Exhibit 99.1
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| | Media | | Investors | | |
| | Mary Eshet | | Jim Rowe | | |
| | 704-383-7777 | | 415-396-8216 | | |
Friday, April 11, 2014
WELLS FARGO REPORTS RECORD QUARTERLY NET INCOME
Q1 Net Income of $5.9 Billion, Up 14 Percent YoY; EPS of $1.05
• | | Continued strong financial results: |
| o | Net income of $5.9 billion, up 14 percent from first quarter 2013 |
| o | Diluted earnings per share (EPS) of $1.05, up 14 percent |
| o | Revenue of $20.6 billion, compared with $21.3 billion |
| o | Noninterest expense of $11.9 billion, down $452 million |
| o | Efficiency ratio of 57.9 percent, improved by 40 basis points |
| o | Return on assets (ROA) of 1.57 percent, up 8 basis points1 |
| o | Return on equity (ROE) of 14.35 percent, up 76 basis points |
• | | Strong loan and deposit growth: |
| o | Total average loans of $823.8 billion, up $27.1 billion, or 3 percent from first quarter 20131 |
| ¡ | Quarter-end loans of $826.4 billion, up $28.1 billion, or 4 percent1 |
| ¡ | Quarter-end core loans of $748.4 billion, up $41.0 billion, or 6 percent1,2 |
| o | Total average core deposits of $973.8 billion, up $47.9 billion, or 5 percent |
| ¡ | Quarter-end core deposits of $994.2 billion, up $54.3 billion, or 6 percent |
• | | Continued improvement in credit quality: |
| o | Net charge-offs of $825 million, down $594 million from first quarter 2013 |
| ¡ | Net charge-off rate of 0.41 percent (annualized), down from 0.72 percent |
| o | Nonperforming assets down $4.1 billion, or 18 percent |
| o | $500 million reserve release3 due to continued strong credit performance and improved economic conditions |
• | | Strengthened capital levels4: |
| o | Common Equity Tier 1 ratio under Basel III (General Approach) of 11.36 percent at March 31, 2014 |
| o | Common Equity Tier 1 ratio under Basel III (Advanced Approach, fully phased-in) of 10.04 percent |
| o | Received a non-objection to 2014 Capital Plan under the Comprehensive Capital Analysis and Review (CCAR), which included a proposed dividend rate of $0.35 per share for second quarter 2014, subject to Board approval, up from $0.30 per share in the first quarter. The 2014 Capital Plan also included an increase in common stock repurchase activity compared with actual repurchases in 2013. |
| o | In the first quarter, the Board approved an additional 350 million shares in the Company’s authority to repurchase its common stock. |
1 Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information.
2 See table on page 4 for more information on core and non-strategic/liquidating loan portfolios.
3 Reserve release represents the amount by which net charge-offs exceed the provision for credit losses.
4 See tables on page 36 for more information on Common Equity Tier 1. Common Equity Tier 1 (Advanced Approach, fully phased-in) is estimated based on final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act.
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Selected Financial Information
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| | | | | Quarter ended | |
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| | Mar. 31, | | | Dec. 31, | | | Mar. 31, | |
| | 2014 | | | 2013 | | | 2013 | |
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Earnings | | | | | | | | | | | | |
Diluted earnings per common share | | $ | 1.05 | | | | 1.00 | | | | 0.92 | |
Wells Fargo net income (in billions) | | | 5.89 | | | | 5.61 | | | | 5.17 | |
Return on assets (ROA) (1) | | | 1.57 | % | | | 1.48 | | | | 1.49 | |
Return on equity (ROE) | | | 14.35 | | | | 13.81 | | | | 13.59 | |
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Asset Quality | | | | | | | | | | | | |
Net charge-offs (annualized) as a % of avg. total loans | | | 0.41 | | | | 0.47 | | | | 0.72 | |
Allowance for credit losses as a % of total loans (1) | | | 1.74 | | | | 1.82 | | | | 2.15 | |
Allowance for credit losses as a % of annualized net charge-offs | | | 431 | | | | 392 | | | | 299 | |
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Other | | | | | | | | | | | | |
Revenue (in billions) | | $ | 20.6 | | | | 20.7 | | | | 21.3 | |
Efficiency ratio | | | 57.9 | % | | | 58.5 | | | | 58.3 | |
Average loans (in billions) (1) | | $ | 823.8 | | | | 813.3 | | | | 796.7 | |
Average core deposits (in billions) | | | 973.8 | | | | 965.8 | | | | 925.9 | |
Net interest margin (1) | | | 3.20 | % | | | 3.27 | | | | 3.49 | |
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(1) | Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information. |
SAN FRANCISCO – Wells Fargo & Company (NYSE:WFC) reported record net income of $5.9 billion, or $1.05 per diluted common share, for first quarter 2014, up from $5.2 billion, or $0.92 per share, for first quarter 2013, and up from $5.6 billion, or $1.00 per share, for fourth quarter 2013.
“Our solid first quarter results again demonstrated the ability of our diversified business model to perform for shareholders,” said Chairman and CEO John Stumpf. “Our 265,000 team members remained focused on achieving our vision of serving the financial needs of our customers as we grew loans, deposits and increased cross-sell. First quarter 2014 earnings were another record for our Company and capital levels continued to strengthen. Returning more capital to our shareholders has remained a priority for Wells Fargo and we were pleased to have received a non-objection to our 2014 CCAR submission, which included a proposed 17 percent common stock dividend increase to $0.35 per share in the second quarter of this year and higher planned share repurchases compared with 2013 repurchase activity. As we move forward in 2014, I am optimistic about the opportunities ahead and believe that we are well positioned for growth.”
Chief Financial Officer Tim Sloan said, “We are very pleased with Wells Fargo’s performance in the first quarter, particularly in some of the fundamental drivers of long term growth: loans, deposits, investments, capital and credit quality. Revenue remained relatively stable despite the impact of fewer days in the quarter, reflecting contributions from our diversified sources of fee revenue. In addition, we generated
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revenue more efficiently as we reduced expenses year-over-year and compared with fourth quarter of last year. Income tax expense in the first quarter was $227 million lower than the prior quarter, driven by a $423 million tax benefit recognized in the first quarter.”
Revenue
Revenue was $20.6 billion, compared with $20.7 billion in fourth quarter 2013, as higher noninterest income was more than offset by the expected decline in net interest income due to two fewer days in the quarter. Several businesses generated linked-quarter growth, including retirement services, equipment finance, wealth management, asset-backed finance, merchant services, personal lines and loans, and retail sales finance.
Net Interest Income
Net interest income in first quarter 2014 declined $188 million on a linked-quarter basis to $10.6 billion primarily due to two fewer days compared with fourth quarter 2013. In addition, interest income from mortgages held for sale and variable sources, including purchased credit-impaired (PCI) loan resolutions and loan fees included in interest income, also declined linked quarter. These impacts were partially offset by the benefits of growth in commercial and consumer loans and lower funding costs.
Net interest margin was 3.20 percent, down 7 basis points from the fourth quarter of 20131. Approximately 4 basis points of the decline was due to lower income from variable sources. Two basis points of the decrease was from customer driven deposit growth and 1 basis point from actions taken to meet regulatory expectations for liquidity. Both of these items had minimal impact to net interest income but were dilutive to net interest margin. The net impact of balance sheet repricing and growth was neutral in the first quarter, as it was in fourth quarter 2013.
Noninterest Income
Noninterest income in the first quarter was $10.0 billion, up from $9.9 billion in the prior quarter. Growth was driven by increases in market sensitive revenues5, in particular equity gains, mortgage servicing income and brokerage advisory fees. These increases were offset by a decline in mortgage gain on sale revenues, as well as lower investment banking and commercial real estate brokerage commission revenue, which were down from strong fourth quarter 2013 levels, and seasonal declines in card fees and deposit service charges.
Mortgage banking noninterest income was $1.5 billion, down $60 million from fourth quarter 2013. During the first quarter, residential mortgage originations were $36 billion, down from $50 billion in fourth quarter 2013 while the gain on sale margin was 1.61 percent, compared with 1.77 percent in the fourth quarter. Net mortgage servicing rights (MSRs) results were $407 million, compared with $266 million in fourth quarter 2013.
5 Consists of net gains from trading activities, debt securities and equity investments.
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The Company had net unrealized securities gains of $6.2 billion at March 31, 2014, up from $3.8 billion at December 31, 2013, primarily driven by a decline in interest rates in the quarter.
Noninterest Expense
Noninterest expense declined $137 million from the prior quarter to $11.9 billion, as seasonally higher incentive compensation and employee benefits were more than offset by lower outside professional services, salaries and equipment. The efficiency ratio was 57.9 percent in first quarter 2014, an improvement from 58.5 percent in fourth quarter 2013. The Company expects to operate within its targeted efficiency ratio range of 55 to 59 percent in second quarter 2014.
Income Taxes
The Company’s effective income tax rate was 27.9 percent for first quarter 2014, compared with 30.9 percent in the prior quarter. The tax rate for the first quarter included a net $423 million discrete tax benefit primarily from a reduction in the reserve for uncertain tax positions due to the resolution of prior period matters with state taxing authorities. Absent additional discrete tax benefits emerging during the remainder of 2014, the Company expects its effective income tax rate for the full year 2014 to be higher than the effective income tax rate for first quarter 2014.
Loans
Total loans were $826.4 billion at March 31, 2014, up $4.2 billion1 from December 31, 2013, as growth in commercial and industrial, commercial real estate, auto and 1-4 family first mortgage more than offset the decline in junior lien mortgages and a seasonal decline in credit card loans. Core loan growth was $7.0 billion1, as non-strategic/liquidating portfolios declined $2.9 billion in the quarter. Total average loans were $823.8 billion, up $10.5 billion1 from the prior quarter, driven by growth in the core mortgage portfolio, commercial banking, corporate banking, commercial real estate and auto.
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| | March 31, 2014 | | | December 31, 2013 | |
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(in millions) | | Core | | | Liquidating (1) | | | Total | | | Core (2) | | | Liquidating (1) | | | Total (2) | |
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Commercial | | $ | 379,561 | | | | 1,720 | | | | 381,281 | | | | 375,230 | | | | 2,013 | | | | 377,243 | |
Consumer | | | 368,888 | | | | 76,274 | | | | 445,162 | | | | 366,190 | | | | 78,853 | | | | 445,043 | |
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Total loans | | $ | 748,449 | | | | 77,994 | | | | 826,443 | | | | 741,420 | | | | 80,866 | | | | 822,286 | |
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Change from prior quarter: | | $ | 7,029 | | | | (2,872 | ) | | | 4,157 | | | | 16,423 | | | | (3,272 | ) | | | 13,151 | |
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(1) | See table on page 34 for additional information on non-strategic/liquidating loan portfolios. Management believes that the above information provides useful disclosure regarding the Company’s ongoing loan portfolios. |
(2) | Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information. |
Deposits
Total average deposits for first quarter 2014 were $1.1 trillion, up 9 percent from a year ago and up 6 percent (annualized) from fourth quarter 2013, driven by solid consumer and commercial growth. The average deposit cost for first quarter 2014 was 11 basis points, which was flat compared with the prior quarter and down 4 basis points from a year ago. Average core deposits were $973.8 billion, up 5 percent from a year ago and up 3 percent (annualized) from fourth quarter 2013. Average mortgage escrow deposits decreased to $24.2 billion, compared with $38.8 billion a year ago and $28.2 billion in fourth quarter 2013.
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Capital
Capital continued to strengthen in the first quarter, with Common Equity Tier 1 of $132.7 billion under Basel III (General Approach), or 11.36 percent of risk-weighted assets. The Common Equity Tier 1 ratio under Basel III (Advanced Approach, fully phased-in) was 10.04 percent.6 In first quarter 2014, the Company purchased 33.5 million shares of its common stock. The Company also paid a quarterly common stock dividend of $0.30 per share, up from $0.25 per share a year ago.
On March 26, 2014, the Company received a non-objection to its 2014 Capital Plan under the CCAR, which included a proposed dividend rate of $0.35 per share for second quarter 2014, subject to Board approval. The 2014 Capital Plan also included an increase in common stock repurchase activity compared with actual repurchases in 2013.
In the first quarter, the Board approved an additional 350 million shares in the Company’s authority to repurchase its common stock.
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| | Mar. 31, | | | Dec. 31, | | | Mar. 31, | |
(as a percent of total risk-weighted assets) | | 2014 (1) | | | 2013 | | | 2013 | |
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Common Equity Tier 1 (2) | | | 11.36 | % | | | 10.82 | | | | 10.39 | |
Tier 1 capital | | | 12.63 | | | | 12.33 | | | | 11.80 | |
Tier 1 leverage | | | 9.83 | | | | 9.60 | | | | 9.53 | |
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(1) | March 31, 2014, ratios are preliminary. |
(2) | See table on page 36 for more information on Common Equity Tier 1. |
Credit Quality
“Credit performance was strong in the first quarter as losses remained at historically low levels, nonperforming assets continued to decrease and we continued to originate high quality loans,” said Chief Risk Officer Mike Loughlin. “Credit losses were $825 million in first quarter 2014, compared with $1.4 billion in first quarter 2013, a 42 percent year-over-year improvement. The quarterly loss rate (annualized) was 0.41 percent with commercial losses of only 0.01 percent and consumer losses of 0.75 percent. Nonperforming assets declined by $840 million, or 17 percent (annualized) from last quarter. We released $500 million from the allowance for credit losses in the first quarter, reflecting improved credit performance. We continue to expect future reserve releases absent a significant deterioration in the economic environment.”
6 Estimated based on final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act.
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Net Loan Charge-offs
Net loan charge-offs improved to $825 million in first quarter 2014, or 0.41 percent (annualized) of average loans, compared with $963 million in fourth quarter 2013, or 0.47 percent (annualized) of average loans.
