WELLS FARGO & COMPANY/MN0000072971false2020Q312/31DECACommon Stock, par value $1-2/37.5% Non-Cumulative Perpetual Convertible Class A Preferred Stock, Series LDep Shares, 1/1000th int. per share of Non-Cumulative Perpetual Class A Preferred Stock, Series NDep Shares, 1/1000th int. per share of Non-Cumulative Perpetual Class A Preferred Stock, Series ODep Shares, 1/1000th int. per share of Non-Cumulative Perpetual Class A Preferred Stock, Series PDep Shr, 1/1000th int. per shr of 5.85% Fix-to-Float Non-Cum. Perpetual Class A Pref. Stock, Ser. QDep Shr, 1/1000th int. per shr of 6.625% Fix-to-Float Non-Cum. Perpetual Class A Pref. Stock, Ser. RDep Shares, 1/1000th int. per share of Non-Cumulative Perpetual Class A Preferred Stock, Series TDep Shares, 1/1000th int. per share of Non-Cumulative Perpetual Class A Preferred Stock, Series VDep Shares, 1/1000th int. per share of Non-Cumulative Perpetual Class A Preferred Stock, Series WDep Shares, 1/1000th int. per share of Non-Cumulative Perpetual Class A Preferred Stock, Series XDep Shares, 1/1000th int. per share of Non-Cumulative Perpetual Class A Preferred Stock, Series YDep Shares, 1/1000th int. per share of Non-Cumulative Perpetual Class A Preferred Stock, Series ZDep Shares, 1/1000th int. per share of Non-Cumulative Perpetual Class A Preferred Stock, Series AAGuarantee 5.80% Fix-to-Float Normal Wachovia Income Trust Securities of Wachovia Capital Trust IIIGuarantee of Medium-Term Notes, Series A, due October 30, 2028 of Wells Fargo Finance LLC0790260189,434156,86019,88416,6061,68897214817125,05341,93601.66661.66665,481,811,4745,481,811,4749,000,000,0009,000,000,0001,349,294,5921,347,385,5375.65.8010101000000000111.471556The Parent fully and unconditionally 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.180.1082020-01-012029-12-312020-01-012029-12-312034-01-012047-12-312022-01-012047-12-312020-01-012029-12-312020-01-012029-12-312047-01-012072-12-312047-01-012058-12-312045-01-012046-12-312045-01-012046-12-312020-01-012040-12-312020-01-012049-12-310.5281.560.5850.3221.490.3640.110.94.9the greater of three-month LIBOR plus 0.93% and 5.56975the greater of three-month LIBOR plus 0.93% and 5.56975three-month LIBOR plus 3.77three-month LIBOR plus 3.777.507.505.205.205.1255.1255.255.255.855.856.6256.6255.905.906.006.005.8755.8756.006.005.705.705.505.505.6255.6254.75000If issued, preference shares would be limited to one vote per shareNaNNaN7.008.007.008.009.3010.308.909.908.709.708.509.5010.0011.009.0010.002201.31.50000072971us-gaap:LoansReceivableMember2019-01-012019-09-300000072971wfc:WealthAndInvestmentManagementMemberus-gaap:AssetManagement1Member2019-01-012019-09-300000072971us-gaap:StandbyLettersOfCreditMember2020-12-310000072971us-gaap:FairValueInputsLevel3Memberus-gaap:ValuationTechniqueDiscountedCashFlowMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:MeasurementInputLossSeverityMembersrt:MaximumMember2020-12-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2020~~March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

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 94104

(Address of principal executive offices) (Zip ~~Code)~~ code)

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

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


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $1-2/3	WFC	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
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series Z	WFC.PRZ	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series AA	WFC.PRA	NYSE
~~Guarantee~~Depositary Shares, each representing a 1/1000th interest in a share of ~~5.80% Fixed-to-Floating Rate Normal Wachovia Income Trust Securities of Wachovia Capital Trust III~~Non-Cumulative Perpetual Class A Preferred Stock, Series CC	~~WFC/TP~~WFC.PRC	NYSE
Guarantee of Medium-Term Notes, Series A, due October 30, 2028 of Wells Fargo Finance LLC	WFC/28A	NYSE

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 ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes þ No ¨

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 ¨

Non-accelerated filer ¨ Smaller reporting company ☐

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. ¨

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

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


						Shares Outstanding
						~~October 23, 2020~~April 22, 2021
Common stock, $1-2/3 par value						~~4,134,489,571~~4,133,571,501

FORM 10-Q
CROSS-REFERENCE INDEX
PART I Financial Information
Item 1. Financial Statements Page
Consolidated Statement of Income
65
Consolidated Statement of Comprehensive Income
66
Consolidated Balance Sheet
67
Consolidated Statement of Changes in Equity
68
Consolidated Statement of Cash Flows
72
Notes to Financial Statements
1 — Summary of Significant Accounting Policies
73
2 — Restructuring Charges
78
3 — Cash, Loan and Dividend Restrictions
79
4 — Trading Activities
80
5 — Available-for-Sale and Held-to-Maturity Debt Securities
81
6 — Loans and Related Allowance for Credit Losses
88
7 — Leasing Activity
106
8 — Equity Securities
107
9 — Other Assets
109
10 — Securitizations and Variable Interest Entities
110
11 — Mortgage Banking Activities
117
12 — Intangible Assets
119
13 — Guarantees, Pledged Assets and Collateral, and Other Commitments
120
14 — Legal Actions
124
15 — Derivatives
129
16 — Fair Values of Assets and Liabilities
140
17 — Preferred Stock
157
18 — Revenue from Contracts with Customers
160
19 — Employee Benefits and Other Expenses
163
20 — Earnings and Dividends Per Common Share
164
21 — Other Comprehensive Income
165
22 — Operating Segments
167
23 — Regulatory and Agency Capital Requirements
168
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)
Summary Financial Data
2
Overview
3
Earnings Performance
7
Balance Sheet Analysis
22
Off-Balance Sheet Arrangements
24
Risk Management
25
Capital Management
50
Regulatory Matters
57
Critical Accounting Policies
58
Current Accounting Developments
60
Forward-Looking Statements
61
Risk Factors
63
Glossary of Acronyms
170
Item 3. Quantitative and Qualitative Disclosures About Market Risk
43
Item 4. Controls and Procedures
64
PART II Other Information
Item 1. Legal Proceedings
171
Item 1A. Risk Factors
171
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
171
Item 6. Exhibits
172
Signature
173


FORM 10-Q
CROSS-REFERENCE INDEX
PART I	Financial Information
Item 1.	Financial Statements			Page
	Consolidated Statement of Income			59
	Consolidated Statement of Comprehensive Income			60
	Consolidated Balance Sheet			61
	Consolidated Statement of Changes in Equity			62
	Consolidated Statement of Cash Flows			63
	Notes to Financial Statements
	1	—	Summary of Significant Accounting Policies	64
	2	—	Trading Activities	66
	3	—	Available-for-Sale and Held-to-Maturity Debt Securities	67
	4	—	Loans and Related Allowance for Credit Losses	73
	5	—	Leasing Activity	88
	6	—	Equity Securities	89
	7	—	Other Assets	91
	8	—	Securitizations and Variable Interest Entities	92
	9	—	Mortgage Banking Activities	97
	10	—	Intangible Assets	99
	11	—	Guarantees and Other Commitments	100
	12	—	Pledged Assets and Collateral	102
	13	—	Legal Actions	105
	14	—	Derivatives	109
	15	—	Fair Values of Assets and Liabilities	115
	16	—	Preferred Stock	122
	17	—	Revenue from Contracts with Customers	125
	18	—	Employee Benefits and Other Expenses	126
	19	—	Restructuring Charges	127
	20	—	Earnings and Dividends Per Common Share	128
	21	—	Other Comprehensive Income	129
	22	—	Operating Segments	131
	23	—	Regulatory Capital Requirements and Other Restrictions	133
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)
	Summary Financial Data			2
	Overview			3
	Earnings Performance			6
	Balance Sheet Analysis			23
	Off-Balance Sheet Arrangements			25
	Risk Management			26
	Capital Management			47
	Regulatory Matters			53
	Critical Accounting Policies			54
	Current Accounting Developments			54
	Forward-Looking Statements			55
	Risk Factors			57
	Glossary of Acronyms			135
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			41
Item 4.	Controls and Procedures			58

PART II	Other Information
Item 1.	Legal Proceedings			136
Item 1A.	Risk Factors			136
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			136
Item 6.	Exhibits			137

Signature				138


			Wells Fargo & Company			1

~~PART I – FINANCIAL INFORMATION~~

FINANCIAL REVIEW

Summary Financial Data
% Change
Quarter ended Sep 30, 2020 from Nine months ended
($ in millions, except per share amounts) Sep 30,
2020 June 30, 2020 Sep 30,
2019 Jun 30,
2020 Sep 30,
2019 Sep 30,
2020 Sep 30,
2019 %
Change
For the Period
Wells Fargo net income (loss) $ 2,035 (2,379) 4,610 NM (56) $ 309 16,676 (98) %
Wells Fargo net income (loss) applicable to common stock 1,720 (2,694) 4,037 NM (57) (932) 15,392 NM
Diluted earnings (loss) per common share 0.42 (0.66) 0.92 NM (54) (0.23) 3.43 NM
Profitability ratios (annualized):
Wells Fargo net income (loss) to average assets (ROA) 0.42 % (0.49) 0.95 NM (56) 0.02 % 1.17 (98)
Wells Fargo net income (loss) applicable to common stock to average Wells Fargo common stockholders’ equity (ROE) 4.22 (6.63) 9.00 NM (53) (0.76) 11.64 NM
Return on average tangible common equity (ROTCE) (1) 5.10 (8.00) 10.70 NM (52) (0.91) 13.85 NM
Efficiency ratio (2) 80.7 81.6 69.1 (1) 17 78.7 65.3 21
Total revenue $ 18,862 17,836 22,010 6 (14) $ 54,415 65,203 (17)
Pre-tax pre-provision profit (PTPP) (3) 3,633 3,285 6,811 11 (47) 11,587 22,639 (49)
Dividends declared per common share 0.10 0.51 0.51 (80) (80) 1.12 1.41 (21)
Average common shares outstanding 4,123.8 4,105.5 4,358.5 — (5) 4,111.4 4,459.1 (8)
Diluted average common shares outstanding (4) 4,132.2 4,105.5 4,389.6 1 (6) 4,111.4 4,489.5 (8)
Average loans $ 931,708 971,266 949,760 (4) (2) $ 955,918 949,076 1
Average assets 1,947,672 1,948,939 1,927,415 — 1 1,949,085 1,903,873 2
Average total deposits 1,399,028 1,386,656 1,291,375 1 8 1,374,638 1,274,246 8
Average consumer and small business banking deposits (5) 897,779 857,943 749,529 5 20 845,977 745,370 13
Net interest margin 2.13 % 2.25 2.66 (5) (20) 2.32 % 2.79 (17)
At Period End
Debt securities $ 476,421 472,580 503,528 1 (5) $ 476,421 503,528 (5)
Loans 920,082 935,155 954,915 (2) (4) 920,082 954,915 (4)
Allowance for loan losses 19,463 18,926 9,715 3 100 19,463 9,715 100
Goodwill 26,387 26,385 26,388 — — 26,387 26,388 —
Equity securities 51,169 52,494 63,884 (3) (20) 51,169 63,884 (20)
Assets 1,922,220 1,968,766 1,943,950 (2) (1) 1,922,220 1,943,950 (1)
Deposits 1,383,215 1,410,711 1,308,495 (2) 6 1,383,215 1,308,495 6
Common stockholders’ equity 161,109 159,322 172,827 1 (7) 161,109 172,827 (7)
Wells Fargo stockholders’ equity 181,173 179,386 193,304 1 (6) 181,173 193,304 (6)
Total equity 182,032 180,122 194,416 1 (6) 182,032 194,416 (6)
Tangible common equity (1) 133,179 131,329 144,481 1 (8) 133,179 144,481 (8)
Capital ratios (6):
Total equity to assets 9.47 % 9.15 10.00 3 (5) 9.47 % 10.00 (5)
Risk-based capital:
Common Equity Tier 1 11.38 10.97 11.61 4 (2) 11.38 11.61 (2)
Tier 1 capital 13.05 12.60 13.23 4 (1) 13.05 13.23 (1)
Total capital 15.71 15.29 15.96 3 (2) 15.71 15.96 (2)
Tier 1 leverage 8.05 7.95 8.68 1 (7) 8.05 8.68 (7)
Common shares outstanding 4,132.5 4,119.6 4,269.1 — (3) 4,132.5 4,269.1 (3)
Book value per common share (7) $ 38.99 38.67 40.48 1 (4) $ 38.99 40.48 (4)
Tangible book value per common share (1)(7) 32.23 31.88 33.84 1 (5) 32.23 33.84 (5)
Headcount (8) 274,900 276,000 272,700 — 1 274,900 272,700 1


Summary Financial Data
	Quarter ended					Mar 31, 2021 % Change from
($ in millions, except per share amounts)	Mar 31, 2021			Dec 31, 2020	Mar 31, 2020	Dec 31, 2020		Mar 31, 2020
Selected Income Statement Data
Total revenue	$	18,063		17,925	17,717	1	%	2
Noninterest expense	13,989			14,802	13,048	(5)		7
Pre-tax pre-provision profit (PTPP) (1)	4,074			3,123	4,669	30		(13)
Provision for credit losses	(1,048)			(179)	4,005	NM		NM
Wells Fargo net income (loss)	4,742			2,992	653	58		626
Wells Fargo net income (loss) applicable to common stock	4,363			2,642	42	65		NM
Common Share Data
Diluted earnings (loss) per common share	1.05			0.64	0.01	64		NM
Dividends declared per common share	0.10			0.10	0.51	—		(80)
Common shares outstanding	4,141.1			4,144.0	4,096.4	—		1
Average common shares outstanding	4,141.3			4,137.6	4,104.8	—		1
Diluted average common shares outstanding	4,171.0			4,151.3	4,135.3	—		1
Book value per common share (2)	$	40.34		39.76	39.71	1		2
Tangible book value per common share (2)(3)	33.57			33.04	32.90	2		2
Selected Equity Data (period-end)
Total equity	188,348			185,920	183,330	1		3
Common stockholders' equity	167,062			164,778	162,654	1		3
Tangible common equity (3)	139,016			136,935	134,787	2		3
Performance Ratios
Return on average assets (ROA)(4)	0.99		%	0.62	0.13
Return on average equity (ROE)(5)	10.6			6.4	0.1
Return on average tangible common equity (ROTCE)(3)	12.7			7.7	0.1
Efficiency ratio (6)	77			83	74
Net interest margin on a taxable-equivalent basis	2.05			2.13	2.58
Selected Balance Sheet Data (average)
Loans	$	873,439		899,704	965,046	(3)		(9)
Assets	1,936,710			1,926,872	1,950,659	1		(1)
Deposits	1,393,472			1,380,100	1,337,963	1		4
Selected Balance Sheet Data (period-end)
Debt securities	505,826			501,207	501,563	1		1
Loans	861,572			887,637	1,009,843	(3)		(15)
Allowance for credit losses for loans	18,043			19,713	12,022	(8)		50
Equity securities	59,981			62,260	54,047	(4)		11
Assets	1,959,543			1,955,163	1,981,349	—		(1)
Deposits	1,437,119			1,404,381	1,376,532	2		4

Headcount (#) (period-end)	264,513			268,531	272,267	(1)		(3)
Capital and other metrics
Risk-based capital ratios and components (7):
Standardized Approach:
Common equity tier 1 (CET1)	11.85		%	11.59	10.67
Tier 1 capital	13.54			13.25	12.22
Total capital	16.75			16.47	15.21
Risk-weighted assets (RWAs) (in billions)	1,179.0			1,193.7	1,262.8	(1)		(7)
Advanced Approach:
Common equity tier 1 (CET1)	12.60		%	11.94	11.41
Tier 1 capital	14.39			13.66	13.06
Total capital	16.92			16.14	15.58
Risk-weighted assets (RWAs) (in billions)	$	1,109.4		1,158.4	1,181.3	(4)		(6)
Tier 1 leverage ratio	8.36		%	8.32	8.03
Liquidity Coverage Ratio (LCR)	127			133	121
Supplementary Leverage Ratio (SLR)	7.91			8.05	6.84
Total Loss Absorbing Capacity (TLAC)	25.18			25.74	23.27

NM – Not meaningful

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

(2)Book value per common share is common stockholders' equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares outstanding.

(3)Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, goodwill, certain identifiable intangible assets (other than mortgage servicing rights) and goodwill and other intangibles on nonmarketable equity securities, 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 management, investors, and others to assess the Company’s use of equity. For additional information, including a corresponding reconciliation to generally accepted accounting principles (GAAP) financial measures, see the “Capital Management – Tangible Common Equity” section in this Report.

~~(2)~~(4)Represents Wells Fargo net income (loss) divided by average assets.

(5)Represents Wells Fargo net income (loss) applicable to common stock divided by average common stockholders’ equity.

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

~~(3)~~(7)Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.

~~(4)~~For second quarter 2020 and the nine months ended September 30, 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.

~~(5)Consumer and small business banking deposits are total deposits excluding mortgage escrow and wholesale deposits.~~

~~(6)The risk-based capital ratios were calculated under the lower of the Standardized or Advanced Approach determined pursuant to Basel III.~~ Beginning January 1, 2018, the requirements for calculating common equity tier 1 (CET1) and tier 1 capital, along with risk-weighted assets (RWAs), became fully phased-in. Accordingly, the information presented reflects fully phased-in ~~common equity tier 1 capital,~~CET1, tier 1 capital, and ~~risk-weighted assets,~~RWAs, but reflects total capital still in accordance with ~~Transition Requirements.~~transition requirements. See the “Capital Management” section and Note 23 (Regulatory Capital Requirements and ~~Agency Capital Requirements)~~Other Restrictions) to Financial Statements in this Report for additional information.

~~(7)Book value per common share is common stockholders’ equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares outstanding.~~

~~(8)In third quarter 2020, we began reporting headcount rather than active, full-time equivalent employees. Prior period balances have been revised to conform with the current period presentation.~~


2			Wells Fargo & Company

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, ~~2019 (2019~~2020 (2020 Form 10-K).

When we refer to “Wells Fargo,” “the Company,” “we,” “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 Review


Overview

Wells Fargo & Company is a ~~diversified, community-based~~leading financial services company ~~with $1.92~~that has approximately $1.9 trillion in ~~assets. Founded~~assets and proudly serves one in ~~1852~~three U.S. households and ~~headquartered~~more than 10% of all middle market companies and small businesses in ~~San Francisco, we~~the U.S. We provide a diversified set of banking, investment and mortgage products and services, as well as consumer and commercial finance, through ~~7,200 locations, more than 13,000 ATMs, digital (online, mobile~~our four reportable operating segments: Consumer Banking and ~~social),~~Lending, Commercial Banking, Corporate and ~~contact centers (phone, email~~Investment Banking, and ~~correspondence),~~Wealth and ~~we have offices in 31 countries and territories to support customers who conduct business in the global economy. We serve one in three households in the United States and~~Investment Management. Wells Fargo ranked No. 30 on Fortune’s 2020 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 ~~September 30, 2020.~~March 31, 2021.

Wells Fargo’s top priority remains meeting its regulatory requirements to build the right foundation for all that lies ahead. ToThe Company is subject to a number of consent orders and other regulatory actions, which may require the Company, among other things, to undertake certain changes to its business, operations, products and services, and risk management practices. Addressing these regulatory actions is expected to take multiple years, and we may experience issues or delays along the way in satisfying their requirements. Issues or delays with one regulatory action could affect our progress on others, and failure to satisfy the requirements of a regulatory action on a timely basis could result in additional penalties, enforcement actions, and other negative consequences. While we still have significant work to do, ~~that,~~ the Company is ~~committing~~committed to devoting the resources necessary to ~~ensure that we~~ operate with ~~the strongest~~strong business practices and controls, maintain the highest level of integrity, and have an appropriate culture in place.

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 Company’s Board of Directors (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. The Company continues to engage with the FRB as the Company works to address the consent order provisions. 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 an initial third-party review of the enhancements and improvements provided for in the plans. Until this third-party review is complete

and the plans are approved and implemented to the satisfaction of the FRB, the Company’s total consolidated assets as defined under the consent order will be limited to the level as of December 31, 2017. Compliance with this asset cap is measured on a two-quarter daily average basis to allow for management of temporary fluctuations. Due to the COVID-19 pandemic, on April 8, 2020, the FRB amended the consent order to allow the Company to exclude from the asset cap any on-balance sheet exposure resulting from loans made by the Company in connection with the Small Business Administration’s Paycheck Protection Program and the FRB’s Main Street Lending Program.

As required under the amendment to the consent order, to the extent the Company chooses to exclude these exposures from the asset cap, certain fees and other economic benefits received by the Company from loans made in connection with these programs shall be transferred to the U.S. Treasury or to non-profit organizations approved by the FRB that support small businesses. As of March 31, 2021, the Company had not excluded these exposures from the asset cap. 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 and Office of the Comptroller of the Currency Regarding Compliance Risk Management Program, Automobile Collateral Protection Insurance Policies, and Mortgage Interest Rate Lock Extensions

On April 20, 2018, the Company entered into consent orders with the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) to pay an aggregate of $1 billion in civil money penalties to resolve matters regarding the Company’s compliance risk management program and past practices involving certain automobile collateral protection insurance (CPI) policies and certain mortgage interest rate lock extensions. As required by the consent orders, the Company submitted to the CFPB and OCC an 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. In addition, as required by the consent orders, the Company submitted for non-objection plans to remediate customers affected by the automobile collateral protection insurance and mortgage interest rate lock matters, as well as a plan for the management of remediation activities conducted by the Company. The Company continues to work to address the provisions of the consent orders. The Company has not yet satisfied certain aspects of the consent orders, and as a result, we


			Wells Fargo & Company			3

Overview (continued)

believe regulators may impose additional penalties or take other enforcement actions.

Retail Sales Practices Matters

In September 2016, we announced settlements with the CFPB, the OCC, and the Office of the Los Angeles City Attorney, and entered into related 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 a top priority to rebuild trust through a comprehensive action plan that includes making things right for our customers, employees, 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 to customers resulting from these matters and providing remediation.

For additional information regarding retail sales practices matters, including related legal matters, see the “Risk Factors”

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

section in our ~~2019~~2020 Form 10-K and Note 1413 (Legal Actions) to Financial Statements in this Report.

Other Customer Remediation Activities

Our priority of rebuilding trust has also included an effort to identify other areas or instances where customers may have experienced financial harm, provide remediation as appropriate, and implement additional operational and control procedures. We are working with our regulatory agencies in this effort. We have previously disclosed key areas of focus as part of our rebuilding trust efforts and are in the process of providing remediation for those matters. We have accrued for the ~~reasonably~~probable and estimable remediation costs related to our rebuilding trust efforts, which amounts may change based on additional facts and information, as well as ongoing reviews and communications with our regulators.

As our ongoing reviews continue, it is possible that in the future we may identify additional items or areas of potential concern. To the extent issues are identified, we will continue to assess any customer harm and provide remediation as appropriate. For additional information, including related legal and regulatory risk, see the “Risk Factors” section in our ~~2019~~2020 Form 10-K and Note 1413 (Legal Actions) to Financial Statements in this Report.

Recent Developments

Efficiency Initiatives

We are pursuing various initiatives to reduce expenses and create a more efficient and streamlined organization. Actions from these initiatives may include (i) reorganizing and simplifying business processes and structures to improve internal operations and the customer experience, (ii) reducing headcount, (iii) optimizing third-party spending, including for our technology infrastructure, and (iv) rationalizing our branch and administrative locations, which may include consolidations and closures. We have established dedicated teams in each of our lines of businesses and functions to focus on an organized and structured approach for implementing these initiatives. The evaluation of potential actions will continue in future periods. In ~~third~~first quarter ~~2020,~~2021, we recognized ~~$718 million~~a limited amount of restructuring charges ~~predominantly severance costs,~~ within noninterest expense in our consolidated statement of income as a result of these initiatives. For additional information, see Note 219 (Restructuring Charges) to Financial Statements in this Report.

COVID-19 Pandemic

In response to the COVID-19 pandemic, we have been working diligently to protect employee safety while continuing to carry out Wells Fargo’s role as a provider of ~~critical and~~ essential services to the public. We have taken comprehensive steps to help customers, employees and communities.

We have strong levels of capital and liquidity, and we remain focused on delivering for our customers and communities to get through these unprecedented times.

PAYCHECK PROTECTION PROGRAM The Coronavirus Aid, Relief, and Economic Security Act (CARES Act)created funding for the Small Business Administration’s (SBA) loan program providing forgiveness of up to the full principal amount of qualifying loans guaranteed under a ~~new~~ program called the Paycheck Protection Program (PPP). ~~The intent of the PPP is to provide~~Since its inception, we have funded approximately 264,000 loans ~~to small businesses in order to keep their employees on the payroll and make certain other eligible payments. Loans granted~~ under the PPP ~~are guaranteed by the SBA~~totaling $13.2 billion, and ~~are fully forgivable if used for qualifying expenses such as payroll, mortgage interest, rent and utilities. If the loans are not forgiven, they must be repaid over a~~

~~term not to exceed five years. Under the PPP, through September 30, 2020, we funded $10.5 billion in loans to~~ more than ~~190,000 borrowers and~~$1.0 billion of principal forgiveness has been provided on qualifying PPP loans. We deferred ~~$417~~approximately $420 million of SBA processing fees in 2020 that will be recognized as interest income over the terms of the loans. We voluntarily committed to donate all of the gross processing fees received from PPP loans funded in 2020. Through March 31, 2021, we donated approximately $125 million of these processing fees to non-profit organizations that support small businesses. We funded $2.8 billion of PPP loans in first quarter 2021. For this latest round in first quarter 2021, we deferred approximately $200 million of SBA processing fees that will be recognized as interest income over the ~~term~~terms of the ~~loans. As of September 30, 2020, $10.2 billion of principal remained outstanding on these PPP~~ loans. We have committed to ~~donating the gross processing fees received from funding~~donate any net profits related to PPP loans ~~to non-profit organizations that support small businesses as the fees are recognized~~funded in ~~earnings. Through September 30, 2020, we donated $51 million of processing fees.~~

~~SBA SIX-MONTH PAYMENT ASSISTANCE~~ ~~Under~~2021. For additional information on the CARES Act and the ~~SBA will make principal and interest payments on behalf of certain borrowers for six months. During~~PPP, see the ~~first nine months of~~“Overview – Recent Developments – COVID-19 Pandemic” section in our 2020 ~~over 20,000 of our lending customers were eligible for SBA payment assistance, and we received $393 million in payments from the SBA.~~Form 10-K.

LIBOR Transition

~~Due to uncertainty surrounding the suitability and sustainability of the~~The London Interbank Offered Rate (LIBOR)~~, central banks and global regulators have called for financial market participants to prepare for the discontinuation of LIBOR by the end of 2021. LIBOR~~ is a widely-referenced benchmark rate, which is published in five currencies and a range of tenors, and seeks to estimate the cost at which banks can borrow on an unsecured basis from other banks. WeOn March 5, 2021, the Financial Conduct Authority and the administrator of LIBOR announced that LIBOR will no longer be published on a representative basis after December 31, 2021, with the exception of the most commonly used tenors of U.S. dollar (USD) LIBOR which will no longer be published on a representative basis after June 30, 2023. Federal banking agencies have issued guidance strongly encouraging banking organizations to cease using USD LIBOR as a ~~significant number~~reference rate in new contracts as soon as practicable and in any event by December 31, 2021.

For information on the amount of our LIBOR-linked assets and liabilities, ~~referenced to LIBOR and other interbank offered rates (IBORs), such~~ as ~~commercial loans, adjustable-rate mortgage loans, derivatives, debt securities, and long-term debt.~~

~~Accordingly, we established a~~well as initiatives created by our LIBOR Transition Office ~~(LTO)~~ in ~~February 2018, with senior management and Board oversight. The LTO is responsible for developing a coordinated strategy~~an effort to transition the IBOR-linked contracts and processes across Wells Fargo to alternative reference rates and serves as the primary conduit between Wells Fargo and relevant industry groups, such as the Alternative Reference Rates Committee (ARRC).

In addition, the Company is actively working with regulators, industry working groups (such as the ARRC) and trade associations that are developing guidance to facilitate an orderly transition away from the use of LIBOR. We are closely monitoring and seeking to follow the recommendations and guidance announced by such organizations, including those announced by the ARRC and the Bank of England’s Working Group on Sterling Risk-Free Reference Rates. We continue to assessmitigate the risks ~~and related impacts~~ associated with a transition away from ~~IBORs. See~~LIBOR, see the ~~“Risk Factors”~~“Overview – Recent Developments – LIBOR Transition” section in ~~the 2019~~our 2020 Form ~~10-K for additional~~

10-K. For information regarding the risks and potential impact of ~~a benchmark rate, such as~~ LIBOR or any other referenced financial metric being significantly changed, replaced or ~~discontinued.~~

~~On March 12, 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-04 –~~ ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~ (Update) that provides temporary relief from existing GAAP accounting requirements for entities that perform activities related to reference rate reform. The relief provided by the Update is primarily related to contract modifications and hedge accounting relationships that are impacted by the Company’s reference rate reform activities. For additional information on the Update, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

~~For additional information on the amount of our IBOR-linked assets and liabilities, as well as the program structure and initiatives created by the LTO,~~discontinued, see the “Risk ~~Management –~~

~~Asset/Liability Management – LIBOR Transition”~~Factors” section in our ~~2019~~2020 Form 10-K.

Capital Actions and Restrictions

On ~~September 30, 2020,~~March 25, 2021, the ~~Board of Governors of the Federal Reserve System (FRB)~~FRB announced that it was extending ~~through fourth quarter 2020~~ measures it previously announced ~~on June 25, 2020, prohibiting~~limiting capital distributions by large bank holding companies (BHCs) ~~subject to the~~

~~FRB’s capital plan rule,~~, including Wells Fargo, ~~from making capital distributions,~~ subject to certain ~~limited~~ exceptions. The FRB has generally authorized, among other things, BHCs to pay common stock dividends and make share repurchases that, in the aggregate, do not exceed an amount equal to the average of the BHC’s net income for the four preceding calendar quarters, so long as the BHC does not increase the amount of its common stock dividend from the level paid in second quarter 2020. The FRB also announced that if a BHC remains above all of its minimum risk-based capital


4			Wells Fargo & Company

requirements in this year's supervisory stress test, these additional limitations on capital distributions will end for that BHC after June 30, 2021. For additional information about capital planning, including the FRB’s recent ~~prohibition~~announcement on capital distributions, see the “Capital Management – Capital Planning and Stress Testing” section in this Report.

Business and Portfolio Divestitures

On February 23, 2021, we announced an agreement to sell Wells Fargo Asset Management for a purchase price of $2.1 billion. As part of the transaction, we will own a 9.9% equity interest and continue to serve as a client and distribution partner.

On March 23, 2021, we announced an agreement to sell our Corporate Trust Services business for a purchase price of $750 million. Both transactions are expected to close in the second half of 2021, subject to customary closing conditions.

In ~~October 2020,~~first quarter 2021, we ~~issued $1.2 billion~~completed the first phase of the previously announced sale of our ~~Non-Cumulative Perpetual Class A Preferred Stock, Series AA.~~student loan portfolio, which resulted in a $208 million gain included in other noninterest income and a $104 million goodwill write-down included in other noninterest expense. In April 2021, we completed the sale of substantially all of the remaining portfolio, which will result in a $147 million gain and a $79 million write-down of the remaining goodwill in second quarter 2021.

Financial Performance


Consolidated Financial Highlights	Consolidated Financial Highlights													Consolidated Financial Highlights
		Quarter ended Sep 30,						Nine months ended Sep 30,							Quarter ended Mar 31,
($ in millions)	($ in millions)	2020		2019	$ Change	% Change		2020		2019	$ Change	% Change		($ in millions)		2021		2020	$ Change	% Change
Selected income statement data	Selected income statement data													Selected income statement data
Net interest income	Net interest income	$	9,368	11,625	(2,257)	(19)	%	$	30,560	36,031	(5,471)	(15)	%	Net interest income		$	8,798	11,312	(2,514)	(22)	%
Noninterest income	Noninterest income	9,494		10,385	(891)	(9)		23,855		29,172	(5,317)	(18)		Noninterest income		9,265		6,405	2,860	45
Total revenue	Total revenue	18,862		22,010	(3,148)	(14)		54,415		65,203	(10,788)	(17)		Total revenue		18,063		17,717	346	2
Net charge-offs														Net charge-offs		523		941	(418)	(44)
Change in the allowance for credit losses														Change in the allowance for credit losses		(1,571)		3,064	(4,635)	NM
Provision for credit losses	Provision for credit losses	769		695	74	11		14,308		2,043	12,265	600		Provision for credit losses		(1,048)		4,005	(5,053)	NM
Noninterest expense	Noninterest expense	15,229		15,199	30	—		42,828		42,564	264	1		Noninterest expense		13,989		13,048	941	7
Income tax expense (benefit)		645		1,304	(659)	(51)		(3,113)		3,479	(6,592)	NM
Income tax expense														Income tax expense		326		159	167	105
Wells Fargo net income	Wells Fargo net income	2,035		4,610	(2,575)	(56)		309		16,676	(16,367)	(98)		Wells Fargo net income		4,742		653	4,089	626
Wells Fargo net income (loss) applicable to common stock		1,720		4,037	(2,317)	(57)		(932)		15,392	(16,324)	NM
Wells Fargo net income applicable to common stock														Wells Fargo net income applicable to common stock		4,363		42	4,321	NM

NM – Not meaningful

~~Wells Fargo had~~In first quarter 2021, we generated $4.7 billion of net income ~~of $2.0 billion in third quarter 2020 with~~and diluted earnings per common share (EPS) of ~~$0.42,~~$1.05, compared with $653 million of net income ~~of $4.6 billion~~ and ~~diluted~~ EPS of ~~$0.92~~$0.01 in the same period a year ago. Financial performance for ~~third~~first quarter ~~2020 was impacted by $961 million of customer remediation accruals and $718 million of restructuring charges included in noninterest expense. Also, in third quarter 2020~~2021, compared with the same period a year ~~ago:~~ago, included the following:

•total revenue ~~decreased~~increased due to ~~lower~~higher net ~~interest income~~gains from equity securities and ~~lower noninterest income driven by lower other noninterest~~mortgage banking income, partially offset by ~~higher mortgage banking noninterest~~lower net interest income;

•provision for credit losses decreased reflecting lower net charge-offs and improvements in the economic environment;

•noninterest expense increased due to higher ~~restructuring charges,~~personnel expense, partially offset by lower operating ~~losses;~~losses and lower professional and outside services expense;

•average loans decreased due to ~~lower~~paydowns exceeding originations in the residential mortgage and credit card portfolios, weak demand for commercial loans, and the reclassification of student loans, included in other consumer ~~loans;~~loans, to loans held for sale after the announced sale of the portfolio in fourth quarter 2020; and

•average deposits increased ondriven by growth in ~~interest-bearing~~consumer deposits in the Consumer Banking and ~~noninterest-bearing deposits.~~Lending and Wealth and Investment Management (WIM) operating segments due to customers' preferences for liquidity given the economic uncertainty associated with the COVID-19 pandemic, government stimulus programs, and lower consumer spending, partially offset by actions taken to manage under the asset cap which reduced deposits in the Corporate and Investment Banking operating segment and Corporate.

Wells Fargo had net income of $309 million in the first nine months of 2020 with diluted loss per common share of $0.23, compared with net income of $16.7 billion and diluted EPS of $3.43 a year ago. Financial performance for the first nine months of 2020 was impacted by $14.3 billion of provision for credit losses, $1.9 billion of customer remediation accruals and $718 million of restructuring charges included in noninterest expense. Also, in the first nine months of 2020 compared with the same period a year ago:

•~~total revenue decreased due to lower net interest income and lower noninterest income driven by lower other noninterest income and net gains (losses) from equity securities;~~

•~~noninterest expense increased due to higher restructuring charges, operating losses, and occupancy expense, partially offset by lower personnel and advertising and promotion expense;~~

•~~average loans increased due to higher commercial loans, partially offset by lower consumer loans; and~~

•~~average deposits increased on growth in interest-bearing and noninterest-bearing deposits.~~

Capital and Liquidity

We maintained a ~~solid~~strong capital position in ~~the~~ first ~~nine months of 2020,~~quarter 2021, with total equity of ~~$182.0~~$188.3 billion at ~~September 30, 2020,~~March 31, 2021, compared with ~~$188.0~~$185.9 billion at December 31, ~~2019.~~2020. Our liquidity and regulatory capital ratios remained strong at ~~September 30, 2020, and included:~~March 31, 2021, including:

•our liquidity coverage ratio (LCR) was ~~134% at September 30, 2020,~~127%, which continued to exceed the regulatory minimum of 100%;

•our Common Equity Tier 1 (CET1) ratio was ~~11.38% at September 30, 2020,~~11.85%, which continued to exceed both the regulatory ~~minimum~~requirement of 9% and our current internal target of 10%; and

•our eligible external total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets was ~~25.76% as of September 30, 2020,~~25.18%, compared with the regulatory ~~minimum~~requirement of ~~22.0%~~21.50%.

See the “Capital Management” and the “Risk Management – Asset/Liability Management – Liquidity Risk and Funding” sections in this Report for additional information regarding our capital and liquidity, including the calculation of our regulatory capital and liquidity amounts.

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

Credit Quality

Credit quality was ~~affected~~impacted by the improving economic ~~impact that the COVID-19 pandemic had on our customer base.~~environment.

•The allowance for credit losses (ACL) for loans of ~~$20.5~~$18.0 billion at ~~September 30, 2020, increased $10.0~~March 31, 2021, decreased $1.7 billion from December 31, 2019. We had a $11.3 billion increase in the ACL for loans in the first nine months of 2020, partially offset by a $1.3 billion decrease as a result of our adoption on January 1, 2020, of ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): 2020.

•~~Measurement of Credit Losses on Financial Instruments~~ ~~(CECL).~~ Our provision for credit losses for loans was ~~$14.1~~$(1.1) billion in ~~the~~ first ~~nine months of 2020, up~~quarter 2021, down from ~~$2.0~~$3.8 billion in the same period a year ago. The ~~increase~~decrease in the ACL for loans and the provision for credit losses in first quarter 2021, compared with the same period a year ago, reflected ~~current and forecasted~~improvements in the economic ~~conditions due to the COVID-19 pandemic.~~environment.


			Wells Fargo & Company			5

Overview (continued)

•The allowance coverage for total loans was ~~2.22%~~2.09% at ~~September 30, 2020,~~March 31, 2021, compared with ~~1.09%~~2.22% at December 31, ~~2019.~~2020.

•~~Net loan charge-offs were $683 million, or 0.29% (annualized) of average loans, in third quarter 2020, compared with $645 million a year ago (0.27%)(annualized).~~

•Commercial portfolio net loan charge-offs were ~~$356~~$149 million, or 2913 basis points ~~(annualized)~~ of average commercial loans, in ~~third~~first quarter ~~2020,~~2021, compared with net loan charge-offs of ~~$139~~$324 million, or 1125 basis points, ~~(annualized),~~in the same period a year ago, predominantly driven by ~~increased~~lower losses in our commercial and industrial portfolio primarily within the oil, gas and ~~commercial~~pipelines industry, partially offset by increased losses in the real estate ~~loan~~mortgage and construction portfolios.

•Consumer portfolio net loan charge-offs were ~~$327~~$364 million, or 3037 basis points ~~(annualized)~~ of average consumer loans, in ~~third~~first quarter ~~2020,~~

2021, compared with net loan charge-offs of ~~$506~~$585 million, or 4653 basis points, ~~(annualized),~~in the same period a year ago, ~~predominantly~~ driven by lower losses in ~~our credit card, automobile and other revolving credit and installment~~all consumer loan portfolios ~~partially offset by lower recoveries~~as a result of payment deferral activities and government stimulus programs instituted in ~~our residential real estate portfolios.~~response to the COVID-19 pandemic.

•Nonperforming assets (NPAs) of $8.2 billion at ~~September 30, 2020, increased $2.5 billion,~~March 31, 2021, decreased $692 million, or ~~45%~~8%, from December 31, ~~2019,~~2020, predominantly driven by ~~increases~~decreases in our commercial and industrial portfolio, primarily within the oil, gas and pipelines industry, commercial real estate mortgage, ~~nonaccrual loans.~~and residential mortgage portfolios reflecting improvements in the economic environment. NPAs represented ~~0.89%~~0.95% of total loans at ~~September 30, 2020.~~March 31, 2021.


Earnings Performance

Wells Fargo net income for ~~third~~first quarter ~~2020~~2021 was ~~$2.0~~$4.7 billion ($~~0.42~~1.05 diluted ~~earnings per common share)~~EPS), compared with ~~$4.6 billion~~$653 million ($~~0.92~~0.01 diluted ~~per share) in the same period a year ago.~~EPS) for first quarter 2020. Net income ~~decreased~~increased in ~~third~~first quarter ~~2020,~~2021, compared with the same period a year ago, predominantly due to a ~~$2.3~~$5.1 billion decrease in provision for credit losses and a $2.9 billion increase in noninterest income, partially offset by a $2.5 billion decrease in net interest income and ~~an $891~~a $941 million ~~decrease~~increase in noninterest ~~income, partially offset by a $659 million decrease in income tax~~ expense.

Net Interest Income

Net interest income ~~for the first nine months of 2020 was $309 million, compared with $16.7 billion in the same period a year ago. Net income~~and net interest margin decreased in ~~the~~ first ~~nine months of 2020,~~quarter 2021, compared with the same period a year ago, driven by a repricing of the balance sheet, lower loan balances primarily due to ~~a $12.3 billion increase in our provision for credit losses, a $5.5 billion decrease in~~soft demand and elevated prepayments, as well as unfavorable hedge ineffectiveness accounting results, and higher mortgage-backed securities premium amortization.

Table 1 presents the individual components of net interest income and ~~a $5.3 billion decrease in noninterest income, partially offset by a $6.6 billion decrease in income tax expense.~~

~~Net Interest Income~~

the net interest margin. 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% federal statutory tax rate for the periods ~~ending September 30, 2020~~ended March 31, 2021 and ~~2019.~~

Net interest income and net interest margin decreased in both the third quarter and first nine months of 2020, compared with the same periods a year ago, driven by unfavorable impacts of repricing due to the lower interest rate environment and higher mortgage-backed securities (MBS) premium amortization. The decrease in third quarter 2020 also reflected changes in the mix of earning assets and funding sources.2020.

For additional information about net interest income and net interest margin, see the “Earnings Performance – Net Interest Income” section in our ~~2019~~2020 Form 10-K.


6			Wells Fargo & Company

~~Earnings Performance (~~

~~continued~~

)

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

   Quarter ended September 30,
2020 2019
(in millions) Average
balance Yields/
rates Interest
income/
expense Average
balance Yields/
rates Interest
income/
expense
Earning assets
Interest-earning deposits with banks $ 216,958 0.11 % $ 58 134,017 2.14 % $ 723
Federal funds sold and securities purchased under resale agreements 80,431 0.02 3 105,919 2.24 599
Debt securities (2):
Trading debt securities 88,021 2.49 548 94,737 3.35 794
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies 8,126 0.87 18 16,040 2.14 87
Securities of U.S. states and political subdivisions 32,326 2.16 174 43,305 3.78 409
Mortgage-backed securities:
Federal agencies 131,182 2.03 665 154,134 2.77 1,066
Residential and commercial 4,051 1.58 16 5,175 4.02 52
Total mortgage-backed securities 135,233 2.02 681 159,309 2.81 1,118
Other debt securities 41,871 1.84 194 42,435 4.12 440
Total available-for-sale debt securities 217,556 1.96 1,067 261,089 3.14 2,054
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies 48,582 2.14 261 44,770 2.18 247
Securities of U.S. states and political subdivisions 14,145 3.84 136 8,688 4.01 87
Federal agency and other mortgage-backed securities 113,646 1.85 525 95,434 2.54 606
Other debt securities 11 1.66 — 50 3.58 —
Total held-to-maturity debt securities 176,384 2.09 922 148,942 2.52 940
Total debt securities 481,961 2.10 2,537 504,768 3.00 3,788
Mortgage loans held for sale (3) 29,426 3.15 232 22,743 4.08 232
Loans held for sale (3) 1,597 1.60 7 1,964 4.17 20
Loans:
Commercial loans:
Commercial and industrial – U.S. 270,998 2.53 1,721 284,278 4.21 3,015
Commercial and industrial – Non-U.S. 64,048 2.14 344 64,016 3.67 593
Real estate mortgage 123,391 2.81 870 121,819 4.36 1,338
Real estate construction 22,216 3.13 175 20,686 5.13 267
Lease financing 17,091 3.41 146 19,266 4.34 209
Total commercial loans 497,744 2.60 3,256 510,065 4.22 5,422
Consumer loans:
Real estate 1-4 family first mortgage 290,607 3.24 2,357 288,383 3.74 2,699
Real estate 1-4 family junior lien mortgage 26,018 4.13 270 31,454 5.66 448
Credit card 35,965 11.70 1,057 39,204 12.55 1,240
Automobile 48,718 4.90 600 46,286 5.13 599
Other revolving credit and installment 32,656 5.25 431 34,368 6.95 601
Total consumer loans 433,964 4.33 4,715 439,695 5.06 5,587
Total loans (3) 931,708 3.41 7,971 949,760 4.61 11,009
Equity securities 25,185 1.61 100 37,075 2.68 249
Other 6,974 (0.02) — 6,695 1.77 30
Total earning assets $ 1,774,240 2.45 % $ 10,908 1,762,941 3.76 % $ 16,650
Funding sources
Deposits:
Interest-bearing checking $ 49,608 0.07 % $ 8 59,310 1.39 % $ 208
Market rate and other savings 803,942 0.08 157 711,334 0.66 1,182
Savings certificates 24,808 0.83 52 32,751 1.72 142
Other time deposits 46,920 0.64 75 91,820 2.42 561
Deposits in non-U.S. offices 33,992 0.25 22 51,709 1.77 231
Total interest-bearing deposits 959,270 0.13 314 946,924 0.97 2,324
Short-term borrowings 57,292 (0.08) (12) 121,842 2.07 635
Long-term debt 222,862 1.86 1,038 229,689 3.09 1,780
Other liabilities 27,679 1.33 92 26,173 2.06 135
Total interest-bearing liabilities 1,267,103 0.45 1,432 1,324,628 1.46 4,874
Portion of noninterest-bearing funding sources 507,137 — — 438,313 — —
Total funding sources $ 1,774,240 0.32 1,432 1,762,941 1.10 4,874
Net interest margin and net interest income on a taxable-equivalent basis (4) 2.13 % $ 9,476 2.66 % $ 11,776
Noninterest-earning assets
Cash and due from banks $ 21,991       19,199
Goodwill 26,388       26,413
Other 125,053 118,862
Total noninterest-earning assets $ 173,432 164,474
Noninterest-bearing funding sources
Deposits $ 439,758 344,451
Other liabilities 57,961 58,241
Total equity 182,850 200,095
Noninterest-bearing funding sources used to fund earning assets (507,137) (438,313)
Net noninterest-bearing funding sources $ 173,432 164,474
Total assets $ 1,947,672 1,927,415
Average prime rate 3.25 % 5.31 %
Average three-month London Interbank Offered Rate (LIBOR) 0.25 2.20


	Quarter ended March 31,
	2021						2020
(in millions)	Average balance		Interest income/ expense		Interest rates		Average balance		Interest income/ expense		Interest rates
Assets
Interest-earning deposits with banks	$	223,437	57		0.10	%	$	129,522	381		1.18	%
Federal funds sold and securities purchased under resale agreements	72,148		7		0.04		107,555		380		1.42
Debt securities:
Trading debt securities	87,383		534		2.45		101,062		770		3.05
Available-for-sale debt securities	206,946		841		1.63		252,559		1,810		2.87
Held-to-maturity debt securities	216,826		1,027		1.90		157,891		1,009		2.56
Total debt securities	511,155		2,402		1.89		511,512		3,589		2.81
Loans held for sale (2)	34,554		331		3.85		21,846		209		3.82
Loans:
Commercial loans:
Commercial and industrial – U.S.	252,892		1,596		2.56		288,502		2,546		3.55
Commercial and industrial – Non-U.S.	65,419		338		2.10		70,659		556		3.16
Real estate mortgage	120,734		812		2.73		121,788		1,187		3.92
Real estate construction	21,755		166		3.10		20,277		229		4.54
Lease financing	15,799		172		4.33		19,288		212		4.40
Total commercial loans	476,599		3,084		2.62		520,514		4,730		3.65
Consumer loans:
Residential mortgage – first lien	266,251		2,068		3.11		293,556		2,650		3.61
Residential mortgage – junior lien	22,321		228		4.13		28,905		370		5.14
Credit card	35,205		1,033		11.90		39,756		1,207		12.21
Auto	48,680		560		4.66		48,258		596		4.96
Other consumer	24,383		233		3.87		34,057		534		6.32
Total consumer loans	396,840		4,122		4.18		444,532		5,357		4.83
Total loans (2)	873,439		7,206		3.33		965,046		10,087		4.20
Equity securities	29,434		137		1.87		37,532		208		2.22
Other	9,498		1		0.03		7,431		14		0.77
Total interest-earning assets	$	1,753,665	10,141		2.33	%	$	1,780,444	14,868		3.35	%
Cash and due from banks	24,598		—				20,571		—
Goodwill	26,383		—				26,387		—
Other	132,064		—				123,257		—
Total noninterest-earning assets	$	183,045	—				170,215		—
Total assets	$	1,936,710	10,141				1,950,659		14,868
Liabilities
Deposits:
Demand deposits	$	444,764	33		0.03	%	$	63,086	135		0.86	%
Savings deposits	411,596		32		0.03		762,138		978		0.52
Time deposits	44,025		47		0.43		112,077		466		1.67
Deposits in non-U.S offices	30,731		—		0.01		53,335		163		1.23
Total interest-bearing deposits	931,116		112		0.05		990,636		1,742		0.71
Short-term borrowings	59,082		(9)		(0.06)		102,977		292		1.14
Long-term debt	198,340		1,026		2.07		229,002		1,240		2.17
Other liabilities	28,875		109		1.50		30,199		142		1.90
Total interest-bearing liabilities	$	1,217,413	1,238		0.41		$	1,352,814	3,416		1.01
Noninterest-bearing demand deposits	462,356		—				347,327		—
Other noninterest-bearing liabilities	67,609		—				62,348		—
Total noninterest-bearing liabilities	$	529,965	—				409,675		—
Total liabilities	$	1,747,378	1,238				1,762,489		3,416
Total equity	189,332		—				188,170		—
Total liabilities and equity	$	1,936,710	1,238				1,950,659		3,416

Interest rate spread on a taxable-equivalent basis (3)					1.92	%					2.34	%
Net interest income and net interest margin on a taxable-equivalent basis (3)			$	8,903	2.05	%			$	11,452	2.58	%

(1)~~Yields/~~The average balance amounts represent amortized costs. The interest rates are based on interest income or expense amounts for the period and are annualized. Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.

(2)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.

~~(3)~~Nonaccrual loans and any related income are included in their respective loan categories.

~~(4)~~(3)Includes taxable-equivalent adjustments of ~~$108~~$105 million and ~~$151~~$140 million for the quarters ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $367 million and $469 million for the first nine months of 2020 and 2019,~~ respectively, predominantly related to tax-exempt income on certain loans and securities.


			Wells Fargo & Company			7

Nine months ended September 30,
      2020       2019
(in millions) Average
balance Yields/
rates Interest
income/
expense Average
balance Yields/
rates Interest
income/
expense
Earning assets
Interest-earning deposits with banks $ 174,425 0.37 % $ 490 138,591 2.27 % $ 2,352
Federal funds sold and securities purchased under resale agreements 88,095 0.58 385 95,945 2.36 1,692
Debt securities (2):
Trading debt securities 95,018 2.78 1,981 90,229 3.46 2,338
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies 9,448 1.06 75 15,178 2.17 246
Securities of U.S. states and political subdivisions 35,656 2.90 775 45,787 3.95 1,355
Mortgage-backed securities:
Federal agencies 144,425 2.37 2,564 151,806 2.95 3,359
Residential and commercial 4,376 2.25 74 5,571 4.12 172
Total mortgage-backed securities 148,801 2.36 2,638 157,377 2.99 3,531
Other debt securities 40,220 2.67 805 44,746 4.33 1,451
Total available-for-sale debt securities 234,125 2.45 4,293 263,088 3.34 6,583
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies 47,701 2.16 770 44,762 2.19 734
Securities of U.S. states and political subdivisions 13,950 3.83 401 7,277 4.03 220
Federal agency and other mortgage-backed securities 105,393 2.19 1,728 95,646 2.64 1,894
Other debt securities 17 2.64 — 56 3.81 1
Total held-to-maturity debt securities 167,061 2.31 2,899 147,741 2.57 2,849
Total debt securities 496,204 2.47 9,173 501,058 3.13 11,770
Mortgage loans held for sale (3) 25,264 3.48 659 18,401 4.20 579
Loans held for sale (3) 1,577 2.19 26 1,823 4.72 64
Loans:
Commercial loans:
Commercial and industrial – U.S. 289,799 2.88 6,257 285,305 4.39 9,360
Commercial and industrial – Non U.S. 68,965 2.61 1,345 63,252 3.82 1,808
Real estate mortgage 122,903 3.25 2,987 121,703 4.51 4,101
Real estate construction 21,288 3.66 583 21,557 5.31 856
Lease financing 18,152 4.07 554 19,262 4.56 659
Total commercial loans 521,107 3.01 11,726 511,079 4.39 16,784
Consumer loans:
Real estate 1-4 family first mortgage 288,355 3.43 7,421 286,600 3.86 8,296
Real estate 1-4 family junior lien mortgage 27,535 4.52 932 32,610 5.72 1,397
Credit card 37,415 11.58 3,243 38,517 12.69 3,656
Automobile 48,473 4.95 1,797 45,438 5.18 1,762
Other revolving credit and installment 33,033 5.68 1,405 34,832 7.07 1,841
Total consumer loans 434,811 4.54 14,798 437,997 5.17 16,952
Total loans (3) 955,918 3.70 26,524 949,076 4.75 33,736
Equity securities 30,027 1.89 425 35,139 2.65 697
Other 7,373 0.24 14 5,275 1.73 68
Total earning assets $ 1,778,883 2.83 % $ 37,696 1,745,308 3.90 % $ 50,958
Funding sources
Deposits:
Interest-bearing checking $ 55,407 0.37 % $ 152 57,715 1.42 % $ 615
Market rate and other savings 788,732 0.24 1,446 696,943 0.58 3,038
Savings certificates 27,310 1.16 237 29,562 1.56 344
Other time deposits 62,881 1.23 580 95,490 2.57 1,836
Deposits in non-U.S. offices 41,642 0.73 226 52,995 1.84 730
Total interest-bearing deposits 975,972 0.36 2,641 932,705 0.94 6,563
Short-term borrowings 74,538 0.47 263 115,131 2.18 1,878
Long-term debt 228,067 2.06 3,515 233,186 3.21 5,607
Other liabilities 29,270 1.59 350 25,263 2.17 410
Total interest-bearing liabilities 1,307,847 0.69 6,769 1,306,285 1.48 14,458
Portion of noninterest-bearing funding sources 471,036 — — 439,023 — —
Total funding sources $ 1,778,883 0.51 6,769 1,745,308 1.11 14,458
Net interest margin and net interest income on a taxable-equivalent basis (4)    2.32 % $ 30,927    2.79 % $ 36,500
Noninterest-earning assets
Cash and due from banks $ 21,266 19,428
Goodwill 26,386 26,416
Other 122,550 112,721
Total noninterest-earning assets $ 170,202 158,565
Noninterest-bearing funding sources
Deposits $ 398,666 341,541
Other liabilities 57,537 56,664
Total equity 185,035 199,383
Noninterest-bearing funding sources used to fund earning assets (471,036) (439,023)
Net noninterest-bearing funding sources $ 170,202 158,565
Total assets $ 1,949,085 1,903,873
Average prime rate 3.63 % 5.43 %
Average three-month London Interbank Offered Rate (LIBOR) 0.79 2.46

Earnings Performance (~~continued~~)

(continued)

Noninterest Income

Table 2: Noninterest Income

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2020 2019 $
Change %
Change 2020 2019 $
Change %
Change
Deposit-related fees (1) $ 1,299 1,480 (181) (12) % $ 3,888 4,289 (401) (9) %
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,336 2,346 (10) — 6,935 6,857 78 1
Trust and investment management 737 729 8 1 2,125 2,310 (185) (8)
Investment banking 441 484 (43) (9) 1,379 1,333 46 3
Total trust and investment fees 3,514 3,559 (45) (1) 10,439 10,500 (61) (1)
Card fees 912 1,027 (115) (11) 2,601 2,996 (395) (13)
Lending-related fees (1) 352 374 (22) (6) 1,025 1,116 (91) (8)
Mortgage banking:
Servicing income, net 341 (142) 483 NM (77) 499 (576) NM
Net gains on mortgage loan origination/sales
activities
1,249 608 641 105 2,363 1,433 930 65
Total mortgage banking 1,590 466 1,124 241 2,286 1,932 354 18
Net gains from trading activities 361 276 85 31 1,232 862 370 43
Net gains on debt securities 264 3 261 NM 713 148 565 382
Net gains (losses) from equity securities 649 956 (307) (32) (219) 2,392 (2,611) NM
Lease income 333 402 (69) (17) 1,021 1,270 (249) (20)
Life insurance investment income 156 173 (17) (10) 480 499 (19) (4)
Other (1) 64 1,669 (1,605) (96) 389 3,168 (2,779) (88)
Total $ 9,494 10,385 (891) (9) $ 23,855 29,172 (5,317) (18)



	Quarter ended March 31,
(in millions)		2021		2020	$ Change	% Change
Deposit-related fees		$	1,255	1,447	(192)	(13)	%
Lending-related fees		361		350	11	3
Investment advisory and other asset-based fees (1)		2,756		2,506	250	10
Commissions and brokerage services fees (1)		636		677	(41)	(6)
Investment banking fees		568		391	177	45
Card fees		949		892	57	6
Servicing income, net		(99)		271	(370)	NM
Net gains on mortgage loan originations/sales		1,425		108	1,317	NM
Mortgage banking		1,326		379	947	250
Net gains from trading activities		348		64	284	444
Net gains on debt securities		151		237	(86)	(36)
Net gains (losses) from equity securities		392		(1,401)	1,793	128
Lease income		315		353	(38)	(11)
Other		208		510	(302)	(59)
Total		$	9,265	6,405	2,860	45

~~NM- not~~NM – Not meaningful

(1)In ~~third~~first quarter ~~2020, service charges on deposit accounts, cash network fees, wire transfer~~2021, trust and ~~other remittance~~investment management fees and ~~certain other~~asset-based brokerage fees were combined into a single line item for ~~deposit-related fees; certain~~investment advisory and other asset-based fees, ~~associated with lending activities~~and brokerage commissions and other brokerage services fees were combined into a single line item for ~~lending-related fees;~~commissions and ~~certain other fees were reclassified to other noninterest income.~~brokerage services fees. Prior period balances have been revised to conform with the current period presentation.

~~Third~~First quarter ~~2020~~2021 vs. ~~third~~first quarter ~~2019~~2020

Deposit-related fees decreased driven by:

•~~lower customer transaction volumes and~~ higher average consumer deposit account balances due to the economic slowdown and government stimulus programs associated with the COVID-19 pandemic; and

•higher fee waivers and reversals as part of our actions to support customers during the COVID-19 pandemic;

partially offset by:

•higher treasury management fees on commercial accounts driven by a lower earnings credit rate due to the lower interest rate environment.

~~Card~~Investment advisory and other asset-based fees increased reflecting higher market valuations on client investment assets.

For additional information on certain client investment assets, see the “Earnings Performance – Operating Segment Results – Wealth and Investment Management – WIM Advisory Assets” and “Earnings Performance – Operating Segment Results – Corporate – Wells Fargo Asset Management (WFAM) Assets Under Management” sections in this Report.

Commissions and brokerage services fees decreased ~~reflecting:~~

•~~lower interchange fees, net of rewards costs,~~ driven by ~~decreased purchase volume~~lower transactional revenue due to higher customer activity in first quarter 2020 reflecting the ~~impact~~economic uncertainty associated with the onset of ~~the COVID-19 pandemic; and~~

•~~higher fee waivers as part of our actions to support customers during~~ the COVID-19 pandemic.

~~Servicing income, net~~Investment banking fees increased ~~reflecting:~~

•higher mortgage servicing right (MSR) valuation gains, net of hedge results, driven by favorable hedge results, changes in expected servicing costs reflecting economic improvements in third quarter 2020 compared with second quarter 2020 and negative valuation model adjustments made in third quarter 2019 reflecting higher prepayment estimates;

~~partially offset by:~~

•~~lower servicing fees due to a lower balance of loans serviced for others.~~

~~For additional information on servicing income, see Note 11 (Mortgage Banking Activities) to Financial Statements in this Report.~~

~~Net~~ ~~gains on mortgage loan origination/sales activities~~ ~~increased driven by:~~

•~~higher residential real estate held for sale (HFS) origination volumes; and~~

•~~an increase in production margin in~~ ~~both our retail and correspondent production channels, as well as a shift to more retail origination volume, which has a higher margin.~~

~~The production margin provides a measure of the profitability of our residential held for sale mortgage loan originations~~.~~Table 2a presents the information used in determining the production margin.~~

~~Table 2aSelected Mortgage Production Data~~

Quarter
ended Sep 30, Nine months
ended Sep 30,
2020 2019 2020 2019
Net gains on mortgage loan
origination/sales activities
(in millions):
Residential (A) $ 1,039 461 $ 2,265 1,015
Commercial 45 106 151 236
Residential pipeline and
unsold/repurchased loan
management (1)
165 41 (53) 182
Total $ 1,249 608 $ 2,363 1,433
Residential real estate
originations (in billions):
Held for sale (B) $ 48 38 $ 124 93
Held for investment 14 20 45 51
Total $ 62 58 $ 169 144
Production margin on
residential held for sale
mortgage loan originations
(A)/(B) 2.16 % 1.21 1.83 % 1.09

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

~~Net~~ ~~gains from trading activities~~ ~~increased reflecting~~ ~~higher volumes and customer activity in equities trading due to volatility in the equity markets.~~

~~Net gains on debt securities~~ ~~increased due to higher gains from the sales of agency MBS as a result of portfolio re-balancing and actions taken to manage under the asset cap.~~

~~Net gains from equity securities~~ ~~decreased reflecting:~~

•~~lower realized gains on nonmarketable equity securities;~~

~~partially offset by:~~

•~~$224 million of net unrealized gains related to a change in the accounting measurement model for certain nonmarketable equity securities from our affiliated venture capital partnerships.~~

O~~ther income~~ ~~decreased~~ ~~due to:~~

•a $1.1 billion gain in third quarter 2019 from the sale of our Institutional Retirement and Trust (IRT) business and $302 million of gains from the sales of purchased credit-impaired (PCI) loans in third quarter 2019; and

•~~a decline in commercial real estate brokerage commissions as a result of the sale of Eastdil Secured (Eastdil) in fourth quarter 2019;~~

~~partially offset by:~~

•$228 million of higher equity method investment income related to a change in the accounting measurement model for certain nonmarketable equity securities from our affiliated venture capital partnerships.

~~First nine months of 2020 vs. first nine months of 2019~~

~~Deposit-related fees~~ ~~decreased driven by:~~

•~~lower customer transaction volumes and higher average consumer deposit account balances due to the economic slowdown associated with the COVID-19 pandemic; and~~

•~~higher fee waivers and reversals as part of our actions to support customers during the COVID-19 pandemic;~~

~~partially offset by:~~

•~~higher treasury management fees on commercial accounts driven by a lower earnings credit rate due to the lower interest rate environment.~~

~~Brokerage~~ ~~advisory, commissions and other fees~~ ~~increased reflecting~~ higher asset-based fees, partially offset by lower transactional revenue. Asset-based fees include fees from advisory accounts that are based on a percentage of the market value of the assets as of the beginning of the quarter.

~~Trust and investment management fees~~ ~~decreased~~ driven by ~~lower trust~~higher advisory fees ~~due to the sale of our IRT business in third quarter 2019.~~

~~Our assets under management (AUM) totaled $797.9 billion at~~ ~~September 30, 2020, compared with $691.9 billion at~~ ~~September 30, 2019. Substantially all of our AUM is managed by our Wealth~~ and ~~Investment Management (WIM) operating segment.~~ ~~Our assets under administration (AUA) totaled $1.6 trillion at September 30, 2020~~equity and $1.8 trillion at September 30, 2019. Management believes that AUM and AUA are useful metrics because they allow investors and others to assess how changes in asset amounts may impact the generation of certain asset-baseddebt origination fees.

Our AUM and AUA included IRT client assets of $22 billion and $708 billion, respectively, at September 30, 2020, which we continue to administer at the direction of the buyer pursuant to a transition services agreement that will terminate no later than July 2021.

Card fees ~~decreased reflecting:~~

•increased reflecting lower ~~interchange fees, net of~~credit card rewards costs, ~~driven~~partially offset by ~~decreased purchase volume~~lower late fees due to ~~the impact of the COVID-19 pandemic; and~~

•higher ~~fee waivers as part of our actions to support customers during the COVID-19 pandemic.~~

~~Lending-related fees~~ ~~decreased driven by an increase in fee waivers and reversals as part of our actions to support customers during the COVID-19 pandemic.~~payment rates.

Servicing income, net decreased reflecting:

•higher MSR valuation losses, net of hedge results, as gains from favorable hedge results were more than offset by valuation adjustments for higher expected servicing costs and prepayment estimates due to changes in economic conditions; and

•lower servicing fees due to a lower balance of loans serviced for others resulting from continued prepayments; and

•lower income from mortgage servicing right (MSR) valuation changes and ~~the impacts of customer accommodations instituted~~related hedges, which reflected a favorable

impact from changes in ~~response~~interest rates, more than offset by less favorable hedge results.

Net gains on mortgage loan originations/sales increased

driven by:

•higher margins in our retail production channel;

•higher residential real estate held for sale (HFS) origination volumes in our retail production channel;

•higher gains related to the ~~COVID-19 pandemic~~re-securitization of loans we purchased from .Government National Mortgage Association (GNMA) loan securitization pools in 2020; and

•higher gains due to losses in first quarter 2020 driven by the impact of interest rate volatility on hedging activities associated with our residential mortgage loans held for sale portfolio and pipeline, as well as valuation losses on certain residential and commercial loans held for sale due to market conditions.

For additional information on servicing income and net gains on mortgage loan originations/sales, see Note 119 (Mortgage Banking Activities) to Financial Statements in this Report.

~~Net~~ ~~gains on mortgage loan origination/sales activities~~ ~~increased driven by:~~

•~~higher residential real estate HFS origination volumes; and~~

•~~an increase in production margin~~ ~~due to~~ ~~higher margins~~ in both our retail and correspondent production channels, as well as a shift to more retail origination volume, which has a higher margin. For additional information on the production margin on residential held for sale mortgage loan originations, see Table 2a.

Net gains from trading activities increased reflecting:

•higher ~~income driven by~~client demand for ~~interest rate~~asset-backed finance products, ~~due to lower interest rates;~~

•~~higher volumes~~other credit products, and ~~customer activity for equities trading due to volatility in the equity markets; and~~

~~Earnings Performance (continued~~)

•~~higher volumes for credit trading due to additional market liquidity from government actions in response to the COVID-19 pandemic;~~municipal bonds;

partially offset by:

•~~losses due to higher prepayment speeds on agency MBS pools, net of hedge gains,~~lower client demand for interest rate products and ~~wider credit spreads for non-agency~~lower revenue in equities and ~~certain asset-backed securities.~~commodities.

Net gains on debt securities ~~increased~~decreased due to ~~higher~~lower gains from the sales of agency ~~MBS~~mortgage-backed securities (MBS) and municipal bonds as a result of ~~portfolio re-balancing and actions taken to manage under the asset cap.~~decreased sales volumes.

Net gains (losses) from equity securities ~~decreased~~increased driven by:

•~~changes~~lower impairment of $920 million on equity securities due to the market impact of the COVID-19 pandemic in ~~the value of~~first quarter 2020;

•losses in first quarter 2020 on deferred compensation plan investments (largely offset in personnel expense). Refer to


8			Wells Fargo & Company

Table 3a for the results for our deferred compensation plan and related ~~investments;~~

•~~lower realized gains on nonmarketable equity securities;~~hedges; and

•~~impairment on equity securities of~~ ~~$1.6 billion, including $434 million related to a change in the accounting~~

~~measurement model for certain nonmarketable equity securities from our affiliated venture capital partnerships;~~

~~partially offset by:~~

•higher ~~unrealized~~realized gains ~~including $658 million related~~on marketable equity securities.

Lease income decreased due to a ~~change~~reduction in the ~~accounting measurement model for certain nonmarketable equity securities from our affiliated venture capital partnerships.~~size of the operating lease asset portfolio.

Other income decreased due to:

•~~a $1.1 billion gain in third quarter 2019 from the sale of our IRT business and $1.6 billion of~~lower gains ~~from~~on the sales of ~~PCI~~residential mortgage loans ~~in the first nine months of 2019;~~

•~~a decline in commercial real estate brokerage commissions as a result of the~~which were reclassified to held for sale ~~of Eastdil~~ in ~~fourth quarter~~ 2019; and

•~~lower equity method investments income;~~higher valuation losses related to the retained litigation risk, including the timing and amount of final settlement,

associated with shares of Visa Class B common stock that we sold. For additional information, see the “Risk Management – Asset/Liability Management – Market Risk – Equity Securities” section in our 2020 Form 10-K;

partially offset by:

•~~gains~~a gain on the ~~sales~~sale of ~~loans reclassified to held for sale in 2019 and sold in the second quarter~~a portion of ~~2020;~~our student loan portfolio; and

•~~transition services fees associated with~~higher income from investments accounted for under the ~~sale of our IRT business.~~equity method.

Noninterest Expense

Table 3: Noninterest Expense


		Quarter ended Sep 30,						Nine months ended Sep 30,							Quarter ended March 31,
(in millions)	(in millions)	2020		2019	$ Change	% Change		2020		2019	$ Change	% Change		(in millions)		2021		2020	$ Change	% Change
Personnel	Personnel	$	8,624	8,604	20	—	%	$	25,863	26,309	(446)	(2)	%	Personnel		$	9,558	8,323	1,235	15	%
Technology, telecommunications and equipment (1)		791		821	(30)	(4)		2,261		2,340	(79)	(3)
Occupancy (2)		851		760	91	12		2,437		2,196	241	11
Technology, telecommunications and equipment														Technology, telecommunications and equipment		844		798	46	6
Occupancy														Occupancy		770		715	55	8
Operating losses	Operating losses	1,219		1,920	(701)	(37)		2,902		2,405	497	21		Operating losses		213		464	(251)	(54)
Professional and outside services (1)		1,760		1,737	23	1		5,042		4,956	86	2
Leases (3)		291		272	19	7		795		869	(74)	(9)
Professional and outside services														Professional and outside services		1,388		1,606	(218)	(14)
Leases (1)														Leases (1)		226		260	(34)	(13)
Advertising and promotion	Advertising and promotion	144		266	(122)	(46)		462		832	(370)	(44)		Advertising and promotion		90		181	(91)	(50)
Restructuring charges	Restructuring charges	718		—	718	NM		718		—	718	NM		Restructuring charges		13		—	13	NM
Other (1)		831		819	12	1		2,348		2,657	(309)	(12)
Other														Other		887		701	186	27
Total	Total	$	15,229	15,199	30	—		$	42,828	42,564	264	1		Total		$	13,989	13,048	941	7

NM -– Not meaningful

(1)In third quarter 2020, expenses for outside professional services, contract services, and outside data processing were combined into a single line item for professional and outside services expense; expenses for technology and equipment and telecommunications were combined into a single line item for technology, telecommunications and equipment expense; and certain other expenses were reclassified to other noninterest expense. Prior period balances have been revised to conform with the current period presentation.

~~(2)Represents expenses for both leased and owned properties.~~

~~(3)~~Represents expenses for assets we lease to customers.

~~Third~~First quarter ~~2020~~2021 vs. ~~third~~first quarter ~~2019~~2020

Personnel expense ~~remained relatively flat, reflecting:~~increased driven by:

•higher ~~salaries~~deferred compensation expense;

•higher incentive compensation expense, ~~driven by~~including the impact of ~~annual salary increases~~higher market valuations on stock-based compensation; and

•higher ~~staffing levels;~~revenue-related compensation expense;

partially offset by:

•lower ~~incentive compensation expense.~~salaries.

~~Occupancy expense~~ ~~increased due to additional cleaning fees, supplies, and equipment expenses related to the COVID-19 pandemic.~~

~~Operating losses~~ ~~decreased driven by:~~

•~~lower litigation accruals, as third quarter 2019 included a $1.6 billion discrete litigation accrual related to retail sales practices matters;~~

~~partially offset by:~~

•~~increased customer remediation accruals reflecting expansions of the population of affected customers, remediation payments, and/or remediation time frames for a variety of matters.~~

~~Advertising and promotion expense~~ ~~decreased driven by decreases in marketing and brand campaign volumes due to the impact of the COVID-19 pandemic.~~

~~Restructuring charges~~ increased driven predominantly by severance costs, as well as facility closure costs, related to our efficiency initiatives that commenced in third quarter 2020. For additional information on restructuring charges, see Note 2 (~~Restructuring Charges) to Financial Statements in this Report.~~

~~First nine months of 2020 vs. first nine months of 2019~~

~~Personnel expense~~ ~~decreased driven by:~~

•~~lower deferred compensation expense (offset in net gains from equity securities);~~

~~partially offset by:~~

•~~higher salaries expense driven by annual salary increases and higher staffing levels; and~~

•~~increases in employee benefits and incentive compensation expense related to the COVID-19 pandemic, including~~

~~additional payments for certain customer-facing and support employees and back-up childcare services.~~

Table 3a presents results for our deferred compensation plan and related hedges. Historically, we used equity securities as economic hedges of our deferred compensation plan liabilities. Changes in the fair value of the equity securities used as economic hedges were recorded in net gains (losses) from equity securities within noninterest income. In second quarter 2020, we entered into arrangements to transition our economic hedges

of the deferred compensation plan liabilities from equity securities to derivative instruments. ~~Changes~~As a result of this transition, changes in fair value of derivatives used as economic hedges are presented within the same financial statement line as the related business activity being hedged. As a result of this transition, we presented the net gains (losses) on derivatives from economic hedges onto economically hedge the deferred compensation plan ~~liabilities~~are reported in personnel ~~expense.~~expense rather than in net gains (losses) from equity securities within noninterest income. For additional information on the derivatives used in the economic hedges, see Note 1514 (Derivatives) to Financial Statements in this Report.

Table 3a: Deferred Compensation and Related Hedges

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2020 2019 2020 2019
Net interest income $ — 13 $ 15 44
Net gains (losses) from equity securities 1 (4) (274) 428
Total revenue (losses) from deferred compensation plan investments 1 9 (259) 472
Change in deferred compensation plan liabilities 220 5 112 476
Net derivative (gains) losses from economic hedges of deferred compensation (215) — (356) —
Personnel expense 5 5 (244) 476
Income (loss) before income tax expense $ (4) 4 $ (15) (4)



	Quarter ended March 31,
(in millions)		2021		2020
Net interest income		$	—	12
Net losses from equity securities		—		(621)
Total losses from deferred compensation plan investments		—		(609)
Decrease (increase) in deferred compensation plan liabilities		(165)		598
Net derivative gains from economic hedges of deferred compensation		160		—
Decrease (increase) in personnel expense		(5)		598
Loss before income tax expense		$	(5)	(11)

Technology, telecommunications and equipment expense ~~decreased~~increased due ~~to:~~

•~~a software impairment in third quarter 2019;~~to higher expense for technology contracts and

•~~a software licensing liability accrual reversal in second quarter 2020;~~

~~partially offset by:~~

•~~higher cloud computing expenses; and~~

•higher telecommunications expense related to the COVID-19 pandemic.

Occupancy expense increased due to additional cleaning fees, supplies, and equipment expenses related to the COVID-19 pandemic.

Operating losses ~~increased~~decreased driven ~~by:~~

•~~higher~~by lower expense for litigation accruals and customer remediation ~~accruals reflecting expansions of the population of affected customers, remediation payments, and/or remediation time frames for a variety of matters;~~

~~partially offset by:~~

•~~lower litigation accruals as third quarter 2019 included a $1.6 billion discrete litigation accrual related to retail sales practices matters.~~accruals.

Professional and outside services expense decreased driven by reduced project spending due to efficiency initiatives.

Lease expense decreased due to a reduction in the size of the operating lease asset portfolio.


			Wells Fargo & Company			9

Earnings Performance (continued)

Advertising and promotion expense decreased driven by reduced marketing and brand campaign volumes due to the impact of the COVID-19 pandemic.

Restructuring charges increased ~~driven predominantly by severance costs, as well as facility closure costs,~~ related to our efficiency initiatives that ~~commenced~~began in third quarter 2020. For additional information on restructuring charges, see Note 219 (Restructuring Charges) to Financial Statements in this Report.

Other expenses ~~decreased~~increased driven by:

•a ~~reduction~~write-down of goodwill in ~~business travel and company events due to ongoing expense management initiatives, as well as the impact of the COVID-19 pandemic; and~~

•~~lower foreclosed assets expense due~~first quarter 2021 related to the ~~suspension~~sale of ~~certain mortgage foreclosure activities in response to the COVID-19 pandemic;~~a portion of our student loan portfolio;

~~partially offset by:~~

•higher ~~pension plan settlement expenses;~~charitable donations expense driven by the donation of PPP processing fees; and

•higher Federal Deposit Insurance Corporation (FDIC) deposit assessment expense driven by a higher assessment ~~rate~~rate;

partially offset by:

•a reduction in business travel and ~~higher deposit balances.~~company events due to the impact of the COVID-19 pandemic.

Income Tax Expense

Income tax expense was ~~$645~~$326 million in ~~third~~first quarter ~~2020,~~2021, compared with ~~$1.3 billion~~$159 million in the same period a year ago, driven by lower pre-tax income. The effective income tax rate was 24.1% for third quarter 2020, compared with 22.1% for the same period a year ago. The effective income tax rate for third quarter 2020 reflected lower pre-tax income and included net discrete income tax benefits primarily related to the resolution and reevaluation of prior period matters with U.S federal and state tax authorities. The effective income tax rate for third quarter 2019 reflected a net discrete income tax expense related to the non-tax deductible treatment of a $1.6 billion discrete litigation accrual.

~~Income tax benefit was $3.1 billion in the first nine months of 2020, compared with income tax expense of $3.5 billion in the same period a year ago, driven by lower~~higher pre-tax income. The effective income tax rate was ~~111.0%~~6.4% for ~~the~~ first ~~nine months of 2020,~~quarter 2021, compared with ~~17.3%~~19.5% for the same period a year ago. ~~The effective income~~Income tax ~~rate~~expense for ~~the~~ first ~~nine months of 2020 reflected lower pre-tax income and~~quarter 2021 included net discrete income tax benefits ~~primarily~~of $154 million related mainly to the resolution ~~and reevaluation~~ of prior period matters with ~~U.S federal and state~~ tax authorities. ~~The effective income~~Income tax ~~rate~~expense for ~~the~~ first ~~nine months of 2019 reflected a~~quarter 2020 included net discrete income tax expense ~~related to~~of $141 million driven by the ~~non-tax deductible treatment~~accounting for stock compensation activity, the net impact of ~~a $1.6 billion discrete litigation accrual, partially offset by net discrete income~~accounting for uncertain tax ~~benefits related to~~positions, and the ~~results~~outcome of U.S. federal ~~and state~~ income tax examinations.

~~Earnings Performance (continued~~)

Operating Segment Results

Our management reporting is organized into four reportable operating segments: Consumer Banking and Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment Management. All other business activities that are not included in the reportable operating segments ~~are defined~~have been included in Corporate. For additional information, see Table 4. We define our reportable operating segments by type of product ~~type~~ and customer segment, and their results are based on our management reporting process. The management reporting process measures the performance of the reportable operating segments based on the Company’s management structure, and the results are regularly reviewed by our Chief Executive Officer and Operating Committee. The management reporting process is based on U.S. GAAP ~~with~~and includes specific adjustments, such as ~~for~~ funds transfer pricing for asset/liability management, ~~for~~ shared revenues and expenses, and ~~tax-equivalent~~taxable-equivalent adjustments to consistently reflect income from taxable and tax-exempt ~~sources. On~~sources, which allows management to assess performance consistently across the operating segments.

In February ~~11, 2020,~~2021, we announced ~~a new organizational structure. We continue~~an agreement to ~~refine~~sell Wells Fargo Asset Management and moved the ~~composition of our operating segments~~business from the Wealth and ~~allocation methodologies. Additionally, we are still in the process of transitioning key leadership positions. We now expect to update our~~Investment Management operating segment ~~disclosures, including comparative financial results, in fourth quarter 2020. These changes will~~to Corporate. Prior period balances have been revised to conform with the current period presentation. This change did not impact the previously reported consolidated financial results of the Company.

Funds Transfer Pricing Corporate treasury manages a funds transfer pricing methodology that considers interest rate risk, liquidity risk, and other product characteristics. Operating segments pay a funding charge for their assets and receive a funding credit for their deposits, both of which are included in net interest income. The net impact of the funding charges or credits is recognized in corporate treasury.

Revenue and Expense Sharing When lines of business jointly serve customers, the line of business that is responsible for providing the product or service recognizes revenue or expense with a referral fee paid or an allocation of cost to the other line of business based on established internal revenue-sharing agreements.

When a line of business uses a service provided by another line of business or enterprise function (included in Corporate), expense is generally allocated based on the cost and use of the service provided.

Taxable-Equivalent Adjustments Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax credits for low-income housing and renewable energy investments are included in noninterest income, in each case with corresponding impacts to income tax expense (benefit). Adjustments are included in Corporate, Commercial Banking, and Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial results.

Allocated Capital Reportable operating segments are allocated capital under a risk-sensitive framework that is primarily based on aspects of our regulatory capital requirements, and the assumptions and methodologies used to allocate capital are periodically assessed and revised. Management believes that return on allocated capital is a useful financial measure because it enables management, investors, and others to assess a reportable operating segment’s use of capital.

Selected Metrics We present certain financial and nonfinancial metrics that management uses when evaluating reportable operating segment results. Management believes that these metrics are useful to investors and others to assess the performance, customer growth, and trends of reportable operating segments or lines of business.


10			Wells Fargo & Company

Table 44:Management Reporting Structure

Wells Fargo & Company

Consumer Banking and Lending

Commercial Banking

Corporate and Investment Banking

Wealth and Investment Management

Corporate

• Consumer and Small Business Banking

• Home Lending

• Credit Card

• Auto

• Personal Lending

• Middle Market Banking

• Asset-Based Lending and Leasing

• Banking

• Commercial Real Estate

• Markets

• Wells Fargo Advisors

• The Private
Bank

• Corporate Treasury

• Enterprise Functions

• Investment Portfolio

• Affiliated venture capital and private equity partnerships

• Non-strategic businesses

Table 5 and the following discussion present our results by ~~current~~reportable operating segment. For additional ~~description of our operating segments, including additional financial~~ information, ~~and the underlying management reporting process,~~ see Note 22 (Operating Segments) to Financial Statements in this Report.

We perform a goodwill impairment assessment annually in the fourth quarter. Since our last annual assessment, we have observed a significant decline in market capitalization given deteriorated macroeconomic conditions from the impact of the COVID-19 pandemic. In first and second quarter 2020, we performed interim, quantitative impairment assessments of our goodwill with no evidence of goodwill impairment. Given the uncertainty of the severity or length of the current economic downturn, we continue to monitor our performance against our internal forecasts as well as market conditions for circumstances that could have a further negative effect on the estimated fair

values of our reporting units. In third quarter 2020, we performed a qualitative assessment of goodwill impairment and concluded that it was more likely than not that the fair value of our reporting units were greater than their carrying amounts as of September 30, 2020.

The aggregate fair value of our reporting units calculated during our latest interim quantitative assessment exceeded our market capitalization as of September 30, 2020. Individual reporting unit fair values cannot be directly correlated to the Company’s market capitalization. However, we consider several factors in the comparison of aggregate fair value to market capitalization, including (i) control premiums adjusted for the current market environment, which include synergies that may not be reflected in current market pricing, (ii) degree of complexity and execution risk at the reporting unit level compared with the enterprise level, and (iii) issues or risks related to the Company level that may not be included in the fair value of the individual reporting units.

In connection with the planned change to our operating segment disclosures, we will realign our goodwill to the reporting units that underlie our operating segments, which could impact the results of our goodwill impairment assessment. We will reassess goodwill for impairment at the time of the realignment. In addition, we may divest or otherwise wind down certain businesses or portfolios of assets in connection with the realignment of our operating segments, which may result in the impairment of goodwill or other long-lived assets related to these businesses or portfolios.

~~For additional information about goodwill, see Note 1 (Summary of Significant Accounting Policies) in our 2019 Form 10-K.~~

Table 4:5: Operating Segment Results – Highlights

(income/expense in millions,
Community
Banking Wholesale
Banking Wealth and
Investment Management Other (1) Consolidated
Company
balance sheet data in billions) 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Quarter ended September 30,
Total revenue $ 10,722 11,239 5,594 6,942 3,794 5,141 (1,248) (1,312) 18,862 22,010
Provision (reversal of provision) for credit losses 556 608 219 92 (9) 3 3 (8) 769 695
Net income (loss) 336 999 1,488 2,644 463 1,280 (252) (313) 2,035 4,610
Average loans $ 457.6 459.0 455.1 474.3 79.8 75.9 (60.8) (59.4) 931.7 949.8
Average deposits 881.7 789.7 418.8 422.0 175.3 142.4 (76.8) (62.7) 1,399.0 1,291.4
Goodwill 16.7 16.7 8.4 8.4 1.3 1.3 — — 26.4 26.4
Nine months ended September 30,
Total revenue $ 28,984 34,794 17,974 21,118 11,169 13,270 (3,712) (3,979) 54,415 65,203
Provision (reversal of provision) for credit losses 5,652 1,797 8,535 254 256 6 (135) (14) 14,308 2,043
Net income (loss) 160 6,969 (344) 8,203 1,106 2,459 (613) (955) 309 16,676
Average loans $ 456.5 458.3 481.2 474.9 79.0 75.1 (60.8) (59.2) 955.9 949.1
Average deposits 843.0 777.7 438.8 414.1 166.2 146.3 (73.4) (63.9) 1,374.6 1,274.2
Goodwill 16.7 16.7 8.4 8.4 1.3 1.3 — — 26.4 26.4


	Quarter ended March 31,
(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate (1)	Reconciling Items (2)	Consolidated Company
2021
Net interest income	$	5,615	1,283	1,778	657	(430)	(105)	8,798
Noninterest income	3,039		925	1,845	2,887	1,319	(750)	9,265
Total revenue	8,654		2,208	3,623	3,544	889	(855)	18,063
Provision for credit losses	(419)		(399)	(284)	(43)	97	—	(1,048)
Noninterest expense	6,267		1,766	1,833	3,028	1,095	—	13,989
Income (loss) before income tax expense (benefit)	2,806		841	2,074	559	(303)	(855)	5,122
Income tax expense (benefit)	702		203	500	140	(364)	(855)	326
Net income before noncontrolling interests	2,104		638	1,574	419	61	—	4,796
Less: Net income from noncontrolling interests	—		1	—	—	53	—	54
Net income	$	2,104	637	1,574	419	8	—	4,742
2020
Net interest income	$	6,002	1,774	2,019	838	819	(140)	11,312
Noninterest income	2,647		728	1,369	2,432	(119)	(652)	6,405
Total revenue	8,649		2,502	3,388	3,270	700	(792)	17,717
Provision for credit losses	1,569		1,041	1,125	8	262	—	4,005
Noninterest expense	6,257		1,697	1,870	2,657	567	—	13,048
Income (loss) before income tax expense (benefit)	823		(236)	393	605	(129)	(792)	664
Income tax expense (benefit)	205		(61)	101	152	554	(792)	159
Net income (loss) before noncontrolling interests	618		(175)	292	453	(683)	—	505
Less: Net income (loss) from noncontrolling interests	—		1	—	—	(149)	—	(148)
Net income (loss)	$	618	(176)	292	453	(534)	—	653

(1)~~Includes~~All other business activities that are not included in the ~~elimination of~~reportable operating segments have been included in Corporate. For additional information, see the "Corporate" section below. In February 2021, we announced an agreement to sell Wells Fargo Asset Management and moved the business from the Wealth and Investment Management operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation.

