6,689		8			—		6,714
Credit contracts	—			269		122			—			391			—			179		99			—		278
Netting	—			—		—			(24,127	)	(3)	(24,127		)	—			—		—			(23,790	)	(23,790	)
Total derivative assets	1,734			32,980		1,641			(24,127	)		12,228			1,711			31,279		1,570			(23,790	)	10,770
Equity securities - excluding securities at NAV:
Marketable	33,931			429		—			—			34,360			23,205			757		—			—		23,962
Nonmarketable	—			46		4,821			—			4,867			—			24		5,468			—		5,492
Total equity securities	$	33,931		475		4,821			—			39,227			23,205			781		5,468			—		29,454
Total assets included in the fair value hierarchy	$	51,601		364,276		24,876			(24,127	)		416,626			$	55,874		350,852		25,322			(23,790	)	408,258
Equity securities at NAV (4)												—													102
Total assets recorded at fair value												$	416,626												408,360
Derivative liabilities:
Interest rate contracts	$	(17	)	(15,392	)	(63	)		—			(15,472		)	$	(21	)	(16,217	)	(70	)		—		(16,308	)
Commodity contracts	—			(1,318	)	(17	)		—			(1,335		)	—			(2,287	)	(49	)		—		(2,336	)
Equity contracts	(1,313		)	(5,338	)	(1,850	)		—			(8,501		)	(1,492		)	(3,186	)	(1,332	)		—		(6,010	)
Foreign exchange contracts	(19		)	(8,546	)	(3	)		—			(8,568		)	(12		)	(7,067	)	(34	)		—		(7,113	)
Credit contracts	—			(336	)	(86	)		—			(422		)	—			(216	)	(64	)		—		(280	)
Netting	—			—		—			25,502		(3)	25,502			—			—		—			23,548		23,548
Total derivative liabilities	(1,349		)	(30,930	)	(2,019	)		25,502			(8,796		)	(1,525		)	(28,973	)	(1,549	)		23,548		(8,499	)
Short sale liabilities:
Securities of U.S. Treasury and federal agencies	(10,420		)	(568	)	—			—			(10,988		)	(11,850		)	(411	)	—			—		(12,261	)
Mortgage-backed securities															—			(47	)	—			—		(47	)
Corporate debt securities	—			(4,986	)	—			—			(4,986		)	—			(4,505	)	—			—		(4,505	)
Equity securities	(2,168		)	(45	)	—			—			(2,213		)	(2,902		)	(2	)	—			—		(2,904	)
Other securities	—			(285	)	—			—			(285		)	—			(3	)	—			—		(3	)
Total short sale liabilities	(12,588		)	(5,884	)	—			—			(18,472		)	(14,752		)	(4,968	)	—			—		(19,720	)
Other liabilities	—			—		(3	)		—			(3		)	—			—		(2	)		—		(2	)
Total liabilities recorded at fair value	$	(13,937	)	(36,814	)	(2,022	)		25,502			(27,271		)	$	(16,277	)	(33,941	)	(1,551	)		23,548		(28,221	)


(1)	~~Includes collateralized debt obligations~~Represents balance sheet netting of ~~$1.0 billion~~. derivative asset and liability balances and related cash collateral. See Note 15 (Derivatives) for additional information.


(2)	~~Balance primarily~~Includes collateralized debt obligations of $800 million.


(3)	A significant portion of the balance consists of securities that are investment grade based on ratings received from the ratings agencies or internal credit grades categorized as investment grade if external ratings are not available. The securities are classified as Level 3 due to limited market activity.


~~(3)~~	~~Represents balance sheet netting of derivative asset and liability balances and related cash collateral. See Note 14 (Derivatives) for additional information.~~


(4)	Consists of certain nonmarketable equity securities that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.

~~Note 15: Fair Values of Assets and Liabilities (continued~~)

Changes in Fair Value Levels

We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy and transfer between Level 1, Level 2, and Level 3 accordingly. Observable market data includes but is not limited to quoted prices and market transactions. Changes in economic conditions or market liquidity generally will drive changes in availability of observable market data. Changes in availability of observable market data, which also may result in

changing the valuation technique used, are generally the cause of transfers between Level 1, Level 2,and Level 3.

~~Transfers into and out of Level 1, Level 2, and Level 3 are provided within Table 15.3 for the periods presented.~~ The amounts reported as transfers represent the fair value as of the beginning of the quarter in which the transfer occurred.

~~Table 15.3:Transfers Between Fair Value Levels~~

   Transfers Between Fair Value Levels
   Level 1 Level 2 Level 3 (1)
(in millions) In Out In Out In Out Total
Quarter ended March 31, 2018
Trading debt securities $ —
—
—
—
—
—
—
Available-for-sale debt securities —
—
269
—
—
(269 ) —
Mortgages held for sale —
—
3
(15 ) 15
(3 ) —
Loans held for sale —
—
—
—
—
—
—
Equity securities —
(11 ) 11
(4 ) 4
—
—
Net derivative assets and liabilities (2) —
—
(49 ) —
—
49
—
Short sale liabilities —
—
—
—
—
—
—
Total transfers $ —
(11 ) 234
(19 ) 19
(223 ) —
Quarter ended March 31, 2017
Trading debt securities $ —
—
1
(3 ) 3
(1 ) —
Available-for-sale debt securities —
—
72
(5 ) 5
(72 ) —
Mortgages held for sale —
—
1
(42 ) 42
(1 ) —
Loans held for sale —
—
—
—
—
—
—
Equity securities —
—
—
—
—
—
—
Net derivative assets and liabilities (2) —
—
3
22
(22 ) (3 ) —
Short sale liabilities —
—
—
—
—
—
—
Total transfers $ —
—
77
(28 ) 28
(77 ) —


~~(1)~~	~~All transfers in and out of Level 3 are disclosed within the recurring Level 3 rollforward tables in this Note.~~


~~(2)~~	~~Includes transfers of net derivative assets and net derivative liabilities between levels due to changes in observable market data.~~

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for ~~the~~first quarter ~~ended March 31, 2018,~~2019, are presented in Table ~~15.4.~~16.3.

Table ~~15.4:~~16.3: Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – Quarter ended ~~ended~~ March 31, ~~2018~~2019


				Total net gains (losses) included in				Purchases, sales, issuances and settlements, net (1)											Net unrealized gains (losses) included in income related to assets and liabilities held at period end							Total net gains (losses) included in					Purchases, sales, issuances and settlements, net (1)										Net unrealized gains (losses) included in income related to assets and liabilities held at period end (4)
(in millions)	Balance, beginning of period			Net income		Other compre- hensive income				Transfers into Level 3		Transfers out of Level 3			Balance, end of period			(2)			Balance, beginning of period				Net income			Other compre- hensive income			Purchases, sales, issuances and settlements, net (1)		Transfers into Level 3 (2)		Transfers out of Level 3 (3)			Balance, end of period
Quarter ended March 31, 2018								Purchases, sales, issuances and settlements, net (1)
Quarter ended March 31, 2019
Trading debt securities:
Securities of U.S. states and political subdivisions	$	3		—		—		—			—		—			3			—			$	3			—			—		(2	)		—		(1	)		—		—
Collateralized loan obligations	354			2		—		(40	)		—		—			316			16			237				(3	)		—		41			—		—			275		1
Corporate debt securities	31			—		—		3			—		—			34			—			34				2			—		4			1		—			41		2
Mortgage-backed securities	—			—		—		—			—		—			—			—
Asset-backed securities	—			—		—		—			—		—			—			—
Other trading debt securities	19			(1	)	—		—			—		—			18			—			16				(1	)		—		—			—		—			15		—
Total trading debt securities	407			1		—		(37	)		—		—			371			16		(3)	290				(2	)		—		43			1		(1	)		331		3		(5)
Available-for-sale debt securities:
Securities of U.S. states and political subdivisions	925			4		(2	)	(41	)		—		(269	)		617			—			444				—			3		23			—		—			470		—
Mortgage-backed securities:
Residential	1			—		—		—			—		—			1			—			—				—			—		—			—		—			—		—
Commercial	75			1		(1	)	(8	)		—		—			67			—			41				—			—		—			—		—			41		—
Total mortgage-backed securities	76			1		(1	)	(8	)		—		—			68			—			41				—			—		—			—		—			41		—
Corporate debt securities	407			1		3		(1	)		—		—			410			—			370				1			4		2			—		—			377		—
Collateralized loan and other debt obligations	1,020			5		43		(23	)		—		—			1,045			—			800				6			(4	)	(47	)		—		—			755		—
Asset-backed securities:
Automobile loans and leases	—			—		—		—			—		—			—			—
Other asset-backed securities	566			8		(7	)	(66	)		—		—			501			—			389				—			(1	)	(26	)		—		—			362		—
Total asset-backed securities	566			8		(7	)	(66	)		—		—			501			—			389				—			(1	)	(26	)		—		—			362		—
Total available-for-sale debt securities	2,994			19		36		(139	)		—		(269	)		2,641			—		(4)	2,044				7			2		(48	)		—		—			2,005		—		(6)
Mortgages held for sale	998			(23	)	—		(37	)		15		(3	)		950			(23	)	(5)
Mortgage loans held for sale																						997				15			—		(66	)		56		(4	)		998		15		(7)
Loans held for sale	14			2		—		(16	)		—		—			—			—			60				—			—		11			37		(37	)		71		—
Loans	376			(1	)	—		(23	)		—		—			352			(4	)	(5)	244				—			—		(19	)		—		—			225		(2	)	(7)
Mortgage servicing rights (residential) (6)	13,625			847		—		569			—		—			15,041			1,330		(5)
Mortgage servicing rights (residential) (8)																						14,649				(1,373	)		—		60			—		—			13,336		(891	)	(7)
Net derivative assets and liabilities:
Interest rate contracts	71			(345	)	—		266			—		—			(8	)		(73	)		25				187			—		(111	)		—		—			101		132
Commodity contracts	19			15		—		(24	)		—		—			10			—			4				(51	)		—		27			2		—			(18	)	(15	)
Equity contracts	(511		)	69		—		71			—		49			(322	)		25			(17		)		(119	)		—		(3	)		9		(32	)		(162	)	(114	)
Foreign exchange contracts	7			(7	)	—		1			—		—			1			(3	)		(26		)		7			—		3			—		—			(16	)	11
Credit contracts	36			8		—		(3	)		—		—			41			4			35				8			—		6			—		—			49		13
Other derivative contracts	—			—		—		—			—		—			—			—
Total derivative contracts	(378		)	(260	)	—		311			—		49			(278	)		(47	)	(7)	21				32			—		(78	)		11		(32	)		(46	)	27		(9)
Equity securities:
Marketable	—			—		—		—			—		—			—			—
Nonmarketable (8)	5,203			108		—		(96	)		4		—			5,219			101
Nonmarketable																						5,468				926			—		(1	)		—		(12	)		6,381		926
Total equity securities	5,203			108		—		(96	)		4		—			5,219			101		(9)	5,468				926			—		(1	)		—		(12	)		6,381		926		(10)
Short sale liabilities	—			—		—		—			—		—			—			—		(3)
Other liabilities	(3		)	1		—		—			—		—			(2	)		—		(5)	(2		)		—			—		—			—		—			(2	)	—		(7)


(1)	See Table ~~15.5~~16.4 for detail.


(2)	All assets and liabilities transferred into level 3 were previously classified within level 2.


(3)	All assets and liabilities transferred out of level 3 are classified as level 2.


(4)	Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.


~~(3)~~(5)	Included in net gains (losses) from trading activities in the income statement.


~~(4)~~(6)	Included in net gains (losses) ~~from~~on debt securities in the income statement.


~~(5)~~(7)	Included in mortgage banking and other noninterest income in the income statement.


~~(6)~~(8)	For more information on the changes in mortgage servicing rights, see Note 1011 (Mortgage Banking Activities).


~~(7)~~(9)	Included in mortgage banking, trading activities, equity securities and other noninterest income in the income statement.


~~(8)~~	~~Beginning balance includes~~ ~~$382 million~~ ~~of auction rate securities, which changed from the cost to fair value method of accounting in connection with the adoption of ASU 2016-01 in first quarter 2018.~~


~~(9)~~(10)	Included in net gains (losses) from equity securities in the income statement.

(continued on following page)

Note ~~15:~~16: Fair Values of Assets and Liabilities (continued)

(continued from previous page)

Table ~~15.5~~16.4 presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for ~~the~~first quarter ~~ended March 31, 2018.~~2019.

Table ~~15.5:~~16.4: Gross Purchases, Sales, Issuances and Settlements – Level 3 – Quarter ended March 31, ~~2018~~2019


(in millions)	Purchases		Sales		Issuances	Settlements		Net		Purchases		Sales		Issuances	Settlements		Net
Quarter ended March 31, 2018
Quarter ended March 31, 2019
Trading debt securities:
Securities of U.S. states and political subdivisions	$	—	—		—	—		—		$	—	—		—	(2	)	(2	)
Collateralized loan obligations	182		(191	)	—	(31	)	(40	)	130		(87	)	—	(2	)	41
Corporate debt securities	4		(1	)	—	—		3		5		(1	)	—	—		4
Mortgage-backed securities	—		—		—	—		—
Asset-backed securities	—		—		—	—		—
Other trading debt securities	—		—		—	—		—		—		—		—	—		—
Total trading debt securities	186		(192	)	—	(31	)	(37	)	135		(88	)	—	(4	)	43
Available-for-sale debt securities:
Securities of U.S. states and political subdivisions	—		(4	)	10	(47	)	(41	)	—		—		49	(26	)	23
Mortgage-backed securities:
Residential	—		—		—	—		—		—		—		—	—		—
Commercial	—		—		—	(8	)	(8	)	—		—		—	—		—
Total mortgage-backed securities	—		—		—	(8	)	(8	)	—		—		—	—		—
Corporate debt securities	—		—		—	(1	)	(1	)	3		—		—	(1	)	2
Collateralized loan and other debt obligations	—		—		—	(23	)	(23	)	—		—		—	(47	)	(47	)
Asset-backed securities:
Automobile loans and leases	—		—		—	—		—
Other asset-backed securities	—		(8	)	49	(107	)	(66	)	—		(3	)	66	(89	)	(26	)
Total asset-backed securities	—		(8	)	49	(107	)	(66	)	—		(3	)	66	(89	)	(26	)
Total available-for-sale debt securities	—		(12	)	59	(186	)	(139	)	3		(3	)	115	(163	)	(48	)
Mortgages held for sale	27		(83	)	58	(39	)	(37	)
Mortgage loans held for sale										16		(93	)	46	(35	)	(66	)
Loans held for sale	—		(16	)	—	—		(16	)	12		(1	)	—	—		11
Loans	1		—		4	(28	)	(23	)	2		—		3	(24	)	(19	)
Mortgage servicing rights (residential) (1)	—		(4	)	573	—		569		—		(281	)	341	—		60
Net derivative assets and liabilities:
Interest rate contracts	—		—		—	266		266		—		—		—	(111	)	(111	)
Commodity contracts	—		—		—	(24	)	(24	)	—		—		—	27		27
Equity contracts	—		—		—	71		71		—		—		—	(3	)	(3	)
Foreign exchange contracts	—		—		—	1		1		—		—		—	3		3
Credit contracts	3		(2	)	—	(4	)	(3	)	6		—		—	—		6
Other derivative contracts	—		—		—	—		—
Total derivative contracts	3		(2	)	—	310		311		6		—		—	(84	)	(78	)
Equity securities:
Marketable	—		—		—	—		—
Nonmarketable	—		(17	)	—	(79	)	(96	)	—		(1	)	—	—		(1	)
Total equity securities	—		(17	)	—	(79	)	(96	)	—		(1	)	—	—		(1	)
Short sale liabilities	—		—		—	—		—
Other liabilities	—		—		—	—		—		—		—		—	—		—


(1)	For more information on the changes in mortgage servicing rights, see Note 1011 (Mortgage Banking Activities).