Net Loan Charge-Offs
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Quarter ended | |
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| | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | |
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($ in millions) | | Net loan charge- offs | | | As a % of average loans (1) | | | Net loan charge- offs | | | As a % of average loans (1) | | | Net loan charge- offs | | | As a % of average loans (1) | |
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Commercial: | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 45 | | | | 0.09 | % | | $ | 107 | | | | 0.22 | % | | $ | 58 | | | | 0.12 | % |
Real estate mortgage | | | (22) | | | | (0.08) | | | | (41) | | | | (0.15) | | | | (20) | | | | (0.08) | |
Real estate construction | | | (23) | | | | (0.55) | | | | (13) | | | | (0.32) | | | | (17) | | | | (0.41) | |
Lease financing | | | 1 | | | | 0.03 | | | | - | | | | - | | | | - | | | | - | |
Foreign | | | 4 | | | | 0.03 | | | | - | | | | - | | | | (2) | | | | (0.02) | |
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Total commercial | | | 5 | | | | 0.01 | | | | 53 | | | | 0.06 | | | | 19 | | | | 0.02 | |
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Consumer: | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate 1-4 family first mortgage | | | 170 | | | | 0.27 | | | | 195 | | | | 0.30 | | | | 242 | | | | 0.38 | |
Real estate 1-4 family junior lien mortgage | | | 192 | | | | 1.20 | | | | 226 | | | | 1.34 | | | | 275 | | | | 1.58 | |
Credit card | | | 231 | | | | 3.57 | | | | 220 | | | | 3.38 | | | | 207 | | | | 3.28 | |
Automobile | | | 90 | | | | 0.70 | | | | 108 | | | | 0.85 | | | | 78 | | | | 0.63 | |
Other revolving credit and installment | | | 137 | | | | 1.29 | | | | 161 | | | | 1.50 | | | | 154 | | | | 1.46 | |
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Total consumer | | | 820 | | | | 0.75 | | | | 910 | | | | 0.82 | | | | 956 | | | | 0.86 | |
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Total | | $ | 825 | | | | 0.41 | % | | $ | 963 | | | | 0.47 | % | | $ | 975 | | | | 0.48 | % |
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(1) | Quarterly net charge-offs as a percentage of average loans are annualized. See explanation on page 31 of the accounting for purchased credit-impaired (PCI) loans and the impact on selected financial ratios. |
Nonperforming Assets
Nonperforming assets decreased by $840 million from the prior quarter to $18.8 billion. Nonaccrual loans decreased $1.0 billion from the prior quarter to $14.7 billion. Foreclosed assets were $4.1 billion, up from $3.9 billion in fourth quarter 2013.
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Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)
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| | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | |
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| | | | | As a | | | | | | As a | | | | | | As a | |
| | | | | % of | | | | | | % of | | | | | | % of | |
| | Total | | | total | | | Total | | | total | | | Total | | | total | |
($ in millions) | | balances | | | loans | | | balances | | | loans (1) | | | balances | | | loans (1) | |
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Commercial: | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 630 | | | | 0.32 | % | | $ | 738 | | | | 0.38 | % | | $ | 809 | | | | 0.43 | % |
Real estate mortgage | | | 2,030 | | | | 1.88 | | | | 2,252 | | | | 2.10 | | | | 2,496 | | | | 2.36 | |
Real estate construction | | | 296 | | | | 1.78 | | | | 416 | | | | 2.48 | | | | 517 | | | | 3.15 | |
Lease financing | | | 31 | | | | 0.26 | | | | 29 | | | | 0.24 | | | | 17 | | | | 0.15 | |
Foreign | | | 40 | | | | 0.08 | | | | 40 | | | | 0.08 | | | | 47 | | | | 0.10 | |
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Total commercial | | | 3,027 | | | | 0.79 | | | | 3,475 | | | | 0.92 | | | | 3,886 | | | | 1.05 | |
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Consumer: | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate 1-4 family first mortgage | | | 9,357 | | | | 3.61 | | | | 9,799 | | | | 3.79 | | | | 10,450 | | | | 4.10 | |
Real estate 1-4 family junior lien mortgage | | | 2,072 | | | | 3.24 | | | | 2,188 | | | | 3.32 | | | | 2,333 | | | | 3.45 | |
Automobile | | | 161 | | | | 0.31 | | | | 173 | | | | 0.34 | | | | 188 | | | | 0.38 | |
Other revolving credit and installment | | | 33 | | | | 0.08 | | | | 33 | | | | 0.08 | | | | 36 | | | | 0.08 | |
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Total consumer | | | 11,623 | | | | 2.61 | | | | 12,193 | | | | 2.74 | | | | 13,007 | | | | 2.95 | |
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Total nonaccrual loans | | | 14,650 | | | | 1.77 | | | | 15,668 | | | | 1.91 | | | | 16,893 | | | | 2.09 | |
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Foreclosed assets: | | | | | | | | | | | | | | | | | | | | | | | | |
Government insured/guaranteed | | | 2,302 | | | | | | | | 2,093 | | | | | | | | 1,781 | | | | | |
Non-government insured/guaranteed | | | 1,813 | | | | | | | | 1,844 | | | | | | | | 2,021 | | | | | |
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Total foreclosed assets | | | 4,115 | | | | | | | | 3,937 | | | | | | | | 3,802 | | | | | |
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Total nonperforming assets | | $ | 18,765 | | | | 2.27 | % | | $ | 19,605 | | | | 2.38 | % | | $ | 20,695 | | | | 2.56 | % |
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Change from prior quarter: | | | | | | | | | | | | | | | | | | | | | | | | |
Total nonaccrual loans | | $ | (1,018) | | | | | | | $ | (1,225) | | | | | | | $ | (1,022) | | | | | |
Total nonperforming assets | | | (840) | | | | | | | | (1,090) | | | | | | | | (360) | | | | | |
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(1) | Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information. |
Loans 90 Days or More Past Due and Still Accruing
Loans 90 days or more past due and still accruing (excluding government insured/guaranteed) totaled $950 million at March 31, 2014, compared with $1.0 billion at December 31, 2013. Loans 90 days or more past due and still accruing with repayments insured by the Federal Housing Administration (FHA) or predominantly guaranteed by the Department of Veterans Affairs (VA) for mortgages and the U.S. Department of Education for student loans under the Federal Family Education Loan Program were $20.3 billion at March 31, 2014, down from $22.2 billion at December 31, 2013.
Allowance for Credit Losses
The allowance for credit losses, including the allowance for unfunded commitments, totaled $14.4 billion at March 31, 2014, down from $15.0 billion at December 31, 2013. The allowance coverage to total loans was 1.74 percent, compared with 1.82 percent1 in fourth quarter 2013. The allowance covered 4.3 times annualized first quarter net charge-offs, compared with 3.9 times in the prior quarter. The allowance coverage to nonaccrual loans was 98 percent at March 31, 2014 compared with 96 percent at December 31, 2013. “We believe the allowance was appropriate for losses inherent in the loan portfolio at March 31, 2014,” said Loughlin.
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Business Segment Performance
Wells Fargo defines its operating segments by product type and customer segment. Segment net income for each of the three business segments was:
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| | Quarter ended | |
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| | Mar. 31, | | | Dec. 31, | | | Mar. 31, | |
(in millions) | | 2014 | | | 2013 | | | 2013 | |
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Community Banking | | $ | 3,844 | | | | 3,222 | | | | 2,924 | |
Wholesale Banking | | | 1,742 | | | | 2,111 | | | | 2,045 | |
Wealth, Brokerage and Retirement | | | 475 | | | | 491 | | | | 337 | |
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More financial information about the business segments is on pages 37.
Community Banking offers a complete line of diversified financial products and services for consumers and small businesses including checking and savings accounts, credit and debit cards, and auto, student, and small business lending. Community Banking also offers investment, insurance and trust services in 39 states and D.C., and mortgage and home equity loans in all 50 states and D.C. through its Regional Banking and Wells Fargo Home Lending business units.
Selected Financial Information
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| | Quarter ended | |
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| | Mar. 31, | | | Dec. 31, | | | Mar. 31, | |
(in millions) | | 2014 | | | 2013 | | | 2013 | |
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Total revenue | | $ | 12,593 | | | | 12,254 | | | | 12,899 | |
Provision for credit losses | | | 419 | | | | 490 | | | | 1,262 | |
Noninterest expense | | | 6,774 | | | | 7,073 | | | | 7,377 | |
Segment net income | | | 3,844 | | | | 3,222 | | | | 2,924 | |
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(in billions) | | | | | | | | | |
Average loans | | | 505.0 | | | | 502.5 | | | | 498.9 | |
Average assets | | | 892.6 | | | | 883.6 | | | | 799.6 | |
Average core deposits | | | 626.5 | | | | 620.2 | | | | 619.2 | |
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Community Banking reported net income of $3.8 billion, up $622 million, or 19 percent, from fourth quarter 2013. Revenue of $12.6 billion increased $339 million, or 3 percent, primarily due to higher equity investments gains and other noninterest income, partially offset by the impact of seasonally lower deposit service charges and card fees. Noninterest expense declined $299 million, or 4 percent, due to lower operating losses, project spending, advertising, and annual license renewal costs, partially offset by seasonally higher personnel costs. The provision for credit losses decreased $71 million driven by a $119 million decline in net charge-offs, partially offset by a lower reserve release.
Net income was up $920 million, or 31 percent, from first quarter 2013. Revenue decreased $306 million, or 2 percent, from a year ago primarily due to lower mortgage banking revenue, partially offset by higher net interest income and equity investment gains. Noninterest expense declined $603 million, or 8 percent, from a year ago largely driven by lower mortgage volume-related expenses and foreclosed asset expense. The provision for credit losses decreased $843 million from a year ago due to improved portfolio performance reflecting lower consumer real estate losses.
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Regional Banking
| o | Retail Bank household cross-sell ratio of 6.17 products per household, up from 6.10 year-over-year7 |
| o | Primary consumer checking customers8 up a net 5.1 percent year-over-year7 |
| o | Customers rated their experience with Wells Fargo stores at an all-time high based on first quarter survey results |
• | | Small Business/Business Banking |
| o | Primary business checking customers8 up a net 5.1 percent year-over-year7 |
| o | Business Direct credit card, lines of credit and loan product solutions (primarily under $100,000 sold through our retail banking stores) were up 15 percent from the prior year |
• | | Online and Mobile Banking |
| o | 23.8 million active online customers, up 6 percent year-over-year7 |
| o | 12.5 million active mobile customers, up 23 percent year-over-year7 |
Consumer Lending Group
| o | Originations of $36 billion, compared with $50 billion in prior quarter |
| o | Applications of $60 billion, compared with $65 billion in prior quarter |
| o | Application pipeline of $27 billion at quarter end, up from $25 billion at December 31, 2013 |
| o | Residential mortgage servicing portfolio of $1.8 trillion; ratio of MSRs to related loans serviced for others was 85 basis points, compared with 88 basis points in prior quarter |
| o | Average note rate on the servicing portfolio was 4.51 percent, compared with 4.52 percent in prior quarter |
| o | Credit card penetration in retail banking households rose to 38.0 percent7, up from 34.1 percent in prior year |
| o | Record auto originations of $7.8 billion, up 16 percent from prior quarter and up 15 percent from prior year |
7 Data as of February 2014, comparisons with February 2013.
8 Customers who actively use their checking account with transactions such as debit card purchases, online bill payments, and direct deposit.
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Wholesale Bankingprovides financial solutions to businesses across the United States and globally with annual sales generally in excess of $20 million. Products and business segments include Middle Market Commercial Banking, Government and Institutional Banking, Corporate Banking, Commercial Real Estate, Treasury Management, Wells Fargo Capital Finance, Insurance, International, Real Estate Capital Markets, Commercial Mortgage Servicing, Corporate Trust, Equipment Finance, Wells Fargo Securities, Principal Investments, Asset Backed Finance, and Asset Management.
Selected Financial Information
| | | | | | | | | | | | |
| |
| | Quarter ended | |
| | | | |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Mar. 31, 2013 | |
| |
Total revenue | | $ | 5,580 | | | | 5,972 | | | | 6,086 | |
Reversal of provision for credit losses | | | (93 | ) | | | (125 | ) | | | (58 | ) |
Noninterest expense | | | 3,215 | | | | 3,020 | | | | 3,091 | |
Segment net income | | | 1,742 | | | | 2,111 | | | | 2,045 | |
| | | |
(in billions) | | | | | | | | | |
Average loans (1) | | | 301.9 | | | | 294.6 | | | | 283.1 | |
Average assets (1) | | | 517.4 | | | | 509.0 | | | | 494.7 | |
Average core deposits | | | 259.0 | | | | 258.5 | | | | 224.1 | |
| |
(1) | Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information. |
Wholesale Banking reported net income of $1.7 billion, down $369 million, or 17 percent, from fourth quarter 2013. Revenue of $5.6 billion decreased $392 million, or 7 percent, from prior quarter. Net interest income declined $242 million as higher loan volume was offset by lower PCI resolutions and two fewer days in the quarter. Noninterest income decreased $150 million as lower investment banking, commercial brokerage fees, and corporate banking energy capital gains were partially offset by increased sales and trading results on higher customer accommodation trading. Noninterest expense increased $195 million, or 6 percent, from fourth quarter 2013 reflecting seasonally higher personnel costs and insurance commissions.
Net income was down $303 million, or 15 percent, from first quarter 2013. Revenue decreased $506 million, or 8 percent, from first quarter 2013 as strong loan and deposit growth was more than offset by lower PCI resolution income and market sensitive revenue, including reduced customer accommodation trading revenue. Noninterest expense increased $124 million, or 4 percent from a year ago due to higher personnel expenses and support costs. The provision for credit losses decreased $35 million from a year ago due to a $51 million reduction in credit losses partially offset by $16 million lower reserve release. The first quarter 2014 provision included a $34 million reserve release, compared with $50 million a year ago.