(2)Taxable-equivalent adjustments related to tax-exempt income on certain ~~items that~~loans and debt securities are included in ~~more than one business segment, substantially all of which represents products~~net interest income, while taxable-equivalent adjustments related to income tax credits for low-income housing and ~~services for WIM customers served through Community~~renewable energy investments are included in noninterest income, in each case with corresponding impacts to income tax expense (benefit). Adjustments are included in Corporate, Commercial Banking, ~~distribution channels.~~and Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial results.


			Wells Fargo & Company			11

Earnings Performance (continued)

~~Community~~Consumer Banking and Lending offers ~~a complete line of~~ diversified financial products and services for consumers and small businesses with annual sales generally up to $5 ~~million in which the owner generally is the financial decision maker.~~million. These financial products and services include checking and savings accounts, credit and

debit cards, ~~automobile, student, mortgage,~~as well as home, ~~equity~~auto, personal, and small business ~~lending, as well as referrals to~~

~~Wholesale~~lending. Table 5a and Table 5b provide additional information for Consumer 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 other segments and results of investments in our affiliated venture capital and private equity partnerships. Table 4a provides additional financial information for Community Banking.Lending.

Table ~~4a:~~5a: ~~Community~~Consumer Banking and Lending – Income Statement and Selected Metrics

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions, except average balances which are in billions) 2020 2019 $
Change %
Change 2020 2019 $
Change %
Change
Net interest income $ 5,587 6,769 (1,182) (17) % $ 18,073 21,083 (3,010) (14) %
Noninterest income (1)
Deposit-related fees 723 952 (229) (24) 2,207 2,675 (468) (17)
Trust and investment fees:
Brokerage advisory, commissions and other fees (2) 489 504 (15) (3) 1,440 1,433 7 —
Trust and investment management (2) 188 203 (15) (7) 556 612 (56) (9)
Investment banking (3) — (26) 26 100 (166) (64) (102) NM
Total trust and investment fees 677 681 (4) (1) 1,830 1,981 (151) (8)
Card fees 856 936 (80) (9) 2,397 2,723 (326) (12)
Lending-related fees 42 60 (18) (30) 128 191 (63) (33)
Mortgage banking 1,542 339 1,203 355 2,135 1,635 500 31
Net gains (losses) from trading activities (11) 19 (30) NM 24 13 11 85
Net gains (losses) on debt securities 240 (1) 241 NM 557 51 506 992
Net gains (losses) from equity securities (4) 587 822 (235) (29) (53) 1,894 (1,947) NM
Other 479 662 (183) (28) 1,686 2,548 (862) (34)
Total noninterest income 5,135 4,470 665 15 10,911 13,711 (2,800) (20)
Total revenue 10,722 11,239 (517) (5) 28,984 34,794 (5,810) (17)
Provision for credit losses 556 608 (52) (9) 5,652 1,797 3,855 215
Noninterest expense (5)
Personnel 5,688 5,533 155 3 17,146 16,941 205 1
Technology, telecommunications and equipment 775 691 84 12 2,305 2,150 155 7
Occupancy 649 584 65 11 1,863 1,668 195 12
Operating losses 1,209 1,806 (597) (33) 2,700 2,222 478 22
Professional and outside services 1,284 1,212 72 6 3,590 3,445 145 4
Advertising and promotion 139 252 (113) (45) 442 791 (349) (44)
Restructuring charges 718 — 718 NM 718 — 718 NM
Other (1,515) (1,312) (203) (15) (4,355) (3,550) (805) (23)
Total noninterest expense 8,947 8,766 181 2 24,409 23,667 742 3
Income (loss) before income tax expense (benefit) and
noncontrolling interests
1,219 1,865 (646) (35) (1,077) 9,330 (10,407) NM
Income tax expense (benefit) 703 667 36 5 (1,319) 1,929 (3,248) NM
Less: Net income from noncontrolling interests (6) 180 199 (19) (10) 82 432 (350) (81)
Net income $ 336 999 (663) (66) $ 160 6,969 (6,809) (98)
Average loans $ 457.6 459.0 (1.4) — $ 456.5 458.3 (1.8) —
Average deposits 881.7 789.7 92.0 12 843.0 777.7 65.3 8


	Quarter ended March 31,
($ in millions, unless otherwise noted)	2021			2020	$ Change	% Change
Income Statement
Net interest income	$	5,615		6,002	(387)	(6)	%
Noninterest income:
Deposit-related fees	661			879	(218)	(25)
Card fees	892			819	73	9
Mortgage banking	1,259			342	917	268
Other	227			607	(380)	(63)
Total noninterest income	3,039			2,647	392	15
Total revenue	8,654			8,649	5	—
Net charge-offs	370			621	(251)	(40)
Change in the allowance for credit losses	(789)			948	(1,737)	NM
Provision for credit losses	(419)			1,569	(1,988)	NM
Noninterest expense	6,267			6,257	10	—
Income before income tax expense	2,806			823	1,983	241
Income tax expense	702			205	497	242
Net income	$	2,104		618	1,486	240
Revenue by Line of Business
Consumer and Small Business Banking	$	4,550		4,861	(311)	(6)
Consumer Lending:
Home Lending	2,227			1,876	351	19
Credit Card	1,346			1,375	(29)	(2)
Auto	403			380	23	6
Personal Lending	128			157	(29)	(18)
Total revenue	$	8,654		8,649	5	—

Selected Metrics
Consumer Banking and Lending:
Return on allocated capital (1)	17.2		%	4.6
Efficiency ratio (2)	72			72
Headcount (#) (period-end)	123,547			133,394		(7)

Retail bank branches (#)	4,944			5,329		(7)
Digital active customers (# in millions) (3)	32.9			31.1		6
Mobile active customers (# in millions) (3)	26.7			24.9		7

Consumer and Small Business Banking:
Deposit spread (4)	1.6		%	2.0
Debit card purchase volume ($ in billions) (5)	$	108.5		90.6	17.9	20
Debit card purchase transactions (# in millions) (5)	2,266			2,195	71	3

(continued on following page)


12			Wells Fargo & Company

(continued from previous page)


	Quarter ended March 31,
($ in millions, unless otherwise noted)	2021			2020	$ Change	% Change
Home Lending:
Mortgage banking:
Net servicing income	$	(123)		257	(380)	NM
Net gains on mortgage loan originations/sales	1,382			85	1,297	NM
Total mortgage banking	$	1,259		342	917	268	%

Originations ($ in billions):
Retail	$	33.6		23.1	10.5	45
Correspondent	18.2			24.9	(6.7)	(27)
Total originations	$	51.8		48.0	3.8	8

% of originations held for sale (HFS)	75.8		%	69.6
Third-party mortgage loans serviced (period-end) ($ in billions) (6)	$	801.0		1,037.5	(236.5)	(23)
Mortgage servicing rights (MSR) carrying value (period-end)	7,536			8,126	(590)	(7)
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) (6)	0.94		%	0.78
Home lending loans 30+ days or more delinquency rate (7)(8)	0.56			0.71

Credit Card:
Point of sale (POS) volume ($ in billions)	$	21.1		19.9	1.2	6
New accounts (# in thousands) (9)	266			315		(16)
Credit card loans 30+ days or more delinquency rate (8)	2.01		%	2.60

Auto:
Auto originations ($ in billions)	$	7.0		6.5	0.5	8
Auto loans 30+ days or more delinquency rate (8)	1.22		%	2.31

Personal Lending:
New funded balances	$	413		667	(254)	(38)

NM – Not meaningful

(1)~~In third quarter 2020, service charges~~Return on deposit accounts, cash network fees, wire transfer and other remittance fees, and certain other fees were combined into a single line item for deposit-related fees; certain fees associated with lending activities were combined into a single line item for lending-related fees; and certain other fees were reclassifiedallocated capital is segment net income (loss) applicable to ~~other noninterest income. Prior period balances have been revised~~common stock divided by segment average allocated capital. Segment net income (loss) applicable to ~~conform with the current period presentation.~~common stock is segment net income (loss) less allocated preferred stock dividends.

(2)~~Represents~~Efficiency ratio is segment noninterest expense divided by segment total revenue (net interest income ~~on products~~ and ~~services for WIM customers served through Community Banking distribution channels which is eliminated in consolidation.~~noninterest income).

(3)~~Includes underwriting fees paid to Wells Fargo Securities for services related to~~Digital and mobile active customers is the ~~issuance~~number of ~~our corporate securities which are offset~~consumer and small business customers who have logged on via a digital or mobile device, respectively, in ~~our Wholesale Banking segment~~the prior 90 days. Digital active customers includes both online and ~~eliminated in consolidation.~~mobile customers.

(4)~~Primarily represents gains (losses) resulting from venture capital investments.~~Deposit spread is (i) the internal funds transfer pricing credit on segment deposits minus interest paid to customers for segment deposits, divided by (ii) average segment deposits.

(5)~~In third quarter 2020, expenses~~Debit card purchase volume and transactions reflect combined activity for ~~outside professional services, contract services,~~both consumer and outside data processing were combined into a single line item for professional and outside services expense; expenses for technology and equipment and telecommunications were combined into a single line item for technology, telecommunications and equipment expense; and certain other expenses were reclassified to other noninterest expense. Prior period balances have been revised to conform with the current period presentation.business debit card purchases.

(6)~~Reflects results attributable~~Excludes residential mortgage loans subserviced for others.

(7)Excludes residential mortgage loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) and loans held for sale.

(8)Beginning in second quarter 2020, customer payment deferral activities instituted in response to ~~noncontrolling interests predominantly associated with~~ the ~~Company’s consolidated venture capital investments.~~COVID-19 pandemic may have delayed the recognition of delinquencies for those customers who would have otherwise moved into past due status.

(9)Excludes certain private label new account openings.

~~Third~~First quarter ~~2020~~2021 vs. ~~third~~first quarter ~~2019~~

2020

Revenue ~~decreased~~was largely unchanged reflecting:

•higher card fees driven by lower credit card rewards costs, partially offset by lower late fees due to higher payment rates; and

•higher mortgage banking noninterest income driven by higher HFS origination volumes and higher margins in our retail production channel, partially offset by lower servicing income due to lower servicing fees on lower balances of loans serviced for others and lower income from MSR valuation changes and related hedges;

partially offset by:

•lower net interest income reflecting the lower interest rate environment and ~~changes in the mix of earning assets and funding sources;~~lower loan balances as paydowns exceeded originations;

•lower deposit-related fees driven by ~~lower~~ ~~customer transaction volumes and~~ higher average consumer deposit account balances due to the economic slowdown associated with the COVID-19 pandemic, as well as fee waivers and reversals as part of our actions to support customers during the COVID-19 pandemic;

•~~lower net gains from equity securities due to impairments;~~ and

•lower other income driven by ~~higher~~lower gains ~~in third quarter 2019 related to sales of PCI loans;~~on loan sales.

~~partially offset by:~~

•Provision for credit losses~~higher mortgage banking revenue due to an increase in real estate HFS origination volumes and higher MSR valuation gains, net of hedge results,~~ decreased driven by ~~favorable hedge results.~~an improving economic environment.

Noninterest expense ~~increased due to:~~

•higher restructuring charges driven predominantly by severance costs, as well as facility closure costs, related to our efficiency initiatives that commenced in third quarter 2020. All restructuring charges were included in the Community Banking segment. For additional information on

~~Earnings Performance (continued~~)

~~restructuring charges, see Note 2~~ (~~Restructuring Charges) to Financial Statements in this Report;~~

•~~higher personnel expense, and technology, telecommunications and equipment expense;~~was largely unchanged reflecting:

•higher charitable ~~contributions~~donations expense ~~within other expense; and~~due to the donation of PPP processing fees;

•higher FDIC deposit assessment expense ~~within other expense~~ driven by a higher assessment ~~rate~~rate;

•higher expense allocated from enterprise functions, reflecting risk management and ~~higher deposit balances;~~technology support; and

•higher personnel expense driven by higher revenue-related compensation in Home Lending, partially offset by lower branch staffing expense related to efficiency initiatives in Consumer and Small Business Banking;

offset by:

•lower operating losses ~~as third quarter 2019 included a $1.6 billion discrete~~due to lower expense for litigation ~~accrual related to retail sales practices matters;~~and customer remediation accruals; and

•lower advertising and promotion expense.


			Wells Fargo & Company			13

~~Average deposits~~Earnings Performance (continued)

Table 5b: ~~increased~~Consumer Banking and Lending – Balance Sheet


	Quarter ended March 31,
(in millions)	2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Loans by Line of Business:
Home Lending	$	243,036	276,827	(33,791)	(12)	%
Auto	49,518		49,493	25	—
Credit Card	35,205		39,756	(4,551)	(11)
Small Business	20,137		9,715	10,422	107
Personal Lending	5,185		6,771	(1,586)	(23)
Total loans	$	353,081	382,562	(29,481)	(8)
Total deposits	789,439		652,706	136,733	21
Allocated capital	48,000		48,000	—	—

Selected Balance Sheet Data (period-end)
Loans by Line of Business:
Home Lending	$	230,478	275,395	(44,917)	(16)
Auto	50,007		49,779	228	—
Credit Card	34,246		38,582	(4,336)	(11)
Small Business	20,820		9,753	11,067	113
Personal Lending	4,998		6,692	(1,694)	(25)
Total loans	$	340,549	380,201	(39,652)	(10)
Total deposits	837,765		672,603	165,162	25

First quarter 2021 vs. first quarter 2020

Total loans (average and period-end) decreased as growth in small business loans driven by ~~government stimulus programs and lower consumer spending due to~~loans funded under the ~~COVID-19 pandemic.~~

~~First nine months of 2020 vs. first nine months of 2019~~

~~Revenue~~ ~~decreased driven by:~~

•~~lower net interest income reflecting the lower interest rate environment;~~

•~~a decrease in deposit-related fees and card fees driven~~PPP was more than offset by lower customer transaction volumes and higher average consumer deposit account balances due to the economic slowdown associated with the COVID-19 pandemic, as well as fee waivers and reversals as part of our actions to support customers during the COVID-19 pandemic;

•~~net losses from equity securities due to impairments and changes~~paydowns exceeding originations in the ~~value of deferred compensation plan investments (largely offset~~home lending, credit card, and personal lending portfolios. Home lending loan balances were also impacted by actions taken in ~~personnel expense);~~2020 to suspend certain non-conforming residential mortgage and

•~~lower other income driven by higher gains in third quarter 2019 related to sales of PCI loans;~~

~~partially offset by:~~

•~~higher mortgage banking revenue as a result of an increase in real estate HFS origination volumes; and~~

•~~higher gains on debt securities.~~

~~Provision for credit losses~~ ~~increased driven by a decline in economic conditions due to the impact of the COVID-19 pandemic.~~

~~Noninterest expense~~ ~~increased due to:~~

•~~higher operating losses, personnel expense, occupancy expense, FDIC deposit assessment expense within other expense, and charitable donations within other expense;~~

~~partially offset by:~~

•~~lower advertising and promotion expense and travel and entertainment expense within other expense; and~~

•~~lower stock-based compensation expense within personnel expense and lower deferred compensation plan expense within personnel expense (largely offset by net losses from~~ home equity ~~securities).~~originations.

~~Average~~Total deposits (average and period-end) increased driven by government stimulus programs and lower consumer spending due to the COVID-19 pandemic.


14			Wells Fargo & Company

~~Wholesale~~Commercial Bankingprovides financial solutions to ~~businesses with annual sales generally in excess of $5 million~~private, family owned and ~~to financial institutions globally.~~certain public companies. Products and ~~businesses~~services include ~~Commercial Banking, Commercial Real Estate, Corporate~~banking and ~~Investment~~credit products across multiple industry sectors and municipalities, secured lending and lease products, and treasury management. In March 2021, we

announced an agreement to sell our Corporate Trust Services business and expect to move the business from the Commercial Banking ~~Credit Investment Portfolio, Treasury Management,~~operating segment to Corporate in second quarter 2021. Table 5c and ~~Commercial Capital.~~ Table ~~4b provides~~5d provide additional ~~financial~~ information for ~~Wholesale~~Commercial Banking.

Table ~~4b:~~5c: ~~Wholesale~~Commercial Banking – Income Statement and Selected Metrics

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions, except average balances which are in billions) 2020 2019 $
Change %
Change 2020 2019 $
Change %
Change
Net interest income $ 3,481 4,382 (901) (21) % $ 11,508 13,451 (1,943) (14) %
Noninterest income (1)
Deposit-related fees 574 527 47 9 1,676 1,610 66 4
Trust and investment fees:
Brokerage advisory, commissions and other fees 70 62 8 13 239 214 25 12
Trust and investment management 140 121 19 16 401 352 49 14
Investment banking 440 510 (70) (14) 1,544 1,397 147 11
Total trust and investment fees 650 693 (43) (6) 2,184 1,963 221 11
Card fees 55 90 (35) (39) 203 271 (68) (25)
Lending-related fees 310 314 (4) (1) 897 925 (28) (3)
Mortgage banking 49 128 (79) (62) 154 300 (146) (49)
Net gains from trading activities 363 247 116 47 1,198 806 392 49
Net gains on debt securities 24 4 20 500 156 97 59 61
Net gains (losses) from equity securities 59 135 (76) (56) (52) 328 (380) NM
Other 29 422 (393) (93) 50 1,367 (1,317) (96)
Total noninterest income 2,113 2,560 (447) (17) 6,466 7,667 (1,201) (16)
Total revenue 5,594 6,942 (1,348) (19) 17,974 21,118 (3,144) (15)
Provision for credit losses 219 92 127 138 8,535 254 8,281 NM
Noninterest expense (2)
Personnel 1,414 1,455 (41) (3) 4,109 4,382 (273) (6)
Technology, telecommunications and equipment 10 16 (6) (38) 34 48 (14) (29)
Occupancy 116 95 21 22 326 286 40 14
Operating losses 9 16 (7) (44) 186 27 159 589
Professional and outside services 222 263 (41) (16) 651 760 (109) (14)
Advertising and promotion 2 8 (6) (75) 8 23 (15) (65)
Other 2,240 2,036 204 10 6,425 6,083 342 6
Total noninterest expense 4,013 3,889 124 3 11,739 11,609 130 1
Income (loss) before income tax expense (benefit) and
noncontrolling interests
1,362 2,961 (1,599) (54) (2,300) 9,255 (11,555) NM
Income tax expense (benefit) (3) (127) 315 (442) NM (1,959) 1,049 (3,008) NM
Less: Net income from noncontrolling interests 1 2 (1) (50) 3 3 — —
Net income (loss) $ 1,488 2,644 (1,156) (44) $ (344) 8,203 (8,547) NM
Average loans $ 455.1 474.3 (19.2) (4) $ 481.2 474.9 6.3 1
Average deposits 418.8 422.0 (3.2) (1) 438.8 414.1 24.7 6


	Quarter ended March 31,
($ in millions)	2021			2020	$ Change	% Change
Income Statement
Net interest income	$	1,283		1,774	(491)	(28)	%
Noninterest income:
Deposit-related fees	317			302	15	5
Lending-related fees	136			128	8	6
Lease income	174			198	(24)	(12)
Other	298			100	198	198
Total noninterest income	925			728	197	27
Total revenue	2,208			2,502	(294)	(12)
Net charge-offs	39			170	(131)	(77)
Change in the allowance for credit losses	(438)			871	(1,309)	NM
Provision for credit losses	(399)			1,041	(1,440)	NM
Noninterest expense	1,766			1,697	69	4
Income (loss) before income tax expense (benefit)	841			(236)	1,077	456
Income tax expense (benefit)	203			(61)	264	433
Less: Net income from noncontrolling interests	1			1	—	—
Net income (loss)	$	637		(176)	813	462

Revenue by Line of Business
Middle Market Banking	$	1,159		1,455	(296)	(20)
Asset-Based Lending and Leasing	898			843	55	7
Other	151			204	(53)	(26)
Total revenue	$	2,208		2,502	(294)	(12)

Revenue by Product
Lending and leasing	$	1,193		1,411	(218)	(15)
Treasury management and payments	749			982	(233)	(24)
Other	266			109	157	144
Total revenue	$	2,208		2,502	(294)	(12)

Selected Metrics
Return on allocated capital	12.3		%	(4.7)
Efficiency ratio	80			68
Headcount (#) (period-end)	22,657			24,036		(6)

NM – Not meaningful

~~(1)In third~~

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

~~(2)In third~~2021 vs. first quarter 2020 expenses for outside professional services, contract services, and outside data processing were combined into a single line item for professional and outside services expense; expenses for technology and equipment and telecommunications were combined into a single line item for technology, telecommunications and equipment expense; and certain other expenses were reclassified to other noninterest expense. Prior period balances have been revised to conform with the current period presentation.

~~(3)~~Income tax expense for our Wholesale Banking operating segment included income tax credits related to low income housing and renewable energy investments of $469 million and $1.4 billion for the third quarter and first nine months of 2020, respectively, and $422 million and $1.3 billion for the third quarter and first nine months of 2019, respectively.

~~Third quarter 2020 vs. third quarter 2019~~

Revenue decreased driven by:

•lower net interest income reflecting the lower interest rate environment ~~as well as~~and lower average loan ~~balances and lower funds transfer pricing credit earned from lower deposit~~ balances;

•lower other noninterest income due to lower commercial real estate brokerage fees related to our sale of Eastdil in fourth quarter 2019, lower community lending investments, lower strategic capital and renewable energy equity method income, and lower lease income; and

•lower ~~investment banking fees, mortgage banking fees, and gains from equity securities;~~lease income reflecting a reduction in the size of the operating lease asset portfolio;

partially offset by:

•higher ~~gains from trading activities~~other noninterest income due to impairments on equity securities in first quarter 2020; and ~~gains on debt securities, as well as higher deposit-related fees.~~

•higher treasury management fees on commercial accounts, included in deposit-related fees, driven by a lower earnings credit rate due to the lower interest rate environment.

Provision for credit losses ~~increased reflecting~~decreased driven by an improving economic ~~uncertainty due to the impact of the COVID-19 pandemic on our commercial loan portfolios, including the oil and gas portfolio.~~environment.

Noninterest expense increased driven by:

•higher ~~other expense,~~expenses allocated from enterprise functions, including ~~increased risk management expense;~~higher technology expenses;

partially offset by:

•lower spending related to efficiency initiatives, including lower personnel expense ~~travel expense within other expense, and project-related expense within~~from reduced headcount;

•lower professional and outside services ~~expense.~~expense reflecting decreased project-related expense; and

•lower lease expense reflecting a reduction in the size of the operating lease asset portfolio.


			Wells Fargo & Company			15

~~Average~~Earnings Performance (continued)

Table 5d:Commercial Banking – Balance Sheet


	Quarter ended March 31,
(in millions)	2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial	$	120,929	154,308	(33,379)	(22)	%
Commercial real estate	48,574		53,288	(4,714)	(9)
Lease financing and other	13,640		17,261	(3,621)	(21)
Total loans	$	183,143	224,857	(41,714)	(19)
Loans by Line of Business:
Middle Market Banking	$	104,379	116,232	(11,853)	(10)
Asset-Based Lending and Leasing and Other	78,764		108,625	(29,861)	(27)


Total loans	$	183,143	224,857	(41,714)	(19)
Total deposits	207,993		193,454	14,539	8
Allocated capital	19,500		19,500	—	—

Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial	$	119,322	170,893	(51,571)	(30)
Commercial real estate	47,832		53,531	(5,699)	(11)
Lease financing and other	13,534		17,179	(3,645)	(21)
Total loans	$	180,688	241,603	(60,915)	(25)
Loans by Line of Business:
Middle Market Banking	$	102,372	125,192	(22,820)	(18)
Asset-Based Lending and Leasing and Other	78,316		116,411	(38,095)	(33)


Total loans	$	180,688	241,603	(60,915)	(25)
Total deposits	210,088		209,495	593	—

First quarter 2021 vs. first quarter 2020

Total loans (average and period-end) decreased driven by lower loan demand, including lower line utilization, and higher paydowns reflecting continued client liquidity and strength in the capital markets.

Total deposits (average) increased due to government stimulus programs, customers’ preferences for liquidity given the economic uncertainty associated with the COVID-19 pandemic, and lower investment spending.


16			Wells Fargo & Company

~~Earnings Performance (continued~~)

~~Average deposits~~ Corporate and Investment Banking~~decreased reflecting continued actions taken~~ delivers a suite of capital markets, banking, and financial products and services to ~~manage under the asset cap.~~corporate, commercial real estate, government and institutional clients globally. Products and services include corporate banking, investment banking, treasury management, commercial real

estate lending and servicing, equity and fixed income solutions, as well as sales, trading, and research capabilities. Table 5e and Table 5fprovide additional information for Corporate and Investment Banking.

Table 5e:Corporate and Investment Banking – Income Statement and Selected Metrics


	Quarter ended March 31,
($ in millions)	2021			2020	$ Change	% Change
Income Statement
Net interest income	$	1,778		2,019	(241)	(12)	%
Noninterest income:
Deposit-related fees	266			257	9	4
Lending-related fees	183			172	11	6
Investment banking fees	611			477	134	28
Net gains from trading activities	331			35	296	846
Other	454			428	26	6
Total noninterest income	1,845			1,369	476	35
Total revenue	3,623			3,388	235	7
Net charge-offs	37			47	(10)	(21)
Change in the allowance for credit losses	(321)			1,078	(1,399)	NM
Provision for credit losses	(284)			1,125	(1,409)	NM
Noninterest expense	1,833			1,870	(37)	(2)
Income before income tax expense	2,074			393	1,681	428
Income tax expense	500			101	399	395

Net income	$	1,574		292	1,282	439

Revenue by Line of Business
Banking:
Lending	$	453		457	(4)	(1)
Treasury Management and Payments	370			498	(128)	(26)
Investment Banking	416			361	55	15
Total Banking	1,239			1,316	(77)	(6)
Commercial Real Estate	931			883	48	5
Markets:
Fixed Income, Currencies, and Commodities (FICC)	1,144			914	230	25
Equities	252			396	(144)	(36)
Credit Adjustment (CVA/DVA) and Other	36			(108)	144	133
Total Markets	1,432			1,202	230	19
Other	21			(13)	34	262
Total revenue	$	3,623		3,388	235	7

Selected Metrics
Return on allocated capital	17.8		%	2.4
Efficiency ratio	51			55
Headcount (#) (period-end)	8,249			7,965		4

NM – Not meaningful

First ~~nine months of 2020~~quarter 2021 vs. first ~~nine months of 2019~~

quarter 2020

Revenue ~~decreased~~increased driven by:

•higher net gains from trading activities driven by higher client demand for asset-backed finance products, other credit products, and municipal bonds, partially offset by lower client demand for interest rate products and lower revenue in equities and commodities; and

•higher investment banking fees driven by higher advisory fees and equity and debt origination fees;

partially offset by:

•lower net interest income reflecting the lower interest rate environment, ~~partially offset by higher investment asset spread and higher average loan~~lower deposit balances, and ~~higher funds transfer pricing credit earned from higher deposit balances; and~~

•lower noninterest income driven by lower other income from community lending investments, lower strategic capital and renewable energy equity method income, and lower commercial real estate brokerage fees related to our sale of Eastdil in fourth quarter 2019, as well as lower mortgage banking fees and net losses from equity securities;

~~partially offset by:~~

•~~higher investment banking fees, gains from trading activities, gains on debt securities, and deposit-related fees.~~trading-related assets.

Provision for credit losses ~~increased due to:~~decreased driven by an improving economic environment.


			Wells Fargo & Company			17

Earnings Performance (continued)

Noninterest expense decreased driven by:

•~~increases~~lower operating losses due to lower expense for litigation accruals and customer remediation accruals;

•lower expenses allocated from enterprise functions reflecting lower spending due to efficiency initiatives; and

•a reduction in ~~the ACL reflecting current~~business travel and ~~forecasted economic conditions~~company events due to the impact of the COVID-19 pandemic; ~~and~~

•~~higher charge-offs in the oil and gas, commercial real estate, and commercial capital portfolios.~~

~~Noninterest expense~~ ~~increased due to:~~

•~~higher other expense, including increased risk management expense and charitable donations; and~~

•~~higher operating losses;~~

partially offset by:

•~~lower~~higher personnel expense on revenue-related incentive compensation.

Table 5f:Corporate and Investment Banking – Balance Sheet


	Quarter ended March 31,
(in millions)	2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial	$	162,290	178,254	(15,964)	(9)	%
Commercial real estate	83,858		79,988	3,870	5
Total loans	$	246,148	258,242	(12,094)	(5)
Loans by Line of Business:
Banking	$	86,536	96,844	(10,308)	(11)
Commercial Real Estate	107,609		105,194	2,415	2
Markets	52,003		56,204	(4,201)	(7)
Total loans	$	246,148	258,242	(12,094)	(5)
Trading-related assets:
Trading account securities	$	106,358	123,327	(16,969)	(14)
Reverse repurchase agreements/securities borrowed	63,965		89,132	(25,167)	(28)
Derivative assets	27,102		18,284	8,818	48
Total trading-related assets	$	197,425	230,743	(33,318)	(14)
Total assets	511,813		551,987	(40,174)	(7)
Total deposits	194,501		266,167	(71,666)	(27)
Allocated capital	34,000		34,000	—	—

Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial	$	163,808	206,620	(42,812)	(21)
Commercial real estate	84,836		81,152	3,684	5
Total loans	$	248,644	287,772	(39,128)	(14)
Loans by Line of Business:
Banking	$	88,042	118,682	(30,640)	(26)
Commercial Real Estate	108,508		109,937	(1,429)	(1)
Markets	52,094		59,153	(7,059)	(12)
Total loans	$	248,644	287,772	(39,128)	(14)
Trading-related assets:
Trading account securities	$	100,586	110,544	(9,958)	(9)
Reverse repurchase agreements/securities borrowed	71,282		79,560	(8,278)	(10)
Derivative assets	24,228		24,834	(606)	(2)
Total trading-related assets	$	196,096	214,938	(18,842)	(9)
Total assets	512,340		574,660	(62,320)	(11)
Total deposits	188,920		260,281	(71,361)	(27)

First quarter 2021 vs. first quarter 2020

Total assets (average and period-end) decreased predominantly due to a decline in trading-related assets reflecting continued actions to manage under the asset cap and a decline in loan balances driven by lower ~~lease~~demand due to the COVID-19 pandemic and ~~travel expenses within other expense, as well as~~higher paydowns reflecting continued client liquidity and strength in the ~~impact of the sale of Eastdil in fourth quarter 2019.~~capital markets.

~~Average loans~~Total deposits (average and period-end) ~~increased~~decreased reflecting ~~broad-based growth across~~continued actions to manage under the ~~lines of business driven by draws of revolving lines due to the economic slowdown associated with the COVID-19 pandemic.~~asset cap.

~~Average deposits~~ ~~increased reflecting customers’ preferences for liquidity due to the COVID-19 pandemic.~~


18			Wells Fargo & Company

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 and The Private ~~Bank, Abbot Downing,~~Bank. We serve clients’ brokerage needs, 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~~In February 2021, we

~~and provide investment management capabilities delivered~~announced an agreement to ~~global institutional clients through separate accounts and the~~sell Wells Fargo ~~Funds. The sale of our IRT~~Asset Management and moved the business ~~closed on July 1, 2019. For~~from the Wealth and Investment Management operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. Table 5g and Table 5h provide additional information ~~on the sale of our IRT business, including its impact on our AUM~~for Wealth and ~~AUA, see the “Earnings Performance – Noninterest Income” section in this Report.~~

~~Table 4c provides additional financial information for WIM.~~Investment Management.

Table ~~4c:~~5g: Wealth and Investment Management

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions, except average balances which are in billions) 2020 2019 $
Change %
Change 2020 2019 $
Change %
Change
Net interest income $ 771 989 (218) (22) % $ 2,374 3,127 (753) (24) %
Noninterest income (1)
Deposit-related fees 7 6 1 17 20 18 2 11
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,265 2,272 (7) — 6,701 6,644 57 1
Trust and investment management 610 615 (5) (1) 1,760 1,978 (218) (11)
Investment banking 4 — 4 NM 6 4 2 50
Total trust and investment fees 2,879 2,887 (8) — 8,467 8,626 (159) (2)
Card fees 1 2 (1) (50) 3 5 (2) (40)
Lending-related fees 2 2 — — 6 6 — —
Mortgage banking (3) (3) — — (9) (9) — —
Net gains from trading activities 9 10 (1) (10) 8 42 (34) (81)
Net gains (losses) from equity securities 3 (1) 4 400 (114) 170 (284) NM
Other 125 1,249 (1,124) (90) 414 1,285 (871) (68)
Total noninterest income 3,023 4,152 (1,129) (27) 8,795 10,143 (1,348) (13)
Total revenue 3,794 5,141 (1,347) (26) 11,169 13,270 (2,101) (16)
Provision (reversal of provision) for credit losses (9) 3 (12) NM 256 6 250 NM
Noninterest expense (2)
Personnel 1,937 2,060 (123) (6) 5,911 6,369 (458) (7)
Technology, telecommunications and equipment 6 115 (109) (95) (77) 145 (222) NM
Occupancy 123 113 10 9 347 337 10 3
Operating losses 3 101 (98) (97) 27 165 (138) (84)
Professional and outside services 262 271 (9) (3) 825 775 50 6
Advertising and promotion 3 7 (4) (57) 13 21 (8) (38)
Other 850 764 86 11 2,394 2,168 226 10
Total noninterest expense 3,184 3,431 (247) (7) 9,440 9,980 (540) (5)
Income before income tax expense and noncontrolling interests 619 1,707 (1,088) (64) 1,473 3,284 (1,811) (55)
Income tax expense 153 426 (273) (64) 369 819 (450) (55)
Less: Net income (loss) from noncontrolling interests 3 1 2 200 (2) 6 (8) NM
Net income $ 463 1,280 (817) (64) $ 1,106 2,459 (1,353) (55)
Average loans $ 79.8 75.9 3.9 5 $ 79.0 75.1 3.9 5
Average deposits 175.3 142.4 32.9 23 166.2 146.3 19.9 14


	Quarter ended March 31,
($ in millions, unless otherwise noted)	2021			2020	$ Change	% Change
Income Statement
Net interest income	$	657		838	(181)	(22)	%
Noninterest income:
Investment advisory and other asset-based fees (1)	2,306			2,073	233	11
Commissions and brokerage services fees (1)	555			593	(38)	(6)
Other	26			(234)	260	111
Total noninterest income	2,887			2,432	455	19
Total revenue	3,544			3,270	274	8
Net charge-offs	—			1	(1)	(100)
Change in the allowance for credit losses	(43)			7	(50)	NM
Provision for credit losses	(43)			8	(51)	NM
Noninterest expense	3,028			2,657	371	14
Income before income tax expense	559			605	(46)	(8)
Income tax expense	140			152	(12)	(8)

Net income	$	419		453	(34)	(8)

Selected Metrics
Return on allocated capital	18.9		%	20.2
Efficiency ratio	85			81
Headcount (#) (period-end)	27,993			29,266		(4)
Advisory assets ($ in billions)	$	885		661	224	34
Other brokerage assets and deposits ($ in billions)	1,177			950	227	24
Total client assets ($ in billions)	$	2,062		1,611	451	28
Annualized revenue per advisor ($ in thousands) (2)	1,058			909	149	16
Total financial and wealth advisors (#) (period-end)	13,277			14,364		(8)

Selected Balance Sheet Data (average)
Total loans	$	80,839		77,883	2,956	4
Total deposits	173,678			145,388	28,290	19
Allocated capital	8,750			8,750	—	—

Selected Balance Sheet Data (period-end)
Total loans	$	81,175		78,182	2,993	4
Total deposits	175,999			162,370	13,629	8

NM – Not meaningful

(2)~~In third quarter 2020, expenses~~Represents annualized total revenue divided by average total financial and wealth advisors for outside professional services, contract services, and outside data processing were combined into a single line item for professional and outside services expense; expenses for technology and equipment and telecommunications were combined into a single line item for technology, telecommunications and equipment expense; and certain other expenses were reclassified to other noninterest expense. Prior period balances have been revised to conform with the ~~current period presentation.~~period.

~~Third~~First quarter ~~2020~~2021 vs. ~~third~~first quarter ~~2019~~

2020

Revenue ~~decreased~~increased driven by:

•higher investment advisory and other asset-based fees driven by higher market valuations on WIM advisory assets; and

•higher deferred compensation plan investment results included in other noninterest income (largely offset by personnel expense);

partially offset by:

•lower net interest income reflecting the lower interest rate environment, partially offset by higher ~~funds transfer pricing credit earned from higher~~ average deposit ~~balances; and~~balances.

Provision for credit losses decreased driven by an improving economic environment.

•Noninterest expense~~lower noninterest income predominantly related~~ increased due to ~~a $1.1 billion gain~~higher personnel expense driven by higher revenue-related compensation and higher deferred compensation expense (largely offset by net gains from ~~the sale of our IRT business in third quarter 2019 (in other income)~~equity securities).

~~Noninterest expense~~Total deposits (average and period-end) ~~decreased driven by:~~

•~~lower personnel expense from lower incentive compensation;~~

•lower technology, telecommunications and equipment expense driven by a $103 million impairment of capitalized software reflecting a reevaluation of software under development in third quarter 2019; and

•~~lower operating losses;~~

~~partially offset by:~~

•~~higher project spending on regulatory and compliance related initiatives included within other expense.~~

~~Average loans~~ ~~increased driven by growth in real estate 1-4 first mortgage loans.~~

~~Average deposits~~ increased primarily due to growth in brokerage clients’ cash balances.


			Wells Fargo & Company			19

~~Earnings Performance (continued~~)

~~First nine months of 2020 vs. first nine months of 2019~~

~~Revenue~~Earnings Performance ~~decreased driven by:~~

•~~lower net interest income reflecting the lower interest rate environment, partially offset by higher funds transfer pricing credit earned from higher average deposit balances; and~~

•lower noninterest income largely related to a $1.1 billion gain from the sale of our IRT business in third quarter 2019 (in other income), as well as net losses from equity securities driven by a decline in deferred compensation plan investment results (largely offset by lower personnel expense), and lower trust and investment management income;

~~partially offset by:~~

•~~higher retail brokerage advisory fees (priced at the beginning of the quarter).~~

~~Provision for credit losses~~ ~~increased due to current and forecasted economic conditions due to the impact of the COVID-19 pandemic.~~

~~Noninterest expense~~ ~~decreased due to:~~

•~~lower personnel expense driven by lower deferred compensation plan expense (largely offset by net losses from equity securities) and lower incentive compensation;~~

•~~lower operating losses;~~(continued)

~~partially offset by:~~

•~~higher project spending on regulatory and compliance related initiatives included within other expense.~~

~~Average loans~~ ~~increased driven by growth in real estate 1-4 first mortgage loans.~~

~~Average deposits~~ ~~increased primarily due to growth in brokerage clients’ cash balances.~~

~~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~~WIM Advisory Assets Brokerage advisory, commissions and other fees are received for providing full-service and discount brokerage services to retail brokerage clients. A majority of our retail brokerage client assets are in accounts that earn brokerage commissions generally based on the number and size of transactions executed at the client’s direction. In addition to ~~these types of~~transactional accounts, ~~we also offer~~WIM offers advisory account relationships ~~as an important component of our broader strategy of meeting~~to brokerage ~~clients’ financial needs.~~customers. Fees from advisory accounts are based on 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. 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 September 30, 2020 and 2019.

~~Table 4d:Retail Brokerage Client Assets~~

September 30,
($ in billions) 2020 2019
Retail brokerage client assets $ 1,625.8 1,629.4
Advisory account client assets 601.7 569.4
Advisory account client assets as a percentage of total client assets 37 % 35

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.

WIM also manages personal trust and other assets for high net worth clients, with fee income earned based on a percentage of the market value of these assets. Table 5h presents advisory assets activity by WIM line of business for first quarter 2021 and 2020. Management believes that advisory assets is a useful metric because it allows management, investors, and others to assess how changes in asset amounts may impact the generation of certain asset-based fees.

For ~~third~~first quarter ~~2020~~2021 and ~~2019,~~2020, the average fee rate

by account type ranged from 8050 to 120 basis points. ~~Table 4e presents advisory account client assets activity by account type for the third quarter and first nine months of 2020 and 2019.~~

Table ~~4e:~~5h: ~~Retail Brokerage~~WIM Advisory ~~Account Client~~ Assets


		Quarter ended						Nine months ended							Quarter ended
(in billions)	(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	(in billions)	Balance, beginning of period		Inflows (1)	Outflows (2)	Market impact (3)	Balance, end of period
September 30, 2020
March 31, 2021														March 31, 2021
Client-directed (4)														Client-directed (4)	$	186.3	10.6	(9.8)	5.6	192.7
Financial advisor-directed (5)														Financial advisor-directed (5)	211.0		12.3	(9.0)	9.1	223.4
Separate accounts (6)														Separate accounts (6)	174.6		8.5	(7.0)	7.0	183.1
Mutual fund advisory (7)														Mutual fund advisory (7)	91.4		4.0	(3.5)	2.8	94.7
Total Retail Brokerage														Total Retail Brokerage	$	663.3	35.4	(29.3)	24.5	693.9
Total Private Wealth (8)														Total Private Wealth (8)	189.4		8.9	(12.5)	5.7	191.5
Total WIM advisory assets														Total WIM advisory assets	$	852.7	44.3	(41.8)	30.2	885.4
March 31, 2020														March 31, 2020
Client directed (4)	Client directed (4)	$	162.2	8.8	(10.2)	9.5	170.3	$	169.4	26.2	(27.6)	2.3	170.3	Client directed (4)	$	169.4	10.1	(9.6)	(27.2)	142.7
Financial advisor directed (5)	Financial advisor directed (5)	176.8		9.9	(9.0)	11.6	189.3	176.3		29.0	(24.2)	8.2	189.3	Financial advisor directed (5)	176.3		10.7	(8.6)	(26.0)	152.4
Separate accounts (6)	Separate accounts (6)	151.5		5.9	(6.0)	8.0	159.4	160.1		17.7	(20.3)	1.9	159.4	Separate accounts (6)	160.1		6.8	(8.5)	(24.2)	134.2
Mutual fund advisory (7)	Mutual fund advisory (7)	78.9		2.9	(3.3)	4.2	82.7	83.7		8.3	(10.5)	1.2	82.7	Mutual fund advisory (7)	83.7		3.2	(4.5)	(12.9)	69.5
Total advisory client assets		$	569.4	27.5	(28.5)	33.3	601.7	$	589.5	81.2	(82.6)	13.6	601.7
September 30, 2019
Client directed (4)		$	166.2	8.3	(8.3)	0.7	166.9	$	151.5	24.8	(27.3)	17.9	166.9
Financial advisor directed (5)		163.2		8.8	(7.0)	3.1	168.1	141.9		24.9	(23.4)	24.7	168.1
Separate accounts (6)		151.9		6.2	(6.4)	2.3	154.0	136.4		18.0	(21.3)	20.9	154.0
Mutual fund advisory (7)		80.0		2.9	(3.0)	0.5	80.4	71.3		8.6	(9.7)	10.2	80.4
Total advisory client assets		$	561.3	26.2	(24.7)	6.6	569.4	$	501.1	76.3	(81.7)	73.7	569.4
Total Retail Brokerage														Total Retail Brokerage	$	589.5	30.8	(31.2)	(90.3)	498.8
Total Private Wealth (8)														Total Private Wealth (8)	188.0		8.5	(11.0)	(23.7)	161.8
Total WIM advisory assets														Total WIM advisory assets	$	777.5	39.3	(42.2)	(114.0)	660.6

(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.

(8)Discretionary and non-discretionary portfolios held in personal trusts, investment agency, or custody accounts with fees earned based on a percentage of client assets.


20			Wells Fargo & Company

~~Trust~~

Corporate includes corporate treasury and enterprise functions, net of allocations (including funds transfer pricing, capital, liquidity and certain expenses), in support of the reportable operating segments, as well as our investment portfolio and affiliated venture capital and private equity partnerships. In addition, Corporate includes all restructuring charges related to our efficiency initiatives. See Note 19 (Restructuring Charges) to Financial Statements in this Report for additional information on restructuring charges. Corporate also includes certain lines of business that management has determined are no longer

consistent with the long-term strategic goals of the Company, including our student loan and rail car leasing businesses, as well as results for previously divested businesses. In February 2021, we announced an agreement to sell Wells Fargo Asset Management and moved the business from the Wealth and Investment ~~Client~~Management operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. Table 5i, Table 5j, and Table 5k provide additional information for Corporate.

Table 5i:Corporate – Income Statement and Selected Metrics


	Quarter ended March 31,
($ in millions, unless otherwise noted)	2021		2020	$ Change	% Change
Income Statement
Net interest income	$	(430)	819	(1,249)	NM
Noninterest income	1,319		(119)	1,438	NM
Total revenue	889		700	189	27	%
Net charge-offs	77		102	(25)	(25)
Change in the allowance for credit losses	20		160	(140)	(88)
Provision for credit losses	97		262	(165)	(63)
Noninterest expense	1,095		567	528	93
Loss before income tax expense (benefit)	(303)		(129)	(174)	NM
Income tax expense (benefit)	(364)		554	(918)	NM
Less: Net income (loss) from noncontrolling interests (1)	53		(149)	202	136
Net income (loss)	$	8	(534)	542	101

Selected Metrics
Headcount (#) (period-end) (2)	82,067		77,606		6
Wells Fargo Asset Management assets under management ($ in billions)	$	590	518	72	14

NM – Not meaningful

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

(2)Beginning in first quarter 2021, employees who were notified of displacement remained as headcount in their respective operating segment rather than included in Corporate.

First quarter 2021 vs. first quarter 2020

Revenue increased driven by:

•higher gains on equity securities due to impairments in first quarter 2020 related to our affiliated venture capital and private equity partnerships;

•higher deferred compensation plan investment results (largely offset by personnel expense); and

•a gain on the sale of a portion of our student loan portfolio in first quarter 2021;

partially offset by:

•lower net interest income reflecting the lower interest rate environment and unfavorable hedge ineffectiveness accounting results; and

•lower gains on debt securities due to decreased sales volumes.

Provision for credit losses decreased driven by an improving economic environment.

Noninterest expense increased due to:

•higher stock-based compensation on higher market valuations;

•higher deferred compensation plan expense; and

•a write-down of goodwill in first quarter 2021 related to the sale of a portion of our student loan portfolio;

partially offset by:

•lower professional and outside services expense driven by reduced project spending due to efficiency initiatives.

As of March 31, 2021, our rail car leasing business had long-lived operating lease assets (as a lessor) of $5.6 billion, which was net of $1.8 billion of accumulated depreciation. The average age of our rail cars is 21 years and the rail cars are typically leased under short-term leases of 3 to 5 years. Our three largest concentrations, which represented 55% of our rail car fleet as of March 31, 2021, were rail cars used for the transportation of agricultural grain, coal, and cement/sand products. Impairments may result in the future based on changing economic and market conditions affecting the long-term demand and utility of specific types of rail cars. Our assumptions for impairment are sensitive to estimated utilization and rental rates, as well as the estimated economic life of the leased asset. For more information on the accounting for impairment of operating lease assets, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

Corporate includes assets under management (AUM) and assets under administration (AUA) for Institutional Retirement and Trust (IRT) client assets of $22 billion and $668 billion, respectively, at March 31, 2021, which we continue to administer at the direction of the buyer pursuant to a transition services agreement. The transition services agreement has been extended and will now terminate no later than December 2021.


			Wells Fargo & Company			21

Earnings Performance (continued)

Table 5j: Corporate – Balance Sheet


	Quarter ended March 31,
(in millions)	2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Cash, cash equivalents, and restricted cash	$	222,797	122,459	100,338	82	%
Available-for-sale debt securities	200,421		244,834	(44,413)	(18)
Held-to-maturity debt securities	217,346		157,788	59,558	38
Equity securities	10,904		13,970	(3,066)	(22)
Total loans	10,228		21,502	(11,274)	(52)
Total assets	727,440		629,210	98,230	16
Total deposits	27,861		80,248	(52,387)	(65)

Selected Balance Sheet Data (period-end)
Cash, cash equivalents, and restricted cash	$	257,887	123,943	133,944	108
Available-for-sale debt securities	188,724		239,051	(50,327)	(21)
Held-to-maturity debt securities	231,352		169,070	62,282	37
Equity securities	11,093		14,358	(3,265)	(23)
Total loans	10,516		22,085	(11,569)	(52)
Total assets	753,730		622,795	130,935	21
Total deposits	24,347		71,783	(47,436)	(66)

First quarter 2021 vs. first quarter 2020

Total assets (average and period-end) increased due to:

•an increase in cash, cash equivalents, and restricted cash managed by corporate treasury as a result of an increase in deposits from the reportable operating segments; and

•an increase in held-to-maturity debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;

partially offset by:

•a decline in available-for-sale debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;

•a decline in equity securities due to the transition from equity securities to derivative instruments for economic hedges of the deferred compensation plan liabilities in second quarter 2020 and a reduction in Federal Home Loan Bank stock; and

•a decline in loans due to the sale of a portion of our student loan portfolio in first quarter 2021.

Total deposits (average and period-end) decreased reflecting actions taken to manage under the asset cap.

Wells Fargo Asset Management (WFAM) Assets Under Management We earn ~~trust~~investment advisory and ~~investment management~~other asset-based fees from managing and administering assets ~~including mutual funds, separate accounts, and personal trust assets,~~ through our asset management and wealth businesses. Prior to the sale of our IRT business, which closed on July 1, 2019, we also earned fees from managing employee benefit trusts through the retirement business. Our asset management business is conducted by Wells Fargo Asset Management (WFAM),WFAM, which offers Wells Fargo proprietary mutual funds and manages institutional separate ~~accounts, and~~

~~our wealth business, which manages assets for high net worth clients.~~accounts. Generally, ~~our trust and investment management fee income is earned~~we earn fees from AUM where we have discretionary management authority over the investments and generate fees as a percentage of the market value of the AUM. ~~For additional information~~WFAM assets under management consist of equity, alternative, balanced, fixed income, money market, and stable value, and include client assets that are managed or sub-advised on ~~the sale~~behalf of ~~our IRT business, including its impact on our AUM and AUA, see the “Earnings Performance – Noninterest Income” section in this Report.~~other Wells Fargo lines of business. Table 4f5k presents WFAM AUM activity for first quarter 2021 and 2020. Management believes that AUM is a useful metric because it allows management, investors, and others to assess how changes in asset amounts may impact the ~~third quarter and first nine months~~generation of ~~2020 and 2019.~~certain asset-based fees.

Table ~~4f:~~5k: ~~WIM Trust and Investment –~~WFAM Assets Under Management

Quarter ended Nine months 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
September 30, 2020
Assets managed by WFAM (4):
Money market funds (5) $ 201.9 19.2 — — 221.1 $ 130.6 90.5 — — 221.1
Other assets managed 376.4 23.2 (24.1) 10.3 385.8 378.2 76.3 (79.2) 10.5 385.8
Assets managed by Wealth and IRT (6) 176.5 7.2 (10.6) 7.6 180.7 187.4 23.5 (31.8) 1.6 180.7
Total assets under management $ 754.8 49.6 (34.7) 17.9 787.6 $ 696.2 190.3 (111.0) 12.1 787.6
September 30, 2019
Assets managed by WFAM (4):
Money market funds (5) $ 119.8 9.6 — — 129.4 $ 112.4 17.0 — — 129.4
Other assets managed 375.3 16.4 (20.7) 3.0 374.0 353.5 57.9 (65.6) 28.2 374.0
Assets managed by Wealth and IRT (6) 181.9 7.9 (9.1) 1.1 181.8 170.7 25.3 (30.7) 16.5 181.8
Total assets under management $ 677.0 33.9 (29.8) 4.1 685.2 $ 636.6 100.2 (96.3) 44.7 685.2


	Quarter ended
(in billions)	Balance, beginning of period		Inflows (1)	Outflows (2)	Market impact (3)	Balance, end of period
March 31, 2021

Money market funds (4)	$	197.4	—	(6.2)	—	191.2
Other assets managed	405.6		23.8	(30.3)	0.1	399.2

Total WFAM assets under management	$	603.0	23.8	(36.5)	0.1	590.4
March 31, 2020

Money market funds (4)	$	130.6	35.6	—	—	166.2
Other assets managed	378.2		26.2	(28.6)	(24.2)	351.6

Total WFAM assets under management	$	508.8	61.8	(28.6)	(24.2)	517.8

(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 $4.8 billion and $5.4 billion as of September 30, 2020 and 2019, respectively, of client assets invested in proprietary funds managed by WFAM.~~


22			Wells Fargo & Company


Balance Sheet Analysis

At ~~September 30, 2020,~~March 31, 2021, our assets totaled ~~$1.92~~$1.96 trillion, ~~down $5.3~~up $4.4 billion from December 31, ~~2019. The decline in assets reflected:~~2020.

•~~a decrease in debt securities of $20.7 billion;~~

•~~a decrease in loans of $42.2 billion;~~

•~~a decrease in federal funds sold and securities purchased under resale agreements of $32.8 billion; and~~

•~~a decrease in equity securities of $17.1 billion;~~

~~partially offset by:~~

•~~an increase in cash, cash equivalents and restricted cash of $105.5 billion.~~

The following discussion provides additional information about the major components of our consolidated balance sheet. ~~Information regarding our capital and~~

See the “Capital Management” section in this Report for information on changes in our asset mix is included in the “Earnings Performance – Net Interest Income” and “Capital Management” sections and Note 23 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.equity.

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

Table 5:6: Available-for-Sale and Held-to-Maturity Debt Securities


		September 30, 2020					December 31, 2019					March 31, 2021					December 31, 2020
(in millions)		Amortized cost, net (1)		Net unrealized gain (loss)	Fair value	Weighted average expected maturity (yrs)	Amortized cost	Net unrealized gain (loss)	Fair value	Weighted average expected maturity (yrs)
($ in millions)											($ in millions)	Amortized cost, net (1)		Net unrealized gains	Fair value	Weighted average expected maturity (yrs)	Amortized cost, net (1)	Net unrealized gains	Fair value	Weighted average expected maturity (yrs)

Available-for-sale (2)	Available-for-sale (2)	216,311		4,262	220,573	4.5	260,060	3,399	263,459	4.7	Available-for-sale (2)	197,805		3,045	200,850	5.1	215,533	4,859	220,392	4.5
Held-to-maturity (3)	Held-to-maturity (3)	182,595		6,839	189,434	4.5	153,933	2,927	156,860	4.9	Held-to-maturity (3)	232,192		1,767	233,959	6.0	205,720	6,587	212,307	4.5
Total	Total	$	398,906	11,101	410,007	n/a	413,993	6,326	420,319	n/a	Total	$	429,997	4,812	434,809	n/a	421,253	11,446	432,699	n/a

(1)Represents amortized cost of the securities, net of the allowance for credit losses of ~~$79~~$41 million and $28 million related to available-for-sale debt securities and ~~$26~~$89 million and $41 million related to held-to-maturity debt securities at ~~September 30, 2020. The allowance for credit losses related to available-for-sale~~March 31, 2021, and ~~held-to-maturity debt securities was $0 at~~ December 31, ~~2019, due to our adoption of CECL on January 1,~~ 2020. ~~For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.~~

(2)Available-for-sale debt securities are carried on the consolidated balance sheet at fair ~~value, which includes the allowance for credit losses, subsequent to the adoption of CECL on January 1, 2020.~~value.

(3)Held-to-maturity debt securities are carried on the consolidated balance sheet at amortized cost, net of the allowance for credit ~~losses, subsequent to the adoption of CECL on January 1, 2020.~~losses.

Table 56 presents a summary of our portfolio of investments in available-for-sale (AFS) and held-to-maturity (HTM) debt securities. See the “Balance Sheet Analysis – Available-for-Sale and Held-to-Maturity Debt Securities” section in our 2020 Form 10-K for information on our investment management objectives and practices and the “Risk Management – Asset/Liability Management” section in this Report for information on liquidity and interest rate risk.

The fair value of AFS debt securities ~~which~~ decreased ~~in balance sheet carrying value~~ from December 31, ~~2019,~~2020, as purchases were more than offset by runoff, sales and ~~sales. While the overall portfolio decreased from December 31, 2019,~~transfers to HTM debt securities ~~increased~~ due to actions taken to reposition the overall portfolio for capital management purposes.

The net amortized cost of HTM debt securities increased from December 31, 2020, as purchases and transfers from AFS debt securities were partially offset by runoff.

At March 31, 2021, 93% of the combined AFS and HTM debt securities portfolio was rated AA- or above. Ratings are based on external ratings where available and, where not available, based on internal credit grades.

The total net unrealized gains on AFS and HTM debt securities decreased from December 31, 2020, driven by higher interest rates, partially offset by tighter credit spreads. See Note 53 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report for additional information on AFS and HTM debt securities, including a summary of debt securities by security type.

The total net unrealized gains on AFS debt securities increased from December 31, 2019, driven by lower interest rates, partially offset by wider credit spreads. For a discussion of our investment management objectives and practices, see the “Balance Sheet Analysis” section in our 2019 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.

Loan Portfolios

Table 67 provides a summary of total outstanding loans by portfolio segment. Commercial loans ~~decreased from~~were relatively flat compared with December 31, ~~2019, driven by:~~

•~~lower demand for originations of new loans and lower utilization on existing revolving loans in commercial and industrial loans; and~~

•~~loan paydowns on continued customer liquidity from strength in capital markets.~~

2020. Consumer loans decreased from December 31, ~~2019,~~2020, due to:

•paydowns exceeding originations in ~~first and junior lien~~residential mortgage loans; and

•seasonally lower ~~consumer spending and originations in~~ credit ~~cards;~~

~~partially offset by:~~

•~~the repurchase of $26.9 billion of first lien mortgage loans from GNMA loan securitization pools, including $21.9 billion in third quarter 2020.~~

card balances.

Table 6:7: Loan Portfolios

(in millions) September 30, 2020 December 31, 2019
Commercial $ 482,289 515,719
Consumer 437,793 446,546
Total loans $ 920,082 962,265
Change from prior year-end $ (42,183) 9,155


(in millions)	March 31, 2021		December 31, 2020
Commercial	$	477,520	478,417
Consumer	384,052		409,220
Total loans	$	861,572	887,637
Change from prior year-end	$	(26,065)	(74,628)

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 64 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

See the “Balance Sheet Analysis – Loan Portfolios” section in our ~~2019~~2020 Form 10-K for additional information regarding contractual loan maturities and the distribution of loans to changes in interest rates.


			Wells Fargo & Company			23

Balance Sheet Analysis (continued)

Deposits

Deposits increased from December 31, ~~2019,~~2020, reflecting:

•consumer ~~and wealth~~ customers’ preferences for liquidity given the economic uncertainty associated with the

COVID-19 pandemic, ~~loan payment deferrals,~~ government stimulus programs, and lower customer ~~spending;~~spending, as well as seasonality for items such as income tax refunds;

partially offset by:

•actions taken to manage under the asset cap resulting in declines in ~~interest-bearing checking, other~~ time deposits, such as brokered certificates of

deposit (CDs), and interest-bearing deposits in non-U.S. offices.

Table 78 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 7:8: Deposits

($ in millions)
Sep 30,
2020 % of
total
deposits Dec 31,
2019 % of
total
deposits %
Change
Noninterest-bearing $ 447,011 32 % $ 344,496 26 % 30
Interest-bearing checking 48,660 4 62,814 5 (23)
Market rate and other savings 790,117 57 751,080 57 5
Savings certificates 23,187 2 31,715 2 (27)
Other time deposits 41,843 3 78,609 6 (47)
Deposits in non-U.S. offices (1) 32,397 2 53,912 4 (40)
Total deposits $ 1,383,215 100 % $ 1,322,626 100 % 5

~~(1) Includes Eurodollar sweep balances of $19.8 billion and $34.2 billion at September 30, 2020, and December 31, 2019, respectively.~~


($ in millions)	Mar 31, 2021		% of total deposits		Dec 31, 2020		% of total deposits		% Change
Noninterest-bearing demand deposits	$	494,087	34	%	$	467,068	33	%	6
Interest-bearing demand deposits	452,484		32		447,446		32		1
Savings deposits	423,388		29		404,935		29		5
Time deposits	39,446		3		49,775		4		(21)
Interest-bearing deposits in non-U.S. offices	27,714		2		35,157		2		(21)
Total deposits	$	1,437,119	100	%	$	1,404,381	100	%	2

~~Equity~~

~~Total equity was $182.0 billion at September 30, 2020, compared with $188.0 billion at December 31, 2019. The decrease was driven by:~~

•~~common stock repurchases of $3.4 billion (substantially all of which occurred in first quarter 2020); and~~

•~~dividends of $5.6 billion;~~

~~partially offset by:~~

•~~issuances of common stock of $2.4 billion predominantly related to employee stock ownership plans.~~


24			Wells Fargo & Company


Off-Balance Sheet Arrangements

In the ordinary course of business, we engage in financial transactions that are not recorded on the consolidated balance sheet, or may be recorded on the consolidated 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. For additional information on our contractual obligations that may require future cash payments, see the “Off-Balance Sheet Arrangements – Contractual Cash Obligations” section in our 2019 Form 10-K.

Commitments to Lend

We enter into commitments to lend to customers, which are usually at a stated interest rate, if funded, and for specific purposes and time periods. When we enter into 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 are not funded. For additional information, see Note 64 (Loans and Related Allowance for Credit Losses) 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 additional information, see Note 8 (Securitizations and Variable Interest Entities) to Financial Statements in this Report.

Guarantees and Other 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, direct pay letters of credit, written options, recourse obligations, exchange and clearing house guarantees, indemnifications, and other types of similar arrangements. For additional information, see Note 11 (Guarantees and Other Commitments) to Financial Statements in this Report.

Commitments to Purchase Debt and Equity Securities

We enter into commitments to purchase securities under resale agreements. We also may enter into commitments to purchase debt and equity securities to provide capital for customers’ funding, liquidity or other future needs. For additional information, see Note 1311 (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 additional information, see Note 10 (Securitizations and Variable Interest Entities) to Financial Statements in this Report.

~~Guarantees and Other 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, direct pay letters of credit, written options, recourse obligations, exchange and clearing house guarantees, indemnifications, and other types of similar arrangements. For additional information, see Note 13 (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 consolidated 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 consolidated balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. For additional information, see Note 1514 (Derivatives) to Financial Statements in this Report.


			Wells Fargo & Company			25


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, shareholders, regulators and other stakeholders. For additional information about how we manage risk, see the “Risk Management” section in our ~~2019~~2020 Form 10-K. The discussion that follows supplements our discussion of the management of certain risks contained in the “Risk Management” section in our ~~2019~~2020 Form 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~~Risk Committee has primary oversight responsibility for credit risk. A Credit Subcommittee of the Risk Committee assists the Risk Committee in providing oversight of credit risk. At the management level, Credit Risk, which is part of ~~the Company’s Independent Risk Management (IRM) organization,~~IRM, has ~~primary~~ oversight responsibility for credit risk. Credit Risk reports to the ~~Chief Risk Officer (CRO)~~CRO and ~~also provides~~supports periodic reports related to credit risk provided to the Board’s Risk Committee or its Credit ~~Committee.~~Subcommittee.

Loan ~~Portfolios~~Portfolio

~~The following discussion focuses on our~~Our loan portfolios ~~which~~ represent the largest component of assets on our consolidated balance sheet for which we have credit risk. Table 89 presents our total loans outstanding by portfolio segment and class of financing receivable.

Table 8:9: Total Loans Outstanding by Portfolio Segment and Class of Financing Receivable


(in millions)	(in millions)	Sep 30, 2020		Dec 31, 2019	(in millions)	Mar 31, 2021		Dec 31, 2020
Commercial:	Commercial:				Commercial:
Commercial and industrial	Commercial and industrial	$	320,913	354,125	Commercial and industrial	$	319,055	318,805
Real estate mortgage	Real estate mortgage	121,910		121,824	Real estate mortgage	121,198		121,720
Real estate construction	Real estate construction	22,519		19,939	Real estate construction	21,533		21,805
Lease financing	Lease financing	16,947		19,831	Lease financing	15,734		16,087
Total commercial	Total commercial	482,289		515,719	Total commercial	477,520		478,417
Consumer:	Consumer:				Consumer:
Real estate 1-4 family first mortgage		294,990		293,847
Real estate 1-4 family junior lien mortgage		25,162		29,509
Residential mortgage – first lien					Residential mortgage – first lien	254,363		276,674
Residential mortgage – junior lien					Residential mortgage – junior lien	21,308		23,286
Credit card	Credit card	36,021		41,013	Credit card	34,246		36,664
Automobile		48,450		47,873
Other revolving credit and installment		33,170		34,304
Auto					Auto	49,210		48,187
Other consumer					Other consumer	24,925		24,409
Total consumer	Total consumer	437,793		446,546	Total consumer	384,052		409,220
Total loans	Total loans	$	920,082	962,265	Total loans	$	861,572	887,637

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; and

•Reputation risk.

Our credit risk management oversight process is governed centrally, but provides for direct 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 Credit quality in ~~third~~first quarter ~~2020~~2021 reflected continued ~~to be affected by~~improvement in the economic ~~impact that the COVID-19 pandemic had on our customer base. Third quarter 2020 results reflected:~~environment. In particular:

•Nonaccrual loans were ~~$8.0~~$8.1 billion at ~~September 30, 2020, up~~March 31, 2021, down from ~~$5.3~~$8.7 billion at December 31, ~~2019.~~2020. Commercial nonaccrual loans ~~increased~~decreased to ~~$4.4~~$4.2 billion at ~~September 30, 2020,~~March 31, 2021, compared with ~~$2.3~~$4.8 billion at December 31, ~~2019,~~2020, and consumer nonaccrual loans ~~increased~~declined to ~~$3.6~~$3.8 billion at ~~September 30, 2020,~~March 31, 2021, compared with ~~$3.1~~$3.9 billion at December 31, ~~2019.~~2020. Nonaccrual loans represented ~~0.87%~~0.93% of total loans at ~~September 30, 2020,~~March 31, 2021, compared with ~~0.56%~~0.98% at December 31, ~~2019.~~2020.

•Net loan charge-offs ~~(annualized)~~ as a percentage of our average commercial and consumer loan portfolios were ~~0.29%~~0.13% and ~~0.30%~~0.37%, respectively, in ~~the third~~first quarter ~~and 0.33% and 0.44% in the first nine months of 2020, respectively,~~2021, compared with ~~0.11%~~0.25% and ~~0.46%~~0.53% in ~~the third~~first quarter ~~and 0.12% and 0.47% in the first nine months of 2019.~~2020.

•Loans that are not government insured/guaranteed and 90 days or more past due and still accruing were ~~$108~~$269 million and ~~$549~~$598 million in our commercial and consumer portfolios, respectively, at ~~September 30, 2020,~~March 31, 2021, compared with $78 million and ~~$855~~$612 million at December 31, ~~2019.~~2020.

•~~Provision~~Our provision for credit losses for loans was ~~$751 million and $14.1~~$(1.1) billion in ~~the third~~first quarter ~~and first nine months of 2020, respectively,~~2021, compared with ~~$695 million and $2.0~~$3.8 billion for the same ~~periods~~period a year ago.

•The ACL for loans ~~totaled $20.5~~decreased to $18.0 billion, or ~~2.22%~~2.09% of total loans, at ~~September 30, 2020, up from $10.5~~March 31, 2021, compared with $19.7 billion, or ~~1.09%~~2.22%, at December 31, ~~2019.~~2020.

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


26			Wells Fargo & Company

~~TROUBLED DEBT RESTRUCTURING RELIEF~~

COVID-Related Lending Accommodations ~~The CARES Act provides banks optional, temporary relief from accounting for certain loan modifications as troubled debt restructurings (TDRs). The modifications must be related~~During 2020, we provided accommodations to customers in response to the ~~adverse effects~~COVID-19 pandemic, including payment deferrals, and other expanded assistance for mortgage, credit card, auto, small business, personal and commercial lending customers. With the exception of ~~COVID-19, and certain other criteria are required to be met in order to apply~~residential mortgage-related accommodation programs, the ~~relief. In~~COVID-related lending accommodations instituted during 2020 were no longer offered as of December 31, 2020. Residential mortgage accommodation programs, which continued during first quarter ~~2020, we elected~~2021, offered payment deferrals for up to ~~apply~~a total of 18 months. Table 10 summarizes the ~~TDR relief provided by~~unpaid principal balance (UPB) of consumer loans that received accommodations under loan modification programs established to assist customers with the economic impact of the COVID-19 pandemic (COVID-related modifications) and that remained in a deferral period as of March 31, 2021.

Based on guidance in the CARES Act ~~which expires no later than December 31, 2020.~~

~~On April 7, 2020, federal banking regulators issued~~and the I~~Interagency~~nteragency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the

~~Risk Management – Credit Risk Management~~ ~~(continued)~~

Coronavirus (Revised) issued by federal banking regulators in April 2020 (the Interagency Statement)~~. The Interagency Statement provides additional TDR relief as it clarifies that it is not necessary~~, both of which we elected to ~~consider the impact of COVID-19 on the financial condition of a borrower in connection with short-term (e.g., six months or less)~~apply, loan modifications related to COVID-19 and that meet certain other criteria are exempt from troubled debt restructuring (TDR) classification. Additionally, our election to apply the TDR relief provided by the ~~borrower is current at~~CARES Act and the ~~date~~Interagency Statement impacts our regulatory capital ratios as these loan modifications

related to COVID-19 are not adjusted to a higher risk-weighting normally required with TDR classification. At March 31, 2021, substantially all residential mortgage loans that were in a deferral period, excluding those that were government insured/guaranteed, met the ~~modification program is implemented.~~criteria for TDR relief and were therefore not classified as TDRs. For additional information regarding the TDR relief provided by the CARES Act and the clarifying TDR accounting guidance from the Interagency Statement, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in ~~this Report.~~

~~The TDR relief provided under the CARES Act, as well as from the Interagency Statement, does not change~~ our ~~processes for monitoring the credit quality of our loan portfolios or for updating our measurement of the allowance for credit losses for loans based on expected losses.~~

Additionally, our election to apply the TDR relief provided by the CARES Act and the Interagency Statement impacts our regulatory capital ratios as these loan modifications related to COVID-19 are not adjusted to a higher risk-weighting normally required with TDR classification.

~~COVID-Related Lending Accommodations~~

~~During the first nine months of~~ 2020 we provided accommodations to customers in response to the COVID-19 pandemic, including fee reversals for consumer and small business banking customers, and payment deferrals, fee waivers, covenant waivers, and other expanded assistance for mortgage, credit card, automobile, small business, personal and commercial lending customers. Certain foreclosure, collection and credit bureau reporting activities were also suspended. Additionally, we deferred rental payments on certain leased assets for which we are the lessor.

Table 9 and Table 9a summarize the unpaid principal balance (UPB) of commercial and consumer loans that received accommodations under loan modification programs established to assist customers with the economic impact of the COVID-19 pandemic (COVID-related modifications) and that remained in a deferral period as of September 30, 2020. These amounts included accommodations made for customers with loans reported on our consolidated balance sheet and excluded accommodations made for customers with loans that we service for others. COVID-related modifications primarily included payment deferrals of principal, interest or both as well as interest and fee waivers.Form 10-K.

Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of net charge-offs, delinquencies, and nonaccrual status for those customers who would have otherwise moved into past due or nonaccrual status. Customers requiring assistance after receiving payment deferrals under the programs described in Tables 9 and 9a may be eligible to receive modifications consistent with those offered prior to the COVID-19 pandemic, such as interest rate reductions, term extensions, or principal forgiveness.

Of the total modifications granted during the first nine months of 2020, $222 million and $6.1 billion of unpaid principal balance of commercial and consumer loans, respectively, were classified as TDRs as of September 30, 2020, including $201 million and $4.0 billion, respectively, that were already classified as a TDR when the COVID-related modification was granted.

~~For information related to~~Customer loans that are ~~classified as TDRs,~~not further modified upon exit from the deferral period may be placed on nonaccrual status or charged-off in accordance with our policies if customers are unable to resume making payments in accordance with the contractual terms of their agreement. As of March 31, 2021, substantially all of our consumer loans were current after exiting the deferral period. For additional information about our COVID-related modifications, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section and Note ~~6 (Loans and Allowance for Credit Losses)~~1 (Summary of Significant Accounting Policies) to Financial Statements in ~~this Report.~~our 2020 Form 10-K.

Table 9:10: ~~Commercial~~Consumer Loan Modifications Related to COVID-19

($ in millions) Unpaid principal
balance of modified
loans still in deferral period at Sep 30, 2020 (1) % of loan class (2) General program description
Commercial:
Commercial and industrial $ 1,102 * Initial deferral of scheduled principal and/or interest up to 90 days, extensions available on a case-by-case basis, generally in increments of 90 days.
Real estate mortgage and construction 2,504 2 Initial deferral of scheduled principal and/or interest up to 90 days, extensions available on a case-by-case basis, generally in increments of 90 days.
Lease financing 111 1 Initial deferral of lease payments up to 90 days, with available extensions up to 90 days.
Total commercial $ 3,717 1 %


($ in millions)	Unpaid principal balance of modified loans still in deferral period at Mar 31, 2021		% of loan class (1)		% current at Mar 31, 2021 after exit from deferral period (2)
Consumer:
Residential mortgage – first lien (3)	$	9,210	4	%	97
Residential mortgage – junior lien (3)	1,274		6		93
All other consumer (4)	221		*		92
Subtotal	10,705		3
Residential mortgage – first lien (government insured/guaranteed) (5)	14,165		6
Total consumer	$	24,870

*Less than 1%.

(1)~~COVID-related modifications are at the loan facility level.~~

~~(2)~~Based on total loans outstanding at ~~September 30, 2020.~~

~~Table 9a:Consumer Loan Modifications Related to COVID-19~~

($ in millions) Unpaid
principal
balance of modified
loans still in deferral period at Jun 30, 2020 % of loan class (1) Unpaid
principal
balance of modified loans still in deferral period at Sep 30, 2020 % of loan
class (2) % current after exit from deferral period (3) General program description
Consumer:
Real estate 1-4 family first mortgage $ 25,194 9 % $ 16,994 6 % 96 Initial deferral up to 90 days of scheduled principal and interest, with available extensions up to a total of 12 months.
Real estate 1-4 family junior lien mortgage 2,812 10 1,848 7 94 Initial deferral up to 90 days of scheduled principal and interest, with available extensions up to a total of 12 months.
Credit card 2,616 7 783 2 92 Initial 90 day deferral of minimum payment and waiver of interest and fees until June 2020, then initial or subsequent 60 day deferral of minimum payment and waiver of certain fees. Deferrals limited to an initial period and one subsequent deferral.
Automobile 4,880 10 2,796 6 96 Initial 90 day deferral of scheduled principal and interest, with available extensions of 90 days.
Other revolving credit and installment 1,673 5 1,057 3 95 Revolving lines: Initial 90 day deferral of minimum payment and waiver of interest and fees, with available extensions of 60 days.
Installment loans: Initial 90 day deferral of scheduled principal and interest, with available extensions of 90 days.
Subtotal $ 37,175 9 $ 23,478 5
Real estate 1-4 family first
mortgage (government insured/guaranteed) (4)
7,059 3 19,111 6
Total consumer $ 44,234 10 % $ 42,589 10 %

~~(1)Based on total loans outstanding at June 30, 2020.~~March 31, 2021.

(2)~~Based on total loans outstanding at September 30, 2020.~~

~~(3)~~Represents the UPB of loans that exited the deferral period and had a balance that was less than 30 days past due as of ~~September 30, 2020.~~March 31, 2021.

(3)For residential mortgage loans still in active COVID-related accommodation programs as of March 31, 2021, 95% of first lien and 84% of junior lien mortgage loans had a loan-to-value ratio that was 80% or lower.

(4)Includes credit card, auto, and other consumer loans (including personal lines/loans).

(5)Represents ~~real estate 1-4 family~~residential mortgage – first ~~mortgage~~lien loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) that were primarily repurchased from GNMA loan securitization pools. For additional information on GNMA loan securitization pools, see the “Risk Management – Credit Risk Management – Risks Relating to Servicing Activities” section in this Report. FHA/VA loans are entitled to payment deferrals of scheduled principal and interest up to a total of 1218 months.

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 ~~loan~~ portfolios. See Note 64 (Loans and Related 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 ~~federal banking regulators’~~regulatory definitions of pass and criticized categories with ~~the~~ criticized ~~category including~~segmented among special mention, substandard, doubtful and loss categories.

The commercial and industrial loans and lease financing portfolio totaled $337.9 billion, or 37% of total loans, at September 30, 2020. The net charge-off rate (annualized) of average loans for this portfolio was 0.34% and 0.42% in the third quarter and first nine months of 2020, respectively, compared with 0.17% for both the third quarter and first nine months of 2019. At September 30, 2020, 0.89% of this portfolio was nonaccruing, compared with 0.44% at December 31, 2019. Nonaccrual loans in this portfolio increased $1.4 billion from December 31, 2019, a significant portion of which was in the oil, gas and pipelines category due to the economic impact of the

~~COVID-19 pandemic. Also, $24.6~~We had $18.0 billion of the commercial and industrial loan and lease financing portfolio ~~was~~ internally classified as criticized in accordance with regulatory guidance at ~~September 30, 2020,~~March 31, 2021, compared with ~~$16.6~~$19.3 billion at December 31, ~~2019, reflecting increases primarily~~2020. The change was driven by decreases in the oil, gas and pipelines, ~~real estate~~technology, telecom and ~~construction, entertainment~~media, and ~~recreation, and retail categories due to~~financials except banks industries reflecting improvement in the economic ~~impact of the COVID-19 pandemic.~~environment.

The majority 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 primary source of repayment for this portfolio is the operating cash flows of customers, with the collateral


			Wells Fargo & Company			27

Risk Management – Credit Risk Management (continued)

securing this portfolio ~~represents~~representing a secondary source of repayment.

The portfolio remained flat at March 31, 2021, compared with December 31, 2020, as a result of limited loan draws offset

by paydowns. Table 1011 provides our commercial and industrial loans and lease financing by industry, and includes non-U.S. loans of $62.8 billion and $71.7 billion at September 30, 2020, and December 31, 2019, respectively. Significant industry concentrations of non-U.S. loans included $33.0 billion and $31.2 billion in the financials except banks category, and $13.0 billion and $19.9 billion in the banks category, at September 30, 2020, and December 31, 2019, respectively. The oil, gas and pipelines category included $1.5 billion of non-U.S. loans at both September 30, 2020, and December 31, 2019.industry. The industry categories are based on the North American Industry Classification System.

Table 11:Commercial and Industrial Loans and Lease Financing by Industry


	March 31, 2021							December 31, 2020
($ in millions)	Nonaccrual loans		Total portfolio	% of total loans		Total commitments (1)		Nonaccrual loans		Total portfolio	% of total loans		Total commitments (1)
Financials except banks	$	130	119,793	14	%	$	212,236	$	160	117,726	13	%	$	206,999
Technology, telecom and media	90		21,582	3		55,433		144		23,061	3		56,500
Real estate and construction	146		23,867	3		53,829		133		23,113	3		51,526
Retail	84		17,129	2		40,975		94		17,393	2		41,669
Equipment, machinery and parts manufacturing	66		16,537	2		39,986		81		18,158	2		41,332
Materials and commodities	43		12,591	1		34,138		39		12,071	1		33,879
Health care and pharmaceuticals	42		15,020	2		31,610		145		15,322	2		32,154
Oil, gas and pipelines	635		9,906	1		30,124		953		10,471	1		30,055
Food and beverage manufacturing	18		12,061	1		29,160		17		12,401	1		28,908
Commercial services	85		10,322	1		25,730		107		10,284	1		24,442
Auto related	74		11,297	1		25,113		79		11,817	1		25,034
Utilities	67		6,270	*		19,012		2		5,031	*		18,564
Insurance and fiduciaries	1		3,947	*		18,050		2		3,297	*		14,334
Entertainment and recreation	255		9,483	1		17,108		263		9,884	1		17,551
Diversified or miscellaneous	28		6,304	*		16,802		7		5,437	*		14,717
Transportation services	554		8,889	1		15,372		573		9,236	1		15,531
Banks	—		13,292	2		14,209		—		12,789	1		13,842
Agribusiness	71		6,056	*		11,453		81		6,314	*		11,642
Government and education	9		5,182	*		10,792		9		5,464	*		11,065
Other (2)	74		5,261	*		19,232		68		5,623	*		23,315
Total	$	2,472	334,789	39	%	$	720,364	$	2,957	334,892	33	%	$	713,059

*Less than 1%.

(1)Total commitments consist of loans outstanding plus unfunded credit commitments, excluding issued letters of credit.

(2)No other single industry had total loans in excess of $3.8 billion at both March 31, 2021, and December 31, 2020.

Loans to financials except banks, our largest industry concentration, is predominantly comprised of loans to investment firms, financial vehicles, and ~~non-bank creditors, including those that invest in financial assets backed predominantly by commercial or residential real estate or consumer loan assets.~~nonbank creditors. We had ~~$72.8~~$84.5 billion and ~~$75.9~~$80.0 billion of loans originated by our Asset Backed Finance (ABF) and Financial Institution Group (FIG) lines of business at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, respectively. These loans include: (i) loans to customers related to their subscription or capital calls, (ii) loans to nonbank lenders collateralized by commercial loans, and (iii) loans to originators or servicers of financial assets collateralized by residential real estate or other consumer loans such as credit cards, auto loans and leases, student loans and other financial assets eligible for the securitization market. These ABF and FIG loans are limited to a percentage

~~Risk Management – Credit Risk Management~~ ~~(continued)~~

of the value of the underlying financial assets considering underlying credit risk, asset duration, and ongoing performance. These ABF and FIG loans may also have other features to manage credit risk such as cross-collateralization, credit enhancements, and contractual re-margining of collateral supporting the loans. ~~Loans~~In addition, loans to financials except banks included collateralized loan obligations (CLOs) in loan form, all of ~~$7.7~~which were rated AA or above, of $8.1 billion and ~~$7.0~~$7.9 billion at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, respectively. We had a prime brokerage relationship with Archegos Capital Management, which was closed out as of March 31, 2021. We did not experience losses related to closing out our exposure.

Oil, gas and pipelines loans included ~~$8.1~~$6.8 billion and ~~$9.2~~$7.5 billion of senior secured loans outstanding at ~~September 30,~~

~~2020~~March 31, 2021, and December 31, ~~2019,~~2020, respectively. Oil, gas and

pipelines nonaccrual loans ~~increased~~decreased at ~~September 30, 2020,~~March 31, 2021, compared with December 31, ~~2019, due~~2020, driven by loan payoffs.

We continue to ~~new downgrades~~perform escalated credit monitoring for certain industries that we consider to ~~nonaccrual status~~be directly and most adversely affected by the COVID-19 pandemic.

Our commercial and industrial loans and lease financing portfolio also includes non-U.S. loans of $70.1 billion and $63.8 billion at March 31, 2021, and December 31, 2020, respectively. Significant industry concentrations of non-U.S. loans at March 31, 2021, and December 31, 2020, respectively, included:

•$42.5 billion and $36.2 billion in ~~2020.~~the financials except banks category;

~~In addition to~~•$13.0 billion and $12.8 billion in the banks category; and

•$1.7 billion and $1.6 billion in the oil, gas and pipelines ~~category, industries with escalated credit monitoring include real estate and construction, retail (including restaurants), and hotels/motels.~~

~~Table 10:Commercial and Industrial Loans and Lease Financing by Industry~~category.

September 30, 2020 December 31, 2019
($ in millions) Nonaccrual
loans Loans outstanding % of
total
loans Total commitments (1) Nonaccrual
loans Loans outstanding % of
total
loans Total commitments (1)
Financials except banks $ 204 108,597 12 % $ 193,838 $ 112 117,312 12 % $ 200,848
Equipment, machinery and parts manufacturing 95 19,586 2 40,649 36 23,457 2 42,040
Technology, telecom and media 100 24,517 3 56,417 28 22,447 2 53,343
Real estate and construction 287 24,959 3 52,995 47 22,011 2 48,217
Banks — 12,975 1 13,982 — 20,070 2 20,728
Retail 149 19,243 2 42,250 105 19,923 2 41,938
Materials and commodities 48 13,188 1 35,885 33 16,375 2 39,369
Automobile related 24 12,031 1 25,240 24 15,996 2 26,310
Food and beverage manufacturing 30 12,051 1 28,597 9 14,991 2 29,172
Health care and pharmaceuticals 163 16,074 2 32,304 28 14,920 2 30,168
Oil, gas and pipelines 1,188 11,138 1 31,344 615 13,562 1 35,445
Entertainment and recreation 85 9,643 1 16,849 44 13,462 1 19,854
Transportation services 390 10,216 1 16,642 224 10,957 1 17,660
Commercial services 145 10,618 1 24,467 50 10,455 1 22,713
Agribusiness 40 6,829 * 12,419 35 7,539 * 12,901
Utilities 9 5,922 * 19,315 224 5,995 * 19,390
Insurance and fiduciaries 2 3,463 * 14,814 1 5,525 * 15,596
Government and education 10 5,413 * 11,691 6 5,363 * 12,267
Other (2) 52 11,397 2 27,989 19 13,596 * 32,988
Total $ 3,021 337,860 37 % $ 697,687 $ 1,640 373,956 39 % $ 720,947

*~~Less than 1%.~~

~~(1)Total commitments consist of loans outstanding plus unfunded credit commitments, excluding issued letters of credit.~~

~~(2)No other single industry had total loans in excess of $5.0 billion and $4.7 billion at September 30, 2020, and December 31, 2019, 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 ~~federal banking regulators'~~regulatory definitions of pass and criticized categories with criticized segmented among special mention, substandard, doubtful and loss categories. We had $12.0 billion of CRE mortgage loans classified as criticized at both March 31, 2021, and December 31, 2020, and $1.9 billion of CRE construction loans classified as criticized at March 31, 2021, compared with $1.6 billion at December 31, 2020. The increase in criticized CRE construction loans was driven by the apartment, institutional, and shopping


28			Wells Fargo & Company

center property types and reflected the economic impact of the COVID-19 pandemic. Due to the significant uncertainty related to the duration and severity of the economic impact of the COVID-19 pandemic, the credit quality of certain property types within our CRE loan portfolio, such as retail, hotel/motel, office buildings, and shopping centers, could continue to be adversely affected.