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for ~~the~~first quarter ~~ended March 31, 2017,~~2018, are presented in Table ~~15.6.~~16.5.

Table ~~15.6:~~16.5: Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – ~~Quarter ended~~ March 31, ~~2017~~2018


	Balance, beginning of period			Total net gains (losses) included in				Purchases, sales, issuances and settlements, net (1)												Net unrealized gains (losses) included in income related to assets and liabilities held at period end			Balance, beginning of period				Total net gains (losses) included in					Purchases, sales, issuances and settlements, net (1)											Net unrealized gains (losses) included in income related to assets and liabilities held at period end
(in millions)	Balance, beginning of period			Net income		Other compre- hensive income				Transfers into Level 3			Transfers out of Level 3			Balance, end of period			(2)				Balance, beginning of period			Net income			Other compre- hensive income			Purchases, sales, issuances and settlements, net (1)		Transfers into Level 3 (2)		Transfers out of Level 3 (3)			Balance, end of period			(4)
Quarter ended March 31, 2017								Purchases, sales, issuances and settlements, net (1)
Quarter ended March 31, 2018
Trading debt securities:
Securities of U.S. states and political subdivisions	$	3		—		—		—			—			—			3			—			$	3			—			—		—			—		—			3			—
Collateralized loan obligations	309			4		—		85			—			—			398			—			354				2			—		(40	)		—		—			316			16
Corporate debt securities	34			—		—		1			3			(1	)		37			—			31				—			—		3			—		—			34			—
Mortgage-backed securities	—			—		—		—			—			—			—			—
Asset-backed securities	—			—		—		—			—			—			—			—
Other trading debt securities	28			—		(2	)	—			—			—			26			(1	)		19				(1	)		—		—			—		—			18			—
Total trading debt securities	374			4		(2	)	86			3			(1	)		464			—		(3)	407				1			—		(37	)		—		—			371			16		(5)
Available-for-sale debt securities:
Securities of U.S. states and political subdivisions	1,140			—		2		285			5			(72	)		1,360			—			925				4			(2	)	(41	)		—		(269	)		617			—
Mortgage-backed securities:
Residential	1			—		—		—			—			—			1			—			1				—			—		—			—		—			1			—
Commercial	91			(3	)	4		(3	)		—			—			89			(4	)		75				1			(1	)	(8	)		—		—			67			—
Total mortgage-backed securities	92			(3	)	4		(3	)		—			—			90			(4	)		76				1			(1	)	(8	)		—		—			68			—
Corporate debt securities	432			(14	)	8		(35	)		—			—			391			—			407				1			3		(1	)		—		—			410			—
Collateralized loan and other debt obligations	879			5		41		39			—			—			964			—			1,020				5			43		(23	)		—		—			1,045			—
Asset-backed securities:
Automobile loans and leases	—			—		—		—			—			—			—			—
Other asset-backed securities	962			—		2		(119	)		—			—			845			—			566				8			(7	)	(66	)		—		—			501			—
Total asset-backed securities	962			—		2		(119	)		—			—			845			—			566				8			(7	)	(66	)		—		—			501			—
Total available-for-sale debt securities	3,505			(12	)	57		167			5			(72	)		3,650			(4	)	(4)	2,994				19			36		(139	)		—		(269	)		2,641			—		(6)
Mortgages held for sale	985			(9	)	—		(60	)		42			(1	)		957			(11	)	(5)
Mortgage loans held for sale																							998				(23	)		—		(37	)		15		(3	)		950			(23	)	(7)
Loans held for sale	—			—		—		—			—			—			—			—			14				2			—		(16	)		—		—			—			—
Loans	758			(6	)	—		(247	)		—			—			505			(5	)	(5)	376				(1	)		—		(23	)		—		—			352			(4	)	(7)
Mortgage servicing rights (residential) (6)	12,959			(287	)	—		536			—			—			13,208			174		(5)
Mortgage servicing rights (residential) (8)																							13,625				847			—		569			—		—			15,041			1,330		(7)
Net derivative assets and liabilities:
Interest rate contracts	121			209		—		(112	)		—			—			218			85			71				(345	)		—		266			—		—			(8	)		(73	)
Commodity contracts	23			2		—		(6	)		—			—			19			7			19				15			—		(24	)		—		—			10			—
Equity contracts	(267		)	(44	)	—		37			(22	)		(3	)		(299	)		(57	)		(511		)		69			—		71			—		49			(322	)		25
Foreign exchange contracts	12			(9	)	—		—			—			—			3			(5	)		7				(7	)		—		1			—		—			1			(3	)
Credit contracts	77			7		—		3			—			—			87			(14	)		36				8			—		(3	)		—		—			41			4
Other derivative contracts	(47		)	11		—		—			—			—			(36	)		11
Total derivative contracts	(81		)	176		—		(78	)		(22	)		(3	)		(8	)		27		(7)	(378		)		(260	)		—		311			—		49			(278	)		(47	)	(9)
Equity securities:
Marketable	—			—		—		—			—			—			—			—
Nonmarketable	3,259			481		—		—			—			—			3,740			485			5,203				108			—		(96	)		4		—			5,219			101
Total equity securities	3,259			481		—		—			—			—			3,740			485		(8)	5,203				108			—		(96	)		4		—			5,219			101		(10)
Short sale liabilities	—			—		—		—			—			—			—			—		(3)
Other liabilities	(4		)	—		—		—			—			—			(4	)		—		(5)	(3		)		1			—		—			—		—			(2	)		—		(7)


(1)	See Table ~~15.7~~16.6 for detail.


(2)	All assets and liabilities transferred into level 3 were previously classified within level 2.


(3)	All assets and liabilities transferred out of level 3 are classified as level 2.


(4)	Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.


~~(3)~~(5)	Included in net gains (losses) from trading activities in the income statement.


~~(4)~~(6)	Included in net gains (losses) ~~from~~on debt securities in the income statement.


~~(5)~~(7)	Included in mortgage banking and other noninterest income in the income statement.


~~(6)~~(8)	For more information on the changes in mortgage servicing rights, see Note 1011 (Mortgage Banking Activities).


~~(7)~~(9)	Included in mortgage banking, trading activities, equity securities and other noninterest income in the income statement.


~~(8)~~(10)	Included in net gains (losses) from equity securities in the income statement.

(continued on following page)

Note ~~15:~~16: Fair Values of Assets and Liabilities (continued)

(continued from previous page)

Table ~~15.7~~16.6 presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for ~~the~~first quarter ~~ended March 31, 2017.~~2018.

Table ~~15.7:~~16.6: Gross Purchases, Sales, Issuances and Settlements – Level 3 – Quarter ended March 31, ~~2017~~2018


(in millions)	Purchases		Sales		Issuances	Settlements		Net		Purchases		Sales		Issuances	Settlements			Net
Quarter ended March 31, 2017
Quarter ended March 31, 2018
Trading debt securities:
Securities of U.S. states and political subdivisions	$	1	(1	)	—	—		—		$	—	—		—	—			—
Collateralized loan obligations	199		(76	)	—	(38	)	85		182		(191	)	—	(31	)		(40	)
Corporate debt securities	6		(5	)	—	—		1		4		(1	)	—	—			3
Mortgage-backed securities	—		—		—	—		—
Asset-backed securities	—		—		—	—		—
Other trading debt securities	—		—		—	—		—		—		—		—	—			—
Total trading debt securities	206		(82	)	—	(38	)	86		186		(192	)	—	(31	)		(37	)
Available-for-sale debt securities:
Securities of U.S. states and political subdivisions	—		—		346	(61	)	285		—		(4	)	10	(47	)		(41	)
Mortgage-backed securities:
Residential	—		—		—	—		—		—		—		—	—			—
Commercial	—		—		—	(3	)	(3	)	—		—		—	(8	)		(8	)
Total mortgage-backed securities	—		—		—	(3	)	(3	)	—		—		—	(8	)		(8	)
Corporate debt securities	4		—		—	(39	)	(35	)	—		—		—	(1	)		(1	)
Collateralized loan and other debt obligations	72		—		—	(33	)	39		—		—		—	(23	)		(23	)
Asset-backed securities:
Automobile loans and leases	—		—		—	—		—
Other asset-backed securities	—		—		21	(140	)	(119	)	—		(8	)	49	(107	)		(66	)
Total asset-backed securities	—		—		21	(140	)	(119	)	—		(8	)	49	(107	)		(66	)
Total available-for-sale debt securities	76		—		367	(276	)	167		—		(12	)	59	(186	)		(139	)
Mortgages held for sale	22		(156	)	106	(32	)	(60	)
Mortgage loans held for sale										27		(83	)	58	(39	)		(37	)
Loans held for sale	—		—		—	—		—		—		(16	)	—	—			(16	)
Loans	1		(129	)	6	(125	)	(247	)	1		—		4	(28	)		(23	)
Mortgage servicing rights (residential) (1)	—		(47	)	583	—		536		—		(4	)	573	—			569
Net derivative assets and liabilities:
Interest rate contracts	—		—		—	(112	)	(112	)	—		—		—	266			266
Commodity contracts	—		—		—	(6	)	(6	)	—		—		—	(24	)		(24	)
Equity contracts	—		—		—	37		37		—		—		—	71			71
Foreign exchange contracts	—		—		—	—		—		—		—		—	1		��	1
Credit contracts	2		(1	)	—	2		3		3		(2	)	—	(4	)		(3	)
Other derivative contracts	—		—		—	—		—
Total derivative contracts	2		(1	)	—	(79	)	(78	)	3		(2	)	—	310			311
Equity securities:
Marketable	—		—		—	—		—
Nonmarketable	—		—		—	—		—		—		(17	)	—	(79	)		(96	)
Total equity securities	—		—		—	—		—		—		(17	)	—	(79	)		(96	)
Short sale liabilities	—		—		—	—		—
Other liabilities	—		—		—	—		—		—		—		—	—			—


(1)	For more information on the changes in mortgage servicing rights, see Note 1011 (Mortgage Banking Activities).

Table ~~15.8~~16.7 and Table ~~15.9~~16.8 provide quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of substantially all of our Level 3 assets and liabilities measured at fair value on a recurring basis for which we use an internal model.

The significant unobservable inputs for Level 3 assets and liabilities that are valued using fair values obtained from third party vendors are not included in the table, as the specific inputs applied are not provided by the vendor. In addition, the table excludes the valuation techniques and significant unobservable inputs for certain classes of Level 3 assets and liabilities measured using an internal model that we consider, both individually and in the aggregate, insignificant relative to our overall Level 3 assets and liabilities. We made this determination based upon an evaluation of each class, which considered the magnitude of the positions, nature of the unobservable inputs and potential for significant changes in fair value due to changes

in those inputs. For information on how changes in significant unobservable inputs affect the fair values of Level 3 assets and liabilities, see Note 1718 (Fair Values of Assets and Liabilities) to Financial Statements in our ~~2017~~2018 Form 10-K.

Table ~~15.8:~~ 16.7:Valuation Techniques – Recurring Basis ~~–March~~– March 31, ~~2018~~2019


($ in millions, except cost to service amounts)	Fair Value Level 3				Valuation Technique(s)	Significant Unobservable Input	Range of Inputs							Weighted Average (1)		Fair Value Level 3				Valuation Technique(s)	Significant Unobservable Input		Range of Inputs							Weighted Average (1)
March 31, 2018
March 31, 2019
Trading and available-for-sale debt securities:
Securities of U.S. states and political subdivisions:
Government, healthcare and other revenue bonds	$	565			Discounted cash flow	Discount rate	1.8			-	6.1		%	2.9		$	427			Discounted cash flow	Discount rate		1.8			-	6.4		%	3.0
Other municipal bonds	11				Discounted cash flow	Discount rate	4.8			-	4.9			4.9
	44				Vendor priced											43				Vendor priced
Collateralized loan and other debt obligations (2)	316				Market comparable pricing	Comparability adjustment	(17.0		)	-	21.0			2.6		275				Market comparable pricing	Comparability adjustment		(12.0		)	-	16.1			2.1
																755				Vendor priced
Corporate debt securities																225				Discounted cash flow	Discount rate		2.0				14.9			8.5
																64				Market comparable pricing	Comparability adjustment		(11.1		)		15.3			(2.1	)
	1,045				Vendor priced											129				Vendor priced
Asset-backed securities:
Diversified payment rights (3)	253				Discounted cash flow	Discount rate	2.8			-	4.4			3.6		150				Discounted cash flow	Discount rate		3.1			-	6.8			4.0
Other commercial and consumer	221			(4)	Discounted cash flow	Discount rate	3.9			-	5.4			4.2		195			(4)	Discounted cash flow	Discount rate		4.5			-	5.4			4.6
						Weighted average life	1.8			-	2.1		yrs	1.9							Weighted average life		1.4			-	1.9		yrs	1.8
	27				Vendor priced											17				Vendor priced
Mortgages held for sale (residential)	930				Discounted cash flow	Default rate	0.0			-	8.2		%	1.1
Mortgage loans held for sale (residential)																982				Discounted cash flow	Default rate		0.0			-	16.6		%	0.8
						Discount rate	1.1			-	6.9			5.6							Discount rate		2.6			-	6.4			5.3
						Loss severity	0.0			-	47.6			26.4							Loss severity		0.0			-	48.7			27.9
						Prepayment rate	3.0			-	12.6			4.9							Prepayment rate		4.2			-	13.7			5.6
	20				Market comparable pricing	Comparability adjustment	(56.3		)	-	(6.3	)		(44.0	)	16				Market comparable pricing	Comparability adjustment		(56.3		)	-	(6.3	)		(38.0	)
Loans	352			(5)	Discounted cash flow	Discount rate	3.1			-	7.0			4.2		225			(5)	Discounted cash flow	Discount rate		3.9			-	4.8			4.2
						Prepayment rate	4.4			-	100.0			91.2							Prepayment rate		4.0			-	100.0			86.6
						Loss severity	0.0			-	33.8			7.5							Loss severity		0.0			-	34.8			11.2
Mortgage servicing rights (residential)	15,041				Discounted cash flow	Cost to service per loan (6)	$	77		-	569			136		13,336				Discounted cash flow	Cost to service per loan (6)	��	$	63		-	508			103
						Discount rate	7.0			-	13.3		%	7.2							Discount rate		6.9			-	13.8		%	7.6
						Prepayment rate (7)	8.2			-	20.3			9.3							Prepayment rate (7)		10.5			-	25.2			11.3
Net derivative assets and (liabilities):
Interest rate contracts	(45		)		Discounted cash flow	Default rate	0.1			-	5.0			2.1		43				Discounted cash flow	Default rate		0.0			-	5.0			2.0
						Loss severity	50.0			-	50.0			50.0							Loss severity		50.0			-	50.0			50.0
						Prepayment rate	2.8			-	12.5			10.2							Prepayment rate		2.8			-	25.0			15.3
Interest rate contracts: derivative loan commitments	37				Discounted cash flow	Fall-out factor	1.0			-	99.0			19.3		58				Discounted cash flow	Fall-out factor		1.0			-	99.0			20.5
						Initial-value servicing	(52.5		)	-	122.0		bps	23.6							Initial-value servicing		(37.3		)	-	67.2		bps	20.1
Equity contracts	120				Discounted cash flow	Conversion factor	(9.6		)	-	0.0		%	(8.9	)	120				Discounted cash flow	Conversion factor		(9.0		)	-	0.0		%	(7.7	)
						Weighted average life	1.3			-	2.8		yrs	2.0							Weighted average life		1.3			-	3.8		yrs	2.2
	(442		)		Option model	Correlation factor	(77.0		)	-	99.0		%	27.5		(282		)		Option model	Correlation factor		(77.0		)	-	99.0		%	24.5
						Volatility factor	6.5			-	100.0			24.9							Volatility factor		6.5			-	100.0			19.0
Credit contracts	(3		)		Market comparable pricing	Comparability adjustment	(24.3		)	-	28.8			0.0		2				Market comparable pricing	Comparability adjustment		(42.5		)	-	30.2			(5.4	)
	44				Option model	Credit spread	0.0			-	9.2			0.6		47				Option model	Credit spread		0.1			-	18.4			1.0
						Loss severity	13.0			-	60.0			48.5							Loss severity		13.0			-	60.0			45.2
Nonmarketable equity securities	9				Discounted cash flow	Discount rate	10.0			-	10.0			10.0		6,381				Market comparable pricing	Comparability adjustment		(22.5		)	-	(6.5	)		(16.7	)
						Volatility Factor	0.7			-	2.5			1.9
	4,917				Market comparable pricing	Comparability adjustment	(20.2		)	-	(4.8	)		(17.2	)
	293				Vendor priced

Insignificant Level 3 assets, net of liabilities	539			(8)												91			(8)
Total level 3 assets, net of liabilities	$	24,294		(9)												$	23,299		(9)


(1)	Weighted averages are calculated using outstanding unpaid principal balance for cash instruments, such as loans and securities, and notional amounts for derivative instruments.