• | | Average loans increased 7 percent1 in first quarter 2014 compared with first quarter 2013 on broad-based growth, including asset-backed finance, commercial real estate, corporate banking, government and institutional banking, and international |
• | | Cross-sell of 7.2 products per relationship up from 7.1 in prior quarter and 6.8 in first quarter 2013 |
• | | Treasury management revenue up 4 percent from first quarter 2013 |
• | | Assets under management of $479 billion, up $16 billion from first quarter 2013, reflecting increased market valuation |
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Wealth, Brokerage and Retirementprovides a full range of financial advisory services to clients using a planning approach to meet each client’s needs. Wealth Management provides affluent and high net worth clients with a complete range of wealth management solutions, including financial planning, private banking, credit, investment management and fiduciary services. Abbot Downing, a Wells Fargo business, provides comprehensive wealth management services to ultra-high net worth families and individuals as well as endowments and foundations. Brokerage serves customers’ advisory, brokerage and financial needs as part of one of the largest full-service brokerage firms in the United States. Retirement is a national leader in providing institutional retirement and trust services (including 401(k) and pension plan record keeping) for businesses, retail retirement solutions for individuals, and reinsurance services for the life insurance industry.
Selected Financial Information
| | | | | | | | | | | | |
| |
| | Quarter ended | |
| | | | |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Mar. 31, 2013 | |
| |
Total revenue | | $ | 3,468 | | | | 3,438 | | | | 3,197 | |
Provision (reversal of provision) for credit losses | | | (8 | ) | | | (11 | ) | | | 14 | |
Noninterest expense | | | 2,711 | | | | 2,655 | | | | 2,639 | |
Segment net income | | | 475 | | | | 491 | | | | 337 | |
| | | |
(in billions) | | | | | | | | | |
Average loans | | | 50.0 | | | | 48.4 | | | | 43.8 | |
Average assets | | | 190.6 | | | | 185.3 | | | | 180.3 | |
Average core deposits | | | 156.0 | | | | 153.9 | | | | 149.4 | |
| |
Wealth, Brokerage and Retirement (WBR) reported net income of $475 million, down $16 million, or 3 percent, from fourth quarter 2013. Revenue of $3.5 billion increased $30 million, or 1 percent, from the prior quarter as higher asset-based fees were largely offset by lower gains on deferred compensation plan investments (offset in compensation expense). Noninterest expense was up 2 percent over the prior quarter and included seasonally higher personnel costs and lower deferred compensation plan expense (offset in trading income).
Net income was up $138 million, or 41 percent, from first quarter 2013. Revenue increased $271 million, or 8 percent, from a year ago primarily driven by strong growth in asset-based fees and higher net interest income, partially offset by a decrease in brokerage transaction revenue. Noninterest expense increased $72 million, or 3 percent, from a year ago primarily due to higher broker commissions. The provision for credit losses decreased $22 million from a year ago.
Retail Brokerage
• | | Client assets of $1.4 trillion, up 8 percent from prior year |
• | | Managed account assets increased $63 billion, or 19 percent, from prior year |
• | | Average deposit balances increased 4 percent from prior year |
• | | Strong loan growth, with average balances up 23 percent from prior year |
Wealth Management
• | | Client assets of $217 billion, up 6 percent from prior year |
• | | Strong loan growth, with average balances up 11 percent over prior year |
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Retirement
• | | IRA assets of $344 billion, up 9 percent from prior year |
• | | Institutional Retirement plan assets of $310 billion, up 8 percent from prior year |
WBR cross-sell ratio of 10.42 products per household, up from 10.33 in first quarter 2013
Conference Call
The Company will host a live conference call on Friday, April 11, at 7 a.m. PDT (10 a.m. EDT). To access the call, please dial866-872-5161 (U.S. and Canada) or 706-643-1962 (International). No password is required. The call is also available online atwellsfargo.com/invest_relations/earnings andhttp://us.meeting-stream.com/wellsfargocompany_041114.
A replay of the conference call will be available beginning at approximately noon PDT (3 p.m. EDT) on April 11 through Friday, April 18. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID #75709909. The replay will also be available online atwellsfargo.com/invest_relations/earnings.
- 13 -
Forward-Looking Statements
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, we may make forward-looking statements in our other documents filed or furnished with the SEC, and our management may make forward-looking statements orally to analysts, investors, representatives of the media and others. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “target,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can” and similar references to future periods. In particular, forward-looking statements include, but are not limited to, statements we make about: (i) the future operating or financial performance of the Company, including our outlook for future growth; (ii) our noninterest expense and efficiency ratio; (iii) future credit quality and performance, including our expectations regarding future loan losses and allowance releases; (iv) the appropriateness of the allowance for credit losses; (v) our expectations regarding net interest income and net interest margin; (vi) loan growth or the reduction or mitigation of risk in our loan portfolios; (vii) future capital levels and our estimated Common Equity Tier 1 ratio under Basel III capital standards; (viii) the performance of our mortgage business and any related exposures; (ix) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (x) future common stock dividends, common share repurchases and other uses of capital; (xi) our targeted range for return on assets and return on equity; (xii) the outcome of contingencies, such as legal proceedings; and (xiii) the Company’s plans, objectives and strategies.
Forward-looking statements are not based on historical facts but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:
| • | | current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, and the overall slowdown in global economic growth; |
| • | | our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms; |
| • | | financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services; |
| • | | the extent of our success in our loan modification efforts, as well as the effects of regulatory requirements or guidance regarding loan modifications; |
| • | | the amount of mortgage loan repurchase demands that we receive and our ability to satisfy any such demands without having to repurchase loans related thereto or otherwise indemnify or reimburse third parties, and the credit quality of or losses on such repurchased mortgage loans; |
| • | | negative effects relating to our mortgage servicing and foreclosure practices, including our obligations under the settlement with the Department of Justice and other federal and state government entities, as well as changes in industry standards or practices, regulatory or judicial requirements, penalties or fines, increased servicing and other costs or obligations, including loan modification requirements, or delays or moratoriums on foreclosures; |
| • | | our ability to realize our efficiency ratio 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; |
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| • | | the effect of the current low interest rate environment or changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale; |
| • | | a recurrence of significant turbulence or disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for mortgage loans, a reduction in the availability of funding or increased funding costs, and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our investment securities portfolio; |
| • | | 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; |
| • | | reputational damage from negative publicity, protests, fines, penalties and other negative consequences from regulatory violations and legal actions; |
| • | | a failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber attacks; |
| • | | the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin; |
| • | | fiscal and monetary policies of the Federal Reserve Board; and |
| • | | the other risk factors and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013. |
In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and financial condition of the Company, market conditions, capital requirements (including under Basel capital standards), common stock issuance requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the Company’s Board of Directors, and may be subject to regulatory approval or conditions.
For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.
Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
- 15 -
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.5 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 locations, 12,000 ATMs, and the Internet (wellsfargo.com), and has offices in 36 countries to support our customers who conduct business in the global economy. With more than 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 25 on Fortune’s 2013 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.
# # #
16
Wells Fargo & Company and Subsidiaries
QUARTERLY FINANCIAL DATA
TABLE OF CONTENTS
| | | | |
| | Pages | |
| |
Summary Information | | | | |
Summary Financial Data | | | 17-18 | |
| |
Income | | | | |
Consolidated Statement of Income | | | 19 | |
Consolidated Statement of Comprehensive Income | | | 20 | |
Condensed Consolidated Statement of Changes in Total Equity | | | 20 | |
Five Quarter Consolidated Statement of Income | | | 21 | |
Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) | | | 22 | |
Noninterest Income and Noninterest Expense | | | 24-25 | |
| |
Balance Sheet | | | | |
Consolidated Balance Sheet | | | 26-27 | |
Five Quarter Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) | | | 27 | |
| |
Loans | | | | |
Investment Securities | | | 28 | |
Loans | | | 28 | |
Nonperforming Assets | | | 29 | |
Loans 90 Days or More Past Due and Still Accruing | | | 30 | |
Purchased Credit-Impaired Loans | | | 31-33 | |
Pick-A-Pay Portfolio | | | 34 | |
Non-Strategic and Liquidating Loan Portfolios | | | 34 | |
Changes in Allowance for Credit Losses | | | 35 | |
| |
Equity | | | | |
Five Quarter Risk-Based Capital Components | | | 36 | |
Common Equity Tier 1 Under Basel III | | | 36 | |
| |
Operating Segments | | | | |
Operating Segment Results | | | 37 | |
| |
Other | | | | |
Mortgage Servicing and other related data | | | 38-40 | |
17
Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA
| | | | | | | | | | | | | | | | | | | | |
| |
| | Quarter ended | | | % Change Mar. 31, 2014 from | |
| | | | | | | | |
($ in millions, except per share amounts) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Mar. 31, 2013 | | | Dec. 31, 2013 | | | Mar. 31, 2013 | |
| |
| | | | | |
For the Period | | | | | | | | | | | | | | | | | | | | |
Wells Fargo net income | | $ | 5,893 | | | | 5,610 | | | | 5,171 | | | | 5 | % | | | 14 | |
Wells Fargo net income applicable to common stock | | | 5,607 | | | | 5,369 | | | | 4,931 | | | | 4 | | | | 14 | |
Diluted earnings per common share | | | 1.05 | | | | 1.00 | | | | 0.92 | | | | 5 | | | | 14 | |
Profitability ratios (annualized): | | | | | | | | | | | | | | | | | | | | |
Wells Fargo net income to average assets (ROA) (1) | | | 1.57 | % | | | 1.48 | | | | 1.49 | | | | 6 | | | | 5 | |
Wells Fargo net income applicable to common stock to averageWells Fargo common stockholders’ equity (ROE) | | | 14.35 | | | | 13.81 | | | | 13.59 | | | | 4 | | | | 6 | |