The total CRE loan portfolio decreased $794 million from December 31, 2020, driven by a decrease in CRE mortgage loans predominantly related to the office, retail (excluding shopping

center), and shopping center property types. The CRE loan portfolio ~~which~~ included ~~$8.1~~$8.7 billion of non-U.S. CRE loans ~~totaled $144.4 billion, or 16% of total loans,~~ at ~~September 30, 2020, and consisted of $121.9 billion of mortgage loans and $22.5 billion of construction loans.~~

~~Table 11 summarizes CRE loans by state and property type with the related nonaccrual totals at September 30, 2020.~~March 31, 2021. The portfolio is diversified both geographically and by property type. The largest geographic concentrations of CRE loans are in California, New York, Florida and Texas, which combined represented 48% of the total CRE portfolio. ByThe largest property type ~~the~~

~~largest~~ concentrations are office buildings at 26% and apartments at ~~19%~~20% of the portfolio.

Table 12 summarizes CRE loans by state and property type with the related nonaccrual ~~loans totaled 0.95% of the CRE outstanding balance~~totals at ~~September 30, 2020, compared with 0.43% at December~~March 31, 2019. The increase in CRE nonaccrual loans was predominantly driven by the hotel/motel, shopping center, and office buildings property types and reflected the economic impact of the COVID-19 pandemic. At September 30, 2020, we had $11.2 billion of criticized CRE mortgage loans, compared with $3.8 billion at December 31, 2019, and $1.5 billion of criticized CRE construction loans, compared with $187 million at December 31, 2019. The increase in criticized CRE mortgage and CRE construction loans was driven by the hotel/motel, shopping center, and retail (excluding shopping center) property types and reflected the economic impact of the COVID-19 pandemic.2021.

Table ~~11:~~12: CRE Loans by State and Property Type


		September 30, 2020										March 31, 2021
		Real estate mortgage			Real estate construction		Total		% of total loans			Real estate mortgage			Real estate construction		Total		% of total loans
($ in millions)	($ in millions)	Nonaccrual loans		Total portfolio	Nonaccrual loans	Total portfolio	Nonaccrual loans	Total portfolio			($ in millions)	Nonaccrual loans		Total portfolio	Nonaccrual loans	Total portfolio	Nonaccrual loans	Total portfolio
By state:	By state:										By state:
California	California	$	172	31,615	2	4,515	174	36,130	4	%	California	$	238	30,892	2	4,219	240	35,111	4	%
New York	New York	97		12,973	2	2,022	99	14,995	2		New York	76		12,771	2	1,951	78	14,722	2
Florida	Florida	24		8,104	1	1,542	25	9,646	1		Florida	41		8,033	1	1,581	42	9,614	1
Texas	Texas	325		7,855	—	1,221	325	9,076	*		Texas	315		7,800	5	1,264	320	9,064	1
Washington	Washington	13		3,935	—	837	13	4,772	*		Washington	141		4,058	6	913	147	4,971	*
North Carolina	North Carolina	14		3,666	—	743	14	4,409	*		North Carolina	13		3,794	—	794	13	4,588	*
Georgia	Georgia	12		3,919	—	446	12	4,365	*		Georgia	48		4,129	—	365	48	4,494	*
Arizona	Arizona	35		3,672	—	334	35	4,006	*		Arizona	57		3,851	1	319	58	4,170	*
New Jersey	New Jersey	51		3,049	—	915	51	3,964	*		New Jersey	87		2,851	—	860	87	3,711	*
Colorado	Colorado	82		3,275	—	615	82	3,890	*		Colorado	83		3,216	—	481	83	3,697	*
Other (1)	Other (1)	518		39,847	29	9,329	547	49,176	5		Other (1)	604		39,803	38	8,786	642	48,589	6
Total	Total	$	1,343	121,910	34	22,519	1,377	144,429	16	%	Total	$	1,703	121,198	55	21,533	1,758	142,731	17	%
By property:	By property:										By property:
Office buildings	Office buildings	$	279	34,133	1	3,214	280	37,347	4	%	Office buildings	$	257	33,830	1	3,254	258	37,084	4	%
Apartments	Apartments	30		19,162	—	8,273	30	27,435	3		Apartments	30		19,940	—	8,025	30	27,965	3
Industrial/warehouse	Industrial/warehouse	76		15,949	1	1,781	77	17,730	2		Industrial/warehouse	84		15,674	1	1,494	85	17,168	2
Retail (excluding shopping center)	Retail (excluding shopping center)	170		13,886	2	167	172	14,053	2		Retail (excluding shopping center)	290		13,442	3	140	293	13,582	2
Hotel/motel	Hotel/motel	159		10,594	—	1,694	159	12,288	1		Hotel/motel	319		10,474	5	1,788	324	12,262	1
Shopping center	Shopping center	408		10,703	—	1,029	408	11,732	1		Shopping center	470		10,200	—	924	470	11,124	1
Institutional											Institutional	62		4,136	20	2,562	82	6,698	*
Mixed use properties	Mixed use properties	91		5,516	—	701	91	6,217	*		Mixed use properties	105		5,382	—	760	105	6,142	*
Institutional		75		3,871	20	2,344	95	6,215	*
Collateral pool	Collateral pool	—		2,659	—	191	—	2,850	*		Collateral pool	—		2,788	—	191	—	2,979	*
Storage facilities		1		1,577	—	226	1	1,803	*
1-4 family structure											1-4 family structure	—		8	—	1,364	—	1,372	*
Other	Other	54		3,860	10	2,899	64	6,759	*		Other	86		5,324	25	1,031	111	6,355	*
Total	Total	$	1,343	121,910	34	22,519	1,377	144,429	16	%	Total	$	1,703	121,198	55	21,533	1,758	142,731	17	%

*Less than 1%.

(1)~~Consists of~~Includes 40 ~~states, none of which~~states; no state in Other had loans in excess of ~~$3.8~~$3.6 billion.


			Wells Fargo & Company			29

Risk Management – Credit Risk Management (continued)

~~NON-U.S~~NON-U.S. LOANS Our classification of non-U.S. loans is based on whether the borrower’s primary address is outside of the United States. At ~~September 30, 2020,~~March 31, 2021, non-U.S. loans totaled ~~$71.2~~$79.1 billion,, representing approximately 9% of our total consolidated loans outstanding, compared with $72.9 billion, or approximately 8% of our total consolidated loans outstanding, ~~compared with $80.5 billion, or approximately 8% of total consolidated loans outstanding,~~ at December 31, ~~2019.~~2020. Non-U.S. loans were approximately 4% of our total consolidated ~~total~~ assets at both ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019.~~2020.

COUNTRY RISK EXPOSURE Our country risk monitoring process incorporates centralized monitoring of economic, political, social, legal, and transfer risks in countries where we do or plan to do business, along with frequent dialogue with our customers, counterparties and regulatory agencies. We establish exposure limits for each country through a centralized oversight process based on customer needs, and through consideration of the relevant and distinct risk of each country. 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 country exposure outside the U.S. ~~based on our assessment of risk~~ at ~~September 30, 2020,~~March 31, 2021, was the United Kingdom, which totaled ~~$38.1~~$36.1 billion, or approximately 2% of our total assets, and included ~~$12.2~~$8.8 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 withdrew from the European Union (Brexit) on January 31, 2020, and is currently subject to a transition period during which the terms and conditions of its exit are being negotiated. For additional information on our plans to address Brexit, see the “Risk Management – Credit Risk Management – Country Risk Exposure” section in our 2019 Form 10-K. For additional information on risks associated with Brexit, see the “Risk Factors” section in our 2019 Form 10-K.

Table 1213 provides information regarding our top 20 exposures by country (excluding the U.S.), based on our assessment of risk, which gives consideration to the country of any guarantors and/or underlying collateral. With respect to

Table ~~12:~~13:

•Lending and deposits exposure includes outstanding loans, unfunded credit commitments, and deposits with non-U.S. banks. These balances are presented prior to the deduction of allowance for credit losses or collateral received under the terms of the credit agreements, if any.

•Securities exposure represents debt and equity securities of non-U.S. issuers. Long and short positions are netted, and net short positions are reflected as negative exposure.

•Derivatives and other exposure represents foreign exchange contracts, derivative contracts, securities resale agreements, and securities lending agreements.

Table ~~12:~~13: Select Country Exposures


		September 30, 2020											March 31, 2021
		Lending and deposits			Securities		Derivatives and other		Total exposure				Lending and deposits			Securities		Derivatives and other		Total exposure
(in millions)	(in millions)	Sovereign		Non- sovereign	Sovereign	Non- sovereign	Sovereign	Non- sovereign	Sovereign	Non- sovereign (1)	Total	(in millions)	Sovereign		Non-sovereign	Sovereign	Non-sovereign	Sovereign	Non-sovereign	Sovereign	Non- sovereign (1)	Total
Top 20 country exposures:	Top 20 country exposures:											Top 20 country exposures:
United Kingdom	United Kingdom	$	12,150	23,010	—	1,075	3	1,868	12,153	25,953	38,106	United Kingdom	$	8,829	24,199	—	1,027	—	2,063	8,829	27,289	36,118
Canada	Canada	3		14,712	—	(60)	—	410	3	15,062	15,065	Canada	2		15,494	1	121	3	373	6	15,988	15,994
Japan	Japan	20		913	8,848	229	—	20	8,868	1,162	10,030	Japan	19		751	14,432	418	—	27	14,451	1,196	15,647
Cayman Islands	Cayman Islands	—		6,380	—	—	—	186	—	6,566	6,566	Cayman Islands	—		6,213	—	—	—	194	—	6,407	6,407
Ireland (EU)		1,375		4,802	—	81	—	84	1,375	4,967	6,342
Luxembourg (EU)		—		3,772	—	99	—	90	—	3,961	3,961
Ireland												Ireland	1,157		4,468	—	131	—	100	1,157	4,699	5,856
Luxembourg												Luxembourg	—		4,035	—	143	—	156	—	4,334	4,334
China												China	—		3,634	(4)	403	145	36	141	4,073	4,214
Guernsey	Guernsey	—		3,537	—	2	—	7	—	3,546	3,546	Guernsey	—		4,013	—	2	—	49	—	4,064	4,064
Germany (EU)		—		2,834	—	197	6	120	6	3,151	3,157
Bermuda	Bermuda	—		2,885	—	6	—	92	—	2,983	2,983	Bermuda	—		3,578	—	43	—	138	—	3,759	3,759
China		—		2,540	(12)	294	39	47	27	2,881	2,908
Netherlands (EU)		—		2,340	—	304	1	226	1	2,870	2,871
Germany												Germany	—		3,008	(3)	91	7	38	4	3,137	3,141
Netherlands												Netherlands	—		2,498	—	104	—	129	—	2,731	2,731
France												France	130		1,976	—	167	301	4	431	2,147	2,578
South Korea	South Korea	—		2,229	2	60	1	12	3	2,301	2,304	South Korea	—		1,875	—	133	7	16	7	2,024	2,031
Switzerland	Switzerland	—		1,843	—	(84)	—	118	—	1,877	1,877	Switzerland	—		1,810	—	(62)	—	217	—	1,965	1,965
France (EU)		—		1,761	—	23	52	2	52	1,786	1,838
Brazil	Brazil	—		1,501	—	3	5	15	5	1,519	1,524	Brazil	—		1,442	—	4	8	20	8	1,466	1,474
Australia	Australia	—		1,366	—	33	—	22	—	1,421	1,421	Australia	—		1,110	—	110	—	11	—	1,231	1,231
India		—		1,008	—	67	—	—	—	1,075	1,075
Norway												Norway	—		1,009	—	1	—	—	—	1,010	1,010
Hong Kong												Hong Kong	—		921	(2)	13	12	3	10	937	947
United Arab Emirates												United Arab Emirates	—		906	—	—	—	3	—	909	909
Chile	Chile	—		966	—	49	—	1	—	1,016	1,016	Chile	—		847	—	40	—	1	—	888	888
United Arab Emirates		—		1,004	—	1	—	4	—	1,009	1,009
Singapore		—		821	—	145	—	37	—	1,003	1,003
Total top 20 country exposures	Total top 20 country exposures	$	13,548	80,224	8,838	2,524	107	3,361	22,493	86,109	108,602	Total top 20 country exposures	$	10,137	83,787	14,424	2,889	483	3,578	25,044	90,254	115,298

(1)Total non-sovereign exposure comprised ~~$45.6~~$46.8 billion of exposure to financial institutions and ~~$40.5~~$43.5 billion to non-financial corporations at ~~September 30, 2020.~~March 31, 2021.

~~REAL ESTATE 1-4 FAMILY~~RESIDENTIAL MORTGAGE LOANS Our ~~real estate 1-4 family~~residential mortgage loan portfolio is comprised of ~~both~~1-4 family first and junior lien mortgage loans. Residential mortgage – first lien loans ~~which are presented in Table 13.~~

~~Table 13:Real Estate 1-4 Family Mortgage Loans~~

September 30, 2020 December 31, 2019
($ in millions) Balance % of
portfolio Balance % of
portfolio
Real estate 1-4 family first mortgage $ 294,990 92 % $ 293,847 91 %
Real estate 1-4 family junior lien mortgage 25,162 8 29,509 9
Total real estate 1-4 family mortgage loans $ 320,152 100 % $ 323,356 100 %

comprised 92% of the total residential mortgage loan portfolio at both March 31, 2021, and December 31, 2020.

The ~~real estate 1-4 family~~residential mortgage loan portfolio includes some loans with adjustable-rate features and some with an interest-only feature as part of the loan ~~terms and some with adjustable-rate features.~~terms. Interest-only loans were approximately 3% of total loans at both ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019.~~2020. We believe ~~we have manageable~~our origination process appropriately addresses our adjustable-rate mortgage (ARM) reset risk across our residential mortgage loan portfolios ~~including ARM~~and our ACL for loans ~~that have negative amortizing features that were acquired in prior business combinations.~~considers this risk. 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. In connection with our adoption of CECL on January 1, 2020, our real estate 1-4 family mortgage purchased credit-impaired (PCI) loans, which had a carrying value of $568 million, were reclassified as purchased credit-deteriorated (PCD) loans. PCD loans are generally accounted for in the same manner as non-PCD loans. For additional information on PCD loans, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

We continue to modify ~~real estate 1-4 family~~residential mortgage loans to assist homeowners and other borrowers experiencing financial difficulties. For additional information on our modification programs, see the “Risk Management – Credit Risk Management – ~~Real Estate 1-4 Family~~Residential Mortgage Loans” section in our ~~2019~~

2020 Form 10-K. For additional information on customer accommodations, including loan modifications, in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section in this Report.

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 on the mortgage portfolio exclude government insured/guaranteed loans. Loans 30 days or more delinquent at September 30, 2020, totaled $3.1 billion, or 1% of total mortgages, compared with $3.0 billion, or 1%, at December 31, 2019. Loans with FICO scores lower than 640 totaled $6.1 billion, or 2% of total mortgages at September 30, 2020, compared with $7.6 billion, or 2%, at December 31, 2019. Mortgages with a LTV/CLTV greater than 100% totaled $2.0 billion at September 30, 2020, or 1% of total mortgages, compared with $2.5 billion, or 1%, at December 31, 2019. Information regarding credit quality indicators can be found in Note 6 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.


30			Wells Fargo & Company

Real estate 1-4 mortgage loans by state are presented in Table 14. Our real estate 1-4 family mortgage loans to borrowers in California represented 13% of total loans at September 30, 2020, located predominantly within the larger metropolitan areas, with no single California metropolitan area consisting of more than 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~~residential 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 original appraisals adjusted for the change in Home Price Index (HPI) or estimates from automated valuation models (AVMs) to support property values. Additional information about appraisals, ~~and~~ AVMs, and our policy for their use can be found in Note 64 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report and the “Risk Management – Credit Risk Management – ~~Real Estate 1-4 Family~~Residential Mortgage Loans” section in our ~~2019~~2020 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 residential mortgage loan portfolio. Excluding government insured/guaranteed loans, these credit risk indicators on the residential mortgage portfolio were:

•Loans 30 days or more delinquent at March 31, 2021, totaled $4.1 billion, or 1% of total mortgages, compared with $4.7 billion, or 2%, at December 31, 2020. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies;

•Loans with FICO scores lower than 640 totaled $4.9 billion, or 2% of total mortgages at March 31, 2021, compared with $5.6 billion, or 2%, at December 31, 2020; and

•Mortgages with a LTV/CLTV greater than 100% totaled $1.3 billion at March 31, 2021, or less than 1% of total mortgages, compared with $1.6 billion, or 1%, at December 31, 2020.

Information regarding credit quality indicators can be found in Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report. Residential mortgage loans by state are presented in Table 14.

Table 14: ~~Real Estate 1-4 Family~~Residential Mortgage Loans by State


		September 30, 2020							March 31, 2021
($ in millions)	($ 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		($ in millions)	Residential mortgage – first lien		Residential mortgage – junior lien	Total residential mortgage	% of total loans
Real estate 1-4 family mortgage loans:
Residential mortgage loans:								Residential mortgage loans:
California(1)	California(1)	$	110,292	6,795	117,087	13	%	California(1)	$	97,322	5,646	102,968	12	%
New York	New York	31,652		1,347	32,999	4		New York	30,132		1,185	31,317	4
New Jersey	New Jersey	13,020		2,406	15,426	2		New Jersey	10,980		2,104	13,084	1
Florida	Florida	11,063		2,254	13,317	1		Florida	10,088		1,965	12,053	1
Washington	Washington	9,935		558	10,493	1		Washington	8,219		457	8,676	1
Texas								Texas	7,217		423	7,640	1
Virginia	Virginia	7,622		1,459	9,081	1		Virginia	5,990		1,244	7,234	1
Texas		8,275		508	8,783	1
North Carolina	North Carolina	5,307		1,185	6,492	1		North Carolina	4,589		1,006	5,595	1
Colorado		5,771		542	6,313	1
Pennsylvania								Pennsylvania	4,039		1,278	5,317	1
Other ~~(1)~~(2)	Other ~~(1)~~(2)	59,116		8,108	67,224	7		Other ~~(1)~~(2)	50,665		6,000	56,665	6
Government insured/ guaranteed loans ~~(2)~~(3)	Government insured/ guaranteed loans ~~(2)~~(3)	32,937		—	32,937	3		Government insured/ guaranteed loans ~~(2)~~(3)	25,122		—	25,122	3
Total	Total	$	294,990	25,162	320,152	35	%	Total	$	254,363	21,308	275,671	32	%

(1)Our residential mortgage loans to borrowers in California are located predominantly within the larger metropolitan areas, with no single California metropolitan area consisting of more than 4% of total loans.

(2)Consists of 41 ~~states, none of which~~states; no state in Other had loans in excess of ~~$6.3~~$5.3 billion.

~~(2)~~(3)Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA).


			Wells Fargo & Company			31

Risk Management – Credit Risk Management (continued)

Residential Mortgage – First Lien ~~Mortgage~~ Portfolio Our total ~~real estate 1-4 family~~residential mortgage – first lien ~~mortgage~~ portfolio ~~(first mortgage) increased $1.1~~decreased $22.3 billion from December 31, ~~2019,~~2020, driven by ~~our repurchase~~loan paydowns as a result of ~~$26.9~~the low interest rate environment and the transfer of $5.9 billion of first lien mortgage loans from GNMA loan securitization pools, including $21.9 billion in third quarter 2020, and mortgage loan originations of $44.1 billion that were more than offset by paydowns. We also reclassified $9.0 billion of loans that were designated as mortgageto loans held for sale ~~(MLHFS) in second quarter 2020 to held for investment in third quarter 2020.~~

~~Net loan charge-offs (annualized) as a percentage~~(LHFS), partially offset by originations of ~~average first mortgage loans were 0.00% in both the third quarter and first nine months of 2020, compared with a net recovery of 0.01% and 0.02%, respectively, for the same periods a year ago.~~$12.5 billion.

Nonaccrual loans were $2.6 billion at September 30, 2020, up $491 million from December 31, 2019. The increase in nonaccrual loans from December 31, 2019 was driven by COVID-related loan payment deferrals that did not qualify for legislative or regulatory relief, as well as the implementation of CECL, which required PCI loans to be classified as nonaccruing based on performance. For additional information, see the “Risk Management – Credit Risk Management – Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)” section in this Report.

Table 15 shows certain delinquency and loss information for the residential mortgage – first ~~mortgage~~lien portfolio and lists the top five states by outstanding balance.

Table 15: Residential Mortgage – First ~~Mortgage~~Lien 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)	($ in millions)	Sep 30, 2020		Dec 31, 2019	Sep 30, 2020		Dec 31, 2019	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	($ in millions)	Mar 31, 2021		Dec 31, 2020	Mar 31, 2021		Dec 31, 2020	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020

California	California	$	110,292	118,256	0.69	%	0.48	(0.01)	(0.01)	(0.01)	(0.02)	(0.01)	California	$	97,322	104,260	0.95	%	1.00	(0.02)	(0.03)	(0.01)	(0.01)	(0.01)
New York	New York	31,652		31,336	0.97		0.83	0.02	0.02	(0.01)	0.02	0.01	New York	30,132		31,028	1.25		1.40	(0.01)	0.01	0.02	0.02	(0.01)
New Jersey	New Jersey	13,020		14,113	1.41		1.40	(0.01)	0.03	—	0.02	0.02	New Jersey	10,980		12,073	2.03		1.92	—	(0.03)	(0.01)	0.03	—
Florida	Florida	11,063		11,804	2.07		1.81	0.03	(0.01)	(0.03)	(0.06)	(0.07)	Florida	10,088		10,623	2.47		2.56	(0.11)	0.01	0.03	(0.01)	(0.03)
Washington	Washington	9,935		10,863	0.55		0.29	0.01	(0.01)	(0.02)	(0.02)	—	Washington	8,219		9,094	0.62		0.66	0.02	(0.01)	0.01	(0.01)	(0.02)
Other	Other	86,091		95,750	1.28		1.20	(0.01)	0.01	0.01	(0.02)	—	Other	72,500		79,356	1.60		1.60	(0.09)	0.02	(0.01)	0.01	0.01
Total	Total	262,053		282,122	1.00		0.86	—	—	—	(0.02)	(0.01)	Total	229,241		246,434	1.30		1.34	(0.04)	—	—	—	—
Government insured/guaranteed loans	Government insured/guaranteed loans	32,937		11,170									Government insured/guaranteed loans	25,122		30,240
PCI (1)		N/A		555
Total first lien mortgages		$	294,990	293,847
Total first mortgage portfolio													Total first mortgage portfolio	$	254,363	276,674

~~(1)~~In connection with our adoption of CECL on January 1, 2020, PCI loans were reclassified as PCD loans and are therefore included with other non-PCD loans in this table. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

Residential Mortgage – Junior Lien ~~Mortgage~~ PortfolioThe residential mortgage – 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~~primarily amortizing payment loans with fixed interest rates and repayment periods between five to 30 years.

We continuously monitor the credit performance of our residential mortgage – junior lien ~~mortgage~~ portfolio for trends and factors that influence the

frequency and severity of losses, such as residential mortgage – junior lien ~~mortgage~~ performance when the residential mortgage – first ~~mortgage~~lien loan is delinquent. ~~Table 16 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~~the residential mortgage – junior lien portfolio at March 31, 2021, compared with December 31, ~~2019, predominantly~~

2020, reflected loan paydowns. Beginning in second quarter 2020, we suspended the origination of residential mortgage – junior lien ~~mortgages.~~ loans. Table 16 shows certain delinquency and loss information for the residential mortgage – junior lien portfolio and lists the top five states by outstanding balance.

Table 16:Residential Mortgage – Junior Lien Portfolio Performance


	Outstanding balance			% of loans 30 days or more past due			Loss (recovery) rate (annualized) quarter ended
($ in millions)	Mar 31, 2021		Dec 31, 2020	Mar 31, 2021		Dec 31, 2020		Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020


California	$	5,646	6,237	2.24	%	2.20		(0.69)	(0.46)	(0.34)	(0.26)	(0.36)
New Jersey	2,104		2,258	2.69		2.84		0.32	(0.06)	(0.02)	(0.12)	0.13
Florida	1,965		2,119	2.71		3.06		(0.11)	(0.35)	(0.22)	(0.01)	—
Pennsylvania	1,278		1,377	2.19		2.30		(0.22)	(0.62)	(0.19)	0.05	0.11
Virginia	1,244		1,355	2.35		2.41		(0.29)	(0.15)	(0.34)	(0.05)	0.09
Other	9,071		9,940	2.26		2.31		(0.36)	(0.43)	(0.17)	(0.21)	0.01
Total junior lien mortgage portfolio	$	21,308	23,286	2.34		2.41		(0.35)	(0.39)	(0.22)	(0.17)	(0.07)

As of ~~September 30, 2020, 4%~~March 31, 2021, with respect to loans in the residential mortgage – junior lien portfolio that had a CLTV ratio in excess of 100%:

•such loans totaled 3% of the outstanding balance of the residential mortgage – 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%, 3%~~portfolio;

•2% were 30 days or more past due. ~~CLTV means~~Customer payment deferral activities instituted in response to the ~~ratio~~COVID-19 pandemic could continue to delay the recognition of delinquencies; and

•the ~~total loan balance of first 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 1% of the residential mortgage – junior lien ~~mortgage portfolio at September 30, 2020.~~portfolio.

CLTV represents the ratio of the total loan balance of first and junior lien mortgages (including unused line amounts for credit line products) to property collateral value. For additional information on consumer loans by LTV/CLTV, see Table ~~6.12~~4.11 in Note 64 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.


32			Wells Fargo & Company

~~Table 16:~~

Residential Mortgage – Junior Lien Line and Loan and Residential Mortgage ~~Portfolio Performance~~– First Lien Line

Outstanding balance % of loans 30 days
or more past due Loss (recovery) rate (annualized) quarter ended
($ in millions) Sep 30,
2020 Dec 31,
2019 Sep 30,
2020 Dec 31,
2019 Sep 30,
2020 Jun 30,
2020 Mar 31,
2020 Dec 31,
2019 Sep 30,
2019
California $ 6,795 8,054 1.78 % 1.62 (0.34) (0.26) (0.36) (0.44) (0.51)
New Jersey 2,406 2,744 2.52 2.74 (0.02) (0.12) 0.13 0.07 0.11
Florida 2,254 2,600 2.74 2.93 (0.22) (0.01) — (0.09) (0.11)
Virginia 1,459 1,712 2.06 1.97 (0.34) (0.05) 0.09 (0.02) (0.23)
Pennsylvania 1,464 1,674 1.96 2.16 (0.19) 0.05 0.11 (0.10) (0.05)
Other 10,784 12,712 2.01 2.05 (0.17) (0.21) 0.01 (0.18) (0.29)
Total 25,162 29,496 2.06 2.07 (0.22) (0.17) (0.07) (0.21) (0.28)
PCI (1) N/A 13
Total junior lien mortgages $ 25,162 29,509

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 available during the draw period of (1) ~~interest only~~interest-only or (2) 1.5% of outstanding principal balance plus accrued interest. As of ~~September 30, 2020,~~March 31, 2021, lines of credit in a draw period primarily used the interest-only option.

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 September 2020, excluding borrowers with COVID-related loan modification payment deferrals, approximately 43% of borrowers paid the minimum amount due and approximately 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 28% paid the minimum amount due and approximately 67% 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~~ACL for ~~credit loss~~loans 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.

~~Risk Management – Credit Risk Management~~ ~~(continued)~~

Table 17 reflects the outstanding balance of our portfolio of residential mortgage – junior ~~lien mortgages,~~liens, including lines and loans, and residential mortgage – first lien lines segregated into scheduled ~~end-of-draw~~end of draw or end-of-term periods and products that are currently amortizing, or in balloon repayment status. ~~At September 30, 2020, $383 million, or 2%, of lines in their draw period were 30 days or more past due,~~

~~compared with $377 million, or 5%, of amortizing lines of credit. Included in the amortizing amounts in Table 17 is $64 million of end-of-term balloon payments which were past due.~~ The unfunded credit commitments for residential mortgage – junior and first lien lines totaled ~~$55.7~~$51.9 billion at ~~September 30, 2020.~~March 31, 2021.

Table 17: Residential Mortgage – Junior Lien ~~Mortgage~~ Line and Loan and Residential Mortgage – First Lien ~~Mortgage~~ Line Portfolios Payment Schedule


																		Scheduled end of draw/term										Amortizing (2)
						Scheduled end of draw / term							Outstanding balance			Remainder of 2021										2026 and
($ in millions)	($ in millions)	Outstanding balance September 30, 2020			Remainder of 2020	2021	2022	2023	2024	2025 and thereafter (1)	Amortizing	($ in millions)	March 31, 2021				2022		2023		2024		2025		thereafter (1)
Junior lien lines and loans		$	25,162		61	682	2,822	1,930	1,545	10,441	7,681
First lien lines		9,393			24	345	1,433	1,076	847	4,103	1,565
																												Amortizing (2)

Residential mortgage – junior lien lines and loans												Residential mortgage – junior lien lines and loans	$	21,308			494		2,462		1,669		1,326		2,207		6,558
Residential mortgage – first lien lines												Residential mortgage – first lien lines	8,401			270		1,295		975		760		1,041		2,622
Total	Total	$	34,555		85	1,027	4,255	3,006	2,392	14,544	9,246	Total	$	29,709		764		3,757		2,644		2,086		3,248		9,180
% of portfolios	% of portfolios	100		%	—	3	12	9	7	42	27	% of portfolios	100		%	3		13		9		7		11		31		26

(1)Substantially all lines and loans are scheduled to convert to amortizing loans by the end of ~~2029,~~2030, with annual scheduled amounts through ~~2029~~2030 ranging from ~~$1.5~~$1.0 billion to ~~$4.1~~$3.5 billion and averaging ~~$2.7~~$1.8 billion per year.

(2)Includes $69 million of end-of-term balloon payments which were past due.

~~CREDIT CARDS~~ ~~Our credit card portfolio totaled $36.0 billion at September~~At March 31, 2021, $344 million, or 2%, of lines in their draw period were 30 ~~2020, which represented 4% of our total outstanding loans. The net charge-off rate (annualized) for our credit card portfolio was 2.71% for third quarter 2020,~~days or more past due, compared with ~~3.22% for third quarter 2019, and 3.39% and 3.54% for the first nine months~~$351 million, or 5%, of ~~2020 and 2019, respectively. The decrease in the net charge-off rate in the third quarter and first nine months~~amortizing lines of ~~2020, compared with the same periods a year ago, was driven by~~credit. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies. On a monthly basis, we monitor the payment characteristics of borrowers in our residential mortgage – first and junior lien lines of credit portfolios. In March 2021, excluding borrowers with COVID-related loan modification payment deferrals:

•Approximately 42% of these borrowers paid only the ~~effects of government stimulus programs.~~minimum amount due and approximately 53% 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 27% paid only the minimum amount due and approximately 69% paid more than the minimum amount due.

~~AUTOMOBILE~~Table 18: Credit Card, Auto, and Other Consumer Loans


	March 31, 2021				December 31, 2020
($ in millions)	Outstanding balance		% of total loans		Outstanding balance		% of total loans
Credit card	$	34,246	3.97	%	$	36,664	4.13	%
Auto	49,210		5.71		48,187		5.43
Other consumer (1)	24,925		2.89		24,409		2.75
Total	$	108,381	12.58	%	$	109,260	12.31	%

(1)Other consumer loans primarily include securities-based loans.

CREDIT CARD Our ~~automobile~~credit card portfolio totaled ~~$48.5~~$34.2 billion at ~~September 30, 2020. The net charge-off rate (annualized) for our automobile portfolio was 0.25% for third quarter 2020,~~March 31, 2021, compared with ~~0.65% for third quarter 2019, and 0.60% and 0.64% for the first nine months of 2020 and 2019, respectively.~~$36.7 billion at December 31, 2020. The decrease in the ~~net charge-off rate in the third quarter and first nine months of 2020,~~outstanding balance at March 31, 2021, compared with ~~the same periods in 2019,~~December 31, 2020, was driven by ~~payment deferral activities in response to the COVID-19 pandemic and stronger recoveries from higher used car values.~~seasonal paydowns.

AUTOOur auto portfolio totaled $49.2 billion at March 31, 2021, compared with $48.2 billion at December 31, 2020. The outstanding balance at March 31, 2021, compared with December 31, 2020, increased slightly as originations exceeded paydowns.

OTHER ~~REVOLVING CREDIT AND INSTALLMENT~~CONSUMER Other consumer loans, which include revolving credit and installment loans, totaled ~~$33.2~~$24.9 billion at ~~September 30, 2020, and predominantly included student and securities-based loans. Our private student loan portfolio totaled $10.0~~March 31, 2021, compared with $24.4 billion at ~~September 30,~~December 31, 2020. On September 22, 2020, we notified customers of our exit from the student lending business. New applications from current customers will be accepted for the 2020-2021 academic year until January 28, 2021, with final disbursement of funds to colleges by June 30, 2021. The net charge-off rate (annualized) for other revolving credit and installment loans was 0.80% for third quarter 2020, compared with 1.60% for third quarter 2019, and 1.16% and 1.54% for the first nine months of 2020 and 2019, respectively. The decrease in the net charge-off rate in the third quarter and first nine months of 2020, compared with the same periods a year ago, was driven by payment deferral activities in response to the COVID-19 pandemic.


			Wells Fargo & Company			33

Risk Management – Credit Risk Management (continued)

NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS)Table 18 summarizes nonperforming assets (NPAs) for each of the last four quarters. Total NPAs increased $378 million from second quarter 2020 to $8.2 billion. Nonaccrual loans of $8.0 billion increased $417 million from second quarter 2020. The increase in nonaccrual loans was due to the economic impact of the COVID-19 pandemic, including real estate 1-4 family mortgage loans in COVID-related payment deferral programs that were classified as nonaccrual because they did not qualify for legislative or regulatory relief. Customer payment deferral activities instituted in response to the COVID-19 pandemic may delay recognition of delinquencies for customers who otherwise would have moved into nonaccrual status. Prior to January 1, 2020, PCI loans were excluded from nonaccrual loans because they continued to earn interest income from accretable yield, independent of performance in accordance with their contractual terms. However, as a result of our adoption of CECL on January 1,

2020, $275 million of real estate 1-4 family mortgage loans were reclassified from PCI to PCD loans, and as a result, were also classified as nonaccrual loans given their contractual delinquency. For additional information on PCD loans, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

For information about when we generally place loans on nonaccrual status, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2019~~2020 Form 10-K. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of nonaccrual loans for those customers who would have otherwise moved into nonaccrual status. For additional

information on customer accommodations, including loan modifications, in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section in this Report.

~~Foreclosed~~Table 19 summarizes nonperforming assets (NPAs) for each of ~~$156 million were down $39 million from second quarter 2020.~~the last four quarters.

Table ~~18:~~19: Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)


		September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019					March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
($ in millions)	($ in millions)	Balance		% of total loans		Balance		% of total loans		Balance		% of total loans		Balance		% of total loans		($ in millions)	Balance		% of total loans		Balance		% of total loans		Balance		% of total loans		Balance		% of total loans
Nonaccrual loans:	Nonaccrual loans:																	Nonaccrual loans:
Commercial:	Commercial:																	Commercial:
Commercial and industrial	Commercial and industrial	$	2,834	0.88	%	$	2,896	0.83	%	$	1,779	0.44	%	$	1,545	0.44	%	Commercial and industrial	$	2,223	0.70	%	$	2,698	0.85	%	$	2,834	0.88	%	$	2,896	0.83	%
Real estate mortgage	Real estate mortgage	1,343		1.10		1,217		0.98		944		0.77		573		0.47		Real estate mortgage	1,703		1.41		1,774		1.46		1,343		1.10		1,217		0.98
Real estate construction	Real estate construction	34		0.15		34		0.16		21		0.10		41		0.21		Real estate construction	55		0.26		48		0.22		34		0.15		34		0.16
Lease financing	Lease financing	187		1.10		138		0.79		131		0.68		95		0.48		Lease financing	249		1.58		259		1.61		187		1.10		138		0.79
Total commercial	Total commercial	4,398		0.91		4,285		0.83		2,875		0.51		2,254		0.44		Total commercial	4,230		0.89		4,779		1.00		4,398		0.91		4,285		0.83
Consumer:	Consumer:																	Consumer:
Real estate 1-4 family first mortgage (1)		2,641		0.90		2,393		0.86		2,372		0.81		2,150		0.73
Real estate 1-4 family junior lien mortgage (1)		767		3.05		753		2.81		769		2.70		796		2.70
Automobile		176		0.36		129		0.26		99		0.20		106		0.22
Other revolving credit and installment		40		0.12		45		0.14		41		0.12		40		0.12
Residential mortgage – first lien (1)																		Residential mortgage – first lien (1)	2,859		1.12		2,957		1.07		2,641		0.90		2,393		0.86
Residential mortgage – junior lien (1)																		Residential mortgage – junior lien (1)	747		3.51		754		3.24		767		3.05		753		2.81
Auto																		Auto	181		0.37		202		0.42		176		0.36		129		0.26
Other consumer																		Other consumer	38		0.15		36		0.15		40		0.12		45		0.14
Total consumer	Total consumer	3,624		0.83		3,320		0.79		3,281		0.74		3,092		0.69		Total consumer	3,825		1.00		3,949		0.97		3,624		0.83		3,320		0.79
Total nonaccrual loans	Total nonaccrual loans	8,022		0.87		7,605		0.81		6,156		0.61		5,346		0.56		Total nonaccrual loans	8,055		0.93		8,728		0.98		8,022		0.87		7,605		0.81
Foreclosed assets:	Foreclosed assets:																	Foreclosed assets:
Government insured/guaranteed (2)	Government insured/guaranteed (2)	22				31				43				50				Government insured/guaranteed (2)	16				18				22				31
Non-government insured/guaranteed	Non-government insured/guaranteed	134				164				209				253				Non-government insured/guaranteed	124				141				134				164
Total foreclosed assets	Total foreclosed assets	156				195				252				303				Total foreclosed assets	140				159				156				195
Total nonperforming assets	Total nonperforming assets	$	8,178	0.89	%	$	7,800	0.83	%	$	6,408	0.63	%	$	5,649	0.59	%	Total nonperforming assets	$	8,195	0.95	%	$	8,887	1.00	%	$	8,178	0.89	%	$	7,800	0.83	%
Change in NPAs from prior quarter	Change in NPAs from prior quarter	$	378			1,392				759				(333)				Change in NPAs from prior quarter	$	(692)			$	709			$	378			$	1,392

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

(2)Consistent with regulatory reporting requirements, foreclosed real estate resulting from government insured/guaranteed loans are classified as nonperforming. 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. Receivables related to the foreclosure of certain government guaranteed ~~residential~~ real estate mortgage loans are excluded from this table and included in Accounts Receivable in Other Assets. For additional information on foreclosed assets, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2019~~2020 Form 10-K.

~~Risk~~Commercial nonaccrual loans decreased $549 million from December 31, 2020, driven by a decline in commercial and industrial nonaccrual loans in the oil, gas and pipelines industry reflecting improvement in the economic environment. For additional information on commercial and industrial nonaccrual loans, see the “Risk Management – Credit Risk Management – Commercial and Industrial Loans and Lease Financing” section in this Report.

Consumer nonaccrual loans decreased $124 million from December 31, 2020, driven by a decline in residential mortgage nonaccrual loans.


34			Wells Fargo & Company

~~(continued)~~

Table 1920 provides an analysis of the changes in nonaccrual loans.

~~Table 19:Analysis of Changes in Nonaccrual Loans~~

Quarter ended
(in millions) Sep 30,
2020 Jun 30,
2020 Mar 31,
2020 Dec 31,
2019 Sep 30,
2019
Commercial nonaccrual loans
Balance, beginning of period $ 4,285 2,875 2,254 2,312 2,470
Inflows 1,316 2,741 1,479 652 710
Outflows:
Returned to accruing (166) (64) (56) (124) (52)
Foreclosures — — — — (78)
Charge-offs (382) (560) (360) (201) (194)
Payments, sales and other (655) (707) (442) (385) (544)
Total outflows (1,203) (1,331) (858) (710) (868)
Balance, end of period 4,398 4,285 2,875 2,254 2,312
Consumer nonaccrual loans
Balance, beginning of period 3,320 3,281 3,092 3,233 3,452
Inflows (1) 696 379 749 473 448
Outflows:
Returned to accruing (160) (135) (254) (227) (274)
Foreclosures (4) (6) (21) (29) (32)
Charge-offs (36) (39) (48) (45) (44)
Payments, sales and other (192) (160) (237) (313) (317)
Total outflows (392) (340) (560) (614) (667)
Balance, end of period 3,624 3,320 3,281 3,092 3,233
Total nonaccrual loans $ 8,022 7,605 6,156 5,346 5,545

~~(1)In connection with our adoption of CECL on January 1, 2020, we classified $275 million of PCD loans as nonaccruing based on performance.~~

Typically, changes to nonaccrual loans period-over-period represent inflows for loans that are placed on nonaccrual status in accordance with our ~~policy,~~policies, 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.

Table 20:Analysis of Changes in Nonaccrual Loans


	Quarter ended


($ in millions)	Mar 31, 2021		Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Commercial nonaccrual loans
Balance, beginning of period	$	4,779	4,398	4,285	2,875	2,254
Inflows	773		1,696	1,316	2,741	1,479
Outflows:
Returned to accruing	(177)		(99)	(166)	(64)	(56)
Foreclosures	(6)		(37)	—	—	—
Charge-offs	(202)		(367)	(382)	(560)	(360)
Payments, sales and other	(937)		(812)	(655)	(707)	(442)
Total outflows	(1,322)		(1,315)	(1,203)	(1,331)	(858)
Balance, end of period	4,230		4,779	4,398	4,285	2,875
Consumer nonaccrual loans
Balance, beginning of period	3,949		3,624	3,320	3,281	3,092
Inflows	454		792	696	379	749
Outflows:
Returned to accruing	(152)		(208)	(160)	(135)	(254)
Foreclosures	(19)		(5)	(4)	(6)	(21)
Charge-offs	(26)		(36)	(36)	(39)	(48)
Payments, sales and other	(381)		(218)	(192)	(160)	(237)
Total outflows	(578)		(467)	(392)	(340)	(560)
Balance, end of period	3,825		3,949	3,624	3,320	3,281
Total nonaccrual loans	$	8,055	8,728	8,022	7,605	6,156

We believe exposure to loss on nonaccrual loans is mitigated by the following factors at ~~September 30, 2020:~~March 31, 2021:

•~~92%~~94% of total commercial nonaccrual loans and 99% of total consumer nonaccrual loans are secured. Of the consumer nonaccrual loans, 94% are secured by real estate and ~~90%~~91% have a combined LTV (CLTV) ratio of 80% or less.

•losses of ~~$701~~$661 million and $1.0 billion have already been recognized on ~~18%~~16% of commercial nonaccrual loans and ~~32%~~30% of consumer nonaccrual loans, respectively, in accordance with our charge-off policies. Once we write down loans to the net realizable value (fair value of collateral less estimated costs to sell), we re-evaluate each loan regularly and record additional write-downs if needed.

•~~74%~~75% of commercial nonaccrual loans were current on interest and ~~70%~~66% of commercial nonaccrual loans 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.

•of the ~~$1.3~~$1.1 billion of consumer loans in bankruptcy or discharged in bankruptcy, and classified as nonaccrual, ~~$848~~$723 million were current.

•the remaining risk of loss of all nonaccrual loans has been considered in developing our allowance for loan losses.

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.~~modification. Under our proprietary modification 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.


			Wells Fargo & Company			35

Risk Management – Credit Risk Management (continued)

Table 2021 provides a summary of foreclosed assets and an analysis of changes in foreclosed assets.

Table ~~20:~~21: Foreclosed Assets


(in millions)		Sep 30, 2020		Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
									Quarter ended

($ in millions)								($ in millions)	Mar 31, 2021		Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Summary by loan segment	Summary by loan segment							Summary by loan segment
Government insured/guaranteed	Government insured/guaranteed	$	22	31	43	50	59	Government insured/guaranteed	$	16	18	22	31	43
Commercial	Commercial	39		45	49	62	180	Commercial	64		70	39	45	49
Consumer	Consumer	95		119	160	191	198	Consumer	60		71	95	119	160
Total foreclosed assets	Total foreclosed assets	$	156	195	252	303	437	Total foreclosed assets	$	140	159	156	195	252
Analysis of changes in foreclosed assets	Analysis of changes in foreclosed assets							Analysis of changes in foreclosed assets
Balance, beginning of period	Balance, beginning of period	$	195	252	303	437	377	Balance, beginning of period	$	159	156	195	252	303
Net change in government insured/guaranteed (1)	Net change in government insured/guaranteed (1)	(9)		(12)	(7)	(9)	(9)	Net change in government insured/guaranteed (1)	(2)		(4)	(9)	(12)	(7)
Additions to foreclosed assets (2)	Additions to foreclosed assets (2)	60		51	107	126	235	Additions to foreclosed assets (2)	88		114	60	51	107
Reductions:	Reductions:							Reductions:
Sales	Sales	(88)		(98)	(154)	(250)	(155)	Sales	(107)		(104)	(88)	(98)	(154)
Write-downs and gains (losses) on sales	Write-downs and gains (losses) on sales	(2)		2	3	(1)	(11)	Write-downs and gains (losses) on sales	2		(3)	(2)	2	3
Total reductions	Total reductions	(90)		(96)	(151)	(251)	(166)	Total reductions	(105)		(107)	(90)	(96)	(151)
Balance, end of period	Balance, end of period	$	156	195	252	303	437	Balance, end of period	$	140	159	156	195	252

(1)Foreclosed government insured/guaranteed loans are temporarily transferred to and held by us as servicer, until reimbursement is received from FHA or VA.

(2)Includes loans moved into foreclosed assets from nonaccrual status and repossessed ~~automobiles.~~autos.

Foreclosed assets at ~~September 30, 2020,~~March 31, 2021, included ~~$104~~$59 million of foreclosed residential real estate, of which ~~21%~~28% is predominantly FHA insured or VA guaranteed and expected to have minimal or no loss content. The remaining amount of foreclosed assets has been written down to estimated net realizable value. Of the ~~$156~~$140 million in foreclosed assets at ~~September 30, 2020, 52%~~March 31, 2021, 56% have been in the foreclosed assets portfolio for one year or less.

As part of our actions to support customers during the COVID-19 pandemic, we have temporarily suspended certain mortgage foreclosure activities, which ~~may affect~~has affected the amount of our foreclosed ~~assets for the remainder of the year.~~assets. For additional information on loans in process of foreclosure, see Note 64 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

~~Risk Management – Credit Risk Management~~ ~~(continued)~~

TROUBLED DEBT RESTRUCTURINGS

(TDRs)

Table ~~21:TDR Balances~~

(in millions) Sep 30,
2020 Jun 30,
2020 Mar 31,
2020 Dec 31,
2019 Sep 30,
2019
Commercial:
Commercial and industrial $ 2,082 1,882 1,302 1,183 1,162
Real estate mortgage 805 717 697 669 598
Real estate construction 21 20 33 36 40
Lease financing 9 10 10 13 16
Total commercial TDRs 2,917 2,629 2,042 1,901 1,816
Consumer:
Real estate 1-4 family first mortgage 9,420 7,176 7,284 7,589 7,905
Real estate 1-4 family junior lien mortgage 1,298 1,309 1,356 1,407 1,457
Credit Card 494 510 527 520 504
Automobile 156 108 76 81 82
Other revolving credit and installment 190 173 172 170 167
Trial modifications 91 91 108 115 123
Total consumer TDRs 11,649 9,367 9,523 9,882 10,238
Total TDRs $ 14,566 11,996 11,565 11,783 12,054
TDRs on nonaccrual status $ 4,163 3,475 2,846 2,833 2,775
TDRs on accrual status:
Government insured/guaranteed 3,467 1,277 1,157 1,190 1,199
Non-government insured/guaranteed 6,936 7,244 7,562 7,760 8,080
Total TDRs $ 14,566 11,996 11,565 11,783 12,054

~~Table 21~~22 provides information regarding the recorded investment of loans modified in TDRs. ~~The allowance for loan losses for~~ TDRs ~~was $732 million and $1.0 billion~~ at ~~September 30, 2020, and~~March 31, 2021, decreased, compared with December 31, ~~2019, respectively. See Note 6 (Loans~~2020, due to paydowns primarily in the commercial and ~~Related Allowance for Credit Losses) to Financial Statements in this Report for additional information regarding TDRs.~~ industrial portfolio. The amount of our TDRs at March 31, 2021, would have otherwise been higher without the TDR relief provided by the CARES Act and Interagency Statement.

Table 22:TDR Balances


($ in millions)	Mar 31, 2021		Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Commercial:
Commercial and industrial	$	1,331	1,933	2,082	1,882	1,302
Real estate mortgage	652		774	805	717	697
Real estate construction	21		15	21	20	33
Lease financing	9		9	9	10	10
Total commercial TDRs	2,013		2,731	2,917	2,629	2,042
Consumer:
Residential mortgage – first lien	9,446		9,764	9,420	7,176	7,284
Residential mortgage – junior lien	1,174		1,237	1,298	1,309	1,356
Credit card	411		458	494	510	527
Auto	156		176	156	108	76
Other consumer	67		67	190	173	172
Trial modifications	81		90	91	91	108
Total consumer TDRs	11,335		11,792	11,649	9,367	9,523
Total TDRs	$	13,348	14,523	14,566	11,996	11,565
TDRs on nonaccrual status	$	3,800	4,456	4,163	3,475	2,846
TDRs on accrual status:
Government insured/guaranteed	3,708		3,721	3,467	1,277	1,157
Non-government insured/guaranteed	5,840		6,346	6,936	7,244	7,562
Total TDRs	$	13,348	14,523	14,566	11,996	11,565


36			Wells Fargo & Company

In those situations where principal is forgiven, the entire amount of such forgiveness is immediately charged 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. The allowance for loan losses for TDRs was $509 million and $565 million at March 31, 2021, and December 31, 2020, respectively. As part of our actions to support customers during the COVID-19 pandemic, we have provided borrowers relief in the form of loan modifications. Under the CARES Act and the Interagency Statement, loan modifications related to the COVID-19 pandemic will not be classified as TDRs if they meet certain eligibility criteria. For additional information on the CARES Act

and the Interagency Statement, see the “Risk Management – Credit Risk Management – Credit Quality Overview – ~~Troubled Debt Restructuring Relief”~~COVID-Related Lending Accommodations” section in this Report.

For ~~additional~~ information on our nonaccrual policies when a restructuring is involved, see the “Risk Management – Credit Risk Management – Troubled Debt Restructurings (TDRs)” section in our ~~2019~~2020 Form 10-K.

Table 2223 provides an analysis of the changes in TDRs. Loans modified more than once as a TDR are reported as ~~TDR~~ inflows only in the period they are first modified. ~~Other than resolutions such as~~In addition to 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 ~~loans.~~loan.

Table ~~22:~~23: Analysis of Changes in TDRs


					Quarter ended									Quarter ended
(in millions)		Sep 30, 2020		Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019

($ in millions)								($ in millions)	Mar 31, 2021		Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Commercial TDRs	Commercial TDRs							Commercial TDRs
Balance, beginning of quarter		$	2,629	2,042	1,901	1,816	1,988
Balance, beginning of period								Balance, beginning of period	$	2,731	2,917	2,629	2,042	1,901
Inflows (1)	Inflows (1)	866		971	452	476	293	Inflows (1)	155		486	866	971	452
Outflows	Outflows							Outflows
Charge-offs	Charge-offs	(77)		(60)	(56)	(48)	(66)	Charge-offs	(49)		(72)	(77)	(60)	(56)
Foreclosures		—		—	—	(1)	—
Foreclosure								Foreclosure	(5)		—	—	—	—
Payments, sales and other (2)	Payments, sales and other (2)	(501)		(324)	(255)	(342)	(399)	Payments, sales and other (2)	(819)		(600)	(501)	(324)	(255)
Balance, end of quarter		2,917		2,629	2,042	1,901	1,816
Balance, end of period								Balance, end of period	2,013		2,731	2,917	2,629	2,042
Consumer TDRs	Consumer TDRs							Consumer TDRs
Balance, beginning of quarter		9,367		9,523	9,882	10,238	10,625
Balance, beginning of period								Balance, beginning of period	11,792		11,649	9,367	9,523	9,882
Inflows (1)	Inflows (1)	2,805		425	312	350	360	Inflows (1)	633		1,226	2,805	425	312
Outflows	Outflows							Outflows
Charge-offs	Charge-offs	(58)		(46)	(63)	(57)	(56)	Charge-offs	(43)		(57)	(58)	(46)	(63)
Foreclosures		(7)		(8)	(57)	(61)	(70)
Foreclosure								Foreclosure	(14)		(5)	(7)	(8)	(57)
Payments, sales and other (2)	Payments, sales and other (2)	(458)		(510)	(544)	(580)	(617)	Payments, sales and other (2)	(1,024)		(1,020)	(458)	(510)	(544)
Net change in trial modifications (3)	Net change in trial modifications (3)	—		(17)	(7)	(8)	(4)	Net change in trial modifications (3)	(9)		(1)	—	(17)	(7)
Balance, end of quarter		11,649		9,367	9,523	9,882	10,238
Balance, end of period								Balance, end of period	11,335		11,792	11,649	9,367	9,523
Total TDRs	Total TDRs	$	14,566	11,996	11,565	11,783	12,054	Total TDRs	$	13,348	14,523	14,566	11,996	11,565

(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 TDRs that modified in a prior period.

(2)Other outflows ~~consist of~~include normal amortization/accretion of loan basis adjustments and loans transferred to held for sale. Occasionally, loans that have been refinanced or restructured at market terms qualify as new loans, which are also included as other outflows.

(3)Net change in trial modifications ~~includes~~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.


			Wells Fargo & Company			37

Risk Management – Credit Risk Management (continued)

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING Loans 90 days or more past due are still accruing if they are (1) well-secured and in the process of collection or (2) ~~real estate 1-4 family~~residential mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. ~~Prior to January 1, 2020, PCI loans were excluded from~~

Table 24 reflects loans 90 days or more past due and still accruing ~~because they continued~~by class for loans not government insured/guaranteed. For additional information on delinquencies by loan class, see Note 4 (Loans and Related Allowance for Credit Losses) to ~~earn interest income from accretable yield, independent of performance~~Financial Statements in ~~accordance with their contractual terms. In connection with our adoption of CECL, PCI~~this Report.

Table 24:Loans 90 Days or More Past Due and Still Accruing


($ in millions)	Mar 31, 2021		Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Total:	$	6,273	7,041	11,698	9,739	7,023
Less: FHA insured/VA guaranteed (1)	5,406		6,351	11,041	8,922	6,142

Total, not government insured/guaranteed	$	867	690	657	817	881
By segment and class, not government insured/guaranteed: Commercial:
Commercial and industrial	$	55	39	61	101	24
Real estate mortgage	128		38	47	44	28
Real estate construction	86		1	—	—	1
Total commercial	269		78	108	145	53
Consumer:
Residential mortgage – first lien	85		135	97	93	128
Residential mortgage – junior lien	15		19	28	19	25
Credit card	394		365	297	418	528
Auto	46		65	50	54	69
Other consumer	58		28	77	88	78
Total consumer	598		612	549	672	828
Total, not government insured/guaranteed	$	867	690	657	817	881

(1)Represents loans ~~were reclassified as PCD loans and classified as accruing~~whose repayments are predominantly insured by the FHA or ~~nonaccruing based on performance.~~guaranteed by the VA.

Loans 90 days or more past due and still accruing, excluding government insured/guaranteed loans, at ~~September 30, 2020,~~March 31, 2021, were ~~down $276 million, or 30%,~~up from December 31, ~~2019~~2020, due to ~~lower~~

~~delinquencies~~an increase in ~~consumer loans as~~delinquent commercial real estate mortgage and construction loans. Customer payment deferral activities instituted in response to the COVID-19 pandemic ~~delayed~~could continue to delay the recognition of delinquencies for customers who would have otherwise moved into past due status.

Loans 90 days or more past due and still accruing whose repayments are largely insured by the FHA or guaranteed by the VA for mortgages at ~~September 30, 2020,~~March 31, 2021, were updown from December 31, ~~2019, driven by our repurchases of loans more than 90 days past due from GNMA loan securitization pools.~~

Table 23 reflects 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 Related Allowance for Credit Losses) to Financial Statements2020, consistent with the overall decrease in ~~this Report.~~

~~Table 23:Loans 90 Days or More Past Due and Still Accruing~~

(in millions) Sep 30,
2020 Jun 30,
2020 Mar 31,
2020 Dec 31,
2019 Sep 30,
2019
Total: $ 11,698 9,739 7,023 7,285 7,130
Less: FHA insured/VA guaranteed (1) 11,041 8,922 6,142 6,352 6,308
Total, not government insured/guaranteed $ 657 817 881 933 822
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial $ 61 101 24 47 6
Real estate mortgage 47 44 28 31 28
Real estate construction — — 1 — —
Total commercial 108 145 53 78 34
Consumer:
Real estate 1-4 family first mortgage 97 93 128 112 100
Real estate 1-4 family junior lien mortgage 28 19 25 32 35
Credit card 297 418 528 546 491
Automobile 50 54 69 78 75
Other revolving credit and installment 77 88 78 87 87
Total consumer 549 672 828 855 788
Total, not government insured/guaranteed $ 657 817 881 933 822

~~(1)Represents loans whose repayments are largely insured by the FHA or guaranteed by the VA.~~

residential mortgage loans.


38			Wells Fargo & Company

NET ~~LOAN~~ CHARGE-OFFSTable 25 presents net loan charge-offs for first quarter 2021 and the previous four quarters.

Table ~~24:~~25: Net Loan Charge-offs

Quarter ended
Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019
($ 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)
Commercial:
Commercial and industrial $ 274 0.33 % $ 521 0.55 % $ 333 0.37 % $ 168 0.19 % $ 147 0.17 %
Real estate mortgage 56 0.18 67 0.22 (2) (0.01) 4 0.01 (8) (0.02)
Real estate construction (2) (0.03) (1) (0.02) (16) (0.32) — — (8) (0.14)
Lease financing 28 0.66 15 0.33 9 0.19 31 0.63 8 0.17
Total commercial 356 0.29 602 0.44 324 0.25 203 0.16 139 0.11
Consumer:
Real estate 1-4 family first mortgage (1) — 2 — (3) — (3) — (5) (0.01)
Real estate 1-4 family junior lien mortgage (14) (0.22) (12) (0.17) (5) (0.07) (16) (0.20) (22) (0.28)
Credit card 245 2.71 327 3.60 377 3.81 350 3.48 319 3.22
Automobile 31 0.25 106 0.88 82 0.68 87 0.73 76 0.65
Other revolving credit and installment 66 0.80 88 1.09 134 1.59 148 1.71 138 1.60
Total consumer 327 0.30 511 0.48 585 0.53 566 0.51 506 0.46
Total $ 683 0.29 % $ 1,113 0.46 % $ 909 0.38 % $ 769 0.32 % $ 645 0.27 %


		Quarter ended
		Mar 31, 2021			Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020
($ 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)





Commercial:
	Commercial and industrial		$	88	0.11	%	$	111	0.14	%	$	274	0.33	%	$	521	0.55	%	$	333	0.37	%
	Real estate mortgage		46		0.16		162		0.53		56		0.18		67		0.22		(2)		(0.01)
	Real estate construction		—		—		—		—		(2)		(0.03)		(1)		(0.02)		(16)		(0.32)
	Lease financing		15		0.40		35		0.83		28		0.66		15		0.33		9		0.19
Total commercial			149		0.13		308		0.26		356		0.29		602		0.44		324		0.25
Consumer:
	Residential mortgage – first lien		(24)		(0.04)		(3)		—		(1)		—		2		—		(3)		—
	Residential mortgage – junior lien		(19)		(0.35)		(24)		(0.39)		(14)		(0.22)		(12)		(0.17)		(5)		(0.07)
	Credit card		236		2.71		190		2.09		245		2.71		327		3.60		377		3.81
	Auto		52		0.44		51		0.43		31		0.25		106		0.88		82		0.68
	Other consumer		119		1.97		62		0.88		66		0.80		88		1.09		134		1.59
Total consumer			364		0.37		276		0.26		327		0.30		511		0.48		585		0.53
	Total		$	513	0.24	%	$	584	0.26	%	$	683	0.29	%	$	1,113	0.46	%	$	909	0.38	%

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

~~Table 24 presents net loan charge-offs for third quarter 2020 and the previous four quarters.~~

The decrease in commercial net loan charge-offs in ~~third~~first quarter ~~2020 from~~2021, compared with the prior quarter, was driven by by:

•lower commercial and industrial loan losses ~~predominantly~~primarily in ~~our~~the oil, gas and ~~gas portfolio, as well as~~ pipelines industry; and

•lower commercial real estate mortgage ~~losses.~~ loan losses primarily in the shopping center property type.

The ~~decrease~~increase in consumer net loan charge-offs in ~~third~~first quarter ~~2020 from~~2021, compared with the prior quarter, was driven ~~by lower~~by:

•credit card customers who exited deferral programs; and

•additional losses in other consumer loans due to the sale of a portion of our ~~credit card and automobile portfolios.~~student loan portfolio.

The COVID-19 pandemic may continue to impact the credit quality of our loan portfolio. Although the potential impacts were considered in our allowance for credit losses for loans, payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of net loan charge-offs. For additional information on customer accommodations in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section in this Report.

ALLOWANCE FOR CREDIT LOSSES We maintain an allowance for credit losses (ACL) for loans, which is management’s estimate of the expected credit losses in the loan portfolio and unfunded credit commitments, at the balance sheet date, excluding loans and unfunded credit commitments carried at fair value or held for sale. Additionally, we maintain an ACL for debt securities classified as either ~~available-for-sale~~AFS or ~~held-to-maturity,~~HTM, other financial assets measured at amortized cost, net investments in leases, and other off-balance sheet credit exposures.

We apply a disciplined process and methodology to establish our ACL each quarter. The process for establishing the ACL for loans 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. For additional information on our ACL, see the “Critical Accounting Policies – Allowance for Credit Losses” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in ~~this Report.~~our 2020 Form 10-K. For additional information on our ACL for loans, see Note 64 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report, and for additional information on our ~~allowance for credit losses~~ACL for debt securities, see the “Balance Sheet Analysis – Available-For-Sale and Held-To-Maturity Debt Securities” section and Note 53 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report.


			Wells Fargo & Company			39

Risk Management – Credit Risk Management (continued)

Table 2526 presents the allocation of the ACL for loans by loan portfolio segment and class for the most recent quarter ~~end~~ and last four year ends. The detail of the changes in the ACL for loans by portfolio segment (including charge-offs and recoveries by loan class) is included in Note 6 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

~~Risk Management – Credit Risk Management~~
~~(continued)~~

Table ~~25:~~26: Allocation of the ACL for Loans(1)


		Sep 30, 2020				Dec 31, 2019				Dec 31, 2018				Dec 31, 2017				Dec 31, 2016					Mar 31, 2021				Dec 31, 2020				Dec 31, 2019				Dec 31, 2018				Dec 31, 2017
($ in millions)	($ 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		($ 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
Commercial:	Commercial:																					Commercial:
Commercial and industrial	Commercial and industrial	$	7,845	35	%	$	3,600	37	%	$	3,628	37	%	$	3,752	35	%	$	4,560	34	%	Commercial and industrial	$	6,512	37	%	$	7,230	36	%	$	3,600	37	%	$	3,628	37	%	$	3,752	35	%
Real estate mortgage	Real estate mortgage	2,517		13		1,236		13		1,282		13		1,374		13		1,320		14		Real estate mortgage	3,156		14		3,167		14		1,236		13		1,282		13		1,374		13
Real estate construction	Real estate construction	521		2		1,079		2		1,200		2		1,238		3		1,294		2		Real estate construction	410		2		410		2		1,079		2		1,200		2		1,238		3
Lease financing	Lease financing	659		2		330		2		307		2		268		2		220		2		Lease financing	604		2		709		2		330		2		307		2		268		2
Total commercial	Total commercial	11,542		52		6,245		54		6,417		54		6,632		53		7,394		52		Total commercial	10,682		55		11,516		54		6,245		54		6,417		54		6,632		53
Consumer:	Consumer:																					Consumer:
Real estate 1-4 family first mortgage		1,519		32		692		30		750		30		1,085		30		1,270		29
Real estate 1-4 family junior lien mortgage		710		3		247		3		431		3		608		4		815		5
Residential mortgage – first lien																						Residential mortgage – first lien	1,202		30		1,600		31		692		30		750		30		1,085		30
Residential mortgage – junior lien																						Residential mortgage – junior lien	428		2		653		3		247		3		431		3		608		4
Credit card	Credit card	4,082		4		2,252		4		2,064		4		1,944		4		1,605		4		Credit card	4,082		4		4,082		4		2,252		4		2,064		4		1,944		4
Automobile		1,225		5		459		5		475		5		1,039		5		817		6
Other revolving credit and installment		1,393		4		561		4		570		4		652		4		639		4
Auto																						Auto	1,108		6		1,230		5		459		5		475		5		1,039		5
Other consumer																						Other consumer	541		3		632		3		561		4		570		4		652		4
Total consumer	Total consumer	8,929		48		4,211		46		4,290		46		5,328		47		5,146		48		Total consumer	7,361		45		8,197		46		4,211		46		4,290		46		5,328		47
Total	Total	$	20,471	100	%	$	10,456	100	%	$	10,707	100	%	$	11,960	100	%	$	12,540	100	%	Total	$	18,043	100	%	$	19,713	100	%	$	10,456	100	%	$	10,707	100	%	$	11,960	100	%

		Sep 30, 2020				Dec 31, 2019				Dec 31, 2018				Dec 31, 2017				Dec 31, 2016
Components:	Components:																					Components:
Allowance for loan losses	Allowance for loan losses	$	19,463			9,551				9,775				11,004				11,419				Allowance for loan losses	$	16,928			18,516				9,551				9,775				11,004
Allowance for unfunded credit commitments	Allowance for unfunded credit commitments	1,008				905				932				956				1,121				Allowance for unfunded credit commitments	1,115				1,197				905				932				956
Allowance for credit losses for loans		$	20,471			10,456				10,707				11,960				12,540
Allowance for credit losses																						Allowance for credit losses	$	18,043			19,713				10,456				10,707				11,960
Ratio of allowance for loan losses to total net loan charge-offs (2)																						Ratio of allowance for loan losses to total net loan charge-offs (2)	8.13x				5.63				3.46				3.56				3.76
Allowance for loan losses as a percentage of total loans	Allowance for loan losses as a percentage of total loans	2.12			%	0.99				1.03				1.15				1.18				Allowance for loan losses as a percentage of total loans	1.96			%			2.09				0.99				1.03				1.15
Allowance for loan losses as a percentage of total net loan charge-offs (2)		716				346				356				376				324
Allowance for credit losses for loans as a percentage of total loans	Allowance for credit losses for loans as a percentage of total loans	2.22				1.09				1.12				1.25				1.30				Allowance for credit losses for loans as a percentage of total loans	2.09						2.22				1.09				1.12				1.25
Allowance for credit losses for loans as a percentage of total nonaccrual loans	Allowance for credit losses for loans as a percentage of total nonaccrual loans	255				196				165				156				126				Allowance for credit losses for loans as a percentage of total nonaccrual loans	224						226				196				165				156

(1)Disclosure is not comparative due to our adoption of ~~CECL~~Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL) on January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in ~~this Report.~~our 2020 Form 10-K.

(2)Total net loan charge-offs are annualized for the quarter ended ~~September 30, 2020.~~March 31, 2021.

The ratios for the allowance for loan losses and the ACL for loans presented in Table 2526 may fluctuate 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 ACL for loans ~~increased $10.0~~decreased $1.7 billion, or ~~96%~~8%, from December 31, ~~2019, driven by a $11.3 billion increase~~2020, reflecting continued improvement in the ~~ACL for loans in the first nine months of 2020 reflecting current and forecasted~~ economic ~~conditions due to the COVID-19 pandemic, partially offset by a $1.3 billion decrease as a result of adopting CECL.~~environment. Total provision for credit losses for loans was ~~$751 million~~$(1.1) billion in ~~third~~first quarter ~~2020,~~2021, compared with ~~$695 million~~$3.8 billion in ~~third quarter 2019. The increase in the provision for credit losses for loans in third quarter 2020, compared with~~ the same period a year ago, ~~reflected an increase~~reflecting lower net charge-offs and improvement in the economic environment. The detail of the changes in the ACL for loans ~~due~~by portfolio segment (including charge-offs and recoveries by loan class) is included in Note 4 (Loans and Related Allowance for Credit Losses) to ~~the economic impact of the COVID-19 pandemic.~~Financial Statements in this Report.

We consider multiple economic scenarios to develop our estimate of the ACL for loans. The scenarios generally include a base ~~case considered to be the most likely economic forecast,~~scenario, along with an optimistic (upside) and aone or more pessimistic (downside) ~~economic forecast.~~scenarios. Our estimate of the ACL for loans at ~~September 30, 2020,~~March 31, 2021, was based on a weighting of the base ~~case~~ and a downside

economic ~~scenarios~~scenario of ~~80%~~50% and ~~20%~~50%, respectively, with no weighting applied to ~~the~~an upside scenario. The base ~~case~~scenario assumed economic ~~forecast assumed near-term economic stress recovering into late 2021.~~improvements in the near term with a return to normalized levels near the end of 2022. The downside scenario assumed more sustained adverse economic impacts resulting from the COVID-19 pandemic, compared with the base ~~case.~~scenario. The downside scenario assumed U.S. real GDP growth

rates increasing ~~slowly and not fully recovering during~~in the ~~remainder of 2020 and 2021,~~near term followed by a decline with a return to normalized levels after 2023 and a sustained elevation in the U.S. unemployment rate until ~~mid-2022.~~late 2022. We considered expectations for the impact of government economic stimulus programs in effect on September 30, 2020; however, we did not consider the impact of future government economic stimulus programs. In addition, we consideredwithin each scenario our expectations for the impact of customer accommodation activity, as well as the estimated impact on certain industries that we consider to be directly and most adversely affected by the COVID-19 pandemic.

In addition to quantitative estimates, we consider qualitative factors that represent risks inherent in our processes and assumptions such as economic environmental factors, modeling assumptions and performance, and other subjective factors, including industry trends and emerging risk assessments. ~~The forecasted key economic variables used in our estimate of the~~

ACL for loans generally reflected improvement from our prior expectations resulting in lower loss expectations in the quantitative component of our ACL for loans at September 30, 2020. However, we significantly increased the qualitative component of our ACL for loans at September 30, 2020, to considerWe also considered the significant uncertainty related to the duration and severity of the economic impacts from the COVID-19 pandemic and the incremental risks to our loan ~~portfolio, including specifically impacted industries in our commercial loan~~ portfolio.

The forecasted key economic variables used in our estimate of the ACL for loans at ~~June 30~~March 31, 2021, and ~~September 30,~~December 31, 2020, are presented in Table ~~26.~~27.


40			Wells Fargo & Company

Table ~~26:~~27: Forecasted Key Economic Variables

4Q 2020 2Q 2021 4Q 2021
Blend of economic scenarios (1):
U.S. unemployment rate (2)
Jun 30, 2020 11.0 9.2 7.5
Sep 30, 2020 8.8 7.3 6.0
U.S. real GDP (3)
Jun 30, 2020 4.3 6.3 3.5
Sep 30, 2020 1.7 3.9 2.8
Home price index (4)
Jun 30, 2020 0.7 (3.0) (0.9)
Sep 30, 2020 2.0 (2.0) (1.8)
Commercial real estate asset prices (4)
Jun 30, 2020 (2.5) (7.6) (5.1)
Sep 30, 2020 (5.4) (10.9) (5.5)


	2Q 2021	4Q 2021	2Q 2022
Blend of economic scenarios (1):
U.S. unemployment rate (2):


Dec 31, 2020	8.1	7.1	6.2
Mar 31, 2021	6.2	6.5	7.0

U.S. real GDP (3):


Dec 31, 2020	5.5	4.5	4.0
Mar 31, 2020	3.0	(1.1)	(0.6)

Home price index (4):


Dec 31, 2020	1.7	(0.2)	2.5
Mar 31, 2021	9.2	1.0	(5.2)

Commercial real estate asset prices (4):


Dec 31, 2020	(9.2)	(9.8)	(5.3)
Mar 31, 2021	2.3	(10.0)	(11.5)

(1)Represents a ~~weighted average~~weighting of the forecasted economic variable ~~inputs.~~inputs based on a weighting of 50% for the base and 50% for a downside scenario at both March 31, 2021, and December 31, 2020.

(2)Quarterly average.

(3)Percent change from the preceding period, seasonally adjusted annualized rate.

(4)Percent change year over year of national average; outlook differs by geography and property type.

Future amounts of the ACL for loans will be based on a variety of factors, including loan balance changes, portfolio credit quality and mix changes, and changes in general economic conditions and expectations (including for unemployment and GDP), among other factors. ~~Based on~~We observed economic ~~conditions at the end of third~~improvements in first quarter ~~2020, it was difficult~~2021; however, there remained significant uncertainty related to ~~estimate~~ the length and severity of the economic ~~downturn that may result from~~impact of the COVID-19 pandemic and the impact of other factors that may influence the level of eventual losses and corresponding requirements for future amounts of the ACL, including the impact of economic stimulus programs and customer accommodation activity. The COVID-19 pandemic could continue to ~~result in~~impact the recognition of credit losses in our loan portfolios and may result in increases in our ~~allowance for credit losses,~~ACL, particularly if the impact on the economy worsens.

We believe the ACL for loans of ~~$20.5~~$18.0 billion at ~~September 30, 2020,~~March 31, 2021, was appropriate to cover expected credit losses, including unfunded credit commitments, at that date. The entire allowance is available to absorb ~~expected~~ credit losses from the total loan portfolio. The ACL for loans 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 ACL for loans 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. Our process for determining the ACL 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 2020 Form 10-K.

LIABILITY FOR MORTGAGE LOAN REPURCHASE LOSSESFor information on our repurchase liability, see the “Risk

Management – Credit Risk Management – Liability For Mortgage Loan Repurchase Losses” section in our ~~2019~~2020 Form 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 ~~government-sponsored entity (GSE)-guaranteed~~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, and can result in the imposition of certain monetary penalties.

As a servicer, we are required to advance certain delinquent payments of principal and interest on mortgage loans we service. The amount and timing of reimbursement of ~~these~~ advances of delinquent payments vary by investor and the applicable servicing agreements. Due to continued customer requests for payment deferrals as a result of the COVID-19 pandemic, the amount of our servicing advances of principal and interest remained ~~elevated in third quarter 2020.~~elevated. The amount of these advances may continue to increase if additional payment deferrals are provided. Payment deferrals also delay the collection of contractually specified servicing fees, resulting in lower net servicing income.

In accordance with applicable servicing guidelines, delinquency status continues to advance for loans with COVID-related payment deferrals, which has resulted in an increase in delinquent loans serviced for others and a corresponding increase in loans eligible for repurchase from GNMA loan securitization pools. OurUpon transfer as servicer, we retain the option to repurchase loans from GNMA loan securitization pools, which becomes exercisable when three scheduled loan payments remain unpaid by the borrower. We generally repurchase these loans for cash and as a result, our total consolidated assets do not change. ~~In third quarter 2020, we repurchased $21.9 billion~~As a result of the COVID-19 pandemic, our repurchases of these ~~delinquent~~ loans ~~substantially all of which had COVID-related payment deferrals.~~were elevated in 2020 but returned to more normalized levels in first quarter 2021.

~~Loans~~Repurchased loans that regain current status or are otherwise modified in accordance with applicable servicing guidelines may be included in future GNMA loan securitization pools. However, in accordance with guidance issued by GNMA, certain loans repurchased after June 30, 2020, ~~with COVID-related payment deferrals~~ are ineligible for inclusion in future GNMA loan securitization pools until the borrower has timely made six consecutive payments. This requirement may delay our ability to resell loans into the securitization market. At September 30, 2020, the amount of repurchased GNMA loans with COVID-related payment deferrals that were ineligible for inclusion in future GNMA loan securitization pools due to this requirement was $21.0 billion.

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 ~~2019~~2020 Form 10-K. For additional information on mortgage banking activities, see Note 119 (Mortgage Banking Activities) to Financial Statements in this Report.

Asset/Liability Management

Asset/liability management involves evaluating, monitoring and managing interest rate risk, market risk, liquidity and funding. ~~Primary~~For information on our oversight of ~~interest rate risk and market risk resides with~~asset/liability risks, see the ~~Finance Committee of~~“Risk Management – Asset/Liability Management” section in our ~~Board, which oversees the administration and effectiveness of financial risk management~~

2020 Form 10-K.

~~Asset/Liability Management (continued~~)

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 Committee (Corporate ALCO), which consists of management from finance, risk and business groups, to oversee these risks and provide periodic reports 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~~is created in our role as a financial intermediary for customers based on investments such as loans and other extensions of credit and debt securities. Interest rate risk can have a significant ~~earnings~~ impact ~~is an integral part of being a financial intermediary.~~to our earnings. We are subject to interest rate risk because:

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

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

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


			Wells Fargo & Company			41

Risk Management – Asset/Liability Management (continued)

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

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

to a greater degree than our liabilities resulting in lower net interest income.

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 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, as presented in Table 28, estimate net interest income sensitivity over the next ~~two years under a range of~~12 months using instantaneous movements across the yield curve with both lower and higher interest ~~rates. Measured impacts from standardized ramps (gradual changes) and shocks (instantaneous changes) are summarized in Table 27, indicating net interest income sensitivity~~rates relative to ~~the Company’s~~our base ~~net interest income plan. Ramp~~scenario. Steeper and flatter scenarios ~~assume interest rates move gradually~~measure non-parallel changes in ~~parallel across~~ the yield curve, ~~relative to the base scenario in year one,~~with long-term interest rates defined as all tenors three years and ~~the full amount of the ramp is held~~longer (e.g., 10-year U.S. Treasury securities) and short-term interest rates defined as ~~a constant differential to the base scenario in year two.~~all tenors less than three years. Where applicable, U.S. dollar interest rates are floored at 0.00%. The following describes the simulation assumptions for the scenarios presented in Table ~~27:~~28:

•Simulations are dynamic and reflect anticipated ~~growth across~~changes to our 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 ~~27:~~28: Net Interest Income Sensitivity ~~Over Next Two-Year Horizon Relative to Base Expectation~~

Lower Rates (1) Higher Rates
($ in billions) 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 $ (1.7) - (1.2) 5.9 - 6.4 5.3 - 5.8
Key Rates at Horizon End
Fed Funds Target 0.25 % 0.00 1.25 2.25
10-year CMT (2) 0.84 0.00 1.84 2.84
Second Year of Forecasting Horizon
Net Interest Income Sensitivity to Base Scenario $ (3.5) - (3.0) 8.6 - 9.1 13.2 - 13.7
Key Rates at Horizon End
Fed Funds Target 0.25 % 0.00 1.25 2.25
10-year CMT (2) 0.99 0.00 1.99 2.99

~~(1)U.S. interest rates are floored at zero where applicable in this scenario analysis~~

~~(2)U.S. Constant Maturity Treasury Rate~~


($ in billions)	Mar 31, 2021		Dec 31, 2020
Parallel Shift:
+100 bps shift in interest rates	$	6.8	6.7
-100 bps shift in interest rates	(3.0)		(2.7)

Steeper yield curve:
+50 bps shift in long-term interest rates	1.2		1.3

Flatter yield curve:
+50 bps shift in short-term interest rates	2.4		2.2
-50 bps shift in long-term interest rates	(1.3)		(1.4)

The sensitivity results above do not capture ~~interest rate sensitive~~ noninterest income ~~and~~or expense impacts. Our interest rate sensitive noninterest income and expense are predominantly driven by mortgage banking activities, and may move in the opposite direction of our net interest income. Mortgage originations generally decline in response to higher interest rates and generally increase, particularly refinancing activity, in response to lower interest rates. 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~~our 2020 Form 10-K for additional information.

Interest rate sensitive noninterest income also results from changes in earnings credit for noninterest-bearing deposits that reduce treasury management deposit service fees. Additionally, for the trading portfolio, For additional information on our trading assets ~~are (before the effects of certain economic hedges) generally less sensitive~~and liabilities, see Note 2 (Trading Activities) to ~~changes~~Financial Statements in interest rates than the related funding liabilities. As a result, net interest income from the trading portfolio contracts and expands as interest rates rise and fall, respectively. The impact to net interest income does not include the fair value changes of trading securities and loans, which, along with the effects of related economic hedges, are recorded in noninterest income.this Report.

We use the debt securities portfolio and exchange-traded and over-the-counter (OTC) interest rate derivatives to ~~hedge~~

manage our interest rate exposures. See ~~the “Balance Sheet Analysis – Available-for-Sale~~Note 1 (Summary of Significant Accounting Policies), Note 3 (Available-for-Sale and Held-to-Maturity Debt ~~Securities” section in this Report for additional information on the use of the available-for-sale~~Securities) 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 September 30, 2020, and December 31, 2019, are presented in Note 1514 (Derivatives) to Financial Statements in ~~this Report. We use derivatives~~our 2020 Form 10-K for ~~asset/liability management in two main ways:~~additional information.

•
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 additional information on mortgage banking interest rate and market risk, see Note 9 (Mortgage Banking Activities) to Financial Statements in this Report and the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section in our ~~2019~~2020 Form 10-K.

Hedging the various sources of interest rate risk in mortgage banking is a complex process that requires sophisticated modeling and constant monitoring. There are several potential risks to earnings from mortgage banking related to origination volumes and mix, valuation of MSRs and associated hedging results, the relationship and degree of volatility between short-term and long-term interest rates, and changes in servicing and foreclosures costs. While ~~our hedging activities are designed~~we attempt to balance our mortgage banking interest rate and market 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 index-based financial instruments used as economic hedges for such ARMs. Hedge results may also be impacted as the overall level of hedges changes as interest rates change, or as there are other changes in the market for mortgage forwards that may affect the implied carry on the MSRs.

The total carrying value of our residential and commercial MSRs was $7.7 billion at September 30, 2020, and $12.9 billion at December 31, 2019. The weighted average note rate on our portfolio of loans serviced for others was 4.13% at September 30, 2020, and 4.25% at December 31, 2019. The carrying value of our total MSRs represented 0.52% and 0.79% of mortgage loans serviced for others at September 30, 2020 and December 31, 2019, respectively.

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

~~The Board’s Finance Committee has primary~~ For information on our oversight ~~responsibility for~~of market risk, ~~and oversees~~see 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 also reports key market risk matters to the Risk Committee.

~~At the management level, the~~“Risk Management – Asset/Liability Management – Market and Counterparty Risk Management function, which is part of IRM, has primary oversight responsibility for market risk. The Market and Counterparty Risk Management function reports into the CRO and also provides periodic reports related to market risk to the Board’s Finance Committee.Risk” section in our 2020 Form 10-K.

MARKET RISK – TRADING ACTIVITIESWe 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~~CIB businesses and to a lesser extent other ~~divisions~~businesses 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.~~consolidated statement of income. Changes in fair value of the financial instruments used in our trading activities are reflected in net gains onfrom trading ~~activities, a component of noninterest income in our income statement.~~activities. For additional information on the financial instruments used in our trading activities and the income from these trading activities, see Note 42 (Trading Activities) to Financial Statements in this Report.


42			Wells Fargo & Company

Value-at-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 additional information ~~including information regarding~~on our monitoring activities, sensitivity analysis and stress testing, see the “Risk Management – Asset/Liability Management – Market Risk – Trading Activities” section in our ~~2019~~2020 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 consolidated balance sheet.

Table 2829 shows the Company’s Trading General VaR by risk category. As presented in Table 28, average Company Trading General VaR was $153 million for the quarter ended September 30, 2020, compared with $155 million for the quarter ended June 30, 2020, and $24 million for the quarter ended September 30, 2019. The increase in average ~~as well as period end~~ Company Trading General VaR for the quarter ended ~~September 30, 2020,~~March 31, 2021, compared with the ~~quarter ended September 30, 2019,~~same period a year ago, was driven by a greater presence of market volatility ~~due~~in the 12-month historical lookback window used to calculate average Company Trading General VaR for the quarter ended March 31, 2021. Market volatility was driven by the COVID-19 pandemic, in particular, changes in interest rate curves and a significant widening of credit ~~spreads entering the 12-month historical lookback window used to calculate VaR.~~spreads.

~~Asset/Liability Management (continued~~)

Table ~~28:~~29: Trading 1-Day 99% General VaR by Risk Category


				Quarter ended											Quarter ended
		September 30, 2020					June 30, 2020				September 30, 2019				March 31, 2021					December 31, 2020				March 31, 2020
(in millions)	(in millions)	Period end		Average	Low	High	Period end	Average	Low	High	Period end	Average	Low	High			(in millions)	Period end		Average	Low	High	Period end	Average	Low	High	Period end	Average	Low	High
Company Trading General VaR Risk Categories	Company Trading General VaR Risk Categories															Company Trading General VaR Risk Categories
Credit	Credit	$	98	85	59	104	86	82	61	99	27	20	12	30			Credit	$	22	94	21	112	106	96	80	121	62	28	15	75
Interest rate	Interest rate	145		155	114	201	155	106	42	161	15	18	13	26			Interest rate	36		73	26	120	81	122	81	241	84	32	5	198
Equity	Equity	21		17	9	24	14	10	6	17	6	5	4	11			Equity	35		36	28	72	32	21	14	35	6	7	4	10
Commodity	Commodity	5		5	2	8	4	4	2	7	2	2	1	3			Commodity	11		5	2	12	3	4	2	6	2	2	1	6
Foreign exchange	Foreign exchange	1		1	1	2	1	2	1	3	1	1	1	1			Foreign exchange	1		1	1	1	1	1	1	1	2	1	1	6
Diversification benefit (1)	Diversification benefit (1)	(121)		(110)			(51)	(49)			(16)	(22)					Diversification benefit (1)	(64)		(111)			(126)	(93)			(63)	(37)
Company Trading General VaR	Company Trading General VaR	$	149	153			209	155			35	24					Company Trading General VaR	$	41	98			97	151			93	33

(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 – EQUITY SECURITIESWe 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 other-than-temporary impairment (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 investments 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”~~“Risk Management – Asset/Liability Management – Market Risk – Equity Securities” section in ~~Note 14 (Legal Actions) to Financial Statements in this Report.~~

our 2020 Form 10-K.