(2)	Includes ~~$1.0 billion~~$755 million of collateralized debt obligations.


(3)	Securities backed by specified sources of current and future receivables generated from foreign originators.


(4)	~~A significant portion of the balance~~Predominantly consists of investments in asset-backed securities that are revolving in nature, for which the timing of advances and repayments of principal are uncertain.


(5)	Consists of reverse mortgage loans.


(6)	The high end of the range of inputs is for servicing modified loans. For non-modified loans the range is ~~$77~~$63 - ~~$246~~. $199.


(7)	Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

(8)

Represents the aggregate amount of Level 3 assets and liabilities measured at fair value on a recurring basis that are individually and in the aggregate insignificant. The amount includes ~~corporate debt securities,~~ mortgage-backed securities, other trading positions, other liabilities and certain net derivative assets and liabilities, such as commodity contracts and foreign exchange ~~contracts, and other derivative~~ contracts.


(9)	Consists of total Level 3 assets of ~~$26.3~~$25.2 billion and total Level 3 liabilities of ~~$2.0~~$1.9 billion,, before netting of derivative balances.

Note ~~15:~~16: Fair Values of Assets and Liabilities (continued)

Table ~~15.9:~~16.8: Valuation Techniques – Recurring Basis ~~–December~~– December 31, ~~2017~~2018


($ in millions, except cost to service amounts)	Fair Value Level 3				Valuation Technique(s)	Significant Unobservable Input	Range of Inputs							Weighted Average (1)		Fair Value Level 3				Valuation Technique(s)	Significant Unobservable Input	Range of Inputs							Weighted Average (1)
December 31, 2017
December 31, 2018
Trading and available-for-sale debt securities:
Securities of U.S. states and political subdivisions:
Government, healthcare and other revenue bonds	$	868			Discounted cash flow	Discount rate	1.7			-	5.8		%	2.7		$	404			Discounted cash flow	Discount rate	2.1			-	6.4		%	3.4
Other municipal bonds	11				Discounted cash flow	Discount rate	4.7			-	4.9			4.8
	49				Vendor priced											43				Vendor priced
Collateralized loan and other debt obligations (2)	354				Market comparable pricing	Comparability adjustment	(22.0		)	-	19.5			3.0		298				Market comparable pricing	Comparability adjustment	(13.5		)	-	22.1			3.2
																739				Vendor priced
Corporate debt securities																220				Discounted cash flow	Discount rate	4.0				11.7			8.5
																56				Market comparable pricing	Comparability adjustment	(11.3		)		16.6			(1.4	)
	1,020				Vendor priced											128				Vendor priced
Asset-backed securities:
Diversified payment rights (3)	292				Discounted cash flow	Discount rate	2.4			-	3.9			3.1		171				Discounted cash flow	Discount rate	3.4			-	6.2			4.4
Other commercial and consumer	248			(4)	Discounted cash flow	Discount rate	3.7			-	5.2			3.9		198			(4)	Discounted cash flow	Discount rate	4.6			-	5.2			4.7
						Weighted average life	2.0			-	2.3		yrs	2.1							Weighted average life	1.1			-	1.5		yrs	1.1
	26				Vendor priced											20				Vendor priced
Mortgages held for sale (residential)	974				Discounted cash flow	Default rate	0.0			-	7.1		%	1.3
Mortgage loans held for sale (residential)																982				Discounted cash flow	Default rate	0.0			-	15.6		%	0.8
						Discount rate	2.6			-	7.3			5.6							Discount rate	1.1			-	6.6			5.5
						Loss severity	0.1			-	41.4			19.6							Loss severity	—			-	43.3			23.4
						Prepayment rate	6.5			-	15.9			9.1							Prepayment rate	3.2			-	13.4			4.6
	24				Market comparable pricing	Comparability adjustment	(56.3		)	-	(6.3	)		(42.7	)	15				Market comparable pricing	Comparability adjustment	(56.3		)	-	(6.3	)		(36.3	)
Loans	376			(5)	Discounted cash flow	Discount rate	3.1			-	7.5			4.2		244			(5)	Discounted cash flow	Discount rate	3.4			-	6.4			4.2
						Prepayment rate	8.7			-	100.0			91.9							Prepayment rate	2.9			-	100.0			87.2
						Loss severity	0.0			-	33.9			6.6							Loss severity	0.0			-	34.8			10.2
Mortgage servicing rights (residential)	13,625				Discounted cash flow	Cost to service per loan (6)	$	78		-	587			143		14,649				Discounted cash flow	Cost to service per loan (6)	$	62		-	507			106
						Discount rate	6.6			-	12.9		%	6.9							Discount rate	7.1			-	15.3		%	8.1
						Prepayment rate (7)	9.7			-	20.5			10.5							Prepayment rate (7)	9.0			-	23.5			9.9
Net derivative assets and (liabilities):
Interest rate contracts	54				Discounted cash flow	Default rate	0.0			-	5.0			2.1		(35		)		Discounted cash flow	Default rate	0.0			-	5.0			2.0
						Loss severity	50.0			-	50.0			50.0							Loss severity	50.0			-	50.0			50.0
						Prepayment rate	2.8			-	12.5			10.5							Prepayment rate	2.8			-	25.0			13.8
Interest rate contracts: derivative loan commitments	17				Discounted cash flow	Fall-out factor	1.0			-	99.0			15.2		60				Discounted cash flow	Fall-out factor	1.0			-	99.0			19.4
						Initial-value servicing	(59.9		)	-	101.1		bps	2.7							Initial-value servicing	(36.6		)	-	91.7		bps	18.5
Equity contracts	102				Discounted cash flow	Conversion factor	(9.7		)	-	0.0		%	(7.6	)	104				Discounted cash flow	Conversion factor	(9.3		)	-	0.0		%	(7.8	)
						Weighted average life	0.5			-	3.0		yrs	1.6							Weighted average life	1.0			-	3.0		yrs	1.8
	(613		)		Option model	Correlation factor	(77.0		)	-	98.0		%	24.2		(121		)		Option model	Correlation factor	(77.0		)	-	99.0		%	21.6
						Volatility factor	5.7			-	95.5			19.2							Volatility factor	6.5			-	100.0			21.8
Credit contracts	(3		)		Market comparable pricing	Comparability adjustment	(29.9		)	-	17.3			(0.2	)	3				Market comparable pricing	Comparability adjustment	(15.5		)	-	40.0			3.5
	39				Option model	Credit spread	0.0			-	63.7			1.3		32				Option model	Credit spread	0.9			-	21.5			1.3
						Loss severity	13.0			-	60.0			50.7							Loss severity	13.0			-	60.0			45.2
Nonmarketable equity securities	8				Discounted cash flow	Discount rate	10.0			-	10.0			10.0		5,468				Market comparable pricing	Comparability adjustment	(20.6		)	-	(4.3	)		(15.8	)
						Volatility Factor	0.5			-	1.9			1.4
	4,813				Market comparable pricing	Comparability adjustment	(21.1		)	-	(5.5	)		(15.0	)

Insignificant Level 3 assets, net of liabilities	570			(8)												93			(8)
Total level 3 assets, net of liabilities	$	22,854		(9)												$	23,771		(9)


(1)	Weighted averages are calculated using outstanding unpaid principal balance for cash instruments, such as loans and securities, and notional amounts for derivative instruments.


(2)	Includes ~~$1.0 billion~~$800 million of collateralized debt obligations.


(3)	Securities backed by specified sources of current and future receivables generated from foreign originators.


(4)	~~A significant portion of the balance~~Predominantly consists of investments in asset-backed securities that are revolving in nature, for which the timing of advances and repayments of principal are uncertain.


(5)	Consists of reverse mortgage loans.


(6)	The high end of the range of inputs is for servicing modified loans. For non-modified loans the range is ~~$78~~$62 - ~~$252~~. $204.


(7)	Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

(8)


(9)	Consists of total Level 3 assets of ~~$24.9~~$25.3 billion and total Level 3 liabilities of ~~$2.0~~$1.6 billion,, before netting of derivative balances.

The valuation techniques used for our Level 3 assets and liabilities, as presented in the previous tables, are described as follows:

Discounted cash flow – Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument and then discounting those cash flows at a rate of return that results in the fair value amount.

Market comparable pricing – Market comparable pricing valuation techniques are used to determine the fair value of certain instruments by incorporating known inputs, such as recent transaction prices, pending transactions, or prices of other similar investments that require significant adjustment to reflect differences in instrument characteristics.

Option model – Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return.

Vendor-priced– Prices obtained from third party pricing vendors or brokers that are used to record the fair value of the asset or liability for which the related valuation technique and significant unobservable inputs are not provided.

Significant unobservable inputs presented in the previous tables are those we consider significant to the fair value of the Level 3 asset or liability. We consider unobservable inputs to be significant if by their exclusion the fair value of the Level 3 asset or liability would be impacted by a predetermined percentage change. We also consider qualitative factors, such as nature of the instrument, type of valuation technique used, and the significance of the unobservable inputs relative to other inputs used within the valuation. Following is a description of the significant unobservable inputs provided in the table.

Comparability adjustment – is an adjustment made to observed market data, such as a transaction price in order to reflect dissimilarities in underlying collateral, issuer, rating, or other factors used within a market valuation approach, expressed as a percentage of an observed price.

Conversion Factor – is the risk-adjusted rate in which a particular instrument may be exchanged for another instrument upon settlement, expressed as a percentage change from a specified rate.

Correlation factor – is the likelihood of one instrument changing in price relative to another based on an established relationship expressed as a percentage of relative change in price over a period over time.

Cost to service – is the expected cost per loan of servicing a portfolio of loans, which includes estimates for unreimbursed expenses (including delinquency and foreclosure costs) that may occur as a result of servicing such loan portfolios.

Credit spread – is the portion of the interest rate in excess of a benchmark interest rate, such as Overnight Index Swap (OIS), LIBOR or U.S. Treasury rates, that when applied to an investment captures changes in the obligor’s creditworthiness.

Default rate – is an estimate of the likelihood of not collecting contractual amounts owed expressed as a constant default rate (CDR).

Discount rate – is a rate of return used to calculate the present value of the future expected cash flow to arrive at the fair value of an instrument. The discount rate consists of a benchmark rate component and a risk premium component. The benchmark rate component, for example, OIS, LIBOR or U.S. Treasury rates, is generally observable within the market and is necessary to appropriately reflect the time value of money. The risk premium component reflects the amount of compensation market participants require due to the uncertainty inherent in the instruments’ cash flows resulting from risks such as credit and liquidity.

Fall-out factor – is the expected percentage of loans associated with our interest rate lock commitment portfolio that are likely of not funding.

Initial-value servicing – is the estimated value of the underlying loan, including the value attributable to the embedded servicing right, expressed in basis points of outstanding unpaid principal balance.

Loss severity – is the estimated percentage of contractual cash flows lost in the event of a default.

Prepayment rate – is the estimated rate at which forecasted prepayments of principal of the related loan or debt instrument are expected to occur, expressed as a constant prepayment rate (CPR).

~~Utilization rate~~ ~~– is the estimated rate in which incremental portions of existing reverse mortgage credit lines are expected to be drawn by borrowers, expressed as an annualized rate.~~

Volatility factor – is the extent of change in price an item is estimated to fluctuate over a specified period of time expressed as a percentage of relative change in price over a period over time.

Weighted average life – is the weighted average number of years an investment is expected to remain outstanding based on its expected cash flows reflecting the estimated date the issuer will call or extend the maturity of the instrument or otherwise reflecting an estimate of the timing of an instrument’s cash flows whose timing is not contractually fixed.

Note ~~15:~~16: Fair Values of Assets and Liabilities (continued)

Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis

We may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of LOCOM accounting, write-downs of individual assets or

~~commencing in 2018 with adoption of ASU 2016-01,~~ use of the measurement alternative for nonmarketable equity securities.

Table ~~15.10~~16.9 provides the fair value hierarchy and ~~carrying amount~~fair value at the date of the nonrecurring fair value adjustment for all assets that were still held as of March 31, ~~2018,~~2019, and December 31, ~~2017,~~2018, and for which a nonrecurring fair value adjustment was recorded during the ~~periods presented.~~three months ended March 31, 2019 and year ended December 31, 2018.

Table ~~15.10:~~16.9: Fair Value on a Nonrecurring Basis


	March 31, 2018					December 31, 2017				March 31, 2019					December 31, 2018
(in millions)	Level 1		Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total	Level 1		Level 2	Level 3	Total	Level 1	Level 2	��	Level 3	Total
Mortgages held for sale (LOCOM) (1)	$	—	1,606	1,285	2,891	—	1,646	1,333	2,979
Mortgage loans held for sale (LOCOM) (1)										$	—	1,712	1,272	2,984	—	1,213		1,233	2,446
Loans held for sale	—		1,799	—	1,799	—	108	—	108	—		5	—	5	—	313		—	313
Loans:
Commercial	—		218	—	218	—	374	—	374	—		147	—	147	—	339		—	339
Consumer	—		130	3	133	—	502	10	512	—		117	—	117	—	346		1	347
Total loans (2)	—		348	3	351	—	876	10	886	—		264	—	264	—	685		1	686
Nonmarketable equity securities (3)	—		356	128	484	—	—	136	136	—		553	46	599	—	774		157	931
Other assets (4)	—		146	12	158	—	177	161	338	—		169	—	169	—	149		6	155
Total assets at fair value on a nonrecurring basis ~~(5)~~	$	—	4,255	1,428	5,683	—	2,807	1,640	4,447	$	—	2,703	1,318	4,021	—	3,134		1,397	4,531


(1)	Consists of commercial mortgages and residential real estate 1-4 family first mortgage loans.


(2)	Represents the carrying value of loans for which nonrecurring adjustments are based on the appraised value of the collateral.


(3)	Consists of certain nonmarketable equity securities that are measured at fair value on a nonrecurring basis, including observable price adjustments for nonmarketable equity securities carried under the measurement alternative.


(4)	Includes the fair value of foreclosed real estate, other collateral owned and operating lease assets.


~~(5)~~	~~Prior period balances exclude~~ ~~$6 million~~ ~~of nonmarketable equity securities at NAV.~~

Table ~~15.11~~16.10 presents the increase (decrease) in value of certain assets held at the end of the respective reporting periods presented for which a nonrecurring fair value adjustment was recognized during the periods presented.

Table ~~15.11:~~16.10: Change in Value of Assets with Nonrecurring Fair Value Adjustment


	Quarter ended March 31,					Quarter ended March 31,
(in millions)	2018			2017		2019			2018
Mortgages held for sale (LOCOM)	$	7		21
Mortgage loans held for sale (LOCOM)						$	20		7
Loans held for sale	(82		)	—		—			(82	)
Loans:
Commercial	(81		)	(127	)	(74		)	(81	)
Consumer	(107		)	(175	)	(79		)	(107	)
Total loans (1)	(188		)	(302	)	(153		)	(188	)
Nonmarketable equity securities (2)	208			(60	)	149			208
Other assets (3)	(22		)	(40	)	(18		)	(22	)
Total	$	(77	)	(381	)	$	(2	)	(77	)


(1)	Represents write-downs of loans based on the appraised value of the collateral.