Efficiency ratio (2) | | | 57.9 | | | | 58.5 | | | | 58.3 | | | | (1) | | | | (1) | |
Total revenue | | $ | 20,625 | | | | 20,665 | | | | 21,259 | | | | - | | | | (3) | |
Pre-tax pre-provision profit (PTPP) (3) | | | 8,677 | | | | 8,580 | | | | 8,859 | | | | 1 | | | | (2) | |
Dividends declared per common share | | | 0.30 | | | | 0.30 | | | | 0.25 | | | | - | | | | 20 | |
Average common shares outstanding | | | 5,262.8 | | | | 5,270.3 | | | | 5,279.0 | | | | - | | | | - | |
Diluted average common shares outstanding | | | 5,353.3 | | | | 5,358.6 | | | | 5,353.5 | | | | - | | | | - | |
Average loans (1) | | $ | 823,790 | | | | 813,318 | | | | 796,662 | | | | 1 | | | | 3 | |
Average assets (1) | | | 1,525,905 | | | | 1,505,766 | | | | 1,402,922 | | | | 1 | | | | 9 | |
Average core deposits (4) | | | 973,801 | | | | 965,828 | | | | 925,866 | | | | 1 | | | | 5 | |
Average retail core deposits (5) | | | 690,643 | | | | 679,355 | | | | 662,913 | | | | 2 | | | | 4 | |
Net interest margin (1) | | | 3.20 | % | | | 3.27 | | | | 3.49 | | | | (2) | | | | (8) | |
| | | | | |
At Period End | | | | | | | | | | | | | | | | | | | | |
Investment Securities | | $ | 270,327 | | | | 264,353 | | | | 248,160 | | | | 2 | | | | 9 | |
Loans (1) | | | 826,443 | | | | 822,286 | | | | 798,362 | | | | 1 | | | | 4 | |
Allowance for loan losses | | | 13,695 | | | | 14,502 | | | | 16,711 | | | | (6) | | | | (18) | |
Goodwill | | | 25,637 | | | | 25,637 | | | | 25,637 | | | | - | | | | - | |
Assets (1) | | | 1,546,707 | | | | 1,523,502 | | | | 1,435,030 | | | | 2 | | | | 8 | |
Core deposits (4) | | | 994,185 | | | | 980,063 | | | | 939,934 | | | | 1 | | | | 6 | |
Wells Fargo stockholders’ equity | | | 175,654 | | | | 170,142 | | | | 162,086 | | | | 3 | | | | 8 | |
Total equity | | | 176,469 | | | | 171,008 | | | | 163,395 | | | | 3 | | | | 8 | |
Capital ratios: | | | | | | | | | | | | | | | | | | | | |
Total equity to assets (1) | | | 11.41 | % | | | 11.22 | | | | 11.39 | | | | 2 | | | | - | |
Risk-based capital (6): | | | | | | | | | | | | | | | | | | | | |
Tier 1 capital | | | 12.63 | | | | 12.33 | | | | 11.80 | | | | 2 | | | | 7 | |
Total capital | | | 15.70 | | | | 15.43 | | | | 14.76 | | | | 2 | | | | 6 | |
Tier 1 leverage (6) | | | 9.83 | | | | 9.60 | | | | 9.53 | | | | 2 | | | | 3 | |
Common Equity Tier 1 (6)(7) | | | 11.36 | | | | 10.82 | | | | 10.39 | | | | 5 | | | | 9 | |
Common shares outstanding | | | 5,265.7 | | | | 5,257.2 | | | | 5,288.8 | | | | - | | | | - | |
Book value per common share | | $ | 30.48 | | | | 29.48 | | | | 28.27 | | | | 3 | | | | 8 | |
Common stock price: | | | | | | | | | | | | | | | | | | | | |
High | | | 49.97 | | | | 45.64 | | | | 38.20 | | | | 9 | | | | 31 | |
Low | | | 44.17 | | | | 40.07 | | | | 34.43 | | | | 10 | | | | 28 | |
Period end | | | 49.74 | | | | 45.40 | | | | 36.99 | | | | 10 | | | | 34 | |
Team members (active, full-time equivalent) | | | 265,300 | | | | 264,900 | | | | 274,300 | | | | - | | | | (3) | |
| |
(1) | Amounts for prior periods have been revised to reflect our determination that certain factoring arrangements previously included within commercial loans, which were recorded with a corresponding obligation in other liabilities, did not qualify as loan purchases under ASC Topic 860 (Transfers and Servicing of Financial Assets) based on interpretations of the specific arrangements. Accordingly, we revised our commercial loan balances for year-end 2012 and each of the quarters in 2013 in order to appropriately present the Company’s lending trends over this period. This revision, which resulted in a reduction to total commercial loans and a corresponding decrease to other liabilities, did not impact the Company’s consolidated net income or total cash flows. We reduced our commercial loans by $3.5 billion, $3.2 billion, $2.1 billion, $1.6 billion, and $1.2 billion at December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013, and December 31, 2012, respectively, which represented less than 1% of total commercial loans and less than 0.5% of our total loan portfolio. Other affected financial information, including ratios, has been appropriately revised to reflect this revision. |
(2) | The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). |
(3) | Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle. |
(4) | Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances). |
(5) | Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits. |
(6) | The March 31, 2014, ratios are preliminary. |
(7) | See the “Five Quarter Risk-Based Capital Components” table for additional information. |
18
Wells Fargo & Company and Subsidiaries
FIVE QUARTER SUMMARY FINANCIAL DATA
| | | | | | | | | | | | | | | | | | | | |
| |
| | Quarter ended | |
| | | | |
($ in millions, except per share amounts) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| | | | | |
For the Quarter | | | | | | | | | | | | | | | | | | | | |
Wells Fargo net income | | $ | 5,893 | | | | 5,610 | | | | 5,578 | | | | 5,519 | | | | 5,171 | |
Wells Fargo net income applicable to common stock | | | 5,607 | | | | 5,369 | | | | 5,317 | | | | 5,272 | | | | 4,931 | |
Diluted earnings per common share | | | 1.05 | | | | 1.00 | | | | 0.99 | | | | 0.98 | | | | 0.92 | |
Profitability ratios (annualized): | | | | | | | | | | | | | | | | | | | | |
Wells Fargo net income to average assets (ROA) (1) | | | 1.57 | % | | | 1.48 | | | | 1.53 | | | | 1.55 | | | | 1.49 | |
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE) | | | 14.35 | | | | 13.81 | | | | 14.07 | | | | 14.02 | | | | 13.59 | |
Efficiency ratio (2) | | | 57.9 | | | | 58.5 | | | | 59.1 | | | | 57.3 | | | | 58.3 | |
Total revenue | | $ | 20,625 | | | | 20,665 | | | | 20,478 | | | | 21,378 | | | | 21,259 | |
Pre-tax pre-provision profit (PTPP) (3) | | | 8,677 | | | | 8,580 | | | | 8,376 | | | | 9,123 | | | | 8,859 | |
Dividends declared per common share | | | 0.30 | | | | 0.30 | | | | 0.30 | | | | 0.30 | | | | 0.25 | |
Average common shares outstanding | | | 5,262.8 | | | | 5,270.3 | | | | 5,295.3 | | | | 5,304.7 | | | | 5,279.0 | |
Diluted average common shares outstanding | | | 5,353.3 | | | | 5,358.6 | | | | 5,381.7 | | | | 5,384.6 | | | | 5,353.5 | |
Average loans (1) | | $ | 823,790 | | | | 813,318 | | | | 802,134 | | | | 798,386 | | | | 796,662 | |
Average assets (1) | | | 1,525,905 | | | | 1,505,766 | | | | 1,446,965 | | | | 1,427,150 | | | | 1,402,922 | |
Average core deposits (4) | | | 973,801 | | | | 965,828 | | | | 940,279 | | | | 936,090 | | | | 925,866 | |
Average retail core deposits (5) | | | 690,643 | | | | 679,355 | | | | 670,335 | | | | 666,043 | | | | 662,913 | |
Net interest margin (1) | | | 3.20 | % | | | 3.27 | | | | 3.39 | | | | 3.47 | | | | 3.49 | |
| | | | | |
At Quarter End | | | | | | | | | | | | | | | | | | | | |
Investment securities | | $ | 270,327 | | | | 264,353 | | | | 259,399 | | | | 249,439 | | | | 248,160 | |
Loans (1) | | | 826,443 | | | | 822,286 | | | | 809,135 | | | | 799,867 | | | | 798,362 | |
Allowance for loan losses | | | 13,695 | | | | 14,502 | | | | 15,159 | | | | 16,144 | | | | 16,711 | |
Goodwill | | | 25,637 | | | | 25,637 | | | | 25,637 | | | | 25,637 | | | | 25,637 | |
Assets (1) | | | 1,546,707 | | | | 1,523,502 | | | | 1,484,865 | | | | 1,438,456 | | | | 1,435,030 | |
Core deposits (4) | | | 994,185 | | | | 980,063 | | | | 947,805 | | | | 941,158 | | | | 939,934 | |
Wells Fargo stockholders’ equity | | | 175,654 | | | | 170,142 | | | | 167,165 | | | | 162,421 | | | | 162,086 | |
Total equity | | | 176,469 | | | | 171,008 | | | | 168,813 | | | | 163,777 | | | | 163,395 | |
Capital ratios: | | | | | | | | | | | | | | | | | | | | |
Total equity to assets (1) | | | 11.41 | % | | | 11.22 | | | | 11.37 | | | | 11.39 | | | | 11.39 | |
Risk-based capital (6): | | | | | | | | | | | | | | | | | | | | |
Tier 1 capital | | | 12.63 | | | | 12.33 | | | | 12.11 | | | | 12.12 | | | | 11.80 | |
Total capital | | | 15.70 | | | | 15.43 | | | | 15.09 | | | | 15.03 | | | | 14.76 | |
Tier 1 leverage (6) | | | 9.83 | | | | 9.60 | | | | 9.76 | | | | 9.63 | | | | 9.53 | |
Common Equity Tier 1 (6)(7) | | | 11.36 | | | | 10.82 | | | | 10.60 | | | | 10.71 | | | | 10.39 | |
Common shares outstanding | | | 5,265.7 | | | | 5,257.2 | | | | 5,273.7 | | | | 5,302.2 | | | | 5,288.8 | |
Book value per common share | | $ | 30.48 | | | | 29.48 | | | | 28.98 | | | | 28.26 | | | | 28.27 | |
Common stock price: | | | | | | | | | | | | | | | | | | | | |
High | | | 49.97 | | | | 45.64 | | | | 44.79 | | | | 41.74 | | | | 38.20 | |
Low | | | 44.17 | | | | 40.07 | | | | 40.79 | | | | 36.19 | | | | 34.43 | |
Period end | | | 49.74 | | | | 45.40 | | | | 41.32 | | | | 41.27 | | | | 36.99 | |
Team members (active, full-time equivalent) | | | 265,300 | | | | 264,900 | | | | 270,600 | | | | 274,300 | | | | 274,300 | |
| |
(1) | Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information. |
(2) | The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). |
(3) | Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle. |
(4) | Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances). |
(5) | Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits. |
(6) | The March 31, 2014, ratios are preliminary. |
(7) | See the “Five Quarter Risk-Based Capital Components” table for additional information. |
19
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
| | | | | | | | | | | | |
| |
| | Quarter ended March 31, | | | % | |
| | | | | | | | |
(in millions, except per share amounts) | | 2014 | | | 2013 | | | Change | |
| |
| | | |
Interest income | | | | | | | | | | | | |
Trading assets | | $ | 374 | | | | 327 | | | | 14 | % |
Investment securities | | | 2,110 | | | | 1,925 | | | | 10 | |
Mortgages held for sale | | | 170 | | | | 371 | | | | (54) | |
Loans held for sale | | | 2 | | | | 3 | | | | (33) | |
Loans | | | 8,746 | | | | 8,861 | | | | (1) | |
Other interest income | | | 210 | | | | 163 | | | | 29 | |
| | | | | |
Total interest income | | | 11,612 | | | | 11,650 | | | | - | |
| | | | | |
| | | |
Interest expense | | | | | | | | | | | | |
Deposits | | | 279 | | | | 369 | | | | (24) | |
Short-term borrowings | | | 12 | | | | 20 | | | | (40) | |
Long-term debt | | | 619 | | | | 697 | | | | (11) | |
Other interest expense | | | 87 | | | | 65 | | | | 34 | |
| | | | | |
Total interest expense | | | 997 | | | | 1,151 | | | | (13) | |
| | | | | |
| | | |
Net interest income | | | 10,615 | | | | 10,499 | | | | 1 | |
Provision for credit losses | | | 325 | | | | 1,219 | | | | (73) | |
| | | | | |
Net interest income after provision for credit losses | | | 10,290 | | | | 9,280 | | | | 11 | |
| | | | | |
| | | |
Noninterest income | | | | | | | | | | | | |
Service charges on deposit accounts | | | 1,215 | | | | 1,214 | | | | - | |
Trust and investment fees | | | 3,412 | | | | 3,202 | | | | 7 | |
Card fees | | | 784 | | | | 738 | | | | 6 | |
Other fees | | | 1,047 | | | | 1,034 | | | | 1 | |
Mortgage banking | | | 1,510 | | | | 2,794 | | | | (46) | |
Insurance | | | 432 | | | | 463 | | | | (7) | |
Net gains from trading activities | | | 432 | | | | 570 | | | | (24) | |
Net gains on debt securities | | | 83 | | | | 45 | | | | 84 | |
Net gains from equity investments | | | 847 | | | | 113 | | | | 650 | |
Lease income | | | 133 | | | | 130 | | | | 2 | |
Other | | | 115 | | | | 457 | | | | (75) | |
| | | | | |
Total noninterest income | | | 10,010 | | | | 10,760 | | | | (7) | |
| | | | | |
| | | |
Noninterest expense | | | | | | | | | | | | |
Salaries | | | 3,728 | | | | 3,663 | | | | 2 | |
Commission and incentive compensation | | | 2,416 | | | | 2,577 | | | | (6) | |
Employee benefits | | | 1,372 | | | | 1,583 | | | | (13) | |
Equipment | | | 490 | | | | 528 | | | | (7) | |
Net occupancy | | | 742 | | | | 719 | | | | 3 | |
Core deposit and other intangibles | | | 341 | | | | 377 | | | | (10) | |
FDIC and other deposit assessments | | | 243 | | | | 292 | | | | (17) | |
Other | | | 2,616 | | | | 2,661 | | | | (2) | |
| | | | | |
Total noninterest expense | | | 11,948 | | | | 12,400 | | | | (4) | |
| | | | | |
| | | |