~~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 additional information, see Note 86 (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~~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.

LIQUIDITY RISK AND FUNDING In the ordinary course of business, we enter into contractual obligations that may require future cash payments, including funding for customer loan requests, customer deposit maturities and withdrawals, debt service, leases for premises and equipment, and other cash commitments. The objective of effective liquidity management is to ensure that we can meet ~~customer loan requests, customer deposit maturities/withdrawals~~our contractual obligations and other cash commitments efficiently under both normal operating conditions and under periods of Wells Fargo-specific and/or market stress. To help achieve this objective, the Board 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. These guidelines are established and monitored forwe monitor 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. The Parent acts as a source of funding for the Company through the issuance of long-term debt and equity, and WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), provides funding support for the ongoing operational requirements of the Parent and certain of its direct and indirect subsidiaries. For additional information on liquidity risk and funding management, see the “Risk Management – Liquidity Risk and Funding” section in our 2020 Form 10-K. For additional information on the IHC, see the “Regulatory Matters – ‘Living Will’ Requirements and Related Matters” section in our 2020 Form 10-K.

Liquidity Standards We are subject to a rule, issued by the FRB, OCC and ~~Federal Deposit Insurance Corporation (FDIC),~~FDIC, that ~~includes~~establishes a quantitative minimum liquidity requirement consistent with the liquidity coverage ratio (LCR) established by the Basel Committee on Banking Supervision (BCBS). The rule requires a covered banking ~~institutions,~~organization, such as Wells Fargo, to hold high-quality liquid assets (HQLA), predominantly consisting of central bank deposits, government debt securities, and mortgage-backed securities of federal agencies 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~~LCR applies to the Company on a consolidated basis and to our insured depository institutions (IDIs) with total assets ~~greater than~~of $10 ~~billion.~~billion or more. In addition, rules issued by the FRB impose enhanced liquidity risk management standards on large BHCs, such as Wells Fargo.

The FRB, OCC and FDIC have also issued a rule implementing a stable funding requirement, known as the net stable funding ratio (NSFR), which ~~will require large~~requires a covered banking ~~organizations, including~~organization, such as Wells Fargo, to maintain a ~~sufficient~~minimum amount of ~~available~~ stable funding, ~~such as~~including common equity, long-term ~~subordinated~~ debt and most types of deposits, in relation to ~~their~~its assets, derivative exposures and commitments over a one-year horizon period. The ~~rule~~NSFR will


			Wells Fargo & Company			43

Risk Management – Asset/Liability Management (continued)

become effective on July 1, ~~2021.~~2021, and applies to the Company on a consolidated basis and to our IDIs with total assets of $10 billion or more. Based on our liquidity profile at March 31, 2021, we expect to be compliant with the NSFR requirement.

Liquidity Coverage Ratio As of ~~September 30, 2020,~~March 31, 2021, the consolidated Company, Wells Fargo Bank, N.A., and Wells Fargo

National Bank West ~~were above~~exceeded 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 2930 presents the Company’s quarterly average values for the daily-calculated LCR and its components calculated pursuant to the LCR rule requirements.

Table ~~29:~~ 30:Liquidity Coverage Ratio


		Average for Quarter ended						Average for Quarter ended
(in millions, except ratio)	(in millions, except ratio)	Sep 30, 2020			Jun 30, 2020	Sep 30, 2019	(in millions, except ratio)	Mar 31, 2021			Dec 31, 2020	Mar 31, 2020
HQLA (1)(2)		$	424,073		409,467	359,364
HQLA (1):							HQLA (1):
Eligible cash							Eligible cash	$	216,403		213,937	118,758
Eligible securities (2)							Eligible securities (2)	186,270			201,060	263,192
Total HQLA							Total HQLA	402,673			414,997	381,950
Projected net cash outflows	Projected net cash outflows	317,064			316,268	302,214	Projected net cash outflows	316,116			312,697	315,980
LCR	LCR	134		%	129	119	LCR	127		%	133	121

(1)Excludes excess HQLA at certain subsidiaries that is not transferable to other Wells Fargo entities.

(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 30.~~liquidity. 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 IDIs required under the LCR rule. Our primary sources of liquidity are presented in Table 31, which also includes encumbered securities that are not included as available HQLA in the calculation of the LCR.

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~~MBS 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 our ~~held-to-maturity~~HTM 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 ~~30:~~31: Primary Sources of Liquidity


		September 30, 2020				December 31, 2019				March 31, 2021				December 31, 2020
(in millions)	(in millions)	Total		Encumbered	Unencumbered	Total	Encumbered	Unencumbered	(in millions)	Total		Encumbered	Unencumbered	Total	Encumbered	Unencumbered
Interest-earning deposits with banks	Interest-earning deposits with banks	$	221,235	—	221,235	119,493	—	119,493	Interest-earning deposits with banks	$	258,394	—	258,394	236,376	—	236,376
Debt securities of U.S. Treasury and federal agencies	Debt securities of U.S. Treasury and federal agencies	56,262		4,907	51,355	61,099	3,107	57,992	Debt securities of U.S. Treasury and federal agencies	65,811		3,576	62,235	70,756	5,370	65,386
Mortgage-backed securities of federal agencies(1)	Mortgage-backed securities of federal agencies(1)	258,554		36,935	221,619	258,589	41,135	217,454	Mortgage-backed securities of federal agencies(1)	262,835		46,145	216,690	258,668	49,156	209,512
Total	Total	$	536,051	41,842	494,209	439,181	44,242	394,939	Total	$	587,040	49,721	537,319	565,800	54,526	511,274

(1)Included in encumbered securities at March 31, 2021, were securities with a fair value of $422 million, which were purchased in March 2021, but settled in April 2021.


44			Wells Fargo & Company

In addition to our primary sources of liquidity shown in

Table ~~30,~~31, liquidity is also available through the sale or financing of other debt securities including trading and/or ~~available-for-sale~~AFS debt securities, as well as through the sale, securitization or financing of loans, to the extent such debt securities and loans are not encumbered. As of ~~September 30, 2020,~~March 31, 2021, we also maintained approximately ~~$262.7~~$227.3 billion of available borrowing capacity at various Federal Home Loan Banks and the Federal Reserve Discount Window.

Deposits have historically provided a sizable source of relatively low-cost funds. Deposits were ~~150%~~167% and 158% of total loans at ~~September 30, 2020,~~March 31, 2021, and ~~137% at~~ December 31, ~~2019.~~

2020, respectively. Additional funding is provided by long-term debt and short-term borrowings. Table 3132 shows selected information for short-term borrowings, which generally mature in less than 30 days. We pledge certain financial instruments that we own to collateralize repurchase agreements and other securities financings. For additional information, see the “Pledged Assets” section of

Note 12 (Pledged Assets and Collateral) to Financial Statements in this Report.

~~Asset/Liability Management (continued~~)

Table ~~31:~~32: Short-Term Borrowings


		Quarter ended							Quarter ended
(in millions)	(in millions)	Sep 30, 2020		Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	(in millions)	Mar 31, 2021		Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Balance, period end	Balance, period end							Balance, period end
Federal funds purchased and securities sold under agreements to repurchase	Federal funds purchased and securities sold under agreements to repurchase	$	44,055	49,659	79,036	92,403	110,399	Federal funds purchased and securities sold under agreements to repurchase	$	46,871	46,362	44,055	49,659	79,036

Other short-term borrowings	Other short-term borrowings	11,169		10,826	13,253	12,109	13,509	Other short-term borrowings	12,049		12,637	11,169	10,826	13,253
Total	Total	$	55,224	60,485	92,289	104,512	123,908	Total	$	58,920	58,999	55,224	60,485	92,289
Average daily balance for period	Average daily balance for period							Average daily balance for period
Federal funds purchased and securities sold under agreements to repurchase	Federal funds purchased and securities sold under agreements to repurchase	$	46,504	52,868	90,722	103,614	109,499	Federal funds purchased and securities sold under agreements to repurchase	$	47,358	46,069	46,504	52,868	90,722

Other short-term borrowings	Other short-term borrowings	10,788		10,667	12,255	12,335	12,343	Other short-term borrowings	11,724		11,235	10,788	10,667	12,255
Total	Total	$	57,292	63,535	102,977	115,949	121,842	Total	$	59,082	57,304	57,292	63,535	102,977
Maximum month-end balance for period	Maximum month-end balance for period							Maximum month-end balance for period
Federal funds purchased and securities sold under agreements to repurchase (1)	Federal funds purchased and securities sold under agreements to repurchase (1)	$	49,148	50,397	91,121	111,727	110,399	Federal funds purchased and securities sold under agreements to repurchase (1)	$	47,050	46,879	49,148	50,397	91,121

Other short-term borrowings (2)	Other short-term borrowings (2)	11,169		11,220	13,253	12,708	13,509	Other short-term borrowings (2)	12,049		12,637	11,169	11,220	13,253

(1)Highest month-end balance in each of the last five quarters was in February 2021, and November, July, April and February ~~2020, and October and September 2019.~~2020.

(2)Highest month-end balance in each of the last five quarters was in March 2021, and December, September, April and March ~~2020, and October and September 2019.~~2020.


			Wells Fargo & Company			45

Risk Management – Asset/Liability Management (continued)

Long-Term Debt 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. We issue long-term debt in a variety of maturities and currencies to achieve cost-efficient funding and to maintain an appropriate maturity profile. 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. ~~Long-term debt of $215.7 billion at~~

~~September 30, 2020, decreased $12.5 billion from December 31, 2019. We issued $237.1 million and $37.9 billion of long-term debt in the third quarter and first nine months of 2020, respectively.~~ 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. We issued $110 million of long-term debt in first quarter 2021. Table 3233 provides the aggregate carrying value of long-term debt maturities (based on contractual payment dates) for the remainder of ~~2020~~2021 and the following years thereafter, as of ~~September 30, 2020.~~March 31, 2021.

Table ~~32:~~33: Maturity of Long-Term Debt

September 30, 2020
(in millions) Remaining 2020 2021 2022 2023 2024 Thereafter Total
Wells Fargo & Company (Parent Only)
Senior notes $ 2,713 18,126 18,748 11,472 12,373 88,839 152,271
Subordinated notes — — — 3,770 768 26,251 30,789
Junior subordinated notes — — — — — 1,820 1,820
Total long-term debt – Parent $ 2,713 18,126 18,748 15,242 13,141 116,910 184,880
Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior notes $ 257 6,872 4,887 2,924 6 420 15,366
Subordinated notes — — — 1,048 — 4,834 5,882
Junior subordinated notes — — — — — 372 372
Securitizations and other bank debt 1,254 1,353 1,057 339 156 1,383 5,542
Total long-term debt – Bank $ 1,511 8,225 5,944 4,311 162 7,009 27,162
Other consolidated subsidiaries
Senior notes $ 91 1,861 205 517 124 839 3,637
Securitizations and other bank debt — — — — — 32 32
Total long-term debt – Other consolidated subsidiaries $ 91 1,861 205 517 124 871 3,669
Total long-term debt $ 4,315 28,212 24,897 20,070 13,427 124,790 215,711


	March 31, 2021
(in millions)	Remaining 2021		2022	2023	2024	2025	Thereafter	Total
Wells Fargo & Company (Parent Only)
Senior notes	$	11,046	13,867	8,410	12,248	14,196	69,946	129,713
Subordinated notes	—		—	3,724	757	1,114	21,517	27,112
Junior subordinated notes	—		—	—	—	—	1,356	1,356
Total long-term debt – Parent	$	11,046	13,867	12,134	13,005	15,310	92,819	158,181
Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior notes	$	3,303	4,859	2,879	3	186	230	11,460
Subordinated notes	—		—	1,100	—	169	4,032	5,301
Junior subordinated notes	—		—	—	—	—	378	378
Securitizations and other bank debt	1,905		1,304	748	228	128	1,484	5,797
Total long-term debt – Bank	$	5,208	6,163	4,727	231	483	6,124	22,936
Other consolidated subsidiaries
Senior notes	$	543	192	515	112	436	365	2,163

Securitizations and other bank debt	—		—	—	—	—	32	32
Total long-term debt – Other consolidated subsidiaries	$	543	192	515	112	436	397	2,195
Total long-term debt	$	16,797	20,222	17,376	13,348	16,229	99,340	183,312

Credit RatingsInvestors 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 July 22, 2020, Standard & Poor's (S&P) Global Ratings lowered the long-term rating of the Company to BBB+ from A- and revised~~There were no actions undertaken by the rating ~~outlook~~agencies with regard to ~~stable from negative. On~~our credit ratings during first quarter 2021.

~~September 2, 2020, Moody’s Investors Service affirmed the Company’s ratings and revised the ratings outlook to negative from stable.~~

See the “Risk Factors” section in our ~~2019~~2020 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 1514 (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 ~~Company~~Parent and Wells Fargo Bank, N.A., as of ~~September 30, 2020,~~March 31, 2021, are presented in Table ~~33.~~34.

Table ~~33:~~34: Credit Ratings as of ~~September 30, 2020~~March 31, 2021

Wells Fargo & Company

Wells Fargo Bank, N.A.

Senior debt

Short-term

borrowings

Long-term

deposits

Short-term

borrowings

Moody’s

P-1

Aa1

P-1

S&P Global Ratings

BBB+

A-2

A+

A-1

Fitch Ratings, Inc.

A+

F1+

DBRS Morningstar

AA (low)

R-1 (middle)

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~~FHLB members are 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 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.~~


46			Wells Fargo & Company

future event, the amount of any future investment in the capital stock of the FHLBs is not determinable.


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~~long- and short-term debt. Retained earnings at ~~September 30, 2020, decreased $5.8~~March 31, 2021, increased $3.9 billion from December 31, ~~2019,~~2020, predominantly as a result of $4.7 billion of Wells Fargo net income, partially offset by $755 million of common and preferred stock ~~dividends of $5.6 billion.~~dividends. During ~~third~~first quarter ~~2020,~~2021, we issued ~~$325~~$724 million of common stock, substantially all of which was issued in connection with employee compensation and benefits, excluding conversions of preferred shares. ~~On September 30, 2020, the Board~~During first quarter 2021, we repurchased 17 million shares of ~~Governors~~common stock at a cost of the Federal Reserve System (FRB) announced that it was extending through fourth quarter 2020 measures it announced on June 25, 2020, prohibiting large bank holding companies (BHCs) subject to the FRB’s capital plan rule, including Wells Fargo, from making capital distributions, subject to certain limited exceptions.$596 million. For additional information about capital planning, including the FRB’s recent ~~prohibition~~announcement on capital distributions, see the “Capital Planning and Stress Testing” ~~and “Securities Repurchases” sections~~section below.

In ~~January 2020,~~first quarter 2021, we issued ~~$2.0~~$4.6 billion of ~~our Preferred Stock, Series Z. In March 2020, we~~preferred stock and redeemed ~~the remaining $1.8~~$4.5 billion of ~~our Preferred Stock, Series K, and redeemed $669 million of our Preferred Stock, Series T. In October 2020, we issued $1.2 billion of our Preferred Stock, Series AA.~~preferred stock. For additional information, see Note 1716 (Preferred Stock) to Financial Statements in this Report.

Regulatory Capital ~~Guidelines~~Requirements

The Company and each of our ~~insured depository institutions (IDIs)~~IDIs are subject to various regulatory capital adequacy requirements administered by the FRB and the OCC. Risk-based capital ~~(RBC) guidelines~~rules establish a risk-adjusted ~~ratio~~ratios relating regulatory 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 rules issued by federal banking regulators to implement Basel III capital requirements for U.S. banking organizations. The ~~federal banking regulators’ capital rules, among other things, required on a fully phased-in basis as of September 30, 2020:~~

•a minimum Common Equity Tier 1 (CET1) ratio of 9.00%, comprised of a 4.50% minimum requirement plus a capital conservation buffer of 2.50% and for us, as a global systemically important bank (G-SIB), a capital surcharge of 2.00%;

•~~a minimum tier 1 capital ratio of 10.50%, comprised of a 6.00% minimum requirement plus the capital conservation buffer of 2.50% and the G-SIB capital surcharge of 2.00%;~~

•~~a minimum total capital ratio of 12.50%, comprised of a 8.00% minimum requirement plus the capital conservation buffer of 2.50% and the G-SIB capital surcharge of 2.00%;~~

•a potential countercyclical buffer of up to 2.50% to be added to the minimum risk-based capital ratios, which 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; and

•~~a minimum tier 1 leverage ratio of 4.00%.~~

The Basel III capital requirements for calculating CET1 and tier 1 capital, along with risk-weighted assets (RWAs), are fully phased-in. However, the requirements for determining tier 2 and total capital are still in accordance with Transition Requirements and 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 and an Advanced Approach applicable to certain institutions, including Wells Fargo. Our capital adequacy is assessed based on the lower of our risk-based capital ratios calculated under the two approaches. The Company is required to satisfy the risk-based capital ratio requirements to avoid restrictions on capital distributions and discretionary bonus payments. Table 35 and Table 36 present the risk-based capital requirements applicable to the Company on a fully phased-in basis under the Standardized Approach and ~~under the Advanced Approach. The difference between RWAs under the Standardized and~~ Advanced Approach, ~~has narrowed~~respectively, as of March 31, 2021.

Table 35: Risk-Based Capital Requirements – Standardized Approach

Table 36: Risk-Based Capital Requirements – Advanced Approach

In addition to the risk-based capital requirements described in ~~recent quarters due to economic conditions from~~Table 35 and Table 36, if the ~~COVID-19 pandemic impacting our calculation~~FRB determines that a period of ~~Advanced Approach RWAs. In particular, changes in internal~~excessive credit ~~ratings in our loan portfolio contributed~~growth is contributing to an increase in ~~our Advanced Approach RWAs at September 30, 2020. We expect this trend~~systemic risk, a countercyclical buffer of up to ~~continue if~~2.50% could be added to the ~~economic impact of the COVID-19 pandemic continues to affect our customer base.~~risk-based capital ratio requirements under federal banking regulations.

~~Effective October 1, 2020, a stress capital buffer replaced the 2.50%~~The capital conservation buffer is applicable to certain institutions, including Wells Fargo, under the ~~Standardized Approach.~~ Advanced Approach and is intended to absorb losses during times of economic or financial stress.

The stress capital buffer is calculated based on the decrease in a BHC’s risk-based capital ratios under the severely adverse scenario in the FRB’s annual supervisory stress test and related Comprehensive Capital Analysis and Review (CCAR), plus four quarters of planned common stock dividends. ~~On August 10, 2020,~~Because the ~~FRB announced~~stress capital buffer is calculated annually based on data that can differ over time, our stress capital buffer, and thus our risk-based capital ratio requirements under the ~~Company's~~Standardized Approach, are subject to change in future periods. The Company’s stress capital buffer for the period October 1, 2020, through September 30, 2021, is 2.50%. Because the stress capital buffer is calculated annually as part of the FRB’s supervisory stress test and related CCAR and will be based on data that can differ over time, our stress capital buffer, and thus the regulatory minimums for our risk-based capital ratios, are subject to change in future years.


			Wells Fargo & Company			47

Capital Management (continued)

As a ~~G-SIB,~~global systemically important bank (G-SIB), we are also subject to the FRB’s rule implementing ~~the~~an additional capital surcharge of between 1.00-4.50% on the ~~minimum~~risk-based capital ratio requirements of 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 (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.~~under method one. Because the G-SIB capital 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 risk-based capital rules, 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.

The tables that follow provide information about our risk-based capital and related ratios as calculated under Basel III capital ~~guidelines.~~rules. Although we report certain capital amounts and ratios in accordance with ~~Transition Requirements~~transition requirements for ~~banking industry~~bank regulatory reporting purposes, we manage our capital ~~based~~ on a fully phased-in basis. For information about

our capital requirements calculated in accordance with ~~Transition Requirements,~~transition requirements, see

Note 23 (Regulatory Capital Requirements and ~~Agency Capital Requirements)~~Other Restrictions) to Financial Statements in this Report.

Table 3437 summarizes our CET1, tier 1 capital, total capital, RWAs and capital ratios on a fully phased-in basis at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019.~~

~~Table 34:Capital Components and Ratios (Fully Phased-In) (1)~~

September 30, 2020 December 31, 2019
(in millions, except ratios) Required
Minimum
Capital Ratios Advanced
Approach Standardized
Approach Advanced
Approach Standardized
Approach
Common Equity Tier 1 (A) $ 134,901 134,901 138,760 138,760
Tier 1 Capital (B) 154,743 154,743 158,949 158,949
Total Capital (2) (C) 184,040 193,667 187,813 195,703
Risk-Weighted Assets (3) (D) 1,171,956 1,185,610 1,165,079 1,245,853
Common Equity Tier 1 Capital Ratio (3) (A)/(D) 9.00 % 11.51 % 11.38 * 11.91 11.14 *
Tier 1 Capital Ratio (3) (B)/(D) 10.50 13.20 13.05 * 13.64 12.76 *
Total Capital Ratio (2)(3) (C)/(D) 12.50 15.70 * 16.33 16.12 15.71 *

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

~~(1)See Table 35 for information regarding the calculation and components of CET1, tier 1 capital, total capital and RWAs.~~

~~(2)~~2020. 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 3538 for information regarding the calculation and components of our ~~fully phased-in~~CET1, tier 1 capital, total capital ~~amounts, including~~and RWAs, as well as a corresponding reconciliation to GAAP financial ~~measures.~~measures for our fully phased-in total capital amounts.

Table 37:Capital Components and Ratios (Fully Phased-In)


				March 31, 2021				December 31, 2020
(in millions, except ratios)		Required Capital Ratios (1)		Advanced Approach		Standardized Approach		Advanced Approach		Standardized Approach
Common Equity Tier 1	(A)			$	139,724	139,724		138,297		138,297
Tier 1 Capital	(B)			159,675		159,675		158,196		158,196
Total Capital	(C)			187,585		197,467		186,803		196,529
Risk-Weighted Assets	(D)			1,109,354		1,178,996		1,158,355		1,193,744
Common Equity Tier 1 Capital Ratio	(A)/(D)	9.00	%	12.60		11.85	*	11.94		11.59	*
Tier 1 Capital Ratio	(B)/(D)	10.50		14.39		13.54	*	13.66		13.25	*
Total Capital Ratio	(C)/(D)	12.50		16.91		16.75	*	16.13	*	16.46

~~(3)~~*~~RWAs and capital ratios for December 31, 2019, have been revised as a result of a decrease in RWAs~~Denotes the binding ratio based on the lower calculation under the Advanced ~~Approach due~~and Standardized Approaches.

(1)Represents the minimum ratios required to avoid restrictions on capital distributions and discretionary bonus payments. The required ratios were the ~~correction of duplicated operational loss amounts.~~same under both the Standardized and Advanced Approaches at March 31, 2021.


48			Wells Fargo & Company

~~Capital Management (continued~~)

Table 3538 provides information regarding the calculation and composition of our risk-based capital under the Advanced and Standardized Approaches at March 31, 2021, and December 31, 2020.

~~Standardized Approaches at September 30, 2020, and~~

~~December 31, 2019.~~

Table ~~35:~~38: Risk-Based Capital Calculation and Components


			September 30, 2020			December 31, 2019				March 31, 2021			December 31, 2020
(in millions)	(in millions)		Advanced Approach		Standardized Approach	Advanced Approach	Standardized Approach	(in millions)		Advanced Approach		Standardized Approach	Advanced Approach	Standardized Approach
Total equity	Total equity		$	182,032	182,032	187,984	187,984	Total equity		$	188,348	188,348	185,920	185,920
Adjustments:	Adjustments:							Adjustments:
Preferred stock	Preferred stock		(21,098)		(21,098)	(21,549)	(21,549)	Preferred stock		(21,170)		(21,170)	(21,136)	(21,136)
Additional paid-in capital on preferred stock	Additional paid-in capital on preferred stock		159		159	(71)	(71)	Additional paid-in capital on preferred stock		139		139	152	152
Unearned ESOP shares	Unearned ESOP shares		875		875	1,143	1,143	Unearned ESOP shares		875		875	875	875
Noncontrolling interests	Noncontrolling interests		(859)		(859)	(838)	(838)	Noncontrolling interests		(1,130)		(1,130)	(1,033)	(1,033)
Total common stockholders’ equity	Total common stockholders’ equity		161,109		161,109	166,669	166,669	Total common stockholders’ equity		167,062		167,062	164,778	164,778
Adjustments:	Adjustments:							Adjustments:
Goodwill	Goodwill		(26,387)		(26,387)	(26,390)	(26,390)	Goodwill		(26,290)		(26,290)	(26,392)	(26,392)
Certain identifiable intangible assets (other than MSRs)	Certain identifiable intangible assets (other than MSRs)		(366)		(366)	(437)	(437)	Certain identifiable intangible assets (other than MSRs)		(322)		(322)	(342)	(342)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)	Goodwill and other intangibles on nonmarketable equity securities (included in other assets)		(2,019)		(2,019)	(2,146)	(2,146)	Goodwill and other intangibles on nonmarketable equity securities (included in other assets)		(2,300)		(2,300)	(1,965)	(1,965)
Applicable deferred taxes related to goodwill and other intangible assets (1)	Applicable deferred taxes related to goodwill and other intangible assets (1)		842		842	810	810	Applicable deferred taxes related to goodwill and other intangible assets (1)		866		866	856	856
CECL transition provision (2)	CECL transition provision (2)		1,877		1,877	—	—	CECL transition provision (2)		1,298		1,298	1,720	1,720
Other	Other		(155)		(155)	254	254	Other		(590)		(590)	(358)	(358)
Common Equity Tier 1	Common Equity Tier 1		134,901		134,901	138,760	138,760	Common Equity Tier 1		$	139,724	139,724	138,297	138,297

Common Equity Tier 1			$	134,901	134,901	138,760	138,760
Preferred stock	Preferred stock		21,098		21,098	21,549	21,549	Preferred stock		21,170		21,170	21,136	21,136
Additional paid-in capital on preferred stock	Additional paid-in capital on preferred stock		(159)		(159)	71	71	Additional paid-in capital on preferred stock		(139)		(139)	(152)	(152)
Unearned ESOP shares	Unearned ESOP shares		(875)		(875)	(1,143)	(1,143)	Unearned ESOP shares		(875)		(875)	(875)	(875)
Other	Other		(222)		(222)	(288)	(288)	Other		(205)		(205)	(210)	(210)
Total Tier 1 capital	Total Tier 1 capital	(A)	154,743		154,743	158,949	158,949	Total Tier 1 capital	(A)	$	159,675	159,675	158,196	158,196

Long-term debt and other instruments qualifying as Tier 2	Long-term debt and other instruments qualifying as Tier 2		24,953		24,953	26,515	26,515	Long-term debt and other instruments qualifying as Tier 2		23,840		23,840	24,387	24,387
Qualifying allowance for credit losses (3)	Qualifying allowance for credit losses (3)		4,504		14,131	2,566	10,456	Qualifying allowance for credit losses (3)		4,245		14,127	4,408	14,134
Other	Other		(160)		(160)	(217)	(217)	Other		(175)		(175)	(188)	(188)
Total Tier 2 capital (Fully Phased-In)	Total Tier 2 capital (Fully Phased-In)	(B)	29,297		38,924	28,864	36,754	Total Tier 2 capital (Fully Phased-In)	(B)	$	27,910	37,792	28,607	38,333
Effect of Basel III Transition Requirements	Effect of Basel III Transition Requirements		132		132	520	520	Effect of Basel III Transition Requirements		66		66	131	131
Total Tier 2 capital (Basel III Transition Requirements)	Total Tier 2 capital (Basel III Transition Requirements)		$	29,429	39,056	29,384	37,274	Total Tier 2 capital (Basel III Transition Requirements)		$	27,976	37,858	28,738	38,464

Total qualifying capital (Fully Phased-In)	Total qualifying capital (Fully Phased-In)	(A)+(B)	$	184,040	193,667	187,813	195,703	Total qualifying capital (Fully Phased-In)	(A)+(B)	$	187,585	197,467	186,803	196,529
Total Effect of Basel IIII Transition Requirements			132		132	520	520
Total Effect of Basel III Transition Requirements								Total Effect of Basel III Transition Requirements		66		66	131	131
Total qualifying capital (Basel III Transition Requirements)	Total qualifying capital (Basel III Transition Requirements)		$	184,172	193,799	188,333	196,223	Total qualifying capital (Basel III Transition Requirements)		$	187,651	197,533	186,934	196,660

Risk-Weighted Assets (RWAs) (4)(5):
Credit risk (6)			$	772,206	1,125,098	790,784	1,210,209
Risk-Weighted Assets (RWAs)(4):								Risk-Weighted Assets (RWAs)(4):
Credit risk (5)								Credit risk (5)		$	717,744	1,126,536	752,999	1,125,813
Market risk	Market risk		60,512		60,512	35,644	35,644	Market risk		52,460		52,460	67,931	67,931
Operational risk (7)			339,238		—	338,651	—
Total RWAs (7)			$	1,171,956	1,185,610	1,165,079	1,245,853
Operational risk								Operational risk		339,150		—	337,425	—
Total RWAs								Total RWAs		$	1,109,354	1,178,996	1,158,355	1,193,744

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

(2)~~In second quarter 2020,~~At March 31, 2021, the ~~Company elected to apply a modified~~impact of the CECL transition provision issued by federal banking regulators related to the impact of CECL on regulatory capital. The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the ACL under CECL for each period until December 31, 2021, followed by a three-year phase-out of the benefits. The impact of the CECL transition provision on our regulatory capital ~~at September 30, 2020,~~ was an increase in capital of ~~$1.9~~$1.3 billion, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the ~~$11.5~~$9.2 billion increase in our ACL under CECL from January 1, 2020, through ~~September 30, 2020.~~March 31, 2021.

(3)Under the Advanced Approach the allowance for credit losses that exceeds expected credit losses is eligible for inclusion in ~~Tier~~tier 2 ~~Capital,~~capital, to the extent the excess allowance does not exceed 0.60% of Advanced credit RWAs, and under the Standardized Approach, the allowance for credit losses is includable in ~~Tier~~tier 2 ~~Capital~~capital up to 1.25% of Standardized credit RWAs, in each case with any excess allowance for credit losses being deducted from the respective total RWAs.

(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 loss resulting from inadequate or failed internal processes, people and systems, or from external events.

(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.

~~(6)~~Includes an increase of ~~$1.5~~$1.0 billion under the Standardized Approach and a decrease of ~~$1.3~~$1.4 billion under the Advanced Approach related to the impact of the CECL transition provision on our excess allowance for credit losses as of ~~September 30, 2020.~~March 31, 2021. See footnote (3) to this table.

~~(7)Amounts for December 31, 2019, have been revised as a result of a decrease in RWAs under the Advanced Approach due to the correction of duplicated operational loss amounts.~~


			Wells Fargo & Company			49

Capital Management (continued)

Table 3639 presents the changes in ~~Common Equity Tier 1~~CET1 under the Advanced Approach for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021.

Table ~~36:~~39: Analysis of Changes in Common Equity Tier 1 (Advanced Approach)


(in millions)
Common Equity Tier 1 at December 31, ~~2019~~2020	$	~~138,760~~138,297
Net income applicable to common stock	~~(932)~~4,363
Common stock dividends	~~(4,602)~~(414)
Common stock issued, repurchased, and stock compensation-related items	~~(1,759)~~(222)
Changes in cumulative other comprehensive income	~~561~~ (1,444)
~~Cumulative effect from change in accounting policies (1)~~	~~991~~
Goodwill	3102
Certain identifiable intangible assets (other than MSRs)	7120
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)	~~127~~ (335)
Applicable deferred taxes related to goodwill and other intangible assets ~~(2)~~(1)	3210
CECL transition provision ~~(3)~~(2)	~~1,877~~ (422)
Other	~~(228)~~(231)
Change in Common Equity Tier 1	~~(3,859)~~1,427
Common Equity Tier 1 at ~~September 30, 2020~~March 31, 2021	$	~~134,901~~139,724

(1)~~Effective January 1, 2020, we adopted CECL. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.~~

~~(2)~~Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.

~~(3)~~(2)~~In second quarter 2020,~~At March 31, 2021, the ~~Company elected to apply a modified~~impact of the CECL transition provision issued by federal banking regulators related to the impact of CECL on regulatory capital. The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the ACL under CECL for each period until December 31, 2021, followed by a three-year phase-out of the benefits. The impact of the CECL transition provision on our regulatory capital ~~at September 30, 2020,~~ was an increase in capital of ~~$1.9~~$1.3 billion, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the ~~$11.5~~$9.2 billion increase in our ACL under CECL from January 1, 2020, through ~~September 30, 2020.~~

March 31, 2021.

Table 3740 presents net changes in the components of RWAs under the Advanced and Standardized Approaches for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021.

Table ~~37:~~40: Analysis of Changes in RWAs


(in millions)	(in millions)	Advanced Approach		Standardized Approach	(in millions)	Advanced Approach		Standardized Approach

RWAs at December 31, 2019 (1)		$	1,165,079	1,245,853
Net change in credit risk RWAs (2)		(18,578)		(85,111)
RWAs at December 31, 2020					RWAs at December 31, 2020	$	1,158,355	1,193,744
Net change in credit risk RWAs (1)					Net change in credit risk RWAs (1)	(35,255)		723
Net change in market risk RWAs	Net change in market risk RWAs	24,868		24,868	Net change in market risk RWAs	(15,471)		(15,471)
Net change in operational risk RWAs	Net change in operational risk RWAs	587		—	Net change in operational risk RWAs	1,725		—
Total change in RWAs	Total change in RWAs	6,877		(60,243)	Total change in RWAs	(49,001)		(14,748)
RWAs at September 30, 2020		$	1,171,956	1,185,610

RWAs at March 31, 2021					RWAs at March 31, 2021	$	1,109,354	1,178,996

(1)~~Amount for December 31, 2019, has been revised as a result of a decrease in RWAs under the Advanced Approach due to the correction of duplicated operational loss amounts.~~

~~(2)~~Includes an increase of ~~$1.5~~$1.0 billion under the Standardized Approach and a decrease of ~~$1.3~~$1.4 billion under the Advanced Approach related to the impact of the CECL transition provision on our excess allowance for credit losses. See Table 3538 for additional information.


50			Wells Fargo & Company

~~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, goodwill, certain identifiable intangible assets (other than MSRs) and goodwill and other intangibles on nonmarketable equity securities, net of applicable deferred taxes. ~~These tangible common equity~~The ratios are ~~as follows:~~

•~~Tangible~~(i) tangible book value per common share, which represents tangible common equity divided by common shares outstanding; and

•~~Return~~ (ii) 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 management, investors, and others to assess the Company’s use of equity.

Table 3841 provides a reconciliation of these non-GAAP financial measures to GAAP financial measures.

Table ~~38:~~41: Tangible Common Equity


			Balance at period end				Average balance									Balance at period end			Average balance
			Quarter ended				Quarter ended						Nine months ended					Quarter ended				Quarter ended
(in millions, except ratios)	(in millions, except ratios)		Sep 30, 2020		June 30, 2020	Sep 30, 2019		Sep 30, 2020		June 30, 2020		Sep 30, 2019		Sep 30, 2020	Sep 30, 2019		(in millions, except ratios)		Mar 31, 2021		Dec 31, 2020	Mar 31, 2020	Mar 31, 2021			Dec 31, 2020	Mar 31, 2020
Total equity	Total equity		$	182,032	180,122	194,416		182,850		184,108		200,095		185,035	199,383		Total equity		$	188,348	185,920	183,330	189,332			185,748	188,170
Adjustments:	Adjustments:																Adjustments:
Preferred stock	Preferred stock		(21,098)		(21,098)	(21,549)		(21,098)		(21,344)		(22,325)		(21,411)	(22,851)		Preferred stock		(21,170)		(21,136)	(21,347)	(21,840)			(21,223)	(21,794)
Additional paid-in capital on preferred stock	Additional paid-in capital on preferred stock		159		159	(71)		158		140		(78)		145	(84)		Additional paid-in capital on preferred stock		139		152	140	145			156	135

Unearned ESOP shares	Unearned ESOP shares		875		875	1,143		875		1,140		1,290		1,052	1,361		Unearned ESOP shares		875		875	1,143	875			875	1,143
Noncontrolling interests	Noncontrolling interests		(859)		(736)	(1,112)		(761)		(643)		(1,065)		(730)	(968)		Noncontrolling interests		(1,130)		(1,033)	(612)	(1,115)			(887)	(785)
Total common stockholders’ equity	Total common stockholders’ equity	(A)	161,109		159,322	172,827		162,024		163,401		177,917		164,091	176,841		Total common stockholders’ equity	(A)	167,062		164,778	162,654	167,397			164,669	166,869
Adjustments:	Adjustments:																Adjustments:
Goodwill	Goodwill		(26,387)		(26,385)	(26,388)		(26,388)		(26,384)		(26,413)		(26,386)	(26,416)		Goodwill		(26,290)		(26,392)	(26,381)	(26,383)			(26,390)	(26,387)
Certain identifiable intangible assets (other than MSRs)	Certain identifiable intangible assets (other than MSRs)		(366)		(389)	(465)		(378)		(402)		(477)		(401)	(508)		Certain identifiable intangible assets (other than MSRs)		(322)		(342)	(413)	(330)			(354)	(426)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)	Goodwill and other intangibles on nonmarketable equity securities (included in other assets)		(2,019)		(2,050)	(2,295)		(2,045)		(1,922)		(2,159)		(2,040)	(2,158)		Goodwill and other intangibles on nonmarketable equity securities (included in other assets)		(2,300)		(1,965)	(1,894)	(2,217)			(1,889)	(2,152)
Applicable deferred taxes related to goodwill and other intangible assets (1)	Applicable deferred taxes related to goodwill and other intangible assets (1)		842		831	802		838		828		797		828	787		Applicable deferred taxes related to goodwill and other intangible assets (1)		866		856	821	863			852	818
Tangible common equity	Tangible common equity	(B)	$	133,179	131,329	144,481		134,051		135,521		149,665		136,092	148,546		Tangible common equity	(B)	$	139,016	136,935	134,787	139,330			136,888	138,722
Common shares outstanding	Common shares outstanding	(C)	4,132.5		4,119.6	4,269.1		N/A		N/A				N/A	N/A		Common shares outstanding	(C)	4,141.1		4,144.0	4,096.4	N/A			N/A
Net income applicable to common stock	Net income applicable to common stock	(D)	N/A		N/A	N/A		1,720		$	(2,694)	4,037		(932)	15,392		Net income applicable to common stock	(D)	N/A		N/A		$	4,363		2,642	42
Book value per common share	Book value per common share	(A)/(C)	$	38.99	38.67	40.48		N/A		N/A				N/A	N/A		Book value per common share	(A)/(C)	$	40.34	39.76	39.71	N/A			N/A
Tangible book value per common share	Tangible book value per common share	(B)/(C)	32.23		31.88	33.84		N/A		N/A				N/A	N/A		Tangible book value per common share	(B)/(C)	33.57		33.04	32.90	N/A			N/A
Return on average common stockholders’ equity (ROE) (annualized)	Return on average common stockholders’ equity (ROE) (annualized)	(D)/(A)	N/A		N/A	N/A		4.22	%	(6.63)		9.00		(0.76)	11.64		Return on average common stockholders’ equity (ROE) (annualized)	(D)/(A)	N/A		N/A		10.57		%	6.38	0.10
Return on average tangible common equity (ROTCE) (annualized)	Return on average tangible common equity (ROTCE) (annualized)	(D)/(B)	N/A		N/A	N/A		5.10		(8.00)		10.70		(0.91)	13.85		Return on average tangible common equity (ROTCE) (annualized)	(D)/(B)	N/A		N/A		12.70			7.68	0.12

~~SUPPLEMENTARY~~ LEVERAGE ~~RATIO~~REQUIREMENTS As a BHC, we are required to maintain a supplementary leverage ratio (SLR) ~~of at least 5.00% (comprised of a 3.00% minimum requirement plus a supplementary leverage buffer of 2.00%)~~ to avoid restrictions on capital distributions and discretionary bonus ~~payments. Our~~payments and maintain a minimum tier 1 leverage ratio. Table 42 presents the leverage requirements applicable to the Company as of March 31, 2021.

Table 42:Leverage Requirements Applicable to the Company

In addition, our IDIs are required to maintain aan SLR of at least 6.00% to be considered ~~well-capitalized~~well capitalized under applicable regulatory capital adequacy ~~guidelines. In April 2018, the~~rules and maintain a minimum tier 1 leverage ratio of 4.00%.

The FRB and OCC have proposed ~~rules (Proposed~~amendments to the SLR ~~rules) that would replace~~rules. For information regarding the ~~2.00% supplementary leverage buffer with a buffer equal~~proposed amendments to ~~one-half of our G-SIB capital surcharge. The Proposed~~the SLR rules, ~~would similarly tailor~~see the ~~current 6.00% SLR requirement for~~“Capital Management – Leverage Requirements” section in our ~~IDIs.~~ 2020 Form 10-K.

In April 2020, the FRB issued an interim final rule that temporarily ~~allows~~allowed a BHC to exclude on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of its total leverage exposure in the denominator of the SLR. This interim final rule became effective on April 1, 2020, and ~~expires~~expired on April 1, 2021.

At March 31, ~~2021.~~2021, the Company’s SLR was 7.91%, and each of our IDIs exceeded their applicable SLR requirements. In ~~May~~addition, the Company’s SLR at March 31, 2021, would have been 6.97% without relying on the FRB’s April 2020 ~~federal banking regulators issued an~~ interim final rule that permits IDIs to choose to similarly exclude these items from the denominator of their SLRs; however, if an IDI chooses to exclude such amounts from the calculation of its SLR, it will be required to request approval from its primary federal banking regulator before making capital distributions, such as paying dividends, to its parent company. As of September 30, 2020, none of the Company’s IDIs elected to apply this exclusion.

~~At September 30, 2020, our SLR~~temporarily allowed for the ~~Company was 7.75%, and we also exceeded the applicable SLR requirements for each~~exclusion of ~~our IDIs. See~~specific on-balance sheet amounts. Table ~~39 for~~43 presents information regarding the calculation and components of the ~~SLR.~~Company’s SLR and tier 1 leverage ratio.


			Wells Fargo & Company			51

Capital Management (continued)

Table ~~39:~~43: ~~Supplementary~~ Leverage ~~Ratio~~Ratios for the Company


(in millions, except ratio)		Quarter ended ~~September 30, 2020~~March 31, 2021
Tier 1 capital	(A)	$	~~154,743~~159,675
Total average assets		~~1,949,549~~1,938,008
Less: Goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities)		~~28,246~~28,744
Less: Other SLR exclusions		~~257,568~~272,860
Total adjusted average assets		~~1,663,735~~1,636,404
Plus adjustments for off-balance sheet exposures:
Derivatives (1)		~~69,902~~66,520
Repo-style transactions (2)		~~2,839~~3,650
Other (3)		~~260,973~~312,815
Total off-balance sheet exposures		~~333,714~~382,985
Total leverage exposure	(B)	$	~~1,997,449~~2,019,389
Supplementary leverage ratio	(A)/(B)	~~7.75~~7.91		%

Tier 1 leverage ratio (4)		8.36		%

(1)Adjustment represents derivatives and collateral netting exposures as defined for supplementary leverage ratio determination purposes.

(2)Adjustment represents counterparty credit risk for repo-style transactions where Wells Fargo & Company is the principal ~~(i.e., principal~~ counterparty facing the ~~client).~~client.

(3)Adjustment represents credit equivalent amounts of other off-balance sheet exposures not already included as derivatives and repo-style transactions exposures.

(4)The tier 1 leverage ratio consists of tier 1 capital divided by total average assets, excluding goodwill and certain other items as determined under the rule.

TOTAL LOSS ABSORBING CAPACITY As a G-SIB, we are required to have a minimum amount of equity and unsecured long-term debt for purposes of resolvability and resiliency, often referred to as Total Loss Absorbing Capacity (TLAC). U.S. G-SIBs are required to have a minimum amount of 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) 18.00% of RWAs and (ii) 7.50% of total leverage exposure (the denominator of the SLR calculation). Additionally, U.S. G-SIBs are required to maintain (i) a TLAC buffer equal to 2.50% of RWAs plus our applicable G-SIB capital surcharge calculated under

method one plus any applicable countercyclical buffer to be added to the 18.00% minimum and (ii) an external TLAC leverage buffer equal to 2.00% of total leverage exposure to be added to the 7.50% minimum, in order to avoid restrictions on capital distributions and discretionary bonus ~~payments. U.S. G-SIBs are also required to have~~payments, as well as a minimum amount of eligible unsecured long-term ~~debt equal to the greater of (i) 6.00% of RWAs plus our applicable G-SIB capital surcharge calculated under method two~~debt. Our minimum TLAC and (ii) 4.50% of the total leverage exposure. Under the Proposed SLR rules, the 2.00% external TLAC leverage buffer would be replaced with a buffer equal to one-half of our applicable G-SIB capital surcharge, and the leverage component for calculating the minimum amount of eligible unsecured long-term debt ~~would be modified from 4.50%~~requirements as of March 31, 2021, are presented in Table 44.

Table 44:TLAC and Eligible Unsecured Long-Term Debt Requirements

TLAC requirement

Greater of:

18.00% of RWAs

7.50% of total leverage exposure
(the denominator of the SLR calculation)

TLAC buffer (equal to 2.50% of RWAs + method one G-SIB capital surcharge + any countercyclical buffer)

External TLAC leverage buffer
(equal to 2.00% of total leverage exposure)

Minimum amount of eligible unsecured long-term debt

Greater of:

6.00% of RWAs

4.50% of total leverage exposure

Method two G-SIB capital surcharge

The FRB and OCC have proposed amendments to ~~2.50% of total leverage exposure plus one-half of~~the TLAC and eligible unsecured long-term debt requirements. For information regarding these proposed amendments, see the “Capital Management – Total Loss Absorbing Capacity” section in our ~~applicable G-SIB capital surcharge.~~ 2020 Form 10-K.

As of ~~September 30, 2020,~~March 31, 2021, our eligible external TLAC as a percentage of total ~~risk-weighted assets~~RWAs was ~~25.76%~~25.18%, compared with a required minimum of ~~22.00%~~21.50%. Similar to the risk-based capital

requirements, our minimum TLAC requirement is assessed based on the greater of RWAs determined under the Standardized and Advanced ~~approaches.~~Approaches.

OTHER REGULATORY CAPITAL AND LIQUIDITY MATTERS ~~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~~For information regarding the U.S. implementation of the Basel III LCR and ~~a proposed rule regarding~~NSFR, see the ~~NSFR.~~“Risk Management – Asset/ Liability Management – Liquidity Risk and Funding – Liquidity Standards” section in this Report.

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 capital 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 10.00%~~, which includes a 2.00% G-SIB capital 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, changes to the regulatory ~~minimums~~requirements for our capital ratios, ~~(including changes to our stress capital buffer),~~ planned capital actions, changes in our risk profile and other factors.

~~Under the FRB’s~~The FRB capital plan rule ~~large~~establishes capital planning and other requirements that govern capital distributions, including dividends and share repurchases, by certain 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.~~Wells Fargo. The FRB assesses, among other things, the overall financial condition, risk profile, and capital adequacy of BHCs when evaluating their capital plans.

~~Our 2020~~We submitted our 2021 capital plan ~~which was submitted~~to the FRB on April 3, 2020, 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.5, 2021. As part of the ~~2020~~2021 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.~~test. The FRB ~~reviewed~~is expected to review the supervisory stress test

~~Capital Management (continued~~)

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~~is also expected to review the Company’s proposed capital actions. The FRB ~~published~~has indicated it will publish its supervisory stress test results ~~as required under the Dodd-Frank Act on June 25, 2020.~~by July 1, 2021.

On ~~June~~March 25, 2020, the FRB also announced that it was requiring large BHCs, including Wells Fargo, to update and resubmit their capital plans within 45 days after the FRB provides updated scenarios. The FRB released the updated scenarios on September 17, 2020, and has announced that it will release BHC-specific results under the updated scenarios by the end of 2020.

~~On September 30, 2020,~~2021, the FRB announced that it was extending ~~through fourth quarter 2020~~ measures it previously announced ~~on June 25, 2020, prohibiting~~limiting large BHCs, ~~subject to the FRB's capital plan rule,~~ including Wells Fargo, from making any capital distribution (excluding any capital distribution arising from the issuance of a capital instrument eligible for inclusion in the numerator of a regulatory capital ratio), unless otherwise approved by the FRB. The FRB has generally authorized BHCs to (i) ~~make share repurchases relating to issuances of common stock related to employee stock ownership plans; (ii)~~ provided that the BHC does not increase the amount of its common stock dividends to be larger than the level paid in second quarter 2020, pay common stock dividends and make share repurchases that, in the aggregate, do not exceed an amount equal to the average of the BHC’s net income for the four preceding calendar ~~quarters, unless otherwise specified by~~quarters; (ii) make share repurchases that equal the ~~FRB;~~amount of share issuances related to expensed employee compensation; and (iii) redeem and make scheduled payments on additional tier 1 and tier 2 capital instruments. ~~These provisions may be extended~~The FRB has also announced that if a BHC remains above all of its minimum risk-based capital requirements in this year's supervisory stress test, these additional limitations on capital distributions will end for that BHC after June 30, 2021. However, a BHC that falls below any of its minimum risk-based capital requirements in this year's supervisory stress test will remain subject to the additional limitations on capital distributions through September 30, 2021, and if the BHC remains below the capital required by the ~~FRB quarter-by-quarter.~~supervisory stress test at that time, the existing stress capital


52			Wells Fargo & Company

buffer framework will impose even stricter capital distribution limitations.

Concurrently with CCAR, federal banking regulators also require large BHCs and banks to conduct their own stress tests to evaluate whether the 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. We submitted the results of our stress test to the FRB and disclosed a summary of the results in June 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 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 under the FRB’s ~~response to our~~ capital plan ~~and to changes in our risk profile.~~rule. Due to the various factors ~~impacting~~that may impact 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.

On September 30, 2020, the FRB announced that it was extending through fourth quarter 2020 measures it announced on June 25, 2020, prohibiting large BHCs subject to the FRB’s capital plan rule, including Wells Fargo, from making capital distributions, subject to certain limited exceptions that are described in the “Capital Planning and Stress Testing” section above.

At ~~September 30, 2020~~,March 31, 2021, we had remaining Board authority to repurchase approximately ~~167~~650 million shares, subject to regulatory and legal conditions. For additional information about share repurchases during ~~third~~first quarter ~~2020,~~2021, 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.


Regulatory Matters

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

For a discussion of certain consent orders applicable to the Company, see the “Overview” section in this Report. ~~The following supplements our~~For a discussion of ~~the~~ 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 ~~2019~~2020 Form ~~10-K and in our 2020 First and Second Quarter Reports on Form 10-Q.~~

~~REGULATORY DEVELOPMENTS RELATED TO COVID-19~~In response to the COVID-19 pandemic and related events, federal banking regulators have undertaken a number of measures to help stabilize the banking sector, support the broader economy, and facilitate the ability of banking organizations like Wells Fargo to continue lending to consumers and businesses. For example, in order to facilitate the Coronavirus Aid, Relief and Economic Security Act (CARES Act), federal banking regulators issued rules designed to encourage financial institutions to participate in stimulus measures, such as the Small Business Administration’s Paycheck Protection Program and the FRB’s Main Street Lending Program. Similarly, the FRB launched a number of lending facilities designed to enhance liquidity and the functioning of markets, including facilities covering money market mutual funds and term asset-backed securities loans. Federal banking regulators also issued several rules amending the regulatory capital and TLAC rules and other prudential regulations to ease certain restrictions on banking organizations and encourage the use of certain FRB-established facilities in order to further promote lending to consumers and businesses.

In addition, the OCC and the FRB issued guidelines for banks and BHCs related to working with customers affected by the COVID-19 pandemic, including guidance with respect to waiving fees, offering repayment accommodations, and providing payment deferrals. Any current or future rules, regulations, and guidance related to the COVID-19 pandemic and its impacts could require us to change certain of our business practices, reduce our revenue and earnings, impose additional costs on us, or otherwise adversely affect our business operations and/or competitive position.10-K.


			Wells Fargo & Company			53


Critical Accounting Policies

Our significant accounting policies (see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2019~~2020 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~~Six 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 (ACL);~~losses;

•the valuation of residential MSRs;

•the fair value of financial instruments;

•income taxes; ~~and~~

•liability for contingent litigation ~~losses.~~losses; and

•goodwill impairment.

Management has discussed these critical accounting policies and the related estimates and judgments with the Board’s Audit ~~Committee have reviewed and approved~~Committee. For additional information on these ~~critical accounting policies. These~~ policies, ~~are described further in~~see the ~~“Financial Review – Critical~~“Critical Accounting Policies” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2019~~2020 Form 10-K.


Current Accounting Developments

The following significant accounting update has been issued by the Financial Accounting Standards Board (FASB) and is applicable to us, but is not yet effective:

•ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts and subsequent related updates

ASU 2018-12 See the “Current Accounting Developments” section in our 2020 Form 10-K for information on the effective date and our assessment of the expected financial statement impact upon adoption.

Other Accounting Developments

The following Update is applicable to us but is not expected to have a material impact on our consolidated financial statements:

•ASU 2020-06 – Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity


54			Wells Fargo & Company


Forward-Looking Statements

This document contains forward-looking statements. In ~~connection~~addition, we may make forward-looking statements in our other documents filed or furnished with the Securities and Exchange Commission, and our management may make forward-looking statements orally to analysts, investors, representatives of the media and others. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “target,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can” and similar references to future periods. In particular, forward-looking statements include, but are not limited to, statements we make about: (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, our allowance for credit losses, and the economic scenarios considered to develop the allowance; (iv) our expectations regarding net interest income and net interest margin; (v) loan growth or the reduction or mitigation of risk in our loan portfolios; (vi) future capital or liquidity levels, ratios or targets; (vii) the performance of our mortgage business and any related exposures; (viii) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (ix) future common stock dividends, common share repurchases and other uses of capital; (x) our targeted range for return on assets, return on equity, and return on tangible common equity; (xi) expectations regarding our effective income tax rate; (xii) the outcome of contingencies, such as legal proceedings; (xiii) environmental, social and governance related goals or commitments; and (xiv) the Company’s plans, objectives and strategies.

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

•current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth;

•the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions;

•our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;

•current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses,

including rules and regulations relating to bank products and financial services;

•developments in our mortgage banking business, including the extent of the success of our mortgage loan modification efforts, the amount of mortgage loan repurchase demands that we receive, any negative effects relating to our mortgage servicing, loan modification or foreclosure practices, and the effects of regulatory or judicial requirements or guidance impacting our mortgage banking business and any changes in industry standards;

•our ability to realize any efficiency ratio or expense target as part of our expense management initiatives, including as a result of business and economic cyclicality, seasonality, changes in our business composition and operating environment, growth in our businesses and/or acquisitions, and unexpected expenses relating to, among other things, litigation and regulatory matters;

•the effect of the current interest rate environment or changes in interest rates or in the level or composition of our assets or liabilities on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgage loans held for sale;

•significant turbulence or a disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for mortgage loans, a reduction in the availability of funding or increased funding costs, and declines in asset values and/or recognition of impairments of securities held in our debt securities and equity securities portfolios;

•the effect of a fall in stock market prices on our investment banking business and our fee income from our brokerage and wealth management businesses;

•negative effects from the retail banking sales practices matter and from other instances where customers may have experienced financial harm, including on our legal, operational and compliance costs, our ability to engage in certain business activities or offer certain products or services, our ability to keep and attract customers, our ability to attract and retain qualified employees, and our reputation;

•resolution of regulatory matters, litigation, or other legal actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences;

•a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber attacks;

•the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;

•fiscal and monetary policies of the Federal Reserve Board;

•changes to U.S. tax guidance and regulations, as well as the effect of discrete items on our effective income tax rate;

•our ability to develop and execute effective business plans and strategies; and

•the other risk factors and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.

In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and


			Wells Fargo & Company			55

financial condition of the Company, market conditions, capital requirements (including under Basel capital standards), common stock issuance requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the Company’s Board of Directors, and may be subject to regulatory approval or conditions.

For additional 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, 2020, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.1

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.


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

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.


56			Wells Fargo & Company


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 2020 Form 10-K.


			Wells Fargo & Company			57


Controls and Procedures


Disclosure Controls and Procedures

The Company’s management evaluated the effectiveness, as of March 31, 2021, 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, 2021.


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 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


58			Wells Fargo & Company

Financial Statements


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Income (Unaudited)
	Quarter ended March 31,
(in millions, except per share amounts)		2021		2020
Interest income
Debt securities		$	2,312	3,472
Loans held for sale		331		209
Loans		7,191		10,065
Equity securities		137		206
Other interest income		65		775
Total interest income		10,036		14,727
Interest expense
Deposits		112		1,742
Short-term borrowings		(9)		291
Long-term debt		1,026		1,240
Other interest expense		109		142
Total interest expense		1,238		3,415
Net interest income		8,798		11,312
Noninterest income
Deposit and lending-related fees		1,616		1,797
Investment advisory and other asset-based fees (1)		2,756		2,506
Commissions and brokerage services fees (1)		636		677
Investment banking fees		568		391
Card fees		949		892
Mortgage banking		1,326		379
Net gains (losses) on trading and securities		891		(1,100)
Other		523		863
Total noninterest income		9,265		6,405
Total revenue		18,063		17,717
Provision for credit losses		(1,048)		4,005

Noninterest expense
Personnel		9,558		8,323
Technology, telecommunications and equipment		844		798
Occupancy		770		715
Operating losses		213		464
Professional and outside services		1,388		1,606
Advertising and promotion		90		181
Restructuring charges		13		0
Other		1,113		961
Total noninterest expense		13,989		13,048
Income before income tax expense		5,122		664
Income tax expense		326		159
Net income before noncontrolling interests		4,796		505
Less: Net income (loss) from noncontrolling interests		54		(148)
Wells Fargo net income		$	4,742	653
Less: Preferred stock dividends and other		379		611
Wells Fargo net income applicable to common stock		$	4,363	42
Per share information
Earnings per common share		$	1.05	0.01
Diluted earnings per common share		1.05		0.01
Average common shares outstanding		4,141.3		4,104.8
Diluted average common shares outstanding		4,171.0		4,135.3

(1)In first quarter 2021, trust and investment management fees and asset-based brokerage fees were combined into a single line item for investment advisory and other asset-based fees, and brokerage commissions and other brokerage services fees were combined into a single line item for commissions and brokerage services fees. Prior period balances have been revised to conform with the current period presentation.

The accompanying notes are an integral part of these statements.


			Wells Fargo & Company			59


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Comprehensive Income (Unaudited)
	Quarter ended March 31,

(in millions)		2021		2020
Net income before noncontrolling interests		$	4,796	505
Other comprehensive income (loss), after tax:
Net change in debt securities		(1,525)		(228)
Net change in derivatives and hedging activities		36		137
Defined benefit plans adjustments		35		30

Net change in foreign currency translation adjustments		11		(193)
Other comprehensive loss, after tax		(1,443)		(254)
Total comprehensive income before noncontrolling interests		3,353		251
Less: Other comprehensive income (loss) from noncontrolling interests		1		(1)
Less: Net income (loss) from noncontrolling interests		54		(148)
Wells Fargo comprehensive income		$	3,298	400

The accompanying notes are an integral part of these statements.


60			Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet
(in millions, except shares)	Mar 31, 2021		Dec 31, 2020
Assets	(Unaudited)
Cash and due from banks	$	28,339	28,236
Interest-earning deposits with banks	258,394		236,376
Total cash, cash equivalents, and restricted cash	286,733		264,612
Federal funds sold and securities purchased under resale agreements	79,502		65,672
Debt securities:
Trading, at fair value	72,784		75,095
Available-for-sale, at fair value (includes amortized cost of $197,805 and $215,533, net of allowance for credit losses)	200,850		220,392
Held-to-maturity, at amortized cost, net of allowance for credit losses (fair value $233,959 and $212,307)	232,192		205,720
Loans held for sale (includes $23,538 and $18,806 carried at fair value)	35,434		36,384
Loans	861,572		887,637
Allowance for loan losses	(16,928)		(18,516)
Net loans	844,644		869,121
Mortgage servicing rights (includes $7,536 and $6,125 carried at fair value)	8,832		7,437
Premises and equipment, net	8,760		8,895
Goodwill	26,290		26,392
Derivative assets	25,429		25,846
Equity securities (includes $31,401 and $34,009 carried at fair value)	59,981		62,260
Other assets	78,112		87,337
Total assets (1)	$	1,959,543	1,955,163
Liabilities
Noninterest-bearing deposits	$	494,087	467,068
Interest-bearing deposits	943,032		937,313
Total deposits	1,437,119		1,404,381
Short-term borrowings	58,920		58,999
Derivative liabilities	14,930		16,509
Accrued expenses and other liabilities (includes $22,733 and $22,441 carried at fair value)	76,914		76,404
Long-term debt	183,312		212,950
Total liabilities (2)	1,771,195		1,769,243
Equity
Wells Fargo stockholders’ equity:
Preferred stock	21,170		21,136
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares	9,136		9,136
Additional paid-in capital	59,854		60,197
Retained earnings	166,772		162,890
Cumulative other comprehensive income (loss)	(1,250)		194
Treasury stock – 1,340,691,115 shares and 1,337,799,931 shares	(67,589)		(67,791)
Unearned ESOP shares	(875)		(875)
Total Wells Fargo stockholders’ equity	187,218		184,887
Noncontrolling interests	1,130		1,033
Total equity	188,348		185,920
Total liabilities and equity	$	1,959,543	1,955,163

(1)Our consolidated assets at March 31, 2021, and December 31, 2020, included the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Debt securities, $965 million and $967 million; Loans, $5.5 billion and $10.9 billion; All other assets, $267 million and $310 million; and Total assets, $6.7 billion and $12.1 billion, respectively.

(2)Our consolidated liabilities at March 31, 2021, and December 31, 2020, include the following VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo: Long-term debt, $192 million and $203 million; All other liabilities, $890 million and $900 million; and Total liabilities, $1.1 billion and $1.1 billion, respectively.

The accompanying notes are an integral part of these statements.


			Wells Fargo & Company			61


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity
	Wells Fargo stockholders’ equity
	Preferred stock			Common stock
($ and shares in millions)	Shares	Amount		Shares	Amount		Additional paid-in capital	Retained earnings	Cumulative other comprehensive income (loss)	Treasury stock	Unearned ESOP shares	Noncontrolling interests	Total equity
Balance December 31, 2020	5.5	$	21,136	4,144.0	$	9,136	60,197	162,890	194	(67,791)	(875)	1,033	185,920



Net income								4,742				54	4,796
Other comprehensive income (loss), net of tax									(1,444)			1	(1,443)
Noncontrolling interests												42	42
Common stock issued				14.3			0	(61)		785			724
Common stock repurchased				(17.2)						(596)			(596)
Preferred stock redeemed (1)	(0.1)	(4,526)					44	(44)					(4,526)




Preferred stock issued	0.2	4,560					(31)						4,529
Common stock dividends							6	(420)					(414)
Preferred stock dividends								(335)					(335)
Stock incentive compensation expense							498						498
Net change in deferred compensation and related plans							(860)			13			(847)
Net change	0.1	34		(2.9)	0		(343)	3,882	(1,444)	202	0	97	2,428
Balance March 31, 2021	5.6	$	21,170	4,141.1	$	9,136	59,854	166,772	(1,250)	(67,589)	(875)	1,130	188,348
Balance December 31, 2019	7.5	$	21,549	4,134.4	$	9,136	61,049	166,697	(1,311)	(68,831)	(1,143)	838	187,984
Cumulative effect from change in accounting policies (2)								991					991
Balance January 1, 2020	7.5	21,549		4,134.4	9,136		61,049	167,688	(1,311)	(68,831)	(1,143)	838	188,975

Net income								653				(148)	505
Other comprehensive income (loss), net of tax									(253)			(1)	(254)
Noncontrolling interests												(77)	(77)
Common stock issued				37.4			(17)	(308)		2,002			1,677
Common stock repurchased				(75.4)						(3,407)			(3,407)
Preferred stock redeemed (3)	(1.9)	(2,215)					17	(272)					(2,470)




Preferred stock issued	0.1	2,013					(45)						1,968
Common stock dividends							18	(2,114)					(2,096)
Preferred stock dividends								(339)					(339)
Stock incentive compensation expense							181						181
Net change in deferred compensation and related plans							(1,354)			21			(1,333)
Net change	(1.8)	(202)		(38.0)	0		(1,200)	(2,380)	(253)	(1,384)	0	(226)	(5,645)
Balance March 31, 2020	5.7	$	21,347	4,096.4	$	9,136	59,849	165,308	(1,564)	(70,215)	(1,143)	612	183,330

(1)Represents the impact of the redemption of Preferred Stock, Series I, Series P and Series W, and partial redemption of Preferred Stock, Series N, in first quarter 2021.

(2)We adopted Accounting Standards Update (ASU) 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL) effective January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies) in our Annual Report on Form 10-K for the year ended December 31, 2020.

(3)Represents the impact of the redemption of the remaining Preferred Stock, Series K, in first quarter 2020.

The accompanying notes are an integral part of these statements.


62			Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
	Quarter ended March 31,
(in millions)	2021		2020
Cash flows from operating activities:
Net income before noncontrolling interests	$	4,796	505
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	(1,048)		4,005
Changes in fair value of MSRs and LHFS carried at fair value	(1,368)		3,486
Depreciation, amortization and accretion	2,237		1,868
Other net (gains) losses (1)	(6,264)		7,643
Stock-based compensation	929		582
Originations and purchases of loans held for sale (1)	(45,179)		(38,001)
Proceeds from sales of and paydowns on loans originally classified as held for sale (1)	24,757		31,971
Net change in:
Debt and equity securities, held for trading	11,122		20,413

Deferred income taxes	299		(1,448)
Derivative assets and liabilities	(922)		(4,293)
Other assets	8,481		(10,391)
Other accrued expenses and liabilities	(1,310)		933
Net cash provided (used) by operating activities	(3,470)		17,273
Cash flows from investing activities:
Net change in:
Federal funds sold and securities purchased under resale agreements	(13,830)		15,675
Available-for-sale debt securities:
Proceeds from sales	13,367		11,843
Prepayments and maturities	21,840		14,135
Purchases	(36,203)		(18,658)
Held-to-maturity debt securities:
Paydowns and maturities	20,643		3,769
Purchases	(19,899)		(19,141)
Equity securities, not held for trading:
Proceeds from sales and capital returns	545		1,115
Purchases	(1,626)		(3,338)
Loans:
Loans originated by banking subsidiaries, net of principal collected	17,447		(53,400)
Proceeds from sales of loans originally classified as held for investment	11,358		1,959
Purchases of loans	(50)		(342)
Principal collected on nonbank entities’ loans	5,265		3,837
Loans originated by nonbank entities	(3,469)		(2,348)

Proceeds from sales of foreclosed assets and short sales	180		500
Other, net	(40)		91
Net cash provided (used) by investing activities	15,528		(44,303)
Cash flows from financing activities:
Net change in:
Deposits	33,222		53,903
Short-term borrowings	(79)		(12,223)
Long-term debt:
Proceeds from issuance	110		18,895
Repayment	(21,676)		(17,563)
Preferred stock:
Proceeds from issuance	4,529		1,968
Redeemed	(4,525)		(2,470)
Cash dividends paid	(276)		(280)
Common stock:
Proceeds from issuance	66		209
Stock tendered for payment of withholding taxes	(222)		(306)
Repurchased	(596)		(3,407)
Cash dividends paid	(383)		(2,032)
Net change in noncontrolling interests	(31)		(29)
Other, net	(76)		(76)
Net cash provided by financing activities	10,063		36,589
Net change in cash, cash equivalents, and restricted cash	22,121		9,559
Cash, cash equivalents, and restricted cash at beginning of period	264,612		141,250
Cash, cash equivalents, and restricted cash at end of period	$	286,733	150,809
Supplemental cash flow disclosures:
Cash paid for interest	$	1,091	3,479
Cash paid for income taxes, net (1)	358		23

(1)Prior periods have been revised to conform to the current period presentation.

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


			Wells Fargo & Company			63

Notes to Financial Statements

-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, investment and mortgage products and services, as well as consumer and commercial finance, through banking locations and offices, the internet and other distribution channels to individuals, businesses and institutions in all 50 states, the District of Columbia, and in countries outside the U.S. 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, 2020 (2020 Form 10-K). There were no material changes to these policies in first quarter 2021.

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 4 (Loans and Related Allowance for Credit Losses));

•valuations of residential mortgage servicing rights (MSRs) (Note 8 (Securitizations and Variable Interest Entities) and Note 9 (Mortgage Banking Activities));

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

•liabilities for contingent litigation losses (Note 13 (Legal Actions));

•income taxes; and

•goodwill impairment (Note 10 (Intangible Assets)).

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 ~~adoption~~2020 Form 10-K.

Accounting Standards Adopted in 2021

In first quarter 2021, we adopted the following new accounting guidance:

•Accounting Standards Update (ASU or Update) 2021-01 – Reference Rate Reform (Topic 848): Scope

•ASU 2020-08 – Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs

•ASU 2020-01 – Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Financial Accounting Standards Board (FASB) Emerging Issues Task Force)

•ASU 2019-12 – Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

ASU 2021-01 clarifies the scope of Topic 848 to include derivatives affected by changes in interest rates for margining, discounting, or contract price alignment as part of the market-wide transition to new reference rate (commonly referred to as the “discounting transition”), even if they do not reference the London Interbank Offered Rate or another rate that is expected to be discontinued as a result of reference rate reform. The guidance also clarifies other aspects of the relief provided in Accounting Standards Codification (ASC) 848. We adopted ASU 2021-01 in first quarter 2021, and the guidance will be followed until the Update terminates on December 31, 2022. This guidance is applied on a prospective basis. The Update did not have a material impact on our consolidated financial statements.

ASU 2020-08 clarifies the accounting for purchased callable debt securities carried at a premium and was issued to correct an unintended application of ASU 2017-08 – Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, ~~CECL~~which requires amortization of such premiums to the earliest call date, but was not clear for the method to be used for instruments with multiple call dates. This Update now specifies that such premiums are amortized to the next call date and requires reassessment throughout the life of the instruments with multiple call dates. The Update did not have an impact on ~~January 1, 2020,~~our consolidated financial statements, as we had interpreted the provisions of ASU 2017-08 in this manner upon our adoption in first quarter 2019.

ASU 2020-01 clarifies the accounting for equity securities upon transition between the measurement alternative and equity method. The Update also clarifies for forward contracts and options to purchase equity securities an entity need not consider whether upon settlement of the forward contract or option if the equity securities would be accounted for by the equity method or the fair value option. We adopted this Update in first quarter 2021. The Update did not have an impact on our consolidated financial statements.

ASU 2019-12 provides narrow scope simplifications and improvements to the general principles in ASC Topic 740 – Income Taxes related to intraperiod tax allocation, basis differences when there are changes in ownership of foreign investments and interim periods income tax accounting for year to date losses that exceed anticipated annual losses. The Update did not have an impact on our consolidated financial statements.


64			Wells Fargo & Company

Supplemental Cash Flow Information

Significant noncash activities are presented in Table 1.1.

Table 1.1:Supplemental Cash Flow Information


	Quarter ended March 31,
(in millions)	2021	2020

Held-to-maturity debt securities purchased from securitization of LHFS (1)	10,252	62
Transfers from loans to LHFS (2)	6,249	1,063
Transfers from available-for-sale debt securities to held-to-maturity debt securities	16,617	0

(1)For the quarter ended March 31, 2021, predominantly represents agency mortgage-backed securities purchased upon settlement of the sale and securitization of our conforming residential mortgage loans. See Note 8 (Securitizations and Variable Interest Entities) for additional information.

(2)Prior periods have been revised to conform to the current period presentation.

Subsequent Events

We have evaluated the effects of events that have occurred subsequent to March 31, 2021, and there have been no material events that would require recognition in our first quarter 2021 consolidated financial statements or disclosure in the Notes to the consolidated financial statements.


			Wells Fargo & Company			65


Note 2: Trading Activities

Table 2.1 presents a summary of our trading assets and liabilities measured at fair value through earnings.

Table 2.1:Trading Assets and Liabilities


(in millions)	Mar 31, 2021		Dec 31, 2020
Trading assets:
Debt securities	$	72,784	75,095
Equity securities	20,254		23,032
Loans held for sale	2,303		1,015
Gross trading derivative assets	59,185		58,767
Netting (1)	(35,145)		(34,301)
Total trading derivative assets	24,040		24,466
Total trading assets	119,381		123,608
Trading liabilities:
Short sale	22,733		22,441
Gross trading derivative liabilities	49,296		53,285
Netting (1)	(37,269)		(39,444)
Total trading derivative liabilities	12,027		13,841
Total trading liabilities	$	34,760	36,282

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

Table 2.2 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.

Net interest income also includes dividend income on trading securities and dividend expense on trading securities we have ~~updated~~sold, but not yet purchased.

Table 2.2: Net Interest Income and Net Gains (Losses) on Trading Activities


	Quarter ended March 31,
(in millions)		2021		2020
Interest income:
Debt securities		$	529	766
Equity securities		103		137
Loans held for sale		12		12
Total interest income		644		915
Less: Interest expense		110		141
Net interest income		534		774
Net gains (losses) from trading activities (1):
Debt securities		(2,106)		2,355
Equity securities		1,153		(4,401)
Loans held for sale		24		(12)
Derivatives (2)		1,277		2,122
Total net gains from trading activities		348		64
Total trading-related net interest and noninterest income		$	882	838

(1)Represents realized gains (losses) from our ~~critical accounting policy~~trading activities and unrealized gains (losses) due to changes in fair value of our trading positions.

(2)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.


66			Wells Fargo & Company


Note 3: Available-for-Sale and Held-to-Maturity Debt Securities

Table 3.1 provides the amortized cost, net of the allowance for credit ~~losses.~~losses (ACL) for debt securities, and fair value by major categories of available-for-sale (AFS) debt securities, which are carried at fair value, and held-to-maturity (HTM) debt securities, which are carried at amortized cost, net of the ACL. The net unrealized gains (losses) for AFS debt securities are reported as a component of cumulative other comprehensive income (OCI), net of the ACL and applicable income taxes. Information on debt

securities held for trading is included in Note 2 (Trading Activities).

Outstanding balances exclude accrued interest receivable on AFS and HTM debt securities, which are included in other assets. See Note 7 (Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. The interest income reversed in first quarter 2021 and 2020 was insignificant.

Table 3.1:Available-for-Sale and Held-to-Maturity Debt Securities Outstanding


(in millions)	Amortized cost, net (1)		Gross unrealized gains	Gross unrealized losses	Fair value
March 31, 2021
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	25,144	136	(63)	25,217
Non-U.S. government securities	14,458		0	0	14,458
Securities of U.S. states and political subdivisions (2)	19,288		417	(48)	19,657
Federal agency mortgage-backed securities	115,503		3,142	(988)	117,657
Non-agency mortgage-backed securities (3)	4,040		46	(28)	4,058
Collateralized loan obligations	9,858		7	(15)	9,850
Other debt securities	9,514		490	(51)	9,953
Total available-for-sale debt securities	197,805		4,238	(1,193)	200,850
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	40,251		964	(621)	40,594
Securities of U.S. states and political subdivisions	27,569		662	(171)	28,060
Federal agency mortgage-backed securities	144,484		2,986	(2,292)	145,178
Non-agency mortgage-backed securities	907		36	(15)	928
Collateralized loan obligations	18,981		218	0	19,199

Total held-to-maturity debt securities	232,192		4,866	(3,099)	233,959
Total (4)	$	429,997	9,104	(4,292)	434,809
December 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	21,954	205	0	22,159
Non-U.S. government securities	16,816		0	(3)	16,813
Securities of U.S. states and political subdivisions (2)	19,263		224	(81)	19,406
Federal agency mortgage-backed securities	134,838		4,260	(28)	139,070
Non-agency mortgage-backed securities (3)	3,745		30	(46)	3,729
Collateralized loan obligations	9,058		4	(44)	9,018
Other debt securities	9,859		399	(61)	10,197
Total available-for-sale debt securities	215,533		5,122	(263)	220,392
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	47,295		1,472	(170)	48,597
Securities of U.S. states and political subdivisions	25,860		938	(5)	26,793
Federal agency mortgage-backed securities	115,437		4,182	(21)	119,598
Non-agency mortgage-backed securities	890		51	(8)	933
Collateralized loan obligations	16,238		148	0	16,386

Total held-to-maturity debt securities	205,720		6,791	(204)	212,307
Total (4)	$	421,253	11,913	(467)	432,699

(1)Represents amortized cost of the securities, net of the ACL of $41 million and $28 million related to AFS debt securities and $89 million and $41 million related to HTM debt securities at March 31, 2021, and December 31, 2020, respectively.

(2)Includes investments in tax-exempt preferred debt securities issued by investment funds or trusts that predominantly invest in tax-exempt municipal securities. The amortized cost, net of the ACL and fair value of these types of securities, was $5.2 billion at March 31, 2021, and $5.0 billion at December 31, 2020.

(3)Predominantly consists of commercial mortgage-backed securities at both March 31, 2021, and December 31, 2020.

(4)We held AFS and HTM debt securities from Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) that each exceeded 10% of stockholders’ equity, with an amortized cost of $103.4 billion and $89.5 billion and a fair value of $104.5 billion and $90.5 billion at March 31, 2021, and an amortized cost of $99.8 billion and $88.7 billion and a fair value of $103.2 billion and $91.5 billion at December 31, 2020, respectively.


			Wells Fargo & Company			67

Note 3: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

Table 3.2 details the breakout of purchases of and transfers to HTM debt securities by major category of security.

Table 3.2:Held-to-Maturity Debt Securities Purchases and Transfers


	Quarter ended March 31,
(in millions)		2021		2020
Purchases of held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies		$	0	3,016
Securities of U.S. states and political subdivisions		1,910		866
Federal agency mortgage-backed securities		24,867		15,863
Non-agency mortgage-backed securities		29		62
Collateralized loan obligations		3,953		0
Total purchases of held-to-maturity debt securities		30,759		19,807
Transfers from available-for-sale debt securities to held-to-maturity debt securities:


Federal agency mortgage-backed securities		16,617		0


Total transfers from available-for-sale debt securities to held-to-maturity debt securities		$	16,617	0

(1)Inclusive of securities purchased but not yet settled and noncash purchases from securitization of loans held for sale (LHFS).

Table 3.3 shows the composition of interest income, provision for credit losses, and gross realized gains and losses

from sales and impairment write-downs included in earnings related to AFS and HTM debt securities (pre-tax).

Table 3.3:Income Statement Impacts for Available-for-Sale and Held-to-Maturity Debt Securities


	Quarter ended March 31,
(in millions)		2021		2020
Interest income (1):
Available-for-sale		$	811	1,726
Held-to-maturity		972		980
Total interest income		1,783		2,706
Provision for credit losses:
Available-for-sale		22		168
Held-to-maturity		47		4
Total provision for credit losses		69		172
Realized gains and losses (2):
Gross realized gains		151		256
Gross realized losses		0		(4)


Impairment write-downs		0		(15)
Net realized gains		$	151	237

(1)Excludes interest income from trading debt securities, which is disclosed in Note 2 (Trading Activities).

(2)Realized gains and losses relate to AFS debt securities. There were 0 realized gains or losses from HTM debt securities in all periods presented.

Credit Quality

We monitor credit quality of debt securities by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the ACL for debt securities. The credit quality indicators that we most closely monitor include credit ratings and delinquency status and are based on information as of our financial statement date.

CREDIT RATINGS Credit ratings express opinions about the credit quality of a debt security. We determine the credit rating of a security according to the lowest credit rating made available by national recognized statistical rating organizations (NRSROs). Debt securities rated investment grade, that is those with ratings similar to BBB-/Baa3 or above, as defined by NRSROs, 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. For debt

securities not rated by NRSROs, we determine an internal credit grade of the debt securities (used for credit risk management purposes) equivalent to the credit ratings assigned by major credit agencies. Substantially all of our debt securities were rated by NRSROs at March 31, 2021, and December 31, 2020.

Table 3.4 shows the percentage of fair value of AFS debt securities and amortized cost of HTM debt securities determined to be rated investment grade, inclusive of securities rated based on internal credit grades.


68			Wells Fargo & Company

Table 3.4:Investment Grade Debt Securities


	Available-for-Sale				Held-to-Maturity
($ in millions)	Fair value		% investment grade		Amortized cost	% investment grade
March 31, 2021
Total portfolio (1)	$	200,850	99	%	232,281	99	%
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)	$	142,874	100	%	184,735	100	%
Securities of U.S. states and political subdivisions	19,657		99		27,587	100
Collateralized loan obligations (3)	9,850		100		19,031	100
All other debt securities (4)	28,469		92		928	5
December 31, 2020
Total portfolio (1)	$	220,392	99	%	205,761	99	%
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)	$	161,229	100	%	162,732	100	%
Securities of U.S. states and political subdivisions	19,406		99		25,870	100
Collateralized loan obligations (3)	9,018		100		16,255	100
All other debt securities (4)	30,739		93		904	6

(1)93% and 92% were rated AA- and above at March 31, 2021, and December 31, 2020, respectively.

(2)Includes federal agency mortgage-backed securities.

(3)99% and 98% were rated AA- and above at March 31, 2021, and December 31, 2020, respectively.

(4)Includes non-U.S. government, non-agency mortgage-backed, and all other debt securities.

DELINQUENCY STATUS AND NONACCRUAL DEBT SECURITIESDebt security issuers that are delinquent in payment of amounts due under contractual debt agreements have a higher probability of recognition of credit losses. As such, as part of our monitoring of the credit quality of the debt security portfolio, we consider whether debt securities we own are past due in payment of principal or interest payments and whether any securities have been placed into nonaccrual status.

Debt securities that are past due and still accruing were insignificant at both March 31, 2021, and December 31, 2020. The carrying value of debt securities in nonaccrual status was insignificant at both March 31, 2021, and December 31, 2020. Charge-offs on debt securities were insignificant for the quarters ended March 31, 2021 and 2020.

Purchased debt securities with credit deterioration (PCD) are not considered to be in nonaccrual status, as payments from issuers of these securities remain current. PCD securities were insignificant during the quarters ended March 31, 2021 and 2020.


			Wells Fargo & Company			69

Note 3: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

Unrealized Losses of Available-for-Sale Debt Securities

Table 3.5 shows the gross unrealized losses and fair value of AFS 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 recorded credit impairment 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 amortized cost basis, net of allowance for credit losses.

Table 3.5:Gross Unrealized Losses and Fair Value – Available-for-Sale Debt Securities


	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
March 31, 2021
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	(63)	10,584	0	0	(63)	10,584
Non-U.S. government securities	0		0	0	0	0	0
Securities of U.S. states and political subdivisions	(37)		1,097	(11)	1,088	(48)	2,185
Federal agency mortgage-backed securities	(988)		41,851	0	0	(988)	41,851
Non-agency mortgage-backed securities	(2)		777	(26)	886	(28)	1,663
Collateralized loan obligations	(2)		1,984	(13)	2,381	(15)	4,365
Other debt securities	(25)		1,102	(26)	1,091	(51)	2,193
Total available-for-sale debt securities	$	(1,117)	57,395	(76)	5,446	(1,193)	62,841
December 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	0	0	0	0	0	0
Non-U.S. government securities	(3)		16,812	0	0	(3)	16,812
Securities of U.S. states and political subdivisions	(51)		3,681	(30)	1,101	(81)	4,782
Federal agency mortgage-backed securities	(27)		11,310	(1)	316	(28)	11,626
Non-agency mortgage-backed securities	(28)		1,366	(18)	534	(46)	1,900
Collateralized loan obligations	(27)		5,082	(17)	1,798	(44)	6,880
Other debt securities	(16)		647	(45)	1,604	(61)	2,251
Total available-for-sale debt securities	$	(152)	38,898	(111)	5,353	(263)	44,251

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. Credit impairment is recorded as an ACL for debt securities.

For descriptions of the factors we consider when analyzing debt securities for impairment as well as methodology and significant inputs used to measure credit losses, see Note 1 (Summary of Significant Accounting Policies) in our 2020 Form 10-K.


70			Wells Fargo & Company

Contractual Maturities

Table 3.6 and Table 3.7 show the remaining contractual maturities, amortized cost, net of the ACL, fair value and weighted average effective yields of AFS and HTM debt securities, respectively. The remaining contractual principal

maturities for mortgage-backed securities (MBS) do not 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 3.6:Contractual Maturities – Available-for-Sale Debt Securities


By remaining contractual maturity ($ in millions)	Total			Within one year	After one year through five years	After five years through ten years	After ten years
March 31, 2021
Available-for-sale debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	25,144		296	15,550	7,460	1,838
Fair value	25,217			296	15,573	7,402	1,946
Weighted average yield	0.59		%	0.15	0.33	0.95	1.44
Non-U.S. government securities
Amortized cost, net	$	14,458		14,433	25	0	0
Fair value	14,458			14,433	25	0	0
Weighted average yield	(0.11		%)	(0.12)	0.42	0	0
Securities of U.S. states and political subdivisions
Amortized cost, net	$	19,288		2,024	2,049	4,715	10,500
Fair value	19,657			2,028	2,094	4,712	10,823
Weighted average yield	2.02		%	1.35	1.74	1.22	2.56
Federal agency mortgage-backed securities
Amortized cost, net	$	115,503		8	292	3,037	112,166
Fair value	117,657			8	303	3,133	114,213
Weighted average yield	2.70		%	2.37	2.34	2.08	2.72
Non-agency mortgage-backed securities
Amortized cost, net	$	4,040		0	0	162	3,878
Fair value	4,058			0	0	162	3,896
Weighted average yield	2.04		%	0	0	1.94	2.05
Collateralized loan obligations
Amortized cost, net	$	9,858		0	201	7,359	2,298
Fair value	9,850			0	201	7,353	2,296
Weighted average yield	1.60		%	0	2.25	1.61	1.51
Other debt securities
Amortized cost, net	$	9,514		362	2,595	3,136	3,421
Fair value	9,953			359	2,771	3,171	3,652
Weighted average yield	3.22		%	3.04	4.47	3.23	2.29
Total available-for-sale debt securities
Amortized cost, net	$	197,805		17,123	20,712	25,869	134,101
Fair value	$	200,850		17,124	20,967	25,933	136,826
Weighted average yield	2.13		%	0.23	1.03	1.60	2.64

(1)Weighted average yields displayed by maturity bucket are weighted based on amortized cost without effect for any related hedging derivatives and are shown pre-tax.