(2)	Includes impairment losses for nonmarketable equity securities accounted for under the equity method and measurement alternative. Also includes observable price adjustments for ~~certain~~ nonmarketable equity ~~securities.~~securities accounted for under the measurement alternative.


(3)	Includes the losses on foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets.

Table ~~15.12~~16.11 provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of substantially all of our Level 3 assets that are measured at fair value on a nonrecurring basis using an internal model. The table is limited to financial instruments that had nonrecurring fair value adjustments during the periods presented.

We have excluded from the table valuation techniques and significant unobservable inputs for certain classes of Level 3

assets measured using an internal model that we consider, both individually and in the aggregate, insignificant relative to our overall Level 3 nonrecurring measurements. We made this determination based upon an evaluation of each class that considered the magnitude of the positions, nature of the unobservable inputs and potential for significant changes in fair value due to changes in those inputs.

Table ~~15.12:~~16.11: Valuation Techniques – Nonrecurring Basis


($ in millions)	Fair Value Level 3			Valuation Technique(s) (1)	Significant Unobservable Inputs (1)		Range of inputs				Weighted Average (2)		Fair Value Level 3			Valuation Technique(s) (1)	Significant Unobservable Inputs (1)		Range of inputs				Weighted Average (2)
March 31, 2018
Residential mortgages held for sale (LOCOM)	$	1,285	(3)	Discounted cash flow	Default rate	(4)	0.2	—	3.4	%	1.7	%
March 31, 2019
Residential mortgage loans held for sale (LOCOM)													$	1,272	(3)	Discounted cash flow	Default rate	(4)	0.2	—	4.1	%	1.9	%
					Discount rate		1.5	—	8.5		3.8						Discount rate		1.5	—	8.5		4.0
					Loss severity		0.7	—	50.5		2.2						Loss severity		0.4	—	70.3		1.7
					Prepayment rate	(5)	4.4	—	100.0		49.0						Prepayment rate	(5)	2.7	—	100.0		40.7
Nonmarketable equity securities	17			Discounted cash flow	Discount rate		10.5	—	10.5		10.5		—			Discounted cash flow	Discount rate		—	—	—		—
Insignificant level 3 assets	126												46
Total	$	1,428											$	1,318
December 31, 2017
Residential mortgages held for sale (LOCOM)	$	1,333	(3)	Discounted cash flow	Default rate	(4)	0.1	—	4.1	%	1.7	%
December 31, 2018
Residential mortgage loans held for sale (LOCOM)													$	1,233	(3)	Discounted cash flow	Default rate	(4)	0.2	—	2.3	%	1.4	%
					Discount rate		1.5	—	8.5		3.8						Discount rate		1.5	—	8.5		4.0
					Loss severity		0.7	—	52.9		2.2						Loss severity		0.5	—	66.0		1.7
					Prepayment rate	(5)	5.4	—	100.0		50.6						Prepayment rate	(5)	3.5	—	100.0		46.5
Nonmarketable equity securities	122			Discounted cash flow	Discount rate		5.0	—	10.5		10.2		7			Discounted cash flow	Discount rate		10.5	—	10.5		10.5
Insignificant level 3 assets	185												157
Total	$	1,640											$	1,397


(1)	Refer to the narrative following Table ~~15.9~~16.8 for a definition of the valuation technique(s) and significant unobservable inputs.


(2)	For residential ~~MHFS,~~MLHFS, weighted averages are calculated using the outstanding unpaid principal balance of the loans.


(3)	Consists of approximately ~~$1.3~~$1.2 billion of government insured/guaranteed loans purchased from GNMA-guaranteed mortgage securitizations at both March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, and ~~$26~~$26 million and $27 million, respectively, of other mortgage loans that are not government insured/~~guaranteed at both dates.~~ guaranteed.


(4)	Applies only to non-government insured/guaranteed loans.


(5)	Includes the impact on prepayment rate of expected defaults for government insured/guaranteed loans, which impact the frequency and timing of early resolution of loans.

Note ~~15:~~16: Fair Values of Assets and Liabilities (continued)

Fair Value Option

The fair value option is an irrevocable election, generally only permitted upon initial recognition of financial assets or liabilities, to measure eligible financial instruments at fair value with changes in fair value reflected in earnings. We may elect the fair value option to align the measurement model with how the financial assets or liabilities are managed or to reduce complexity or accounting asymmetry. For more information, including the

basis for our fair value option elections, see Note 1718 (Fair Values of Assets and Liabilities) to Financial Statements in our ~~2017~~2018 Form 10-K.

Table ~~15.13~~16.12 reflects differences between the fair value carrying amount of the assets for which we have elected the fair value option and the contractual aggregate unpaid principal amount at maturity.

Table ~~15.13:~~16.12: Fair Value Option


	March 31, 2018					December 31, 2017				March 31, 2019					December 31, 2018
(in millions)	Fair value carrying amount		Aggregate unpaid principal	Fair value carrying amount less aggregate unpaid principal		Fair value carrying amount	Aggregate unpaid principal	Fair value carrying amount less aggregate unpaid principal		Fair value carrying amount		Aggregate unpaid principal	Fair value carrying amount less aggregate unpaid principal		Fair value carrying amount	Aggregate unpaid principal	Fair value carrying amount less aggregate unpaid principal
Mortgages held for sale:
Mortgage loans held for sale:
Total loans	$	13,859	13,762	97		16,116	15,827	289		$	11,091	10,883	208		11,771	11,573	198
Nonaccrual loans	128		168	(40	)	127	165	(38	)	128		157	(29	)	127	158	(31	)
Loans 90 days or more past due and still accruing	9		13	(4	)	16	21	(5	)	7		9	(2	)	7	9	(2	)
Loans held for sale:
Total loans	1,695		1,749	(54	)	1,023	1,075	(52	)	998		1,056	(58	)	1,469	1,536	(67	)
Nonaccrual loans	29		53	(24	)	34	56	(22	)	57		71	(14	)	21	32	(11	)
Loans:
Total loans	352		382	(30	)	376	404	(28	)	225		255	(30	)	244	274	(30	)
Nonaccrual loans	244		274	(30	)	253	281	(28	)	166		196	(30	)	179	208	(29	)
Equity securities (1)	4,975		N/A	N/A		4,867	N/A	N/A		6,381		N/A	N/A		5,455	N/A	N/A


(1)	Consists of nonmarketable equity securities carried at fair value.

The assets accounted for under the fair value option are initially measured at fair value. Gains and losses from initial measurement and subsequent changes in fair value are recognized in earnings. The changes in fair value related to initial

measurement and subsequent changes in fair value included in

earnings for these assets measured at fair value are shown in Table ~~15.14~~16.13 by income statement line item. Amounts recorded as interest income are excluded from Table 16.13.

Table ~~15.14:~~16.13: Fair Value Option – Changes in Fair Value Included in Earnings


	2018							2017				2019						2018
(in millions)	Mortgage banking noninterest income			Net gains (losses) from trading activities		Other noninterest income		Mortgage banking noninterest income	Net gains (losses) from trading activities		Other noninterest income	Mortgage banking noninterest income		Net gains (losses) from trading activities		Net gains from equity securities	Other noninterest income	Mortgage banking noninterest income		Net gains (losses) from trading activities		Net gains from equity securities	Other noninterest income
Quarter ended March 31,
Mortgages held for sale	$	(59	)	—		—		279	—		—
Mortgage loans held for sale												$	214	—		—	—	(59	)	—		—	—
Loans held for sale	—			6		—		—	25		—	—		14		—	1	—		6		—	—
Loans	—			—		(1	)	—	—		—	—		—		—	—	—		—		—	(1	)
Equity securities	—			—		101		—	—		490	—		—		926	—	—		—		101	—
Other interests held (1)	—			(1	)	—		—	(2	)	—	—		(1	)	—	—	—		(1	)	—	—


(1)	Includes retained interests in securitizations.

For performing loans, instrument-specific credit risk gains or losses were derived principally by determining the change in fair value of the loans due to changes in the observable or implied credit spread. Credit spread is the market yield on the loans less the relevant risk-free benchmark interest rate. For

nonperforming loans, we attribute all changes in fair value to instrument-specific credit risk. Table ~~15.15~~16.14 shows the estimated gains and losses from earnings attributable to instrument-specific credit risk related to assets accounted for under the fair value option.

Table ~~15.15:~~16.14: Fair Value Option – Gains/Losses Attributable to Instrument-Specific Credit Risk


	Quarter ended March 31,				Quarter ended March 31,
(in millions)	2018		2017		2019			2018
Gains (losses) attributable to instrument-specific credit risk:
Mortgages held for sale	$	1	(1	)
Mortgage loans held for sale					$	(4	)	1
Loans held for sale	6		25		14			6
Total	$	7	24		$	10		7

Disclosures about Fair Value of Financial Instruments

Table ~~15.16~~16.15 is a summary of fair value estimates for financial instruments, excluding financial instruments recorded at fair value on a recurring basis, as they are included within Table ~~15.2~~16.2 in this Note. In connection with the adoption of ASU 2016-01 in first quarter 2018, the valuation methodologies for estimating the fair value of financial instruments in Table 15.16 have been changed, where necessary, to conform with an exit price notion. Under an exit price notion, fair value estimates are based upon the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the balance sheet date. For certain loans and deposit liabilities, the estimated fair values prior to adoption of ASU 2016-01 followed an entrance price notion that based fair values on recent prices offered to customers for loans and deposits with similar characteristics. The carrying amounts in the following table are recorded on the balance sheet under the indicated captions.

We have not included assets and liabilities that are not financial instruments in our disclosure, such as the value of the long-term relationships with our deposit, credit card and trust customers, amortized MSRs, premises and equipment, goodwill and other intangibles, deferred taxes and other liabilities.

The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.

Note ~~15:~~16: Fair Values of Assets and Liabilities (continued)

Table ~~15.16:~~16.15: Fair Value Estimates for Financial Instruments


			Estimated fair value						Estimated fair value
(in millions)	Carrying amount		Level 1	Level 2	Level 3	Total	Carrying amount		Level 1	Level 2	Level 3	Total
March 31, 2018
March 31, 2019
Financial assets
Cash and due from banks (1)	$	18,145	18,145	—	—	18,145	$	20,650	20,650	—	—	20,650
Interest-earning deposits with banks (1)	184,250		184,091	159	—	184,250	128,318		128,036	282	—	128,318
Federal funds sold and securities purchased under resale agreements (1)	73,550		—	73,550	—	73,550	98,621		—	98,621	—	98,621
Held-to-maturity debt securities	141,446		44,179	93,650	494	138,323	144,990		44,693	99,475	531	144,699
Mortgages held for sale	4,085		—	2,808	1,285	4,093
Mortgage loans held for sale							3,925		—	2,701	1,272	3,973
Loans held for sale	1,886		—	1,887	—	1,887	20		—	20	—	20
Loans, net ~~(3)~~(2)	917,574		—	49,806	871,564	921,370	919,308		—	46,649	873,169	919,818
Nonmarketable equity securities (cost method) ~~(4)~~	5,780		—	—	5,803	5,803	5,732		—	—	5,765	5,765
Total financial assets	$	1,346,716	246,415	221,860	879,146	1,347,421	$	1,321,564	193,379	247,748	880,737	1,321,864
Financial liabilities
Deposits ~~(5)~~(3)	$	118,666	—	98,649	19,930	118,579	$	138,494	—	110,129	28,346	138,475
Short-term borrowings	97,207		—	97,204	—	97,204	106,597		—	106,597	—	106,597
Long-term debt ~~(6)~~(4)	227,264		—	228,231	2,029	230,260	236,305		—	237,250	1,601	238,851
Total financial liabilities	$	443,137	—	424,084	21,959	446,043	$	481,396	—	453,976	29,947	483,923
December 31, 2017
December 31, 2018
Financial assets
Cash and due from banks (1)	$	23,367	23,367	—	—	23,367	$	23,551	23,551	—	—	23,551
Interest-earning deposits with banks (1)	192,580		192,455	125	—	192,580	149,736		149,542	194	—	149,736
Federal funds sold and securities purchased under resale agreements (1)	80,025		1,002	78,954	69	80,025	80,207		—	80,207	—	80,207
Held-to-maturity securities	139,335		44,806	93,694	485	138,985
Mortgages held for sale	3,954		—	2,625	1,333	3,958
Held-to-maturity debt securities							144,788		44,339	97,275	501	142,115
Mortgage loans held for sale							3,355		—	2,129	1,233	3,362
Loans held for sale	108		—	108	—	108	572		—	572	—	572
Loans, net ~~(3)~~(2)	926,273		—	51,713	886,622	938,335	923,703		—	45,190	872,725	917,915
Nonmarketable equity securities (cost method)	7,136		—	23	7,605	7,628	5,643		—	—	5,675	5,675
Total financial assets ~~(7)~~	$	1,372,778	261,630	227,242	896,114	1,384,986	$	1,331,555	217,432	225,567	880,134	1,323,133
Financial liabilities
Deposits ~~(5)~~(3)	$	128,594	—	108,146	19,768	127,914	$	130,645	—	107,448	22,641	130,089
Short-term borrowings	103,256		—	103,256	—	103,256	105,787		—	105,789	—	105,789
Long-term debt ~~(6)~~(4)	224,981		—	227,109	3,159	230,268	229,008		—	225,904	2,230	228,134
Total financial liabilities	$	456,831	—	438,511	22,927	461,438	$	465,440	—	439,141	24,871	464,012


(1)	Amounts consist of financial instruments for which carrying value approximates fair value.


(2)	Excludes lease financing with a carrying amount of ~~$19.3~~$19.1 billion and ~~$19.4~~$19.7 billion at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, respectively.

(3)

~~In connection with the adoption of ASU 2016-01, the valuation methodologies used to estimate the fair value at~~ ~~March 31, 2018, for a portion of loans and deposit liabilities with a defined or contractual maturity has been changed to conform to an exit price notion. The fair value estimates at~~ ~~December 31, 2017~~ ~~have not been revised to reflect application of the modified methodology.~~


~~(4)~~	~~Excludes~~ ~~$1.3 billion~~ ~~of nonmarketable equity securities accounted for under the measurement alternative at~~ ~~March 31, 2018, that were accounted for under the cost method in prior periods.~~


~~(5)~~	Excludes deposit liabilities with no defined or contractual maturity of ~~$1.2~~$1.1 trillion and $1.2 trillion at ~~both~~ March 31, ~~2018~~2019 and December 31, ~~2017~~. 2018, respectively.


~~(6)~~(4)	Excludes capital lease obligations under capital leases of ~~$38~~$34 million and ~~$39~~$36 million at March 31, ~~2018~~,2019, and December 31, ~~2017~~,2018, respectively.


~~(7)~~	~~Excludes~~ ~~$27 million~~ ~~of carrying value and~~ ~~$30 million~~ ~~of fair value relating to nonmarketable equity securities at NAV at December 31, 2017.~~

Loan commitments, standby letters of credit and commercial and similar letters of credit are not included in ~~the table above.~~Table 16.15. A reasonable estimate of the fair value of these instruments is the carrying value of deferred fees plus the allowance for unfunded credit commitments, which totaled $1.0 billion at both March 31, ~~2018,~~2019, and December 31, ~~2017.~~2018.

Note ~~16:~~17: Preferred Stock

We are authorized to issue 20 million shares of preferred stock and 4 million shares of preference stock, both without par value. Preferred shares outstanding rank senior to common shares both as to dividends and liquidation preference but have no general voting rights. We have not issued any preference shares under

this authorization. If issued, preference shares would be limited to one vote per share. Our total authorized, issued and outstanding preferred stock is presented in the following two tables along with the Employee Stock Ownership Plan (ESOP) Cumulative Convertible Preferred Stock.