Income before income tax expense | | | 8,352 | | | | 7,640 | | | | 9 | |
Income tax expense | | | 2,277 | | | | 2,420 | | | | (6) | |
| | | | | |
| | | |
Net income before noncontrolling interests | | | 6,075 | | | | 5,220 | | | | 16 | |
Less: Net income from noncontrolling interests | | | 182 | | | | 49 | | | | 271 | |
| | | | | |
Wells Fargo net income | | $ | 5,893 | | | | 5,171 | | | | 14 | |
| | | | | |
Less: Preferred stock dividends and other | | | 286 | | | | 240 | | | | 19 | |
| | | | | |
Wells Fargo net income applicable to common stock | | $ | 5,607 | | | | 4,931 | | | | 14 | |
| | | | | |
| | | |
Per share information | | | | | | | | | | | | |
Earnings per common share | | $ | 1.07 | | | | 0.93 | | | | 15 | |
Diluted earnings per common share | | | 1.05 | | | | 0.92 | | | | 14 | |
Dividends declared per common share | | | 0.30 | | | | 0.25 | | | | 20 | |
Average common shares outstanding | | | 5,262.8 | | | | 5,279.0 | | | | - | |
Diluted average common shares outstanding | | | 5,353.3 | | | | 5,353.5 | | | | - | |
| |
20
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| | | | | | | | | | | | |
| |
| | Quarter ended March 31, | | | % | |
| | | | | | | | |
(in millions) | | 2014 | | | 2013 | | | Change | |
| |
Wells Fargo net income | | $ | 5,893 | | | | 5,171 | | | | 14 | % |
| | | | | |
Other comprehensive income (loss), before tax: | | | | | | | | | | | | |
Investment securities: | | | | | | | | | | | | |
Net unrealized gains (losses) arising during the period | | | 2,725 | | | | (634) | | | | NM | |
Reclassification of net gains to net income | | | (394) | | | | (113) | | | | 249 | |
Derivatives and hedging activities: | | | | | | | | | | | | |
Net unrealized gains arising during the period | | | 44 | | | | 7 | | | | 529 | |
Reclassification of net gains on cash flow hedges to net income | | | (106) | | | | (87) | | | | 22 | |
Defined benefit plans adjustments: | | | | | | | | | | | | |
Net unrealized gains arising during the period | | | - | | | | 6 | | | | (100) | |
Amortization of net actuarial loss, settlements, and other to net income | | | 18 | | | | 49 | | | | (63) | |
Foreign currency translation adjustments: | | | | | | | | | | | | |
Net unrealized losses arising during the period | | | (17) | | | | (18) | | | | (6) | |
Reclassification of net losses to net income | | | 6 | | | | - | | | | NM | |
| | | | | |
| | | |
Other comprehensive income (loss), before tax | | | 2,276 | | | | (790) | | | | NM | |
Income tax (expense) benefit related to other comprehensive income | | | (831) | | | | 288 | | | | NM | |
| | | | | |
| | | |
Other comprehensive income (loss), net of tax | | | 1,445 | | | | (502) | | | | NM | |
Less: Other comprehensive income from noncontrolling interests | | | 79 | | | | 3 | | | | NM | |
| | | | | |
Wells Fargo other comprehensive income (loss), net of tax | | | 1,366 | | | | (505) | | | | NM | |
| | | | | |
| | | |
Wells Fargo comprehensive income | | | 7,259 | | | | 4,666 | | | | 56 | |
Comprehensive income from noncontrolling interests | | | 261 | | | | 52 | | | | 402 | |
| | | | | |
| | | |
Total comprehensive income | | $ | 7,520 | | | | 4,718 | | | | 59 | |
| |
NM - Not meaningful
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY
| | | | | | | | |
| | Quarter ended March 31, | |
| | | | |
(in millions) | | 2014 | | | 2013 | |
| |
| | |
Balance, beginning of period | | $ | 171,008 | | | | 158,911 | |
Wells Fargo net income | | | 5,893 | | | | 5,171 | |
Wells Fargo other comprehensive income (loss), net of tax | | | 1,366 | | | | (505) | |
Common stock issued | | | 994 | | | | 878 | |
Common stock repurchased | | | (1,025) | | | | (383) | |
Preferred stock released by ESOP | | | 305 | | | | 296 | |
Preferred stock issued | | | - | | | | 610 | |
Common stock dividends | | | (1,579) | | | | (1,319) | |
Preferred stock dividends and other | | | (286) | | | | (240) | |
Noncontrolling interests and other, net | | | (207) | | | | (24) | |
| |
| | |
Balance, end of period | | $ | 176,469 | | | | 163,395 | |
| |
21
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
| | | | | | | | | | | | | | | | | | | | |
| |
| |
| | Quarter ended | |
| | | | |
| | Mar. 31, | | | Dec. 31, | | | Sept. 30, | | | June 30, | | | Mar. 31, | |
(in millions, except per share amounts) | | 2014 | | | 2013 | | | 2013 | | | 2013 | | | 2013 | |
| |
| | | | | |
Interest Income | | | | | | | | | | | | | | | | | | | | |
Trading assets | | $ | 374 | | | | 378 | | | | 331 | | | | 340 | | | | 327 | |
Investment securities | | | 2,110 | | | | 2,119 | | | | 2,038 | | | | 2,034 | | | | 1,925 | |
Mortgages held for sale | | | 170 | | | | 221 | | | | 320 | | | | 378 | | | | 371 | |
Loans held for sale | | | 2 | | | | 3 | | | | 3 | | | | 4 | | | | 3 | |
Loans | | | 8,746 | | | | 8,907 | | | | 8,901 | | | | 8,902 | | | | 8,861 | |
Other interest income | | | 210 | | | | 208 | | | | 183 | | | | 169 | | | | 163 | |
| |
Total interest income | | | 11,612 | | | | 11,836 | | | | 11,776 | | | | 11,827 | | | | 11,650 | |
| |
| | | | | |
Interest expense | | | | | | | | | | | | | | | | | | | | |
Deposits | | | 279 | | | | 297 | | | | 318 | | | | 353 | | | | 369 | |
Short-term borrowings | | | 12 | | | | 14 | | | | 9 | | | | 17 | | | | 20 | |
Long-term debt | | | 619 | | | | 635 | | | | 621 | | | | 632 | | | | 697 | |
Other interest expense | | | 87 | | | | 87 | | | | 80 | | | | 75 | | | | 65 | |
| |
Total interest expense | | | 997 | | | | 1,033 | | | | 1,028 | | | | 1,077 | | | | 1,151 | |
| |
| | | | | |
Net interest income | | | 10,615 | | | | 10,803 | | | | 10,748 | | | | 10,750 | | | | 10,499 | |
Provision for credit losses | | | 325 | | | | 363 | | | | 75 | | | | 652 | | | | 1,219 | |
| |
Net interest income after provision for credit losses | | | 10,290 | | | | 10,440 | | | | 10,673 | | | | 10,098 | | | | 9,280 | |
| |
| | | | | |
Noninterest income | | | | | | | | | | | | | | | | | | | | |
Service charges on deposit accounts | | | 1,215 | | | | 1,283 | | | | 1,278 | | | | 1,248 | | | | 1,214 | |
Trust and investment fees | | | 3,412 | | | | 3,458 | | | | 3,276 | | | | 3,494 | | | | 3,202 | |
Card fees | | | 784 | | | | 827 | | | | 813 | | | | 813 | | | | 738 | |
Other fees | | | 1,047 | | | | 1,119 | | | | 1,098 | | | | 1,089 | | | | 1,034 | |
Mortgage banking | | | 1,510 | | | | 1,570 | | | | 1,608 | | | | 2,802 | | | | 2,794 | |
Insurance | | | 432 | | | | 453 | | | | 413 | | | | 485 | | | | 463 | |
Net gains from trading activities | | | 432 | | | | 325 | | | | 397 | | | | 331 | | | | 570 | |
Net gains (losses) on debt securities | | | 83 | | | | (14) | | | | (6) | | | | (54) | | | | 45 | |
Net gains from equity investments | | | 847 | | | | 654 | | | | 502 | | | | 203 | | | | 113 | |
Lease income | | | 133 | | | | 148 | | | | 160 | | | | 225 | | | | 130 | |
Other | | | 115 | | | | 39 | | | | 191 | | | | (8) | | | | 457 | |
| |
Total noninterest income | | | 10,010 | | | | 9,862 | | | | 9,730 | | | | 10,628 | | | | 10,760 | |
| |
| | | | | |
Noninterest expense | | | | | | | | | | | | | | | | | | | | |
Salaries | | | 3,728 | | | | 3,811 | | | | 3,910 | | | | 3,768 | | | | 3,663 | |
Commission and incentive compensation | | | 2,416 | | | | 2,347 | | | | 2,401 | | | | 2,626 | | | | 2,577 | |
Employee benefits | | | 1,372 | | | | 1,160 | | | | 1,172 | | | | 1,118 | | | | 1,583 | |
Equipment | | | 490 | | | | 567 | | | | 471 | | | | 418 | | | | 528 | |
Net occupancy | | | 742 | | | | 732 | | | | 728 | | | | 716 | | | | 719 | |
Core deposit and other intangibles | | | 341 | | | | 375 | | | | 375 | | | | 377 | | | | 377 | |
FDIC and other deposit assessments | | | 243 | | | | 196 | | | | 214 | | | | 259 | | | | 292 | |
Other | | | 2,616 | | | | 2,897 | | | | 2,831 | | | | 2,973 | | | | 2,661 | |
| |
Total noninterest expense | | | 11,948 | | | | 12,085 | | | | 12,102 | | | | 12,255 | | | | 12,400 | |
| |
| | | | | |
Income before income tax expense | | | 8,352 | | | | 8,217 | | | | 8,301 | | | | 8,471 | | | | 7,640 | |
Income tax expense | | | 2,277 | | | | 2,504 | | | | 2,618 | | | | 2,863 | | | | 2,420 | |
| |
| | | | | |
Net income before noncontrolling interests | | | 6,075 | | | | 5,713 | | | | 5,683 | | | | 5,608 | | | | 5,220 | |
Less: Net income from noncontrolling interests | | | 182 | | | | 103 | | | | 105 | | | | 89 | | | | 49 | |
| |
| | | | | |
Wells Fargo net income | | $ | 5,893 | | | | 5,610 | | | | 5,578 | | | | 5,519 | | | | 5,171 | |
| |
Less: Preferred stock dividends and other | | | 286 | | | | 241 | | | | 261 | | | | 247 | | | | 240 | |
| |
| | | | | |
Wells Fargo net income applicable to common stock | | $ | 5,607 | | | | 5,369 | | | | 5,317 | | | | 5,272 | | | | 4,931 | |
| |
| | | | | |
Per share information | | | | | | | | | | | | | | | | | | | | |
Earnings per common share | | $ | 1.07 | | | | 1.02 | | | | 1.00 | | | | 1.00 | | | | 0.93 | |
Diluted earnings per common share | | | 1.05 | | | | 1.00 | | | | 0.99 | | | | 0.98 | | | | 0.92 | |
Dividends declared per common share | | | 0.30 | | | | 0.30 | | | | 0.30 | | | | 0.30 | | | | 0.25 | |
Average common shares outstanding | | | 5,262.8 | | | | 5,270.3 | | | | 5,295.3 | | | | 5,304.7 | | | | 5,279.0 | |
Diluted average common shares outstanding | | | 5,353.3 | | | | 5,358.6 | | | | 5,381.7 | | | | 5,384.6 | | | | 5,353.5 | |
| |
22
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | Quarter ended March 31, | |
| | | | |
| | | | | | | | | | | 2014 | | | | | | | | | | | | | | 2013 | |
| | | | | | | | | | |
(in millions) | | Average balance | | | Yields/ rates | | | | | | Interest income/ expense | | | | | Average balance | | | Yields/ rates | | | | | | Interest income/ expense | |
| |
| | | | | | | | | |
Earning assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Federal funds sold, securities purchased under resale agreements and other short-term investments | | $ | 213,284 | | | | 0.27 | | | | % | | | $ | 144 | | | | | | 121,024 | | | | 0.36 | | | | % | | | $ | 107 | |
Trading assets | | | 48,231 | | | | 3.17 | | | | | | | | 381 | | | | | | 42,130 | | | | 3.17 | | | | | | | | 334 | |
Investment securities (3): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Available-for-sale securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities of U.S. Treasury and federal agencies | | | 6,572 | | | | 1.68 | | | | | | | | 28 | | | | | | 7,079 | | | | 1.56 | | | | | | | | 28 | |
Securities of U.S. states and political subdivisions | | | 42,600 | | | | 4.37 | | | | | | | | 465 | | | | | | 37,584 | | | | 4.38 | | | | | | | | 410 | |
Mortgage-backed securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Federal agencies | | | 117,641 | | | | 2.94 | | | | | | | | 864 | | | | | | 95,368 | | | | 2.74 | | | | | | | | 654 | |
Residential and commercial | | | 28,035 | | | | 6.12 | | | | | | | | 429 | | | | | | 32,141 | | | | 6.46 | | | | | | | | 519 | |
Total mortgage-backed securities | | | 145,676 | | | | 3.55 | | | | | | | | 1,293 | | | | | | 127,509 | | | | 3.68 | | | | | | | | 1,173 | |
Other debt and equity securities | | | 49,156 | | | | 3.59 | | | | | | | | 438 | | | | | | 53,724 | | | | 3.58 | | | | | | | | 476 | |
Total available-for-sale securities | | | 244,004 | | | | 3.65 | | | | | | | | 2,224 | | | | | | 225,896 | | | | 3.70 | | | | | | | | 2,087 | |
Held-to-maturity securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities of U.S. Treasury and federal agencies | | | 1,104 | | | | 2.18 | | | | | | | | 6 | | | | | | - | | | | - | | | | | | | | - | |
Federal agency mortgage-backed securities | | | 6,162 | | | | 3.11 | | | | | | | | 48 | | | | | | - | | | | - | | | | | | | | - | |
Other debt securities | | | 6,414 | | | | 1.86 | | | | | | | | 29 | | | | | | - | | | | - | | | | | | | | - | |
Total held-to-maturity securities | | | 13,680 | | | | 2.45 | | | | | | | | 83 | | | | | | - | | | | - | | | | | | | | - | |
Mortgages held for sale (4) | | | 16,556 | | | | 4.11 | | | | | | | | 170 | | | | | | 43,312 | | | | 3.42 | | | | | | | | 371 | |