			Wells Fargo & Company			71

Note 3: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

Table 3.7: Contractual Maturities – Held-to-Maturity Debt Securities


By remaining contractual maturity ($ in millions)	Total			Within one year	After one year through five years	After five years through ten years	After ten years
March 31, 2021
Held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	40,251		24,063	12,406	0	3,782
Fair value	40,594			24,236	13,197	0	3,161
Weighted average yield	2.12		%	2.09	2.37	0	1.57
Securities of U.S. states and political subdivisions
Amortized cost, net	$	27,569		628	2,231	2,026	22,684
Fair value	28,060			633	2,305	2,109	23,013
Weighted average yield	2.18		%	1.82	1.90	2.69	2.17
Federal agency mortgage-backed securities
Amortized cost, net	$	144,484		0	0	0	144,484
Fair value	145,178			0	0	0	145,178
Weighted average yield	2.28		%	0	0	0	2.28
Non-agency mortgage-backed securities
Amortized cost, net	$	907		0	14	0	893
Fair value	928			0	14	0	914
Weighted average yield	3.12		%	0	1.57	0	3.15
Collateralized loan obligations
Amortized cost, net	$	18,981		0	32	8,652	10,297
Fair value	19,199			0	32	8,748	10,419
Weighted average yield	1.75		%	0	2.32	1.77	1.73
Total held-to-maturity debt securities
Amortized cost, net	$	232,192		24,691	14,683	10,678	182,140
Fair value	233,959			24,869	15,548	10,857	182,685
Weighted average yield	2.20		%	2.08	2.29	1.94	2.23

(1)Weighted average yields displayed by maturity bucket are weighted based on amortized cost and are shown pre-tax.


72			Wells Fargo & Company


Note 4: Loans and Related Allowance for Credit Losses

Table 4.1 presents total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include unearned income, net deferred loan fees or costs, and unamortized discounts and premiums. These amounts were less

than 1% of our total loans outstanding at March 31, 2021, and December 31, 2020.

Outstanding balances exclude accrued interest receivable on loans, except for certain revolving loans, such as credit card loans.

See Note 7 (Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. During first quarter 2021, we reversed accrued interest receivable of $16 million for our commercial portfolio segment and $51 million for our consumer portfolio segment, compared with $9 million and $63 million, respectively, for the same period a year ago.

Table 4.1:Loans Outstanding


(in millions)	Mar 31, 2021		Dec 31, 2020



Commercial:
Commercial and industrial	$	319,055	318,805
Real estate mortgage	121,198		121,720
Real estate construction	21,533		21,805
Lease financing	15,734		16,087
Total commercial	477,520		478,417
Consumer:
Residential mortgage – first lien	254,363		276,674
Residential mortgage – junior lien	21,308		23,286
Credit card	34,246		36,664
Auto	49,210		48,187
Other consumer	24,925		24,409
Total consumer	384,052		409,220
Total loans	$	861,572	887,637

Our non-U.S. loans are reported by respective class of financing receivable in the table above. Substantially all of our non-U.S. loan portfolio is commercial loans. Table 4.2 presents total non-U.S. commercial loans outstanding by class of financing receivable.

Table 4.2:Non-U.S. Commercial Loans Outstanding


(in millions)	Mar 31, 2021		Dec 31, 2020




Non-U.S. commercial loans:
Commercial and industrial	$	69,493	63,128
Real estate mortgage	7,066		7,278
Real estate construction	1,665		1,603
Lease financing	636		629
Total non-U.S. commercial loans	$	78,860	72,638


			Wells Fargo & Company			73

Note 4: Loans and Related Allowance for Credit Losses (continued)

Loan Purchases, Sales, and Transfers

Table 4.3 presents the proceeds paid or received for purchases and sales of loans and transfers from loans held for investment to mortgages/loans held for sale. The table excludes loans for

which we have elected the fair value option and government insured/guaranteed residential mortgage – first lien loans because their loan activity normally does not impact the ACL.

Table 4.3:Loan Purchases, Sales, and Transfers



	2021				2020
(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total
Quarter ended March 31,




Purchases	$	48	1	49	341	1	342
Sales	(273)		(188)	(461)	(813)	(26)	(839)
Transfers (to)/from LHFS	(435)		63	(372)	77	2	79

Commitments to Lend

A commitment to lend is a legally binding agreement to lend 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. For unconditionally cancelable commitments at our discretion, we do not recognize an ACL.

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. The unfunded amount of these temporary advance arrangements totaled approximately $81.9 billion at March 31, 2021.

We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At both March 31, 2021, and December 31, 2020, we had $1.3 billion, 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 11 (Guarantees and Other Commitments) for additional information on standby letters of credit.

When we enter into 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 are not funded. 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, autos, 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 4.4. The table excludes the issued standby and commercial letters of credit and temporary advance arrangements described above.

Table 4.4:Unfunded Credit Commitments


(in millions)	Mar 31, 2021		Dec 31, 2020
Commercial:
Commercial and industrial	$	385,575	378,167
Real estate mortgage	8,584		7,993
Real estate construction	15,150		15,650

Total commercial	409,309		401,810
Consumer:
Residential mortgage – first lien	37,066		31,530
Residential mortgage – junior lien	31,573		32,820
Credit card	124,077		121,096
Other consumer	51,361		49,179
Total consumer	244,077		234,625
Total unfunded credit commitments	$	653,386	636,435


74			Wells Fargo & Company

~~Allowance for Credit Losses~~

We maintain an ACL for loans, which is management’s estimate of the expected credit losses in the loan portfolio and unfunded credit commitments, at the balance sheet date, excluding loans and unfunded credit commitments carried at fair value or held for sale. Additionally, we maintain an allowance for credit losses for debt securities classified as either held-to-maturity (HTM) or available-for-sale (AFS), other financial assets measured at amortized cost, net investments in leases, and other off-balance sheet credit exposures. In connection with our adoption of CECL, we updated our approach for estimating expected credit losses, which includes new areas for management judgment, described more fully below, and updated our accounting policies. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

For loans and HTM debt securities, the ACL is measured based on the remaining contractual term of the financial asset (including off-balance sheet credit exposures) adjusted, as appropriate, for prepayments and permitted extension options using historical experience, current conditions, and forecasted information. For AFS debt securities, the ACL is measured using a discounted cash flow approach and is limited to the difference between the fair value of the security and its amortized cost.

Changes in the ACL and, therefore, in the related provision for credit losses can materially affect net income. In applying the judgment and review required to determine the ACL, management considerations include the evaluation of past events, historical experience, changes in economic forecasts and conditions, customer behavior, collateral values, and the length of the initial loss forecast period, and other influences. From time to time, changes in economic factors or assumptions, business strategy, products or product mix, or debt security investment strategy, may result in a corresponding increase or decrease in our ACL. While our methodology attributes portions of the ACL to specific financial asset classes (loan and debt security portfolios) or loan portfolio segments (commercial and

~~consumer), the entire ACL is available to absorb credit losses of the Company.~~

~~Judgment is specifically applied in:~~

•~~Economic assumptions and the length of the initial loss forecast period.~~ Forecasted economic variables, such as gross domestic product (GDP), unemployment rate or collateral asset prices, are used to estimate expected credit losses. While many of these economic variables are evaluated at the macro-economy level, some economic variables may be forecasted at more granular levels, for example, using the metro statistical area (MSA) level for unemployment rates, home prices and commercial real estate prices. Quarterly, we assess the length of the initial loss forecast period and have currently set the period to one year. Management exercises judgment when assigning weight to the three economic scenarios that are used to estimate future credit losses. The three scenarios include a most likely expectation of economic variables referred to as the base case scenario, as well as an optimistic (upside) scenario and a pessimistic (downside) scenario.

•~~Reversion of losses beyond the initial forecast period.~~ We use a reversion approach to connect the losses estimated for our initial loss forecast period to the period of our historical loss forecast based on economic conditions at the measurement date. Our reversion methodology considers the type of portfolio, point in the credit cycle, expected length of recessions and recoveries, as well as other relevant factors. The length of reversion period varies by asset type – one year for shorter contractual term loans such as commercial loans and two years for longer contractual term loans such as real estate 1-4 family mortgage loans. We assess the reversion approach on a quarterly basis and the length of the reversion period by asset type annually.

•~~Historical loss expectations~~. At the end of the reversion period, we incorporate the changes in economic variables observed during representative historical time periods that include both recessions and expansions. This analysis is used to compute average losses for any given portfolio and its associated credit characteristics. Annually, we assess the historical time periods and ensure the average loss estimates are representative of our historical loss experience.

•~~Credit risk ratings applied to individual commercial loans, unfunded credit commitments, and debt securities.~~ Individually assessed credit risk ratings are considered key credit variables in our modeled approaches to help assess probability of default and loss given default. Borrower quality ratings are aligned to the borrower’s financial strength and contribute to forecasted probability of default curves. Collateral quality ratings combined with forecasted collateral prices (as applicable) contribute to the forecasted severity of loss in the event of default. These credit risk ratings are reviewed by experienced senior credit officers and subjected to reviews by an internal team of credit risk specialists.

•~~Usage of credit loss estimation models.~~ We use internally developed models that incorporate credit attributes and economic variables to generate estimates of credit losses. Management uses a combination of judgement and quantitative analytics in the determination of segmentation, modeling approach, and variables that are leveraged in the models. These models are validated in accordance with the Company’s policies by an internal model validation group.~~We routinely assess our model performance and apply~~

adjustments when necessary to improve the accuracy of loss estimation. We also assess our models for limitations against the company-wide risk inventory to help ensure that we appropriately capture known and emerging risks in our estimate of expected credit losses and apply overlays as needed.

•~~Valuation of collateral~~. The current fair value of collateral is utilized to assess the expected credit losses when a financial asset is considered to be collateral dependent. We apply judgment when valuing the collateral either through appraisals, evaluation of the cash flows of the property, or other quantitative techniques. Decreases in collateral valuations support incremental charge-downs and increases in collateral valuation are included in the allowance for credit losses as a negative allowance when the financial asset has been previously written-down below current recovery value.

•~~Contractual term considerations.~~ The remaining contractual term of a loan is adjusted for expected prepayments and certain expected extensions, renewals, or modifications. We extend the contractual term when we are not able to unconditionally cancel contractual renewals or extension options. We also incorporate into our allowance for credit losses any scenarios where we reasonably expect to provide an extension through a TDR.

•~~Qualitative factors which may not be adequately captured in the loss models.~~ These amounts represent management’s judgment of risks inherent in the processes and assumptions used in establishing the ACL. We also consider economic environmental factors, modeling assumptions and performance, process risk, and other subjective factors, including industry trends and emerging risk assessments.

~~Sensitivity~~The ACL for loans is sensitive to changes in key assumptions which requires significant judgment to be used by management. Future amounts of the ACL for loans will be based on a variety of factors, including loan balance changes, portfolio credit quality, and general economic conditions. General economic conditions are forecasted using economic variables, which could have varying impacts on different financial assets or portfolios. Additionally, throughout numerous credit cycles, there are observed changes in economic variables such as the unemployment rate, GDP and real estate prices which may not move in a correlated manner as variables may move in opposite directions or differ across portfolios or geography.

Our sensitivity analysis does not represent management’s view of expected credit losses at the balance sheet date. We applied 50% weight to both the base case scenario and the downside scenario in our sensitivity analysis to reflect the potential for further economic deterioration from a COVID-19 resurgence. The outcomes of both scenarios were influenced by the duration, severity, and timing of changes in economic variables within those scenarios. The sensitivity analysis resulted in a hypothetical increase in the ACL for loans of approximately $2.3 billion at September 30, 2020. The hypothetical increase in our ACL for loans does not incorporate the impact of management judgment for qualitative factors applied in the current ACL for loans, which may have a positive or negative effect on the results. It is possible that others performing similar sensitivity analyses could reach different conclusions or results.

The sensitivity analysis excludes the ACL for debt securities given its size relative to the overall ACL. Management believes that the estimate for the ACL for loans was appropriate at the balance sheet date.


~~Current Accounting Developments~~

~~Table 40 provides the significant accounting updates applicable to us that have been issued by the Financial Accounting Standards Board (FASB) but are not yet effective.~~

~~Table 40:Current Accounting Developments – Issued Standards~~

~~Description~~

~~Effective date and financial statement impact~~

~~ASU 2018-12 – Financial Services – Insurance (Topic 944):~~

~~Targeted Improvements to the Accounting for Long-Duration Contracts~~ ~~and subsequent related updates~~

The Update requires all features in long-duration insurance contracts that meet the definition of a market risk benefit to be measured at fair value through earnings with changes in fair value attributable to our own credit risk recognized in other comprehensive income. Currently, two measurement models exist for these features, fair value and insurance accrual. The Update requires the use of a standardized discount rate and routine updates for insurance assumptions used in valuing the liability for future policy benefits for traditional long-duration contracts. The Update also simplifies the amortization of deferred acquisition costs.

The guidance becomes effective on January 1, 2022. Certain of our variable annuity reinsurance products meet the definition of market risk benefits and will require the associated insurance related reserves for these products to be measured at fair value as of the earliest period presented, with the cumulative effect on fair value for changes attributable to our own credit risk 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 our own credit, will be recognized in the opening balance of retained earnings. As of September 30, 2020, we held $1.2 billion in insurance-related reserves of which $583 million was in scope of the Update. A total of $531 million was associated with products that meet the definition of market risk benefits, and of this amount, $47 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 generally due to the long duration of these contracts. We plan to economically hedge this volatility, where feasible. The ultimate impact of these changes will depend on the composition of our market risk benefits portfolio at the date of adoption. Changes in the accounting for the liability of 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 their existing carrying amounts at the beginning of the earliest period presented, and are not expected to be material.

~~The following Updates are applicable to us but are not expected to have a material impact on our consolidated financial statements:~~

•~~ASU 2020-10 - Codification Improvements~~

•~~ASU 2020-09 – Debt (Topic 470):~~ ~~Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762~~

•~~ASU 2020-08 – Codification Improvements to Subtopic 310-20,~~ ~~Receivables-Nonrefundable Fees and Other Costs~~

•~~ASU 2020-06 – Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):~~ ~~Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity~~

•~~ASU 2020-01 – Investments – Equity Securities (Topic 321),~~

~~Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815):~~ ~~Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the FASB Emerging Issues Task Force)~~

•~~ASU 2019-12 – Income Taxes (Topic 740):~~ ~~Simplifying the Accounting for Income Taxes~~


~~Forward-Looking Statements~~

This document contains forward-looking statements. In addition, we may make forward-looking statements in our other documents filed or furnished with the Securities and Exchange Commission, and our management may make forward-looking statements orally to analysts, investors, representatives of the media and others. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “target,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can” and similar references to future periods. In particular, forward-looking statements include, but are not limited to, statements we make about: (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, our allowance for credit losses, and the economic scenarios considered to develop the allowance; (iv) our expectations regarding net interest income and net interest margin; (v) loan growth or the reduction or mitigation of risk in our loan portfolios; (vi) future capital or liquidity levels, ratios or targets; (vii) the performance of our mortgage business and any related exposures; (viii) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (ix) future common stock dividends, common share repurchases and other uses of capital; (x) our targeted range for return on assets, return on equity, and return on tangible common equity; (xi) expectations regarding our effective income tax rate; (xii) the outcome of contingencies, such as legal proceedings; and (xiii) the Company’s plans, objectives and strategies.

•~~the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions;~~

•financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;

•~~the 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;~~

•~~a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber attacks;~~

•~~the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;~~

•~~fiscal and monetary policies of the Federal Reserve Board;~~

•~~changes to U.S. tax guidance and regulations, as well as the effect of discrete items on our effective income tax rate;~~

•~~our ability to develop and execute effective business plans and strategies; and~~

•the other risk factors and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, as supplemented by the “Risk Factors” section in this Report.

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

~~Forward-Looking Statements (continued~~)

stock issuance requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the Company’s Board of Directors, and may be subject to regulatory approval or conditions.

For additional information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, as supplemented by the “Risk Factors” section in this Report, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov1.

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

~~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~~

~~The following risk factor supplements the “Risk Factors” section in our 2019 Form 10-K.~~

The COVID-19 pandemic has adversely impacted our business and financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, affected equity market valuations, created significant volatility and disruption in financial markets, and increased unemployment levels. In addition, the pandemic has resulted in restrictions and closures for many businesses, as well as the institution of social distancing and sheltering in place requirements in many states and communities. As a result, the demand for our products and services may continue to be significantly impacted, which could adversely affect our revenue. Furthermore, the pandemic could continue to result in the recognition of credit losses in our loan portfolios and increases in our allowance for credit losses, particularly if businesses remain closed, the impact on the global economy worsens, or more customers draw on their lines of credit or seek additional loans to help finance their businesses. Similarly, because of changing economic and market conditions affecting issuers, we may be required to recognize further impairments on the securities we hold, as well as reductions in other comprehensive income. Moreover, the persistence of adverse economic conditions and reduced revenue may adversely affect the fair value of our operating segments and underlying reporting units which may result in the impairment of goodwill or other long-lived assets. Our business operations may be further disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic, and we have already temporarily closed certain of our branches and offices.

Moreover, the pandemic has created additional operational and compliance risks, including the need to quickly implement and execute new programs and procedures for the products and services we offer our customers, provide enhanced safety measures for our employees and customers, comply with rapidly changing regulatory requirements, address any increased risk of fraudulent activity, and protect the integrity and functionality of our systems and networks as a larger number of our employees work remotely. The pandemic could also result in or contribute to additional downgrades to our credit ratings or credit outlook. In response to the pandemic, we have temporarily suspended certain mortgage foreclosure activities, and have provided fee waivers, payment deferrals, and other expanded assistance for credit card, automobile, mortgage, small business, personal and commercial lending customers, and future governmental actions may require these and other types of customer-related responses. In addition, we have reduced our common stock dividend and temporarily suspended share repurchases, and we could take, or be required to take, other capital actions in the future. The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.

~~Controls and Procedures~~


~~Disclosure Controls and Procedures~~

The Company’s management evaluated the effectiveness, as of September 30, 2020, 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 September 30, 2020.


~~Internal Control Over Financial Reporting~~

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

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 third quarter 2020 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 September 30, Nine months ended September 30,
(in millions, except per share amounts) 2020 2019 2020 2019
Interest income
Debt securities $ 2,446 3,666 $ 8,864 11,388
Mortgage loans held for sale 232 232 659 579
Loans held for sale 7 20 26 64
Loans 7,954 10,982 26,467 33,652
Equity securities 101 247 423 693
Other interest income 60 1,352 889 4,112
Total interest income 10,800 16,499 37,328 50,488
Interest expense
Deposits 314 2,324 2,641 6,563
Short-term borrowings (12) 635 262 1,877
Long-term debt 1,038 1,780 3,515 5,607
Other interest expense 92 135 350 410
Total interest expense 1,432 4,874 6,768 14,457
Net interest income 9,368 11,625 30,560 36,031
Provision for credit losses:
Debt securities (1) 18 0 159 0
Loans 751 695 14,149 2,043
Net interest income after provision for credit losses 8,599 10,930 16,252 33,988
Noninterest income (2)
Deposit-related fees 1,299 1,480 3,888 4,289
Trust and investment fees 3,514 3,559 10,439 10,500
Card fees 912 1,027 2,601 2,996
Lending-related fees 352 374 1,025 1,116
Mortgage banking 1,590 466 2,286 1,932
Net gains from trading activities 361 276 1,232 862
Net gains on debt securities 264 3 713 148
Net gains (losses) from equity securities 649 956 (219) 2,392
Lease income 333 402 1,021 1,270
Other 220 1,842 869 3,667
Total noninterest income 9,494 10,385 23,855 29,172
Noninterest expense (3)
Personnel 8,624 8,604 25,863 26,309
Technology, telecommunications and equipment 791 821 2,261 2,340
Occupancy 851 760 2,437 2,196
Operating losses 1,219 1,920 2,902 2,405
Professional and outside services 1,760 1,737 5,042 4,956
Leases 291 272 795 869
Advertising and promotion 144 266 462 832
Restructuring charges 718 0 718 0
Other 831 819 2,348 2,657
Total noninterest expense 15,229 15,199 42,828 42,564
Income (loss) before income tax expense (benefit) 2,864 6,116 (2,721) 20,596
Income tax expense (benefit) 645 1,304 (3,113) 3,479
Net income before noncontrolling interests 2,219 4,812 392 17,117
Less: Net income from noncontrolling interests 184 202 83 441
Wells Fargo net income $ 2,035 4,610 $ 309 16,676
Less: Preferred stock dividends and other 315 573 1,241 1,284
Wells Fargo net income (loss) applicable to common stock $ 1,720 4,037 $ (932) 15,392
Per share information
Earnings (loss) per common share $ 0.42 0.93 $ (0.23) 3.45
Diluted earnings (loss) per common share 0.42 0.92 (0.23) 3.43
Average common shares outstanding 4,123.8 4,358.5 4,111.4 4,459.1
Diluted average common shares outstanding (4) 4,132.2 4,389.6 4,111.4 4,489.5

~~(1)Prior to our adoption of Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326):~~ ~~Measurement of Credit Losses on Financial Instruments~~ ~~(CECL)~~, on January 1, 2020, provision for credit losses from debt securities was not applicable and is therefore presented as $0 for both the third quarter and first nine months of 2019. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

~~(2)~~In third quarter 2020, service charges on deposit accounts, cash network fees, wire transfer and other remittance fees, and certain other fees were combined into a single line item for deposit-related fees; certain fees associated with lending activities were combined into a single line item for lending-related fees; and certain other fees were reclassified to other noninterest income. Prior period balances have been revised to conform with the current period presentation.

~~(3)~~In third quarter 2020, expenses for outside professional services, contract services, and outside data processing were combined into a single line item for professional and outside services expense; expenses for technology and equipment and telecommunications were combined into a single line item for technology, telecommunications and equipment expense; and certain other expenses were reclassified to other noninterest expense. Prior period balances have been revised to conform with the current period presentation.

~~(4)~~For the nine months ended September 30, 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.

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

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Comprehensive Income (Unaudited)
Quarter ended September 30, Nine months ended September 30,
(in millions) 2020 2019 2020 2019
Wells Fargo net income $ 2,035 4,610 309 16,676
Other comprehensive income (loss), before tax:
Debt securities:
Net unrealized gains arising during the period 96 652 1,582 5,192
Reclassification of net (gains) losses to net income (95) 76 (357) 34
Derivative and hedging activities:
Net unrealized gains (losses) arising during the period (70) 10 2 32
Reclassification of net losses to net income 52 75 165 233
Defined benefit plans adjustments:
Net actuarial and prior service losses arising during the period (89) 0 (760) (4)
Amortization of net actuarial loss, settlements and other to net income 68 33 205 101
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period 74 (53) (70) 3
Other comprehensive income, before tax 36 793 767 5,591
Income tax benefit (expense) related to other comprehensive income 13 (208) (206) (1,375)
Other comprehensive income, net of tax 49 585 561 4,216
Less: Other comprehensive income from noncontrolling interests 1 0 0 0
Wells Fargo other comprehensive income, net of tax 48 585 561 4,216
Wells Fargo comprehensive income 2,083 5,195 870 20,892
Comprehensive income from noncontrolling interests 185 202 83 441
Total comprehensive income $ 2,268 5,397 953 21,333

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

Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet
(in millions, except shares) Sep 30,
2020 Dec 31,
2019
Assets (Unaudited)
Cash and due from banks $ 25,535 21,757
Interest-earning deposits with banks 221,235 119,493
Total cash, cash equivalents, and restricted cash 246,770 141,250
Federal funds sold and securities purchased under resale agreements 69,304 102,140
Debt securities:
Trading, at fair value 73,253 79,733
Available-for-sale, at fair value (includes amortized cost of $216,311 and $260,060, net of allowance for credit losses of
$79 and $0) (1)
220,573 263,459
Held-to-maturity, at amortized cost, net of allowance for credit losses of $26 and $0 (fair value $189,434 and $156,860) (1) 182,595 153,933
Mortgage loans held for sale (includes $19,884 and $16,606 carried at fair value) (2) 23,307 23,342
Loans held for sale (includes $1,688 and $972 carried at fair value) (2) 1,697 977
Loans (includes $148 and $171 carried at fair value) (2) 920,082 962,265
Allowance for loan losses (19,463) (9,551)
Net loans 900,619 952,714
Mortgage servicing rights:
Measured at fair value 6,355 11,517
Amortized 1,325 1,430
Premises and equipment, net 8,977 9,309
Goodwill 26,387 26,390
Derivative assets 23,715 14,203
Equity securities (includes $25,053 and $41,936 carried at fair value) (2) 51,169 68,241
Other assets 86,174 78,917
Total assets (3) $ 1,922,220 1,927,555
Liabilities
Noninterest-bearing deposits $ 447,011 344,496
Interest-bearing deposits 936,204 978,130
Total deposits 1,383,215 1,322,626
Short-term borrowings 55,224 104,512
Derivative liabilities 13,767 9,079
Accrued expenses and other liabilities 72,271 75,163
Long-term debt 215,711 228,191
Total liabilities (4) 1,740,188 1,739,571
Equity
Wells Fargo stockholders’ equity:
Preferred stock 21,098 21,549
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares 9,136 9,136
Additional paid-in capital 60,035 61,049
Retained earnings 160,913 166,697
Cumulative other comprehensive income (loss) (750) (1,311)
Treasury stock – 1,349,294,592 shares and 1,347,385,537 shares (68,384) (68,831)
Unearned ESOP shares (875) (1,143)
Total Wells Fargo stockholders’ equity 181,173 187,146
Noncontrolling interests 859 838
Total equity 182,032 187,984
Total liabilities and equity $ 1,922,220 1,927,555

~~(1)~~Prior to our adoption of CECL on January 1, 2020, the allowance for credit losses (ACL) related to available-for-sale (AFS) and held-to-maturity (HTM) debt securities was not applicable and is therefore presented as $0 at December 31, 2019. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

~~(2)Parenthetical amounts represent assets and liabilities that we are required to carry at fair value or for which we have elected the fair value option.~~

~~(3)~~Our consolidated assets at September 30, 2020, and December 31, 2019, included 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, $16 million and $16 million; Interest-earning deposits with banks, $0 million and $284 million; Debt securities, $662 million and $540 million; Net loans, $10.6 billion and $13.2 billion; Derivative assets, $1 million and $1 million; Equity securities, $72 million and $118 million; Other assets, $214 million and $239 million; and Total assets, $11.6 billion and $14.4 billion, respectively.

~~(4)~~Our consolidated liabilities at September 30, 2020, and December 31, 2019, included the following VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo: Short-term borrowings, $395 million and $401 million; Derivative liabilities, $1 million and $3 million; Accrued expenses and other liabilities, $229 million and $235 million; Long-term debt, $215 million and $587 million; and Total liabilities, $840 million and $1.2 billion, respectively.

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

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity (Unaudited)
Preferred stock Common stock
(in millions, except shares) Shares Amount Shares Amount
Balance June 30, 2020 5,494,773 $ 21,098 4,119,558,592 $ 9,136
Net income
Other comprehensive income (loss), net of tax
Noncontrolling interests
Common stock issued 13,087,759
Common stock repurchased (129,469)
Preferred stock redeemed 0 0
Preferred stock released by ESOP
Preferred stock converted to common shares 0 0 0
Common stock dividends
Preferred stock dividends
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change 0 0 12,958,290 0
Balance September 30, 2020 5,494,773 $ 21,098 4,132,516,882 $ 9,136
Balance June 30, 2019 9,184,169 $ 23,021 4,419,591,197 $ 9,136
Net income
Other comprehensive income (loss), net of tax
Noncontrolling interests
Common stock issued 5,834,645
Common stock repurchased (159,099,263)
Preferred stock redeemed (1,550,000) (1,330)
Preferred stock released by ESOP
Preferred stock converted to common shares (142,000) (142) 2,815,225
Common stock dividends
Preferred stock dividends
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change (1,692,000) (1,472) (150,449,393) 0
Balance September 30, 2019 7,492,169 $ 21,549 4,269,141,804 $ 9,136

Quarter ended September 30,
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
59,923 159,952 (798) (69,050) (875) 179,386 736 180,122
2,035 2,035 184 2,219
48 48 1 49
0 (62) (62)
0 (343) 668 325 325
(3) (3) (3)
0 0 0
0 0 0 0
0 0 0 0
3 (416) (413) (413)
(315) (315) (315)
136 136 136
(27) 1 (26) (26)
112 961 48 666 0 1,787 123 1,910
60,035 160,913 (750) (68,384) (875) 181,173 859 182,032
60,625 164,551 (2,224) (54,775) (1,292) 199,042 995 200,037
   4,610       4,610 202 4,812
      585    585 0 585
         0 (85) (85)
(6) (15)    299 278 278
   (7,448) (7,448) (7,448)
(220) (1,550) (1,550)
(7)    149 142 142
(1)    143 0 0
23 (2,253)       (2,230) (2,230)
(353)       (353) (353)
262    262 262
(30)       (4) (34) (34)
241 1,769 585 (7,010) 149 (5,738) 117 (5,621)
60,866 166,320 (1,639) (61,785) (1,143) 193,304 1,112 194,416

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity (Unaudited)
Preferred stock Common stock
(in millions, except shares) Shares Amount Shares Amount
Balance December 31, 2019 7,492,169 $ 21,549 4,134,425,937 $ 9,136
Cumulative effect from change in accounting policies (1)
Balance January 1, 2020 7,492,169 $ 21,549 4,134,425,937 $ 9,136
Net income
Other comprehensive income (loss), net of tax
Noncontrolling interests
Common stock issued 63,900,366
Common stock repurchased (75,542,855)
Preferred stock redeemed (1,828,720) (2,215)
Preferred stock released by ESOP
Preferred stock converted to common shares (249,176) (249) 9,733,434
Preferred stock issued 80,500 2,013
Common stock dividends
Preferred stock dividends
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change (1,997,396) (451) (1,909,055) 0
Balance September 30, 2020 5,494,773 $ 21,098 4,132,516,882 $ 9,136
Balance December 31, 2018 9,377,216 $ 23,214 4,581,253,608 $ 9,136
Cumulative effect from change in accounting policies (2)
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 42,384,469
Common stock repurchased (361,315,717)
Preferred stock redeemed (1,550,000) (1,330)
Preferred stock released by ESOP
Preferred stock converted to common shares (335,047) (335) 6,819,444
Preferred stock issued 0 0
Common stock dividends
Preferred stock dividends
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change (1,885,047) (1,665) (312,111,804) 0
Balance September 30, 2019 7,492,169 $ 21,549 4,269,141,804 $ 9,136

~~(1)We adopted CECL effective January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies) in this Report.~~

~~(2)Effective January 1, 2019, we adopted ASU 2016-02 – Leases (Topic 842) and subsequent related Updates, ASU 2017-08 – Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20):~~ ~~Premium Amortization on Purchased Callable Debt Securities.~~

Nine months ended September 30,
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
61,049 166,697 (1,311) (68,831) (1,143) 187,146 838 187,984
991 0 991 991
61,049 167,688 (1,311) (68,831) (1,143) 188,137 838 188,975
309 309 83 392
561 561 0 561
0 (62) (62)
207 (1,200) 3,362 2,369 2,369
(3,412) (3,412) (3,412)
17 (272) (2,470) (2,470)
(19) 268 249 249
(243) 492 0 0
(45) 1,968 1,968
41 (4,643) (4,602) (4,602)
(969) (969) (969)
437 437 437
(1,409) 5 (1,404) (1,404)
(1,014) (6,775) 561 447 268 (6,964) 21 (6,943)
60,035 160,913 (750) (68,384) (875) 181,173 859 182,032
60,685 158,163 (6,336) (47,194) (1,502) 196,166 900 197,066
(492) 481 (11) (11)
60,685 157,671 (5,855) (47,194) (1,502) 196,155 900 197,055
   16,676       16,676 441 17,117
      4,216    4,216 0 4,216
         0 (229) (229)
(8) (382)    2,206 1,816 1,816
   (17,166) (17,166) (17,166)
0 (220) (1,550) (1,550)
(24)    359 335 335
(16)    351 0 0
0       0 0
62 (6,361)       (6,299) (6,299)
(1,064)       (1,064) (1,064)
1,053    1,053 1,053
(886)       18 (868) (868)
181 8,649 4,216 (14,591) 359 (2,851) 212 (2,639)
60,866 166,320 (1,639) (61,785) (1,143) 193,304 1,112 194,416

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
Nine months ended September 30,
(in millions) 2020 2019
Cash flows from operating activities:
Net income before noncontrolling interests $ 392 17,117
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 14,308 2,043
Changes in fair value of MSRs, MLHFS and LHFS carried at fair value 4,434 3,704
Depreciation, amortization and accretion 6,444 4,940
Other net (gains) losses 6,753 (2,888)
Stock-based compensation 1,337 1,885
Originations and purchases of mortgage loans held for sale (134,318) (109,609)
Proceeds from sales of and paydowns on mortgage loans held for sale 87,350 70,676
Net change in:
Debt and equity securities, held for trading 58,969 17,104
Loans held for sale (669) 241
Deferred income taxes (1,647) (3,142)
Derivative assets and liabilities (5,823) (2,397)
Other assets (9,482) (6,320)
Other accrued expenses and liabilities (3,232) 953
Net cash provided (used) by operating activities 24,816 (5,693)
Cash flows from investing activities:
Net change in:
Federal funds sold and securities purchased under resale agreements 32,836 (22,844)
Available-for-sale debt securities:
Proceeds from sales 40,709 7,709
Prepayments and maturities 59,393 30,362
Purchases (54,010) (44,460)
Held-to-maturity debt securities:
Paydowns and maturities 22,767 9,154
Purchases (41,758) (2,929)
Equity securities, not held for trading:
Proceeds from sales and capital returns 10,344 4,104
Purchases (6,518) (4,595)
Loans:
Loans originated by banking subsidiaries, net of principal collected 33,296 (15,133)
Proceeds from sales (including participations) of loans held for investment 6,828 10,416
Purchases (including participations) of loans (1,036) (1,574)
Principal collected on nonbank entities’ loans 7,150 2,990
Loans originated by nonbank entities (8,703) (3,816)
Proceeds from sales of foreclosed assets and short sales 967 1,992
Other, net (223) 1,519
Net cash provided (used) by investing activities 102,042 (27,105)
Cash flows from financing activities:
Net change in:
Deposits 60,589 22,005
Short-term borrowings (49,288) 18,121
Long-term debt:
Proceeds from issuance 37,901 40,220
Repayment (61,151) (45,940)
Preferred stock:
Proceeds from issuance 1,968 0
Redeemed (2,470) (1,550)
Cash dividends paid (910) (1,005)
Common stock:
Proceeds from issuance 513 356
Stock tendered for payment of withholding taxes (326) (283)
Repurchased (3,412) (17,166)
Cash dividends paid (4,454) (6,118)
Net change in noncontrolling interests (67) (221)
Other, net (231) (177)
Net cash provided (used) by financing activities (21,338) 8,242
Net change in cash, cash equivalents, and restricted cash 105,520 (24,556)
Cash, cash equivalents, and restricted cash at beginning of period 141,250 173,287
Cash, cash equivalents, and restricted cash at end of period $ 246,770 148,731
Supplemental cash flow disclosures:
Cash paid for interest $ 7,099 14,505
Cash paid for income taxes 2,360 5,248

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

~~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.

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

•~~valuations of residential mortgage servicing rights (MSRs) (Note 10 (Securitizations and Variable Interest Entities) and Note 11 (Mortgage Banking Activities));~~

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

•~~liabilities for contingent litigation losses (Note 14 (Legal Actions)); and~~

•~~income taxes.~~

~~Actual results could differ from those estimates.~~

~~Accounting Standards Adopted in 2020~~

~~In 2020, we adopted the following new accounting guidance:~~

•~~Accounting Standards Update (ASU or Update) 2020-04 – Reference Rate Reform (Topic 848):~~ ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~

•~~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 is included in the discussion for ASU 2016-13 below.~~

•~~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 Financial Accounting Standards Board (FASB) Emerging Issues Task Force)

•~~ASU 2018-13 – Fair Value Measurement (Topic 820):Disclosure Framework~~ – ~~Changes to the Disclosure Requirements for Fair Value Measurement.~~

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

•~~ASU 2016-13 – Financial Instruments – Credit Losses (Topic 326):~~ ~~Measurement of Credit Losses on Financial Instruments~~ ~~and related subsequent Updates~~

~~ASU 2020-04~~ provides optional, temporary relief to ease the burden of accounting for reference rate reform activities that affect contractual modifications of floating rate financial instruments indexed to interbank offering rates (IBORs) and hedge accounting relationships. Modifications of qualifying contracts are accounted for as the continuation of an existing contract rather than as a new contract. Modifications of qualifying hedging relationships will not require discontinuation of the existing hedge accounting relationships. The application of the relief for qualifying existing hedging relationships may be made on a hedge-by-hedge basis and across multiple reporting periods.

We adopted ASU 2020-04 on April 1, 2020, and the guidance will be followed until the Update terminates on December 31, 2022. This guidance is applied on a prospective basis. The Update did not have a material impact on our consolidated financial statements.

~~ASU 2018-17~~ updates the guidance used by decision-makers of VIEs. Indirect interests held through related parties in common control arrangements will be considered on a proportional basis for determining whether fees paid to decision-makers and service providers are variable interests. This is consistent with how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE. The Update did not have a material impact on our consolidated financial statements.

~~ASU 2018-15~~ clarifies the accounting for implementation costs related to a cloud computing arrangement that is a service contract and enhances disclosures around implementation costs for internal-use software and cloud computing arrangements. The guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use

~~Note 1: Summary of Significant Accounting Policies (continued~~)

software license). It also requires the expense related to the capitalized implementation costs be presented in the same line item in the statement of income as the fees associated with the hosting element of the arrangement and capitalized implementation costs be presented in the balance sheet in the same line item that a prepayment for the fees of the associated hosting arrangement are presented. The Update did not have a material impact on our consolidated financial statements.

~~ASU 2018-13~~ clarifies, eliminates and adds certain fair value measurement disclosure requirements for assets and liabilities, which affects our disclosures in Note 16 (Fair Values of Assets and Liabilities). Although the ASU became effective on January 1, 2020, it permitted early adoption of individual requirements without causing others to be early adopted and, as such, we partially adopted the Update during third quarter 2018 and the remainder of the requirements in first quarter 2020. The Update did not have a material impact on our consolidated financial statements.

~~ASU 2017-04~~ simplifies the goodwill impairment test by eliminating the requirement to assign the fair value of a reporting unit to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. The Update requires that a goodwill impairment loss is recognized if the fair value of the reporting unit is less than the carrying amount, including goodwill. The goodwill impairment loss is limited to the amount of goodwill allocated to the reporting unit. The guidance did not change the qualitative assessment of goodwill. This guidance is applied on a prospective basis, and accordingly, the Update did not have a material impact on our consolidated financial statements.

~~ASU 2016-13~~ changes the accounting for the measurement of credit losses on loans and debt securities. For loans and held-to-maturity (HTM) debt securities, the Update requires a current expected credit loss (CECL) measurement to estimate the allowance for credit losses (ACL) for the remaining contractual term, adjusted for prepayments, of the financial asset (including off-balance sheet credit exposures) using historical experience, current conditions, and reasonable and supportable forecasts. Also, the Update eliminates the existing guidance for purchased credit-impaired (PCI) loans, but requires an allowance for purchased financial assets with more than an insignificant deterioration of credit since origination. In addition, the Update modifies the other-than-temporary impairment (OTTI) model for available-for-sale (AFS) 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. Upon adoption, we recognized an overall decrease in our ACL of approximately $1.3 billion (pre-tax) as a cumulative effect adjustment from a change in accounting policies, which increased our retained earnings and regulatory capital amounts and ratios. Loans previously classified as PCI were automatically transitioned to purchased credit-deteriorated (PCD) classification. We recognized an ACL for these new PCD loans and made a corresponding adjustment to the loan balance, with no impact to net income or transition adjustment to retained earnings. For more information on the impact of CECL by type of financial asset, see Table 1.1 below.

~~Table 1.1:ASU 2016-13 Adoption Impact to Allowance for Credit Losses (1)~~

Dec 31, 2019 ASU 2016-13 Adoption Impact Jan 1, 2020
(in billions) Balance Outstanding ACL Balance Coverage ACL Balance Coverage
Total commercial (2) $ 515.7 6.2 1.2 % $ (2.9) 3.4 0.7 %
Real estate 1-4 family mortgage (3) 323.4 0.9 0.3 0 0.9 0.3
Credit card (4) 41.0 2.3 5.5 0.7 2.9 7.1
Automobile (4) 47.9 0.5 1.0 0.3 0.7 1.5
Other revolving credit and installment (4) 34.3 0.6 1.6 0.6 1.2 3.5
Total consumer 446.5 4.2 0.9 1.5 5.7 1.3
Total loans 962.3 10.5 1.1 (1.3) 9.1 0.9
Available-for-sale and held-to-maturity debt securities and other assets (5) 420.0 0.1 NM 0 0.1 NM
Total $ 1,382.3 10.6 NM $ (1.3) 9.3 NM

~~NM – Not meaningful~~

~~(1)Amounts presented in this table may not equal the sum of its components due to rounding.~~

~~(2)Decrease reflecting shorter contractual maturities given limitation to contractual terms.~~

~~(3)~~Impact reflects an increase due to longer contractual terms, offset by expectation of recoveries in collateral value on mortgage loans previously written down significantly below current recovery value.

~~(4)Increase due to longer contractual terms or indeterminate maturities.~~

~~(5)Excludes other financial assets in the scope of CECL that do not have an allowance for credit losses based on the nature of the asset.~~

The adoption of ASU 2016-13 did not result in a change to accounting policies, except as noted herein. Our accounting policy for the ACL was updated and is now inclusive of loans, debt securities and other financing receivables. Other than the ACL and the elimination of PCI loans, there were no changes to accounting policies for loans as described in the 2019 Form 10-K. For debt securities, other than the policies with respect to the ACL, all of the current accounting policies, including those that changed as a result of CECL adoption, are included below under Debt Securities.

~~Debt Securities~~

~~Our investments in debt securities that are not held for trading purposes are classified as either debt securities available-for-sale (AFS) or held-to-maturity (HTM).~~

Investments in debt securities for which the Company does not have the positive intent and ability to hold to maturity are classified as AFS. AFS debt securities are measured at fair value, with unrealized gains and losses reported in cumulative other comprehensive income (OCI), net of the allowance for credit losses and applicable income taxes. Investments in debt securities

~~for which the Company has the positive intent and ability to hold to maturity are classified as HTM. HTM debt securities are measured at amortized cost, net of allowance for credit losses.~~

~~INTEREST INCOME AND GAIN/LOSS RECOGNITION~~Unamortized premiums and discounts are recognized in interest income over the contractual life of the security using the effective interest method, except for purchased callable debt securities carried at a premium. For purchased callable debt securities carried at a premium, the premium is amortized into interest income to the earliest call date using the effective interest method. As principal repayments are received on securities (e.g., mortgage-backed securities (MBS)), a proportionate amount of the related premium or discount is recognized in income so that the effective interest rate on the remaining portion of the security continues unchanged.

~~We recognize realized gains and losses on the sale of debt securities in net gains (losses) on debt securities within noninterest income using the specific identification method.~~

~~IMPAIRMENT AND CREDIT LOSSES~~ Unrealized losses of AFS debt securities are driven by a number of factors, including changes in interest rates and credit spreads which impact most types of debt securities with additional considerations for certain types of debt securities:

•~~Debt securities of U.S. Treasury and federal agencies, including federal agency MBS, are not impacted by credit movements given the explicit or implicit guarantees provided by the U.S. government.~~

•Debt securities of U.S. states and political subdivisions are most impacted by changes in the relationship between municipal and term funding credit curves rather than by changes in the credit quality of the underlying securities.

•~~Structured securities, such as MBS and collateralized loan obligations (CLO), are also impacted by changes in projected collateral losses of assets underlying the security.~~

For debt securities where fair value is less than amortized cost basis, we recognize impairment in earnings if we have the intent to sell the security or if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. Impairment is recognized equal to the entire difference between the amortized cost basis and the fair value of the security and is classified as net gains (losses) from debt securities within noninterest income. Following the recognition of impairment, the security’s new amortized cost basis is the previous basis less impairment.

For debt securities where fair value is less than amortized cost basis where we did not recognize impairment in earnings, we set up an allowance for credit losses as of the balance sheet date. See “Allowance for Credit Losses” section in this Note.

~~TRANSFERS BETWEEN CATEGORIES OF DEBT SECURITIES~~ AFS debt securities transferred to the HTM classification are recorded at fair value and the unrealized gains or losses resulting from the transfer of these securities continue to be reported in cumulative OCI. The cumulative OCI balance is amortized into earnings over the same period as the unamortized premiums and discounts using the effective interest method. Any allowance for credit losses previously recorded under the AFS model on securities transferred to HTM is reversed and an allowance for credit losses is subsequently recorded under the HTM debt security model.

~~NONACCRUAL AND PAST DUE, AND CHARGE-OFF POLICIES~~ We generally place debt securities on nonaccrual status using factors similar to those described for loans. When we place a debt security on nonaccrual status, we reverse the accrued unpaid interest receivable against interest income and suspend the amortization of premiums and accretion of discounts. If the ultimate collectability of the principal is in doubt on a nonaccrual debt security, any cash collected is first applied to reduce the security’s amortized cost basis to zero, followed by recovery of amounts previously charged off, and subsequently to interest income. Generally, we return a debt security to accrual status when all delinquent interest and principal become current under the contractual terms of the security and collectability of remaining principal and interest is no longer doubtful.

~~Our debt securities are considered past due when contractually required principal or interest payments have not been made on the due dates.~~

Our charge-off policy for debt securities are similar to those described for loans. Subsequent to charge-off, the debt security will be designated as nonaccrual and follow the process described above for any cash received.

~~Allowance for Credit Losses~~Contractual Maturities

~~The ACL is management’s estimate~~Table 3.6 and Table 3.7 show the remaining contractual maturities, amortized cost, net of the ~~current expected credit losses in the loan portfolio and unfunded credit commitments, at the balance sheet date, excluding loans and unfunded credit commitments carried at~~ACL, fair value ~~or held for sale. Additionally, we maintain an ACL on~~and weighted average effective yields of AFS and HTM debt securities, other financing receivables measured at amortized cost, and other off-balance sheet credit exposures. While we attribute portions of the allowance to specific financial asset classes (loan and debt security portfolios), loan portfolio segments (commercial and consumer) or major security type, the entire ACL is available to absorb credit losses of the Company.respectively. The remaining contractual principal

Our ACL process involves procedures to appropriately consider the unique risk characteristics of our financial asset classes, portfolio segments, and major security types. For each loan portfolio segment and each major HTM debt security type, losses are estimated collectively

maturities for ~~groups of loans or~~mortgage-backed securities ~~with similar risk characteristics. For loans and securities that~~(MBS) do not ~~share similar risk characteristics with other financial assets,~~consider prepayments. Remaining expected maturities will differ from contractual maturities because borrowers may have the ~~losses are estimated individually, which primarily includes our impaired large commercial loans and non-accruing HTM debt securities. For AFS debt securities, losses are estimated at~~right to prepay obligations before the ~~tax-lot level.~~underlying mortgages mature.

Our ACL amounts are influenced by a variety of factors, including changes in loan and debt security volumes, portfolio credit quality, and general economic conditions. General economic conditions are forecasted using economic variables which will create volatility as those variables change over time. See Table 1.2 for key economic variables used for our loan portfolios.

~~Note 1: Summary of Significant Accounting Policies (continued~~)

Table ~~1.2:~~3.6: ~~Key Economic Variables~~Contractual Maturities – Available-for-Sale Debt Securities


By remaining contractual maturity ($ in millions)	Total			Within one year	After one year through five years	After five years through ten years	After ten years
March 31, 2021
Available-for-sale debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	25,144		296	15,550	7,460	1,838
Fair value	25,217			296	15,573	7,402	1,946
Weighted average yield	0.59		%	0.15	0.33	0.95	1.44
Non-U.S. government securities
Amortized cost, net	$	14,458		14,433	25	0	0
Fair value	14,458			14,433	25	0	0
Weighted average yield	(0.11		%)	(0.12)	0.42	0	0
Securities of U.S. states and political subdivisions
Amortized cost, net	$	19,288		2,024	2,049	4,715	10,500
Fair value	19,657			2,028	2,094	4,712	10,823
Weighted average yield	2.02		%	1.35	1.74	1.22	2.56
Federal agency mortgage-backed securities
Amortized cost, net	$	115,503		8	292	3,037	112,166
Fair value	117,657			8	303	3,133	114,213
Weighted average yield	2.70		%	2.37	2.34	2.08	2.72
Non-agency mortgage-backed securities
Amortized cost, net	$	4,040		0	0	162	3,878
Fair value	4,058			0	0	162	3,896
Weighted average yield	2.04		%	0	0	1.94	2.05
Collateralized loan obligations
Amortized cost, net	$	9,858		0	201	7,359	2,298
Fair value	9,850			0	201	7,353	2,296
Weighted average yield	1.60		%	0	2.25	1.61	1.51
Other debt securities
Amortized cost, net	$	9,514		362	2,595	3,136	3,421
Fair value	9,953			359	2,771	3,171	3,652
Weighted average yield	3.22		%	3.04	4.47	3.23	2.29
Total available-for-sale debt securities
Amortized cost, net	$	197,805		17,123	20,712	25,869	134,101
Fair value	$	200,850		17,124	20,967	25,933	136,826
Weighted average yield	2.13		%	0.23	1.03	1.60	2.64

(1)Weighted average yields displayed by maturity bucket are weighted based on amortized cost without effect for any related hedging derivatives and are shown pre-tax.


	~~Loan Portfolio~~Wells Fargo & Company		~~Key economic variables~~
~~Total commercial~~		~~• Gross domestic product~~ ~~• Commercial real estate asset prices, where applicable~~ ~~• Unemployment rate~~ ~~• Corporate investment-grade bond spreads~~
~~Real estate 1-4 family mortgage~~		~~• Home price index~~ ~~• Unemployment rate~~
~~Other consumer (including credit card, automobile, and other revolving credit and installment)~~		~~• Unemployment rate~~71

~~Our approach for estimating expected life-time credit losses for loans and debt securities includes the following key components:~~

•An initial loss forecast period of one year for all portfolio segments and 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 term, adjusted for expected prepayments and certain expected extensions, renewals, or modifications, by portfolio segment and class of financing receivables based on the changes in key historical economic variables during representative historical expansionary and recessionary periods.

•A reversion period of up to two years to connect the losses estimated for our initial loss forecast period to the period of our historical loss forecast based on economic conditions at the measurement date. Our reversion methodology considers the type of portfolio, point in the credit cycle, expected length of recessions and recoveries, as well as other relevant factors.

•Utilization of discounted cash flow (DCF) methods to measure credit impairment for loans modified in a troubled debt restructuring, unless they are collateral dependent and measured at the fair value of the collateral. The DCF methods obtain estimated life-time credit losses using the initial and historical mean loss forecast periods described above.

•For AFS debt securities and certain beneficial interests classified as HTM, we utilize the DCF methods to measure the ACL, which incorporate expected credit losses using the conceptual components described above. The ACL on AFS debt securities is subject to a limitation based on the fair value of the debt securities (fair value floor).

The ACL for financial assets held at amortized cost and AFS debt securities will be reversible with immediate recognition of recovery in earnings if credit improves. The ACL for financial assets held at amortized cost is a valuation account that is deducted from, or added to, the amortized cost basis of the financial assets to present the net amount expected to be collected, which can include a negative allowance limited to the cumulative amounts previously charged off. For financial assets with an ACL estimated using DCF methods, changes in the ACL due to the passage of time are recorded in interest income. The ACL for AFS debt securities reflects the amount of unrealized loss related to expected credit losses, limited by the amount that fair value is less than the amortized cost basis, and cannot have an associated negative allowance.

For certain financial assets, such as residential real estate loans guaranteed by the Government National Mortgage Association (GNMA), an agency of the federal government, U. S. Treasury and Agency mortgage backed debt securities, as well as certain sovereign debt securities, the Company has not recognized an ACL as our expectation of nonpayment of the

~~amortized cost basis, based on historical losses, adjusted for current conditions and reasonable and supportable forecasts, is zero.~~

A financial asset is collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. When a collateral-dependent financial asset is probable of foreclosure, we will measure the ACL based on the fair value of the collateral. If we intend to sell the underlying collateral, we will measure the ACL based on the collateral’s net realizable value (fair value of collateral, less estimated costs to sell). In most situations, based on our charge-off policies, we will immediately write-down the financial asset to the fair value of the collateral or net realizable value. For consumer loans, collateral-dependent financial assets may have collateral in the form of residential real estate, automobiles or other personal assets. For commercial loans, collateral-dependent financial assets may have collateral in the form of commercial real estate or other business assets.

We do not generally record an ACL for accrued interest receivables because uncollectible accrued interest is reversed through interest income in a timely manner in line with our non-accrual and past due policies for loans and debt securities. For consumer credit card and certain consumer lines of credit, we include an ACL for accrued interest and fees since these loans are not placed on nonaccrual status and written off until the loan is 180 days past due. Accrued interest receivables are included in other assets, except for certain revolving loans, such as credit card loans.

~~COMMERCIAL LOAN PORTFOLIO SEGMENT ACL METHODOLOGY~~Generally, commercial loans, which include net investments in lease financing, are assessed for estimated losses by grading each loan using various risk factors as identified through periodic reviews. 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 default and losses after default within each credit risk rating. These estimates are adjusted as appropriate based on additional analysis of long-term average loss experience compared with previously forecasted losses, external loss data or other risks identified from current economic conditions and credit quality trends. The estimated probability of default and severity at the time of default are applied to loan equivalent exposures to estimate losses for unfunded credit commitments.

~~CONSUMER LOAN PORTFOLIO SEGMENT ACL METHODOLOGY~~For consumer loans, we determine the allowance at the individual loan level. When developing historical loss experience, we pool loans, generally by product types with similar risk characteristics, such as residential real estate mortgages and credit cards. As appropriate and to achieve greater accuracy, we may further stratify selected portfolios by sub-product, origination channel,

vintage, loss type, geographic location and other predictive characteristics. We use pooled loan data such as historic delinquency and default and loss severity in the development of our consumer loan models, in addition to home price trends, unemployment trends, and other economic variables that may influence the frequency and severity of losses in the consumer portfolio.

~~AFS PORTFOLIO ACL METHODOLOGY~~ We develop our ACL estimate for AFS debt securities by utilizing a security-level multi-scenario, probability-weighted discounted cash flow model based on a combination of past events, current conditions, as well as reasonable and supportable forecasts. The projected cash flows are discounted at the security’s effective interest rate, except for certain variable rate securities which are discounted using projections of future changes in interest rates, prepayable securities which are adjusted for estimated prepayments, and securities part of a fair value hedge which use hedge-adjusted assumptions. The ACL on an AFS debt security is limited to the difference between its amortized cost basis and fair value (fair value floor) and reversals of the allowance are permitted up to the amount previously recorded.

~~HTM PORTFOLIO ACL METHODOLOGY~~ For most HTM debt securities, the ACL is measured using an expected loss model, similar to the methodology used for loans. Unlike AFS debt securities, the ACL on an HTM debt security is not limited to the fair value floor.

~~Certain beneficial interests categorized as HTM debt securities utilize a similar discounted cash flow model as described for AFS debt securities, without the limitation of the fair value floor.~~

~~OTHER QUALITATIVE FACTORS~~The ACL includes amounts for qualitative factors which may not be adequately reflected in our loss models. These amounts represent management’s judgment of risks in the processes and assumptions used in establishing the ACL. Generally, these amounts are established at a granular level below our loan portfolio segments. We also consider economic environmental factors, modeling assumptions and performance, process risk, and other subjective factors, including industry trends and emerging risk assessments.

~~OFF-BALANCE SHEET CREDIT EXPOSURES~~ Our off-balance sheet credit exposures include unfunded loan commitments (generally in the form of revolving lines of credit), financial guarantees not accounted for as insurance contracts or derivatives, including standby letters of credit, and other similar instruments. For off-balance sheet credit exposures, we recognize an ACL associated with the unfunded amounts. We do not recognize an ACL for commitments that are unconditionally cancelable at our discretion. Additionally, we recognize an ACL for financial guarantees that create off-balance sheet credit exposure, such as loans sold with credit recourse and factoring guarantees. ACL for off-balance sheet credit exposures are reported as a liability in accrued expenses and other liabilities on our consolidated balance sheet.

~~OTHER FINANCIAL ASSETS~~ Other financial assets are evaluated for expected credit losses. These other financial assets include accounts receivable for fees, receivables from government-sponsored entities, such as Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC), and GNMA, and other accounts receivable from high-credit quality counterparties, such as central clearing

counterparties. Many of these financial assets are generally not expected to have an ACL as there is a zero loss expectation (for example, government guarantee) or no historical credit losses. Some financial assets, such as loans to employees, maintain an ACL that is presented on a net basis with the related amortized cost amounts in other assets on our consolidated balance sheet. Given the nature of these financial assets, provision for credit losses is not recognized separately from the regular income or expense associated with these financial assets.

Securities purchased under resale agreements are generally over-collateralized by securities or cash and are generally short-term in nature. We have elected the practical expedient for these financial assets given collateral maintenance provisions. These provisions require that we monitor the collateral value and customers are required to replenish collateral, if needed. Accordingly, we generally do not maintain an ACL for these financial assets.

~~PURCHASED CREDIT DETERIORATED FINANCIAL ASSETS~~Financial assets acquired that are of poor credit quality and with more than an insignificant evidence of credit deterioration since their origination or issuance are PCD assets. PCD assets are recorded at their purchase price plus an ACL estimated at the time of acquisition. Under this approach, there is no provision for credit losses recognized at acquisition; rather, there is a gross-up of the purchase price of the financial asset for the estimate of expected credit losses and a corresponding ACL recorded. Changes in estimates of expected credit losses after acquisition are recognized as provision for credit losses (or reversal of provision for credit losses) in subsequent periods. In general, interest income recognition for PCD financial assets is consistent with interest income recognition for the similar non-PCD financial asset.

~~Troubled Debt Restructuring and Other Relief Related to COVID-19~~

~~On March 25, 2020, the U.S. Senate approved the~~ ~~Coronavirus, Aid, Relief, and Economic Security Act~~ (the CARES Act) providing optional, temporary relief from accounting for certain loan modifications as troubled debt restructurings (TDRs). Under the CARES Act, TDR relief is available to banks for loan modifications related to the adverse effects of Coronavirus Disease 2019 (COVID-19) (COVID-related modifications) granted to borrowers that are current as of December 31, 2019. TDR relief applies to COVID-related modifications made from March 1, 2020, until the earlier of December 31, 2020, or 60 days following the termination of the national emergency declared by the President of the United States. In first quarter 2020, we elected to apply the TDR relief provided by the CARES Act.

~~On April 7, 2020, federal banking regulators issued the~~ ~~Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised)~~ (the Interagency Statement). The guidance in the Interagency Statement provides additional TDR relief as it clarifies that it is not necessary to consider the impact of the COVID-19 pandemic on the financial condition of a borrower in connection with a short-term (e.g., six months or less) COVID-related modification provided the borrower is current at the date the modification program is implemented.

For COVID-related modifications in the form of payment deferrals, delinquency status will not advance and loans that were accruing at the time the relief is provided will generally not be placed on nonaccrual status during the deferral period. COVID-related modifications that do not meet the provisions of the

Note ~~1: Summary of Significant Accounting Policies (~~3:~~continued~~ Available-for-Sale and Held-to-Maturity Debt Securities )(continued)

~~CARES Act or the Interagency Statement will be assessed for TDR classification.~~

~~On April 10, 2020, the FASB Staff issued~~ ~~Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic, a question and answer guide (the guide). The guide provided an election for leases accounted for under Accounting Standards Codification (ASC) 842,~~ ~~Leases, that were modified due to COVID-19 and met certain criteria in order to not require a new~~

~~lease classification test upon modification. In second quarter 2020, we elected to apply the lease modification relief provided by the guide.~~

~~Supplemental Cash Flow Information~~

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

Table ~~1.3:~~3.7: ~~Supplemental Cash Flow Information~~Contractual Maturities – Held-to-Maturity Debt Securities

Nine months ended September 30,
(in millions) 2020 2019
Trading debt securities retained from securitization of mortgage loans held for sale (MLHFS) $ 39,626 31,517
Available-for-sale debt securities retained from securitization of MLHFS 2,710 0
Held-to-maturity debt securities retained from securitization of MLHFS 9,016 115
Transfers from (to) loans to (from) MLHFS 4,033 5,409
Transfers from available-for-sale debt securities to held-to-maturity debt securities 1,236 13,833
Operating lease ROU assets acquired with operating lease liabilities (1) 482 5,644


By remaining contractual maturity ($ in millions)	Total			Within one year	After one year through five years	After five years through ten years	After ten years
March 31, 2021
Held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	40,251		24,063	12,406	0	3,782
Fair value	40,594			24,236	13,197	0	3,161
Weighted average yield	2.12		%	2.09	2.37	0	1.57
Securities of U.S. states and political subdivisions
Amortized cost, net	$	27,569		628	2,231	2,026	22,684
Fair value	28,060			633	2,305	2,109	23,013
Weighted average yield	2.18		%	1.82	1.90	2.69	2.17
Federal agency mortgage-backed securities
Amortized cost, net	$	144,484		0	0	0	144,484
Fair value	145,178			0	0	0	145,178
Weighted average yield	2.28		%	0	0	0	2.28
Non-agency mortgage-backed securities
Amortized cost, net	$	907		0	14	0	893
Fair value	928			0	14	0	914
Weighted average yield	3.12		%	0	1.57	0	3.15
Collateralized loan obligations
Amortized cost, net	$	18,981		0	32	8,652	10,297
Fair value	19,199			0	32	8,748	10,419
Weighted average yield	1.75		%	0	2.32	1.77	1.73
Total held-to-maturity debt securities
Amortized cost, net	$	232,192		24,691	14,683	10,678	182,140
Fair value	233,959			24,869	15,548	10,857	182,685
Weighted average yield	2.20		%	2.08	2.29	1.94	2.23

(1)~~Includes amounts attributable to new leases~~Weighted average yields displayed by maturity bucket are weighted based on amortized cost and ~~changes from modified leases. The nine months ended September 30, 2019, balance also includes $4.9 billion from adoption of ASU 2016-02 – Leases (Topic 842).~~

are shown pre-tax.

~~Subsequent Events~~

~~We have evaluated the effects of events that have occurred subsequent to September 30, 2020, and, except as disclosed in Note 17 (Preferred Stock) and Note 19 (Employee Benefits and~~

Other Expenses), there have been no material events that would require recognition in our third quarter 2020 consolidated financial statements or disclosure in the Notes to the consolidated financial statements.


~~Note 2:~~ ~~Restructuring Charges~~

The Company is pursuing various initiatives to reduce expenses and create a more efficient and streamlined organization. Actions from these initiatives may include reorganizing and simplifying business processes and structures, reducing headcount, optimizing third-party spending, and rationalizing our branch and administrative locations, which may include consolidations and closures. The evaluation of potential actions will continue in future periods.

~~Restructuring charges are recorded as a component of noninterest expense on our consolidated statement of income.~~

~~The following costs associated with these initiatives are included in restructuring charges~~

•~~Personnel costs – Primarily severance costs associated with headcount reductions with payments made over time in accordance with our severance plan.~~

•~~Facility closure costs – Write-downs and acceleration of depreciation and amortization of owned or leased assets for branch and administrative locations, as well as related decommissioning costs.~~

~~Table 2.1 provides details on our restructuring charges.~~

~~Table 2.1:Restructuring Charges~~

(in millions) Personnel costs Facility closure costs Total
Restructuring charges $ 694 24 718
Payments and utilization 0 (24) (24)
Accrual balance at September 30, 2020 $ 694 0 694


72			~~Note 3:~~Wells Fargo & Company~~Cash, Loan and Dividend Restrictions~~

Cash and cash equivalents may be restricted as to usage or withdrawal. Federal Reserve Board (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) Sep 30,
2020 Dec 31,
2019
Required reserve balance for the FRB (1) $ 0 11,374
Reserve balance for non-U.S. central banks 220 460
Segregated for benefit of brokerage customers under federal and other brokerage regulations 875 733
Related to consolidated variable interest entities (VIEs) that can only be used to settle liabilities
of VIEs
16 300

~~(1)Effective March 26, 2020, the FRB reduced reserve requirement ratios to 0%. The amount for December 31, 2019, represents an average for the year ended December 31, 2019.~~

Federal laws and regulations limit the dividends that a national bank may pay. Our national bank subsidiaries could have declared additional dividends of $2.7 billion at September 30, 2020, without obtaining prior regulatory approval. We have elected to retain higher capital at our national bank subsidiaries in order to meet internal capital policy minimums and regulatory requirements. 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, as amended and restated on June 26, 2019, among Wells Fargo & Company, the parent holding company (the “Parent”), WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), Wells Fargo Bank, N.A., Wells Fargo Securities, LLC, Wells Fargo Clearing Services, LLC, and certain other direct and indirect subsidiaries of the Parent designated as material entities for resolution planning purposes or identified as related support entities in our resolution plan, the IHC may be restricted from making dividend payments to the Parent if certain liquidity and/or capital metrics fall below defined triggers or if the Parent’s board of directors authorizes it to file a case under the U.S. Bankruptcy Code. Based on retained earnings at September 30, 2020, our nonbank subsidiaries could have declared additional dividends of $27.8 billion at September 30, 2020, without obtaining prior regulatory approval. For additional information see Note 3 (~~Cash, Loan and Dividend Restrictions) in our 2019 Form 10-K.~~

The FRB’s Capital Plan Rule (codified at 12 CFR 225.8 of Regulation Y) establishes capital planning and other requirements that govern 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 Parent’s ability to make certain capital distributions is subject to review by the FRB as part of the Parent’s capital plan in connection with the FRB’s annual Comprehensive Capital Analysis and Review (CCAR). The Parent’s ability to take certain capital actions is also subject to the Parent meeting or exceeding certain regulatory capital minimums.

On September 30, 2020, the Board of Governors of the Federal Reserve System (FRB) announced that it was extending through fourth quarter 2020 measures it announced on June 25, 2020, prohibiting large bank holding companies (BHCs) subject to the FRB’s capital plan rule, including Wells Fargo, from making any capital distribution (excluding any capital distribution arising from the issuance of a capital instrument eligible for inclusion in the numerator of a regulatory capital ratio), unless otherwise approved by the FRB. The FRB has generally authorized BHCs to (i) make share repurchases relating to issuances of common stock related to employee stock ownership plans; (ii) provided that the BHC does not increase the amount of its common stock dividends, pay common stock dividends that do not exceed an amount equal to the average of the BHC’s net income for the four preceding calendar quarters, unless otherwise specified by the FRB; and (iii) make scheduled payments on additional tier 1 and tier 2 capital instruments. These provisions may be extended by the FRB quarter-by-quarter.


Note 4: ~~Trading Activities~~Loans and Related Allowance for Credit Losses

Table 4.1 presents ~~a summary~~total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include unearned income, net deferred loan fees or costs, and unamortized discounts and premiums. These amounts were less

than 1% of our ~~trading assets~~total loans outstanding at March 31, 2021, and ~~liabilities measured at fair value through earnings.~~

December 31, 2020.

~~Table 4.1: Trading Assets and Liabilities~~

(in millions) Sep 30,
2020 Dec 31,
2019
Trading assets:
Debt securities $ 73,253 79,733
Equity securities 14,058 27,440
Loans held for sale 1,688 972
Gross trading derivative assets 57,990 34,825
Netting (1) (35,662) (21,463)
Total trading derivative assets 22,328 13,362
Total trading assets 111,327 121,507
Trading liabilities:
Short sale 18,779 17,430
Gross trading derivative liabilities 51,241 33,861
Netting (1) (39,278) (26,074)
Total trading derivative liabilities 11,963 7,787
Total trading liabilities $ 30,742 25,217

~~(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.~~

~~Net interest income also includes dividend income on trading securities and dividend expense on trading securities we have sold, but not yet purchased.~~

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

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2020 2019 2020 2019
Interest income:
Debt securities $ 546 790 $ 1,971 2,323
Equity securities 68 157 273 415
Loans held for sale 6 20 24 63
Total interest income 620 967 2,268 2,801
Less: Interest expense 93 129 350 392
Net interest income 527 838 1,918 2,409
Net gains (losses) from trading activities (1):
Debt securities 214 451 2,898 1,540
Equity securities 1,381 (242) (691) 3,061
Loans held for sale 14 5 26 15
Derivatives (2) (1,248) 62 (1,001) (3,754)
Total net gains from trading activities 361 276 1,232 862
Total trading-related net interest and noninterest income $ 888 1,114 $ 3,150 3,271

~~(1)Represents realized gains (losses) from our trading activities and unrealized gains (losses) due to changes in fair value of our trading positions.~~

~~(2)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.~~


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

Table 5.1 provides the amortized cost, net of the allowance for credit losses, 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, net of allowance for credit losses. The net unrealized gains (losses) for available-for-sale debt securities are reported as a component of cumulative OCI, net of the allowance for credit losses and applicable income taxes. Information on debt securities held for trading is included in Note 4 (Trading Activities).

Outstanding balances exclude accrued interest receivable on available-for-sale and held-to-maturity debt securities which are included in other assets. During the first nine months of 2020, we reversed accrued interest receivable on our available-for-sale and held-to-maturity debt securities by reversing interest income of $6 million. loans, except for certain revolving loans, such as credit card loans.

See Note 97 (Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. During first quarter 2021, we reversed accrued interest receivable of $16 million for our commercial portfolio segment and $51 million for our consumer portfolio segment, compared with $9 million and $63 million, respectively, for the same period a year ago.

Table ~~5.1:~~4.1: ~~Available-for-Sale and Held-to-Maturity Debt Securities~~Loans Outstanding

(in millions) Amortized cost, net (1) Gross
unrealized gains Gross
unrealized losses Fair value
September 30, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies $ 5,826 149 0 5,975
Securities of U.S. states and political subdivisions (2) 31,563 239 (291) 31,511
Mortgage-backed securities:
Federal agencies 130,717 4,582 (72) 135,227
Residential 539 3 (1) 541
Commercial 3,393 17 (67) 3,343
Total mortgage-backed securities 134,649 4,602 (140) 139,111
Corporate debt securities 5,687 131 (46) 5,772
Collateralized loan obligations 25,389 5 (380) 25,014
Other 13,197 80 (87) 13,190
Total available-for-sale debt securities 216,311 5,206 (944) 220,573
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies 48,587 1,765 (65) 50,287
Securities of U.S. states and political subdivisions 14,232 682 (4) 14,910
Federal agency and other mortgage-backed securities (3) 119,766 4,518 (57) 124,227
Other debt securities 10 0 0 10
Total held-to-maturity debt securities 182,595 6,965 (126) 189,434
Total (4) $ 398,906 12,171 (1,070) 410,007
December 31, 2019
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies $ 14,948 13 (1) 14,960
Securities of U.S. states and political subdivisions (2) 39,381 992 (36) 40,337
Mortgage-backed securities:
Federal agencies 160,318 2,299 (164) 162,453
Residential 814 14 (1) 827
Commercial 3,899 41 (6) 3,934
Total mortgage-backed securities 165,031 2,354 (171) 167,214
Corporate debt securities 6,343 252 (32) 6,563
Collateralized loan obligations 29,153 25 (123) 29,055
Other 5,204 150 (24) 5,330
Total available-for-sale debt securities 260,060 3,786 (387) 263,459
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies 45,541 617 (19) 46,139
Securities of U.S. states and political subdivisions 13,486 286 (13) 13,759
Federal agency and other mortgage-backed securities (3) 94,869 2,093 (37) 96,925
Other debt securities 37 0 0 37
Total held-to-maturity debt securities 153,933 2,996 (69) 156,860
Total (4) $ 413,993 6,782 (456) 420,319

~~(1)~~Represents amortized cost of the securities, net of the allowance for credit losses of $79 million related to available-for-sale debt securities and $26 million related to held-to-maturity debt securities at September 30, 2020. Prior to our adoption of CECL on January 1, 2020, the allowance for credit losses related to available-for-sale and held-to-maturity debt securities was not applicable and is therefore presented as $0 at December 31, 2019. For additional information, see Note 1 (Summary of Significant Accounting Policies).

~~(2)~~Includes investments in tax-exempt preferred debt securities issued by investment funds or trusts that predominantly invest in tax-exempt municipal securities. The amortized cost net of allowance for credit losses and fair value of these types of securities was $5.6 billion at September 30, 2020, and $5.8 billion at December 31, 2019.

~~(3)Predominantly consists of federal agency mortgage-backed securities at both September 30, 2020 and December 31, 2019.~~

~~(4)~~We held available-for-sale and held-to-maturity debt securities from Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) that each exceeded 10% of stockholders’ equity, with an amortized cost of $97.1 billion and $85.0 billion and a fair value of $100.9 billion and $88.1 billion at September 30, 2020 and an amortized cost of $98.5 billion and $84.1 billion and a fair value of $100.3 billion and $85.5 billion at December 31, 2019, respectively.

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

~~Table 5.2 details the breakout of purchases of and transfers to held-to-maturity debt securities by major category of security.~~

~~Table 5.2:Held-to-Maturity Debt Securities Purchases and Transfers~~

Quarter ended September 30, Nine months ended September 30,
(in millions) 2020 2019 2020 2019
Purchases of held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies $ 0 0 $ 3,016 0
Securities of U.S. states and political subdivisions 0 491 881 734
Federal agency and other mortgage-backed securities 23,683 3,108 46,578 3,161
Total purchases of held-to-maturity debt securities 23,683 3,599 50,475 3,895
Transfers from available-for-sale debt securities to held-to-maturity debt securities:
Securities of U.S. states and political subdivisions 1,236 4,354 1,236 5,912
Federal agency and other mortgage-backed securities 0 3,408 0 7,921
Total transfers from available-for-sale debt securities to held-to-maturity debt securities $ 1,236 7,762 $ 1,236 13,833


(in millions)	Mar 31, 2021		Dec 31, 2020



Commercial:
Commercial and industrial	$	319,055	318,805
Real estate mortgage	121,198		121,720
Real estate construction	21,533		21,805
Lease financing	15,734		16,087
Total commercial	477,520		478,417
Consumer:
Residential mortgage – first lien	254,363		276,674
Residential mortgage – junior lien	21,308		23,286
Credit card	34,246		36,664
Auto	49,210		48,187
Other consumer	24,925		24,409
Total consumer	384,052		409,220
Total loans	$	861,572	887,637

Our non-U.S. loans are reported by respective class of financing receivable in the table above. Substantially all of our non-U.S. loan portfolio is commercial loans. Table ~~5.3 shows the composition~~4.2 presents total non-U.S. commercial loans outstanding by class of ~~interest income, provision for credit losses, and gross realized gains and losses~~

~~from sales and impairment write-downs included in earnings related to available-for-sale and held-to-maturity debt securities (pre-tax)~~.financing receivable.

Table ~~5.3:~~4.2: ~~Income Statement Impacts for Available-for-Sale and Held-to-Maturity Debt Securities~~Non-U.S. Commercial Loans Outstanding

Quarter ended September 30, Nine months ended September 30,
(in millions) 2020 2019 2020 2019
Interest income:
Available-for-sale $ 1,009 1,957 $ 4,084 6,268
Held-to-maturity 891 919 2,809 2,797
Total interest income (1) 1,900 2,876 6,893 9,065
Provision for credit losses (2):
Available-for-sale 12 0 140 0
Held-to-maturity 6 0 19 0
Total provision for credit losses 18 0 159 0
Realized gains and losses (3):
Gross realized gains 264 21 768 223
Gross realized losses 0 (12) (40) (17)
Impairment write-downs included in earnings:
Credit-related (4) 0 0 0 (23)
Intent-to-sell 0 (6) (15) (35)
Total impairment write-downs included in earnings 0 (6) (15) (58)
Net realized gains $ 264 3 $ 713 148

~~(1)Total interest income from debt securities excludes interest income from trading debt securities, which is disclosed in Note 4 (Trading Activities).~~

~~(2)~~Prior to our adoption of CECL on January 1, 2020, the provision for credit losses from debt securities was not applicable and is therefore presented as $0 for the prior period. For additional information, see Note 1 (Summary of Significant Accounting Policies).

~~(3)Realized gains and losses relate to available-for-sale debt securities. There were 0 realized gains or losses from held-to-maturity debt securities in all periods presented.~~

~~(4)For the third quarter and first nine months of 2020, credit-related impairment recognized in earnings is classified as provision for credit losses due to our adoption of CECLon January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies).~~

~~Credit Quality~~

We monitor credit quality of debt securities by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the allowance for credit losses. The credit quality indicators that we most closely monitor include credit ratings and delinquency status and are based on information as of our financial statement date.


(in millions)	Mar 31, 2021		Dec 31, 2020




Non-U.S. commercial loans:
Commercial and industrial	$	69,493	63,128
Real estate mortgage	7,066		7,278
Real estate construction	1,665		1,603
Lease financing	636		629
Total non-U.S. commercial loans	$	78,860	72,638

~~CREDIT RATINGS~~ Credit ratings express opinions about the credit quality of a debt security. We determine the credit rating of a security according to the lowest credit rating made available by national recognized statistical rating organizations (NRSROs).

Debt securities rated investment grade, that is those with ratings similar to BBB-/Baa3 or above, as defined by NRSROs, 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. For debt securities not rated by NRSROs, we determine an internal credit grade of the debt securities (used for credit risk management purposes) equivalent to the credit ratings assigned by major credit agencies. Substantially all of our debt securities were rated by NRSROs at September 30, 2020, and December 31, 2019.

~~Table 5.4 shows the percentage of fair value of available-for-sale debt securities and amortized cost of held-to-maturity debt~~

~~securities determined by those rated investment grade, inclusive of those based on internal credit grades.~~

~~Table 5.4:Investment Grade Debt Securities~~

Available-for-Sale Held-to-Maturity
($ in millions) Fair value % investment grade Amortized cost % investment grade
September 30, 2020
Total portfolio $ 220,573 99 % 182,621 99 %
Breakdown by category:
Securities of U.S. Treasury and federal agencies (1) $ 141,202 100 % 167,489 100 %
Securities of U.S. states and political subdivisions 31,511 99 14,245 100
Collateralized loan obligations 25,014 100 N/A N/A
All other debt securities (2) 22,846 90 887 7
December 31, 2019
Total portfolio $ 263,459 99 % 153,933 99 %
Breakdown by category:
Securities of U.S. Treasury and federal agencies (1) $ 177,413 100 % 139,619 100 %
Securities of U.S. states and political subdivisions 40,337 99 13,486 100
Collateralized loan obligations 29,055 100 N/A N/A
All other debt securities (2) 16,654 82 828 4

~~(1)Includes federal agency mortgage-backed securities.~~

~~(2)Includes non-agency mortgage-backed, corporate, and all other debt securities.~~

~~DELINQUENCY STATUS AND NONACCRUAL DEBT SECURITIES~~ Debt security issuers that are delinquent in payment of amounts due under contractual debt agreements have a higher probability of recognition of credit losses. As such, as part of our monitoring of the credit quality of the debt security portfolio, we consider whether debt securities we own are past due in payment of principal or interest payments and whether any securities have been placed into nonaccrual status.

We had 0 debt securities that were past due and still accruing at September 30, 2020 or December 31, 2019. The fair value of available-for-sale debt securities in nonaccrual status was $98 million and $110 million as of September 30, 2020, and December 31, 2019, respectively. There were 0 held-to-

maturity debt securities in nonaccrual status as of September 30, 2020, or December 31, 2019. Purchased debt securities with credit deterioration (PCD) are not considered to be in nonaccrual status, as payments from issuers of these securities remain current.

Table 5.5 presents detail of available-for-sale debt securities purchased with credit deterioration during the period. There were 0 available-for-sale debt securities purchased with credit deterioration during third quarter 2020. There were 0 held-to-maturity debt securities purchased with credit deterioration during the third quarter and first nine months of 2020. The amounts presented are as of the date of the PCD assets were purchased.

~~Table 5.5: Debt Securities Purchased with Credit Deterioration~~

~~(in millions)~~

~~Nine months ended September 30, 2020~~

~~Available-for-sale debt securities purchased with credit deterioration (PCD):~~

~~Par value~~

$Wells Fargo & Company

~~164~~

~~Allowance for credit losses at acquisition~~

~~(11)~~

~~Discount (or premiums) attributable to other factors~~

~~Purchase price of available-for-sale debt securities purchased with credit deterioration~~

~~156~~

Note ~~5: Available-for-Sale~~4: Loans and ~~Held-to-Maturity Debt Securities~~Related Allowance for Credit Losses (continued)

~~Unrealized Losses of Available-for-Sale Debt Securities~~Loan Purchases, Sales, and Transfers

Table ~~5.6 shows~~4.3 presents the ~~gross unrealized losses~~proceeds paid or received for purchases and ~~fair value~~sales of ~~available-for-sale debt securities by length of time those individual securities in each category have been in a continuous loss position. Debt securities on~~ loans and transfers from loans held for investment to mortgages/loans held for sale. The table excludes loans for

which we have ~~recorded credit impairment 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~~elected the fair value ~~declined to below~~option and government insured/guaranteed residential mortgage – first lien loans because their loan activity normally does not impact the ~~(1) for the current period presented, amortized cost basis net of allowance for credit losses, or the (2) for the prior period presented, amortized cost basis.~~ACL.

Table ~~5.6:~~4.3: ~~Gross Unrealized Losses~~Loan Purchases, Sales, and ~~Fair Value – Available-for-Sale Debt Securities~~Transfers

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
September 30, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies $ 0 0 0 0 0 0
Securities of U.S. states and political subdivisions (234) 12,366 (57) 1,817 (291) 14,183
Mortgage-backed securities:
Federal agencies (71) 15,985 (1) 365 (72) 16,350
Residential 0 0 (1) 58 (1) 58
Commercial (45) 1,910 (22) 331 (67) 2,241
Total mortgage-backed securities (116) 17,895 (24) 754 (140) 18,649
Corporate debt securities (35) 788 (11) 95 (46) 883
Collateralized loan obligations (208) 16,696 (172) 7,265 (380) 23,961
Other (34) 6,545 (53) 1,382 (87) 7,927
Total available-for-sale debt securities $ (627) 54,290 (317) 11,313 (944) 65,603
December 31, 2019
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies $ 0 0 (1) 2,423 (1) 2,423
Securities of U.S. states and political subdivisions (10) 2,776 (26) 2,418 (36) 5,194
Mortgage-backed securities:
Federal agencies (50) 16,807 (114) 10,641 (164) 27,448
Residential (1) 149 0 0 (1) 149
Commercial (3) 998 (3) 244 (6) 1,242
Total mortgage-backed securities (54) 17,954 (117) 10,885 (171) 28,839
Corporate debt securities (9) 303 (23) 216 (32) 519
Collateralized loan obligations (13) 5,001 (110) 16,789 (123) 21,790
Other (12) 1,656 (12) 492 (24) 2,148
Total available-for-sale debt securities $ (98) 27,690 (289) 33,223 (387) 60,913



	2021				2020
(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total
Quarter ended March 31,




Purchases	$	48	1	49	341	1	342
Sales	(273)		(188)	(461)	(813)	(26)	(839)
Transfers (to)/from LHFS	(435)		63	(372)	77	2	79

Commitments to Lend

A commitment to lend is a legally binding agreement to lend to a customer, usually at a stated interest rate, if funded, and for specific purposes and time periods. We ~~have assessed each debt security~~generally require a fee to extend such commitments. Certain commitments are subject to loan agreements with ~~gross unrealized losses included~~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 ~~previous table for credit impairment. As part of that assessment we evaluated~~contracts and ~~concluded that~~applicable law. For unconditionally cancelable commitments at our discretion, 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.~~ recognize an ACL.

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. In prior periods, credit impairment was recordedmay, as a ~~write-down~~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. The unfunded amount of these temporary advance arrangements totaled approximately $81.9 billion at March 31, 2021.

We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At both March 31, 2021, and December 31, 2020, we had $1.3 billion, of outstanding issued commercial letters of credit. We also originate multipurpose lending commitments under which borrowers have the ~~amortized cost basis~~option to draw on the facility for different purposes in one of several forms, including a standby letter of credit. See Note 11 (Guarantees and Other Commitments) for additional information on standby letters of credit.

When we enter into commitments, we are exposed to credit risk. The maximum credit risk for these commitments will generally be lower than the ~~security. In~~contractual amount because a significant portion of these commitments are not funded. We manage the ~~current period,~~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 ~~impairment is recorded~~standards for these commitments as ~~an allowance~~ for all of our credit ~~losses for debt securities.~~

activities.

For ~~descriptions~~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, autos, 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 ~~factors we consider when analyzing debt securities for impairment as well as methodology~~loan product and ~~significant inputs used~~our assessment of a customer’s credit risk according to ~~measure~~the specific credit ~~losses, see Note 1 (Summary~~underwriting, including credit terms and structure.

The contractual amount of ~~Significant Accounting Policies).~~our unfunded credit commitments, including unissued standby and commercial letters of credit, is summarized by portfolio segment and class of financing receivable in Table 4.4. The table excludes the issued standby and commercial letters of credit and temporary advance arrangements described above.

Table 4.4:Unfunded Credit Commitments


(in millions)	Mar 31, 2021		Dec 31, 2020
Commercial:
Commercial and industrial	$	385,575	378,167
Real estate mortgage	8,584		7,993
Real estate construction	15,150		15,650

Total commercial	409,309		401,810
Consumer:
Residential mortgage – first lien	37,066		31,530
Residential mortgage – junior lien	31,573		32,820
Credit card	124,077		121,096
Other consumer	51,361		49,179
Total consumer	244,077		234,625
Total unfunded credit commitments	$	653,386	636,435


74			Wells Fargo & Company

~~Allowance for Credit Losses for Debt Securities~~

~~Table 5.7 presents the allowance for credit losses on available-for-sale and held-to-maturity debt securities.~~

~~Table 5.7:Allowance for Credit Losses for Debt Securities~~

Quarter ended September 30, 2020 Nine months ended September 30, 2020
(in millions) Available-for-Sale Held-to-Maturity Available-for-Sale Held-to-Maturity
Balance, beginning of period (1) $ 114 20 $ 0 0
Cumulative effect from change in accounting policies (2) 0 0 24 7
Balance, beginning of period, adjusted 114 20 24 7
Provision for credit losses 12 6 140 19
Securities purchased with credit deterioration 0 0 11 0
Reduction due to sales 0 0 (8) 0
Reduction due to intent to sell (2) 0 (13) 0
Charge-offs (48) 0 (81) 0
Interest income (3) 3 0 6 0
Balance, end of period (4) $ 79 26 $ 79 26

~~(1)~~Prior to our adoption of CECL on January 1, 2020, the allowance for credit losses related to available-for-sale and held-to-maturity debt securities was not applicable and is therefore presented as $0 at December 31, 2019. For additional information, see Note 1 (Summary of Significant Accounting Policies).

~~(2)Represents the impact of adoption of CECL on January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies).~~

~~(3)~~Certain debt securities with an allowance for credit losses calculated by discounting expected cash flows using the securities’ effective interest rate over its remaining life, recognize changes in the allowance for credit losses attributable to the passage of time as interest income.