Table ~~16.1:~~17.1: Preferred Stock Shares


	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
	Liquidation preference per share		Shares authorized and designated	Liquidation preference per share		Shares authorized and designated	Liquidation preference per share		Shares authorized and designated	Liquidation preference per share		Shares authorized and designated
DEP Shares
Dividend Equalization Preferred Shares (DEP)	$	10	97,000	$	10	97,000	$	10	97,000	$	10	97,000
Series I
Floating Class A Preferred Stock(1)	100,000		25,010	100,000		25,010	100,000		25,010	100,000		25,010
Series J
8.00% Non-Cumulative Perpetual Class A Preferred Stock	1,000		2,300,000	1,000		2,300,000
Series K
7.98% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	1,000		3,500,000	1,000		3,500,000
Floating Non-Cumulative Perpetual Class A Preferred Stock (2)							1,000		3,500,000	1,000		3,500,000
Series L
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock	1,000		4,025,000	1,000		4,025,000	1,000		4,025,000	1,000		4,025,000
Series N
5.20% Non-Cumulative Perpetual Class A Preferred Stock	25,000		30,000	25,000		30,000	25,000		30,000	25,000		30,000
Series O
5.125% Non-Cumulative Perpetual Class A Preferred Stock	25,000		27,600	25,000		27,600	25,000		27,600	25,000		27,600
Series P
5.25% Non-Cumulative Perpetual Class A Preferred Stock	25,000		26,400	25,000		26,400	25,000		26,400	25,000		26,400
Series Q
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	25,000		69,000	25,000		69,000	25,000		69,000	25,000		69,000
Series R
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	25,000		34,500	25,000		34,500	25,000		34,500	25,000		34,500
Series S
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	25,000		80,000	25,000		80,000	25,000		80,000	25,000		80,000
Series T
6.00% Non-Cumulative Perpetual Class A Preferred Stock	25,000		32,200	25,000		32,200	25,000		32,200	25,000		32,200
Series U
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	25,000		80,000	25,000		80,000	25,000		80,000	25,000		80,000
Series V
6.00% Non-Cumulative Perpetual Class A Preferred Stock	25,000		40,000	25,000		40,000	25,000		40,000	25,000		40,000
Series W
5.70% Non-Cumulative Perpetual Class A Preferred Stock	25,000		40,000	25,000		40,000	25,000		40,000	25,000		40,000
Series X
5.50% Non-Cumulative Perpetual Class A Preferred Stock	25,000		46,000	25,000		46,000	25,000		46,000	25,000		46,000
Series Y
5.625% Non-Cumulative Perpetual Class A Preferred Stock	25,000		27,600	25,000		27,600	25,000		27,600	25,000		27,600
ESOP
Cumulative Convertible Preferred Stock (1)	—		2,425,104	—		1,556,104
Cumulative Convertible Preferred Stock (3)							—		1,406,460	—		1,406,460
Total			12,905,414			12,036,414			9,586,770			9,586,770


(1)	Series I preferred stock issuance relates to trust preferred securities. See Note 10 (Securitizations and Variable Interest Entities) in this Report for additional information. This issuance has a floating interest rate that is the greater of three-month LIBOR plus 0.93% and 5.56975%.


(2)	Floating rate for Preferred Stock, Series K, is three-month LIBOR plus 3.77%.


(3)	See the ESOP Cumulative Convertible Preferred Stock section in this Note for additional information about the liquidation preference for the ESOP Cumulative Convertible Preferred Stock.

Note ~~16:~~17: Preferred Stock (continued)

Table ~~16.2:~~17.2: Preferred Stock – Shares Issued and Carrying Value


	March 31, 2018					December 31, 2017					March 31, 2019					December 31, 2018
(in millions, except shares)	Shares issued and outstanding	Liquidation preference value		Carrying value	Discount	Shares issued and outstanding	Liquidation preference value		Carrying value	Discount	Shares issued and outstanding	Liquidation preference value		Carrying value	Discount	Shares issued and outstanding	Liquidation preference value		Carrying value	Discount
DEP Shares
Dividend Equalization Preferred Shares (DEP)	96,546	$	—	—	—	96,546	$	—	—	—	96,546	$	—	—	—	96,546	$	—	—	—
Series I ~~(1)~~(2)
Floating Class A Preferred Stock	25,010	2,501		2,501	—	25,010	2,501		2,501	—	25,010	2,501		2,501	—	25,010	2,501		2,501	—
Series J (1)
8.00% Non-Cumulative Perpetual Class A Preferred Stock	2,150,375	2,150		1,995	155	2,150,375	2,150		1,995	155
Series K (1)
7.98% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	3,352,000	3,352		2,876	476	3,352,000	3,352		2,876	476
Series K (1)(3)
Floating Non-Cumulative Perpetual Class A Preferred Stock											3,352,000	3,352		2,876	476	3,352,000	3,352		2,876	476
Series L (1)
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock	3,968,000	3,968		3,200	768	3,968,000	3,968		3,200	768	3,967,995	3,968		3,200	768	3,968,000	3,968		3,200	768
Series N (1)
5.20% Non-Cumulative Perpetual Class A Preferred Stock	30,000	750		750	—	30,000	750		750	—	30,000	750		750	—	30,000	750		750	—
Series O (1)
5.125% Non-Cumulative Perpetual Class A Preferred Stock	26,000	650		650	—	26,000	650		650	—	26,000	650		650	—	26,000	650		650	—
Series P (1)
5.25% Non-Cumulative Perpetual Class A Preferred Stock	25,000	625		625	—	25,000	625		625	—	25,000	625		625	—	25,000	625		625	—
Series Q (1)
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	69,000	1,725		1,725	—	69,000	1,725		1,725	—	69,000	1,725		1,725	—	69,000	1,725		1,725	—
Series R (1)
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	33,600	840		840	—	33,600	840		840	—	33,600	840		840	—	33,600	840		840	—
Series S (1)
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	80,000	2,000		2,000	—	80,000	2,000		2,000	—	80,000	2,000		2,000	—	80,000	2,000		2,000	—
Series T (1)
6.00% Non-Cumulative Perpetual Class A Preferred Stock	32,000	800		800	—	32,000	800		800	—	32,000	800		800	—	32,000	800		800	—
Series U (1)
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	80,000	2,000		2,000	—	80,000	2,000		2,000	—	80,000	2,000		2,000	—	80,000	2,000		2,000	—
Series V (1)
6.00% Non-Cumulative Perpetual Class A Preferred Stock	40,000	1,000		1,000	—	40,000	1,000		1,000	—	40,000	1,000		1,000	—	40,000	1,000		1,000	—
Series W (1)
5.70% Non-Cumulative Perpetual Class A Preferred Stock	40,000	1,000		1,000	—	40,000	1,000		1,000	—	40,000	1,000		1,000	—	40,000	1,000		1,000	—
Series X (1)
5.50% Non-Cumulative Perpetual Class A Preferred Stock	46,000	1,150		1,150	—	46,000	1,150		1,150	—	46,000	1,150		1,150	—	46,000	1,150		1,150	—
Series Y (1)
5.625% Non-Cumulative Perpetual Class A Preferred Stock	27,600	690		690	—	27,600	690		690	—	27,600	690		690	—	27,600	690		690	—
ESOP
Cumulative Convertible Preferred Stock	2,425,104	2,425		2,425	—	1,556,104	1,556		1,556	—	1,406,460	1,407		1,407	—	1,406,460	1,407		1,407	—
Total	12,546,235	$	27,626	26,227	1,399	11,677,235	$	26,757	25,358	1,399	9,377,211	$	24,458	23,214	1,244	9,377,216	$	24,458	23,214	1,244


(1)	Preferred shares qualify as Tier 1 capital.


(2)	Floating rate for Preferred Stock, Series I, is the greater of three-month LIBOR plus 0.93% and 5.56975%.


(3)	Floating rate for Preferred Stock, Series K, is three-month LIBOR plus 3.77%.

~~See Note 9 (Securitizations and Variable Interest Entities) for additional information on our trust preferred securities.~~

ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK All shares of our ESOP Cumulative Convertible Preferred Stock (ESOP Preferred Stock) were issued to a trustee acting on behalf of the Wells Fargo & Company 401(k) Plan (the 401(k) Plan). Dividends on the ESOP Preferred Stock are cumulative from the date of initial issuance and are payable quarterly at annual rates based upon the year of issuance. Each share of ESOP Preferred Stock released from the unallocated reserve of the 401(k) Plan is converted into shares of our common stock based on the stated

value of the ESOP Preferred Stock and the then current market price of our common stock. The ESOP Preferred Stock is also convertible at the option of the holder at any time, unless previously redeemed. We have the option to redeem the ESOP Preferred Stock at any time, in whole or in part, at a redemption price per share equal to the higher of (a) $1,000 per share plus accrued and unpaid dividends or (b) the fair market value, as defined in the Certificates of Designation for the ESOP Preferred Stock.

Table ~~16.3:~~17.3: ESOP Preferred Stock


	Shares issued and outstanding		Carrying value					Adjustable dividend rate			Shares issued and outstanding		Carrying value					Adjustable dividend rate
(in millions, except shares)	Mar 31, 2018	Dec 31, 2017	Mar 31, 2018			Dec 31, 2017		Minimum		Maximum	Mar 31, 2019	Dec 31, 2018	Mar 31, 2019			Dec 31, 2018		Minimum		Maximum
ESOP Preferred Stock
$1,000 liquidation preference per share
2018	1,100,000	—	$	1,100		—		7.00	%	8.00	336,945	336,945	337			337		7.00	%	8.00	%
2017	249,210	273,210	249			273		7.00		8.00	222,210	222,210	222			222		7.00		8.00
2016	268,826	322,826	269			323		9.30		10.30	233,835	233,835	234			234		9.30		10.30
2015	167,436	187,436	167			187		8.90		9.90	144,338	144,338	144			144		8.90		9.90
2014	212,151	237,151	212			237		8.70		9.70	174,151	174,151	174			174		8.70		9.70
2013	169,948	201,948	170			202		8.50		9.50	133,948	133,948	134			134		8.50		9.50
2012	105,634	128,634	106			129		10.00		11.00	77,634	77,634	78			78		10.00		11.00
2011	99,296	129,296	99			129		9.00		10.00	61,796	61,796	62			62		9.00		10.00
2010(1)	52,603	75,603	53			76		9.50		10.50	21,603	21,603	22			22		9.50		10.50
Total ESOP Preferred Stock ~~(1)~~(2)	2,425,104	1,556,104	$	2,425		1,556					1,406,460	1,406,460	$	1,407		1,407
Unearned ESOP shares ~~(2)~~(3)			$	(2,571	)	(1,678	)						$	(1,502	)	(1,502	)


(1)	At ~~March 31, 2018~~ ~~and~~ ~~December 31, 2017, additional paid-in capital included~~ ~~$146 million~~ ~~and~~ ~~$122 million, respectively, related to~~In April 2019, all of the 2010 ESOP ~~preferred~~Preferred Stock was converted into common stock.


(2)	Additional paid-in capital included $95 million at both March 31, 2019 and December 31, 2018, related to ESOP preferred stock.


(3)	We recorded a corresponding charge to unearned ESOP shares in connection with the issuance of the ESOP Preferred Stock. The unearned ESOP shares are reduced as shares of the ESOP Preferred Stock are committed to be released.

Note 18: Revenue from Contracts with Customers (continued)

Note ~~17:~~18: Revenue from Contracts with Customers

Our revenue includes net interest income on financial instruments and noninterest income. Table ~~17.1~~18.1 presents our revenue by operating segment. The ~~other~~“Other” segment for each of the tables below includes the elimination of certain items that are included in more than one business segment, ~~most~~substantially all of which represents products and services for WIM customers served

through Community Banking distribution channels. For additional description of our operating segments, including additional financial information and the underlying management accounting process, see Note 2122 (Operating Segments).

We adopted ASU 2014-09 – Revenue from Contracts with Customers on a modified retrospective basis as of January 1, 2018. For details on the impact of the adoption of this ASU, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in ~~this Report.~~our 2018 Form 10-K.

Table ~~17.1:~~18.1: Revenue by Operating Segment


	Quarter ended March 31,																		Quarter ended Mar 31,
	Community Banking					Wholesale Banking			Wealth and Investment Management				Other				Consolidated Company		Community Banking					Wholesale Banking			Wealth and Investment Management				Other (3)				Consolidated Company
(in millions)	2018			2017		2018	2017		2018		2017		2018		2017		2018	2017	2019			2018		2019		2018	2019		2018		2019		2018		2019	2018
Net interest income (1)	$	7,195		7,132		4,532	4,681		1,112		1,141		(601	)	(630	)	12,238	12,324	$	7,248		7,195		4,534		4,532	1,101		1,112		(572	)	(601	)	12,311	12,238
Noninterest income:
Service charges on deposit accounts	639			742		534	570		4		5		(4	)	(4	)	1,173	1,313	610			639		483		534	4		4		(3	)	(4	)	1,094	1,173
Trust and investment fees:
Brokerage advisory, commissions and other fees	478			444		67	84		2,344		2,245		(486	)	(449	)	2,403	2,324	449			478		78		67	2,124		2,344		(458	)	(486	)	2,193	2,403
Trust and investment management	233			218		113	129		743		707		(239	)	(225	)	850	829	210			233		114		113	676		743		(214	)	(239	)	786	850
Investment banking	(10		)	(27	)	440	445		—		(1	)	—		—		430	417	(20		)	(10	)	412		440	5		—		(3	)	—		394	430
Total trust and investment fees	701			635		620	658		3,087		2,951		(725	)	(674	)	3,683	3,570	639			701		604		620	2,805		3,087		(675	)	(725	)	3,373	3,683
Card fees	821			865		87	80		1		1		(1	)	(1	)	908	945	858			821		86		87	1		1		(1	)	(1	)	944	908
Other fees:
Charges and fees on loans (1)	74			84		227	223		1		1		(1	)	(1	)	301	307
Lending related charges and fees (1)(2)																			65			76		282		304	2		2		(2	)	(2	)	347	380
Cash network fees	125			123		1	3		—		—		—		—		126	126	109			125		—		1	—		—		—		—		109	126
Commercial real estate brokerage commissions	—			—		85	81		—		—		—		—		85	81	—			—		81		85	—		—		—		—		81	85
Letters of credit fees (1)	2			1		77	73		1		1		(1	)	(1	)	79	74
Wire transfer and other remittance fees	63			57		52	49		2		2		(1	)	(1	)	116	107	64			63		48		52	2		2		(1	)	(1	)	113	116
All other fees	63			130		30	39		—		1		—		—		93	170
All other fees (1)																			94			63		26		30	—		—		—		—		120	93
Total other fees	327			395		472	468		4		5		(3	)	(3	)	800	865	332			327		437		472	4		4		(3	)	(3	)	770	800
Mortgage banking (1)	842			1,106		93	123		(3	)	(2	)	2		1		934	1,228	641			842		68		93	(3	)	(3	)	2		2		708	934
Insurance (1)	28			34		79	234		18		20		(11	)	(11	)	114	277	11			28		78		79	17		18		(10	)	(11	)	96	114
Net gains (losses) from trading activities (1)	(1		)	(52	)	225	290		19		34		—		—		243	272	5			(1	)	333		225	19		19		—		—		357	243
Net gains (losses) on debt securities (1)	—			102		1	(66	)	—		—		—		—		1	36
Net gains on debt securities (1)																			37			—		88		1	—		—		—		—		125	1
Net gains from equity securities (1)	684			468		93	36		6		66		—		—		783	570	601			684		77		93	136		6		—		—		814	783
Lease income (1)	—			—		455	481		—		—		—		—		455	481	—			—		443		455	—		—		—		—		443	455
Other income of the segment (1)	594			396		88	22		(6	)	36		(74	)	(80	)	602	374	768			594		(120	)	88	(5	)	(6	)	(69	)	(74	)	574	602
Total noninterest income	4,635			4,691		2,747	2,896		3,130		3,116		(816	)	(772	)	9,696	9,931	4,502			4,635		2,577		2,747	2,978		3,130		(759	)	(816	)	9,298	9,696
Revenue	$	11,830		11,823		7,279	7,577		4,242		4,257		(1,417	)	(1,402	)	21,934	22,255	$	11,750		11,830		7,111		7,279	4,079		4,242		(1,331	)	(1,417	)	21,609	21,934

(1)

~~These revenues are~~Most of our revenue is not within the scope of ~~ASU~~Accounting Standards Update (ASU) 2014-09 – Revenue from Contracts with Customers, and additional details are included in other footnotes to our financial statements. The scope explicitly excludes net interest income as well as many other revenues for financial assets and liabilities, including loans, leases, securities, and derivatives.