Loans held for sale (4) | | | 111 | | | | 6.28 | | | | | | | | 2 | | | | | | 141 | | | | 8.83 | | | | | | | | 3 | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial (5) | | | 193,865 | | | | 3.43 | | | | | | | | 1,641 | | | | | | 183,122 | | | | 3.76 | | | | | | | | 1,700 | |
Real estate mortgage | | | 107,797 | | | | 3.52 | | | | | | | | 937 | | | | | | 106,221 | | | | 3.84 | | | | | | | | 1,006 | |
Real estate construction | | | 16,879 | | | | 4.37 | | | | | | | | 182 | | | | | | 16,559 | | | | 4.84 | | | | | | | | 197 | |
Lease financing | | | 11,936 | | | | 6.15 | | | | | | | | 183 | | | | | | 12,424 | | | | 6.78 | | | | | | | | 210 | |
Foreign (5) | | | 47,876 | | | | 2.21 | | | | | | | | 262 | | | | | | 39,881 | | | | 2.16 | | | | | | | | 213 | |
Total commercial (5) | | | 378,353 | | | | 3.43 | | | | | | | | 3,205 | | | | | | 358,207 | | | | 3.76 | | | | | | | | 3,326 | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate 1-4 family first mortgage | | | 259,477 | | | | 4.17 | | | | | | | | 2,705 | | | | | | 252,049 | | | | 4.29 | | | | | | | | 2,702 | |
Real estate 1-4 family junior lien mortgage | | | 64,980 | | | | 4.30 | | | | | | | | 692 | | | | | | 74,068 | | | | 4.28 | | | | | | | | 785 | |
Credit card | | | 26,272 | | | | 12.32 | | | | | | | | 798 | | | | | | 24,097 | | | | 12.62 | | | | | | | | 750 | |
Automobile | | | 51,794 | | | | 6.50 | | | | | | | | 831 | | | | | | 46,566 | | | | 7.20 | | | | | | | | 826 | |
Other revolving credit and installment | | | 42,914 | | | | 5.00 | | | | | | | | 529 | | | | | | 41,675 | | | | 4.70 | | | | | | | | 483 | |
Total consumer | | | 445,437 | | | | 5.02 | | | | | | | | 5,555 | | | | | | 438,455 | | | | 5.10 | | | | | | | | 5,546 | |
Total loans (4)(5) | | | 823,790 | | | | 4.29 | | | | | | | | 8,760 | | | | | | 796,662 | | | | 4.49 | | | | | | | | 8,872 | |
Other | | | 4,655 | | | | 5.72 | | | | | | | | 66 | | | | | | 4,255 | | | | 5.19 | | | | | | | | 55 | |
Total earning assets (5) | | $ | 1,364,311 | | | | 3.49 | | | | % | | | $ | 11,830 | | | | | | 1,233,420 | | | | 3.87 | | | | % | | | $ | 11,829 | |
| | | | | | | | | |
Funding sources | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing checking | | $ | 36,799 | | | | 0.07 | | | | % | | | $ | 6 | | | | | | 32,165 | | | | 0.06 | | | | % | | | $ | 5 | |
Market rate and other savings | | | 579,044 | | | | 0.07 | | | | | | | | 105 | | | | | | 537,549 | | | | 0.09 | | | | | | | | 122 | |
Savings certificates | | | 40,535 | | | | 0.89 | | | | | | | | 89 | | | | | | 55,238 | | | | 1.22 | | | | | | | | 167 | |
Other time deposits | | | 45,822 | | | | 0.42 | | | | | | | | 48 | | | | | | 15,905 | | | | 1.25 | | | | | | | | 50 | |
Deposits in foreign offices | | | 91,050 | | | | 0.14 | | | | | | | | 31 | | | | | | 71,077 | | | | 0.14 | | | | | | | | 25 | |
Total interest-bearing deposits | | | 793,250 | | | | 0.14 | | | | | | | | 279 | | | | | | 711,934 | | | | 0.21 | | | | | | | | 369 | |
Short-term borrowings | | | 54,502 | | | | 0.09 | | | | | | | | 13 | | | | | | 55,410 | | | | 0.17 | | | | | | | | 23 | |
Long-term debt | | | 153,793 | | | | 1.62 | | | | | | | | 619 | | | | | | 127,112 | | | | 2.20 | | | | | | | | 697 | |
Other liabilities | | | 12,859 | | | | 2.72 | | | | | | | | 87 | | | | | | 11,608 | | | | 2.24 | | | | | | | | 65 | |
Total interest-bearing liabilities | | | 1,014,404 | | | | 0.40 | | | | | | | | 998 | | | | | | 906,064 | | | | 0.51 | | | | | | | | 1,154 | |
Portion of noninterest-bearing funding sources (5) | | | 349,907 | | | | - | | | | | | | | - | | | | | | 327,356 | | | | - | | | | | | | | - | |
Total funding sources (5) | | $ | 1,364,311 | | | | 0.29 | | | | | | | | 998 | | | | | | 1,233,420 | | | | 0.38 | | | | | | | | 1,154 | |
Net interest margin and net interest income on a taxable-equivalent basis (5)(6) | | | | | | | 3.20 | | | | % | | | $ | 10,832 | | | | | | | | | | 3.49 | | | | % | | | $ | 10,675 | |
Noninterest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 16,363 | | | | | | | | | | | | | | | | | | 16,529 | | | | | | | | | | | | | |
Goodwill | | | 25,637 | | | | | | | | | | | | | | | | | | 25,637 | | | | | | | | | | | | | |
Other | | | 119,594 | | | | | | | | | | | | | | | | | | 127,336 | | | | | | | | | | | | | |
Total noninterest-earning assets | | $ | 161,594 | | | | | | | | | | | | | | | | | | 169,502 | | | | | | | | | | | | | |
| | | | | | | | | |
Noninterest-bearing funding sources | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits | | $ | 284,069 | | | | | | | | | | | | | | | | | | 274,221 | | | | | | | | | | | | | |
Other liabilities (5) | | | 52,955 | | | | | | | | | | | | | | | | | | 62,222 | | | | | | | | | | | | | |
Total equity | | | 174,477 | | | | | | | | | | | | | | | | | | 160,415 | | | | | | | | | | | | | |
Noninterest-bearing funding sources used to fund earning assets (5) | | | (349,907 | ) | | | | | | | | | | | | | | | | | (327,356 | ) | | | | | | | | | | | | |
Net noninterest-bearing funding sources | | $ | 161,594 | | | | | | | | | | | | | | | | | | 169,502 | | | | | | | | | | | | | |
Total assets | | $ | 1,525,905 | | | | | | | | | | | | | | | | | | 1,402,922 | | | | | | | | | | | | | |
(1) | Our average prime rate was 3.25% for the quarters ended March 31, 2014 and 2013. The average three-month London Interbank Offered Rate (LIBOR) was 0.24% and 0.29% for the same quarters, respectively. |
(2) | Yield/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories. |
(3) | Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost for the periods presented. |
(4) | Nonaccrual loans and related income are included in their respective loan categories. |
(5) | Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information. |
(6) | Includes taxable-equivalent adjustments of $217 million and $176 million for the quarters ended March 31, 2014 and 2013, respectively, primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented. |
23
Wells Fargo & Company and Subsidiaries
FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarter ended | | | | |
| | | | | | | | |
| | Mar. 31, 2014 | | | | | | | | | Dec. 31, 2013 | | | | | | | | | Sept. 30, 2013 | | | | | | June 30, 2013 | | | | | | | | | Mar. 31, 2013 | | | | |
| | | | | |
($ in billions) | | Average balance | | | Yields/ rates | | | | | | | | | Average balance | | | Yields/ rates | | | | | | | | | Average balance | | | Yields/ rates | | | | | | | | | Average balance | | | Yields/ rates | | | | | | | | | Average balance | | | Yields/ rates | | | | |
Earning assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Federal funds sold, securities purchased under resale agreements and other short-term investments | | $ | 213.3 | | | | 0.27 | | | | % | | | $ | | | | | 205.3 | | | | 0.28 | | | | % | | | $ | | | | | 155.9 | | | | 0.31 | | | | % | | | $ | | | | | 136.5 | | | | 0.33 | | | | % | | | $ | | | | | 121.0 | | | | 0.36 | | | | % | |
Trading assets | | | 48.2 | | | | 3.17 | | | | | | | | | | | | 45.4 | | | | 3.40 | | | | | | | | | | | | 44.8 | | | | 3.02 | | | | | | | | | | | | 46.6 | | | | 2.98 | | | | | | | | | | | | 42.1 | | | | 3.17 | | | | | |
Investment securities (2): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Available-for-sale securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities of U.S. Treasury and federal agencies | | | 6.6 | | | | 1.68 | | | | | | | | | | | | 6.6 | | | | 1.67 | | | | | | | | | | | | 6.6 | | | | 1.69 | | | | | | | | | | | | 6.7 | | | | 1.73 | | | | | | | | | | | | 7.1 | | | | 1.56 | | | | | |
Securities of U.S. states and political subdivisions | | | 42.6 | | | | 4.37 | | | | | | | | | | | | 42.0 | | | | 4.38 | | | | | | | | | | | | 40.8 | | | | 4.35 | | | | | | | | | | | | 39.3 | | | | 4.42 | | | | | | | | | | | | 37.6 | | | | 4.38 | | | | | |
Mortgage-backed securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Federal agencies | | | 117.6 | | | | 2.94 | | | | | | | | | | | | 117.9 | | | | 2.94 | | | | | | | | | | | | 113.0 | | | | 2.83 | | | | | | | | | | | | 102.0 | | | | 2.79 | | | | | | | | | | | | 95.4 | | | | 2.74 | | | | | |
Residential and commercial | | | 28.0 | | | | 6.12 | | | | | | | | | | | | 29.2 | | | | 6.35 | | | | | | | | | | | | 30.2 | | | | 6.56 | | | | | | | | | | | | 31.3 | | | | 6.50 | | | | | | | | | | | | 32.1 | | | | 6.46 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total mortgage-backed securities | | | 145.6 | | | | 3.55 | | | | | | | | | | | | 147.1 | | | | 3.62 | | | | | | | | | | | | 143.2 | | | | 3.62 | | | | | | | | | | | | 133.3 | | | | 3.66 | | | | | | | | | | | | 127.5 | | | | 3.68 | | | | | |
Other debt and equity securities | | | 49.2 | | | | 3.59 | | | | | | | | | | | | 55.4 | | | | 3.43 | | | | | | | | | | | | 55.4 | | | | 3.27 | | | | | | | | | | | | 55.5 | | | | 3.84 | | | | | | | | | | | | 53.7 | | | | 3.58 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total available-for-sale securities | | | 244.0 | | | | 3.65 | | | | | | | | | | | | 251.1 | | | | 3.65 | | | | | | | | | | | | 246.0 | | | | 3.61 | | | | | | | | | | | | 234.8 | | | | 3.77 | | | | | | | | | | | | 225.9 | | | | 3.70 | | | | | |
Held-to-maturity securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Securities of U.S. Treasury and federal agencies | | | 1.1 | | | | 2.18 | | | | | | | | | | | | - | | | | - | | | | | | | | | | | | - | | | | - | | | | | | | | | | | | - | | | | - | | | | | | | | | | | | - | | | | - | | | | | |
Federal agency mortgage-backed securities | | | 6.2 | | | | 3.11 | | | | | | | | | | | | 2.7 | | | | 3.11 | | | | | | | | | | | | - | | | | - | | | | | | | | | | | | - | | | | - | | | | | | | | | | | | - | | | | - | | | | | |
Other debt securities | | | 6.4 | | | | 1.86 | | | | | | | | | | | | 0.1 | | | | 1.99 | | | | | | | | | | | | - | | | | - | | | | | | | | | | | | - | | | | - | | | | | | | | | | | | - | | | | - | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total held-to-maturity securities | | | 13.7 | | | | 2.45 | | | | | | | | | | | | 2.8 | | | | 3.09 | | | | | | | | | | | | - | | | | - | | | | | | | | | | | | - | | | | - | | | | | | | | | | | | - | | | | - | | | | | |
Mortgages held for sale | | | 16.6 | | | | 4.11 | | | | | | | | | | | | 21.4 | | | | 4.13 | | | | | | | | | | | | 33.2 | | | | 3.86 | | | | | | | | | | | | 43.4 | | | | 3.48 | | | | | | | | | | | | 43.3 | | | | 3.42 | | | | | |
Loans held for sale | | | 0.1 | | | | 6.28 | | | | | | | | | | | | 0.1 | | | | 8.21 | | | | | | | | | | | | 0.2 | | | | 7.25 | | | | | | | | | | | | 0.2 | | | | 7.85 | | | | | | | | | | | | 0.1 | | | | 8.83 | | | | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial (3) | | | 193.9 | | | | 3.43 | | | | | | | | | | | | 189.9 | | | | 3.54 | | | | | | | | | | | | 185.8 | | | | 3.63 | | | | | | | | | | | | 184.3 | | | | 3.73 | | | | | | | | | | | | 183.1 | | | | 3.76 | | | | | |
Real estate mortgage | | | 107.8 | | | | 3.52 | | | | | | | | | | | | 105.8 | | | | 3.85 | | | | | | | | | | | | 104.6 | | | | 4.12 | | | | | | | | | | | | 105.3 | | | | 3.92 | | | | | | | | | | | | 106.2 | | | | 3.84 | | | | | |
Real estate construction | | | 16.9 | | | | 4.37 | | | | | | | | | | | | 16.6 | | | | 4.79 | | | | | | | | | | | | 16.2 | | | | 4.43 | | | | | | | | | | | | 16.4 | | | | 5.02 | | | | | | | | | | | | 16.6 | | | | 4.84 | | | | | |
Lease financing | | | 11.9 | | | | 6.15 | | | | | | | | | | | | 11.7 | | | | 5.70 | | | | | | | | | | | | 11.7 | | | | 5.29 | | | | | | | | | | | | 12.3 | | | | 6.66 | | | | | | | | | | | | 12.4 | | | | 6.78 | | | | | |
Foreign (3) | | | 47.9 | | | | 2.21 | | | | | | | | | | | | 46.6 | | | | 2.24 | | | | | | | | | | | | 44.8 | | | | 2.09 | | | | | | | | | | | | 42.3 | | | | 2.23 | | | | | | | | | | | | 39.9 | | | | 2.16 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total commercial (3) | | | 378.4 | | | | 3.43 | | | | | | | | | | | | 370.6 | | | | 3.59 | | | | | | | | | | | | 363.1 | | | | 3.67 | | | | | | | | | | | | 360.6 | | | | 3.77 | | | | | | | | | | | | 358.2 | | | | 3.76 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate 1-4 family first mortgage | | | 259.5 | | | | 4.17 | | | | | | | | | | | | 257.2 | | | | 4.15 | | | | | | | | | | | | 254.1 | | | | 4.20 | | | | | | | | | | | | 252.6 | | | | 4.23 | | | | | | | | | | | | 252.0 | | | | 4.29 | | | | | |