~~(4)The allowance for credit losses for debt securities primarily relates to corporate debt securities as of September 30, 2020.~~

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

Contractual Maturities

Table ~~5.8 shows~~3.6 and Table 3.7 show the remaining contractual maturities, amortized cost, net of ~~allowance for credit losses,~~the ACL, fair value and weighted average effective yields of ~~available-for-sale~~AFS and HTM debt ~~securities.~~securities, respectively. The remaining contractual principal ~~maturities for MBS do not~~

Table ~~5.8:~~3.6: Contractual Maturities – Available-for-Sale Debt Securities


By remaining contractual maturity ($ in millions)	By remaining contractual maturity ($ in millions)	Total			Within one year	After one year through five years	After five years through ten years	After ten years	By remaining contractual maturity ($ in millions)	Total			Within one year	After one year through five years	After five years through ten years	After ten years
September 30, 2020
March 31, 2021									March 31, 2021
Available-for-sale debt securities (1):	Available-for-sale debt securities (1):								Available-for-sale debt securities (1):
Securities of U.S. Treasury and federal agencies	Securities of U.S. Treasury and federal agencies								Securities of U.S. Treasury and federal agencies
Amortized cost, net									Amortized cost, net	$	25,144		296	15,550	7,460	1,838
Fair value									Fair value	25,217			296	15,573	7,402	1,946
Weighted average yield									Weighted average yield	0.59		%	0.15	0.33	0.95	1.44
Non-U.S. government securities									Non-U.S. government securities
Amortized cost, net	Amortized cost, net	$	5,826		511	2,771	10	2,534	Amortized cost, net	$	14,458		14,433	25	0	0
Fair value	Fair value	5,975			511	2,777	11	2,676	Fair value	14,458			14,433	25	0	0
Weighted average yield	Weighted average yield	0.99		%	2.61	0.28	2.34	1.42	Weighted average yield	(0.11		%)	(0.12)	0.42	0	0
Securities of U.S. states and political subdivisions	Securities of U.S. states and political subdivisions								Securities of U.S. states and political subdivisions
Amortized cost, net	Amortized cost, net	$	31,563		2,748	3,193	3,558	22,064	Amortized cost, net	$	19,288		2,024	2,049	4,715	10,500
Fair value	Fair value	31,511			2,754	3,246	3,570	21,941	Fair value	19,657			2,028	2,094	4,712	10,823
Weighted average yield	Weighted average yield	2.34		%	1.37	1.74	1.46	2.68	Weighted average yield	2.02		%	1.35	1.74	1.22	2.56
Mortgage-backed securities:
Federal agencies
Federal agency mortgage-backed securities									Federal agency mortgage-backed securities
Amortized cost, net	Amortized cost, net	$	130,717		0	138	2,766	127,813	Amortized cost, net	$	115,503		8	292	3,037	112,166
Fair value	Fair value	135,227			0	146	2,865	132,216	Fair value	117,657			8	303	3,133	114,213
Weighted average yield	Weighted average yield	3.01		%	0	3.24	2.34	3.02	Weighted average yield	2.70		%	2.37	2.34	2.08	2.72
Residential
Amortized cost, net		$	539		0	0	0	539
Fair value		541			0	0	0	541
Weighted average yield		2.24		%	0	0	0	2.24
Commercial
Amortized cost, net		$	3,393		0	0	161	3,232
Fair value		3,343			0	0	159	3,184
Weighted average yield		2.16		%	0	0	1.63	2.18
Total mortgage-backed securities
Amortized cost, net		$	134,649		0	138	2,927	131,584
Fair value		139,111			0	146	3,024	135,941
Weighted average yield		2.98		%	0	3.24	2.30	3.00
Corporate debt securities
Non-agency mortgage-backed securities									Non-agency mortgage-backed securities
Amortized cost, net	Amortized cost, net	$	5,687		207	2,390	2,301	789	Amortized cost, net	$	4,040		0	0	162	3,878
Fair value	Fair value	5,772			208	2,459	2,326	779	Fair value	4,058			0	0	162	3,896
Weighted average yield	Weighted average yield	4.75		%	6.41	4.88	4.61	4.36	Weighted average yield	2.04		%	0	0	1.94	2.05
Collateralized loan obligations	Collateralized loan obligations								Collateralized loan obligations
Amortized cost, net	Amortized cost, net	$	25,389		0	249	12,901	12,239	Amortized cost, net	$	9,858		0	201	7,359	2,298
Fair value	Fair value	25,014			0	248	12,731	12,035	Fair value	9,850			0	201	7,353	2,296
Weighted average yield	Weighted average yield	1.67		%	0	2.40	1.75	1.57	Weighted average yield	1.60		%	0	2.25	1.61	1.51
Other
Other debt securities									Other debt securities
Amortized cost, net	Amortized cost, net	$	13,197		8,991	457	1,087	2,662	Amortized cost, net	$	9,514		362	2,595	3,136	3,421
Fair value	Fair value	13,190			8,985	446	1,078	2,681	Fair value	9,953			359	2,771	3,171	3,652
Weighted average yield	Weighted average yield	0.42		%	(0.15)	1.76	1.03	1.84	Weighted average yield	3.22		%	3.04	4.47	3.23	2.29
Total available-for-sale debt securities	Total available-for-sale debt securities								Total available-for-sale debt securities
Amortized cost, net	Amortized cost, net	$	216,311		12,457	9,198	22,784	171,872	Amortized cost, net	$	197,805		17,123	20,712	25,869	134,101
Fair value	Fair value	220,573			12,458	9,322	22,740	176,053	Fair value	$	200,850		17,124	20,967	25,933	136,826
Weighted average yield	Weighted average yield	2.57		%	0.41	2.17	2.03	2.82	Weighted average yield	2.13		%	0.23	1.03	1.60	2.64

(1)Weighted average yields displayed by maturity bucket are weighted based on amortized cost without effect for any related hedging derivatives and are shown pre-tax.


			Wells Fargo & Company			71

~~Table 5.9 shows the remaining contractual maturities, amortized cost net of allowance for credit losses, fair value,~~Note 3: Available-for-Sale and ~~weighted average effective yields of held-to-maturity debt securities.~~

Held-to-Maturity Debt Securities
(continued)

Table ~~5.9:~~3.7: Contractual Maturities – Held-to-Maturity Debt Securities


By remaining contractual maturity ($ in millions)	By remaining contractual maturity ($ in millions)	Total			Within one year	After one year through five years	After five years through ten years	After ten years	By remaining contractual maturity ($ in millions)	Total			Within one year	After one year through five years	After five years through ten years	After ten years
September 30, 2020
March 31, 2021									March 31, 2021
Held-to-maturity debt securities (1):	Held-to-maturity debt securities (1):								Held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies	Securities of U.S. Treasury and federal agencies								Securities of U.S. Treasury and federal agencies
Amortized cost, net	Amortized cost, net	$	48,587		24,742	20,064	0	3,781	Amortized cost, net	$	40,251		24,063	12,406	0	3,782
Fair value	Fair value	50,287			25,051	21,275	0	3,961	Fair value	40,594			24,236	13,197	0	3,161
Weighted average yield	Weighted average yield	2.14		%	2.19	2.19	0	1.57	Weighted average yield	2.12		%	2.09	2.37	0	1.57
Securities of U.S. states and political subdivisions	Securities of U.S. states and political subdivisions								Securities of U.S. states and political subdivisions
Amortized cost, net	Amortized cost, net	$	14,232		292	1,006	1,830	11,104	Amortized cost, net	$	27,569		628	2,231	2,026	22,684
Fair value	Fair value	14,910			295	1,059	1,932	11,624	Fair value	28,060			633	2,305	2,109	23,013
Weighted average yield	Weighted average yield	2.72		%	2.36	2.59	2.93	2.71	Weighted average yield	2.18		%	1.82	1.90	2.69	2.17
Federal agency and other mortgage-backed securities
Federal agency mortgage-backed securities									Federal agency mortgage-backed securities
Amortized cost, net	Amortized cost, net	$	119,766		0	15	0	119,751	Amortized cost, net	$	144,484		0	0	0	144,484
Fair value	Fair value	124,227			0	14	0	124,213	Fair value	145,178			0	0	0	145,178
Weighted average yield	Weighted average yield	2.65		%	0	1.50	0	2.65	Weighted average yield	2.28		%	0	0	0	2.28
Other debt securities
Non-agency mortgage-backed securities									Non-agency mortgage-backed securities
Amortized cost, net									Amortized cost, net	$	907		0	14	0	893
Fair value									Fair value	928			0	14	0	914
Weighted average yield									Weighted average yield	3.12		%	0	1.57	0	3.15
Collateralized loan obligations									Collateralized loan obligations
Amortized cost, net	Amortized cost, net	$	10		0	0	10	0	Amortized cost, net	$	18,981		0	32	8,652	10,297
Fair value	Fair value	10			0	0	10	0	Fair value	19,199			0	32	8,748	10,419
Weighted average yield	Weighted average yield	1.45		%	0	0	1.45	0	Weighted average yield	1.75		%	0	2.32	1.77	1.73
Total held-to-maturity debt securities	Total held-to-maturity debt securities								Total held-to-maturity debt securities
Amortized cost, net	Amortized cost, net	$	182,595		25,034	21,085	1,840	134,636	Amortized cost, net	$	232,192		24,691	14,683	10,678	182,140
Fair value	Fair value	189,434			25,346	22,348	1,942	139,798	Fair value	233,959			24,869	15,548	10,857	182,685
Weighted average yield	Weighted average yield	2.52		%	2.19	2.21	2.92	2.62	Weighted average yield	2.20		%	2.08	2.29	1.94	2.23

(1)Weighted average yields displayed by maturity bucket are weighted based on amortized cost and are shown pre-tax.


72			Wells Fargo & Company


Note 6:4: Loans and Related Allowance for Credit Losses

Table ~~6.1~~4.1 presents total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include unearned income, net deferred loan fees or costs, and unamortized discounts and premiums. These amounts were less

than 1% of our total loans outstanding at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019.~~2020.

Outstanding balances exclude accrued interest receivable on loans, except for certain revolving loans, such as credit card loans.

During the first nine months of 2020, we reversed accrued interest receivable by reversing interest income of $29 million for our commercial portfolio segment and $161 million for our consumer portfolio segment. See Note 97 (Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. During first quarter 2021, we reversed accrued interest receivable of $16 million for our commercial portfolio segment and $51 million for our consumer portfolio segment, compared with $9 million and $63 million, respectively, for the same period a year ago.

Table ~~6.1:~~4.1: Loans Outstanding


(in millions)	(in millions)	Sep 30, 2020		Dec 31, 2019	(in millions)	Mar 31, 2021		Dec 31, 2020

Commercial:	Commercial:				Commercial:
Commercial and industrial	Commercial and industrial	$	320,913	354,125	Commercial and industrial	$	319,055	318,805
Real estate mortgage	Real estate mortgage	121,910		121,824	Real estate mortgage	121,198		121,720
Real estate construction	Real estate construction	22,519		19,939	Real estate construction	21,533		21,805
Lease financing	Lease financing	16,947		19,831	Lease financing	15,734		16,087
Total commercial	Total commercial	482,289		515,719	Total commercial	477,520		478,417
Consumer:	Consumer:				Consumer:
Real estate 1-4 family first mortgage		294,990		293,847
Real estate 1-4 family junior lien mortgage		25,162		29,509
Residential mortgage – first lien					Residential mortgage – first lien	254,363		276,674
Residential mortgage – junior lien					Residential mortgage – junior lien	21,308		23,286
Credit card	Credit card	36,021		41,013	Credit card	34,246		36,664
Automobile		48,450		47,873
Other revolving credit and installment		33,170		34,304
Auto					Auto	49,210		48,187
Other consumer					Other consumer	24,925		24,409
Total consumer	Total consumer	437,793		446,546	Total consumer	384,052		409,220
Total loans	Total loans	$	920,082	962,265	Total loans	$	861,572	887,637

Our non-U.S. loans are reported by respective class of financing receivable in the table above. Substantially all of our non-U.S. loan portfolio is commercial loans. Table ~~6.2~~4.2 presents total non-U.S. commercial loans outstanding by class of financing receivable.

Table ~~6.2:~~4.2: Non-U.S. Commercial Loans Outstanding


(in millions)	(in millions)	Sep 30, 2020		Dec 31, 2019	(in millions)	Mar 31, 2021		Dec 31, 2020
Non-U.S. Commercial Loans

Non-U.S. commercial loans:					Non-U.S. commercial loans:
Commercial and industrial	Commercial and industrial	$	61,594	70,494	Commercial and industrial	$	69,493	63,128
Real estate mortgage	Real estate mortgage	6,228		7,004	Real estate mortgage	7,066		7,278
Real estate construction	Real estate construction	1,898		1,434	Real estate construction	1,665		1,603
Lease financing	Lease financing	1,156		1,220	Lease financing	636		629
Total non-U.S. commercial loans	Total non-U.S. commercial loans	$	70,876	80,152	Total non-U.S. commercial loans	$	78,860	72,638


			Wells Fargo & Company			73

Note 4: Loans and Related Allowance for Credit Losses (continued)

Loan Purchases, Sales, and Transfers

Table ~~6.3 summarizes~~4.3 presents the proceeds paid or received for purchases and sales of loans and transfers from loans held for investment to mortgages/loans held for sale. The table excludes loans for

which we have elected the fair value option and government insured/guaranteed ~~real estate 1-4 family~~residential mortgage – first ~~mortgage~~lien loans because

their loan activity normally does not impact the ACL. In the first nine months of 2020, we sold $1.2 billion of 1-4 family first mortgage loans for a gain of $724 million, which is included in other noninterest income on our consolidated income statement. These whole loans were designated as MLHFS in 2019.

Table ~~6.3:~~4.3: Loan Purchases, Sales, and Transfers


		2020				2019				2021				2020
(in millions)	(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total	(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total
Quarter ended September 30,
Quarter ended March 31,									Quarter ended March 31,

Purchases	Purchases	$	260	2	262	571	910	1,481	Purchases	$	48	1	49	341	1	342
Sales	Sales	(564)		0	(564)	(433)	(85)	(518)	Sales	(273)		(188)	(461)	(813)	(26)	(839)
Transfers (to) from MLHFS/LHFS		(170)		8,990	8,820	(25)	(37)	(62)
Nine months ended September 30,
Purchases		$	1,034	5	1,039	1,570	918	2,488
Sales		(3,334)		(27)	(3,361)	(1,389)	(417)	(1,806)
Transfers (to) from MLHFS/LHFS		(101)		(1,387)	(1,488)	(117)	(1,889)	(2,006)
Transfers (to)/from LHFS									Transfers (to)/from LHFS	(435)		63	(372)	77	2	79

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. For unconditionally cancelable commitments at our discretion, we do not recognize an ACL.

We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At ~~September 30, 2020,~~both March 31, 2021, and December 31, ~~2019,~~2020, we had ~~$942 million and $862 million, respectively,~~$1.3 billion, 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 1311 (Guarantees ~~Pledged Assets and Collateral,~~ and Other Commitments) for additional information on standby letters of credit.

When we ~~make~~enter into 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 are not funded. 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,~~autos, 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.~~4.4. The table excludes the issued standby and commercial letters of credit and temporary advance arrangements described above.

Table ~~6.4:~~4.4: Unfunded Credit Commitments


(in millions)	(in millions)	Sep 30, 2020		Dec 31, 2019	(in millions)	Mar 31, 2021		Dec 31, 2020
Commercial:	Commercial:				Commercial:
Commercial and industrial	Commercial and industrial	$	359,827	346,991	Commercial and industrial	$	385,575	378,167
Real estate mortgage	Real estate mortgage	8,420		8,206	Real estate mortgage	8,584		7,993
Real estate construction	Real estate construction	16,028		17,729	Real estate construction	15,150		15,650

Total commercial	Total commercial	384,275		372,926	Total commercial	409,309		401,810
Consumer:	Consumer:				Consumer:
Real estate 1-4 family first mortgage		30,853		34,391
Real estate 1-4 family junior lien mortgage		34,452		36,916
Residential mortgage – first lien					Residential mortgage – first lien	37,066		31,530
Residential mortgage – junior lien					Residential mortgage – junior lien	31,573		32,820
Credit card	Credit card	121,312		114,933	Credit card	124,077		121,096
Other revolving credit and installment		22,239		25,898
Other consumer					Other consumer	51,361		49,179
Total consumer	Total consumer	208,856		212,138	Total consumer	244,077		234,625
Total unfunded credit commitments	Total unfunded credit commitments	$	593,131	585,064	Total unfunded credit commitments	$	653,386	636,435


74			Wells Fargo & Company

~~Note 6: Loans and Related Allowance for Credit Losses~~ ~~(continued)~~

Allowance for Credit Losses ~~for Loans~~

Table ~~6.5~~4.5 presents the allowance for credit losses (ACL) for loans, which consists of the allowance for loan losses and the allowance for unfunded credit commitments. ~~On January 1, 2020, we adopted CECL. Additional information regarding our adoption of CECL is included in Note 1 (Summary of Significant Accounting Policies).~~

The ACL for loans ~~increased $10.0~~decreased

$1.7 billion from December 31, ~~2019, driven by a $11.3 billion increase~~2020, due to continued improvement in the ~~ACL for loans in the first nine months of 2020 reflecting current and forecasted~~ economic ~~conditions due to the COVID-19 pandemic, partially offset by a $1.3 billion decrease as a result of adopting CECL.~~environment.

Table ~~6.5:~~4.5: Allowance for Credit Losses for Loans


		Quarter ended September 30,				Nine months ended September 30,			Quarter ended March 31,
(in millions)		2020			2019	2020	2019
($ in millions)								($ in millions)		2021			2020
Balance, beginning of period	Balance, beginning of period	$	20,436		10,603	10,456	10,707	Balance, beginning of period		$	19,713		10,456

Cumulative effect from change in accounting policies (1)	Cumulative effect from change in accounting policies (1)	0			0	(1,337)	0	Cumulative effect from change in accounting policies (1)		0			(1,337)
Allowance for purchased credit-deteriorated (PCD) loans (2)	Allowance for purchased credit-deteriorated (PCD) loans (2)	0			0	8	0	Allowance for purchased credit-deteriorated (PCD) loans (2)		0			8

Balance, beginning of period, adjusted	Balance, beginning of period, adjusted	20,436			10,603	9,127	10,707	Balance, beginning of period, adjusted		19,713			9,127
Provision for credit losses	Provision for credit losses	751			695	14,149	2,043	Provision for credit losses		(1,117)			3,833

Interest income on certain loans (3)		(41)			(34)	(117)	(112)
Interest income on certain impaired loans (3)								Interest income on certain impaired loans (3)		(41)			(38)
Loan charge-offs:	Loan charge-offs:							Loan charge-offs:
Commercial:	Commercial:							Commercial:
Commercial and industrial	Commercial and industrial	(327)			(209)	(1,260)	(590)	Commercial and industrial		(159)			(377)
Real estate mortgage	Real estate mortgage	(59)			(2)	(134)	(28)	Real estate mortgage		(52)			(3)
Real estate construction	Real estate construction	0			0	0	(1)	Real estate construction		0			0
Lease financing	Lease financing	(34)			(12)	(66)	(35)	Lease financing		(21)			(13)
Total commercial	Total commercial	(420)			(223)	(1,460)	(654)	Total commercial		(232)			(393)
Consumer:	Consumer:							Consumer:
Real estate 1-4 family first mortgage		(20)			(31)	(63)	(101)
Real estate 1-4 family junior lien mortgage		(22)			(27)	(70)	(90)
Residential mortgage – first lien								Residential mortgage – first lien		(17)			(23)
Residential mortgage – junior lien								Residential mortgage – junior lien		(19)			(30)
Credit card	Credit card	(339)			(404)	(1,225)	(1,278)	Credit card		(335)			(471)
Automobile		(99)			(156)	(413)	(485)
Other revolving credit and installment		(94)			(168)	(372)	(497)
Auto								Auto		(129)			(156)
Other consumer								Other consumer		(147)			(165)
Total consumer	Total consumer	(574)			(786)	(2,143)	(2,451)	Total consumer		(647)			(845)
Total loan charge-offs	Total loan charge-offs	(994)			(1,009)	(3,603)	(3,105)	Total loan charge-offs		(879)			(1,238)
Loan recoveries:	Loan recoveries:							Loan recoveries:
Commercial:	Commercial:							Commercial:
Commercial and industrial	Commercial and industrial	53			62	132	151	Commercial and industrial		71			44
Real estate mortgage	Real estate mortgage	3			10	13	26	Real estate mortgage		6			5
Real estate construction	Real estate construction	2			8	19	13	Real estate construction		0			16
Lease financing	Lease financing	6			4	14	15	Lease financing		6			4
Total commercial	Total commercial	64			84	178	205	Total commercial		83			69
Consumer:	Consumer:							Consumer:
Real estate 1-4 family first mortgage		21			36	65	148
Real estate 1-4 family junior lien mortgage		36			49	101	140
Residential mortgage – first lien								Residential mortgage – first lien		41			26
Residential mortgage – junior lien								Residential mortgage – junior lien		38			35
Credit card	Credit card	94			85	276	258	Credit card		99			94
Automobile		68			80	194	266
Other revolving credit and installment		28			30	84	95
Auto								Auto		77			74
Other consumer								Other consumer		28			31
Total consumer	Total consumer	247			280	720	907	Total consumer		283			260
Total loan recoveries	Total loan recoveries	311			364	898	1,112	Total loan recoveries		366			329
Net loan charge-offs	Net loan charge-offs	(683)			(645)	(2,705)	(1,993)	Net loan charge-offs		(513)			(909)
Other	Other	8			(6)	17	(32)	Other		1			9
Balance, end of period	Balance, end of period	$	20,471		10,613	20,471	10,613	Balance, end of period		$	18,043		12,022

Components:	Components:							Components:
Allowance for loan losses	Allowance for loan losses	$	19,463		9,715	19,463	9,715	Allowance for loan losses		$	16,928		11,263
Allowance for unfunded credit commitments	Allowance for unfunded credit commitments	1,008			898	1,008	898	Allowance for unfunded credit commitments		1,115			759
Allowance for credit losses for loans		$	20,471		10,613	20,471	10,613
Allowance for credit losses								Allowance for credit losses		$	18,043		12,022
Net loan charge-offs (annualized) as a percentage of average total loans	Net loan charge-offs (annualized) as a percentage of average total loans	0.29		%	0.27	0.38	0.28	Net loan charge-offs (annualized) as a percentage of average total loans		0.24		%	0.38
Allowance for loan losses as a percentage of total loans	Allowance for loan losses as a percentage of total loans	2.12			1.02	2.12	1.02	Allowance for loan losses as a percentage of total loans		1.96			1.12
Allowance for credit losses for loans as a percentage of total loans	Allowance for credit losses for loans as a percentage of total loans	2.22			1.11	2.22	1.11	Allowance for credit losses for loans as a percentage of total loans		2.09			1.19

(1)Represents the overall decrease in our ~~allowance for credit losses~~ACL for loans as a result of our adoption of CECL on January 1, 2020.

(2)Represents the allowance estimated for ~~PCI~~purchased credit-impaired (PCI) loans that automatically became PCD loans with the adoption of CECL. For additional information, see Note 1 (Summary of Significant Accounting Policies). in our 2020 Form 10-K.

(3)Loans with an allowance measured 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.


			Wells Fargo & Company			75

Note 4: Loans and Related Allowance for Credit Losses (continued)

Table ~~6.6~~4.6 summarizes the activity in the ~~allowance for credit losses for loans~~ACL by our commercial and consumer portfolio segments.

Table ~~6.6:~~4.6: Allowance for Credit Losses for Loans Activity by Portfolio Segment


					2020			2019		2021				2020
(in millions)	(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total	(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total
Quarter ended September 30,
Balance, beginning of period		$	11,669	8,767	20,436	6,298	4,305	10,603

Provision for credit losses		241		510	751	84	611	695
Interest income on certain loans (1)		(18)		(23)	(41)	(10)	(24)	(34)
Loan charge-offs		(420)		(574)	(994)	(223)	(786)	(1,009)
Loan recoveries		64		247	311	84	280	364
Net loan charge-offs		(356)		(327)	(683)	(139)	(506)	(645)
Other		6		2	8	(3)	(3)	(6)
Balance, end of period		$	11,542	8,929	20,471	6,230	4,383	10,613
Nine months ended September 30,

Quarter ended March 31,									Quarter ended March 31,
Balance, beginning of period	Balance, beginning of period	$	6,245	4,211	10,456	6,417	4,290	10,707	Balance, beginning of period	$	11,516	8,197	19,713	6,245	4,211	10,456
Cumulative effect from change in accounting policies (1)	Cumulative effect from change in accounting policies (1)	(2,861)		1,524	(1,337)	0	0	0	Cumulative effect from change in accounting policies (1)	0		0	0	(2,861)	1,524	(1,337)
Allowance for purchased credit-deteriorated (PCD) loans (2)	Allowance for purchased credit-deteriorated (PCD) loans (2)	0		8	8	0	0	0	Allowance for purchased credit-deteriorated (PCD) loans (2)	0		0	0	0	8	8
Balance, beginning of period, adjusted	Balance, beginning of period, adjusted	3,384		5,743	9,127	6,417	4,290	10,707	Balance, beginning of period, adjusted	11,516		8,197	19,713	3,384	5,743	9,127
Provision for credit losses	Provision for credit losses	9,480		4,669	14,149	294	1,749	2,043	Provision for credit losses	(667)		(450)	(1,117)	2,240	1,593	3,833
Interest income on certain loans (3)	Interest income on certain loans (3)	(44)		(73)	(117)	(35)	(77)	(112)	Interest income on certain loans (3)	(19)		(22)	(41)	(14)	(24)	(38)

Loan charge-offs	Loan charge-offs	(1,460)		(2,143)	(3,603)	(654)	(2,451)	(3,105)	Loan charge-offs	(232)		(647)	(879)	(393)	(845)	(1,238)
Loan recoveries	Loan recoveries	178		720	898	205	907	1,112	Loan recoveries	83		283	366	69	260	329
Net loan charge-offs	Net loan charge-offs	(1,282)		(1,423)	(2,705)	(449)	(1,544)	(1,993)	Net loan charge-offs	(149)		(364)	(513)	(324)	(585)	(909)
Other	Other	4		13	17	3	(35)	(32)	Other	1		0	1	(7)	16	9
Balance, end of period	Balance, end of period	$	11,542	8,929	20,471	6,230	4,383	10,613	Balance, end of period	$	10,682	7,361	18,043	5,279	6,743	12,022

(1)Represents the overall decrease in our ~~allowance for credit losses~~ACL for loans as a result of our adoption of CECL on January 1, 2020.

(2)Represents the allowance estimated for PCI loans that automatically became PCD loans with the adoption of CECL. For additional information, see Note 1 (Summary of Significant Accounting Policies). in our 2020 Form 10-K.

Table 6.7 disaggregates our allowance for credit losses for loans and recorded investment in loans by impairment methodology. This information is no longer relevant after December 31, 2019, given our adoption of CECL on January 1, 2020, which has a single impairment methodology.

~~Table 6.7:Allowance for Credit Losses for Loans by Impairment Methodology~~

Allowance for credit losses for loans Recorded investment in loans
(in millions) Commercial Consumer Total Commercial Consumer Total
December 31, 2019
Collectively evaluated (1) $ 5,778 3,364 9,142 512,586 436,081 948,667
Individually evaluated (2) 467 847 1,314 3,133 9,897 13,030
PCI (3) 0 0 0 0 568 568
Total $ 6,245 4,211 10,456 515,719 446,546 962,265

~~(1)Represents non-impaired loans evaluated collectively for impairment.~~

~~(2)Represents impaired loans evaluated individually for impairment.~~

~~(3)Represents the allowance for loan losses and related loan carrying value for PCI loans.~~


76			Wells Fargo & Company

~~Note 6: Loans and Related Allowance for Credit Losses~~ ~~(continued)~~

Credit Quality

We monitor credit quality by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the ~~allowance~~ACL for ~~credit losses.~~loans. 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 ~~June 30,~~December 31, 2020. Amounts disclosed in the credit quality tables that follow are not comparative between reported periods due to our adoption of CECL on January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies).

COMMERCIAL CREDIT QUALITY INDICATORSWe 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, which is our primary credit quality indicator. Our ratings are aligned to ~~federal banking regulators’~~regulatory definitions of pass and criticized categories with the criticized ~~category including~~segmented among special mention, substandard, doubtful and loss categories.

Table ~~6.8~~4.7 provides the outstanding balances of our commercial loan portfolio by risk category. ~~In connection with our adoption of CECL, credit~~Credit quality information is provided with the year of origination for term loans. Revolving loans may convert to term loans as a result of a contractual provision in the original loan agreement or if modified in a ~~TDR.~~troubled debt restructuring (TDR). At ~~September 30, 2020,~~March 31, 2021, we had ~~$444.9~~$445.6 billion and ~~$37.3~~$31.9 billion of pass and criticized commercial loans, respectively.

Table ~~6.8:~~4.7: Commercial ~~Loans~~Loan Categories by Risk Categories and Vintage~~(1)~~

Term loans by origination year Revolving loans Revolving loans converted to term loans Total
(in millions) 2020 2019 2018 2017 2016 Prior
September 30, 2020
Commercial and industrial
Pass $ 46,064 39,124 18,498 8,711 4,905 5,748 172,440 2,546 298,036
Criticized 1,591 2,010 1,893 1,207 915 428 14,645 188 22,877
Total commercial and industrial 47,655 41,134 20,391 9,918 5,820 6,176 187,085 2,734 320,913
Real estate mortgage
Pass 15,269 27,768 20,335 12,452 13,232 16,833 4,831 6 110,726
Criticized 1,307 2,106 2,033 1,361 1,393 2,507 477 0 11,184
Total real estate mortgage 16,576 29,874 22,368 13,813 14,625 19,340 5,308 6 121,910
Real estate construction
Pass 4,244 6,828 5,248 2,139 618 399 1,506 3 20,985
Criticized 123 416 518 96 371 10 0 0 1,534
Total real estate construction 4,367 7,244 5,766 2,235 989 409 1,506 3 22,519
Lease financing
Pass 2,958 4,276 2,496 1,759 1,381 2,324 0 0 15,194
Criticized 254 533 469 249 151 97 0 0 1,753
Total lease financing 3,212 4,809 2,965 2,008 1,532 2,421 0 0 16,947
Total commercial loans $ 71,810 83,061 51,490 27,974 22,966 28,346 193,899 2,743 482,289
Commercial
and
industrial Real
estate
mortgage Real
estate
construction Lease
financing Total
December 31, 2019
By risk category:
Pass $ 338,740 118,054 19,752 18,655 495,201
Criticized 15,385 3,770 187 1,176 20,518
Total commercial loans $ 354,125 121,824 19,939 19,831 515,719

~~(1)Disclosure is not comparative due to our adoption of CECL on January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies).~~


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
(in millions)	2021		2020	2019	2018	2017	Prior
March 31, 2021
Commercial and industrial
Pass	$	23,964	34,788	32,106	13,882	6,094	9,951	181,444	250	302,479
Criticized	463		1,355	1,433	1,639	868	952	9,814	52	16,576
Total commercial and industrial	24,427		36,143	33,539	15,521	6,962	10,903	191,258	302	319,055
Real estate mortgage
Pass	6,354		21,274	24,414	17,998	10,279	24,109	4,748	1	109,177
Criticized	489		1,799	2,679	1,844	1,377	3,432	401	0	12,021
Total real estate mortgage	6,843		23,073	27,093	19,842	11,656	27,541	5,149	1	121,198
Real estate construction
Pass	1,126		4,904	6,465	4,403	1,196	416	1,165	2	19,677
Criticized	107		420	535	373	295	126	0	0	1,856
Total real estate construction	1,233		5,324	7,000	4,776	1,491	542	1,165	2	21,533
Lease financing
Pass	934		3,794	3,493	1,962	1,276	2,810	0	0	14,269
Criticized	62		319	429	312	167	176	0	0	1,465
Total lease financing	996		4,113	3,922	2,274	1,443	2,986	0	0	15,734
Total commercial loans	$	33,499	68,653	71,554	42,413	21,552	41,972	197,572	305	477,520
	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
	2020		2019	2018	2017	2016	Prior
December 31, 2020
Commercial and industrial
Pass	$	56,915	34,040	15,936	7,274	4,048	4,738	177,107	997	301,055
Criticized	1,404		1,327	1,357	972	672	333	11,534	151	17,750
Total commercial and industrial	58,319		35,367	17,293	8,246	4,720	5,071	188,641	1,148	318,805
Real estate mortgage
Pass	22,444		26,114	18,679	11,113	11,582	14,663	5,152	6	109,753
Criticized	2,133		2,544	1,817	1,287	1,625	2,082	479	0	11,967
Total real estate mortgage	24,577		28,658	20,496	12,400	13,207	16,745	5,631	6	121,720
Real estate construction
Pass	5,242		6,574	4,771	1,736	477	235	1,212	3	20,250
Criticized	449		452	527	4	113	10	0	0	1,555
Total real estate construction	5,691		7,026	5,298	1,740	590	245	1,212	3	21,805
Lease financing
Pass	3,970		3,851	2,176	1,464	1,199	1,924	0	0	14,584
Criticized	308		433	372	197	108	85	0	0	1,503
Total lease financing	4,278		4,284	2,548	1,661	1,307	2,009	0	0	16,087
Total commercial loans	$	92,865	75,335	45,635	24,047	19,824	24,070	195,484	1,157	478,417


			Wells Fargo & Company			77

Note 4: Loans and Related Allowance for Credit Losses (continued)

Table ~~6.9~~4.8 provides past due information for commercial loans, which we monitor as part of our credit risk management practices; however, delinquency is not a primary credit quality indicator for commercial loans. Payment deferral activities

instituted in response to the COVID-19 pandemic ~~may~~could continue to delay the recognition of delinquencies for customers who otherwise would have moved into past due status.

Table ~~6.9:~~4.8: Commercial Loan Categories by Delinquency Status


(in millions)	(in millions)	Commercial and industrial		Real estate mortgage	Real estate construction	Lease financing	Total	(in millions)	Commercial and industrial		Real estate mortgage	Real estate construction	Lease financing	Total
September 30, 2020
March 31, 2021								March 31, 2021
By delinquency status:	By delinquency status:							By delinquency status:
Current-29 days past due (DPD) and still accruing	Current-29 days past due (DPD) and still accruing	$	317,563	120,055	22,252	16,518	476,388	Current-29 days past due (DPD) and still accruing	$	316,407	118,987	21,293	15,120	471,807
30-89 DPD and still accruing	30-89 DPD and still accruing	455		465	233	242	1,395	30-89 DPD and still accruing	370		380	99	365	1,214
90+ DPD and still accruing	90+ DPD and still accruing	61		47	0	0	108	90+ DPD and still accruing	55		128	86	0	269
Nonaccrual loans	Nonaccrual loans	2,834		1,343	34	187	4,398	Nonaccrual loans	2,223		1,703	55	249	4,230
Total commercial loans	Total commercial loans	$	320,913	121,910	22,519	16,947	482,289	Total commercial loans	$	319,055	121,198	21,533	15,734	477,520
December 31, 2019
December 31, 2020								December 31, 2020
By delinquency status:	By delinquency status:							By delinquency status:
Current-29 DPD and still accruing	Current-29 DPD and still accruing	$	352,110	120,967	19,845	19,484	512,406	Current-29 DPD and still accruing	$	315,493	119,561	21,532	15,595	472,181
30-89 DPD and still accruing	30-89 DPD and still accruing	423		253	53	252	981	30-89 DPD and still accruing	575		347	224	233	1,379
90+ DPD and still accruing	90+ DPD and still accruing	47		31	0	0	78	90+ DPD and still accruing	39		38	1	0	78
Nonaccrual loans	Nonaccrual loans	1,545		573	41	95	2,254	Nonaccrual loans	2,698		1,774	48	259	4,779
Total commercial loans	Total commercial loans	$	354,125	121,824	19,939	19,831	515,719	Total commercial loans	$	318,805	121,720	21,805	16,087	478,417

CONSUMER CREDIT QUALITY INDICATORS We have various classes of consumer loans that present unique credit risks. Loan delinquency, FICO credit scores and LTV for ~~1-4 family~~residential mortgage loans are the primary credit quality indicators that we monitor and utilize in our evaluation of the appropriateness of the ~~allowance for credit losses~~ACL for the consumer loan portfolio segment.

Many of our loss estimation techniques used for the ~~allowance~~ACL for ~~credit losses~~loans rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality in the establishment of our ~~allowance~~ACL for ~~credit losses.~~loans.

Table ~~6.10~~4.9 provides the outstanding balances of our consumer loan portfolio by delinquency status. Payment deferral activities instituted in response to the COVID-19 pandemic ~~may~~could continue to delay the recognition of delinquencies for customers who otherwise would have moved into past due status.

~~In connection with our adoption of CECL, credit~~Credit quality information is provided with the year of origination for term loans. Revolving loans may convert to term loans as a result of a contractual provision in the original loan agreement or if modified in a TDR. The revolving loans converted to term loans in the credit card loan category represent credit card loans with modified terms that require payment over a specific term.


78			Wells Fargo & Company

Table 4.9:Consumer Loan Categories by Delinquency Status and Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2021		2020	2019	2018	2017	Prior			Total
March 31, 2021
Residential mortgage – first lien
By delinquency status:
Current-29 DPD	$	12,509	49,978	36,683	12,122	20,679	86,286	6,352	1,654	226,263
30-59 DPD	12		28	59	25	37	675	19	35	890
60-89 DPD	0		16	3	3	10	220	13	22	287
90-119 DPD	0		31	2	2	7	85	9	21	157
120-179 DPD	0		129	13	7	5	148	68	87	457
180+ DPD	0		151	8	8	14	775	53	178	1,187
Government insured/guaranteed loans (1)	1		202	472	725	820	22,902	0	0	25,122
Total residential mortgage – first lien	12,522		50,535	37,240	12,892	21,572	111,091	6,514	1,997	254,363
Residential mortgage – junior lien
By delinquency status:
Current-29 DPD	9		22	38	38	33	1,028	13,980	5,036	20,184
30-59 DPD	0		0	0	0	0	16	35	55	106
60-89 DPD	0		0	0	1	0	8	32	41	82
90-119 DPD	0		0	0	0	0	5	25	42	72
120-179 DPD	0		0	0	0	0	9	180	316	505
180+ DPD	0		0	0	0	0	29	78	252	359
Total residential mortgage – junior lien	9		22	38	39	33	1,095	14,330	5,742	21,308
Credit cards
By delinquency status:
Current-29 DPD	0		0	0	0	0	0	33,315	243	33,558
30-59 DPD	0		0	0	0	0	0	157	9	166
60-89 DPD	0		0	0	0	0	0	121	8	129
90-119 DPD	0		0	0	0	0	0	121	8	129
120-179 DPD	0		0	0	0	0	0	262	2	264
180+ DPD	0		0	0	0	0	0	0	0	0
Total credit cards	0		0	0	0	0	0	33,976	270	34,246
Auto
By delinquency status:
Current-29 DPD	6,871		17,864	13,015	5,497	2,880	2,421	0	0	48,548
30-59 DPD	5		112	129	73	49	93	0	0	461
60-89 DPD	0		32	42	23	15	28	0	0	140
90-119 DPD	0		16	18	10	6	10	0	0	60
120-179 DPD	0		0	1	0	0	0	0	0	1
180+ DPD	0		0	0	0	0	0	0	0	0
Total auto	6,876		18,024	13,205	5,603	2,950	2,552	0	0	49,210
Other consumer
By delinquency status:
Current-29 DPD	412		1,204	1,175	472	196	208	21,018	144	24,829
30-59 DPD	0		3	5	2	1	3	9	6	29
60-89 DPD	0		1	3	1	1	1	7	1	15
90-119 DPD	0		1	3	2	1	1	6	3	17
120-179 DPD	0		0	0	0	0	0	14	7	21
180+ DPD	0		0	0	0	0	2	3	9	14
Total other consumer	412		1,209	1,186	477	199	215	21,057	170	24,925
Total consumer loans	$	19,819	69,790	51,669	19,011	24,754	114,953	75,877	8,179	384,052

(continued on following page)


			Wells Fargo & Company			79

Note 6:4: Loans and Related Allowance for Credit Losses (continued)

~~Table 6.10:Consumer Loan Categories by Delinquency Status and Vintage (1)~~

Term loans by origination year Revolving loans Revolving loans converted to term loans
(in millions) 2020 2019 2018 2017 2016 Prior Total
September 30, 2020
Real estate 1-4 family first mortgage
By delinquency status:
Current-29 DPD $ 42,388 49,009 17,902 28,860 34,728 77,341 7,300 1,906 259,434
30-59 DPD 40 84 36 61 64 723 28 42 1,078
60-89 DPD 1 6 2 7 17 236 13 23 305
90-119 DPD 2 6 2 7 2 194 9 19 241
120-179 DPD 3 4 6 3 9 222 8 22 277
180+ DPD 1 0 4 15 14 543 12 129 718
Government insured/guaranteed
loans (2)
204 794 969 1,248 2,646 27,076 0 0 32,937
Total real estate 1-4 family first mortgage 42,639 49,903 18,921 30,201 37,480 106,335 7,370 2,141 294,990
Real estate 1-4 family junior mortgage
By delinquency status:
Current-29 DPD 16 41 47 43 35 1,255 16,896 6,302 24,635
30-59 DPD 1 0 0 0 0 23 57 86 167
60-89 DPD 0 0 0 0 0 10 24 50 84
90-119 DPD 0 0 0 0 0 8 14 29 51
120-179 DPD 0 0 0 0 0 11 12 42 65
180+ DPD 0 0 0 0 1 14 17 128 160
Total real estate 1-4 family junior mortgage 17 41 47 43 36 1,321 17,020 6,637 25,162
Credit cards
By delinquency status:
Current-29 DPD 0 0 0 0 0 0 35,123 264 35,387
30-59 DPD 0 0 0 0 0 0 196 13 209
60-89 DPD 0 0 0 0 0 0 118 10 128
90-119 DPD 0 0 0 0 0 0 93 10 103
120-179 DPD 0 0 0 0 0 0 185 6 191
180+ DPD 0 0 0 0 0 0 3 0 3
Total credit cards 0 0 0 0 0 0 35,718 303 36,021
Automobile
By delinquency status:
Current-29 DPD 15,736 16,210 7,186 4,087 3,269 1,053 0 0 47,541
30-59 DPD 66 185 126 90 127 62 0 0 656
60-89 DPD 15 54 37 27 39 20 0 0 192
90-119 DPD 6 20 11 7 11 5 0 0 60
120-179 DPD 0 1 0 0 0 0 0 0 1
180+ DPD 0 0 0 0 0 0 0 0 0
Total automobile 15,823 16,470 7,360 4,211 3,446 1,140 0 0 48,450
Other revolving credit and installment
By delinquency status:
Current-29 DPD 1,820 2,972 1,809 1,239 1,116 5,148 18,688 165 32,957
30-59 DPD 2 7 7 6 6 41 12 6 87
60-89 DPD 1 6 6 6 6 29 7 2 63
90-119 DPD 0 3 3 3 3 21 5 2 40
120-179 DPD 0 0 0 0 0 1 9 3 13
180+ DPD 0 0 0 0 0 1 3 6 10
Total other revolving credit and installment 1,823 2,988 1,825 1,254 1,131 5,241 18,724 184 33,170
Total consumer loans $ 60,302 69,402 28,153 35,709 42,093 114,037 78,832 9,265 437,793

~~(continued on following page)~~

(continued from previous page)


		Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Credit card	Automobile	Other revolving credit and installment	Total		Term loans by origination year							Revolving loans		Revolving loans converted to term loans
December 31, 2019
(in millions)									(in millions)	2020		2019	2018	2017	2016	Prior		Revolving loans			Revolving loans converted to term loans		Total
December 31, 2020									December 31, 2020
Residential mortgage – first lien									Residential mortgage – first lien
By delinquency status:	By delinquency status:								By delinquency status:
Current-29 DPD	Current-29 DPD	$	279,722	28,870	39,935	46,650	33,981	429,158	Current-29 DPD	$	53,298	43,297	14,761	24,619	30,533	67,960	6,762			1,719		242,949
30-59 DPD	30-59 DPD	1,136		216	311	882	140	2,685	30-59 DPD	111		76	36	67	79	750	52		66		1,237
60-89 DPD	60-89 DPD	404		115	221	263	81	1,084	60-89 DPD	88		10	6	12	13	305	56		68		558
90-119 DPD	90-119 DPD	197		69	202	77	74	619	90-119 DPD	232		11	5	8	7	197	26		33		519
120-179 DPD	120-179 DPD	160		71	343	1	18	593	120-179 DPD	3		4	1	3	5	151	17		29		213
180+ DPD	180+ DPD	503		155	1	0	10	669	180+ DPD	3		1	4	11	15	758	21		145		958
Government insured/guaranteed loans (2)		11,170		0	0	0	0	11,170
Total consumer loans (excluding PCI)		293,292		29,496	41,013	47,873	34,304	445,978
Total consumer PCI loans (carrying value) (3)		555		13	0	0	0	568
Government insured/guaranteed loans (1)									Government insured/guaranteed loans (1)	215		639	904	1,076	2,367	25,039	0		0		30,240
Total residential mortgage – first lien									Total residential mortgage – first lien	53,950		44,038	15,717	25,796	33,019	95,160	6,934		2,060		276,674
Residential mortgage – junior lien									Residential mortgage – junior lien
By delinquency status:									By delinquency status:
Current-29 DPD									Current-29 DPD	22		39	39	37	31	1,115	15,366		5,434		22,083
30-59 DPD									30-59 DPD	0		0	1	1	0	22	113		160		297
60-89 DPD									60-89 DPD	0		0	1	0	0	11	154		271		437
90-119 DPD									90-119 DPD	0		0	0	1	0	7	45		84		137
120-179 DPD									120-179 DPD	0		0	0	0	0	9	36		77		122
180+ DPD									180+ DPD	0		0	0	0	1	25	29		155		210
Total residential mortgage – junior lien									Total residential mortgage – junior lien	22		39	41	39	32	1,189	15,743		6,181		23,286
Credit cards									Credit cards
By delinquency status:									By delinquency status:
Current-29 DPD									Current-29 DPD	0		0	0	0	0	0	35,612		255		35,867
30-59 DPD									30-59 DPD	0		0	0	0	0	0	243		12		255
60-89 DPD									60-89 DPD	0		0	0	0	0	0	167		10		177
90-119 DPD									90-119 DPD	0		0	0	0	0	0	144		10		154
120-179 DPD									120-179 DPD	0		0	0	0	0	0	208		3		211
180+ DPD									180+ DPD	0		0	0	0	0	0	0		0		0
Total credit cards									Total credit cards	0		0	0	0	0	0	36,374		290		36,664
Auto									Auto
By delinquency status:									By delinquency status:
Current-29 DPD									Current-29 DPD	19,625		14,561	6,307	3,459	2,603	697	0		0		47,252
30-59 DPD									30-59 DPD	120		183	114	80	107	46	0		0		650
60-89 DPD									60-89 DPD	32		60	36	25	35	16	0		0		204
90-119 DPD									90-119 DPD	13		26	14	9	12	6	0		0		80
120-179 DPD									120-179 DPD	0		1	0	0	0	0	0		0		1
180+ DPD									180+ DPD	0		0	0	—	0	0	0		0		0
Total auto									Total auto	19,790		14,831	6,471	3,573	2,757	765	0		0		48,187
Other consumer									Other consumer
By delinquency status:									By delinquency status:
Current-29 DPD									Current-29 DPD	1,406		1,383	577	261	59	193	20,246		162		24,287
30-59 DPD									30-59 DPD	2		7	5	2	1	3	19		10		49
60-89 DPD									60-89 DPD	1		5	3	1	1	1	10		6		28
90-119 DPD									90-119 DPD	1		4	2	1	0	1	8		3		20
120-179 DPD									120-179 DPD	0		0	0	0	0	0	10		4		14
180+ DPD									180+ DPD	0		0	0	0	0	2	3		6		11
Total other consumer									Total other consumer	1,410		1,399	587	265	61	200	20,296		191		24,409
Total consumer loans	Total consumer loans	$	293,847	29,509	41,013	47,873	34,304	446,546	Total consumer loans	$	75,172	60,307	22,816	29,673	35,869	97,314	79,347		8,722		409,220

(1)~~Disclosure is not comparative due to our adoption of CECL on January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies).~~

~~(2)~~Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled ~~$11.0~~$8.1 billion and $11.1 billion at ~~September 30, 2020, compared with $6.4 billion at~~March 31, 2021, and December 31, ~~2019.~~

~~(3)26% of the adjusted unpaid principal balance for consumer PCI loans was 30+ DPD at December 31, 2019.~~2020, respectively.

Of the ~~$1.9~~$3.2 billion of consumer loans not government insured/guaranteed that are 90 days or more past due at ~~September 30, 2020, $549~~March 31, 2021, $598 million was accruing, compared with ~~$1.9~~

$2.7 billion past due and ~~$855~~$612 million accruing ~~at December~~atDecember 31, ~~2019.~~2020.


80			Wells Fargo & Company

Table ~~6.11~~4.10 provides the outstanding balances of our consumer loan portfolio by FICO score. Substantially all of the scored consumer portfolio has an updated FICO score of 680 and above, reflecting a strong current borrower credit profile. FICO scores are not available for certain loan types or may not be required if we deem it unnecessary due to strong collateral and

other borrower attributes. Loans not requiring a FICO score totaled ~~$11.3~~$14.7 billion and ~~$9.1~~$13.2 billion at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, respectively. Substantially all loans not requiring a FICO score are securities-based loans originated through retail brokerage.

Table 4.10:Consumer Loan Categories by FICO and Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2021		2020	2019	2018	2017	Prior			Total
March 31, 2021
By FICO:
Residential mortgage – first lien
800+	$	5,312	31,048	24,815	8,195	14,736	54,856	3,216	475	142,653
760-799	5,485		13,403	7,869	2,299	3,532	13,522	1,247	260	47,617
720-759	1,343		4,165	2,711	951	1,500	7,969	793	255	19,687
680-719	291		1,206	923	376	609	4,653	505	216	8,779
640-679	64		313	243	152	175	2,396	231	153	3,727
600-639	5		46	55	55	45	1,330	119	99	1,754
< 600	0		8	28	47	39	1,576	155	155	2,008
No FICO available	21		144	124	92	116	1,887	248	384	3,016
Government insured/guaranteed loans (1)	1		202	472	725	820	22,902	0	0	25,122
Total residential mortgage – first lien	12,522		50,535	37,240	12,892	21,572	111,091	6,514	1,997	254,363
Residential mortgage – junior lien
800+	0		0	0	0	0	263	7,329	1,724	9,316
760-799	0		0	0	0	0	159	2,675	967	3,801
720-759	0		0	0	0	0	186	1,869	949	3,004
680-719	0		0	0	0	0	164	1,129	782	2,075
640-679	0		0	0	0	0	92	461	445	998
600-639	0		0	0	0	0	62	213	267	542
< 600	0		0	0	0	0	63	232	318	613
No FICO available	9		22	38	39	33	106	422	290	959
Total residential mortgage – junior lien	9		22	38	39	33	1,095	14,330	5,742	21,308
Credit card
800+	0		0	0	0	0	0	3,818	1	3,819
760-799	0		0	0	0	0	0	5,202	8	5,210
720-759	0		0	0	0	0	0	7,473	30	7,503
680-719	0		0	0	0	0	0	8,307	59	8,366
640-679	0		0	0	0	0	0	5,102	60	5,162
600-639	0		0	0	0	0	0	1,955	42	1,997
< 600	0		0	0	0	0	0	2,115	69	2,184
No FICO available	0		0	0	0	0	0	4	1	5
Total credit card	0		0	0	0	0	0	33,976	270	34,246
Auto
800+	1,488		2,488	2,392	1,074	614	393	0	0	8,449
760-799	1,162		2,850	2,365	965	472	304	0	0	8,118
720-759	1,093		2,890	2,223	948	473	353	0	0	7,980
680-719	1,150		3,251	2,261	919	449	371	0	0	8,401
640-679	1,084		2,997	1,694	653	328	314	0	0	7,070
600-639	646		1,907	1,007	408	225	266	0	0	4,459
< 600	253		1,620	1,219	627	377	522	0	0	4,618
No FICO available	0		21	44	9	12	29	0	0	115
Total auto	6,876		18,024	13,205	5,603	2,950	2,552	0	0	49,210
Other consumer
800+	126		304	247	76	24	72	2,072	21	2,942
760-799	121		285	228	74	22	36	1,029	14	1,809
720-759	85		207	210	83	26	32	812	24	1,479
680-719	45		135	177	80	27	24	702	24	1,214
640-679	13		58	90	43	15	15	359	24	617
600-639	2		17	30	16	7	8	133	12	225
< 600	2		14	35	23	9	10	150	17	260
No FICO available	18		189	169	82	69	18	1,146	34	1,725
FICO not required	0		0	0	0	0	0	14,654	0	14,654
Total other consumer	412		1,209	1,186	477	199	215	21,057	170	24,925
Total consumer loans	$	19,819	69,790	51,669	19,011	24,754	114,953	75,877	8,179	384,052

(continued on following page)


			Wells Fargo & Company			81

Note 6:4: Loans and Related Allowance for Credit Losses (continued)

~~Table 6.11:Consumer Loan Categories by FICO and Vintage(1)~~

Term loans by origination year Revolving loans Revolving loans converted to term loans
(in millions) 2020 2019 2018 2017 2016 Prior Total
September 30, 2020
By FICO:
Real estate 1-4 family first mortgage
800+ $ 22,861 32,129 12,129 20,712 25,429 46,803 3,644 510 164,217
760-799 13,693 11,343 3,522 5,002 5,507 11,999 1,428 279 52,773
720-759 4,224 3,822 1,376 1,994 2,397 7,526 910 273 22,522
680-719 1,249 1,170 552 745 901 4,718 557 230 10,122
640-679 253 292 184 237 267 2,588 263 163 4,247
600-639 30 77 66 91 77 1,522 131 107 2,101
< 600 16 24 37 44 85 1,994 174 189 2,563
No FICO available 109 252 86 128 171 2,109 263 390 3,508
Government insured/guaranteed loans (2) 204 794 969 1,248 2,646 27,076 0 0 32,937
Total real estate 1-4 family first mortgage 42,639 49,903 18,921 30,201 37,480 106,335 7,370 2,141 294,990
Real estate 1-4 family junior lien mortgage
800+ 0 0 0 0 0 325 8,689 1,926 10,940
760-799 0 0 0 0 0 193 3,213 1,100 4,506
720-759 0 0 0 0 0 233 2,224 1,109 3,566
680-719 0 0 0 0 0 204 1,337 930 2,471
640-679 0 0 0 0 0 114 546 528 1,188
600-639 0 0 0 0 0 70 264 323 657
< 600 0 0 0 0 0 87 291 432 810
No FICO available 17 41 47 43 36 95 456 289 1,024
Total real estate 1-4 family junior lien mortgage 17 41 47 43 36 1,321 17,020 6,637 25,162
Credit card
800+ 0 0 0 0 0 0 3,827 1 3,828
760-799 0 0 0 0 0 0 5,312 7 5,319
720-759 0 0 0 0 0 0 7,795 28 7,823
680-719 0 0 0 0 0 0 8,731 60 8,791
640-679 0 0 0 0 0 0 5,495 65 5,560
600-639 0 0 0 0 0 0 2,223 49 2,272
< 600 0 0 0 0 0 0 2,325 92 2,417
No FICO available 0 0 0 0 0 0 10 1 11
Total credit card 0 0 0 0 0 0 35,718 303 36,021
Automobile
800+ 2,102 2,856 1,378 861 577 168 0 0 7,942
760-799 2,333 2,951 1,276 684 449 128 0 0 7,821
720-759 2,565 2,806 1,251 687 498 153 0 0 7,960
680-719 2,950 2,839 1,224 648 505 157 0 0 8,323
640-679 2,839 2,190 871 464 409 137 0 0 6,910
600-639 1,830 1,335 542 315 328 121 0 0 4,471
< 600 1,198 1,460 814 541 660 263 0 0 4,936
No FICO available 6 33 4 11 20 13 0 0 87
Total automobile 15,823 16,470 7,360 4,211 3,446 1,140 0 0 48,450
Other revolving credit and installment
800+ 621 964 583 432 439 2,070 2,454 23 7,586
760-799 485 676 365 240 225 1,058 1,198 18 4,265
720-759 330 515 303 195 184 830 954 26 3,337
680-719 180 363 229 147 134 590 838 28 2,509
640-679 70 167 117 77 70 323 439 20 1,283
600-639 18 51 41 31 31 154 165 14 505
< 600 10 48 47 33 33 143 166 20 500
No FICO available 109 204 140 99 15 73 1,191 35 1,866
FICO not required 0 0 0 0 0 0 11,319 0 11,319
Total other revolving credit and installment 1,823 2,988 1,825 1,254 1,131 5,241 18,724 184 33,170
Total consumer loans $ 60,302 69,402 28,153 35,709 42,093 114,037 78,832 9,265 437,793

~~(continued on next page)~~

(continued from ~~prior~~previous page)


		Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Credit card	Automobile	Other revolving credit and installment	Total		Term loans by origination year							Revolving loans		Revolving loans converted to term loans
December 31, 2019
(in millions)									(in millions)	2020		2019	2018	2017	2016	Prior		Revolving loans			Revolving loans converted to term loans		Total
December 31, 2020									December 31, 2020
By FICO:	By FICO:								By FICO:
Residential mortgage – first lien									Residential mortgage – first lien
800+									800+	$	29,365	28,652	9,911	17,416	22,215	40,440	3,391			493		151,883
760-799									760-799	17,154		9,866	2,908	4,380	4,955	10,843	1,361		274		51,741
720-759									720-759	5,274		3,290	1,189	1,829	2,106	7,001	879		265		21,833
680-719									680-719	1,361		1,084	490	678	831	4,403	520		221		9,588
640-679									640-679	376		287	148	192	226	2,385	241		154		4,009
600-639									600-639	55		56	44	56	92	1,429	127		106		1,965
< 600									< 600	14		29	36	44	66	1,789	162		175		2,315
No FICO available									No FICO available	136		135	87	125	161	1,831	253		372		3,100
Government insured/guaranteed loans (1)									Government insured/guaranteed loans (1)	215		639	904	1,076	2,367	25,039	0		0		30,240
Total residential mortgage – first lien									Total residential mortgage – first lien	53,950		44,038	15,717	25,796	33,019	95,160	6,934		2,060		276,674
Residential mortgage – junior lien									Residential mortgage – junior lien
800+									800+	0		0	0	0	0	293	7,973		1,819		10,085
760-799									760-799	0		0	0	0	0	177	3,005		1,032		4,214
720-759									720-759	0		0	0	0	0	207	2,093		1,034		3,334
680-719									680-719	0		0	0	0	0	183	1,233		854		2,270
640-679									640-679	0		0	0	0	0	103	503		493		1,099
600-639									600-639	0		0	0	0	0	67	241		299		607
< 600									< 600	0		0	0	0	0	76	254		374		704
No FICO available									No FICO available	22		39	41	39	32	83	441		276		973
Total residential mortgage – junior lien									Total residential mortgage – junior lien	22		39	41	39	32	1,189	15,743		6,181		23,286
Credit card									Credit card
800+									800+	0		0	0	0	0	0	3,860		1		3,861
760-799									760-799	0		0	0	0	0	0	5,438		7		5,445
720-759									720-759	0		0	0	0	0	0	7,897		29		7,926
680-719									680-719	0		0	0	0	0	0	8,854		60		8,914
640-679									640-679	0		0	0	0	0	0	5,657		64		5,721
600-639									600-639	0		0	0	0	0	0	2,242		46		2,288
< 600									< 600	0		0	0	0	0	0	2,416		82		2,498
No FICO available									No FICO available	0		0	0	0	0	0	10		1		11
Total credit card									Total credit card	0		0	0	0	0	0	36,374		290		36,664
Auto									Auto
800+									800+	2,875		2,606	1,211	731	452	104	0		0		7,979
760-799									760-799	3,036		2,662	1,122	579	349	81	0		0		7,829
720-759									720-759	3,162		2,514	1,095	576	395	98	0		0		7,840
680-719									680-719	3,534		2,542	1,066	545	400	105	0		0		8,192
640-679									640-679	3,381		1,948	763	395	334	94	0		0		6,915
600-639									600-639	2,208		1,165	479	274	276	87	0		0		4,489
< 600									< 600	1,581		1,357	730	463	533	186	0		0		4,850
No FICO available									No FICO available	13		37	5	10	18	10	0		0		93
Total auto									Total auto	19,790		14,831	6,471	3,573	2,757	765	0		0		48,187
Other consumer									Other consumer
800+	800+	$	165,460	11,851	4,037	7,900	7,585	196,833	800+	353		287	94	35	10	71	2,249		21		3,120
760-799	760-799	61,559		5,483	5,648	7,624	4,915	85,229	760-799	342		279	93	29	10	34	1,110		16		1,913
720-759	720-759	27,879		4,407	8,376	7,839	4,097	52,598	720-759	262		258	107	35	11	30	915		26		1,644
680-719	680-719	12,844		3,192	9,732	7,871	3,212	36,851	680-719	156		213	99	36	11	24	798		31		1,368
640-679	640-679	5,068		1,499	6,626	6,324	1,730	21,247	640-679	71		112	59	21	7	10	415		23		718
600-639	600-639	2,392		782	2,853	4,230	670	10,927	600-639	18		36	22	9	4	8	151		13		261
< 600	< 600	3,264		1,164	3,373	6,041	704	14,546	< 600	13		41	30	12	5	7	161		18		287
No FICO available	No FICO available	3,656		1,118	368	44	2,316	7,502	No FICO available	195		173	83	88	3	16	1,248		43		1,849
FICO not required	FICO not required	0		0	0	0	9,075	9,075	FICO not required	—		0	0	0	0	0	13,249		0		13,249
Government insured/guaranteed loans (2)		11,170		0	0	0	0	11,170
Total consumer loans (excluding PCI)		293,292		29,496	41,013	47,873	34,304	445,978
Total consumer PCI loans (carrying value) (3)		555		13	0	0	0	568
Total other consumer									Total other consumer	1,410		1,399	587	265	61	200	20,296		191		24,409
Total consumer loans	Total consumer loans	$	293,847	29,509	41,013	47,873	34,304	446,546	Total consumer loans	$	75,172	60,307	22,816	29,673	35,869	97,314	79,347		8,722		409,220

(1)~~Disclosure is not comparative due to our adoption of CECL on January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies).~~

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

~~(3)41% of the adjusted unpaid principal balance for consumer PCI loans had FICO scores less than 680 and 19% where no FICO was available to us at December 31, 2019.~~

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 lien 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.


82			Wells Fargo & Company

Table ~~6.12~~4.11 shows the most updated LTV and CLTV distribution of the ~~real estate 1-4 family~~residential mortgage – first lien and residential mortgage – 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.~~ACL. 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 Related Allowance for Credit Losses~~ ~~(continued)~~

Table ~~6.12:~~4.11: Consumer Loan Categories by LTV/CLTV and Vintage~~(1)~~


		Term loans by origination year							Revolving loans			Revolving loans converted to term loans					Term loans by origination year													Revolving loans		Revolving loans converted to term loans
(in millions)	(in millions)	2020		2019	2018	2017	2016	Prior					Total	(in millions)	2021				2020		2019		2018		2017		Prior						Total
September 30, 2020
Real estate 1-4 family first mortgage
By LTV/CLTV:
March 31, 2021																March 31, 2021
Residential mortgage – first lien																Residential mortgage – first lien
By LTV:																By LTV:
0-60%																0-60%	$	4,267		16,832		14,542		5,555		12,104		72,786		4,755		1,574		132,415
60.01-80%																60.01-80%	8,209			31,194		19,934		5,894		8,045		13,757		1,206		292		88,531
80.01-100%																80.01-100%	23			2,139		2,092		625		501		1,115		365		91		6,951
100.01-120% (1)																100.01-120% (1)	0			40		81		26		24		153		97		21		442
> 120% (1)																> 120% (1)	0			24		35		8		15		75		38		7		202
No LTV available																No LTV available	22			104		84		59		63		303		53		12		700
Government insured/guaranteed loans ~~(3)~~(2)																Government insured/guaranteed loans ~~(3)~~(2)	1			202		472		725		820		22,902		0		0		25,122
Total residential mortgage – first lien																Total residential mortgage – first lien	12,522			50,535		37,240		12,892		21,572		111,091		6,514		1,997		254,363
Residential mortgage – junior lien																Residential mortgage – junior lien
By CLTV:																By CLTV:
0-60%	0-60%	$	12,777	15,718	6,606	13,753	21,870	65,355			5,138		1,605			142,822		0-60%	0		0		0		0		0		520		8,203		3,646		12,369
60.01-80%	60.01-80%	27,558		28,843	9,775	14,099	12,226	12,003	1,485			359		106,348		60.01-80%	0			0		0		0		0		294		4,423		1,371		6,088
80.01-100%	80.01-100%	1,981		4,293	1,419	943	567	1,321	488			119		11,131		80.01-100%	0			0		0		0		0		155		1,273		527		1,955
100.01-120% (2)	100.01-120% (2)	20		110	64	59	56	226	150			32		717		100.01-120% (2)	0			0		0		0		0		44		302		122		468
> 120% (2)	> 120% (2)	10		49	22	21	23	100	53			12		290		> 120% (2)	0			0		0		0		0		12		105		41		158
No LTV/CLTV available		89		96	66	78	92	254	56			14		745
Government insured/guaranteed loans ~~(3)~~(2)		204		794	969	1,248	2,646	27,076	0			0		32,937
Total real estate 1-4 family first mortgage		42,639		49,903	18,921	30,201	37,480	106,335	7,370			2,141		294,990
Real estate 1-4 family junior lien mortgage
By LTV/CLTV:
No CLTV available																No CLTV available	9			22		38		39		33		70		24		35		270
Total residential mortgage – junior lien																Total residential mortgage – junior lien	9			22		38		39		33		1,095		14,330		5,742		21,308
Total																Total	$	12,531		50,557		37,278		12,931		21,605		112,186		20,844		7,739		275,671
																	Term loans by origination year													Revolving loans		Revolving loans converted to term loans
																	2020			2019		2018		2017		2016		Prior					Total
December 31, 2020																December 31, 2020
Residential mortgage – first lien																Residential mortgage – first lien
By LTV:																By LTV:
0-60%																0-60%	$	16,582		15,449		6,065		13,190		21,097		59,291			4,971		1,587		138,232
60.01-80%																60.01-80%	34,639			24,736		7,724		10,745		8,970		9,333		1,323		326		97,796
80.01-100%																80.01-100%	2,332			2,975		900		654		441		1,003		425		100		8,830
100.01-120% (1)																100.01-120% (1)	41			106		45		40		41		168		117		26		584
> 120% (1)																> 120% (1)	31			41		16		19		16		78		44		8		253
No LTV available																No LTV available	110			92		63		72		87		248		54		13		739
Government insured/guaranteed loans (2)																Government insured/guaranteed loans (2)	215			639		904		1,076		2,367		25,039		0		0		30,240
Total residential mortgage – first lien																Total residential mortgage – first lien	53,950			44,038		15,717		25,796		33,019		95,160		6,934		2,060		276,674
Residential mortgage – junior lien																Residential mortgage – junior lien
By CLTV:																By CLTV:
0-60%	0-60%	0		0	0	0	0	572	8,819			3,829		13,220		0-60%	0			0		0		0		0		548		8,626		3,742		12,916
60.01-80%	60.01-80%	0		0	0	0	0	373	5,784			1,740		7,897		60.01-80%	0			0		0		0		0		335		5,081		1,554		6,970
80.01-100%	80.01-100%	0		0	0	0	0	229	1,772			773		2,774		80.01-100%	0			0		0		0		0		187		1,507		641		2,335
100.01-120% (2)	100.01-120% (2)	0		0	0	0	0	74	452			193		719		100.01-120% (2)	0			0		0		0		0		59		376		156		591
> 120% (2)	> 120% (2)	0		0	0	0	0	22	167			61		250		> 120% (2)	0			0		0		0		0		15		128		50		193
No LTV/CLTV available		17		41	47	43	36	51	26			41		302
Total real estate 1-4 family junior lien mortgage		17		41	47	43	36	1,321	17,020			6,637		25,162
No CLTV available																No CLTV available	22			39		41		39		32		45		25		38		281
Total residential mortgage – junior lien																Total residential mortgage – junior lien	22			39		41		39		32		1,189		15,743		6,181		23,286
Total	Total	$	42,656	49,944	18,968	30,244	37,516	107,656	24,390			8,778		320,152		Total	$	53,972		44,077		15,758		25,835		33,051		96,349		22,677		8,241		299,960
December 31, 2019									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%									$	151,478		14,603		166,081
60.01-80%									114,795			9,663		124,458
80.01-100%									13,867			3,574		17,441
100.01-120% (2)									860			978		1,838
> 120% (2)									338			336		674
No LTV/CLTV available									784			342		1,126
Government insured/guaranteed loans (3)									11,170			0		11,170
Total consumer loans (excluding PCI)									293,292			29,496		322,788
Total consumer PCI loans (carrying value) (4)									555			13		568
Total consumer loans									$	293,847		29,509		323,356

(1)~~Disclosure is not comparative due to our adoption of CECL on January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies).~~

~~(2)~~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.

~~(3)~~(2)Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.

~~(4)~~
~~9% of the adjusted unpaid principal balance for consumer PCI loans have LTV/CLTV amounts greater than 80% at December 31, 2019.~~


			Wells Fargo & Company			83

Note 4: Loans and Related Allowance for Credit Losses (continued)

NONACCRUAL LOANSTable ~~6.13~~4.12 provides loans on nonaccrual status. In connection with our adoption of CECL, nonaccrual loans may have an ~~allowance for credit losses~~ACL or a negative allowance for credit losses from expected recoveries of amounts previously written off. Payment

~~written off. Payment~~ deferral activities instituted in response to the COVID-19 pandemic ~~may~~could continue to delay the recognition of delinquencies for customers who otherwise would have moved into nonaccrual status.

Table ~~6.13:~~4.12: Nonaccrual Loans~~(1)~~


							Amortized cost					Recognized interest income
		Amortized cost			Nine months ended September 30, 2020		Nonaccrual loans			Nonaccrual loans without related allowance for credit losses (1)		Quarter ended March 31,
(in millions)	(in millions)	Nonaccrual loans		Nonaccrual loans without related allowance for credit losses (2)	Recognized interest income	(in millions)	Mar 31, 2021		Dec 31, 2020	Mar 31, 2021	Dec 31, 2020	2021	2020
September 30, 2020
Commercial:	Commercial:					Commercial:
Commercial and industrial	Commercial and industrial	$	2,834	293	48	Commercial and industrial	$	2,223	2,698	428	382	31	16
Real estate mortgage	Real estate mortgage	1,343		113	25	Real estate mortgage	1,703		1,774	78	93	11	8
Real estate construction	Real estate construction	34		2	6	Real estate construction	55		48	13	15	0	4
Lease financing	Lease financing	187		18	0	Lease financing	249		259	44	16	0	0
Total commercial	Total commercial	4,398		426	79	Total commercial	4,230		4,779	563	506	42	28
Consumer:	Consumer:					Consumer:
Real estate 1-4 family first mortgage		2,641		1,549	116
Real estate 1-4 family junior lien mortgage		767		465	39
Automobile		176		0	12
Other revolving credit and installment		40		0	2
Residential mortgage- first lien						Residential mortgage- first lien	2,859		2,957	1,932	1,908	37	44
Residential mortgage- junior lien						Residential mortgage- junior lien	747		754	453	461	12	16
Auto						Auto	181		202	0	0	9	3
Other consumer						Other consumer	38		36	0	0	1	1
Total consumer	Total consumer	3,624		2,014	169	Total consumer	3,825		3,949	2,385	2,369	59	64
Total nonaccrual loans	Total nonaccrual loans	$	8,022	2,440	248	Total nonaccrual loans	$	8,055	8,728	2,948	2,875	101	92
December 31, 2019 (1)
Commercial:
Commercial and industrial		$	1,545
Real estate mortgage		573
Real estate construction		41
Lease financing		95
Total commercial		2,254
Consumer:
Real estate 1-4 family first mortgage		2,150
Real estate 1-4 family junior lien mortgage		796
Automobile		106
Other revolving credit and installment		40
Total consumer		3,092
Total nonaccrual loans (excluding PCI)		$	5,346

(1)~~Disclosure is not comparative due to our adoption of CECL on January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies).~~

~~(2)~~Nonaccrual loans may not have an allowance for credit losses if the loss expectations are zero given solid collateral value.

LOANS IN PROCESS OF FORECLOSUREOur recorded investment in consumer mortgage loans collateralized by residential real estate property that are in process of foreclosure was ~~$2.3~~$1.3 billion and ~~$3.5~~$2.1 billion at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, respectively, which included ~~$1.9 billion~~$947 million and ~~$2.8~~$1.7 billion, respectively, of loans that are government insured/guaranteed. Under the Consumer Financial Protection Bureau guidelines, we do not commence the foreclosure process on ~~real estate 1-4 family~~residential mortgage loans until after the loan is 120 days 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. In connection with our actions to support customers during the COVID-19 pandemic, we have suspended certain mortgage foreclosure activities.


84			Wells Fargo & Company

~~Note 6: Loans and Related Allowance for Credit Losses~~ ~~(continued)~~

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING Certain loans 90 days or more past due are still accruing, because they are (1) well-secured and in the process of collection or (2) ~~real estate 1-4 family~~residential mortgage ~~loans~~ or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due.

Table ~~6.14~~4.13 shows loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed.

Table ~~6.14:~~4.13: Loans 90 Days or More Past Due and Still Accruing


(in millions)	(in millions)	Sep 30, 2020		Dec 31, 2019	(in millions)	Mar 31, 2021		Dec 31, 2020
Total:	Total:	$	11,698	7,285	Total:	$	6,273	7,041
Less: FHA insured/VA guaranteed (1)	Less: FHA insured/VA guaranteed (1)	11,041		6,352	Less: FHA insured/VA guaranteed (1)	5,406		6,351

Total, not government insured/guaranteed	Total, not government insured/guaranteed	$	657	933	Total, not government insured/guaranteed	$	867	690
By segment and class, not government insured/guaranteed:	By segment and class, not government insured/guaranteed:				By segment and class, not government insured/guaranteed:
Commercial:	Commercial:				Commercial:
Commercial and industrial	Commercial and industrial	$	61	47	Commercial and industrial	$	55	39
Real estate mortgage	Real estate mortgage	47		31	Real estate mortgage	128		38

Real estate construction					Real estate construction	86		1
Total commercial	Total commercial	108		78	Total commercial	269		78
Consumer:	Consumer:				Consumer:
Real estate 1-4 family first mortgage		97		112
Real estate 1-4 family junior lien mortgage		28		32
Residential mortgage – first lien					Residential mortgage – first lien	85		135
Residential mortgage – junior lien					Residential mortgage – junior lien	15		19
Credit card	Credit card	297		546	Credit card	394		365
Automobile		50		78
Other revolving credit and installment		77		87
Auto					Auto	46		65
Other consumer					Other consumer	58		28
Total consumer	Total consumer	549		855	Total consumer	598		612
Total, not government insured/guaranteed	Total, not government insured/guaranteed	$	657	933	Total, not government insured/guaranteed	$	867	690

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

~~100~~

~~IMPAIRED LOANS~~ In connection with our adoption of CECL, we no longer provide information on impaired loans. We have retained impaired loans information for the period ended December 31, 2019. Table 6.15 summarizes key information for impaired loans. Our impaired loans at December 31, 2019, predominantly included loans on nonaccrual status in the commercial portfolio segment and loans modified in a TDR, whether on accrual or nonaccrual status. Impaired loans generally had estimated losses which are included in the allowance for credit losses. We did have impaired loans with no allowance for credit losses when the loss content has been previously recognized through charge-offs,

such as collateral dependent loans, or when loans are currently performing in accordance with their terms and no loss has been estimated. Impaired loans excluded PCI loans and loans that had been fully charged off or otherwise had zero recorded investment. Table 6.15 included trial modifications that totaled $115 million at December 31, 2019.

~~For additional information on our legacy impaired loans and allowance for credit losses, see Note 1 (Summary of Significant Accounting Policies) in our 2019 Form 10-K.~~

~~Table 6.15:Impaired Loans Summary~~

Recorded investment
(in millions) Unpaid principal balance Impaired loans Impaired loans with related allowance for credit losses Related allowance for credit losses
December 31, 2019
Commercial:
Commercial and industrial $ 2,792 2,003 1,903 311
Real estate mortgage 1,137 974 803 110
Real estate construction 81 51 41 11
Lease financing 131 105 105 35
Total commercial 4,141 3,133 2,852 467
Consumer:
Real estate 1-4 family first mortgage 8,107 7,674 4,433 437
Real estate 1-4 family junior lien mortgage 1,586 1,451 925 144
Credit card 520 520 520 209
Automobile 138 81 42 8
Other revolving credit and installment 178 171 155 49
Total consumer (1) 10,529 9,897 6,075 847
Total impaired loans (excluding PCI) $ 14,670 13,030 8,927 1,314

~~(1)~~Included the recorded investment of $1.2 billion at December 31, 2019 of government insured/guaranteed loans that are predominantly insured by the FHA or guaranteed by the VA and generally do not have an ACL. Impaired loans may also have limited, if any, ACL when the recorded investment of the loan approximates estimated net realizable value as a result of charge-offs prior to a TDR modification.

~~101~~

~~Note 6: Loans and Related Allowance for Credit Losses~~ ~~(continued)~~

~~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~~

Year ended December 31, 2019
(in millions) Average recorded investment Recognized interest income
Commercial:
Commercial and industrial $ 2,150 129
Real estate mortgage 1,067 59
Real estate construction 52 6
Lease financing 93 1
Total commercial 3,362 195
Consumer:
Real estate 1-4 family first mortgage 9,031 506
Real estate 1-4 family junior lien mortgage 1,586 99
Credit card 488 64
Automobile 84 12
Other revolving credit and installment 162 13
Total consumer 11,351 694
Total impaired loans (excluding PCI) $ 14,713 889


~~Interest income:~~
~~Cash basis of accounting~~	$	~~241~~
~~Other (1)~~	~~648~~
~~Total interest income~~	$	~~889~~

~~(1)~~Included 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 ~~$14.6~~$13.3 billion and ~~$11.8~~$14.5 billion at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, respectively. We do not consider loan resolutions such as foreclosure or short sale to be a TDR. In addition, COVID-related modifications are generally not classified as TDRs due to the relief under the CARES Act and the Interagency Statement. For additional information on the TDR relief, see Note 1 (Summary of Significant Accounting Policies). in our 2020 Form 10-K.

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.

Commitments to lend additional funds on loans whose terms have been modified in a TDR amounted to ~~$477~~$506 million and ~~$500~~$489 million at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, respectively.

~~102~~

Table ~~6.17~~4.14 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~~are paid off or written-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
($ in millions) Principal forgiveness Interest
rate
reduction Other concessions (2) Total Charge-
offs (3) Weighted
average
interest
rate
reduction Recorded
investment
related to
interest rate
reduction (4)
Quarter ended September 30, 2020
Commercial:
Commercial and industrial $ 0 7 882 889 44 0.79 % $ 7
Real estate mortgage 0 5 238 243 5 1.38 5
Real estate construction 9 1 1 11 0 5.25 1
Lease financing 0 0 0 0 0 0 0
Total commercial 9 13 1,121 1,143 49 1.29 13
Consumer:
Real estate 1-4 family first mortgage 1 4 2,576 2,581 1 2.06 4
Real estate 1-4 family junior lien mortgage 0 2 59 61 2 2.63 2
Credit card 0 72 0 72 0 15.06 72
Automobile 0 1 65 66 35 3.99 1
Other revolving credit and installment 0 3 24 27 1 7.36 3
Trial modifications (5) 0 0 10 10 0 0 0
Total consumer 1 82 2,734 2,817 39 13.64 82
Total $ 10 95 3,855 3,960 88 12.07 % $ 95
Quarter ended September 30, 2019
Commercial:
Commercial and industrial $ 13 9 209 231 39 0.67 % $ 9
Real estate mortgage 0 4 72 76 0 0.91 4
Real estate construction 0 1 15 16 0 1.00 1
Lease financing 0 0 2 2 0 0 0
Total commercial 13 14 298 325 39 0.75 14
Consumer:
Real estate 1-4 family first mortgage 24 4 199 227 0 2.11 16
Real estate 1-4 family junior lien mortgage 1 8 19 28 0 2.49 9
Credit card 0 94 0 94 0 12.78 94
Automobile 2 3 12 17 7 5.30 3
Other revolving credit and installment 0 14 2 16 0 8.38 14
Trial modifications (5) 0 0 6 6 0 0 0
Total consumer 27 123 238 388 7 10.23 136
Total $ 40 137 536 713 46 9.32 % $ 150


			Wells Fargo & Company			85

~~(continued on following page)~~

~~103~~

Note 6:4: Loans and Related Allowance for Credit Losses (continued)

~~(continued from previous page)~~

Table 4.14:TDR Modifications


		Primary modification type (1)					Financial effects of modifications						Primary modification type (1)					Financial effects of modifications
($ in millions)	($ in millions)	Principal forgiveness		Interest rate reduction	Other concessions (2)	Total	Charge- offs (3)	Weighted average interest rate reduction		Recorded investment related to interest rate reduction (4)		($ in millions)	Principal forgiveness		Interest rate reduction	Other concessions (2)	Total	Charge- offs (3)	Weighted average interest rate reduction		Recorded investment related to interest rate reduction (4)
Nine months ended September 30, 2020
Quarter ended March 31, 2021												Quarter ended March 31, 2021
Commercial:	Commercial:											Commercial:
Commercial and industrial	Commercial and industrial	$	18	39	2,144	2,201	126	0.74	%	$	39	Commercial and industrial	$	0	1	230	231	6	0.89	%	$	1
Real estate mortgage	Real estate mortgage	0		23	488	511	5	1.21		23		Real estate mortgage	0		4	100	104	0	0.93		4
Real estate construction	Real estate construction	9		1	7	17	0	4.29		1		Real estate construction	0		0	1	1	0	0		0
Lease financing	Lease financing	0		0	1	1	0	0		0		Lease financing	0		0	3	3	0	0		0
Total commercial	Total commercial	27		63	2,640	2,730	131	0.98		63		Total commercial	0		5	334	339	6	0.92		5
Consumer:	Consumer:											Consumer:
Real estate 1-4 family first mortgage		42		10	3,021	3,073	2	1.76		35
Real estate 1-4 family junior lien mortgage		4		10	95	109	2	2.43		11
Residential mortgage – first lien												Residential mortgage – first lien	0		7	532	539	0	1.87		7
Residential mortgage – junior lien												Residential mortgage – junior lien	0		5	13	18	1	2.41		5
Credit card	Credit card	0		229	0	229	0	13.31		229		Credit card	0		32	0	32	0	18.87		32
Automobile		3		5	119	127	69	4.45		5
Other revolving credit and installment		0		18	32	50	1	7.65		18
Auto												Auto	0		1	14	15	7	3.87		1
Other consumer												Other consumer	0		7	1	8	0	12.20		7
Trial modifications (5)	Trial modifications (5)	0		0	(1)	(1)	0	0		0		Trial modifications (5)	0		0	0	0	0	0		0
Total consumer	Total consumer	49		272	3,266	3,587	74	11.03		298		Total consumer	0		52	560	612	8	14.01		52
Total	Total	$	76	335	5,906	6,317	205	9.29	%	$	361	Total	$	0	57	894	951	14	12.82	%	$	57
Nine months ended September 30, 2019
Quarter ended March 31, 2020												Quarter ended March 31, 2020
Commercial:	Commercial:											Commercial:
Commercial and industrial	Commercial and industrial	$	13	54	943	1,010	78	0.47	%	$	54	Commercial and industrial	$	18	15	314	347	44	0.65	%	$	15
Real estate mortgage	Real estate mortgage	0		30	240	270	0	0.59		30		Real estate mortgage	0		13	152	165	0	0.97		13
Real estate construction	Real estate construction	13		1	31	45	0	1.00		1		Real estate construction	0		0	6	6	0	2.49		0
Lease financing	Lease financing	0		0	2	2	0	0		0		Lease financing	0		0	0	0	0	0		0
Total commercial	Total commercial	26		85	1,216	1,327	78	0.51		85		Total commercial	18		28	472	518	44	0.82		28
Consumer:	Consumer:											Consumer:
Real estate 1-4 family first mortgage		87		9	674	770	1	1.96		54
Real estate 1-4 family junior lien mortgage		4		30	65	99	2	2.38		32
Residential mortgage – first lien												Residential mortgage – first lien	21		3	166	190	0	1.63		17
Residential mortgage – junior lien												Residential mortgage – junior lien	1		6	14	21	0	2.38		6
Credit card	Credit card	0		280	0	280	0	13.11		280		Credit card	0		95	0	95	0	12.33		95
Automobile		6		7	38	51	21	4.84		7
Other revolving credit and installment		0		37	6	43	0	7.92		37
Auto												Auto	2		2	10	14	6	4.69		2
Other consumer												Other consumer	0		12	2	14	0	8.22		12
Trial modifications (5)	Trial modifications (5)	0		0	11	11	0	0		0		Trial modifications (5)	0		0	2	2	0	0		0
Total consumer	Total consumer	97		363	794	1,254	24	10.19		410		Total consumer	24		118	194	336	6	10.00		132
Total	Total	$	123	448	2,010	2,581	102	8.52	%	$	495	Total	$	42	146	666	854	50	8.38	%	$	160

(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 ~~$382~~$256 million and ~~$188~~$263 million for ~~the quarters ended September 30,~~first quarter 2021 and 2020, ~~and 2019, respectively, and $866 million and $871 million for the first nine months of 2020 and 2019,~~ respectively.

(2)Other concessions include loans ~~with payment (principal and/or interest) deferral, loans~~ discharged in bankruptcy, ~~and loans with~~loan renewals, term extensions ~~or other changes to original contract terms~~ and other interest and noninterest adjustments, but exclude modifications that also forgive principal and/or reduce the contractual interest rate. The reported amounts include COVID-related payment deferrals that are new TDRs and exclude COVID-related payment deferrals previously reported as TDRs given limited current financial effects other than the payment deferral.

(3)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~~NaN modifications resulted in deferring or legally forgiving principal ~~of $2~~in first quarter 2021, while $29 million ~~and $16 million~~modifications resulted in deferring or legally forgiving principal for the ~~quarters ended September 30, 2020 and 2019, respectively, and $34 million and $22 million for the first nine months of 2020 and 2019, respectively.~~same period in 2020.

(4)~~Reflects~~Recorded investment related to interest rate reduction reflects the effect of reduced interest rates on loans with an interest rate concession as one of ~~its~~their concession types, which includes loans reported as a principal primary modification type that also have an interest rate concession.

(5)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.