(2)	Represents combined amount of previously reported “Charges and fees on loans” and “Letters of credit fees”.


(3)	Includes the elimination of certain items that are included in more than one business segment, substantially all of which represents products and services for WIM customers served through Community Banking distribution channels.

~~Following is a discussion of key revenues within the scope of ASU 2014-09 –~~ ~~Revenue from Contracts with Customers~~ ~~(“the new revenue guidance”).~~ We provide services to customers which have related performance obligations that we complete to recognize revenue. Our revenues are generally recognized either immediately upon the completion of our service or over time as we perform services. Any services performed over time generally require that we render services each period and therefore we measure our progress in completing these services based upon the passage of time.

SERVICE CHARGES ON DEPOSIT ACCOUNTS are earned on depository accounts for commercial and consumer customers and include fees for account and overdraft services. Account charges include fees for periodic account maintenance activities and event-driven services such as stop payment fees. Our obligation for event-driven services is satisfied at the time of the event when the service is delivered, while our obligation for maintenance services is satisfied over the course of each month. Our obligation for overdraft services is satisfied at the time of the overdraft.

Table ~~17.2~~18.2 presents our service charges on deposit accounts by operating segment.

Table ~~17.2:~~18.2: Service Charges on Deposit Accounts by Operating Segment


	Quarter ended March 31,													Quarter ended Mar 31,
	Community Banking			Wholesale Banking		Wealth and Investment Management		Other				Consolidated Company		Community Banking			Wholesale Banking		Wealth and Investment Management		Other				Consolidated Company
(in millions)	2018		2017	2018	2017	2018	2017	2018		2017		2018	2017	2019		2018	2019	2018	2019	2018	2019		2018		2019	2018
Overdraft fees	$	412	484	2	2	—	—	—		—		414	486	$	417	412	1	2	—	—	—		—		418	414
Account charges	227		258	532	568	4	5	(4	)	(4	)	759	827	193		227	482	532	4	4	(3	)	(4	)	676	759
Service charges on deposit accounts	$	639	742	534	570	4	5	(4	)	(4	)	1,173	1,313	$	610	639	483	534	4	4	(3	)	(4	)	1,094	1,173

BROKERAGE ADVISORY, COMMISSIONS AND OTHER FEES are earned for providing full-service and discount brokerage services predominantly to retail brokerage clients. These revenues include fees earned on asset-based and transactional accounts and other brokerage advisory services.

Asset-based revenues are charged based on the market value of the client’s assets. The services and related obligations associated with certain of these revenues, which include investment advice, active management of client assets, or assistance with selecting and engaging a third-party advisory manager, are generally satisfied over a month or quarter. The remaining revenues include trailing commissions which are earned for selling shares to investors. Our obligation associated with earning trailing commissions is satisfied at the time shares are sold. However, these fees are received and recognized over time during the period the customer owns the shares and we

remain the broker of record. The amount of trailing commissions is variable based on the length of time the customer holds the shares and on changes in the value of the underlying assets.

Transactional revenues are earned for executing transactions at the client’s direction. Our obligation is generally satisfied upon the execution of the transaction and the fees are based on the size and number of transactions executed.

Other revenues earned from other brokerage advisory services include omnibus and networking fees received from mutual fund companies in return for providing record keeping and other administrative services, and annual account maintenance fees charged to customers.

Table ~~17.3~~18.3 presents our brokerage advisory, commissions and other fees by operating segment.

Table ~~17.3:~~18.3: Brokerage Advisory, Commissions and Other Fees by Operating Segment


	Quarter ended March 31,													Quarter ended Mar 31,
	Community Banking			Wholesale Banking		Wealth and Investment Management		Other				Consolidated Company		Community Banking			Wholesale Banking		Wealth and Investment Management		Other				Consolidated Company
(in millions)	2018		2017	2018	2017	2018	2017	2018		2017		2018	2017	2019		2018	2019	2018	2019	2018	2019		2018		2019	2018
Asset-based revenue (1)	$	371	326	—	—	1,743	1,599	(371	)	(326	)	1,743	1,599	$	343	371	—	—	1,580	1,743	(343	)	(371	)	1,580	1,743
Transactional revenue	93		100	12	10	439	479	(100	)	(105	)	444	484	89		93	16	12	387	439	(98	)	(100	)	394	444
Other revenue	14		18	55	74	162	167	(15	)	(18	)	216	241	17		14	62	55	157	162	(17	)	(15	)	219	216
Brokerage advisory, commissions and other fees	$	478	444	67	84	2,344	2,245	(486	)	(449	)	2,403	2,324	$	449	478	78	67	2,124	2,344	(458	)	(486	)	2,193	2,403


(1)	We earned ~~$331 million~~ in trailing commissions of $280 million and $331 million in ~~the~~ first quarter ~~of both~~2019 and 2018, ~~and 2017,~~ respectively.

Note 18: Revenue from Contracts with Customers (continued)

TRUST AND INVESTMENT MANAGEMENT FEES are earned for providing trust, investment management and other related services.

Investment management services include managing and administering assets, including mutual funds, and institutional separate accounts. Fees for these services are generally determined based on a tiered scale relative to the market value of assets under management (AUM). In addition to AUM, we have client assets under administration (AUA) that earn various administrative fees which are generally based on the extent of the services provided to administer the account. Services with AUM and AUA-based fees are generally performed over time.

Trust services include acting as a trustee or agent for corporate trust, personal trust, and agency assets. Obligations for trust services are generally satisfied over time, while obligations for activities that are transactional in nature are satisfied at the time of the transaction.

Other related services include the custody and safekeeping of accounts. Our obligation for these services is generally satisfied over time.

~~Note 17: Revenue from Contracts with Customers (continued~~)

Table ~~17.4~~18.4 presents our trust and investment management fees by operating segment.

Table ~~17.4:~~18.4: Trust and Investment Management Fees by Operating Segment


	Quarter ended March 31,													Quarter ended Mar 31,
	Community Banking			Wholesale Banking		Wealth and Investment Management		Other				Consolidated Company		Community Banking			Wholesale Banking		Wealth and Investment Management		Other				Consolidated Company
(in millions)	2018		2017	2018	2017	2018	2017	2018		2017		2018	2017	2019		2018	2019	2018	2019	2018	2019		2018		2019	2018
Investment management fees	$	—	1	—	—	534	500	—		—		534	501	$	1	—	—	—	477	534	—		—		478	534
Trust fees	221		217	86	104	188	184	(239	)	(225	)	256	280	209		221	82	86	168	188	(214	)	(239	)	245	256
Other revenue	12		—	27	25	21	23	—		—		60	48	—		12	32	27	31	21	—		—		63	60
Trust and investment management fees	$	233	218	113	129	743	707	(239	)	(225	)	850	829	$	210	233	114	113	676	743	(214	)	(239	)	786	850

INVESTMENT BANKING FEES are earned for underwriting debt and equity securities, arranging loan syndications and performing other advisory services. Our obligation for these services is generally satisfied at closing of the transaction. Substantially all of these fees are in the Wholesale Banking operating segment.

CARD FEES include credit and debit card interchange and network revenues and various card-related fees. ~~Card-related fees such as late fees, cash advance fees,~~Credit and ~~balance transfer fees are loan-related and excluded from the scope of the new revenue guidance.~~debit

~~Credit and debit~~ card interchange and network revenues are earned on credit and debit card transactions conducted through payment networks such as Visa, MasterCard, and American Express. Our obligation is satisfied concurrently with the delivery of services on a daily basis.

Table ~~17.5~~18.5 presents our card fees by operating segment.

Table ~~17.5:~~18.5: Card Fees by Operating Segment


	Quarter ended March 31,													Quarter ended Mar 31,
	Community Banking			Wholesale Banking		Wealth and Investment Management		Other				Consolidated Company		Community Banking			Wholesale Banking		Wealth and Investment Management		Other				Consolidated Company
(in millions)	2018		2017	2018	2017	2018	2017	2018		2017		2018	2017	2019		2018	2019	2018	2019	2018	2019		2018		2019	2018
Credit card interchange and network revenues (1)	$	171	219	87	80	1	1	(1	)	(1	)	258	299	$	189	171	86	87	1	1	(1	)	(1	)	275	258
Debit card interchange and network revenues	479		465	—	—	—	—	—		—		479	465	507		479	—	—	—	—	—		—		507	479
Late fees, cash advance fees, balance transfer fees, and annual fees	171		181	—	—	—	—	—		—		171	181	162		171	—	—	—	—	—		—		162	171
Card fees (1)	$	821	865	87	80	1	1	(1	)	(1	)	908	945	$	858	821	86	87	1	1	(1	)	(1	)	944	908


(1)	The cost of credit card rewards and rebates of ~~$343~~$354 million and ~~$277~~$343 million for the quarters ended March 31, ~~2018~~2019 and ~~March 31, 2017,~~2018, respectively, are presented net against the related revenues.

CASH NETWORK FEES are earned for processing ATM transactions. Our obligation is completed daily upon settlement of ATM transactions. All of these fees are in the Community Banking operating segment.

COMMERCIAL REAL ESTATE BROKERAGE COMMISSIONS are earned for assisting customers in the sale of real estate property. Our obligation is satisfied upon the successful brokering of a transaction. Fees are based on a fixed percentage of the sales price. All of these fees are in the Wholesale Banking operating segment.

WIRE TRANSFER AND OTHER REMITTANCE FEES consist of fees earned for funds transfer services and issuing cashier’s checks and money orders. Our obligation is satisfied at the time of the funds transfer services or upon issuance of the cashier’s check or money order. Substantially all of these fees are in the Community Banking and Wholesale Banking operating segments.

ALL OTHER FEES include various types of fees earned on services to customers which have related performance obligations that we complete to recognize revenue. A ~~significant~~majority portion of the revenue is earned from providing business payroll services and merchant services, which are generally recognized over time as we perform the services. Most of these fees are in the Community Banking operating segment.

Note ~~18:~~19: Employee Benefits

We sponsor a frozen noncontributory qualified defined benefit retirement plan, the Wells Fargo & Company Cash Balance Plan (Cash Balance Plan), which covers eligible employees of Wells Fargo. The Cash Balance Plan was frozen on July 1, 2009, and no new benefits accrue after that date. For additional information on our pension and postretirement plans, including plan assumptions, investment strategy and asset allocation,

projected benefit payments, and valuation methodologies used for assets measured at fair value, see Note 22 (Employee Benefits and Other Expenses) to Financial Statements in our 2018 Form 10-K.

Table ~~18.1~~19.1 presents the components of net periodic benefit cost.

Table ~~18.1:~~19.1: Net Periodic Benefit Cost


	2018						2017					2019						2018
	Pension benefits						Pension benefits					Pension benefits						Pension benefits
(in millions)	Qualified			Non-qualified	Other benefits		Qualified		Non-qualified	Other benefits		Qualified			Non-qualified	Other benefits		Qualified		Non-qualified	Other benefits
Quarter ended March 31,
Service cost	$	1		—	—		1		—	—		$	3		—	—		1		—	—
Interest cost (1)	98			5	5		103		6	7		105			6	5		98		5	5
Expected return on plan assets (1)	(160		)	—	(7	)	(163	)	—	(7	)	(142		)	—	(7	)	(160	)	—	(7	)
Amortization of net actuarial loss (gain) (1)	33			3	(4	)	38		2	(2	)	37			2	(4	)	33		3	(4	)
Amortization of prior service credit (1)	—			—	(3	)	—		—	(3	)	—			—	(2	)	—		—	(3	)
Settlement loss (1)	—			3	—		1		2	—		—			2	—		—		3	—
Net periodic benefit cost (income)	$	(28	)	11	(9	)	(20	)	10	(5	)	$	3		10	(8	)	(28	)	11	(9	)


(1)	~~Effective January 1, 2018, we adopted ASU 2017-07,~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Accordingly, 2018 balances~~Balances are reported in other noninterest expense on the consolidated statement of income. ~~For 2017, these balances were reported in employee benefits.~~

Note ~~19:~~20: Earnings and Dividends Per Common Share

Table ~~19.1~~20.1 shows earnings per common share and diluted earnings per common share and reconciles the numerator and denominator of both earnings per common share calculations.

See Note 1 (Summary of Significant Accounting Policies) for discussion of share repurchases.

Table ~~19.1:~~20.1: Earnings Per Common Share Calculations


	Quarter ended March 31,			Quarter ended March 31,
(in millions, except per share amounts)	2018		2017	2019		2018
Wells Fargo net income ~~(1)~~	$	5,136	5,634	$	5,860	5,136
Less: Preferred stock dividends and other	403		401	353		403
Wells Fargo net income applicable to common stock (numerator) ~~(1)~~	$	4,733	5,233	$	5,507	4,733
Earnings per common share
Average common shares outstanding (denominator)	4,885.7		5,008.6	4,551.5		4,885.7
Per share ~~(1)~~	$	0.97	1.05	$	1.21	0.97
Diluted earnings per common share
Average common shares outstanding	4,885.7		5,008.6	4,551.5		4,885.7
Add: Stock options	9.9		21.2	2.5		9.9
Restricted share rights	28.3		28.0	30.0		28.3
Warrants	6.8		12.6	—		6.8
Diluted average common shares outstanding (denominator)	4,930.7		5,070.4	4,584.0		4,930.7
Per share ~~(1)~~	$	0.96	1.03	$	1.20	0.96


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

Table ~~19.2~~20.2 presents the outstanding options to purchase shares of common stock that were anti-dilutive (the exercise

price was higher than the weighted-average market price), and therefore not included in the calculation of diluted earnings per common share.

Table ~~19.2:~~20.2: Outstanding Anti-Dilutive Options


	Weighted-average shares		Weighted-average shares
	Quarter ended March 31,		Quarter ended March 31,
(in millions)	2018	2017	2019	2018
Options	0.9	2.2	—	0.9

Table 20.3 presents dividends declared per common share.

Table 20.3:Dividends Declared Per Common Share



	Quarter ended March 31,
	2019	2018
Per common share	0.450	0.390

Note ~~20:~~21: Other Comprehensive Income

Table ~~20.1~~21.1 provides the components of ~~other comprehensive income (OCI),~~OCI, reclassifications to net income by income statement line item, and the related tax effects.