Real estate 1-4 family junior lien mortgage | | | 65.0 | | | | 4.30 | | | | | | | | | | | | 66.8 | | | | 4.29 | | | | | | | | | | | | 68.8 | | | | 4.30 | | | | | | | | | | | | 71.4 | | | | 4.29 | | | | | | | | | | | | 74.1 | | | | 4.28 | | | | | |
Credit card | | | 26.2 | | | | 12.32 | | | | | | | | | | | | 25.9 | | | | 12.23 | | | | | | | | | | | | 25.0 | | | | 12.45 | | | | | | | | | | | | 24.0 | | | | 12.55 | | | | | | | | | | | | 24.1 | | | | 12.62 | | | | | |
Automobile | | | 51.8 | | | | 6.50 | | | | | | | | | | | | 50.2 | | | | 6.70 | | | | | | | | | | | | 49.1 | | | | 6.85 | | | | | | | | | | | | 47.9 | | | | 7.05 | | | | | | | | | | | | 46.6 | | | | 7.20 | | | | | |
Other revolving credit and installment | | | 42.9 | | | | 5.00 | | | | | | | | | | | | 42.6 | | | | 4.94 | | | | | | | | | | | | 42.0 | | | | 4.83 | | | | | | | | | | | | 41.9 | | | | 4.74 | | | | | | | | | | | | 41.7 | | | | 4.70 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total consumer | | | 445.4 | | | | 5.02 | | | | | | | | | | | | 442.7 | | | | 5.01 | | | | | | | | | | | | 439.0 | | | | 5.04 | | | | | | | | | | | | 437.8 | | | | 5.05 | | | | | | | | | | | | 438.5 | | | | 5.10 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans (3) | | | 823.8 | | | | 4.29 | | | | | | | | | | | | 813.3 | | | | 4.36 | | | | | | | | | | | | 802.1 | | | | 4.42 | | | | | | | | | | | | 798.4 | | | | 4.47 | | | | | | | | | | | | 796.7 | | | | 4.49 | | | | | |
Other | | | 4.6 | | | | 5.72 | | | | | | | | | | | | 4.7 | | | | 5.22 | | | | | | | | | | | | 4.3 | | | | 5.62 | | | | | | | | | | | | 4.2 | | | | 5.55 | | | | | | | | | | | | 4.3 | | | | 5.19 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total earning assets (3) | | $ | 1,364.3 | | | | 3.49 | | | | % | | | $ | | | | | 1,344.1 | | | | 3.57 | | | | % | | | $ | | | | | 1,286.5 | | | | 3.71 | | | | % | | | $ | | | | | 1,264.1 | | | | 3.81 | | | | % | | | $ | | | | | 1,233.4 | | | | 3.87 | | | | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Funding sources | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing checking | | $ | 36.8 | | | | 0.07 | | | | % | | | $ | | | | | 35.2 | | | | 0.07 | | | | % | | | $ | | | | | 34.5 | | | | 0.06 | | | | % | | | $ | | | | | 40.4 | | | | 0.06 | | | | % | | | $ | | | | | 32.2 | | | | 0.06 | | | | % | |
Market rate and other savings | | | 579.0 | | | | 0.07 | | | | | | | | | | | | 568.7 | | | | 0.08 | | | | | | | | | | | | 553.1 | | | | 0.08 | | | | | | | | | | | | 541.8 | | | | 0.08 | | | | | | | | | | | | 537.5 | | | | 0.09 | | | | | |
Savings certificates | | | 40.5 | | | | 0.89 | | | | | | | | | | | | 43.1 | | | | 0.94 | | | | | | | | | | | | 47.3 | | | | 1.08 | | | | | | | | | | | | 52.6 | | | | 1.23 | | | | | | | | | | | | 55.2 | | | | 1.22 | | | | | |
Other time deposits | | | 45.8 | | | | 0.42 | | | | | | | | | | | | 39.7 | �� | | | 0.48 | | | | | | | | | | | | 30.4 | | | | 0.62 | | | | | | | | | | | | 26.0 | | | | 0.76 | | | | | | | | | | | | 15.9 | | | | 1.25 | | | | | |
Deposits in foreign offices | | | 91.1 | | | | 0.14 | | | | | | | | | | | | 86.3 | | | | 0.15 | | | | | | | | | | | | 81.1 | | | | 0.15 | | | | | | | | | | | | 68.9 | | | | 0.15 | | | | | | | | | | | | 71.1 | | | | 0.14 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing deposits | | | 793.2 | | | | 0.14 | | | | | | | | | | | | 773.0 | | | | 0.15 | | | | | | | | | | | | 746.4 | | | | 0.17 | | | | | | | | | | | | 729.7 | | | | 0.19 | | | | | | | | | | | | 711.9 | | | | 0.21 | | | | | |
Short-term borrowings | | | 54.5 | | | | 0.09 | | | | | | | | | | | | 52.3 | | | | 0.12 | | | | | | | | | | | | 53.4 | | | | 0.08 | | | | | | | | | | | | 57.8 | | | | 0.14 | | | | | | | | | | | | 55.4 | | | | 0.17 | | | | | |
Long-term debt | | | 153.8 | | | | 1.62 | | | | | | | | | | | | 153.5 | | | | 1.65 | | | | | | | | | | | | 133.4 | | | | 1.86 | | | | | | | | | | | | 125.5 | | | | 2.02 | | | | | | | | | | | | 127.1 | | | | 2.20 | | | | | |
Other liabilities | | | 12.9 | | | | 2.72 | | | | | | | | | | | | 12.8 | | | | 2.70 | | | | | | | | | | | | 12.1 | | | | 2.64 | | | | | | | | | | | | 13.3 | | | | 2.25 | | | | | | | | | | | | 11.6 | | | | 2.24 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total interest-bearing liabilities | | | 1,014.4 | | | | 0.40 | | | | | | | | | | | | 991.6 | | | | 0.42 | | | | | | | | | | | | 945.3 | | | | 0.43 | | | | | | | | | | | | 926.3 | | | | 0.47 | | | | | | | | | | | | 906.0 | | | | 0.51 | | | | | |
Portion of noninterest-bearing funding sources (3) | | | 349.9 | | | | - | | | | | | | | | | | | 352.5 | | | | - | | | | | | | | | | | | 341.2 | | | | - | | | | | | | | | | | | 337.8 | | | | - | | | | | | | | | | | | 327.4 | | | | - | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total funding sources (3) | | $ | 1,364.3 | | | | 0.29 | | | | | | | $ | | | | | 1,344.1 | | | | 0.30 | | | | | | | $ | | | | | 1,286.5 | | | | 0.32 | | | | | | | $ | | | | | 1,264.1 | | | | 0.34 | | | | | | | $ | | | | | 1,233.4 | | | | 0.38 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest margin on a taxable-equivalent basis (3) | | | | | | | 3.20 | | | | % | | | | | | | | | | | | 3.27 | | | | % | | | | | | | | | | | | 3.39 | | | | % | | | | | | | | | | | | 3.47 | | | | % | | | | | | | | | | | | 3.49 | | | | % | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Noninterest-earning assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 16.4 | | | | | | | | | | | | | | | | 16.0 | | | | | | | | | | | | | | | | 16.4 | | | | | | | | | | | | | | | | 16.2 | | | | | | | | | | | | | | | | 16.5 | | | | | | | | | |
Goodwill | | | 25.6 | | | | | | | | | | | | | | | | 25.6 | | | | | | | | | | | | | | | | 25.6 | | | | | | | | | | | | | | | | 25.6 | | | | | | | | | | | | | | | | 25.6 | | | | | | | | | |
Other | | | 119.6 | | | | | | | | | | | | | | | | 120.0 | | | | | | | | | | | | | | | | 118.4 | | | | | | | | | | | | | | | | 121.3 | | | | | | | | | | | | | | | | 127.4 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total noninterest-earnings assets | | $ | 161.6 | | | | | | | | | | | | | | | | 161.6 | | | | | | | | | | | | | | | | 160.4 | | | | | | | | | | | | | | | | 163.1 | | | | | | | | | | | | | | | | 169.5 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing funding sources | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits | | $ | 284.1 | | | | | | | | | | | | | | | | 287.4 | | | | | | | | | | | | | | | | 279.2 | | | | | | | | | | | | | | | | 280.0 | | | | | | | | | | | | | | | | 274.2 | | | | | | | | | |
Other liabilities (3) | | | 52.9 | | | | | | | | | | | | | | | | 57.1 | | | | | | | | | | | | | | | | 57.3 | | | | | | | | | | | | | | | | 56.2 | | | | | | | | | | | | | | | | 62.3 | | | | | | | | | |
Total equity | | | 174.5 | | | | | | | | | | | | | | | | 169.6 | | | | | | | | | | | | | | | | 165.1 | | | | | | | | | | | | | | | | 164.7 | | | | | | | | | | | | | | | | 160.4 | | | | | | | | | |
Noninterest-bearing funding sources used to fund earning assets (3) | | | (349.9 | ) | | | | | | | | | | | | | | | (352.5 | ) | | | | | | | | | | | | | | | (341.2 | ) | | | | | | | | | | | | | | | (337.8 | ) | | | | | | | | | | | | | | | (327.4 | ) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net noninterest-bearing funding sources | | $ | 161.6 | | | | | | | | | | | | | | | | 161.6 | | | | | | | | | | | | | | | | 160.4 | | | | | | | | | | | | | | | | 163.1 | | | | | | | | | | | | | | | | 169.5 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets (3) | | $ | 1,525.9 | | | | | | | | | | | | | | | | 1,505.7 | | | | | | | | | | | | | | | | 1,446.9 | | | | | | | | | | | | | | | | 1,427.2 | | | | | | | | | | | | | | | | 1,402.9 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Our average prime rate was 3.25% for quarters ended March 31, 2014, and December 31, September 30, June 30 and March 31, 2013. The average three-month London Interbank Offered Rate (LIBOR) was 0.24%, 0.24%, 0.26%, 0.28% and 0.29% for the same quarters, respectively. |
(2) | Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost for the periods presented. |
(3) | Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information. |
24
Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
| | | | | | | | | | | | |
| |
| | |
| | Quarter ended March 31, | | | % | |
| | | | | | | | |
| | | |
(in millions) | | 2014 | | | 2013 | | | Change | |
| |
| | | |
Service charges on deposit accounts | | $ | 1,215 | | | | 1,214 | | | | - | % |
Trust and investment fees: | | | | | | | | | | | | |
Brokerage advisory, commissions and other fees | | | 2,241 | | | | 2,050 | | | | 9 | |
Trust and investment management | | | 844 | | | | 799 | | | | 6 | |
Investment banking | | | 327 | | | | 353 | | | | (7) | |
| | | | | |
| | | |
Total trust and investment fees | | | 3,412 | | | | 3,202 | | | | 7 | |
| | | | | |
| | | |
Card fees | | | 784 | | | | 738 | | | | 6 | |
Other fees: | | | | | | | | | | | | |
Charges and fees on loans | | | 367 | | | | 384 | | | | (4) | |
Merchant transaction processing fees | | | 172 | | | | 154 | | | | 12 | |
Cash network fees | | | 120 | | | | 117 | | | | 3 | |
Commercial real estate brokerage commissions | | | 72 | | | | 45 | | | | 60 | |
Letters of credit fees | | | 96 | | | | 109 | | | | (12) | |
All other fees | | | 220 | | | | 225 | | | | (2) | |
| | | | | |
| | | |
Total other fees | | | 1,047 | | | | 1,034 | | | | 1 | |
| | | | | |
| | | |
Mortgage banking: | | | | | | | | | | | | |
Servicing income, net | | | 938 | | | | 314 | | | | 199 | |
Net gains on mortgage loan origination/sales activities | | | 572 | | | | 2,480 | | | | (77) | |
| | | | | |
| | | |
Total mortgage banking | | | 1,510 | | | | 2,794 | | | | (46) | |
| | | | | |
| | | |
Insurance | | | 432 | | | | 463 | | | | (7) | |
Net gains from trading activities | | | 432 | | | | 570 | | | | (24) | |
Net gains on debt securities | | | 83 | | | | 45 | | | | 84 | |
Net gains from equity investments | | | 847 | | | | 113 | | | | 650 | |
Lease income | | | 133 | | | | 130 | | | | 2 | |
Life insurance investment income | | | 132 | | | | 145 | | | | (9) | |
All other | | | (17) | | | | 312 | | | | NM | |
| | | | | |
| | | |
Total | | $ | 10,010 | | | | 10,760 | | | | (7) | |
| |
NM - Not meaningful NONINTEREST EXPENSE | | | | | | | | | | | | |
| |
| | |
| | Quarter ended March 31, | | | % | |
| | | | | | | | |
| | | |
(in millions) | | 2014 | | | 2013 | | | Change | |
| |
Salaries | | $ | 3,728 | | | | 3,663 | | | | 2 | % |
Commission and incentive compensation | | | 2,416 | | | | 2,577 | | | | (6) | |
Employee benefits | | | 1,372 | | | | 1,583 | | | | (13) | |
Equipment | | | 490 | | | | 528 | | | | (7) | |
Net occupancy | | | 742 | | | | 719 | | | | 3 | |
Core deposit and other intangibles | | | 341 | | | | 377 | | | | (10) | |
FDIC and other deposit assessments | | | 243 | | | | 292 | | | | (17) | |
Outside professional services | | | 559 | | | | 535 | | | | 4 | |
Outside data processing | | | 241 | | | | 233 | | | | 3 | |
Contract services | | | 234 | | | | 207 | | | | 13 | |
Travel and entertainment | | | 219 | | | | 213 | | | | 3 | |
Operating losses | | | 159 | | | | 157 | | | | 1 | |
Postage, stationery and supplies | | | 191 | | | | 199 | | | | (4) | |
Advertising and promotion | | | 118 | | | | 105 | | | | 12 | |
Foreclosed assets | | | 132 | | | | 195 | | | | (32) | |
Telecommunications | | | 114 | | | | 123 | | | | (7) | |
Insurance | | | 125 | | | | 137 | | | | (9) | |
Operating leases | | | 50 | | | | 48 | | | | 4 | |
All other | | | 474 | | | | 509 | | | | (7) | |
| | | | | |
| | | |
Total | | $ | 11,948 | | | | 12,400 | | | | (4 | ) |
| |
25
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONINTEREST INCOME
| | | | | | | | | | | | | | | | | | | | |
| |
| |
| | Quarter ended | |
| | | | |
| | | | | |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
| | | | | |
Service charges on deposit accounts | | $ | 1,215 | | | | 1,283 | | | | 1,278 | | | | 1,248 | | | | 1,214 | |