~~104~~


86			Wells Fargo & Company

Table ~~6.18~~4.15 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:~~4.15: Defaulted TDRs


		Recorded investment of defaults							Recorded investment of defaults
		Quarter ended September 30,			Nine months ended September 30,			Quarter ended March 31,
(in millions)	(in millions)	2020		2019	2020	2019	(in millions)		2021		2020
Commercial:	Commercial:						Commercial:
Commercial and industrial	Commercial and industrial	$	138	24	360	72	Commercial and industrial		$	41	185
Real estate mortgage	Real estate mortgage	3		5	105	38	Real estate mortgage		16		21
Real estate construction	Real estate construction	0		12	0	15	Real estate construction		0		0
Lease financing							Lease financing		0		0
Total commercial	Total commercial	141		41	465	125	Total commercial		57		206
Consumer:	Consumer:						Consumer:
Real estate 1-4 family first mortgage		8		8	26	32
Real estate 1-4 family junior lien mortgage		1		2	9	11
Residential mortgage – first lien							Residential mortgage – first lien		3		10
Residential mortgage – junior lien							Residential mortgage – junior lien		1		2
Credit card	Credit card	11		23	56	65	Credit card		10		26
Automobile		11		2	14	9
Other revolving credit and installment		1		2	4	5
Auto							Auto		11		2
Other consumer							Other consumer		1		1
Total consumer	Total consumer	32		37	109	122	Total consumer		26		41
Total	Total	$	173	78	574	247	Total		$	83	247

~~105~~


			Wells Fargo & Company			87


Note 7:5: Leasing Activity

The information below provides a summary of our leasing activities as a lessor and lessee. See Note ~~7 (Leasing~~5

(Leasing Activity) in our ~~2019~~2020 Form 10-K for additional information about our leasing activities.

As a Lessor

Noninterest income on leases, which is presented in Table ~~7.1 presents the composition~~5.1, is included in other noninterest income on our consolidated statement of income. Lease expense, included in other noninterest expense on our ~~leasing revenue.~~consolidated statement of income, was $226 million and $260 million in first quarter 2021 and 2020, respectively.

Table ~~7.1:~~5.1: Leasing Revenue


		Quarter ended September 30,			Nine months ended September 30,				Quarter ended March 31,
(in millions)	(in millions)	2020		2019	2020		2019	(in millions)		2021		2020
Interest income on lease financing	Interest income on lease financing	$	144	208	$	551	655	Interest income on lease financing		$	171	211
Other lease revenues:	Other lease revenues:							Other lease revenues:
Variable revenues on lease financing	Variable revenues on lease financing	26		23	80		74	Variable revenues on lease financing		26		27
Fixed revenues on operating leases	Fixed revenues on operating leases	287		339	895		1,069	Fixed revenues on operating leases		260		314
Variable revenues on operating leases	Variable revenues on operating leases	9		16	34		48	Variable revenues on operating leases		18		14
Other lease-related revenues (1)	Other lease-related revenues (1)	11		24	12		79	Other lease-related revenues (1)		11		(2)
Lease income		333		402	1,021		1,270
Noninterest income on leases								Noninterest income on leases		315		353
Total leasing revenue	Total leasing revenue	$	477	610	$	1,572	1,925	Total leasing revenue		$	486	564

(1) Predominantly includes net gains (losses) on disposition of assets leased under operating leases or lease financings.

As a Lessee

Substantially all of our leases are operating leases. Table ~~7.2~~5.2 presents balances for our operating leases.

Table ~~7.2:~~5.2: Operating Lease Right of Use (ROU) Assets and Lease Liabilities

(in millions) Sep 30, 2020 Dec 31, 2019
ROU assets $ 4,421 4,724
Lease liabilities 5,022 5,297


(in millions)	Mar 31, 2021		Dec 31, 2020
ROU assets	$	4,137	4,306
Lease liabilities	4,769		4,962

Table ~~7.3~~5.3 provides the composition of our lease costs, which are predominantly included in net occupancy expense.

Table ~~7.3:~~5.3: Lease Costs


		Quarter ended September 30,			Nine months ended September 30,				Quarter ended March 31,
(in millions)	(in millions)	2020		2019	2020		2019	(in millions)		2021		2020
Fixed lease expense – operating leases	Fixed lease expense – operating leases	$	286	302	$	869	890	Fixed lease expense – operating leases		$	265	291
Variable lease expense	Variable lease expense	81		81	227		234	Variable lease expense		78		66
Other (1)	Other (1)	(7)		(40)	(63)		(57)	Other (1)		(3)		(14)
Total lease costs	Total lease costs	$	360	343	$	1,033	1,067	Total lease costs		$	340	343

(1)Predominantly includes gains recognized from sale leaseback transactions and sublease rental income.

~~106~~


88			Wells Fargo & Company


Note 8:6: Equity Securities

Table ~~8.1~~6.1 provides a summary of our equity securities by business purpose and accounting method, including equity securities with readily determinable fair values (marketable) and those without readily determinable fair values (nonmarketable).

Table 6.1: Equity Securities

~~Table 8.1: Equity Securities~~


(in millions)	Mar 31, 2021		Dec 31, 2020
Held for trading at fair value:
Marketable equity securities	$	20,254	23,032
Not held for trading:
Fair value:
Marketable equity securities	2,102		1,564
Nonmarketable equity securities	9,045		9,413
Total equity securities at fair value	11,147		10,977
Equity method:
Low-income housing tax credit investments	11,492		11,628
Private equity	2,893		2,960
Tax-advantaged renewable energy	5,562		5,458
New market tax credit and other	405		409
Total equity method	20,352		20,455
Other:
Federal Reserve Bank stock and other at cost (1)	3,585		3,588
Private equity (2)	4,643		4,208
Total equity securities not held for trading	39,727		39,228
Total equity securities	$	59,981	62,260

(in millions) Sep 30,
2020 Dec 31,
2019
Held for trading at fair value:
Marketable equity securities $ 14,058 27,440
Not held for trading:
Fair value:
Marketable equity securities (1) 2,412 6,481
Nonmarketable equity securities 8,583 8,015
Total equity securities at fair value 10,995 14,496
Equity method:
Low income housing tax credit investments 11,295 11,343
Private equity 2,841 3,459
Tax-advantaged renewable energy 4,142 3,811
New market tax credit and other 356 387
Total equity method 18,634 19,000
Other:
Federal Reserve Bank stock and other at cost (2) 3,585 4,790
Private equity (3) 3,897 2,515
Total equity securities not held for trading 37,111 40,801
Total equity securities $ 51,169 68,241

(1)Includes $206 million and $3.8 billion at September 30, 2020, and December 31, 2019, respectively, related to securities held as economic hedges of our deferred compensation plan liabilities. In second quarter 2020, we entered into arrangements to transition our economic hedges of our deferred compensation plan liabilities from equity securities to derivative instruments.

~~(2)Includes $3.5 billion and $4.8 billion at September 30, 2020, and December 31, 2019, respectively, related~~ Substantially alll relates to investments in Federal Reserve Bank stock at both March 31, 2021, and ~~Federal Home Loan Bank stock.~~December 31, 2020.

~~(3)~~(2) Represents nonmarketable equity securities accounted for 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 are held as part of our customer accommodation trading activities. For additional information on these activities, see Note 42 (Trading Activities).

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).

FAIR VALUE Marketable equity securities held for purposes other than trading consist of holdings of publicly traded equity securities held for investment purposes and, to a lesser extent, exchange-traded equity funds held to economically hedge obligations related to our deferred compensation ~~plans, as well as other holdings of publicly traded equity securities held for investment purposes.~~plans. We account for certain nonmarketable equity securities under the fair value method, and substantially all of these securities are economically hedged with equity derivatives.

EQUITY METHOD Our equity method investments consist of tax credit and private equity investments, the majority of which are our ~~low income~~low-income housing tax credit (LIHTC) investments.

We invest in affordable housing projects that qualify for the LIHTC, which are designed to promote private development of ~~low income~~low-income housing. These investments typically generate a return through realization of federal tax credit and other tax benefits. In ~~the third~~first quarter ~~and first nine months of 2020,~~2021, we recognized pre-tax losses of ~~$336~~$326 million ~~and $1.0 billion, respectively,~~ related to our LIHTC investments, compared with ~~$304~~$339 million ~~and $875 million, respectively, for the same periods a year ago.~~in first quarter 2020. These losses were recognized in other noninterest income. We also recognized total tax benefits of ~~$422~~$435 million ~~and $1.2 billion~~ in ~~the third~~first quarter ~~and first nine months of 2020, respectively,~~2021, which included tax credits recorded to income taxes of ~~$339 million and $970 million for the same periods, respectively.~~$354 million. In ~~the third~~first quarter ~~and first nine months of 2019,~~2020, total tax benefits were ~~$362~~$398 million, ~~and $1.1 billion, respectively,~~ which included tax credits of ~~$286 million and $891 million for the same periods, respectively.~~$314 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 ~~$4.0~~$4.1 billion at ~~September 30, 2020,~~March 31, 2021, and ~~$4.3~~$4.2 billion at December 31, ~~2019.~~2020. This liability for unfunded commitments is included in long-term debt.

OTHER The remaining portion of our nonmarketable equity securities portfolio consists of securities accounted for using the cost or measurement alternative.

~~107~~


			Wells Fargo & Company			89

Note 8:6: Equity Securities (~~continued~~(continued)

)

Realized Gains and Losses Not Held for Trading

Table ~~8.2~~6.2 provides a summary of the net gains and losses from equity securities not held for ~~trading.~~trading, which excludes equity method adjustments for our share of the investee’s earnings or

losses that are recognized in other noninterest income. Gains and losses for

securities held for trading are reported in net gains ~~from~~on trading ~~activities.~~

and securities.

Table ~~8.2:~~6.2: Net Gains (Losses) from Equity Securities Not Held for Trading


		Quarter ended Sep 30,			Nine months ended Sep 30,				Quarter ended March 31,
(in millions)	(in millions)	2020		2019	2020		2019	(in millions)		2021		2020
Net gains (losses) from equity securities carried at fair value:	Net gains (losses) from equity securities carried at fair value:							Net gains (losses) from equity securities carried at fair value:
Marketable equity securities	Marketable equity securities	$	38	116	$	(371)	757	Marketable equity securities		$	60	(803)
Nonmarketable equity securities	Nonmarketable equity securities	265		1,477	585		3,145	Nonmarketable equity securities		(358)		(1,104)
Total equity securities carried at fair value	Total equity securities carried at fair value	303		1,593	214		3,902	Total equity securities carried at fair value		(298)		(1,907)
Net gains (losses) from nonmarketable equity securities not carried at fair value:
Impairment write-downs (1)		(535)		(43)	(1,576)		(110)
Net unrealized gains related to measurement alternative observable transactions (1)		1,030		158	1,276		489
Net gains (losses) from nonmarketable equity securities not carried at fair value (1):								Net gains (losses) from nonmarketable equity securities not carried at fair value (1):
Impairment write-downs								Impairment write-downs		(15)		(935)
Net unrealized gains related to measurement alternative observable transactions								Net unrealized gains related to measurement alternative observable transactions		225		222
Net realized gains on sale	Net realized gains on sale	60		623	259		1,029	Net realized gains on sale		55		0

Total nonmarketable equity securities not carried at fair value	Total nonmarketable equity securities not carried at fair value	555		738	(41)		1,408	Total nonmarketable equity securities not carried at fair value		265		(713)
Net gains (losses) from economic hedge derivatives (2)		(209)		(1,375)	(392)		(2,918)
Total net gains (losses) from equity securities not held for trading		$	649	956	$	(219)	2,392
Net losses from economic hedge derivatives (2)								Net losses from economic hedge derivatives (2)		425		1,219
Total net gains from equity securities not held for trading								Total net gains from equity securities not held for trading		$	392	(1,401)

(1)In third quarter 2020, we recorded $452 million of income related to a change in the accounting measurement model from the equity method to the measurement alternative for certain nonmarketable equity securities from our affiliated venture capital partnerships. This amount is comprised of $(434) million ofIncludes impairment write-downs and ~~$$658 million of~~ net ~~unrealized~~realized gains on sale related to private equity and venture capital investments in consolidated portfolio companies, which are not reported in ~~the table above, as well as $228 million of~~ equity ~~method investment income reported in other noninterest income.~~securities on our consolidated balance sheet.

(2)Includes net gains (losses) on derivatives not designated as hedging instruments.

Measurement Alternative

Table ~~8.3~~6.3 provides additional information about the impairment write-downs and observable price adjustments related to

nonmarketable equity securities accounted for under the measurement alternative. Gains and losses related to these adjustments are also included in Table ~~8.2.~~

6.2.

Table ~~8.3:~~6.3: Net Gains (Losses) from Measurement Alternative Equity Securities

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2020 2019 2020 2019
Net gains (losses) recognized in earnings during the period:
Gross unrealized gains due to observable price changes $ 1,030 158 $ 1,276 500
Gross unrealized losses due to observable price changes 0 0 0 (11)
Impairment write-downs (506) (20) (918) (53)
Realized net gains from sale 8 36 21 161
Total net gains (losses) recognized during the period $ 532 174 $ 379 597



	Quarter ended March 31,
(in millions)		2021		2020
Net gains (losses) recognized in earnings during the period:
Gross unrealized gains due to observable price changes		$	225	222

Impairment write-downs		(12)		(354)
Realized net gains from sale		0		2
Total net gains recognized during the period		$	213	(130)

Table ~~8.4~~6.4 presents cumulative carrying value adjustments to nonmarketable equity securities accounted for under the measurement alternative that were still held at the end of each reporting period presented.

Table ~~8.4:~~6.4: Measurement Alternative Cumulative Gains (Losses)


(in millions)	(in millions)	Sep 30, 2020		Dec 31, 2019	(in millions)	Mar 31, 2020		Dec 31, 2020

Cumulative gains (losses):	Cumulative gains (losses):				Cumulative gains (losses):
Gross unrealized gains due to observable price changes	Gross unrealized gains due to observable price changes	$	2,138	973	Gross unrealized gains due to observable price changes	$	2,581	2,356
Gross unrealized losses due to observable price changes	Gross unrealized losses due to observable price changes	(43)		(42)	Gross unrealized losses due to observable price changes	(25)		(25)
Impairment write-downs	Impairment write-downs	(1,024)		(134)	Impairment write-downs	(981)		(969)

~~108~~


90			Wells Fargo & Company


Note 9:7: Other Assets

Table ~~9.1~~7.1 presents the components of other assets.

Table ~~9.1:~~7.1: Other Assets

(in millions) Sep 30,
2020 Dec 31,
2019
Corporate/bank-owned life insurance $ 20,303 20,070
Accounts receivable (1) 34,524 29,137
Interest receivable:
AFS and HTM debt securities 1,399 1,729
Loans 3,074 3,099
Trading and other 409 758
Customer relationship and other amortized intangibles 352 423
Foreclosed assets:
Residential real estate:
Government insured/guaranteed (1) 22 50
Non-government insured/guaranteed 82 172
Other 52 81
Operating lease assets (lessor) 7,573 8,221
Operating lease ROU assets (lessee) 4,421 4,724
Due from customers on acceptances 207 253
Other 13,756 10,200
Total other assets $ 86,174 78,917

~~(1)~~Certain government-guaranteed residential real estate mortgage loans upon foreclosure are included in Accounts receivable. For additional information, see Note 1 (Summary of Significant Accounting Policies) in our 2019 Form 10-K.


(in millions)	Mar 31, 2021		Dec 31, 2020
Corporate/bank-owned life insurance	$	20,446	20,380
Accounts receivable	28,065		38,116
Interest receivable:
AFS and HTM debt securities	1,371		1,368
Loans	2,472		2,838
Trading and other	470		415
Customer relationship and other amortized intangibles	308		328
Foreclosed assets:
Residential real estate	58		73
Other	82		86
Operating lease assets (lessor)	7,098		7,391
Operating lease ROU assets (lessee)	4,137		4,306
Due from customers on acceptances	227		268
Other	13,378		11,768
Total other assets	$	78,112	87,337

~~109~~


			Wells Fargo & Company			91


Note ~~10:~~8: Securitizations and Variable Interest Entities

Involvement with ~~Special Purpose~~Variable Interest Entities ~~(SPEs)~~(VIEs)

In the normal course of business, we enter into various types of on- and off-balance sheet transactions with ~~SPEs,~~special purpose entities (SPEs), which are corporations, trusts, limited liability companies or partnerships that are established for a limited purpose. ~~For further description~~

SPEs are often formed in connection with securitization transactions whereby financial assets are transferred to an SPE. SPEs formed in connection with securitization transactions are generally considered variable interest entities (VIEs). The VIE may alter the risk profile of the asset by entering into derivative transactions or obtaining credit support, and issues various forms of interests in those assets to investors. When we transfer financial assets from our ~~involvement~~consolidated balance sheet to a VIE in connection with ~~SPEs, see Note 10 (Securitizations~~a securitization, we typically receive cash and ~~Variable Interest Entities)~~sometimes other interests in ~~our 2019 Form 10-K.~~

~~Table 10.1 provides~~ the ~~classifications of~~VIE as proceeds for the assets we transfer. In certain transactions with VIEs, we may retain the right to service the transferred assets and ~~liabilities in~~repurchase the transferred assets if the outstanding balance of the assets falls below the level at which the cost to service the assets exceed the benefits. In addition, we may purchase the right to service loans transferred to a VIE by a third party.

In connection with our ~~balance sheet for our transactions with VIEs.~~

~~Table 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
September 30, 2020
Cash and due from banks $ 0 16 0 16
Interest-earning deposits with banks 0 0 0 0
Debt securities (1):
Trading debt securities 1,869 267 0 2,136
Available-for-sale debt securities 1,484 395 0 1,879
Held-to-maturity debt securities 1,170 0 0 1,170
Loans 1,960 10,634 69 12,663
Mortgage servicing rights 7,009 0 0 7,009
Derivative assets 247 1 0 248
Equity securities 11,356 72 0 11,428
Other assets 1,002 214 0 1,216
Total assets 26,097 11,599 69 37,765
Short-term borrowings 0 595 0 595
Derivative liabilities 2 1 0 3
Accrued expenses and other liabilities 223 229 0 452
Long-term debt 4,080 215 68 4,363
Total liabilities 4,305 1,040 68 5,413
Noncontrolling interests 0 35 0 35
Net assets $ 21,792 10,524 1 32,317
December 31, 2019
Cash and due from banks $ 0 16 0 16
Interest-earning deposits with banks 0 284 0 284
Debt securities (1):
Trading debt securities 792 339 0 1,131
Available-for-sale debt securities 1,696 201 0 1,897
Held-to-maturity debt securities 791 0 0 791
Loans 2,127 13,170 80 15,377
Mortgage servicing rights 11,884 0 0 11,884
Derivative assets 142 1 0 143
Equity securities 11,401 118 0 11,519
Other assets 1,268 239 0 1,507
Total assets 30,101 14,368 80 44,549
Short-term borrowings 0 401 0 401
Derivative liabilities 1 3 0 4
Accrued expenses and other liabilities 189 235 0 424
Long-term debt 4,817 587 79 5,483
Total liabilities 5,007 1,226 79 6,312
Noncontrolling interests 0 43 0 43
Net assets $ 25,094 13,099 1 38,194

~~(1)~~Excludes certain debt securities related to loans serviced for the Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and Government National Mortgage Association (GNMA).

~~Transactions with Unconsolidated VIEs~~

~~Our transactions with unconsolidated VIEs include predominantly securitizations of residential and commercial mortgage loans, and investments in tax credit structures. We~~securitization or other VIE activities, we have various forms of ongoing involvement with VIEs, ~~including servicing,~~ which may include:

•underwriting securities issued by VIEs and subsequently making markets in those securities;

•providing credit enhancement on securities issued by VIEs through the use of letters of credit or financial guarantees;

•entering into other derivative contracts with VIEs;

•holding senior or

subordinated interests ~~and entering into liquidity arrangements and 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.~~

~~110~~

~~Table 10.2 provides a summary of our exposure to unconsolidated VIEs with which we have significant continuing involvement but for which we are not the primary beneficiary.~~

We include transactions where we were the sponsor or servicer and also have other significant forms of continuing involvement. Sponsorship includes transactions where we solely or materially participated in the initial design or structuring of the VIE or marketed the transaction to investors. We consider investments in securities, loans, guarantees, liquidity agreements, commitments and certain derivatives to be other forms of

continuing involvement that may be significant. We also include transactions where we transferred assets to a VIE, account for the transfer as a sale, and service the VIE collateral or have other forms of continuing involvement that may be significant (as described above). We exclude certain transactions with unconsolidated VIEs when our continuing involvement is temporary in nature or insignificant in size. We also exclude 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 10.2:Unconsolidated VIEs~~

Carrying value – asset (liability)
(in millions) Total
VIE
assets Debt and
equity
interests (1) Servicing
assets and advances Derivatives Debt, guarantees, and other
commitments Net
assets
September 30, 2020
Residential mortgage loan securitizations:
Conforming (2) $ 979,592 2,067 6,787 0 (217) 8,637
Other/nonconforming 5,762 15 38 0 0 53
Commercial mortgage loan securitizations (2) 177,421 2,512 1,186 179 (76) 3,801
Tax credit structures 39,532 13,094 0 0 (4,010) 9,084
Other asset-based finance structures 865 100 0 66 0 166
Other 1,153 51 0 0 0 51
Total $ 1,204,325 17,839 8,011 245 (4,303) 21,792
Maximum exposure to loss
Debt and
equity
interests (1) Servicing
assets and advances Derivatives Debt, guarantees, and other
commitments Total
exposure
Residential mortgage loan securitizations:
Conforming (2) $ 2,047 6,787 0 1,355 10,189
Other/nonconforming 15 38 0 0 53
Commercial mortgage loan securitizations (2) 2,461 1,186 179 12,200 16,026
Tax credit structures 13,094 0 0 1,331 14,425
Other asset-based finance structures 100 0 70 71 241
Other 51 0 0 157 208
Total $ 17,768 8,011 249 15,114 41,142
Carrying value – asset (liability)
(in millions) Total
VIE
assets Debt and
equity
interests (1) Servicing
assets and advances Derivatives Debt, guarantees,
and other
commitments Net
assets
December 31, 2019
Residential mortgage loan securitizations:
Conforming (2) $ 1,098,103 1,528 11,931 0 (683) 12,776
Other/nonconforming 5,178 6 152 0 0 158
Commercial mortgage loan securitizations (2) 169,736 2,239 1,069 80 (43) 3,345
Tax credit structures 39,091 12,826 0 0 (4,260) 8,566
Other asset-based finance structures 1,355 157 0 61 (20) 198
Other 1,167 51 0 0 0 51
Total $ 1,314,630 16,807 13,152 141 (5,006) 25,094
Maximum exposure to loss
Debt and
equity
interests (1) Servicing
assets and advances Derivatives Debt, guarantees,
and other
commitments Total
exposure
Residential mortgage loan securitizations:
Conforming (2) $ 972 11,931 0 937 13,840
Other/nonconforming 6 152 0 0 158
Commercial mortgage loan securitizations (2) 2,239 1,069 80 11,667 15,055
Tax credit structures 12,826 0 0 1,701 14,527
Other asset-based finance structures 157 0 63 91 311
Other 51 0 0 157 208
Total $ 16,251 13,152 143 14,553 44,099

~~(1)~~Includes total equity interests of $11.4 billion at both September 30, 2020, and December 31, 2019. 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.VIEs;

~~(2)~~•Carrying values include assets and related liabilities of $71 million and $556 million at September 30, 2020, and December 31, 2019, respectively, related to certain unexercised unconditional repurchase options. These amounts represent the carrying value of the loans and associated debt that would be payable if the option was exercised to repurchase eligible loans from GNMA residential and multifamily loan securitizations. These amounts are excluded from maximum exposure to lossacting as ~~we are not obligated to exercise the options.~~servicer or investment manager for VIEs;

~~In Table 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~~•providing administrative or trustee services to ~~assets synthetically through derivative instruments, the notional amount of the derivative is included in the asset balance. “Carrying value” is the amount in our consolidated balance sheet~~

VIEs; and

~~related~~•providing seller financing to ~~our involvement with the unconsolidated~~ VIEs. “Maximum exposure to loss” is determined as the carrying value of our investment in the VIEs excluding the unconditional repurchase options that have not been exercised, plus the remaining undrawn liquidity and lending commitments, the notional amount of net written derivative contracts, and generally

~~111~~

~~Note 10: Securitizations and Variable Interest Entities (continued~~)

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 disclosure is not an indication of expected loss.

For complete descriptions of our transactions with unconsolidated VIEs with which we have a significant continuing involvement, but we are not the primary beneficiary, see Note 10 (Securitizations and Variable Interest Entities) in our 2019 Form 10-K.

Loan Sales and Securitization Activity

We periodically transfer consumer and commercial loans and other types of financial assets in securitization and whole loan sale transactions.

MORTGAGE LOANS SOLD TO U.S. GOVERNMENT SPONSORED ENTITIES AND TRANSACTIONS WITH GINNIE MAE In the normal course of business we sell originated and purchased residential and commercial mortgage loans to government-sponsored entities (GSEs). These loans are generally transferred into securitizations sponsored by the GSEs, which provide certain credit guarantees to investors and servicers. We also transfer mortgage loans into securitizations pursuant to Government National Mortgage Association (GNMA) guidelines which are insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Mortgage loans eligible for securitization with the GSEs or GNMA are considered conforming loans. The GSEs or GNMA design the structure of these securitizations, sponsor the involved VIEs, and have power over the activities most significant to the VIE.

We account for loans transferred in conforming mortgage loan securitization transactions as sales and do not consolidate the VIEs as we are not the primary beneficiary. In exchange for the transfer of loans, we typically receive securities issued by the VIEs which we sell to third parties for cash or hold for investment purposes as HTM or AFS securities. We also retain servicing rights on the transferred loans. As a servicer, we retain the option

to repurchase loans from GNMA loan securitization pools, which becomes exercisable when three scheduled loan payments remain unpaid by the borrower. During the quarters ended March 31, 2021 and 2020, we repurchased loans of $1.9 billion and $1.5 billion, respectively, which predominantly represented repurchases of government insured loans. We recorded assets and related liabilities of $133 million and $176 million at March 31, 2021, and December 31, 2020, respectively, where we did not exercise our option to repurchase eligible loans.

Upon transfers of loans, we also provide indemnification for losses incurred due to material breaches of contractual representations and warranties, as well as other recourse arrangements. At March 31, 2021, and December 31, 2020, our liability associated with these provisions was $209 million and $221 million, respectively, and the maximum exposure to loss was $13.4 billion and $13.7 billion, respectively.

Off-balance sheet mortgage loans sold or securitized presented in Table 8.5 are predominantly loans securitized by the GSEs and GNMA. See Note 9 (Mortgage Banking Activities) for additional information about residential and commercial servicing rights, advances and servicing fees. Substantially all residential servicing activity is related to assets transferred to GSE and GNMA securitizations.

NONCONFORMING MORTGAGE LOAN SECURITIZATIONS In the normal course of business, we sell nonconforming residential and commercial mortgage loans in securitization transactions that we design and sponsor. Nonconforming mortgage loan securitizations do not involve a government credit guarantee, and accordingly, beneficial interest holders are subject to credit risk of the underlying assets held by the securitization VIE. We typically originate the transferred loans , account for the transfers as sales and do not consolidate the VIE. We also typically retain the ~~servicing rights from these sales~~right to service the loans and may ~~continue to~~ hold other beneficial interests issued by the VIEs, such as debt securities held for investment purposes. Our servicing role related to nonconforming commercial mortgage loan securitizations is limited to primary or master servicer and the most significant decisions impacting the performance of the VIE are generally made by the special servicer or the controlling class security holder. For our residential nonconforming mortgage loan securitizations accounted for as sales, we either do not hold variable interests that we consider potentially significant or are not the primary servicer for a majority of the VIE assets.

WHOLE LOAN SALE TRANSACTIONS We also sell whole loans to VIEs where we have continuing involvement in the ~~transferred financial assets.~~form of financing. We ~~may also provide liquidity to~~

~~investors in the beneficial interests and credit enhancements. Through~~account for these transfers as sales, and do not consolidate the VIEs as we ~~may be exposed~~do not have the power to ~~liability under limited amounts~~direct the most significant activities of ~~recourse as well as standard representations and warranties we make to purchasers and issuers.~~the VIEs.

Table ~~10.3~~8.1 presents information about transfers of assets during the period ~~to unconsolidated VIEs or third-party investors~~ for which we recorded the transfers as sales and have continuing involvement with the transferred assets. In connection with these transfers, we received proceeds and recorded servicing assets, securities, and ~~a liability for repurchase losses which reflects management’s estimate of probable losses~~loans. Substantially all transfers were related to ~~various representations~~residential mortgage securitizations with the GSEs or GNMA and ~~warranties for~~resulted in no gain or loss because the loans ~~transferred.~~were already measured at fair value on a recurring basis. Each of these interests are initially measured at fair value. Servicing rights are classified as Level 3 measurements, and generally securities are ~~initially~~ classified as Level 2.

~~Sales~~


92			Wells Fargo & Company

Table 8.1:Transfers with Continuing Involvement



	2021			2020
(in millions)	Residential mortgages		Commercial mortgages	Residential mortgages	Commercial mortgages
Quarter ended March 31,
Asset balances sold	$	40,586	3,191	38,385	2,728
Proceeds from transfer (1)	40,691		3,282	38,420	2,797
Net gains (losses) on sale	105		91	35	69

Continuing involvement (2):
Servicing rights recognized	$	407	47	446	34
Securities recognized (3)	10,223		29	0	62
Loans recognized	926		0	0	0

(1)Represents cash proceeds and the fair value of non-cash beneficial interests recognized at securitization settlement. Prior periods have been revised to conform with the current period presentation.

(2)Represents assets or liabilities recognized at securitization settlement date related to our continuing involvement ~~include securitizations of conforming residential mortgages~~in the transferred assets.

(3)Represents debt securities obtained at securitization settlement held for investment purposes that are classified as available-for-sale or held-to-maturity, which predominantly relate to agency securities. Excludes trading debt securities held temporarily for market-marking purposes, which are sold to ~~the government-sponsored entities (GSEs)~~third parties at or ~~GNMA. Substantially all transfers to these entities resulted in no gain or loss because the loans were already measured at fair value on a recurring basis.~~

~~Table 10.3:Transfers With Continuing Involvement~~

(in millions) 2020 2019
Quarter ended September 30, Residential mortgages Commercial mortgages Residential mortgages Commercial mortgages
Net gains (losses) on sale $ 1 54 25 72
Asset balances sold 71,032 2,430 48,378 4,419
Servicing rights recognized 477 32 532 33
Securities recognized (1) 12,024 5 4,271 0
Liability for repurchase losses recognized 8 0 5 0
Nine months ended September 30,
Net gains (losses) on sale $ 53 187 85 193
Asset balances sold 182,473 7,663 119,153 10,479
Servicing rights recognized 1,366 114 1,239 92
Securities recognized (1) 14,074 79 7,665 0
Liability for repurchase losses recognized 15 0 13 0

~~(1)Includes securities retained upon initial transfer~~shortly after securitization settlement, of $6.8 billion and ~~subsequent sales~~$7.7 billion, during the ~~periods presented, which may result in a net reduction of securities recognized.~~quarters ended March 31, 2021 and 2020, respectively.

In the normal course of business we purchase certain non-agency securities at initial securitization or subsequently in the secondary market. We also provide seller financing in the form of loans. During the quarters ended March 31, 2021 and 2020, we received cash flows of $75 million and $73 million, respectively, predominantly related to principal and interest payments on these securities and loans.

Table ~~10.4~~8.2 presents the key ~~weighted average~~weighted-average assumptions we used to initially measure residential MSRs atrecognized during the ~~date of securitization.~~periods presented.

Table ~~10.4:~~8.2: Residential Mortgage Servicing Rights


		Residential mortgage servicing rights
		2020			2019		2021			2020
Quarter ended September 30,
Quarter ended March 31,						Quarter ended March 31,
Prepayment speed (1)	Prepayment speed (1)	16.7		%	13.2	Prepayment speed (1)	14.4		%	12.7
Discount rate	Discount rate	6.7			7.4	Discount rate	6.0			6.5
Cost to service ($ per loan) (2)	Cost to service ($ per loan) (2)	$	107		101	Cost to service ($ per loan) (2)	$	82		91
Nine months ended September 30,
Prepayment speed (1)		15.0		%	13.3
Discount rate		6.8			7.6
Cost to service ($ per loan) (2)		$	99		106

(1)The prepayment speed assumption for residential MSRs 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 due to changes in model assumptions and the mix of modified government-guaranteed loans sold to GNMA.

Table 10.5 presents the proceeds related to transfers accounted for as sales in which we have continuing involvement with the transferred financial assets, as well as current period cash flows from continuing involvement with previous transfers accounted for as sales. Cash flows from other interests held exclude cash flows from certain debt securities related to loans serviced for FNMA, FHLMC and GNMA and predominantly include principal and interest payments received on retained bonds. Repurchases of assets represent cash paid to repurchase loans from investors under representation and warranty obligations or in connection with the exercise of cleanup calls on securitizations. Loss reimbursements are cash paid to reimburse investors for losses on individual loans that are already liquidated. Repurchases of government insured loans result from the exercise of our option, as servicer, to repurchase loans from GNMA loan securitization pools, when three scheduled loan payments remain unpaid by the borrower. These loans are insured by the FHA or guaranteed by the VA. Cash flows from servicing advances include principal and interest payments to investors required by servicing agreements.

~~112~~

~~Table 10.5:Cash Inflows (Outflows) From Sales and Securitization Activity~~

Mortgage loans
(in millions) 2020 2019
Quarter ended September 30,
Proceeds from securitizations and whole loan sales $ 73,673 52,274
Fees from servicing rights retained 676 793
Cash flows from other interests held 174 131
Repurchases of assets/loss reimbursements:
Non-agency securitizations and whole loan transactions 1 (1,369)
Government insured loans (21,905) (1,402)
Agency securitizations (152) (26)
Servicing advances, net of recoveries (66) 73
Nine months ended September 30,
Proceeds from securitizations and whole loan sales $ 188,911 128,478
Fees from servicing rights retained 2,095 2,359
Cash flows from other interests held 533 375
Repurchases of assets/loss reimbursements:
Non-agency securitizations and whole loan transactions 0 (1,370)
Government insured loans (26,939) (4,590)
Agency securitizations (213) (70)
Servicing advances, net of recoveries (126) 166

~~113~~

~~Note 10: Securitizations and Variable Interest Entities (continued~~)

~~Retained Interests from Unconsolidated VIEs~~

Table 10.6 provides key economic assumptions and the sensitivity of the current fair value of residential MSRs and other interests held related to unconsolidated VIEs to immediate adverse changes in those assumptions. Amounts for residential MSRs include purchased servicing rights as well as servicing rights resulting from the transfer of loans. See Note 1615 (Fair Values of Assets and Liabilities) and Note 9 (Mortgage Banking Activities) for additional information on key economic assumptions for residential MSRs. ~~“Other interests held” were obtained when~~

SALE OF STUDENT LOAN PORTFOLIO In first quarter 2021, we ~~securitized residential~~sold $5.6 billion of student loans, servicing-released. We received $5.8 billion in proceeds from the sale and ~~commercial mortgage loans. Residential mortgage-backed securities retained~~recognized a $208 million gain which is included in ~~securitizations issued through GSEs or GNMA, are excluded~~other noninterest income on our consolidated statement of income. In connection with the sale, we provided $2.2 billion of collateralized loan financing to a third-party sponsored VIE. The loan is measured at amortized cost and is classified in loans on the consolidated balance sheet. The collateral supporting our loan includes the student loans we sold. We do not consolidate the VIE as we do not have power over the significant activities of the entity. Substantially all of the remaining portfolio was sold in second quarter 2021.

~~from~~RESECURITIZATION ACTIVITIES We enter into resecuritization transactions as part of our trading activities to accommodate the ~~table because these~~investment and risk management activities of our customers. In our resecuritization transactions, we transfer trading debt securities ~~have~~to VIEs in exchange for new beneficial interests that are sold to third parties at or shortly after securitization settlement. This activity is performed for customers seeking a ~~remote~~specific return or risk profile. Substantially all of ~~credit loss due to~~our transactions involve the ~~GSE or government guarantee. These securities also have economic characteristics similar to GSE or GNMA~~resecuritization of conforming mortgage-backed securities ~~that~~issued by the GSEs or GNMA. We do not consolidate the resecuritization VIEs as we ~~purchase, which are not included~~share in the ~~table. Subordinated~~decision-making power with third parties and do not hold significant economic 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. Thein the VIEs other than for market-making activities. Table 8.3 presents information ~~presented excludes trading positions held in inventory.~~about assets transferred to re-securitization VIEs and Table 8.4 presents information about our resecuritization VIEs.

Table ~~10.6:~~8.3: ~~Retained Interests from Unconsolidated~~Transfers to Resecuritization VIEs

Residential
mortgage
servicing rights Other interests held
($ in millions, except cost to service amounts) Subordinated
bonds Senior
bonds
Fair value of interests held at September 30, 2020 $ 6,355 1,009 276
Expected weighted average life (in years) 3.7 6.8 6.3
Key economic assumptions:
Prepayment speed assumption 19.7 %
Decrease in fair value from:
10% adverse change $ 452
25% adverse change 1,044
Discount rate assumption 5.8 % 5.3 1.5
Decrease in fair value from:
100 basis point increase $ 236 56 15
200 basis point increase 454 109 29
Cost to service assumption ($ per loan) 138
Decrease in fair value from:
10% adverse change 204
25% adverse change 508
Credit loss assumption 4.5 % 0
Decrease in fair value from:
10% higher losses $ 32 0
25% higher losses 35 0
Fair value of interests held at December 31, 2019 $ 11,517 909 352
Expected weighted average life (in years) 5.3 7.3 5.5
Key economic assumptions:
Prepayment speed assumption 11.9 %
Decrease in fair value from:
10% adverse change $ 537
25% adverse change 1,261
Discount rate assumption 7.2 % 4.0 2.9
Decrease in fair value from:
100 basis point increase $ 464 53 16
200 basis point increase 889 103 32
Cost to service assumption ($ per loan) 102
Decrease in fair value from:
10% adverse change 253
25% adverse change 632
Credit loss assumption 3.1 % 0
Decrease in fair value from:
10% higher losses $ 1 0
25% higher losses 4 0



(in millions)	2021		2020
Quarter ended March 31,
Assets transferred	$	17,429	9,472
Securities recognized	1,014		662

In addition to residential MSRs included in the previous table, we have a small portfolio of commercial MSRs, which are carried at the lower of cost or fair value (LOCOM), with a fair value of $1.4 billion and $1.9 billion at September 30, 2020, and

Table 8.4:Resecuritization VIEs

December 31, 2019, respectively. Prepayment assumptions do not significantly impact values of commercial MSRs and commercial mortgage bonds as commercial loans generally include contractual restrictions on prepayment. Servicing costs


(in millions)	Mar 31, 2021		Dec 31, 2020
Total VIE assets	$	131,892	130,446
Carrying value of securities	1,343		1,461

~~114~~


			Wells Fargo & Company			93

Note 8: Securitizations and Variable Interest Entities (continued)

are not a driver of our MSR value as we are typically primary or master servicer; the higher costs of servicing delinquent and foreclosed loans is generally borne by the special servicer. 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 the current fair value of our commercial MSRs to a hypothetical immediate adverse 25% change in the assumption about interest earned on deposit balances at September 30, 2020, and December 31, 2019, would result in a decrease in fair value of $89 million and $205 million, respectively. See Note 11 (Mortgage Banking Activities) for additional information on our commercial MSRs.

The sensitivities in the preceding 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 ~~10.7~~8.5 presents information about the principal balances of off-balance sheet loans that were sold or securitized, including residential mortgage loans sold to ~~FNMA, FHLMC,~~the GSEs, 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. In accordance with applicable servicing

guidelines, delinquency status continues to advance for loans with COVID-related payment deferrals. For loans sold or securitized where servicing is our only form of continuing involvement, we ~~would only~~generally experience a loss only 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 ~~10.7:~~8.5: Off-Balance Sheet Loans Sold or Securitized

Net charge-offs (2)
Total loans Delinquent loans
and foreclosed assets (1) Nine months ended Sep 30,
(in millions) Sep 30, 2020 Dec 31, 2019 Sep 30, 2020 Dec 31, 2019 2020 2019
Commercial:
Real estate mortgage $ 114,479 112,507 2,363 776 129 109
Total commercial 114,479 112,507 2,363 776 129 109
Consumer:
Real estate 1-4 family first mortgage 875,298 1,008,446 36,605 6,664 71 180
Real estate 1-4 family junior lien mortgage 10 13 2 2 0 0
Total consumer 875,308 1,008,459 36,607 6,666 71 180
Total off-balance sheet sold or securitized loans (3) $ 989,787 1,120,966 38,970 7,442 200 289


						Net charge-offs (2)
	Total loans			Delinquent loans and foreclosed assets (1)		Quarter ended March 31,
(in millions)	Mar 31, 2021		Dec 31, 2020	Mar 31, 2021	Dec 31, 2020	2021	2020
Commercial	$	114,247	114,134	1,712	2,217	115	71
Residential	767,216		818,886	25,146	29,962	6	31
Total off-balance sheet sold or securitized loans (3)	$	881,463	933,020	26,858	32,179	121	102

(1)Includes ~~$397~~$242 million and ~~$492~~$394 million of commercial foreclosed assets and ~~$264~~$166 million and ~~$356~~$204 million of ~~consumer~~residential foreclosed assets at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, respectively.

(2)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.~~information

(3)At ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, the table includes total loans of ~~$920.7~~$813.1 billion and ~~$1.0 trillion respectively,~~$864.8 billion, delinquent loans of ~~$35.0~~$23.9 billion and ~~$5.2~~$28.5 billion, ~~respectively,~~ and foreclosed assets of ~~$205~~$121 million and ~~$251~~$152 million, respectively, for FNMA, FHLMC and GNMA.

Transactions with Unconsolidated VIEs

MORTGAGE LOAN SECURITIZATIONS Table 8.6 includes nonconforming mortgage loan securitizations where we originate and transfer the loans to the unconsolidated securitization VIEs that we sponsor. For additional information about these VIEs, see the “Loan Sales and Securitization Activity” section within this Note. Nonconforming mortgage loan securitizations also include commercial mortgage loan securitizations sponsored by third parties where we did not originate or transfer the loans but serve as master servicer and invest in securities that could be potentially significant to the VIE.

Conforming loan securitization and resecuritization transactions involving the GSEs and GNMA are excluded from Table 8.6 because we are not the sponsor or we do not have power over the activities most significant to the VIEs. Additionally, due to the nature of the guarantees provided by the GSEs and the FHA and VA, our credit risk associated with these VIEs is limited. For additional information about conforming mortgage loan securitizations and resecuritizations, see the “Loan Sales and Securitization Activity” and "Resecuritization Activities" sections within this Note.

TAX CREDIT STRUCTURESWe co-sponsor and make investments in affordable housing and sustainable energy projects that are designed to generate a return primarily through the realization of federal tax credits. The projects are typically managed by project sponsors who have the power over the VIE’s assets. In some instances, our investments in these structures may require that we fund future capital commitments at the discretion of the project sponsors.

COMMERCIAL REAL ESTATE LOANS We transfer purchased industrial development bonds and GSE credit enhancements to VIEs in exchange for beneficial interests. We own all of the beneficial interests and may also service the underlying mortgages that serve as collateral to the bonds. Prior to first quarter 2021, we consolidated these VIEs as we controlled the key decisions. During first quarter 2021, we amended the structures such that we no longer control the key decisions of the VIEs. The GSEs have the power to direct the servicing and workout activities of the VIE in the event of a default. As a result,

we deconsolidated the VIEs during first quarter 2021, and recognized the beneficial interests at fair value on our consolidated balance sheet.

OTHER VIE STRUCTURESWe engage in various forms of structured finance arrangements with other VIEs, including collateralized debt obligations, asset-backed finance structures and other securitizations collateralized by asset classes other than mortgages. Collateral may include rental properties, asset-backed securities, student loans, mortgage loans and auto loans. We may participate in structuring or marketing the arrangements, as well as provide financing, service one or more of the underlying assets, or enter into derivatives with the VIEs. We may also receive fees for those services. We are not the primary beneficiary of these structures because we do not have power to direct the most significant activities of the VIEs.

Table 8.6 provides a summary of our exposure to the unconsolidated VIEs described above, which includes investments in securities, loans, guarantees, liquidity agreements, commitments and certain derivatives. We exclude certain transactions with unconsolidated VIEs when our continuing involvement is temporary or administrative in nature or insignificant in size.

In Table 8.6, “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 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” is determined as the carrying value of our investment in the VIEs excluding the unconditional repurchase options that have not been exercised, 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.

Debt, guarantees and other commitments include amounts related to loans sold that we may be required to repurchase, or otherwise indemnify or reimburse the investor or insurer for losses incurred, due to material breach of contractual


94			Wells Fargo & Company

representations and warranties as well as other retained recourse arrangements. The maximum exposure to loss for material breach of contractual representations and warranties represents a stressed case estimate we utilize for determining stressed case regulatory capital needs and is considered to be a remote scenario.

“Maximum exposure to loss” 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 disclosure is not an indication of expected loss.

Table 8.6:Unconsolidated VIEs


			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans		Debt securities (1)	Equity securities	All other assets (2)	Debt and other liabilities	Net assets
March 31, 2021


Nonconforming mortgage loan securitizations	$	128,438	0		2,318	0	626	0	2,944
Tax credit structures	41,258		1,800		0	11,501	0	(4,109)	9,192
Commercial real estate loans	5,375		5,366		0	0	9	0	5,375

Other	9,619		3,201		0	56	49	(1)	3,305
Total	$	184,690	10,367		2,318	11,557	684	(4,110)	20,816
			Maximum exposure to loss
			Loans		Debt securities (1)	Equity securities	All other assets (2)	Debt, guarantees, and other commitments	Total exposure


Nonconforming mortgage loan securitizations			$	0	2,318	0	626	33	2,977
Tax credit structures			1,800		0	11,501	0	2,894	16,195
Commercial real estate loans			5,366		0	0	9	0	5,375

Other			4,974		0	56	49	229	5,308
Total			$	12,140	2,318	11,557	684	3,156	29,855
			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans (3)		Debt securities (1)	Equity securities	All other assets (2)(3)	Debt and other liabilities	Net assets
December 31, 2020


Nonconforming mortgage loan securitizations	$	127,717	0		2,303	0	606	0	2,909
Tax credit structures	41,125		1,760		0	11,637	0	(4,202)	9,195
Commercial real estate loans	0		0		0	0	0	0	0

Other	1,991		89		0	51	62	(1)	201
Total	$	170,833	1,849		2,303	11,688	668	(4,203)	12,305
			Maximum exposure to loss
			Loans (3)		Debt securities (1)	Equity securities	All other assets (2)(3)	Debt, guarantees, and other commitments	Total exposure


Nonconforming mortgage loan securitizations			$	0	2,303	0	607	34	2,944
Tax credit structures			1,760		0	11,637	0	3,108	16,505
Commercial real estate loans			0		0	0	0	0	0

Other			89		0	51	62	230	432
Total			$	1,849	2,303	11,688	669	3,372	19,881

(1)Includes $267 million and $310 million of securities classified as trading at March 31, 2021, and December 31, 2020, respectively.

(2)All other assets includes mortgage servicing rights, derivative assets, and other assets (predominantly servicing advances).

(3)Prior period has been revised to conform with the current period presentation to reflect the carrying value of loans separately from all other assets.

~~115~~


			Wells Fargo & Company			95

Note ~~10:~~8: Securitizations and Variable Interest Entities (~~continued~~)(continued)

~~Transactions~~Consolidated VIEs

We consolidate VIEs where we are the primary beneficiary. We are the primary beneficiary of the following structure types:

COMMERCIAL AND INDUSTRIAL LOANS AND LEASES We securitize dealer floor plan loans and leases in a revolving master trust entity and hold the subordinated notes and residual equity interests. As servicer and residual interest holder, we control the key decisions of the trust and consolidate the entity. The total VIE assets held by the master trust represent a majority of the total VIE assets presented for this category in Table 8.7. In a separate transaction structure, we also provide the majority of debt and equity financing to an SPE that engages in lending and leasing to specific vendors and service the underlying collateral.

OTHER VIE STRUCTURESOther VIEs are primarily related to municipal tender option bond (MTOB) transactions and nonconforming mortgage loan securitizations that we sponsor. MTOBs are vehicles to finance the purchase of municipal bonds through the issuance of short-term debt to investors. Our involvement with ~~Consolidated VIEs~~MTOBs includes serving as the residual interest

holder, which provides control over the key decisions of the VIE, as well as the remarketing agent or liquidity provider related to the debt issued to investors. We also securitize nonconforming mortgage loans, in which our involvement includes servicer of the underlying assets and ~~Secured Borrowings~~holder of subordinate or senior securities issued by the VIE.

Table ~~10.8~~8.7 presents a summary of financial assets and liabilities ~~for asset transfers accounted for as secured borrowings~~of our consolidated VIEs. The carrying value represents assets and ~~involvements with~~liabilities recorded on our consolidated ~~VIEs.~~balance sheet. Carrying values of ~~“Assets”~~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 notional amount of the derivative is included in “Total VIE assets.”

On ~~the~~our consolidated balance sheet, we separately disclose (1) the consolidated assets of certain VIEs that can only be used to settle the liabilities of those ~~VIEs.~~VIEs, and (2) the consolidated liabilities of certain VIEs for which the VIE creditors do not have recourse to Wells Fargo.

Table ~~10.8:~~8.7: Transactions with Consolidated VIEs ~~and Secured Borrowings~~

Carrying value
(in millions) Total
VIE assets Assets Liabilities Noncontrolling
interests Net assets
September 30, 2020
Secured borrowings:
Residential mortgage securitizations $ 69 69 (68) 0 1
Total secured borrowings 69 69 (68) 0 1
Consolidated VIEs:
Commercial and industrial loans and leases 6,978 4,924 (227) (13) 4,684
Nonconforming residential mortgage loan securitizations 622 538 (214) 0 324
Commercial real estate loans 5,379 5,379 0 0 5,379
Municipal tender option bond securitizations 596 599 (596) 0 3
Other 159 159 (3) (22) 134
Total consolidated VIEs 13,734 11,599 (1,040) (35) 10,524
Total secured borrowings and consolidated VIEs $ 13,803 11,668 (1,108) (35) 10,525
December 31, 2019
Secured borrowings:
Residential mortgage securitizations $ 81 80 (79) 0 1
Total secured borrowings 81 80 (79) 0 1
Consolidated VIEs:
Commercial and industrial loans and leases 8,054 8,042 (529) (16) 7,497
Nonconforming residential mortgage loan securitizations 935 809 (290) 0 519
Commercial real estate loans 4,836 4,836 0 0 4,836
Municipal tender option bond securitizations 401 402 (401) 0 1
Other 279 279 (6) (27) 246
Total consolidated VIEs 14,505 14,368 (1,226) (43) 13,099
Total secured borrowings and consolidated VIEs $ 14,586 14,448 (1,305) (43) 13,100


			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans	Debt securities (1)	All other assets (2)	Long-term debt	All other liabilities (3)
March 31, 2021
Commercial and industrial loans and leases	$	6,907	5,002	0	188	0	(192)
Commercial real estate loans (4)	0		0	0	0	0	0
Other	1,597		480	965	79	(192)	(899)
Total consolidated VIEs	$	8,504	5,482	965	267	(192)	(1,091)
December 31, 2020
Commercial and industrial loans and leases	$	6,987	5,005	0	223	0	(200)
Commercial real estate loans (4)	5,369		5,357	0	12	0	0
Other	1,627		507	967	75	(203)	(900)
Total consolidated VIEs	$	13,983	10,869	967	310	(203)	(1,100)

(1)Includes $269 million and $269 million of securities classified as trading at March 31, 2021, and December 31, 2020, respectively.

(2)All other assets includes cash and due from banks, Interest-earning deposits with banks, derivative assets, equity securities, and other assets.

~~We have raised financing through~~(3)All other liabilities includes short-term borrowings, derivative liabilities, and accrued expenses and other liabilities.

(4)For structure description, see the ~~securitization of certain financial assets in transactions~~"Transactions with VIEs accounted for as secured borrowings. We also consolidate VIEs where we are the primary beneficiary. In certain transactions, we provide contractual support in the form of limited recourse and liquidity to facilitate the remarketing of short-term securities issued to third-party investors. Other thanUnconsolidated VIEs" section within this ~~limited contractual support, the assets of the VIEs are the sole source of repayment of the securities held by third parties.~~

~~For complete descriptions of our accounting for transfers accounted for as secured borrowings and involvement with~~Note. These consolidated VIEs ~~see Note 10 (Securitizations and Variable Interest Entities)~~were deconsolidated in ~~our 2019 Form 10-K.~~first quarter 2021.

Other Transactions

In addition to the transactions included in the previous tables, we have used wholly-owned trust preferred security VIEs to issue debt securities or preferred equity exclusively to third-party investors. As the sole assets of the VIEs are receivables from us, we do not consolidate the VIEs 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 we reported the debt securities issued to the VIEs as long-term junior subordinated debt with a carrying value of ~~$698~~$710 million and ~~$2.1 billion~~$704 million at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, respectively. During first quarter 2020, we liquidated certain of our trust preferred security VIEs. As part of these liquidations, the preferred securities issued by the trusts were canceled and junior subordinated debentures with a total carrying value of $1.4 billion were distributed to the preferred security holders. Prior to the liquidations, we held $10 million of these preferred securities, which were exchanged for junior subordinated debentures upon liquidation and subsequently retired with 0 impact to earnings. See Note 1716 (Preferred Stock) for additional information about trust preferred securities.

Certain money market funds are also excluded from the previous tables because they are exempt from the consolidation analysis. We voluntarily waived a portion of our management fees for these money market funds to maintain a minimum level of daily net investment income. The amount of fees waived was ~~$30 million and $63 million in the third~~not significant for first quarter ~~and first nine months of 2020, respectively, compared with $10 million and $30 million for the same periods a year ago.~~

2021 or 2020.

~~116~~


96			Wells Fargo & Company


Note ~~11:~~9: Mortgage Banking Activities

Mortgage banking activities consist of residential and commercial mortgage originations, sales and servicing.

We apply the amortization method to commercial MSRs and apply the fair value method to residential MSRs. The amortized

cost of commercial MSRs was $1.3 billion and $1.4 billion with an estimated fair value of $1.7 billion and $1.5 billion at March 31, 2021, and March 31, 2020, respectively. Table ~~11.1~~9.1 presents the changes in MSRs measured using the fair value method.

Table ~~11.1:~~9.1: Analysis of Changes in Fair Value MSRs


		Quarter ended September 30,			Nine months ended September 30,				Quarter ended March 31,
(in millions)	(in millions)	2020		2019	2020		2019	(in millions)	2021		2020
Fair value, beginning of period		$	6,819	12,096	$	11,517	14,649

Fair value, beginning of year								Fair value, beginning of year	$	6,125	11,517
Servicing from securitizations or asset transfers (1)	Servicing from securitizations or asset transfers (1)	351		538	1,274		1,279	Servicing from securitizations or asset transfers (1)	406		461
Sales and other (2)	Sales and other (2)	0		(4)	(32)		(286)	Sales and other (2)	(1)		(31)
Net additions	Net additions	351		534	1,242		993	Net additions	405		430
Changes in fair value:	Changes in fair value:							Changes in fair value:
Due to valuation inputs or assumptions:	Due to valuation inputs or assumptions:							Due to valuation inputs or assumptions:
Mortgage interest rates (3)	Mortgage interest rates (3)	(294)		(718)	(3,916)		(2,811)	Mortgage interest rates (3)	1,630		(3,022)
Servicing and foreclosure costs (4)	Servicing and foreclosure costs (4)	157		13	(265)		3	Servicing and foreclosure costs (4)	9		(73)
Discount rates	Discount rates	0		188	27		179	Discount rates	47		27
Prepayment estimates and other (5)	Prepayment estimates and other (5)	(80)		(445)	(451)		(302)	Prepayment estimates and other (5)	(95)		(189)
Net changes in valuation inputs or assumptions	Net changes in valuation inputs or assumptions	(217)		(962)	(4,605)		(2,931)	Net changes in valuation inputs or assumptions	1,591		(3,257)
Changes due to collection/realization of expected cash flows (6)	Changes due to collection/realization of expected cash flows (6)	(598)		(596)	(1,799)		(1,639)	Changes due to collection/realization of expected cash flows (6)	(585)		(564)
Total changes in fair value	Total changes in fair value	(815)		(1,558)	(6,404)		(4,570)	Total changes in fair value	1,006		(3,821)
Fair value, end of period	Fair value, end of period	$	6,355	11,072	$	6,355	11,072	Fair value, end of period	$	7,536	8,126

(1)Includes impacts associated with exercising cleanup calls on securitizations and our right to repurchase delinquent loans from GNMA loan securitization pools. MSRs may increase upon repurchase due to servicing liabilities associated with these delinquent GNMA loans.

(2)Includes sales and transfers of MSRs, which can result in an increase in MSRs if related to portfolios with servicing liabilities.

(3)Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates.

(4)Includes costs to service and unreimbursed foreclosure costs.

(5)Represents other changes in valuation model inputs or assumptions including prepayment speed estimation changes that are independent of mortgage interest rate changes.

(6)Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.

Table ~~11.2 presents~~9.2 provides key economic assumptions and sensitivity of the current fair value of residential MSRs to immediate adverse changes in ~~amortized MSRs.~~those assumptions. Amounts for residential MSRs include purchased servicing rights as well as servicing

rights resulting from the transfer of loans. See Note 15 (Fair Values of Assets and Liabilities) for additional information on key economic assumptions for residential MSRs.

Table ~~11.2:~~9.2: Economic Assumptions and Sensitivity of Residential MSRs~~Analysis of~~


($ in millions, except cost to service amounts)	Mar 31, 2021			Dec 31, 2020
Fair value of interests held	$	7,536		6,125
Expected weighted-average life (in years)	4.5			3.7

Key economic assumptions:
Prepayment speed assumption	15.6		%	19.9
Impact on fair value from 10% adverse change	$	447		434
Impact on fair value from 25% adverse change	1,041			1,002

Discount rate assumption	6.1		%	5.8
Impact on fair value from 100 basis point increase	$	317		229
Impact on fair value from 200 basis point increase	608			440

Cost to service assumption ($ per loan)	115			130
Impact on fair value from 10% adverse change	181			181
Impact on fair value from 25% adverse change	452			454

The sensitivities in the preceding table are hypothetical and caution should be exercised when relying on this data. Changes in ~~Amortized MSRs~~

Quarter ended September 30, Nine months ended September 30,
(in millions) 2020 2019 2020 2019
Balance, beginning of period $ 1,361 1,407 $ 1,430 1,443
Purchases 6 25 21 65
Servicing from securitizations or asset transfers 32 33 114 92
Amortization (1) (74) (68) (240) (203)
Balance, end of period $ 1,325 1,397 $ 1,325 1,397
Fair value of amortized MSRs:
Beginning of period $ 1,401 1,897 $ 1,872 2,288
End of period 1,400 1,813 1,400 1,813

~~(1)Commercial amortized MSRs are evaluated for impairment purposes by~~value based on variations in assumptions generally cannot be extrapolated because the ~~following risk strata: agency (GSEs) for multi-family properties and non-agency. There was a $7 million and $37 million impairment recorded~~relationship of the change in the ~~third quarter and first nine months~~assumption to the change in value may not be linear. Also, the

effect of ~~2020, respectively, and an associated valuation allowance of $37 million recorded at September 30, 2020,~~a variation in a particular assumption on the ~~commercial amortized MSRs.~~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, which might magnify or counteract the sensitivities.


			Wells Fargo & Company			97

~~117~~

Note ~~11:~~9: Mortgage Banking Activities (~~continued~~)(continued)

We present the components of our managed servicing portfolio in Table ~~11.3~~9.3 at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced.

Table ~~11.3:~~9.3: Managed Servicing Portfolio


(in billions)	(in billions)	Sep 30, 2020			Dec 31, 2019	(in billions)	Mar 31, 2021			Dec 31, 2020
Residential mortgage servicing:	Residential mortgage servicing:					Residential mortgage servicing:
Serviced and subserviced for others	Serviced and subserviced for others	$	920		1,065	Serviced and subserviced for others	$	804		859
Owned loans serviced	Owned loans serviced	342			343	Owned loans serviced	302			323

Total residential servicing	Total residential servicing	1,262			1,408	Total residential servicing	1,106			1,182
Commercial mortgage servicing:	Commercial mortgage servicing:					Commercial mortgage servicing:
Serviced and subserviced for others	Serviced and subserviced for others	579			575	Serviced and subserviced for others	581			583
Owned loans serviced	Owned loans serviced	123			124	Owned loans serviced	122			123

Total commercial servicing	Total commercial servicing	702			699	Total commercial servicing	703			706
Total managed servicing portfolio	Total managed servicing portfolio	$	1,964		2,107	Total managed servicing portfolio	$	1,809		1,888
Total serviced for others, excluding subserviced for others	Total serviced for others, excluding subserviced for others	$	1,488		1,629	Total serviced for others, excluding subserviced for others	$	1,373		1,431
Ratio of MSRs to related loans serviced for others		0.52		%	0.79
MSRs as a percentage of loans serviced for others						MSRs as a percentage of loans serviced for others	0.64		%	0.52
Weighted average note rate (mortgage loans serviced for others)	Weighted average note rate (mortgage loans serviced for others)	4.13			4.25	Weighted average note rate (mortgage loans serviced for others)	3.99			4.03

At ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, we had servicer advances, net of an allowance for uncollectible amounts, of ~~$2.6~~$3.3 billion and ~~$2.0~~$3.4 billion, respectively. As the servicer of loans for others, we advance certain payments of principal, interest, taxes, insurance, and default-related expenses which are generally reimbursed within a short timeframe from cash flows from the trust, GSEs, insurer or borrower. The credit risk related to these advances is limited since the reimbursement is generally senior to cash payments to investors. We also advance payments of taxes and insurance for our owned loans which are collectible

from the borrower. We maintain an allowance for uncollectible amounts for advances on loans serviced for others that may not be reimbursed if the payments were not made in accordance with applicable servicing agreements or if the insurance or servicing agreements contain limitations on reimbursements. Servicing advances on owned loans are charged-off when deemed uncollectible.

Table ~~11.4~~9.4 presents the components of mortgage banking noninterest income.

Table ~~11.4:~~9.4: Mortgage Banking Noninterest Income


			Quarter ended September 30,			Nine months ended September 30,					Quarter ended March 31,
(in millions)	(in millions)		2020		2019	2020		2019	(in millions)		2021		2020
Servicing fees:	Servicing fees:								Servicing fees:
Contractually specified servicing fees, late charges and ancillary fees	Contractually specified servicing fees, late charges and ancillary fees		$	838	924	$	2,452	2,749	Contractually specified servicing fees, late charges and ancillary fees		$	724	865

Unreimbursed direct servicing costs (1)	Unreimbursed direct servicing costs (1)		(121)		(118)	(333)		(272)	Unreimbursed direct servicing costs (1)		(124)		(107)
Servicing fees	Servicing fees		717		806	2,119		2,477	Servicing fees		600		758
Amortization (2)			(74)		(68)	(240)		(203)
Changes due to collection/realization of expected cash flows (3)		(A)	(598)		(596)	(1,799)		(1,639)
Amortization									Amortization		(65)		(66)
Changes due to collection/realization of expected cash flows (2)									Changes due to collection/realization of expected cash flows (2)	(A)	(585)		(564)
Net servicing fees	Net servicing fees		45		142	80		635	Net servicing fees		(50)		128
Changes in fair value of MSRs due to valuation inputs or assumptions (4)		(B)	(217)		(962)	(4,605)		(2,931)
Net derivative gains from economic hedges (5)			513		678	4,448		2,795
Changes in fair value of MSRs due to valuation inputs or assumptions (3)									Changes in fair value of MSRs due to valuation inputs or assumptions (3)	(B)	1,591		(3,257)
Net derivative gains (losses) from economic hedges (4)									Net derivative gains (losses) from economic hedges (4)		(1,640)		3,400
Market-related valuation changes to MSRs, net of hedge results	Market-related valuation changes to MSRs, net of hedge results		296		(284)	(157)		(136)	Market-related valuation changes to MSRs, net of hedge results		(49)		143
Total servicing income (loss), net	Total servicing income (loss), net		341		(142)	(77)		499	Total servicing income (loss), net		(99)		271
Net gains on mortgage loan origination/sales activities (6)			1,249		608	2,363		1,433
Net gains on mortgage loan originations/sales (5)									Net gains on mortgage loan originations/sales (5)		1,425		108
Total mortgage banking noninterest income	Total mortgage banking noninterest income		$	1,590	466	$	2,286	1,932	Total mortgage banking noninterest income		$	1,326	379
Total changes in fair value of MSRs carried at fair value	Total changes in fair value of MSRs carried at fair value	(A)+(B)	$	(815)	(1,558)	$	(6,404)	(4,570)	Total changes in fair value of MSRs carried at fair value	(A)+(B)	$	1,006	(3,821)

(1)Includes costs associated with foreclosures, unreimbursed interest advances to investors, and other interest costs.

(2)~~Includes a $7 million and $37 million impairment recorded in the third quarter and first nine months of 2020, respectively, on the commercial amortized MSRs.~~

~~(3)~~Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.

~~(4)~~(3)Refer to the analysis of changes in fair value MSRs presented in Table ~~11.1~~9.1 in this Note for more detail.

~~(5)~~(4)See Note 1514 (Derivatives) for additional discussion and detail on economic hedges.

~~(6)~~(5)Includes net gains (losses) of ~~$(297) million~~$1.3 billion and ~~$(1.6) billion in the third quarter and first nine months of 2020, respectively, and $58 million and $(376)~~$(929) million in ~~the third~~first quarter 2021 and ~~first nine months of 2019,~~2020, respectively, related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments.

~~118~~


98			Wells Fargo & Company


Note ~~12:~~10: Intangible Assets

Table ~~12.1~~10.1 presents the gross carrying value of intangible assets and accumulated amortization.

Table ~~12.1:~~10.1: Intangible Assets


		September 30, 2020				December 31, 2019				March 31, 2021				December 31, 2020
(in millions)	(in millions)	Gross carrying value		Accumulated amortization	Net carrying value	Gross carrying value	Accumulated amortization	Net carrying value	(in millions)	Gross carrying value		Accumulated amortization	Net carrying value	Gross carrying value	Accumulated amortization	Net carrying value
Amortized intangible assets (1):	Amortized intangible assets (1):								Amortized intangible assets (1):
MSRs (2)	MSRs (2)	$	4,557	(3,232)	1,325	4,422	(2,992)	1,430	MSRs (2)	$	4,661	(3,365)	1,296	4,612	(3,300)	1,312

Customer relationship and other intangibles	Customer relationship and other intangibles	879		(527)	352	947	(524)	423	Customer relationship and other intangibles	880		(572)	308	879	(551)	328
Total amortized intangible assets	Total amortized intangible assets	$	5,436	(3,759)	1,677	5,369	(3,516)	1,853	Total amortized intangible assets	$	5,541	(3,937)	1,604	5,491	(3,851)	1,640
Unamortized intangible assets:	Unamortized intangible assets:								Unamortized intangible assets:
MSRs (carried at fair value) (2)	MSRs (carried at fair value) (2)	$	6,355			11,517			MSRs (carried at fair value) (2)	$	7,536			6,125
Goodwill	Goodwill	26,387				26,390			Goodwill	26,290				26,392
Trademark	Trademark	14				14			Trademark	14				14

(1)Balances are excluded commencing in the period following full amortization.

(2)Includes a $37 million valuation allowance recorded for amortized MSRs at ~~September 30,~~both March 31, 2020, and December 31, 2020. See Note 119 (Mortgage Banking Activities) for additional information on MSRs.

Table ~~12.2~~10.2 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 ~~September 30, 2020.~~March 31, 2021. Future amortization expense may vary from these projections.

Table ~~12.2:~~10.2: Amortization Expense for Intangible Assets


(in millions)	(in millions)	Amortized MSRs		Customer relationship and other intangibles	Total	(in millions)	Amortized MSRs		Customer relationship and other intangibles	Total
Nine months ended September 30, 2020 (actual)		$	240	71	311
Estimate for the remainder of 2020		$	66	24	90
Three months ended March 31, 2021 (actual)						Three months ended March 31, 2021 (actual)	$	65	21	86
Estimate for the remainder of 2021						Estimate for the remainder of 2021	$	184	61	245
Estimate for year ended December 31,	Estimate for year ended December 31,					Estimate for year ended December 31,
2021		239		81	320
2022	2022	212		68	280	2022	218		68	286
2023	2023	184		59	243	2023	191		59	250
2024	2024	159		48	207	2024	166		48	214
2025	2025	134		39	173	2025	143		39	182
2026						2026	109		32	141

In February 2021, we announced an agreement to sell Wells Fargo Asset Management and transferred the associated goodwill from the Wealth and Investment Management operating segment to Corporate. Also in first quarter 2021, we

recognized a goodwill write-down related to the sale of a portion of the student loan portfolio. Table ~~12.3~~10.3 shows the allocation of goodwill to our reportable operating segments. ~~We assess goodwill for impairment at a~~

~~reporting unit level, which is generally one level below the operating segments.~~

Table ~~12.3:~~10.3: Goodwill

(in millions) Community
Banking Wholesale
Banking Wealth and Investment Management Consolidated
Company
December 31, 2018 $ 16,685 8,450 1,283 26,418
Reclassification of goodwill held for sale to other assets 0 (25) 0 (25)
Reduction in goodwill related to divested business and other 0 0 (7) (7)
Foreign currency translation 0 2 0 2
September 30, 2019 $ 16,685 8,427 1,276 26,388
December 31, 2019 $ 16,685 8,429 1,276 26,390
Foreign currency translation 0 (3) 0 (3)
September 30, 2020 $ 16,685 8,426 1,276 26,387


(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate	Consolidated Company





December 31, 2020	$	16,418	3,018	5,375	1,276	305	26,392

Divestitures	0		0	0	0	(104)	(104)
Foreign currency translation	0		2	0	0	0	2
Transfers of goodwill	0		0	0	(932)	932	0
March 31, 2021	$	16,418	3,020	5,375	344	1,133	26,290

~~119~~


			Wells Fargo & Company			99


Note ~~13:~~11: Guarantees ~~Pledged Assets and Collateral,~~ and Other Commitments

written options, recourse obligations, and other types of similar

arrangements. ~~For complete descriptions of our guarantees, see Note 16 (Guarantees, Pledged Assets and Collateral, and Other Commitments) in our 2019 Form 10-K.~~ Table ~~13.1~~11.1 shows carrying value, maximum exposure to loss on our guarantees and the related non-investment grade amounts.

Table ~~13.1:~~11.1: Guarantees – Carrying Value and Maximum Exposure to Loss


				Maximum exposure to loss									Maximum exposure to loss
(in millions)	(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	(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
September 30, 2020
March 31, 2021										March 31, 2021
Standby letters of credit	Standby letters of credit	$	195	12,381	4,287	1,844	446	18,958	7,484	Standby letters of credit	$	145	12,184	4,672	1,692	439	18,987	7,097
Direct pay letters of credit	Direct pay letters of credit	42		2,227	2,853	704	48	5,832	1,175	Direct pay letters of credit	14		2,394	2,565	524	54	5,537	1,093
Written options (1)	Written options (1)	(245)		13,356	10,851	2,379	152	26,738	16,205	Written options (1)	(554)		11,965	7,794	755	58	20,572	13,757
Loans and MLHFS sold with recourse (2)		34		231	752	1,596	10,016	12,595	10,254
Loans and LHFS sold with recourse (2)										Loans and LHFS sold with recourse (2)	33		199	848	2,922	9,484	13,453	11,221
Exchange and clearing house guarantees	Exchange and clearing house guarantees	0		0	0	0	5,516	5,516	0	Exchange and clearing house guarantees	0		0	0	0	7,163	7,163	0
Other guarantees and indemnifications (3)	Other guarantees and indemnifications (3)	1		567	1	1	1,667	2,236	528	Other guarantees and indemnifications (3)	0		623	3	0	306	932	577
Total guarantees	Total guarantees	$	27	28,762	18,744	6,524	17,845	71,875	35,646	Total guarantees	$	(362)	27,365	15,882	5,893	17,504	66,644	33,745
December 31, 2019
December 31, 2020										December 31, 2020
Standby letters of credit	Standby letters of credit	$	36	11,569	4,460	2,812	467	19,308	7,104	Standby letters of credit	$	156	11,977	4,962	1,897	433	19,269	7,528
Direct pay letters of credit	Direct pay letters of credit	0		1,861	3,815	824	105	6,605	1,184	Direct pay letters of credit	18		2,256	2,746	531	39	5,572	1,102
Written options (1)	Written options (1)	(345)		17,088	10,869	2,341	273	30,571	18,113	Written options (1)	(538)		12,735	7,972	889	58	21,654	13,394
Loans and MLHFS sold with recourse (2)		52		114	576	1,356	10,050	12,096	9,835
Loans and LHFS sold with recourse (2)										Loans and LHFS sold with recourse (2)	33		177	819	1,870	9,723	12,589	10,332
Exchange and clearing house guarantees	Exchange and clearing house guarantees	0		0	0	0	4,817	4,817	0	Exchange and clearing house guarantees	0		0	0	0	5,510	5,510	0
Other guarantees and indemnifications (3)	Other guarantees and indemnifications (3)	1		785	1	3	809	1,598	698	Other guarantees and indemnifications (3)	0		734	1	1	1,414	2,150	590
Total guarantees	Total guarantees	$	(256)	31,417	19,721	7,336	16,521	74,995	36,934	Total guarantees	$	(331)	27,879	16,500	5,188	17,177	66,744	32,946

(1)Written options, which are in the form of derivatives, are also included in the derivative disclosures in Note 1514 (Derivatives). Carrying value net asset position is a result of certain deferred premium option trades.

(2)Represent recourse provided, ~~predominantly~~all to the GSEs, on loans sold under various programs and arrangements.

(3)Includes indemnifications provided to certain third-party clearing agents. ~~Outstanding customer obligations under these arrangements were $176~~Estimated maximum exposure to loss was $277 million and ~~$80 million~~$1.4 billion with related collateral of ~~$1.5~~$2.0 billion and ~~$696 million at September 30, 2020,~~$1.2 billion as of March 31, 2021 and December 31, ~~2019,~~2020, respectively.

“Maximum exposure to loss” and “Non-investment grade” are required disclosures under GAAP. 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 ~~13.1~~11.1 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 is more representative of our exposure to loss than maximum exposure to loss. The carrying value represents the fair value of the guarantee, if any, and also includes an ACL for guarantees, if applicable.

Non-investment grade represents those guarantees on which we have a higher risk of 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 64 (Loans and Related Allowance for Credit Losses).

MERCHANT PROCESSING SERVICES We provide debit and credit card transaction processing services through ~~the~~ payment networks directly for merchants and as a sponsor for merchant processing servicers, including our joint venture with a third party that is accounted for as an equity method investment. In our role as the merchant acquiring bank, we have a potential obligation ~~for~~in connection with payment and delivery disputes between the merchant and the cardholder that are resolved in favor of the cardholder. If we are unable to collect the amounts from the merchant, we incur a loss for the refund to the cardholder. We are secondarily obligated to make a refund for transactions involving ~~the~~ sponsored merchant processing servicers. We generally have a low likelihood of loss ~~since~~in connection with our merchant processing services because most products and services are delivered when purchased and amounts are generally refunded when items are returned to the merchant. In addition, we may reduce our risk in connection with these transactions by withholding future payments and requiring cash or other collateral. For ~~the~~ first ~~nine months of 2020,~~quarter 2021, we processed card transaction volume of ~~$982.7~~$372.5 billion as a merchant acquiring bank, and related losses, including those from our joint venture entity, were immaterial.


100			Wells Fargo & Company

GUARANTEES OF SUBSIDIARIES In the normal course of business, the Parent may provide counterparties with guarantees related to its subsidiaries’ obligations. These obligations are included in the Company’s consolidated balance sheet or are reflected as off-balance sheet commitments, and therefore, the Parent has not recognized a separate liability for these guarantees.

The Parent fully and unconditionally 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 securities are not guaranteed by any other subsidiary of the Parent. The guaranteed liabilities were ~~$2.4~~$1.8 billion and ~~$1.6~~$2.3 billion at ~~September 30, 2020~~March 31, 2021, and December 31, ~~2019,~~2020, respectively. These guarantees rank on parity with all of the Parent’s other unsecured and unsubordinated indebtedness. The assets of the Parent consist primarily of equity in its subsidiaries, and the Parent is a separate and distinct legal entity from its subsidiaries. As a result, the Parent’s ability to address claims of holders of these debt securities against the Parent under the guarantee depends on the Parent’s receipt of dividends, loan payments and other funds from its subsidiaries. If any of the Parent’s subsidiaries becomes insolvent, the direct creditors of that subsidiary will have a prior claim on that subsidiary’s assets. The rights of the Parent and the rights of the Parent’s creditors will be subject to that prior claim unless the Parent is also a direct creditor of that subsidiary. For additional information regarding other restrictions on the Parent’s ability to receive dividends, loan payments and other funds from its subsidiaries, see Note 23 (Regulatory Capital Requirements and Other Restrictions).

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 both March 31, 2021, and December 31, 2020, we had commitments to purchase debt securities of $18 million and commitments to purchase equity securities of $3.1 billion and $3.2 billion, respectively.

As part of maintaining our memberships in certain clearing organizations, we are required to stand ready to provide liquidity to sustain market clearing activity in the event unforeseen events occur or are deemed likely to occur. Certain of these obligations are guarantees of other members’ performance and accordingly are included in Table 11.1 in Other guarantees and indemnifications.

Also, we have commitments to purchase loans and securities under resale agreements from certain counterparties, including central clearing organizations. The amount of our unfunded contractual commitments was $8.7 billion and $12.0 billion as of March 31, 2021, and December 31, 2020, respectively.

Given the nature of these commitments, they are excluded from Table 4.4 (Unfunded Credit Commitments) in Note 4 (Loans and Related Allowance for Credit Losses).

~~120~~


			Wells Fargo & Company			101


Note 12: Pledged Assets and Collateral

Pledged Assets

Table ~~13.2~~12.1 provides the carrying amount of on-balance sheet pledged assets and the fair value of other pledged collateral. Other pledged collateral is collateral we have received from third parties, have the right to repledge and is not recognized on our consolidated balance sheet.

TRADING RELATED ACTIVITYOur trading businesses may pledge debt and equity securities in connection with securities sold under agreements to repurchase (repurchase agreements) and securities lending arrangements. The collateral that we pledge related to our trading activities may include our own collateral as well as collateral that we have received from third parties and have the right to repledge. All of the trading activity pledged collateral is eligible to be repledged or sold by the secured party.

NON-TRADING RELATED ACTIVITY As part of our liquidity management strategy, we may pledge loans, debt securities, and

other financial assets to secure trust and public deposits, borrowings and letters of credit from the Federal Home Loan Bank (FHLB) and ~~FRB~~the Board of Governors of the Federal Reserve System (FRB) and for other purposes as required or permitted by law or insurance statutory requirements. Substantially all of the non-trading activity pledged collateral is not eligible to be repledged or sold by the secured party.

VIE RELATED We pledge assets in connection with various types of transactions entered into with VIEs. These pledged assets can only be used to settle the liabilities of those entities.

We also have loans recorded on our consolidated balance sheet which represent certain delinquent loans that are eligible for repurchase from GNMA loan securitizations. See Note 108 (Securitizations and Variable Interest Entities) for additional information on consolidated VIE ~~assets and VIEs accounted for as secured borrowings.~~assets.

Table ~~13.2:~~12.1: Pledged Assets

(in millions) Sep 30,
2020 Dec 31,
2019
Related to trading activities:
Repledged third-party owned debt and equity securities $ 37,121 60,083
Trading debt securities and other 20,483 51,083
Equity securities 835 1,379
Total pledged assets related to trading activities 58,439 112,545
Related to non-trading activities:
Loans 364,865 406,106
Debt securities:
Available-for-sale 55,479 61,126
Held-to-maturity 2,786 3,685
Mortgage loans held for sale 0 2,266
Total pledged assets related to non-trading activities 423,130 473,183
Related to VIEs:
Consolidated VIE assets 11,599 14,368
VIEs accounted for as secured borrowings 69 80
Loans eligible for repurchase from GNMA securitizations 76 568
Total pledged assets related to VIEs 11,744 15,016
Total pledged assets $ 493,313 600,744


(in millions)	Mar 31, 2021		Dec 31, 2020
Related to trading activities:
Repledged third-party owned debt and equity securities	$	51,214	44,765
Trading debt securities and other	20,805		19,572
Equity securities	716		470
Total pledged assets related to trading activities	72,735		64,807
Related to non-trading activities:
Loans	313,479		344,220
Debt securities:

Available-for-sale	52,487		57,289
Held-to-maturity	13,318		17,290
Other financial assets	727		230
Total pledged assets related to non-trading activities	380,011		419,029
Related to VIEs:
Consolidated VIE assets	6,714		12,146
Loans eligible for repurchase from GNMA securitizations	135		179
Total pledged assets related to VIEs	6,849		12,325
Total pledged assets	$	459,595	496,161

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. Our securities financing activities primarily involve ~~high quality,~~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 SECURITIES FINANCING ACTIVITIES Table ~~13.3~~12.2 presents resale and repurchase agreements subject to master

repurchase agreements (MRA) and securities borrowing and lending agreements subject to master securities lending agreements (MSLA). Collateralized financings, and those with a single counterparty, are presented net on our consolidated balance sheet, provided certain criteria are met that permit balance sheet netting. ~~Most~~Substantially all 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 consolidated balance sheet against the related liability. Collateral we received includes securities or loans and is not recognized on our consolidated 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


102			Wells Fargo & Company

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

~~121~~

~~Note 13: Guarantees, Pledged Assets and Collateral, and Other Commitments (continued~~)

amount of the related recognized asset or liability for each counterparty.

In addition to the amounts included in Table ~~13.3,~~12.2, we also have balance sheet netting related to derivatives that is disclosed in Note 1514 (Derivatives).

Table ~~13.3:~~12.2: Offsetting – Securities Financing Activities


(in millions)	(in millions)	Sep 30, 2020		Dec 31, 2019	(in millions)	Mar 31, 2021		Dec 31, 2020
Assets:	Assets:				Assets:
Resale and securities borrowing agreements	Resale and securities borrowing agreements				Resale and securities borrowing agreements
Gross amounts recognized	Gross amounts recognized	$	94,579	140,773	Gross amounts recognized	$	113,611	92,446
Gross amounts offset in consolidated balance sheet (1)	Gross amounts offset in consolidated balance sheet (1)	(11,066)		(19,180)	Gross amounts offset in consolidated balance sheet (1)	(16,480)		(11,513)
Net amounts in consolidated balance sheet (2)	Net amounts in consolidated balance sheet (2)	83,513		121,593	Net amounts in consolidated balance sheet (2)	97,131		80,933
Collateral not recognized in consolidated balance sheet (3)	Collateral not recognized in consolidated balance sheet (3)	(82,736)		(120,786)	Collateral not recognized in consolidated balance sheet (3)	(96,386)		(80,158)
Net amount (4)	Net amount (4)	$	777	807	Net amount (4)	$	745	775
Liabilities:	Liabilities:				Liabilities:
Repurchase and securities lending agreements	Repurchase and securities lending agreements				Repurchase and securities lending agreements
Gross amounts recognized	Gross amounts recognized	$	54,888	111,038	Gross amounts recognized	$	63,062	57,622
Gross amounts offset in consolidated balance sheet (1)	Gross amounts offset in consolidated balance sheet (1)	(11,066)		(19,180)	Gross amounts offset in consolidated balance sheet (1)	(16,480)		(11,513)
Net amounts in consolidated balance sheet (5)	Net amounts in consolidated balance sheet (5)	43,822		91,858	Net amounts in consolidated balance sheet (5)	46,582		46,109
Collateral pledged but not netted in consolidated balance sheet (6)	Collateral pledged but not netted in consolidated balance sheet (6)	(43,602)		(91,709)	Collateral pledged but not netted in consolidated balance sheet (6)	(46,371)		(45,819)
Net amount (4)	Net amount (4)	$	220	149	Net amount (4)	$	211	290

(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)Includes ~~$69.2~~$79.4 billion and ~~$102.1~~$65.6 billion classified on our consolidated balance sheet in federal funds sold and securities purchased under resale agreements at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, respectively. Also includes securities purchased under long-term resale agreements (generally one year or more) classified in loans, which totaled ~~$14.3~~$17.7 billion and ~~$19.5~~$15.3 billion, at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, respectively.

(3)Represents the fair value of collateral we have received under enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized asset due from each counterparty. At ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, we have received total collateral with a fair value of ~~$106.5~~$131.2 billion and ~~$150.9~~$108.5 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 ~~$35.9~~$47.2 billion and $36.1 billion at ~~September 30, 2020,~~March 31, 2021, and ~~$59.1 billion at~~ December 31, ~~2019.~~2020, respectively.

(4)Represents the amount of our exposure (assets) or obligation (liabilities) that is not collateralized and/or is not subject to an enforceable MRA or MSLA.

(5)Amount is classified in short-term borrowings on our consolidated balance sheet.

(6)Represents the fair value of collateral we have pledged, related to enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized liability owed to each counterparty. At ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, we have pledged total collateral with a fair value of ~~$56.5~~$64.6 billion and ~~$113.3~~$59.2 billion, respectively, substantially all of which may be sold or repledged by the counterparty.

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 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 in various ways. Our collateral primarily consists of highly liquid securities. In addition, we underwrite and monitor the financial strength of our counterparties, monitor the fair value of collateral pledged relative to contractually required repurchase amounts, and monitor that our collateral is properly returned through the clearing and settlement process in advance of our cash repayment. Table ~~13.4~~12.3 provides the gross amounts recognized on the consolidated balance sheet (before the effects of offsetting) of our liabilities for repurchase and securities lending agreements disaggregated by underlying collateral type.

~~122~~


			Wells Fargo & Company			103

Note 12: Pledged Assets and Collateral (continued)

Table ~~13.4:~~12.3: Gross Obligations by Underlying Collateral Type


(in millions)	(in millions)	Sep 30, 2020		Dec 31, 2019	(in millions)	Mar 31, 2021		Dec 31, 2020
Repurchase agreements:	Repurchase agreements:				Repurchase agreements:
Securities of U.S. Treasury and federal agencies	Securities of U.S. Treasury and federal agencies	$	22,342	48,161	Securities of U.S. Treasury and federal agencies	$	28,507	22,922
Securities of U.S. States and political subdivisions	Securities of U.S. States and political subdivisions	46		104	Securities of U.S. States and political subdivisions	9		4
Federal agency mortgage-backed securities	Federal agency mortgage-backed securities	13,184		44,737	Federal agency mortgage-backed securities	12,678		15,353
Non-agency mortgage-backed securities	Non-agency mortgage-backed securities	1,176		1,818	Non-agency mortgage-backed securities	1,007		1,069
Corporate debt securities	Corporate debt securities	8,780		7,126	Corporate debt securities	10,291		9,944
Asset-backed securities	Asset-backed securities	1,050		1,844	Asset-backed securities	1,072		1,054
Equity securities	Equity securities	1,463		1,674	Equity securities	1,211		1,500
Other	Other	830		705	Other	683		336
Total repurchases	Total repurchases	48,871		106,169	Total repurchases	55,458		52,182
Securities lending arrangements:	Securities lending arrangements:				Securities lending arrangements:
Securities of U.S. Treasury and federal agencies	Securities of U.S. Treasury and federal agencies	57		163	Securities of U.S. Treasury and federal agencies	19		64

Federal agency mortgage-backed securities	Federal agency mortgage-backed securities	42		0	Federal agency mortgage-backed securities	53		23

Corporate debt securities	Corporate debt securities	98		223	Corporate debt securities	38		79

Equity securities (1)	Equity securities (1)	5,788		4,481	Equity securities (1)	7,375		5,189
Other	Other	32		2	Other	119		85
Total securities lending	Total securities lending	6,017		4,869	Total securities lending	7,604		5,440
Total repurchases and securities lending	Total repurchases and securities lending	$	54,888	111,038	Total repurchases and securities lending	$	63,062	57,622

(1)Equity securities are generally exchange traded and represent collateral received from third parties that has been repledged. We received the collateral through either margin lending agreements or contemporaneous securities borrowing transactions with other counterparties.