Table ~~20.1:~~21.1: Summary of Other Comprehensive Income


	Quarter ended March 31,														Quarter ended March 31,
	2018								2017						2019								2018
(in millions)	Before tax			Tax effect		Net of tax			Before tax		Tax effect		Net of tax		Before tax			Tax effect		Net of tax			Before tax		Tax effect		Net of tax
Debt securities (1):
Debt securities:
Net unrealized gains (losses) arising during the period	$	(3,443	)	848		(2,595		)	369		(133	)	236		$	2,831		(695	)	2,136			(3,443	)	848		(2,595	)
Reclassification of net (gains) losses to net income:
Interest income on debt securities ~~(2)~~(1)	69			(17	)	52			7		(3	)	4		45			(11	)	34			69		(17	)	52
Net gains on debt securities	(1		)	—		(1		)	(36	)	13		(23	)	(125		)	31		(94		)	(1	)	—		(1	)
Net gains from equity securities (3)	—			—		—			(116	)	44		(72	)
Other noninterest income															(1		)	—		(1		)	—		—		—
Subtotal reclassifications to net income	68			(17	)	51			(145	)	54		(91	)	(81		)	20		(61		)	68		(17	)	51
Net change	(3,375		)	831		(2,544		)	224		(79	)	145		2,750			(675	)	2,075			(3,375	)	831		(2,544	)
Derivatives and hedging activities:
Fair Value Hedges:
Change in fair value of excluded components on fair value hedges ~~(4)~~(2)	24			(6	)	18			(226	)	85		(141	)	(26		)	7		(19		)	24		(6	)	18
Cash Flow Hedges:
Net unrealized losses arising during the period on cash flow hedges	(266		)	66		(200		)	(136	)	51		(85	)	(9		)	2		(7		)	(266	)	66		(200	)
Reclassification of net (gains) losses to net income on cash flow hedges:
Reclassification of net losses to net income on cash flow hedges:
Interest income on loans	60			(15	)	45			(205	)	77		(128	)	78			(19	)	59			60		(15	)	45
Interest expense on long-term debt	—			—		—			3		(1	)	2		1			—		1			—		—		—
Subtotal reclassifications to net income	60			(15	)	45			(202	)	76		(126	)	79			(19	)	60			60		(15	)	45
Net change	(182		)	45		(137		)	(564	)	212		(352	)	44			(10	)	34			(182	)	45		(137	)
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period	6			(2	)	4			(7	)	3		(4	)	(4		)	1		(3		)	6		(2	)	4
Reclassification of amounts to net periodic benefit costs (5):
Reclassification of amounts to non interest expense:
Amortization of net actuarial loss	32			(8	)	24			38		(14	)	24		35			(8	)	27			32		(8	)	24
Settlements and other	—			1		1			—		—		—		—			—		—			—		1		1
Subtotal reclassifications to net periodic benefit costs	32			(7	)	25			38		(14	)	24
Subtotal reclassifications to non interest expense															35			(8	)	27			32		(7	)	25
Net change	38			(9	)	29			31		(11	)	20		31			(7	)	24			38		(9	)	29
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period	(2		)	(5	)	(7		)	16		1		17		42			(2	)	40			(2	)	(5	)	(7	)
Net change	(2		)	(5	)	(7		)	16		1		17		42			(2	)	40			(2	)	(5	)	(7	)
Other comprehensive loss	$	(3,521	)	862		(2,659		)	(293	)	123		(170	)
Other comprehensive income (loss)															$	2,867		(694	)	2,173			(3,521	)	862		(2,659	)
Less: Other comprehensive income from noncontrolling interests, net of tax						—							14							—							—
Wells Fargo other comprehensive loss, net of tax						$	(2,659	)					(184	)
Wells Fargo other comprehensive income (loss), net of tax																				$	2,173						(2,659	)


(1)	After adoption of ASU 2016-01 on January 1, 2018, these lines reflect only net unrealized gains and reclassification of net gains from debt securities. The quarter ended March 31, 2017, includes net unrealized gains arising during the period from equity securities of $61 million and reclassification of gains to net income related to equity securities of $(116) million.


~~(2)~~	Represents net unrealized gains and losses amortized over the remaining lives of securities that were transferred from the available-for-sale portfolio to the held-to-maturity portfolio.


~~(3)~~	Net gains from equity securities is presented for table presentation purposes. After adoption of ASU 2016-01 on January 1, 2018, this line does not contain balances as realized and unrealized gains and losses on marketable equity securities are recorded in earnings.


~~(4)~~(2)	Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of effectiveness recorded in other comprehensive income.


~~(5)~~	~~These items are included in the computation of net periodic benefit cost, which is recorded in employee benefits expense (see Note 18 (Employee Benefits) for additional details).~~

Note ~~20:~~21: Other Comprehensive Income (continued)

Table ~~20.2:~~21.2: Cumulative OCI Balances


(in millions)	Debt securities (1)			Derivatives and hedging activities		Defined benefit plans adjustments		Foreign currency translation adjustments		Cumulative other compre- hensive income		Debt securities			Derivatives and hedging activities		Defined benefit plans adjustments		Foreign currency translation adjustments		Cumulative other compre- hensive income
Quarter ended March 31, 2019
Balance, beginning of period												$	(3,122	)	(685	)	(2,296	)	(233	)	(6,336	)
Transition adjustment ~~(2)~~(1)												481			—		—		—		481
Balance, January 1, 2019												(2,641		)	(685	)	(2,296	)	(233	)	(5,855	)
Net unrealized gains (losses) arising during the period												2,136			(26	)	(3	)	40		2,147
Amounts reclassified from accumulated other comprehensive income												(61		)	60		27		—		26
Net change												2,075			34		24		40		2,173
Less: Other comprehensive income from noncontrolling interests												—			—		—		—		—
Balance, end of period												$	(566	)	(651	)	(2,272	)	(193	)	(3,682	)
Quarter ended March 31, 2018
Balance, beginning of period	$	171		(418	)	(1,808	)	(89	)	(2,144	)	$	171		(418	)	(1,808	)	(89	)	(2,144	)
Transition adjustment ~~(2)~~(1)	(118		)	—		—		—		(118	)
Transition adjustment ~~(3)~~(2)												(118		)	—		—		—		(118	)
Balance, January 1, 2018	53			(418	)	(1,808	)	(89	)	(2,262	)	53			(418	)	(1,808	)	(89	)	(2,262	)
Net unrealized gains (losses) arising during the period	(2,595		)	(182	)	4		(7	)	(2,780	)	(2,595		)	(182	)	4		(7	)	(2,780	)
Amounts reclassified from accumulated other comprehensive income	51			45		25		—		121		51			45		25		—		121
Net change	(2,544		)	(137	)	29		(7	)	(2,659	)	(2,544		)	(137	)	29		(7	)	(2,659	)
Less: Other comprehensive income from noncontrolling interests	—			—		—		—		—		—			—		—		—		—
Balance, end of period	$	(2,491	)	(555	)	(1,779	)	(96	)	(4,921	)	$	(2,491	)	(555	)	(1,779	)	(96	)	(4,921	)
Quarter ended March 31, 2017
Balance, beginning of period	$	(1,099	)	89		(1,943	)	(184	)	(3,137	)
Transition adjustment ~~(3)~~(2)	—			168		—		—		168
Balance, January 1, 2017	(1,099		)	257		(1,943	)	(184	)	(2,969	)
Net unrealized gains (losses) arising during the period	236			(226	)	(4	)	17		23
Amounts reclassified from accumulated other comprehensive income	(91		)	(126	)	24		—		(193	)
Net change	145			(352	)	20		17		(170	)
Less: Other comprehensive income from noncontrolling interests	13			—		—		1		14
Balance, end of period	$	(967	)	(95	)	(1,923	)	(168	)	(3,153	)

(1)

~~After~~The transition adjustment relates to the adoption of ASU ~~2016-01~~2017-08 – Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on ~~January~~Purchased Callable Debt Securities. See Note 1 ~~2018, the balances only reflect net unrealized gains and reclassification~~(Summary of ~~net gains from debt securities. The quarter ended March 31, 2017, includes net unrealized gains arising during the period from equity securities of~~ ~~$61 million~~ ~~and reclassification of gains to net income related to equity securities of~~ ~~$(116) million~~.Significant Accounting Policies) for more information.


(2)	The transition adjustment relates to the adoption of ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. See Note 1 (Summary of Significant Accounting Policies) for more information.


~~(3)~~	~~The transition adjustment relates to the adoption of ASU 2017-12, Derivatives and Hedging (Topic 815):~~ ~~Targeted Improvements to Accounting for Hedging Activities. See Note 1 (Summary of Significant Accounting Policies) for more information.~~

Note ~~21:~~22: Operating Segments

We have three reportable operating segments: Community Banking; Wholesale Banking; and Wealth and Investment Management (WIM). We define our operating segments by product type and customer segment and their results are based on our management accounting process, for which there is no comprehensive, authoritative guidance equivalent to GAAP for financial accounting. The management accounting process measures the performance of the operating segments based on

our management structure and is not necessarily comparable with similar information for other financial services companies. If the management structure and/or the allocation process changes, allocations, transfers and assignments may change. ~~Effective first quarter 2018, assets and liabilities receive a funding charge or~~

credit that considers interest rate risk, liquidity risk, and other product characteristics on a more granular level. This methodology change affects results across all three of our reportable operating segments and prior period operating segment results have been revised to reflect this methodology change. Our previously reported consolidated financial results were not impacted by the methodology change; however, in connection with the adoption of ASU 2016-01 in first quarter 2018, certain reclassifications have occurred within noninterest income. For a description of our operating segments see Note 2526 (Operating Segments) to Financial Statements in our ~~2017~~2018 Form 10-K. Table ~~21.1~~22.1 presents our results by operating segment.

Table ~~21.1:~~22.1: Operating Segments


	Community Banking			Wholesale Banking				Wealth and Investment Management				Other (1)				Consolidated Company		Community Banking			Wholesale Banking			Wealth and Investment Management			Other (1)				Consolidated Company
(income/expense in millions, average balances in billions)	2018		2017	2018		2017		2018		2017		2018		2017		2018	2017	2019		2018	2019	2018		2019	2018		2019		2018		2019	2018
Quarter ended March 31,
Net interest income (2)	$	7,195	7,132	4,532		4,681		1,112		1,141		(601	)	(630	)	12,238	12,324	$	7,248	7,195	4,534	4,532		1,101	1,112		(572	)	(601	)	12,311	12,238
Provision (reversal of provision) for credit losses	218		646	(20	)	(43	)	(6	)	(4	)	(1	)	6		191	605	710		218	134	(20	)	4	(6	)	(3	)	(1	)	845	191
Noninterest income	4,635		4,691	2,747		2,896		3,130		3,116		(816	)	(772	)	9,696	9,931	4,502		4,635	2,577	2,747		2,978	3,130		(759	)	(816	)	9,298	9,696
Noninterest expense	8,702		7,281	3,978		4,167		3,290		3,204		(928	)	(860	)	15,042	13,792	7,689		8,702	3,838	3,978		3,303	3,290		(914	)	(928	)	13,916	15,042
Income (loss) before income tax expense (benefit)	2,910		3,896	3,321		3,453		958		1,057		(488	)	(548	)	6,701	7,858	3,351		2,910	3,139	3,321		772	958		(414	)	(488	)	6,848	6,701
Income tax expense (benefit)	809		982	448		973		239		386		(122	)	(208	)	1,374	2,133	424		809	369	448		192	239		(104	)	(122	)	881	1,374
Net income (loss) before noncontrolling interests	2,101		2,914	2,873		2,480		719		671		(366	)	(340	)	5,327	5,725	2,927		2,101	2,770	2,873		580	719		(310	)	(366	)	5,967	5,327
Less: Net income (loss) from noncontrolling interests	188		90	(2	)	(5	)	5		6		—		—		191	91	104		188	—	(2	)	3	5		—		—		107	191
Net income (loss) (3)	$	1,913	2,824	2,875		2,485		714		665		(366	)	(340	)	5,136	5,634	$	2,823	1,913	2,770	2,875		577	714		(310	)	(366	)	5,860	5,136
Average loans	$	470.5	480.7	465.1		468.3		73.9		70.7		(58.5	)	(56.1	)	951.0	963.6	$	458.2	470.5	476.4	465.1		74.4	73.9		(59.0	)	(58.5	)	950.0	951.0
Average assets	1,061.9		1,095.8	829.2		810.5		84.2		81.8		(59.4	)	(57.1	)	1,915.9	1,931.0	1,015.4		1,061.9	844.5	829.2		83.2	84.2		(60.0	)	(59.4	)	1,883.1	1,915.9
Average deposits	747.5		717.8	446.0		465.3		177.9		197.5		(74.2	)	(81.4	)	1,297.2	1,299.2	765.6		747.5	409.8	446.0		153.2	177.9		(66.5	)	(74.2	)	1,262.1	1,297.2


(1)	Includes the elimination of certain items that are included in more than one business segment, ~~most~~substantially all of which represents products and services for Wealth and Investment Management customers served through Community Banking distribution channels.

(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)	Represents segment net income (loss) for Community Banking; Wholesale Banking; and Wealth and Investment Management segments and Wells Fargo net income for the consolidated company.

Note ~~22:~~23: Regulatory and Agency Capital Requirements

The Company and each of its subsidiary banks are subject to regulatory capital adequacy requirements promulgated by federal bank regulatory agencies. The Federal Reserve establishes capital requirements for the consolidated financial holding company, and the OCC has similar requirements for the Company’s national banks, including Wells Fargo Bank, N.A. (the Bank).

Table ~~22.1~~23.1 presents regulatory capital information for Wells Fargo & Company and the Bank using Basel III, which increased minimum required capital ratios, and introduced a minimum Common Equity Tier 1 (CET1) ratio. We must report the lower of our CET1, tier 1 and total capital ratios calculated under the Standardized Approach and under the Advanced Approach in the assessment of our capital adequacy. The Standardized Approach applies assigned risk weights to broad risk categories, while the calculation of risk-weighted assets (RWAs) under the Advanced Approach differs by requiring applicable banks to utilize a risk-sensitive methodology, which relies upon the use of internal credit models, and includes an operational risk component. The

Basel III capital rules are being phased-in effective January 1, 2014, through the end of 2021. Beginning January 1, 2018, the requirements for calculating CET1 and tier 1 capital, along with RWAs, ~~were~~became fully phased-in. Accordingly, the information presented reflects fully phased-in CET1 capital, tier 1 capital, and RWAs, but reflects total capital still in accordance with Transition Requirements.

The Bank is an approved seller/servicer of mortgage loans and is required to maintain minimum levels of shareholders’ equity, as specified by various agencies, including the United States Department of Housing and Urban Development, GNMA, FHLMC and FNMA. At March 31, ~~2018,~~2019, the Bank met these requirements. Other subsidiaries, including the Company’s insurance and broker-dealer subsidiaries, are also subject to various minimum capital levels, as defined by applicable industry regulations. The minimum capital levels for these subsidiaries, and related restrictions, are not significant to our consolidated operations.

Table ~~22.1:~~23.1: Regulatory Capital Information


	Wells Fargo & Company								Wells Fargo Bank, N.A.						Wells Fargo & Company									Wells Fargo Bank, N.A.
	March 31, 2018					December 31, 2017			March 31, 2018			December 31, 2017			March 31, 2019						December 31, 2018			March 31, 2019			December 31, 2018
(in millions, except ratios)	Advanced Approach			Standardized Approach		Advanced Approach	Standardized Approach		Advanced Approach	Standardized Approach		Advanced Approach	Standardized Approach		Advanced Approach			Standardized Approach			Advanced Approach	Standardized Approach		Advanced Approach	Standardized Approach		Advanced Approach	Standardized Approach
Regulatory capital:	Regulatory capital:														Regulatory capital:
Common equity tier 1	$	152,304		152,304		154,765	154,765		141,049	141,049		143,292	143,292		$	148,124		148,124			146,363	146,363		145,091	145,091		142,685	142,685
Tier 1	175,810			175,810		178,209	178,209		141,049	141,049		143,292	143,292		169,611			169,611			167,866	167,866		145,091	145,091		142,685	142,685
Total	207,531			216,237		210,333	220,097		154,939	163,259		156,661	165,734		199,851			208,042			198,798	207,041		158,074	165,836		155,558	163,380
Assets:
Risk-weighted	$	1,203,464		1,278,113		1,199,545	1,260,663		1,094,474	1,185,860		1,090,360	1,169,863
Adjusted average (1)	1,886,209			1,886,209		1,905,568	1,905,568		1,689,250	1,689,250		1,708,828	1,708,828
Risk-weighted assets															$	1,176,360		1,243,125			1,177,350	1,247,210		1,056,290	1,143,763		1,058,653	1,154,182
Adjusted average assets (1)															1,854,367			1,854,367			1,850,299	1,850,299		1,647,785	1,647,785		1,652,009	1,652,009
Regulatory capital ratios:
Common equity tier 1 capital	12.66		%	11.92	*	12.90	12.28	*	12.89	11.89	*	13.14	12.25	*	12.59		%	11.92		*	12.43	11.74	*	13.74	12.69	*	13.48	12.36	*
Tier 1 capital	14.61			13.76	*	14.86	14.14	*	12.89	11.89	*	13.14	12.25	*	14.42			13.64		*	14.26	13.46	*	13.74	12.69	*	13.48	12.36	*
Total capital	17.24			16.92	*	17.53	17.46	*	14.16	13.77	*	14.37	14.17	*	16.99			16.74		*	16.89	16.60	*	14.97	14.50	*	14.69	14.16	*
Tier 1 leverage (1)	9.32			9.32		9.35	9.35		8.35	8.35		8.39	8.39		9.15			9.15			9.07	9.07		8.81	8.81		8.64	8.64
															Wells Fargo & Company									Wells Fargo Bank, N.A.
															March 31, 2019						December 31, 2018			March 31, 2019			December 31, 2018
Supplementary leverage: (2)
Total leverage exposure															$	2,180,614					2,174,564			1,951,217			1,957,276
Supplementary leverage ratio															7.78				%		7.72			7.44			7.29

*Denotes the lowest capital ratio as determined under the Advanced and Standardized Approaches.


(1)	The leverage ratio consists of Tier 1 capital divided by quarterly average total assets, excluding goodwill and certain other items.


(2)	The supplementary leverage ratio consists of Tier 1 capital divided by total leverage exposure. Total leverage exposure consists of the total average on-balance sheet assets, plus off-balance sheet exposures, such as undrawn commitments and derivative exposures, less amounts permitted to be deducted from Tier 1 capital.

Table ~~22.2~~23.2 presents the minimum required regulatory capital ratios under Transition Requirements to which the Company and the Bank were subject as of March 31, ~~2018~~2019, and December 31, ~~2017.~~2018.

Table ~~22.2:~~23.2: Minimum Required Regulatory Capital Ratios – Transition Requirements (1)


	Wells Fargo & Company			Wells Fargo Bank, N.A.		Wells Fargo & Company			Wells Fargo Bank, N.A.
	March 31, 2018		December 31, 2017	March 31, 2018	December 31, 2017	March 31, 2019		December 31, 2018	March 31, 2019	December 31, 2018
Regulatory capital ratios:
Common equity tier 1 capital	7.875	%	6.750	6.375	5.750	9.000	%	7.875	7.000	6.375
Tier 1 capital	9.375		8.250	7.875	7.250	10.500		9.375	8.500	7.875
Total capital	11.375		10.250	9.875	9.250	12.500		11.375	10.500	9.875
Tier 1 leverage	4.000		4.000	4.000	4.000	4.000		4.000	4.000	4.000
Supplementary leverage						5.000		5.000	6.000	6.000


(1)	At March 31, ~~2018~~,2019, under transition requirements, the CET1, tier 1 and total capital minimum ratio requirements for Wells Fargo & Company include a capital conservation buffer of ~~1.875%~~2.500% and a global systemically important bank (G-SIB) surcharge of ~~1.500%~~2.000%. Only the ~~1.875%~~2.500% capital conservation buffer applies to the Bank at March 31, ~~2018~~. 2019.



Glossary of Acronyms

~~ABS~~	~~Asset-backed security~~	~~G-SIB~~	~~Globally systemic important bank~~
ACL	Allowance for credit losses	~~HAMP~~HQLA	~~Home Affordability Modification Program~~High-quality liquid assets
ALCO	Asset/Liability Management Committee	~~HUD~~HTM	~~U.S. Department of Housing and Urban Development~~Held to maturity
ARM	Adjustable-rate mortgage	LCR	Liquidity coverage ratio
ASC	Accounting Standards Codification	LHFS	Loans held for sale
ASU	Accounting Standards Update	LIBOR	London Interbank Offered Rate
AUA	Assets under administration	LIHTC	Low income housing tax credit
AUM	Assets under management	LOCOM	Lower of cost or ~~market~~fair value
AVM	Automated valuation model	LTV	Loan-to-value
BCBS	Basel Committee on Bank Supervision	MBS	Mortgage-backed security
BHC	Bank holding company	~~MHA~~MLHFS	~~Making Home Affordable programs~~Mortgage loans held for sale
CCAR	Comprehensive Capital Analysis and Review	~~MHFS~~MSR	~~Mortgages held for sale~~Mortgage servicing right
CD	Certificate of deposit	~~MSR~~NAV	~~Mortgage servicing right~~Net asset value
CDO	Collateralized debt obligation	~~MTN~~NPA	~~Medium-term note~~Nonperforming asset
CDS	Credit default swaps	~~NAV~~	~~Net asset value~~
~~CECL~~	~~Current expected credit loss~~	~~NPA~~	~~Nonperforming asset~~
~~CET1~~	~~Common Equity Tier 1~~	OCC	Office of the Comptroller of the Currency
~~CFPB~~CECL	~~Consumer Financial Protection Bureau~~Current expected credit loss	OCI	Other comprehensive income
~~CLO~~CET1	~~Collateralized loan obligation~~Common Equity Tier 1	OTC	Over-the-counter
~~CLTV~~CFPB	~~Combined loan-to-value~~Consumer Financial Protection Bureau	OTTI	Other-than-temporary impairment
~~CMBS~~CLO	~~Commercial mortgage-backed securities~~Collateralized loan obligation	PCI Loans	Purchased credit-impaired loans
~~CPI~~CLTV	~~Collateral protection insurance~~Combined loan-to-value	PTPP	Pre-tax pre-provision profit
~~CPP~~CPI	~~Capital Purchase Program~~Collateral protection insurance	RBC	Risk-based capital
~~CRE~~CPP	~~Commercial real estate~~Capital Purchase Program	RMBS	Residential mortgage-backed securities
~~DPD~~CRE	~~Days past due~~Commercial real estate	ROA	Wells Fargo net income to average total assets
~~ESOP~~DPD	~~Employee Stock Ownership Plan~~Days past due	ROE	Wells Fargo net income applicable to common stock
~~FAS~~ESOP	~~Statement of Financial Accounting Standards~~Employee Stock Ownership Plan		to average Wells Fargo common ~~stockholders'~~stockholders’ equity
~~FASB~~FAS	Statement of Financial Accounting Standards ~~Board~~	ROTCE	Return on average tangible common equity
~~FDIC~~FASB	~~Federal Deposit Insurance Corporation~~Financial Accounting Standards Board	RWAs	Risk-weighted assets
~~FFELP~~FDIC	Federal ~~Family Education Loan Program~~Deposit Insurance Corporation	SEC	Securities and Exchange Commission
FHA	Federal Housing Administration	S&P	Standard & Poor’s Global Ratings ~~Services~~
FHLB	Federal Home Loan Bank	SLR	Supplementary leverage ratio
FHLMC	Federal Home Loan Mortgage Corporation	~~SPE~~SOFR	~~Special purpose entity~~Secured Overnight Financing Rate
FICO	Fair Isaac Corporation (credit rating)	~~TARP~~SPE	~~Troubled Asset Relief Program~~Special purpose entity
FNMA	Federal National Mortgage Association	TDR	Troubled debt restructuring
FRB	Board of Governors of the Federal Reserve System	TLAC	Total Loss Absorbing Capacity
GAAP	Generally accepted accounting principles	VA	Department of Veterans Affairs
GNMA	Government National Mortgage Association	VaR	Value-at-Risk
GSE	Government-sponsored entity	VIE	Variable interest entity
G-SIB	Globally systemic important bank	WIM	Wealth and Investment Management

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Information in response to this item can be found in Note 1314 (Legal Actions) to Financial Statements in this Report which information is incorporated by reference into this item.

Item 1A. Risk Factors

Information in response to this item can be found under the “Financial Review – Risk Factors” section in this Report which information is incorporated by reference into this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows Company repurchases of its common stock for each calendar month in the quarter ended March 31, ~~2018.~~2019.


Calendar month	Total number of shares repurchased (1)	Weighted-average price paid per share		Maximum number of shares that may yet be repurchased under the authorization	Total number of shares repurchased (1)	Weighted-average price paid per share		Maximum number of shares that may yet be repurchased under the authorizations
January	3,993,930	$	63.70	416,818,483	21,996,861	$	48.68	373,337,554
February ~~(2)~~	26,586,669	61.43		390,231,814	29,472,213	49.15		343,865,341
March ~~(2)~~	19,986,858	57.13		370,244,956	45,894,636	50.12		297,970,705
Total	50,567,457				97,363,710

(1)

All shares were repurchased under an authorization covering up to 350 million shares of common stock approved by the Board of Directors and publicly announced by the Company on January ~~26, 2016. In addition, the Company publicly announced on January~~ 23, 2018, ~~that~~or an authorization covering up to an additional 350 million shares of common stock approved by the Board of Directors ~~authorized~~and publicly announced by the ~~repurchase of an additional 350 million shares of common stock.~~Company on October 23, 2018. Unless modified or revoked by the Board, these authorizations do not expire.


~~(2)~~	~~February includes a private repurchase transaction of~~ ~~15,682,507~~ ~~shares at a weighted-average price paid per share of~~ ~~$63.77. March includes a private repurchase transaction of~~ ~~10,452,725~~ ~~shares at a weighted-average price paid per share of~~ ~~$57.40~~.

~~The following table shows Company repurchases of the warrants for each calendar month in the quarter ended March 31, 2018.~~



~~Calendar month~~	~~Total number~~ ~~of warrants~~ ~~repurchased (1)~~	~~Average price~~ ~~paid per warrant~~		~~Maximum dollar value~~ ~~of warrants that~~ ~~may yet be repurchased~~
~~January~~	—	$	—	~~451,944,402~~
~~February~~	—	—		~~451,944,402~~
~~March~~	—	—		~~451,944,402~~
~~Total~~	—


~~(1)~~	~~Warrants are repurchased under the authorization covering up to~~ ~~$1 billion~~ ~~in warrants approved by the Board of Directors (ratified and approved on June 22, 2010). Unless modified or revoked by the Board, this authorization does not expire.~~


Item 6.	Exhibits

A list of exhibits to this Form 10-Q is set forth below.

The Company’s SEC file number is 001-2979. On and before November 2, 1998, the Company filed documents with the SEC under the name Norwest Corporation. The former Wells Fargo & Company filed documents under SEC file number 001-6214.

Exhibit
Number
Description Location
3(a)

Restated Certificate of Incorporation, as amended and in effect on the date hereof.
Incorporated by reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 2017.
3(b)

By-Laws.
Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 1, 2018.
4(a) See Exhibits 3(a) and 3(b).
4(b) The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.
12(a)

Computation of Ratios of Earnings to Fixed Charges: (1)
Filed herewith.
      Quarter ended March 31,
      2018
2017

   Including interest on deposits (1) 3.03
4.90

   Excluding interest on deposits 4.07
6.33


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

12(b)

Computation of Ratios of Earnings to Fixed Charges and Preferred Dividends: (1)
Filed herewith.
      Quarter ended March 31,
      2018
2017

   Including interest on deposits 2.61
3.83

   Excluding interest on deposits 3.27
4.59


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

31(a)

Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
31(b)

Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
32(a)

Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.
Furnished herewith.
32(b)

Certification of Periodic Financial Report by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.
Furnished herewith.
101.INS XBRL Instance Document Filed herewith.
101.SCH XBRL Taxonomy Extension Schema Document Filed herewith.
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith.
101.DEF XBRL Taxonomy Extension Definitions Linkbase Document Filed herewith.
101.LAB XBRL Taxonomy Extension Label Linkbase Document Filed herewith.
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith.

Exhibit

Number

Description

Location

3(a)

Restated Certificate of Incorporation, as amended and in effect on the date hereof.

Filed herewith.

3(b)

By-Laws.

Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 1, 2018.

4(a)

See Exhibits 3(a) and 3(b).

4(b)

The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.

10(a)

Long-Term Incentive Compensation Plan (as amended and restated on April 23, 2019)

Incorporated by reference to Exhibit 10(b) to the Company’s Current Report on Form 8-K filed April 26, 2019.

Form of Cash Award Agreement:

For grants on or after February 26, 2019.

Filed herewith.

Form of Restricted Share Rights Award Agreement:

For grants on or after April 7, 2019.

Filed herewith.

10(b)

Wells Fargo Bonus Plan, as amended effective January 1, 2019.

Filed herewith.

31(a)

Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

31(b)

Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

32(a)

Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.

Furnished herewith.

32(b)

Certification of Periodic Financial Report by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.

Furnished herewith.

101.INS

XBRL Instance Document

Filed herewith.

101.SCH

XBRL Taxonomy Extension Schema Document

Filed herewith.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith.

101.DEF

XBRL Taxonomy Extension Definitions Linkbase Document

Filed herewith.

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

Filed herewith.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May ~~4, 2018~~3, 2019 WELLS FARGO & COMPANY

By: ~~/s/~~ /s/ RICHARD D. LEVY

Richard D. Levy

Executive Vice President and Controller

(Principal Accounting Officer)

~~163~~155



(in millions)	Quarter ended March 31, 2018			2009-2017
Balance, beginning of period	$	8,887		10,447
Change in accretable yield due to acquisitions	—			161
Accretion into interest income (1)	(314		)	(16,983	)
Accretion into noninterest income due to sales (2)	(643		)	(801	)
Reclassification from nonaccretable difference for loans with improving credit-related cash flows	340			11,597
Changes in expected cash flows that do not affect nonaccretable difference (3)	(1,406		)	4,466
Balance, end of period	$	6,864		8,887



	Transfers Between Fair Value Levels
	Level 1				Level 2				Level 3 (1)
(in millions)	In		Out		In		Out		In		Out		Total
Quarter ended March 31, 2018
Trading debt securities	$	—	—		—		—		—		—		—
Available-for-sale debt securities	—		—		269		—		—		(269	)	—
Mortgages held for sale	—		—		3		(15	)	15		(3	)	—
Loans held for sale	—		—		—		—		—		—		—
Equity securities	—		(11	)	11		(4	)	4		—		—
Net derivative assets and liabilities (2)	—		—		(49	)	—		—		49		—
Short sale liabilities	—		—		—		—		—		—		—
Total transfers	$	—	(11	)	234		(19	)	19		(223	)	—
Quarter ended March 31, 2017
Trading debt securities	$	—	—		1		(3	)	3		(1	)	—
Available-for-sale debt securities	—		—		72		(5	)	5		(72	)	—
Mortgages held for sale	—		—		1		(42	)	42		(1	)	—
Loans held for sale	—		—		—		—		—		—		—
Equity securities	—		—		—		—		—		—		—
Net derivative assets and liabilities (2)	—		—		3		22		(22	)	(3	)	—
Short sale liabilities	—		—		—		—		—		—		—
Total transfers	$	—	—		77		(28	)	28		(77	)	—



Exhibit Number	Description			Location
3(a)	Restated Certificate of Incorporation, as amended and in effect on the date hereof.			Incorporated by reference to Exhibit 3(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 2017.
3(b)	By-Laws.			Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 1, 2018.
4(a)	See Exhibits 3(a) and 3(b).
4(b)	The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.
12(a)	Computation of Ratios of Earnings to Fixed Charges: (1)			Filed herewith.
		Quarter ended March 31,
		2018	2017
	Including interest on deposits (1)	3.03	4.90
	Excluding interest on deposits	4.07	6.33
	(1) Financial information for the prior period has been revised to reflect the impact of the adoption of ASU 2017-12 – Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.

12(b)	Computation of Ratios of Earnings to Fixed Charges and Preferred Dividends: (1)			Filed herewith.
		Quarter ended March 31,
		2018	2017
	Including interest on deposits	2.61	3.83
	Excluding interest on deposits	3.27	4.59
	(1) Financial information for the prior period has been revised to reflect the impact of the adoption of ASU 2017-12 – Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.

31(a)	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.			Filed herewith.
31(b)	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.			Filed herewith.
32(a)	Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.			Furnished herewith.
32(b)	Certification of Periodic Financial Report by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.			Furnished herewith.
101.INS	XBRL Instance Document			Filed herewith.
101.SCH	XBRL Taxonomy Extension Schema Document			Filed herewith.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document			Filed herewith.
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document			Filed herewith.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document			Filed herewith.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document			Filed herewith.