Table ~~13.5~~12.4 provides the contractual maturities of our gross obligations under repurchase and securities lending agreements.

Table ~~13.5:~~12.4: Contractual Maturities of Gross Obligations


(in millions)	(in millions)	Overnight/continuous		Up to 30 days	30-90 days	>90 days	Total gross obligation	(in millions)	Overnight/continuous		Up to 30 days	30-90 days	>90 days	Total gross obligation
September 30, 2020
March 31, 2021								March 31, 2021
Repurchase agreements	Repurchase agreements	$	37,173	1,963	6,150	3,585	48,871	Repurchase agreements	$	41,585	3,483	5,025	5,365	55,458
Securities lending arrangements	Securities lending arrangements	5,467		0	550	0	6,017	Securities lending arrangements	6,804		200	600	0	7,604
Total repurchases and securities lending (1)	Total repurchases and securities lending (1)	$	42,640	1,963	6,700	3,585	54,888	Total repurchases and securities lending (1)	$	48,389	3,683	5,625	5,365	63,062
December 31, 2019
December 31, 2020								December 31, 2020
Repurchase agreements	Repurchase agreements	$	79,793	17,681	4,825	3,870	106,169	Repurchase agreements	$	36,946	5,251	5,100	4,885	52,182
Securities lending arrangements	Securities lending arrangements	4,724		0	145	0	4,869	Securities lending arrangements	4,690		400	350	0	5,440
Total repurchases and securities lending (1)	Total repurchases and securities lending (1)	$	84,517	17,681	4,970	3,870	111,038	Total repurchases and securities lending (1)	$	41,636	5,651	5,450	4,885	57,622

(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 September 30, 2020, and December 31, 2019, we had commitments to purchase debt securities of $18 million in both periods and commitments to purchase equity securities of $3.2 billion and $2.7 billion, respectively.

As part of maintaining our memberships in certain clearing organizations, we are required to stand ready to provide liquidity to sustain market clearing activity in the event unforeseen events occur or are deemed likely to occur. Certain of these obligations are guarantees of other members’ performance and accordingly are included in Other guarantees and indemnifications in Table 13.1.

Also, we have commitments to purchase loans and securities under resale agreements from certain counterparties, including central clearing organizations. The amount of our unfunded contractual commitments was $9.1 billion and $7.5 billion as of September 30, 2020, and December 31, 2019, respectively.

~~Given the nature of these commitments, they are excluded from Table 6.4 (Unfunded Credit Commitments) in Note 6 (Loans and Related Allowance for Credit Losses).~~

~~123~~


104			Wells Fargo & Company


Note ~~14:~~13: 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 LITIGATIONIn 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 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 3 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 3 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 3 cases returned to the district court for further proceedings. The Company has entered into an agreement pursuant to which the Company will pay $20.8 million to resolve the cases, subject to court approval.

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 compliance risk management

program and its past practices involving certain automobile collateral protection insurance (CPI) policies and certain mortgage interest rate lock extensions. The consent orders require remediation to customers and the payment of a total of $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~~actions alleging, among other things, unfair and deceptive practices relating to these CPI policies, have been filed against the Company and consolidated into 1 multi-district litigation in the United States District Court for the Central District of California. The Company has reached an agreement 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 ~~$643~~$693 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 granted final approval of the settlement on November 21, 2019. ~~A putative class of shareholders~~Shareholders also filed a putative securities fraud class action against the Company and its executive officers alleging material misstatements and omissions of CPI-related information in the Company’s public disclosures. In January 2020, the court dismissed this action as to all defendants except the Company and a former executive officer and limited the action to two alleged misstatements. In addition, 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 related to the unused portion of guaranteed automobile protection (GAP) waiver or insurance agreements between the customer and dealer and, by assignment, the lender. Allegations related to the CPI and GAP programs are among the subjects of a shareholder derivative ~~lawsuits~~lawsuit pending in ~~federal and state court in~~the United States District Court for the Northern District of California. The court dismissed the state court action in September 2018, but plaintiffs filed an amended complaint in November 2018. The parties to the state court action have entered into an agreement to resolve the action pursuant to which the Company will pay plaintiffs’ attorneys’ fees and undertake certain business and governance practices. The state court granted final approval of the settlement on January 15, 2020, and a notice of appeal has been filed. These and other issues related to the origination, servicing, and collection of consumer ~~automobile~~auto loans, including related insurance products, have also subjected the Company to formal or informal inquiries, investigations, or examinations from federal and state government ~~agencies.~~agencies, including the CFPB. 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.

COMMERCIAL LENDING SHAREHOLDER LITIGATION In October and November 2020, plaintiffs filed two putative securities fraud class actions in the United States District Court for the Northern District of California alleging that the Company and certain of its former executive officers made false and misleading statements or omissions regarding, among other things, the Company’s commercial lending underwriting practices, the credit quality of its commercial credit portfolios, and the value of its commercial loans, collateralized loan obligations and commercial mortgage-backed securities.


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Note 13: Legal Actions (continued)

CONSENT ORDER DISCLOSURE LITIGATION Wells Fargo shareholders have brought a putative securities fraud class action in the United States District Court for the Southern District of New

~~124~~

York alleging that the Company and certain of its current and former executive officers and directors made false or misleading statements regarding the Company’s efforts to comply with the February 2018 consent order with the Federal Reserve Board and the April 2018 consent orders with the CFPB and OCC. Allegations related to the Company’s efforts to comply with these three consent orders are also among the subjects of a shareholder derivative lawsuit pending in the United States District Court for the Northern District of California.

CONSUMER DEPOSIT ACCOUNT RELATED REGULATORY ~~INVESTIGATION~~INVESTIGATIONS The CFPB is conducting an investigation into whether customers were unduly harmed by the Company’s 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. The CFPB is also investigating certain of the Company's past disclosures to customers regarding the minimum qualifying debit card usage required for customers to receive a waiver of monthly service fees on certain consumer deposit accounts.

CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY ACT/PAYCHECK PROTECTION PROGRAM Plaintiffs ~~have~~ filed putative class actions in various federal courts against the Company. The actions ~~seek~~sought damages and injunctive relief related to the Company’s offering of Paycheck Protection Program (PPP) loans under the Coronavirus Aid, Relief, and Economic Security Act, as well as claims for fees by purported agents who allegedly assisted customers with preparing PPP loan applications submitted to the Company. These actions have been dismissed or, in a limited number of cases, are proceeding on an individual basis. The Company has also received formal and informal inquiries from federal and state ~~governmental~~government agencies regarding its offering of PPP loans. In addition, Wells Fargo shareholders have brought a securities fraud class action in the United States District Court for the Northern District of California alleging that the Company and certain of its executive officers made false or misleading statements regarding the Company's participation in the PPP and the Company's compliance with related regulations.

~~FIDUCIARY AND CUSTODY ACCOUNT FEE CALCULATIONS~~ Federal government agencies are conducting formal or informal inquiries, investigations, or examinations regarding fee calculations within certain fiduciary and custody accounts in the Company’s investment and fiduciary services business, which is part of the wealth management business within the Wealth and Investment Management (WIM) operating segment. The Company has determined that there have been instances of incorrect fees being applied to certain assets and accounts, resulting in both overcharges and undercharges to customers.

FOREIGN EXCHANGE BUSINESS The United States Department of Justice (Department of Justice) is investigating certain activities in the Company’s foreign exchange business, including whether customers may have received pricing inconsistent with commitments made to those customers. Previous investigations by other federal government agencies have been resolved.

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., 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 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 final approval of the settlement on December 13, 2019, which was appealed to the United States Court of Appeals for the Second Circuit by settlement objector merchants. Several of the opt-out and direct action litigations have been settled while others remain pending. ~~Discovery is proceeding in the opt-out litigations and the equitable relief class case.~~

LOW INCOME HOUSING TAX CREDITS Federal 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.

~~MOBILE DEPOSIT PATENT LITIGATION~~ The Company is a defendant in 2 separate cases brought by United Services Automobile Association (USAA) in the United States District Court for the Eastern District of Texas alleging claims of patent infringement regarding mobile deposit capture technology patents held by USAA. Trial in the first case commenced on October 30, 2019, and resulted in a $200 million verdict against the Company. Trial in the second case commenced on January 6, 2020, and resulted in a $102.7 million verdict against the Company. The Company has filed post-trial motions to, among other things, vacate the verdicts, and USAA has filed post-trial motions seeking future royalty payments and damages for willful infringement.

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~~Note 14: Legal Actions (continued~~)

MORTGAGE LOAN MODIFICATION ~~LITIGATION~~ MATTERSPlaintiffs representing a ~~putative~~ class of mortgage borrowers have filed separate putative class actions, Hernandez v. Wells Fargo, et al., Coordes v. Wells Fargo, et al., Ryder v. Wells Fargo, Liguori v. Wells Fargo, and Dore v. Wells Fargo, against Wells Fargo Bank, N.A., in the United States District Court for the Northern District of California, the United States District Court for the District of Washington, the United States District Court for the Southern District of Ohio, the United States District Court for the Southern District of New York, and the United States District Court for the Western District of Pennsylvania, 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. ~~The district court in the~~ ~~Hernandez~~ ~~case certified a nationwide breach of contract class for foreclosed borrowers and denied certification on claims pertaining to other impacted borrowers.~~ In March 2020, the Company entered into an agreement pursuant to which the Company ~~will pay~~paid $18.5 million to resolve the claims of the initial certified class in the Hernandez


106			Wells Fargo & Company

case, which was approved by the district court in October 2020. The ~~plaintiffs and the Company have informed the district court that they will move to reopen the~~ Hernandez settlement has been reopened to include additional borrowers who the Company determined should have been included in the settlement class ~~once~~because the ~~total number of additional borrowers has been confirmed. The~~ Company ~~has~~ identified a population of additional borrowers during the relevant class period whose loans had not previously been reviewed for inclusion in the original population of impacted customers. The identification of these additional borrowers ~~may also~~will increase the potential class of mortgage borrowers in the other pending matters.

~~MORTGAGE-RELATED REGULATORY INVESTIGATIONS~~ ~~Federal~~ In addition, federal banking regulators and ~~state~~other government agencies ~~including the Department of Justice,~~ have ~~been investigating~~undertaken formal or ~~examining certain~~informal inquiries or investigations regarding these and other mortgage related activities of Wells Fargo and predecessor institutions. Wells Fargo, for itself and for predecessor institutions, has responded 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. An agreement, pursuant to which the Company paid $2.09 billion, was reached in August 2018 to resolve the Department of Justice 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 and reached an agreement with the Attorney General of the State of Maryland in June 2020 pursuant to which the Company agreed to pay $20 million in restitution, in each case to resolve claims 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.servicing matters.

NOMURA/NATIXIS MORTGAGE-RELATED LITIGATION In August 2014 and August 2015, Nomura Credit & Capital Inc. (Nomura) and Natixis Real Estate Holdings, LLC (Natixis) filed a total of 7 third-party complaints against Wells Fargo Bank, N.A., in New York state court. In the underlying first-party actions,

Nomura and Natixis have been sued for alleged breaches of representations and warranties made in connection with residential mortgage-backed securities sponsored by them. In the third-party actions, Nomura and Natixis allege that Wells Fargo, as master servicer, primary servicer or securities administrator, failed to notify Nomura and Natixis of their own breaches, failed to properly oversee the primary servicers, and failed to adhere to accepted servicing practices. Natixis additionally alleges that Wells Fargo failed to perform default oversight duties. Wells Fargo has asserted counterclaims alleging that Nomura and Natixis failed to provide Wells Fargo notice of their representation and warranty breaches.

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) 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 LITIGATIONPlaintiffs 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 (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 in October 2016, and Wells Fargo appealed this decision to the United States Court of Appeals for the Eleventh Circuit. In 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. On September 26, 2019, the district court entered an order granting Wells Fargo’s motion and dismissed the claims of unnamed class members in favor of ~~arbitration. Plaintiffs~~arbitration, which was appealed ~~this decision~~by plaintiffs to the United States Court of Appeals for the Eleventh Circuit. In April 2021, the Eleventh Circuit upheld the district court's decision.

RETAIL SALES PRACTICES MATTERS A number of bodies or entities, including (a) 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, (b) state attorneys general, including the New York Attorney General, and (c) 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 CFPB, the 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 certain of the foregoing. ~~In October 2018,~~As previously disclosed, the Company entered into ~~an agreement~~agreements 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~~

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~~practices, CPI and GAP, and mortgage interest rate lock matters, pursuant to which the Company paid $575 million.~~attorneys general investigations. On February 21, 2020, the Company entered into an agreement with the Department of Justice to resolve the Department of Justice’s criminal investigation into the Company’s retail sales practices, as well as a separate agreement to resolve the Department of Justice’s civil investigation. As part of the Department of Justice criminal settlement, no charges will be filed against the Company provided the Company abides by all the terms of the agreement. The Department of Justice criminal settlement also includes the Company’s agreement that the facts set forth in the settlement document constitute sufficient facts for the finding of criminal violations of statutes regarding bank records and personal information. On February 21, 2020, the Company also entered into an order to resolve the SEC’s investigation arising out of the Company’s retail sales practices. The SEC order contains a finding, to which the Company consented, that the facts set forth include violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. As part of the resolution of the Department of Justice and SEC investigations, the Company ~~has agreed to make~~made payments totaling $3.0 billion. In addition, as part of the settlements and included in the $3.0 billion amount, the Company ~~has~~ agreed to the creation of a $500 million Fair Fund for the benefit of investors who were harmed by the conduct covered in the SEC settlement.

In addition, a number of lawsuits ~~have been~~were 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 againstAs previously disclosed, the Company in the United States District Court for the Northern District of California and various other jurisdictions. On June 14, 2018, the district court granted final approval of a settlement entered into by the Company in the first-filed action, ~~Jabbari v. Wells Fargo Bank, N.A~~., pursuant to which the Company will pay $142 million to resolve claims regarding certain products or services provided without authorization or consent for the time period May 1, 2002 to April 20, 2017. On July 20, 2020, the United States Court of Appeals for the Ninth Circuit affirmed the district court's order granting final approval of the settlement. On September 29, 2020, the district court approved the settlement distribution to the ~~Jabbari~~ claimants. Second, the Company was subject to a consolidated securities fraud class action alleging certain misstatements and omissions in the Company’s disclosures related to sales practices matters. The Company entered into ~~a settlement agreement~~various settlements to resolve this matter pursuant to which the Company paid $480 million. Third, Wells Fargo shareholders have brought numerous shareholder derivative lawsuits asserting breach of fiduciary duty claims against, among others, current and former directors and officers for their alleged involvement with and failure to detect and prevent sales practices issues. These actions are currently pending in the United States District Court for the Northern District of California and California state court as consolidated or coordinated proceedings. 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. The federal court granted final approval of the settlement for its action on April 7, 2020. The state court granted final approval of the settlement for its action on January 15, 2020. Fourth, athese lawsuits. A purported Employee Retirement Income Security Act (ERISA) class action was filed in the United States District Court for the

District of Minnesota on behalf of 401(k) plan participants. The district court dismissed the action, and on July 27, 2020, the United States Court of Appeals for the Eighth Circuit affirmed the dismissal. The 401(k) plan participants filed a writ of certiorari to the United States Supreme Court, which was denied on May 3, 2021.

RMBS TRUSTEE LITIGATION In ~~November~~December 2014, ~~a group of institutional investors (Institutional Investor Plaintiffs), including funds affiliated with BlackRock, Inc.,~~Phoenix Light SF Limited and certain related entities and the National Credit Union Administration (NCUA) filed ~~a putative class action~~complaints 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~~trusts. Complaints raising similar allegations have been filed ~~against other trustees in various courts, including~~by Commerzbank AG in the Southern District of New York and by IKB International and IKB Deutsche Industriebank in New York state ~~court, and in other states, by RMBS investors. The Federal Court Complaint alleged~~court. In each case, the plaintiffs allege that Wells Fargo Bank, N.A., as trustee, caused losses to investors, and ~~asserted~~plaintiffs assert 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


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Note 13: Legal Actions (continued)

alleged events of default, and abide by appropriate standards of care following alleged events of default. ~~Plaintiffs sought money damages~~The Company previously settled 2 class actions with similar allegations that were filed in ~~an unspecified amount, reimbursement of expenses, and equitable relief. In December~~November 2014 and December ~~2015, certain other~~2016 by institutional investors ~~filed additional complaints alleging similar claims against Wells Fargo Bank, N.A.,~~ in the Southern District of New York (Related Federal Cases). In January 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 subsequent 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).

~~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). A complaint raising similar allegations to those in the Federal Court Complaint was filed in May 2016 in New York state court by IKB International and IKB Deutsche Industriebank (IKB Action).

respectively. 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 11 RMBS trusts at issue in the State Court Action (Declaratory Judgment Action). The complaint sought, among other relief, declarations thatMarch 2021, 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 May 2019, the New York state court approved a settlement~~entered into an agreement ~~among the Institutional Investor Plaintiffs and the Company pursuant to which, among other terms, the Company paid $43 million~~ to resolve the ~~Federal Court Complaint and~~case filed by the State Court Action. The settlement also resolved the Third Party Claims and the Declaratory Judgment Action. The settlement did not affect the Related Federal Cases or the IKB Action, which remain pending.

NCUA.

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~~Note 14: Legal Actions (continued~~)

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 3 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. The case is pending trial.

~~WHOLESALE BANKING CONSENT ORDER INVESTIGATION~~On 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 ~~$2.4~~$2.6 billion as of ~~September 30, 2020.~~March 31, 2021. 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 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~~the 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.

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108			Wells Fargo & Company


Note ~~15:~~14: 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 qualifying hedge accounting relationships (fair value or cash flow hedges). 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 additional information on our derivative activities, see Note 1816 (Derivatives) in our ~~2019~~2020 Form 10-K.

Table ~~15.1~~14.1 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~~our consolidated 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 ~~15.1:~~14.1: Notional or Contractual Amounts and Fair Values of Derivatives

September 30, 2020 December 31, 2019
Notional or
contractual
amount Fair value Notional or
contractual
amount Fair value
(in millions) Derivative
assets Derivative
liabilities Derivative
assets Derivative
liabilities
Derivatives designated as hedging instruments
Interest rate contracts $ 185,124 3,483 1,820 182,789 2,595 1,237
Foreign exchange contracts 38,477 587 616 32,386 341 1,170
Total derivatives designated as qualifying hedging instruments 4,070 2,436 2,936 2,407
Derivatives not designated as hedging instruments
Economic hedges:
Interest rate contracts 344,263 470 266 235,810 207 160
Equity contracts 23,624 1,724 209 19,263 1,126 224
Foreign exchange contracts 44,282 422 555 26,595 118 286
Credit contracts – protection purchased 81 32 0 1,400 27 0
Subtotal 2,648 1,030 1,478 670
Customer accommodation trading and other derivatives:
Interest rate contracts 10,657,433 37,949 28,936 11,117,542 21,245 17,969
Commodity contracts 73,086 2,344 2,446 79,737 1,421 1,770
Equity contracts 305,900 13,009 16,066 272,145 7,410 10,240
Foreign exchange contracts 347,499 4,880 4,717 364,469 4,755 4,791
Credit contracts – protection sold 16,067 11 48 12,215 12 65
Credit contracts – protection purchased 25,657 75 17 24,030 69 18
Subtotal 58,268 52,230 34,912 34,853
Total derivatives not designated as hedging instruments 60,916 53,260 36,390 35,523
Total derivatives before netting 64,986 55,696 39,326 37,930
Netting (41,271) (41,929) (25,123) (28,851)
Total $ 23,715 13,767 14,203 9,079


	March 31, 2021					December 31, 2020
	Notional or		Fair value			Notional or	Fair value
	contractual		Derivative		Derivative	contractual	Derivative	Derivative
(in millions)	amount		assets		liabilities	amount	assets	liabilities
Derivatives designated as hedging instruments
Interest rate contracts	$	169,631	2,144		449	184,090	3,212	789
Foreign exchange contracts	44,756		1,502		551	47,331	1,381	607
Total derivatives designated as qualifying hedging instruments			3,646		1,000		4,593	1,396
Derivatives not designated as hedging instruments
Economic hedges:
Interest rate contracts	251,757		939		945	261,159	341	344
Equity contracts	25,237		1,364		69	25,997	1,363	490
Foreign exchange contracts	63,030		686		1,497	47,106	331	1,515
Credit contracts	72		31		0	73	31	0
Subtotal			3,020		2,511		2,066	2,349
Customer accommodation trading and other derivatives:
Interest rate contracts	9,778,319		29,057		24,058	7,947,941	32,510	25,169
Commodity contracts	72,563		3,758		1,522	65,790	2,036	1,543
Equity contracts	299,633		18,283		18,314	280,195	17,522	21,516
Foreign exchange contracts	424,251		8,131		6,615	412,879	6,891	6,034
Credit contracts	42,380		54		51	34,329	64	58

Subtotal			59,283		50,560		59,023	54,320
Total derivatives not designated as hedging instruments			62,303		53,071		61,089	56,669
Total derivatives before netting			65,949		54,071		65,682	58,065
Netting			(40,520)		(39,141)		(39,836)	(41,556)
Total			$	25,429	14,930		25,846	16,509

~~129~~

~~Note 15: Derivatives (continued~~)

Table ~~15.2~~14.2 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 consolidated 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 consolidated balance sheet. The “Gross amounts recognized” column in the following table includes $55.9 billion and ~~$48.6~~$48.0 billion of gross derivative assets and liabilities, respectively, at ~~September 30, 2020,~~March 31, 2021, and ~~$33.7~~$54.6 billion and ~~$33.5~~$50.1 billion, respectively, at December 31, ~~2019,~~2020, with counterparties subject to enforceable master netting arrangements that are eligible for balance sheet netting adjustments. The majority of these amounts are interest rate contracts executed in over-the-counter (OTC) markets. The remaining gross derivative assets and liabilities of ~~$9.1~~$10.0 billion and ~~$7.1~~$6.1 billion, respectively, at ~~September 30, 2020,~~March 31, 2021, and ~~$5.6~~$11.1 billion

and ~~$4.4~~$8.0 billion, respectively, at December 31, ~~2019,~~2020, 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 consolidated balance sheet for these counterparties. Cash collateral receivables and payables that have not been offset against our derivatives were ~~$3.6~~$1.6 billion and ~~$605 million,~~$2.9 billion, respectively, at ~~September 30, 2020,~~March 31, 2021, and ~~$6.3~~$1.8 billion and ~~$1.4 billion,~~$984 million, respectively, at December 31, ~~2019.~~2020.

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


			Wells Fargo & Company			109

Note 14: Derivatives (continued)

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~~our consolidated 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 ~~15.2~~14.2 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~~counterparty-specific credit risk limits, using master netting arrangements and obtaining collateral. Derivative contracts executed in OTC markets include bilateral contractual arrangements that are not cleared through a central clearing organization but are typically subject to master netting arrangements. The proportion of these derivative contracts relative to our total derivative assets and liabilities are presented in the “Percent exchanged in over-the-counter market” column in Table ~~15.2.~~14.2. 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 ~~13 (Guarantees, Pledged~~12 (Pledged Assets and ~~Collateral, and Other Commitments)~~Collateral).

~~130~~

Table ~~15.2:~~14.2: Gross Fair Values of Derivative Assets and Liabilities


(in millions)	(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)	Net amounts	Percent exchanged in over-the-counter market		(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)	Net amounts	Percent exchanged in over-the-counter market
September 30, 2020
March 31, 2021										March 31, 2021
Derivative assets	Derivative assets									Derivative assets
Interest rate contracts	Interest rate contracts	$	41,902	(26,163)	15,739	(1,380)	14,359	97	%	Interest rate contracts	$	32,140	(21,206)	10,934	(1,155)	9,779	93	%
Commodity contracts	Commodity contracts	2,344		(1,345)	999	(6)	993	80		Commodity contracts	3,758		(1,015)	2,743	(3)	2,740	90
Equity contracts	Equity contracts	14,733		(9,390)	5,343	(794)	4,549	71		Equity contracts	19,647		(10,886)	8,761	(730)	8,031	71
Foreign exchange contracts	Foreign exchange contracts	5,889		(4,306)	1,583	(8)	1,575	100		Foreign exchange contracts	10,319		(7,356)	2,963	(33)	2,930	100
Credit contracts – protection sold		11		(8)	3	0	3	73
Credit contracts – protection purchased		107		(59)	48	(2)	46	88
Credit contracts										Credit contracts	85		(57)	28	(1)	27	92

Total derivative assets	Total derivative assets	$	64,986	(41,271)	23,715	(2,190)	21,525			Total derivative assets	$	65,949	(40,520)	25,429	(1,922)	23,507
Derivative liabilities	Derivative liabilities									Derivative liabilities
Interest rate contracts	Interest rate contracts	$	31,022	(27,112)	3,910	(2,039)	1,871	97	%	Interest rate contracts	$	25,452	(20,904)	4,548	(1,712)	2,836	89	%
Commodity contracts	Commodity contracts	2,446		(1,225)	1,221	(6)	1,215	79		Commodity contracts	1,522		(753)	769	(5)	764	58
Equity contracts	Equity contracts	16,275		(9,341)	6,934	(372)	6,562	73		Equity contracts	18,383		(11,868)	6,515	(710)	5,805	75
Foreign exchange contracts	Foreign exchange contracts	5,888		(4,206)	1,682	(624)	1,058	100		Foreign exchange contracts	8,663		(5,581)	3,082	(507)	2,575	100
Credit contracts – protection sold		48		(40)	8	(5)	3	95
Credit contracts – protection purchased		17		(5)	12	0	12	85
Credit contracts										Credit contracts	51		(35)	16	(3)	13	93

Total derivative liabilities	Total derivative liabilities	$	55,696	(41,929)	13,767	(3,046)	10,721			Total derivative liabilities	$	54,071	(39,141)	14,930	(2,937)	11,993
December 31, 2019
December 31, 2020										December 31, 2020
Derivative assets	Derivative assets									Derivative assets
Interest rate contracts	Interest rate contracts	$	24,047	(14,878)	9,169	(445)	8,724	95	%	Interest rate contracts	$	36,063	(21,968)	14,095	(1,274)	12,821	96	%
Commodity contracts	Commodity contracts	1,421		(888)	533	(2)	531	80		Commodity contracts	2,036		(940)	1,096	(4)	1,092	84
Equity contracts	Equity contracts	8,536		(5,570)	2,966	(69)	2,897	65		Equity contracts	18,885		(10,968)	7,917	(737)	7,180	74
Foreign exchange contracts	Foreign exchange contracts	5,214		(3,722)	1,492	(22)	1,470	100		Foreign exchange contracts	8,603		(5,887)	2,716	(141)	2,575	100
Credit contracts – protection sold		12		(9)	3	0	3	84
Credit contracts – protection purchased		96		(56)	40	(1)	39	97
Credit contracts										Credit contracts	95		(73)	22	(1)	21	90

Total derivative assets	Total derivative assets	$	39,326	(25,123)	14,203	(539)	13,664			Total derivative assets	$	65,682	(39,836)	25,846	(2,157)	23,689
Derivative liabilities	Derivative liabilities									Derivative liabilities
Interest rate contracts	Interest rate contracts	$	19,366	(16,595)	2,771	(545)	2,226	94	%	Interest rate contracts	$	26,302	(21,934)	4,368	(2,219)	2,149	95	%
Commodity contracts	Commodity contracts	1,770		(677)	1,093	(2)	1,091	82		Commodity contracts	1,543		(819)	724	0	724	69
Equity contracts	Equity contracts	10,464		(6,647)	3,817	(319)	3,498	81		Equity contracts	22,006		(12,283)	9,723	(837)	8,886	78
Foreign exchange contracts	Foreign exchange contracts	6,247		(4,866)	1,381	(169)	1,212	100		Foreign exchange contracts	8,156		(6,481)	1,675	(529)	1,146	100
Credit contracts – protection sold		65		(60)	5	(3)	2	98
Credit contracts – protection purchased		18		(6)	12	0	12	93
Credit contracts										Credit contracts	58		(39)	19	(3)	16	91

Total derivative liabilities	Total derivative liabilities	$	37,930	(28,851)	9,079	(1,038)	8,041			Total derivative liabilities	$	58,065	(41,556)	16,509	(3,588)	12,921

(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 related to derivative assets were ~~$507~~$293 million and ~~$231~~$399 million and debit valuation adjustments related to derivative liabilities were ~~$236~~$205 million and ~~$100~~$201 million ~~at September 30, 2020,~~as of March 31, 2021, and December 31, ~~2019,~~2020, respectively. Cash collateral totaled ~~$6.4~~$5.8 billion and ~~$7.3~~$4.5 billion, netted against derivative assets and liabilities, respectively, at ~~September 30, 2020,~~March 31, 2021, and ~~$2.9~~$5.5 billion and ~~$6.8~~$7.5 billion, respectively, at December 31, ~~2019.~~2020.


110			Wells Fargo & Company

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 mortgage loans held for sale.~~ 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 21 (Other Comprehensive Income) for the amounts recognized in other comprehensive income.

For cash flow hedges, we use interest rate swaps to hedge the variability in interest payments received on certain ~~floating-rate~~floating-

rate commercial loans, and paid on certain floating-rate debt due to changes in the contractually specified interest rate. We also use cross-currency swaps to hedge variability in interest payments on fixed-rate foreign currency-denominated long-term debt due to changes in foreign exchange rates.

We estimate ~~$175~~$107 million pre-tax of deferred net losses related to cash flow hedges in OCI at ~~September 30, 2020,~~March 31, 2021, will be reclassified into net interest income during the next twelve months. 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 as of

~~131~~

~~Note 15: Derivatives (continued~~)

~~September 30, 2020,~~ March 31, 2021, we are hedging our foreign currency exposure to the variability of future cash flows for all forecasted transactions for a maximum of 109 years. For additional information on our accounting hedges, see Note 1 (Summary of Significant Accounting Policies) ~~and Note 18 (Derivatives) in our 2019 Form 10-K.~~.

Table ~~15.3~~14.3 and Table ~~15.4~~14.4 show the net gains (losses) ~~by income statement line item impacted,~~ related to derivatives in fair value and cash flow hedging relationships, respectively.

Table ~~15.3:~~14.3: Gains (Losses) Recognized on Fair Value Hedging Relationships

Net interest income Noninterest income Total recorded in net income Total recorded in OCI
(in millions) Debt securities Mortgage loans held for sale Deposits Long-term debt Other Derivative gains (losses) Derivative gains (losses)
Quarter ended September 30, 2020
Total amounts presented in the consolidated statement of income
and other comprehensive income
$ 2,446 232 (314) (1,038) 220 N/A (18)
Interest contracts:
Amounts related to interest settlements on derivatives (114) 0 157 542 0 585
Recognized on derivatives 280 1 (156) (1,357) 0 (1,232) 0
Recognized on hedged items (265) (1) 156 1,269 0 1,159
Total gains (losses) (pre-tax) on interest rate contracts (99) 0 157 454 0 512 0
Foreign exchange contracts:
Amounts related to interest settlements on derivatives 16 0 0 (5) 0 11
Recognized on derivatives 1 0 0 52 856 909 (82)
Recognized on hedged items (1) 0 0 (5) (849) (855)
Total gains (losses) (pre-tax) on foreign exchange contracts 16 0 0 42 7 65 (82)
Total gains (losses) (pre-tax) recognized on fair value hedges $ (83) 0 157 496 7 577 (82)
Nine months ended September 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income $ 8,864 659 (2,641) (3,515) 869 N/A 167
Interest contracts:
Amounts related to interest settlements on derivatives (253) 0 379 1,144 0 1,270
Recognized on derivatives (1,612) (52) 288 8,967 0 7,591 0
Recognized on hedged items 1,654 53 (278) (8,775) 0 (7,346)
Total gains (losses) (pre-tax) on interest rate contracts (211) 1 389 1,336 0 1,515 0
Foreign exchange contracts:
Amounts related to interest settlements on derivatives 33 0 0 (136) 0 (103)
Recognized on derivatives (1) 0 0 276 780 1,055 5
Recognized on hedged items 2 0 0 (249) (769) (1,016)
Total gains (losses) (pre-tax) on foreign exchange contracts 34 0 0 (109) 11 (64) 5
Total gains (losses) (pre-tax) recognized on fair value hedges $ (177) 1 389 1,227 11 1,451 5

~~(continued on following page)~~


	Net interest income				Noninterest income		Total recorded in net income		Total recorded in OCI
(in millions)	Debt securities		Deposits	Long-term debt		Other		Derivative gains (losses)		Derivative gains (losses)
Quarter ended March 31, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income	$	2,312	(112)	(1,026)		523		N/A		47
Interest contracts
Amounts related to interest settlements on derivatives	(67)		91	550		0		574
Recognized on derivatives	1,294		(123)	(7,071)		0		(5,900)		0
Recognized on hedged items	(1,258)		119	6,944		0		5,805
Total gains (losses) (pre-tax) on interest rate contracts	(31)		87	423		0		479		0
Foreign exchange contracts
Amounts related to interest settlements on derivatives	28		0	(1)		0		27
Recognized on derivatives	1		0	(227)		307		81		25
Recognized on hedged items	(1)		0	194		(317)		(124)
Total gains (losses) (pre-tax) on foreign exchange contracts	28		0	(34)		(10)		(16)		25
Total gains (losses) (pre-tax) recognized on fair value hedges	$	(3)	87	389		(10)		463		25
Quarter ended March 31, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income	$	3,472	(1,742)	(1,240)		863		N/A		182
Interest contracts
Amounts related to interest settlements on derivatives	(46)		70	174		0		198
Recognized on derivatives	(1,871)		530	9,775		0		8,434		0
Recognized on hedged items	1,856		(511)	(9,426)		0		(8,081)
Total gains (losses) (pre-tax) on interest rate contracts	(61)		89	523		0		551		0
Foreign exchange contracts
Amounts related to interest settlements on derivatives	6		0	(85)		0		(79)
Recognized on derivatives	(1)		0	107		(785)		(679)		144
Recognized on hedged items	2		0	(174)		764		592
Total gains (losses) (pre-tax) on foreign exchange contracts	7		0	(152)		(21)		(166)		144
Total gains (losses) (pre-tax) recognized on fair value hedges	$	(54)	89	371		(21)		385		144

~~132~~


			Wells Fargo & Company			111

~~(continued from previous page)~~

Net interest income Noninterest income Total recorded in net income Total recorded in OCI
(in millions) Debt securities Mortgage loans held for sale Deposits Long-term debt Other Derivative gains (losses) Derivative gains (losses)
Quarter ended September 30, 2019
Total amounts presented in the consolidated statement of income and other comprehensive income $ 3,666 232 (2,324) (1,780) 1,842 N/A 85
Interest contracts:
Amounts related to interest settlements on derivatives (1) 1 26 53 0 79
Recognized on derivatives (628) (3) 30 2,880 0 2,279 0
Recognized on hedged items 631 1 (30) (2,809) 0 (2,207)
Total gains (losses) (pre-tax) on interest rate contracts 2 (1) 26 124 0 151 0
Foreign exchange contracts:
Amounts related to interest settlements on derivatives 9 0 0 (115) 0 (106)
Recognized on derivatives (2) 0 0 86 (918) (834) 28
Recognized on hedged items 3 0 0 (124) 899 778
Total gains (losses) (pre-tax) on foreign exchange contracts 10 0 0 (153) (19) (162) 28
Total gains (losses) (pre-tax) recognized on fair value hedges $ 12 (1) 26 (29) (19) (11) 28
Nine months ended September 30, 2019
Total amounts presented in the consolidated statement of income and other comprehensive income $ 11,388 579 (6,563) (5,607) 3,667 N/A 265
Interest contracts:
Amounts related to interest settlements on derivatives 29 1 (4) 53 0 79
Recognized on derivatives (2,531) (36) 588 7,813 0 5,834 0
Recognized on hedged items 2,544 32 (563) (7,646) 0 (5,633)
Total gains (losses) (pre-tax) on interest rate contracts 42 (3) 21 220 0 280 0
Foreign exchange contracts:
Amounts related to interest settlements on derivatives 29 0 0 (385) 0 (356)
Recognized on derivatives (11) 0 0 583 (994) (422) 58
Recognized on hedged items 12 0 0 (576) 975 411
Total gains (losses) (pre-tax) on foreign exchange contracts 30 0 0 (378) (19) (367) 58
Total gains (losses) (pre-tax) recognized on fair value hedges $ 72 (3) 21 (158) (19) (87) 58

~~133~~

Note ~~15:~~14: Derivatives (~~continued~~)(continued)

Table ~~15.4:~~14.4: Gains (Losses) Recognized on Cash Flow Hedging Relationships

Net interest Income Total recorded in net income Total recorded in OCI
(in millions) Loans Long-term debt Derivative gains (losses) Derivative gains (losses)
Quarter ended September 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income $ 7,954 (1,038) N/A (18)
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income (53) 2 (51) 51
Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A 0
Total gains (losses) (pre-tax) on interest rate contracts (53) 2 (51) 51
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income 0 (1) (1) 1
Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A 12
Total gains (losses) (pre-tax) on foreign exchange contracts 0 (1) (1) 13
Total gains (losses) (pre-tax) recognized on cash flow hedges $ (53) 1 (52) 64
Nine months ended September 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income $ 26,467 (3,515) N/A 167
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income (162) 3 (159) 159
Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A 0
Total gains (losses) (pre-tax) on interest rate contracts (162) 3 (159) 159
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income 0 (6) (6) 6
Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A (3)
Total gains (losses) (pre-tax) on foreign exchange contracts 0 (6) (6) 3
Total gains (losses) (pre-tax) recognized on cash flow hedges $ (162) (3) (165) 162
Quarter ended September 30, 2019
Total amounts presented in the consolidated statement of income and other comprehensive income $ 10,982 (1,780) N/A 85
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income (73) 0 (73) 73
Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A 0
Total gains (losses) (pre-tax) on interest rate contracts (73) 0 (73) 73
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income 0 (2) (2) 2
Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A (18)
Total gains (losses) (pre-tax) on foreign exchange contracts 0 (2) (2) (16)
Total gains (losses) (pre-tax) recognized on cash flow hedges $ (73) (2) (75) 57
Nine months ended September 30, 2019
Total amounts presented in the consolidated statement of income and other comprehensive income $ 33,652 (5,607) N/A 265
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income (228) 1 (227) 227
Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A 0
Total gains (losses) (pre-tax) on interest rate contracts (228) 1 (227) 227
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income 0 (6) (6) 6
Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A (26)
Total gains (losses) (pre-tax) on foreign exchange contracts 0 (6) (6) (20)
Total gains (losses) (pre-tax) recognized on cash flow hedges $ (228) (5) (233) 207

~~134~~


	Net interest income			Total recorded in net income	Total recorded in OCI
(in millions)	Loans		Long-term debt	Derivative gains (losses)	Derivative gains (losses)






















Quarter ended March 31, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income	$	7,191	(1,026)	N/A	47
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(52)		—	(52)	52
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	(20)
Total gains (losses) (pre-tax) on interest rate contracts	(52)		0	(52)	32
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	0		(1)	(1)	1
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	(11)
Total gains (losses) (pre-tax) on foreign exchange contracts	0		(1)	(1)	(10)
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	(52)	(1)	(53)	22
Quarter ended March 31, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income	$	10,065	(1,240)	N/A	182
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(56)		—	(56)	56
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	0
Total gains (losses) (pre-tax) on interest rate contracts	(56)		0	(56)	56
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	0		(2)	(2)	2
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	(20)
Total gains (losses) (pre-tax) on foreign exchange contracts	0		(2)	(2)	(18)
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	(56)	(2)	(58)	38

Table ~~15.5~~14.5 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 ~~15.5:~~14.5: 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)	(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)	(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)
September 30, 2020
March 31, 2021							March 31, 2021
Available-for-sale debt securities (5)	Available-for-sale debt securities (5)	$	25,969	2,109	9,435	301	Available-for-sale debt securities (5)	$	28,215	(462)	16,946	1,050

Mortgage loans held for sale		173		5	0	0

Deposits	Deposits	(29,852)		(604)	0	0	Deposits	(16,276)		(358)	0	0
Long-term debt	Long-term debt	(164,848)		(14,736)	(16,538)	60	Long-term debt	(146,687)		(4,956)	(5,236)	14
December 31, 2019
December 31, 2020							December 31, 2020
Available-for-sale debt securities (5)	Available-for-sale debt securities (5)	$	36,896	1,110	9,486	278	Available-for-sale debt securities (5)	$	29,538	827	17,091	1,111

Mortgage loans held for sale		961		(12)	0	0

Deposits	Deposits	(43,716)		(324)	0	0	Deposits	(22,384)		(477)	0	0
Long-term debt	Long-term debt	(127,423)		(5,827)	(25,750)	173	Long-term debt	(156,907)		(12,466)	(14,468)	31

(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 ~~$9.6~~for debt securities is $15.3 billion and for long-term debt is $(4.5) billion as of March 31, 2021, and $17.6 billion for debt securities and ~~$(4.5) billion for long-term debt as of September 30, 2020, and $1.2 billion for debt securities and $(5.2)~~$(4.7) billion for long-term debt as of December 31, ~~2019.~~2020.

(3)The balance includes ~~$476~~$202 million and ~~$138~~$153 million of debt securities and long-term debt cumulative basis adjustments ~~respectively,~~ as of ~~September 30, 2020,~~March 31, 2021, respectively, and ~~$790~~$205 million and ~~$109~~$130 million of debt securities and long-term debt cumulative basis adjustments ~~respectively,~~ as of December 31, ~~2019,~~2020, respectively, 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.

~~135~~


112			Wells Fargo & Company

~~Note 15: Derivatives (continued~~)

Derivatives Not Designated as Hedging Instruments

Derivatives not designated as hedging instruments include economic hedges and derivatives entered into for customer accommodation trading purposes.

We use economic hedge derivativesto manage our exposure to interest rate risk, equity price risk, foreign currency risk, and credit risk. 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. In second quarter 2020, we entered into arrangements to ~~transition~~

transition the economic hedges of our deferred compensation plan liabilities from equity securities to derivative instruments. Changes in the fair values of derivatives used to economically hedge the deferred compensation plan are reported in personnel expense.

For additional information on economic hedges and other derivatives, see Note 1816 (Derivatives) ~~to Financial Statements~~ in our ~~2019~~2020 Form 10-K.

Table ~~15.6~~14.6 shows the net gains (losses), recognized by income statement lines, related to derivatives not designated as hedging instruments.

Table ~~15.6:~~14.6: Gains (Losses) on Derivatives Not Designated as Hedging Instruments

Noninterest income Noninterest Expense
(in millions) Mortgage banking Net gains (losses) from equity securities Net gains (losses) from trading activities Other Total Personnel expense
Quarter ended September 30, 2020
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1) $ 216 0 0 (27) 189 0
Equity contracts 0 (209) 0 (1) (210) (215)
Foreign exchange contracts 0 0 0 (523) (523) 0
Credit contracts 0 0 0 (3) (3) 0
Subtotal 216 (209) 0 (554) (547) (215)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts 485 0 271 0 756 0
Commodity contracts 0 0 (356) 0 (356) 0
Equity contracts 0 0 (1,291) (142) (1,433) 0
Foreign exchange contracts 0 0 160 0 160 0
Credit contracts 0 0 (32) 0 (32) 0
Subtotal 485 0 (1,248) (142) (905) 0
Net gains (losses) recognized related to derivatives not designated as hedging instruments $ 701 (209) (1,248) (696) (1,452) (215)
Nine months ended September 30, 2020
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1) $ 2,829 0 0 (72) 2,757 0
Equity contracts 0 (392) 0 (35) (427) (356)
Foreign exchange contracts 0 0 0 49 49 0
Credit contracts 0 0 0 14 14 0
Subtotal 2,829 (392) 0 (44) 2,393 (356)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts 1,584 0 (1,516) 0 68 0
Commodity contracts 0 0 (468) 0 (468) 0
Equity contracts 0 0 1,110 (214) 896 0
Foreign exchange contracts 0 0 (242) 0 (242) 0
Credit contracts 0 0 115 0 115 0
Subtotal 1,584 0 (1,001) (214) 369 0
Net gains (losses) recognized related to derivatives not designated as hedging instruments $ 4,413 (392) (1,001) (258) 2,762 (356)

~~(continued on following page)~~

~~136~~

~~(continued from previous page)~~


		Noninterest income							Noninterest income					Noninterest expense
(in millions)	(in millions)	Mortgage banking		Net gains (losses) from equity securities	Net gains (losses) from trading activities	Other	Total	(in millions)	Mortgage banking		Net gains (losses) on trading and securities	Other	Total		Personnel expense
Quarter ended September 30, 2019
Quarter ended March 31, 2021								Quarter ended March 31, 2021
Net gains (losses) recognized on economic hedges derivatives:	Net gains (losses) recognized on economic hedges derivatives:							Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	Interest contracts (1)	$	736	0	0	0	736	Interest contracts (1)	$	(375)	0	(20)	(395)		0
Equity contracts	Equity contracts	0		(1,375)	0	(6)	(1,381)	Equity contracts	0		425	5	430		(160)
Foreign exchange contracts	Foreign exchange contracts	0		0	0	263	263	Foreign exchange contracts	0		0	71	71		0
Credit contracts	Credit contracts	0		0	0	(11)	(11)	Credit contracts	0		0	0	0		0
Subtotal	Subtotal	736		(1,375)	0	246	(393)	Subtotal	(375)		425	56	106		(160)
Net gains (losses) recognized on customer accommodation trading and other derivatives:	Net gains (losses) recognized on customer accommodation trading and other derivatives:							Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	Interest contracts	95		0	(355)	0	(260)	Interest contracts	(531)		1,924	0	1,393		0
Commodity contracts	Commodity contracts	0		0	65	0	65	Commodity contracts	0		80	0	80		0
Equity contracts	Equity contracts	0		0	284	10	294	Equity contracts	0		(1,163)	(89)	(1,252)		0
Foreign exchange contracts	Foreign exchange contracts	0		0	78	0	78	Foreign exchange contracts	0		464	0	464		0
Credit contracts	Credit contracts	0		0	(10)	0	(10)	Credit contracts	0		(28)	0	(28)		0

Subtotal	Subtotal	95		0	62	10	167	Subtotal	(531)		1,277	(89)	657		0
Net gains (losses) recognized related to derivatives not designated as hedging instruments	Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	831	(1,375)	62	256	(226)	Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	(906)	1,702	(33)	763		(160)
Nine months ended September 30, 2019
Quarter ended March 31, 2020								Quarter ended March 31, 2020
Net gains (losses) recognized on economic hedges derivatives:	Net gains (losses) recognized on economic hedges derivatives:							Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	Interest contracts (1)	$	2,419	0	0	7	2,426	Interest contracts (1)	$	2,471	0	29	2,500		0
Equity contracts	Equity contracts	0		(2,918)	0	(6)	(2,924)	Equity contracts	0		1,219	(28)	1,191		0
Foreign exchange contracts	Foreign exchange contracts	0		0	0	403	403	Foreign exchange contracts	0		0	627	627		0
Credit contracts	Credit contracts	0		0	0	(1)	(1)	Credit contracts	0		0	16	16		0
Subtotal	Subtotal	2,419		(2,918)	0	403	(96)	Subtotal	2,471		1,219	644	4,334		0
Net gains (losses) recognized on customer accommodation trading and other derivatives:	Net gains (losses) recognized on customer accommodation trading and other derivatives:							Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	Interest contracts	392		0	(861)	0	(469)	Interest contracts	553		(2,463)	0	(1,910)		0
Commodity contracts	Commodity contracts	0		0	143	0	143	Commodity contracts	0		112	0	112		0
Equity contracts	Equity contracts	0		0	(2,975)	(396)	(3,371)	Equity contracts	0		4,749	73	4,822		0
Foreign exchange contracts	Foreign exchange contracts	0		0	9	0	9	Foreign exchange contracts	0		(557)	0	(557)		0
Credit contracts	Credit contracts	0		0	(70)	0	(70)	Credit contracts	0		281	0	281		0

Subtotal	Subtotal	392		0	(3,754)	(396)	(3,758)	Subtotal	553		2,122	73	2,748		0
Net gains (losses) recognized related to derivatives not designated as hedging instruments	Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	2,811	(2,918)	(3,754)	7	(3,854)	Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	3,024	3,341	717	7,082		0

(1)Mortgage banking amounts for ~~the third~~first quarter ~~and first nine months of 2020~~2021 are comprised of gains (losses) of ~~$513 million and $4.4~~$(1.6) billion ~~respectively,~~ related to derivatives used as economic hedges of MSRs measured at fair value offset by gains (losses) of ~~$(297) million and $(1.6)~~$1.3 billion ~~respectively,~~ related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments. The corresponding amounts for ~~the third~~first quarter ~~and first nine months of 2019~~2020 are comprised of gains (losses) of ~~$678 million and $2.8~~$3.4 billion offset by gains (losses) of ~~$58 million and $(376) million, respectively.~~$(929) million.

~~137~~


			Wells Fargo & Company			113

Note ~~15:~~14: Derivatives (~~continued~~)(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 the 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 ~~15.7~~14.7 provides details of sold and purchased credit derivatives.

Table ~~15.7:~~14.7: Sold and Purchased Credit Derivatives


					Notional amount										Notional amount
(in millions)	(in millions)	Fair value asset		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	(in millions)	Fair value asset		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
September 30, 2020
March 31, 2021											March 31, 2021
Credit default swaps on:	Credit default swaps on:										Credit default swaps on:
Corporate bonds	Corporate bonds	$	8	3	3,850	1,010	2,677	1,173	3,348	2020 - 2029	Corporate bonds	$	6	2	4,727	1,188	3,297	1,430	3,587	2021 - 2029
Structured products	Structured products	0		6	22	22	20	2	92	2034 - 2047	Structured products	0		3	16	16	15	1	82	2034 - 2047
Credit protection on:	Credit protection on:										Credit protection on:
Default swap index	Default swap index	1		0	5,250	1,239	2,125	3,125	4,762	2020 - 2029	Default swap index	1		1	3,552	1,165	2,688	864	4,066	2021 - 2030
Commercial mortgage-backed securities index	Commercial mortgage-backed securities index	2		26	311	54	286	25	75	2047 - 2072	Commercial mortgage-backed securities index	2		18	290	36	265	25	75	2047 - 2072
Asset-backed securities index	Asset-backed securities index	0		7	40	40	40	0	1	2045 - 2046	Asset-backed securities index	0		7	41	41	40	1	1	2045 - 2046
Other	Other	0		6	6,594	6,426	0	6,594	12,312	2020 - 2040	Other	0		2	8,098	7,992	0	8,098	11,612	2021 - 2040
Total credit derivatives	Total credit derivatives	$	11	48	16,067	8,791	5,148	10,919	20,590		Total credit derivatives	$	9	33	16,724	10,438	6,305	10,419	19,423
December 31, 2019
December 31, 2020											December 31, 2020
Credit default swaps on:	Credit default swaps on:										Credit default swaps on:
Corporate bonds	Corporate bonds	$	8	1	2,855	707	1,885	970	2,447	2020 - 2029	Corporate bonds	$	7	2	3,767	971	2,709	1,058	3,012	2021 - 2029
Structured products	Structured products	0		25	74	69	63	11	111	2022 - 2047	Structured products	0		5	20	20	19	1	84	2034 - 2047
Credit protection on:	Credit protection on:										Credit protection on:
Default swap index	Default swap index	1		0	2,542	120	550	1,992	8,105	2020 - 2029	Default swap index	0		0	1,582	731	559	1,023	3,925	2021 - 2030
Commercial mortgage-backed securities index	Commercial mortgage-backed securities index	3		26	322	67	296	26	50	2047 - 2058	Commercial mortgage-backed securities index	3		21	297	42	272	25	75	2047 - 2072
Asset-backed securities index	Asset-backed securities index	0		8	41	41	41	0	1	2045 - 2046	Asset-backed securities index	0		7	41	41	40	1	1	2045 - 2046
Other	Other	0		5	6,381	5,738	0	6,381	11,881	2020 - 2049	Other	0		4	6,378	6,262	0	6,378	11,621	2021 - 2040
Total credit derivatives	Total credit derivatives	$	12	65	12,215	6,742	2,835	9,380	22,595		Total credit derivatives	$	10	39	12,085	8,067	3,599	8,486	18,718

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 an extremely 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.

~~138~~

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. Table ~~15.8~~14.8 illustrates our exposure to ~~such derivatives~~OTC bilateral derivative contracts with credit-risk contingent features, collateral we have posted, and the additional collateral we would be required to post if the credit rating of our debt was downgraded below investment grade.

Table ~~15.8:~~14.8: Credit-Risk Contingent Features


(in billions)	(in billions)	Sep 30, 2020		Dec 31, 2019	(in billions)	Mar 31, 2021		Dec 31, 2020
Net derivative liabilities with credit-risk contingent features	Net derivative liabilities with credit-risk contingent features	$	14.9	10.4	Net derivative liabilities with credit-risk contingent features	$	10.3	10.5
Collateral posted	Collateral posted	13.2		9.1	Collateral posted	9.1		9.0
Additional collateral to be posted upon a below investment grade credit rating (1)	Additional collateral to be posted upon a below investment grade credit rating (1)	1.6		1.3	Additional collateral to be posted upon a below investment grade credit rating (1)	1.2		1.5

(1)Any credit rating below investment grade requires us to post the maximum amount of collateral.

~~139~~


114			Wells Fargo & Company


Note ~~16:~~15: 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, such as derivatives, residential MSRs, and trading or AFS debt securities, are presented in Table ~~16.2~~15.1 in this Note. ~~From~~Additionally, 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~~lower of cost or fair value (LOCOM) accounting, write-downs of individual assets or application of the measurement alternative for nonmarketable equity securities. Assets recorded at fair value on a nonrecurring basis are presented in Table ~~16.13~~15.4 in this Note.

We provide in Table ~~16.19 includes~~15.8 estimates of fair value for financial instruments that are not recorded at fair ~~value.~~value, such as loans and debt liabilities carried at amortized cost.

See Note 1 (Summary of Significant Accounting Policies) in our ~~2019~~2020 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 1917 (Fair Values of Assets and Liabilities) in our ~~2019~~2020 Form 10-K.

FAIR VALUE HIERARCHY We classify our assets and liabilities ~~measured~~recorded at fair value as either Level 1, ~~Level~~ 2, or ~~Level~~ 3 in the fair value hierarchy. The highest priority (Level 1) is assigned to valuations based on unadjusted quoted prices in active markets and the lowest priority (Level 3) is assigned to valuations based on significant unobservable inputs. See Note 1 (Summary of Significant Accounting Policies) in our ~~2019~~2020 Form 10-K for a detailed description of the fair value hierarchy.

In the determination of the classification of financial instruments in Level 2 or Level 3 of the fair value hierarchy, we consider all available information, including observable market data, indications of market liquidity and orderliness, and our understanding of the valuation techniques and significant inputs used. ~~For securities in inactive markets, we use a predetermined percentage to evaluate the impact of fair value adjustments~~

~~derived from weighting both external and internal indications of value to determine if the instrument~~This determination is ~~classified as Level 2 or Level 3. Otherwise, the classification of Level 2 or Level 3 is~~ultimately based upon the specific facts and circumstances of each instrument or instrument category and judgments are made regarding the significance of the ~~Level 3~~unobservable inputs to the instruments’ fair value measurement in its entirety. If ~~Level 3~~unobservable inputs are considered significant, the instrument is classified as Level 3.

We do not classify nonmarketable equity securities 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 are classified in the fair value hierarchy.

~~Fair Value Measurements from Vendors~~

~~For certain assets and liabilities, we obtain fair value measurements from vendors and we record the fair value in our financial statements. For additional information, see~~


			Wells Fargo & Company			115

Note ~~19 (Fair~~15: Fair Values of Assets and ~~Liabilities) in our 2019 Form 10-K.~~

Table 16.1 presents fair value measurements obtained from third-party pricing services classified within the fair value hierarchy. Fair value measurements obtained from brokers and fair value measurements obtained from third-party pricing services that we have adjusted using internal models or non-vendor data to determine the fair value are excluded from

~~Table 16.1.~~

The unadjusted fair value measurements obtained from brokers for available-for-sale debt securities were $19 million in Level 2 assets and $124 million in Level 3 assets at September 30, 2020, and $45 million and $126 million at December 31, 2019, respectively.

~~Table 16.1:~~Liabilities ~~Fair Value Measurements obtained from Third-Party Pricing Services~~

September 30, 2020 December 31, 2019
(in millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Trading debt securities 822 286 0 634 329 0
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies 5,975 0 0 13,460 1,500 0
Securities of U.S. states and political subdivisions 0 31,187 38 0 39,868 34
Mortgage-backed securities 0 139,043 43 0 167,172 42
Other debt securities (1) 0 40,614 569 0 38,067 650
Total available-for-sale debt securities 5,975 210,844 650 13,460 246,607 726
Marketable equity securities 0 105 0 0 110 0
Derivative assets 18 1 0 12 1 0
Derivative liabilities (13) (1) 0 (11) (3) 0

~~(1)Includes corporate debt securities, collateralized loan obligations, and other debt securities.~~

~~140~~

(continued)

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Table ~~16.2~~15.1 presents the balances of assets and liabilities recorded at fair value on a recurring basis.

Table ~~16.2:~~15.1: Fair Value on a Recurring Basis


										March 31, 2021					December 31, 2020
(in millions)	(in millions)	Level 1		Level 2	Level 3		Netting (1)	Total	(in millions)	Level 1		Level 2	Level 3	Total	Level 1		Level 2	Level 3	Total
September 30, 2020
Trading debt securities:	Trading debt securities:								Trading debt securities:
Securities of U.S. Treasury and federal agencies	Securities of U.S. Treasury and federal agencies	$	29,024	3,070	0		—	32,094	Securities of U.S. Treasury and federal agencies	$	30,545	1,996	0	32,541	$	32,060	3,197	0	35,257
Securities of U.S. states and political subdivisions		0		2,509	0		—	2,509
Collateralized loan obligations	Collateralized loan obligations	0		564	140		—	704	Collateralized loan obligations	0		487	152	639	0		534	148	682
Corporate debt securities	Corporate debt securities	56		12,264	12		—	12,332	Corporate debt securities	10		11,401	25	11,436	0		10,696	13	10,709
Mortgage-backed securities		0		24,829	11		—	24,840
Other		0		774	0		—	774
Federal agency mortgage-backed securities									Federal agency mortgage-backed securities	0		23,569	0	23,569	0		23,549	0	23,549
Non-agency mortgage-backed securities									Non-agency mortgage-backed securities	0		1,105	14	1,119	0		1,039	12	1,051
Other debt securities									Other debt securities	0		3,479	1	3,480	0		3,847	0	3,847
Total trading debt securities	Total trading debt securities	29,080		44,010	163		—	73,253	Total trading debt securities	30,555		42,037	192	72,784	32,060		42,862	173	75,095
Available-for-sale debt securities:	Available-for-sale debt securities:								Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	Securities of U.S. Treasury and federal agencies	5,975		0	0		—	5,975	Securities of U.S. Treasury and federal agencies	25,217		0	0	25,217	22,159		0	0	22,159
Non-U.S. government securities									Non-U.S. government securities	0		14,458	0	14,458	0		16,813	0	16,813
Securities of U.S. states and political subdivisions	Securities of U.S. states and political subdivisions	0		31,225	286		—	31,511	Securities of U.S. states and political subdivisions	0		19,291	366	19,657	0		19,182	224	19,406
Mortgage-backed securities:
Federal agencies		0		135,227	0		—	135,227
Residential		0		541	0		—	541
Commercial		0		3,300	43		—	3,343
Total mortgage-backed securities		0		139,068	43		—	139,111
Corporate debt securities		36		4,694	1,042		—	5,772
Federal agency mortgage-backed securities									Federal agency mortgage-backed securities	0		117,657	0	117,657	0		139,070	0	139,070
Non-agency mortgage-backed securities									Non-agency mortgage-backed securities	0		4,022	36	4,058	0		3,697	32	3,729
Collateralized loan obligations	Collateralized loan obligations	0		25,014	0		—	25,014	Collateralized loan obligations	0		9,850	0	9,850	0		9,018	0	9,018
Other		0		12,574	616		—	13,190
Other debt securities									Other debt securities	36		7,177	2,740	9,953	38		7,421	2,738	10,197
Total available-for-sale debt securities	Total available-for-sale debt securities	6,011		212,575	1,987	(2)	—	220,573	Total available-for-sale debt securities	25,253		172,455	3,142	200,850	22,197		195,201	2,994	220,392
Mortgage loans held for sale		0		19,037	847		—	19,884
Loans held for sale	Loans held for sale	0		1,680	8		—	1,688	Loans held for sale	0		22,372	1,166	23,538	0		17,572	1,234	18,806
Loans		0		0	148		—	148
Mortgage servicing rights (residential)	Mortgage servicing rights (residential)	0		0	6,355		—	6,355	Mortgage servicing rights (residential)	0		0	7,536	7,536	0		0	6,125	6,125
Derivative assets:
Derivative assets (gross):									Derivative assets (gross):
Interest rate contracts	Interest rate contracts	20		41,402	480		—	41,902	Interest rate contracts	15		31,912	213	32,140	11		35,590	462	36,063
Commodity contracts	Commodity contracts	0		2,305	39		—	2,344	Commodity contracts	0		3,670	88	3,758	0		1,997	39	2,036
Equity contracts	Equity contracts	4,341		8,967	1,425		—	14,733	Equity contracts	4,576		13,373	1,698	19,647	4,888		12,384	1,613	18,885
Foreign exchange contracts	Foreign exchange contracts	18		5,864	7		—	5,889	Foreign exchange contracts	19		10,290	10	10,319	19		8,573	11	8,603
Credit contracts	Credit contracts	0		60	58		—	118	Credit contracts	0		41	44	85	0		45	50	95

Netting		0		0	0		(41,271)	(41,271)
Total derivative assets		4,379		58,598	2,009		(41,271)	23,715
Equity securities – excluding securities at NAV:
Total derivative assets (gross)									Total derivative assets (gross)	4,610		59,286	2,053	65,949	4,918		58,589	2,175	65,682
Equity securities:									Equity securities:
Marketable	Marketable	16,230		238	2		—	16,470	Marketable	22,080		275	1	22,356	23,995		596	5	24,596
Nonmarketable		0		15	8,428		—	8,443
Nonmarketable (1)									Nonmarketable (1)	0		24	8,864	8,888	10		21	9,228	9,259
Total equity securities	Total equity securities	16,230		253	8,430		—	24,913	Total equity securities	22,080		299	8,865	31,244	24,005		617	9,233	33,855
Total assets included in the fair value hierarchy		$	55,700	336,153	19,947		(41,271)	370,529
Equity securities at NAV (3)								140
Total assets recorded at fair value								370,669
Derivative liabilities:
Total assets prior to derivative netting									Total assets prior to derivative netting	$	82,498	296,449	22,954	401,901	$	83,180	314,841	21,934	419,955
Derivative netting (2)									Derivative netting (2)					(40,520)					(39,836)
Total assets after derivative netting									Total assets after derivative netting					361,381					380,119
Derivative liabilities (gross):									Derivative liabilities (gross):
Interest rate contracts	Interest rate contracts	$	(32)	(30,956)	(34)		—	(31,022)	Interest rate contracts	$	(25)	(25,215)	(212)	(25,452)	$	(27)	(26,259)	(16)	(26,302)
Commodity contracts	Commodity contracts	0		(2,407)	(39)		—	(2,446)	Commodity contracts	0		(1,449)	(73)	(1,522)	0		(1,503)	(40)	(1,543)
Equity contracts	Equity contracts	(4,339)		(10,403)	(1,533)		—	(16,275)	Equity contracts	(4,218)		(12,038)	(2,127)	(18,383)	(4,860)		(15,219)	(1,927)	(22,006)
Foreign exchange contracts	Foreign exchange contracts	(13)		(5,868)	(7)		—	(5,888)	Foreign exchange contracts	(13)		(8,643)	(7)	(8,663)	(10)		(8,134)	(12)	(8,156)
Credit contracts	Credit contracts	0		(53)	(12)		—	(65)	Credit contracts	0		(45)	(6)	(51)	0		(49)	(9)	(58)

Netting		0		0	0		41,929	41,929
Total derivative liabilities		(4,384)		(49,687)	(1,625)		41,929	(13,767)
Short sale liabilities:
Securities of U.S. Treasury and federal agencies		(9,776)		(138)	0		—	(9,914)
Mortgage-backed securities		0		(924)	0		—	(924)
Total derivative liabilities (gross)									Total derivative liabilities (gross)	(4,256)		(47,390)	(2,425)	(54,071)	(4,897)		(51,164)	(2,004)	(58,065)

Corporate debt securities		(2)		(4,837)	0		—	(4,839)
Equity securities		(3,053)		(45)	0		—	(3,098)
Other securities		0		(4)	0		—	(4)
Total short sale liabilities		(12,831)		(5,948)	0		—	(18,779)
Other liabilities		0		0	(2)		—	(2)
Total liabilities recorded at fair value		$	(17,215)	(55,635)	(1,627)		41,929	(32,548)

Short-sale trading liabilities									Short-sale trading liabilities	(15,743)		(6,990)	0	(22,733)	(15,292)		(7,149)	0	(22,441)
Total liabilities prior to derivative netting									Total liabilities prior to derivative netting	$	(19,999)	(54,380)	(2,425)	(76,804)	$	(20,189)	(58,313)	(2,004)	(80,506)
Derivative netting (2)									Derivative netting (2)					39,141					41,556
Total liabilities after derivative netting									Total liabilities after derivative netting					(37,663)					(38,950)

(1)Excludes $157 million and $154 million of nonmarketable equity securities as of March 31, 2021, and December 31, 2020, respectively, that are measured at fair value using non-published NAV per share (or its equivalent) as a practical expedient that are not classified in the fair value hierarchy.

(2)Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Note 1514 (Derivatives) for additional information.

~~(2)~~Largely 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)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)~~

~~141~~

~~Note 16: Fair Values of Assets and Liabilities (continued~~)

~~(continued from previous page)~~

(in millions) Level 1 Level 2 Level 3 Netting (1) Total
December 31, 2019
Trading debt securities:
Securities of U.S. Treasury and federal agencies $ 32,335 4,382 0 — 36,717
Securities of U.S. states and political subdivisions 0 2,434 0 — 2,434
Collateralized loan obligations 0 555 183 — 738
Corporate debt securities 0 11,006 38 — 11,044
Mortgage-backed securities 0 27,712 0 — 27,712
Other 0 1,086 2 — 1,088
Total trading debt securities 32,335 47,175 223 — 79,733
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies 13,460 1,500 0 — 14,960
Securities of U.S. states and political subdivisions 0 39,924 413 — 40,337
Mortgage-backed securities:
Federal agencies 0 162,453 0 — 162,453
Residential 0 827 0 — 827
Commercial 0 3,892 42 — 3,934
Total mortgage-backed securities 0 167,172 42 — 167,214
Corporate debt securities 37 6,159 367 — 6,563
Collateralized loan obligations 0 29,055 0 — 29,055
Other 0 4,587 743 — 5,330
Total available-for-sale debt securities 13,497 248,397 1,565 (2) — 263,459
Mortgage loans held for sale 0 15,408 1,198 — 16,606
Loans held for sale 0 956 16 — 972
Loans 0 0 171 — 171
Mortgage servicing rights (residential) 0 0 11,517 — 11,517
Derivative assets:
Interest rate contracts 26 23,792 229 — 24,047
Commodity contracts 0 1,413 8 — 1,421
Equity contracts 2,946 4,135 1,455 — 8,536
Foreign exchange contracts 12 5,197 5 — 5,214
Credit contracts 0 49 59 — 108
Netting 0 0 0 (25,123) (25,123)
Total derivative assets 2,984 34,586 1,756 (25,123) 14,203
Equity securities – excluding securities at NAV:
Marketable 33,702 216 3 — 33,921
Nonmarketable 0 22 7,847 — 7,869
Total equity securities 33,702 238 7,850 — 41,790
Total assets included in the fair value hierarchy $ 82,518 346,760 24,296 (25,123) 428,451
Equity securities at NAV (3) 146
Total assets recorded at fair value 428,597
Derivative liabilities:
Interest rate contracts $ (23) (19,328) (15) — (19,366)
Commodity contracts 0 (1,746) (24) — (1,770)
Equity contracts (2,011) (6,729) (1,724) — (10,464)
Foreign exchange contracts (11) (6,213) (23) — (6,247)
Credit contracts 0 (53) (30) — (83)
Netting 0 0 0 28,851 28,851
Total derivative liabilities (2,045) (34,069) (1,816) 28,851 (9,079)
Short sale liabilities:
Securities of U.S. Treasury and federal agencies (9,035) (31) 0 — (9,066)
Mortgage-backed securities 0 (2) 0 — (2)
Corporate debt securities 0 (5,915) 0 — (5,915)
Equity securities (2,447) 0 0 — (2,447)
Other securities 0 0 0 — 0
Total short sale liabilities (11,482) (5,948) 0 — (17,430)
Other liabilities 0 0 (2) — (2)
Total liabilities recorded at fair value $ (13,527) (40,017) (1,818) 28,851 (26,511)

~~(1)~~Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Note 15 (Derivatives) for additional information.

~~(2)~~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.

~~142~~

~~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. The amounts reported as transfers represent the fair value as of the beginning of the quarter in which the transfer occurred.

~~The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the quarter ended September 30, 2020, are presented in Table 16.3.~~


116			Wells Fargo & Company

~~Table 16.3:Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – Quarter ended September 30, 2020~~

   Total net gains
(losses) included in Purchases,
sales,
issuances
and
settlements,
net (1)          Net unrealized gains (losses) related to assets and liabilities held at period end included in
(in millions) Balance,
beginning
of period Net
income Other
compre-
hensive
income Transfers into
Level 3 (2) Transfers
out of
Level 3 (3) Balance,
end of
period Net income (4) Other compre-hensive income
Quarter ended September 30, 2020
Trading debt securities:
Securities of U.S. states and political subdivisions $ 0 0 0 0 0 0 0 0    0
Collateralized loan obligations 128 17 0 (5) 0 0 140 10    0
Corporate debt securities 23 (1) 0 (10) 0 0 12 (3)    0
Mortgage-backed securities 49 1 0 (3) 0 (36) 11 0    0
Other 23 0 0 0 0 (23) 0 0 0
Total trading debt securities 223 17 0 (18) 0 (59) 163 7 (5) 0
Available-for-sale debt securities:
Securities of U.S. states and political subdivisions 351 5 (5) (65) 0 0 286 0    1
Mortgage-backed securities:
Residential 0 0 0 0 0 0 0 0    0
Commercial 61 (1) (3) 0 5 (19) 43 (1)    (4)
Total mortgage-backed securities 61 (1) (3) 0 5 (19) 43 (1) (4)
Corporate debt securities 1,051 (22) 6 1 6 0 1,042 (22)    7
Collateralized loan obligations 9 0 0 0 0 (9) 0 0    0
Other 626 4 9 (20) 5 (8) 616 0    9
Total available-for-sale debt securities 2,098 (14) 7 (84) 16 (36) 1,987 (23) (6) 13
Mortgage loans held for sale 751 (7) 0 44 63 (4) 847 (6) (7) 0
Loans held for sale 7 0 0 (2) 3 0 8 0 (5) 0
Loans 152 0 0 (4) 0 0 148 (2) (7) 0
Mortgage servicing rights (residential)(8) 6,819 (815) 0 351 0 0 6,355 (217) (7) 0
Net derivative assets and liabilities:
Interest rate contracts 523 469 0 (546) 0 0 446 226    0
Commodity contracts 1 (15) 0 4 10 0 0 (6)    0
Equity contracts 20 (191) 0 78 0 (15) (108) (114)    0
Foreign exchange contracts (16) 4 0 12 0 0 0 0    0
Credit contracts 50 (5) 0 1 0 0 46 (7)    0
Total derivative contracts 578 262 0 (451) 10 (15) 384 99 (9) 0
Equity securities:
Marketable 0 0 0 0 2 0 2 0 0
Nonmarketable 8,165 253 0 0 10 0 8,428 253 0
Total equity securities 8,165 253 0 0 12 0 8,430 253 (10) 0
Short sale liabilities (3) 0 0 3 0 0 0 0 (5) 0
Other liabilities (2) 0 0 0 0 0 (2) 0 (7) 0

~~(1)See Table 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.

~~(5)Included in net gains from trading activities in the income statement.~~

~~(6)Included in net gains from debt securities and provision for credit losses~~ – ~~debt securities in the income statement.~~

~~(7)Included in mortgage banking and other noninterest income in the income statement.~~

~~(8)For additional information on the changes in mortgage servicing rights, see Note 11 (Mortgage Banking Activities).~~

~~(9)Included in mortgage banking income, net gains from trading activities, net gains (losses) from equity securities and other noninterest income in the income statement.~~

~~(10)Included in net gains (losses) from equity securities in the income statement.~~

~~(continued on following page)~~

~~143~~

~~Note 16: Fair Values of Assets and Liabilities (continued~~)

~~(continued from previous page)~~

Table 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 quarter ended September 30, 2020.

~~Table 16.4:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Quarter ended September 30, 2020~~

(in millions) Purchases Sales Issuances Settlements Net
Quarter ended September 30, 2020
Trading debt securities:
Securities of U.S. states and political subdivisions $ 0 0 0 0 0
Collateralized loan obligations 46 (51) 0 0 (5)
Corporate debt securities 4 (14) 0 0 (10)
Mortgage-backed securities 14 (17) 0 0 (3)
Other 0 0 0 0 0
Total trading debt securities 64 (82) 0 0 (18)
Available-for-sale debt securities:
Securities of U.S. states and political subdivisions 0 (35) 0 (30) (65)
Mortgage-backed securities:
Residential 0 0 0 0 0
Commercial 0 0 0 0 0
Total mortgage-backed securities 0 0 0 0 0
Corporate debt securities 1 0 0 0 1
Collateralized loan obligations 0 0 0 0 0
Other 0 0 0 (20) (20)
Total available-for-sale debt securities 1 (35) 0 (50) (84)
Mortgage loans held for sale 46 (34) 98 (66) 44
Loans held for sale 0 (2) 0 0 (2)
Loans 1 0 1 (6) (4)
Mortgage servicing rights (residential) (1) 0 0 351 0 351
Net derivative assets and liabilities:
Interest rate contracts 0 0 0 (546) (546)
Commodity contracts 0 0 0 4 4
Equity contracts 0 0 0 78 78
Foreign exchange contracts 0 0 0 12 12
Credit contracts 0 7 0 (6) 1
Total derivative contracts 0 7 0 (458) (451)
Equity securities:
Marketable 0 0 0 0 0
Nonmarketable 0 0 0 0 0
Total equity securities 0 0 0 0 0
Short sale liabilities 3 0 0 0 3
Other liabilities 0 0 0 0 0

~~(1)For additional information on the changes in mortgage servicing rights, see Note 11 (Mortgage Banking Activities).~~

~~144~~

Level 3 Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Table ~~16.5~~15.2 presents the changes in Level 3 assets and liabilities measured at fair value on a recurring ~~basis for the quarter ended September 30, 2019.~~basis.

Table ~~16.5:~~15.2: Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis ~~– Quarter ended September 30, 2019~~

   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) Net
income Other
compre-
hensive
income Transfers
into
Level 3 (2) Transfers
out of
Level 3 (3) Balance,
end of
period (4)
Quarter ended September 30, 2019
Trading debt securities:
Securities of U.S. states and political subdivisions $ 0 0 0 0 0 0 0 0
Collateralized loan obligations 249 (11) 0 (4) 0 (2) 232 (13)
Corporate debt securities 44 (2) 0 (4) 0 (5) 33 1
Mortgage-backed securities 0 0 0 0 0 0 0 0
Other 14 (1) 0 (6) 0 0 7 0
Total trading debt securities 307 (14) 0 (14) 0 (7) 272 (12) (5)
Available-for-sale debt securities:
Securities of U.S. states and political subdivisions 391 0 0 (38) 0 0 353 0
Mortgage-backed securities:
Residential 0 0 0 0 0 0 0 0
Commercial 41 0 (1) (3) 0 0 37 0
Total mortgage-backed securities 41 0 (1) (3) 0 0 37 0
Corporate debt securities 383 6 (8) (14) 0 0 367 0
Other 990 6 (11) (105) 0 (153) 727 0
Total available-for-sale debt securities 1,805 12 (20) (160) 0 (153) 1,484 0 (6)
Mortgage loans held for sale 1,115 22 0 (6) 121 (3) 1,249 22 (7)
Loans held for sale 12 0 0 (12) 1 0 1 0 (5)
Loans 202 0 0 (17) 0 0 185 (2) (7)
Mortgage servicing rights (residential) (8) 12,096 (1,558) 0 534 0 0 11,072 (962) (7)
Net derivative assets and liabilities:
Interest rate contracts 205 71 0 (133) 0 0 143 30
Commodity contracts (29) (85) 0 61 0 23 (30) (6)
Equity contracts (228) (298) 0 263 0 60 (203) (80)
Foreign exchange contracts (10) 17 0 (33) 0 0 (26) 0
Credit contracts 45 (8) 0 1 0 0 38 (8)
Total derivative contracts (17) (303) 0 159 0 83 (78) (64) (9)
Equity securities:
Marketable 0 0 0 0 0 0 0 0
Nonmarketable 7,110 13 0 0 7 0 7,130 13
Total equity securities 7,110 13 0 0 7 0 7,130 13 (10)
Other liabilities (2) 0 0 0 0 0 (2) 0 (7)


										Net unrealized gains (losses) related to assets and liabilities held at period end
(in millions)	Balance, beginning of period		Net gains/(losses) (1)	Purchases (2)	Sales	Settlements	Transfers into Level 3 (3)	Transfers out of Level 3 (4)	Balance, end of period		(5)






















Quarter ended March 31, 2021
Trading debt securities	$	173	16	169	(173)	0	7	0	192	8	(6)
Available-for-sale debt securities	2,994		(7)	15	0	(68)	242	(34)	3,142	(27)	(6)
Loans held for sale	1,234		(19)	129	(148)	(110)	81	(1)	1,166	(17)	(7)
Mortgage servicing rights (residential) (8)	6,125		1,006	406	(1)	0	0	0	7,536	1,591	(7)
Net derivative assets and liabilities:
Interest rate contracts	446		(541)	0	0	101	0	(5)	1	(225)
Equity contracts	(314)		(168)	0	0	40	(27)	40	(429)	(177)
Other derivative contracts	39		27	0	0	(10)	0	0	56	16
Total derivative contracts	171		(682)	0	0	131	(27)	35	(372)	(386)	(9)
Equity securities	$	9,233	(365)	0	(5)	0	2	0	8,865	(365)	(6)
Quarter ended March 31, 2020
Trading debt securities	$	223	(118)	290	(93)	(10)	100	(3)	389	(117)	(6)
Available-for-sale debt securities	1,565		(142)	26	(5)	(48)	1,087	(71)	2,412	(147)	(6)
Loans held for sale	1,214		(63)	866	(70)	(98)	1,329	(2)	3,176	(63)	(7)
Mortgage servicing rights (residential) (8)	11,517		(3,821)	461	(32)	1	0	0	8,126	(3,257)	(7)
Net derivative assets and liabilities:
Interest rate contracts	214		744	0	0	(273)	0	0	685	531
Equity contracts	(269)		430	0	0	73	(10)	(7)	217	451
Other derivative contracts	(5)		(55)	6	(3)	60	(6)	0	(3)	(12)
Total derivative contracts	(60)		1,119	6	(3)	(140)	(16)	(7)	899	970	(9)
Equity securities	$	7,850	(1,101)	0	0	0	7	(2)	6,754	(1,103)	(6)

(1)~~See Table 16.6~~Includes net gains (losses) included in both net income and other comprehensive income. All amounts represent net gains (losses) included in net income except for ~~detail.~~$14 million and $(91) million included in other comprehensive income from available-for-sale debt securities for first quarter 2021 and 2020, respectively.

(2)~~All assets~~Includes originations of mortgage servicing rights and ~~liabilities transferred into level 3 were previously classified within level 2.~~loans held for sale.

(3)All assets and liabilities transferred into Level 3 were previously classified within Level 2.

(4)All assets and liabilities transferred out of ~~level~~Level 3 are classified as ~~level 2, except for $153 million of asset-backed securities that were transferred to loans during third quarter 2019.~~

(5)~~Included~~Includes net unrealized gains (losses) related to assets and liabilities held at period end included in both net income and other comprehensive income. All amounts represent net unrealized gains (losses) included in net ~~gains~~income except for $0 million and $(88) million included in other comprehensive income from ~~trading activities in the income statement.~~available-for-sale debt securities for first quarter 2021 and 2020, respectively.

(6)Included in net gains ~~from debt~~(losses) on trading and securities in the ~~income statement.~~consolidated statement of income.

(7)Included in mortgage banking ~~and other noninterest~~ income in the ~~income statement.~~consolidated statement of income.

(8)For additional information on the changes in mortgage servicing rights, see Note 119 (Mortgage Banking Activities).

(9)Included in mortgage banking income, net gains ~~from~~(losses) on trading ~~activities, net gains (losses) from equity~~and securities, and other noninterest income in the ~~income statement.~~

~~(10)Included in net gains (losses) from equity securities in the income statement.~~

~~(continued on following page)~~

~~145~~

~~Note 16: Fair Values~~consolidated statement of ~~Assets and Liabilities (continued~~)

~~(continued from previous page)~~

Table 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 quarter ended September 30, 2019.

~~Table 16.6:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Quarter ended September 30, 2019~~

(in millions) Purchases Sales Issuances Settlements Net
Quarter ended September 30, 2019
Trading debt securities:
Securities of U.S. states and political subdivisions $ 0 0 0 0 0
Collateralized loan obligations 107 (100) 0 (11) (4)
Corporate debt securities 3 (7) 0 0 (4)
Mortgage-backed securities 0 0 0 0 0
Other 0 0 0 (6) (6)
Total trading debt securities 110 (107) 0 (17) (14)
Available-for-sale debt securities:
Securities of U.S. states and political subdivisions 0 0 12 (50) (38)
Mortgage-backed securities:
Residential 0 0 0 0 0
Commercial 0 0 0 (3) (3)
Total mortgage-backed securities 0 0 0 (3) (3)
Corporate debt securities 1 0 0 (15) (14)
Other 0 (4) 10 (111) (105)
Total available-for-sale debt securities 1 (4) 22 (179) (160)
Mortgage loans held for sale 23 (45) 87 (71) (6)
Loans held for sale 0 0 0 (12) (12)
Loans 1 0 2 (20) (17)
Mortgage servicing rights (residential) (1) 0 (4) 538 0 534
Net derivative assets and liabilities:
Interest rate contracts 0 0 (1) (132) (133)
Commodity contracts 0 0 0 61 61
Equity contracts 0 0 0 263 263
Foreign exchange contracts 0 0 0 (33) (33)
Credit contracts 4 (3) 0 0 1
Total derivative contracts 4 (3) (1) 159 159
Equity securities:
Marketable 0 0 0 0 0
Nonmarketable 0 0 0 0 0
Total equity securities 0 0 0 0 0
Other liabilities 0 0 0 0 0

~~(1)For additional information on the changes in mortgage servicing rights, see Note 11 (Mortgage Banking Activities).~~

~~146~~

~~The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2020, are presented in Table 16.7.~~

~~Table 16.7:Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – Nine months ended September 30, 2020~~

   Total net gains
(losses) included in Purchases,
sales,
issuances
and
settlements,
net (1)          Net unrealized gains (losses)
related to assets and liabilities held at period end included in
(in millions) Balance,
beginning
of period Net
income Other
compre-
hensive
income Transfers
into
Level 3 (2) Transfers
out of
Level 3 (3) Balance,
end of
period Net income (4) Other
compre-
hensive
income
Nine months ended September 30, 2020
Trading debt securities:
Securities of U.S. states and political subdivisions $ 0 0 0 0 0 0 0 0    0
Collateralized loan obligations 183 (52) 0 18 16 (25) 140 (50)    0
Corporate debt securities 38 (12) 0 (6) 0 (8) 12 (6)    0
Mortgage-backed securities 0 (6) 0 20 52 (55) 11 (1)    0
Other 2 2 0 (28) 47 (23) 0 (1) 0
Total trading debt securities 223 (68) 0 4 115 (111) 163 (58) (5) 0
Available-for-sale debt securities:
Securities of U.S. states and political subdivisions 413 6 (5) (109) 67 (86) 286 0    1
Mortgage-backed securities:
Residential 0 0 (3) 1 13 (11) 0 0    0
Commercial 42 0 (17) (3) 160 (139) 43 (3)    (6)
Total mortgage-backed securities 42 0 (20) (2) 173 (150) 43 (3) (6)
Corporate debt securities 367 (76) 33 (45) 837 (74) 1,042 (78)    43
Collateralized loan obligations 0 0 (9) 0 68 (59) 0 0    0
Other 743 10 (67) (78) 43 (35) 616 (1)    (64)
Total available-for-sale debt securities 1,565 (60) (68) (234) 1,188 (404) 1,987 (82) (6) (26)
Mortgage loans held for sale 1,198 (105) 0 493 1,465 (2,204) 847 (32) (7) 0
Loans held for sale 16 (6) 0 (11) 10 (1) 8 (4) (5) 0
Loans 171 (2) 0 (21) 0 0 148 (7) (7) 0
Mortgage servicing rights (residential) (8) 11,517 (6,404) 0 1,242 0 0 6,355 (4,605) (7) 0
Net derivative assets and liabilities:
Interest rate contracts 214 1,673 0 (1,441) 0 0 446 335    0
Commodity contracts (16) (80) 0 74 22 0 0 3    0
Equity contracts (269) (38) 0 230 (10) (21) (108) 194    0
Foreign exchange contracts (18) 2 0 16 0 0 0 2    0
Credit contracts 29 14 0 3 0 0 46 13    0
Total derivative contracts (60) 1,571 0 (1,118) 12 (21) 384 547 (9) 0
Equity securities:
Marketable 3 0 0 0 2 (3) 2 (1) 0
Nonmarketable 7,847 566 0 0 17 (2) 8,428 562 0
Total equity securities 7,850 566 0 0 19 (5) 8,430 561 (10) 0
Short sale liabilities 0 0 0 0 0 0 0 0 (5) 0
Other liabilities (2) 0 0 0 0 0 (2) 0 (7) 0

~~(1)See Table 16.8 for detail.~~