Trust and investment fees: | | | | | | | | | | | | | | | | | | | | |
Brokerage advisory, commissions and other fees | | | 2,241 | | | | 2,150 | | | | 2,068 | | | | 2,127 | | | | 2,050 | |
Trust and investment management | | | 844 | | | | 850 | | | | 811 | | | | 829 | | | | 799 | |
Investment banking | | | 327 | | | | 458 | | | | 397 | | | | 538 | | | | 353 | |
| |
| | | | | |
Total trust and investment fees | | | 3,412 | | | | 3,458 | | | | 3,276 | | | | 3,494 | | | | 3,202 | |
| |
| | | | | |
Card fees | | | 784 | | | | 827 | | | | 813 | | | | 813 | | | | 738 | |
Other fees: | | | | | | | | | | | | | | | | | | | | |
Charges and fees on loans | | | 367 | | | | 379 | | | | 390 | | | | 387 | | | | 384 | |
Merchant transaction processing fees | | | 172 | | | | 172 | | | | 169 | | | | 174 | | | | 154 | |
Cash network fees | | | 120 | | | | 122 | | | | 129 | | | | 125 | | | | 117 | |
Commercial real estate brokerage commissions | | | 72 | | | | 129 | | | | 91 | | | | 73 | | | | 45 | |
Letters of credit fees | | | 96 | | | | 99 | | | | 100 | | | | 102 | | | | 109 | |
All other fees | | | 220 | | | | 218 | | | | 219 | | | | 228 | | | | 225 | |
| |
| | | | | |
Total other fees | | | 1,047 | | | | 1,119 | | | | 1,098 | | | | 1,089 | | | | 1,034 | |
| |
| | | | | |
Mortgage banking: | | | | | | | | | | | | | | | | | | | | |
Servicing income, net | | | 938 | | | | 709 | | | | 504 | | | | 393 | | | | 314 | |
Net gains on mortgage loan origination/sales activities | | | 572 | | | | 861 | | | | 1,104 | | | | 2,409 | | | | 2,480 | |
| |
| | | | | |
Total mortgage banking | | | 1,510 | | | | 1,570 | | | | 1,608 | | | | 2,802 | | | | 2,794 | |
| |
| | | | | |
Insurance | | | 432 | | | | 453 | | | | 413 | | | | 485 | | | | 463 | |
Net gains from trading activities | | | 432 | | | | 325 | | | | 397 | | | | 331 | | | | 570 | |
Net gains (losses) on debt securities | | | 83 | | | | (14) | | | | (6) | | | | (54) | | | | 45 | |
Net gains from equity investments | | | 847 | | | | 654 | | | | 502 | | | | 203 | | | | 113 | |
Lease income | | | 133 | | | | 148 | | | | 160 | | | | 225 | | | | 130 | |
Life insurance investment income | | | 132 | | | | 125 | | | | 154 | | | | 142 | | | | 145 | |
All other | | | (17) | | | | (86) | | | | 37 | | | | (150) | | | | 312 | |
| |
| | | | | |
Total | | $ | 10,010 | | | | 9,862 | | | | 9,730 | | | | 10,628 | | | | 10,760 | |
| |
FIVE QUARTER NONINTEREST EXPENSE
| | | | | | | | | | | | | | | | | | | | |
| |
| |
| | Quarter ended | |
| | | | |
| | | | | |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
Salaries | | $ | 3,728 | | | | 3,811 | | | | 3,910 | | | | 3,768 | | | | 3,663 | |
Commission and incentive compensation | | | 2,416 | | | | 2,347 | | | | 2,401 | | | | 2,626 | | | | 2,577 | |
Employee benefits | | | 1,372 | | | | 1,160 | | | | 1,172 | | | | 1,118 | | | | 1,583 | |
Equipment | | | 490 | | | | 567 | | | | 471 | | | | 418 | | | | 528 | |
Net occupancy | | | 742 | | | | 732 | | | | 728 | | | | 716 | | | | 719 | |
Core deposit and other intangibles | | | 341 | | | | 375 | | | | 375 | | | | 377 | | | | 377 | |
FDIC and other deposit assessments | | | 243 | | | | 196 | | | | 214 | | | | 259 | | | | 292 | |
Outside professional services | | | 559 | | | | 754 | | | | 623 | | | | 607 | | | | 535 | |
Outside data processing | | | 241 | | | | 264 | | | | 251 | | | | 235 | | | | 233 | |
Contract services | | | 234 | | | | 261 | | | | 241 | | | | 226 | | | | 207 | |
Travel and entertainment | | | 219 | | | | 234 | | | | 209 | | | | 229 | | | | 213 | |
Operating losses | | | 159 | | | | 181 | | | | 195 | | | | 288 | | | | 157 | |
Postage, stationery and supplies | | | 191 | | | | 189 | | | | 184 | | | | 184 | | | | 199 | |
Advertising and promotion | | | 118 | | | | 165 | | | | 157 | | | | 183 | | | | 105 | |
Foreclosed assets | | | 132 | | | | 103 | | | | 161 | | | | 146 | | | | 195 | |
Telecommunications | | | 114 | | | | 118 | | | | 116 | | | | 125 | | | | 123 | |
Insurance | | | 125 | | | | 59 | | | | 98 | | | | 143 | | | | 137 | |
Operating leases | | | 50 | | | | 51 | | | | 56 | | | | 49 | | | | 48 | |
All other | | | 474 | | | | 518 | | | | 540 | | | | 558 | | | | 509 | |
| |
| | | | | |
Total | | $ | 11,948 | | | | 12,085 | | | | 12,102 | | | | 12,255 | | | | 12,400 | |
| |
26
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
| | | | | | | | | | | | |
| |
| | Mar. 31, | | | Dec. 31, | | | % | |
(in millions, except shares) | | 2014 | | | 2013 | | | Change | |
| |
| | | |
Assets | | | | | | | | | | | | |
Cash and due from banks | | $ | 19,731 | | | | 19,919 | | | | (1) | % |
Federal funds sold, securities purchased under resale agreements and other short-term investments | | | 222,781 | | | | 213,793 | | | | 4 | |
Trading assets | | | 63,753 | | | | 62,813 | | | | 1 | |
Investment securities: | | | | | | | | | | | | |
Available-for-sale, at fair value | | | 252,665 | | | | 252,007 | | | | - | |
Held-to-maturity, at cost (fair value $17,621 and $12,247) | | | 17,662 | | | | 12,346 | | | | 43 | |
Mortgages held for sale (includes $12,994 and $13,879 carried at fair value) (1) | | | 16,233 | | | | 16,763 | | | | (3) | |
Loans held for sale (includes $1 and $1 carried at fair value) (1) | | | 91 | | | | 133 | | | | (32) | |
| | | |
Loans (includes $5,959 and $5,995 carried at fair value) (1)(2) | | | 826,443 | | | | 822,286 | | | | 1 | |
Allowance for loan losses | | | (13,695) | | | | (14,502) | | | | (6) | |
| | | | | |
| | | |
Net loans (2) | | | 812,748 | | | | 807,784 | | | | 1 | |
| | | | | |
Mortgage servicing rights: | | | | | | | | | | | | |
Measured at fair value | | | 14,953 | | | | 15,580 | | | | (4) | |
Amortized | | | 1,219 | | | | 1,229 | | | | (1) | |
Premises and equipment, net | | | 9,020 | | | | 9,156 | | | | (1) | |
Goodwill | | | 25,637 | | | | 25,637 | | | | - | |
Other assets (includes $1,933 and $1,386 carried at fair value) (1) | | | 90,214 | | | | 86,342 | | | | 4 | |
| | | | | |
| | | |
Total assets (2) | | $ | 1,546,707 | | | | 1,523,502 | | | | 2 | |
| | | | | |
| | | |
Liabilities | | | | | | | | | | | | |
Noninterest-bearing deposits | | $ | 294,863 | | | | 288,117 | | | | 2 | |
Interest-bearing deposits | | | 799,713 | | | | 791,060 | | | | 1 | |
| | | | | |
Total deposits | | | 1,094,576 | | | | 1,079,177 | | | | 1 | |
Short-term borrowings | | | 57,061 | | | | 53,883 | | | | 6 | |
Accrued expenses and other liabilities (2) | | | 65,179 | | | | 66,436 | | | | (2) | |
Long-term debt | | | 153,422 | | | | 152,998 | | | | - | |
| | | | | |
| | | |
Total liabilities (2) | | | 1,370,238 | | | | 1,352,494 | | | | 1 | |
| | | | | |
| | | |
Equity | | | | | | | | | | | | |
| | | |
Wells Fargo stockholders’ equity: | | | | | | | | | | | | |
Preferred stock | | | 17,179 | | | | 16,267 | | | | 6 | |
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares and 5,481,811,474 shares | | | 9,136 | | | | 9,136 | | | | - | |
Additional paid-in capital | | | 60,618 | | | | 60,296 | | | | 1 | |
Retained earnings | | | 96,368 | | | | 92,361 | | | | 4 | |
Cumulative other comprehensive income | | | 2,752 | | | | 1,386 | | | | 99 | |
Treasury stock – 216,084,768 shares and 224,648,769 shares | | | (8,206) | | | | (8,104) | | | | 1 | |
Unearned ESOP shares | | | (2,193) | | | | (1,200) | | | | 83 | |
| | | | | |
Total Wells Fargo stockholders’ equity | | | 175,654 | | | | 170,142 | | | | 3 | |
Noncontrolling interests | | | 815 | | | | 866 | | | | (6) | |
| | | | | |
| | | |
Total equity | | | 176,469 | | | | 171,008 | | | | 3 | |
| | | | | |
| | | |
Total liabilities and equity (2) | | $ | 1,546,707 | | | | 1,523,502 | | | | 2 | |
| |
(1) | Parenthetical amounts represent assets and liabilities for which we have elected the fair value option. |
(2) | Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information. |
27
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE SHEET
| | | | | | | | | | | | | | | | | | | | |
| |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
| | | | | |
Assets | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | $ | 19,731 | | | | 19,919 | | | | 18,928 | | | | 17,939 | | | | 16,217 | |
Federal funds sold, securities purchased under resale agreements and other short-term investments | | | 222,781 | | | | 213,793 | | | | 182,036 | | | | 148,665 | | | | 143,804 | |
Trading assets | | | 63,753 | | | | 62,813 | | | | 60,203 | | | | 58,619 | | | | 62,274 | |
Investment securities: | | | | | | | | | | | | | | | | | | | | |
Available-for-sale, at fair value | | | 252,665 | | | | 252,007 | | | | 259,399 | | | | 249,439 | | | | 248,160 | |
Held-to-maturity, at cost | | | 17,662 | | | | 12,346 | | | | - | | | | - | | | | - | |
Mortgages held for sale | | | 16,233 | | | | 16,763 | | | | 25,395 | | | | 38,785 | | | | 46,702 | |
Loans held for sale | | | 91 | | | | 133 | | | | 204 | | | | 190 | | | | 194 | |
| | | | | |
Loans (1) | | | 826,443 | | | | 822,286 | | | | 809,135 | | | | 799,867 | | | | 798,362 | |
Allowance for loan losses | | | (13,695) | | | | (14,502) | | | | (15,159) | | | | (16,144) | | | | (16,711) | |
| |
| | | | | |
Net loans (1) | | | 812,748 | | | | 807,784 | | | | 793,976 | | | | 783,723 | | | | 781,651 | |
| |
Mortgage servicing rights: | | | | | | | | | | | | | | | | | | | | |
Measured at fair value | | | 14,953 | | | | 15,580 | | | | 14,501 | | | | 14,185 | | | | 12,061 | |
Amortized | | | 1,219 | | | | 1,229 | | | | 1,204 | | | | 1,176 | | | | 1,181 | |
Premises and equipment, net | | | 9,020 | | | | 9,156 | | | | 9,120 | | | | 9,190 | | | | 9,263 | |
Goodwill | | | 25,637 | | | | 25,637 | | | | 25,637 | | | | 25,637 | | | | 25,637 | |
Other assets | | | 90,214 | | | | 86,342 | | | | 94,262 | | | | 90,908 | | | | 87,886 | |
| |
| | | | | |
Total assets (1) | | $ | 1,546,707 | | | | 1,523,502 | | | | 1,484,865 | | | | 1,438,456 | | | | 1,435,030 | |
| |
| | | | | |
Liabilities | | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing deposits | | $ | 294,863 | | | | 288,117 | | | | 279,911 | | | | 277,648 | | | | 278,909 | |
Interest-bearing deposits | | | 799,713 | | | | 791,060 | | | | 761,960 | | | | 743,937 | | | | 731,824 | |
| |
Total deposits | | | 1,094,576 | | | | 1,079,177 | | | | 1,041,871 | | | | 1,021,585 | | | | 1,010,733 | |
Short-term borrowings | | | 57,061 | | | | 53,883 | | | | 53,851 | | | | 56,983 | | | | 60,693 | |
Accrued expenses and other liabilities (1) | | | 65,179 | | | | 66,436 | | | | 69,118 | | | | 72,736 | | | | 74,018 | |
Long-term debt | | | 153,422 | | | | 152,998 | | | | 151,212 | | | | 123,375 | | | | 126,191 | |
| |
| | | | | |
Total liabilities (1) | | | 1,370,238 | | | | 1,352,494 | | | | 1,316,052 | | | | 1,274,679 | | | | 1,271,635 | |
| |
| | | | | |
Equity | | | | | | | | | | | | | | | | | | | | |
Wells Fargo stockholders’ equity: | | | | | | | | | | | | | | | | | | | | |
Preferred stock | | | 17,179 | | | | 16,267 | | | | 15,549 | | | | 13,988 | | | | 14,412 | |
Common stock | | | 9,136 | | | | 9,136 | | | | 9,136 | | | | 9,136 | | | | 9,136 | |
Additional paid-in capital | | | 60,618 | | | | 60,296 | | | | 60,188 | | | | 59,945 | | | | 60,136 | |
Retained earnings | | | 96,368 | | | | 92,361 | | | | 88,625 | | | | 84,923 | | | | 81,264 | |
Cumulative other comprehensive income | | | 2,752 | | | | 1,386 | | | | 2,289 | | | | 1,797 | | | | 5,145 | |
Treasury stock | | | (8,206) | | | | (8,104) | | | | (7,290) | | | | (5,858) | | | | (6,036) | |
Unearned ESOP shares | | | (2,193) | | | | (1,200) | | | | (1,332) | | | | (1,510) | | | | (1,971) | |
| |
| | | | | |
Total Wells Fargo stockholders’ equity | | | 175,654 | | | | 170,142 | | | | 167,165 | | | | 162,421 | | | | 162,086 | |
Noncontrolling interests | | | 815 | | | | 866 | | | | 1,648 | | | | 1,356 | | | | 1,309 | |
| |
| | | | | |
Total equity | | | 176,469 | | | | 171,008 | | | | 168,813 | | | | 163,777 | | | | 163,395 | |
| |
| | | | | |
Total liabilities and equity (1) | | $ | 1,546,707 | | | | 1,523,502 | | | | 1,484,865 | | | | 1,438,456 | | | | 1,435,030 | |
| |
(1) | Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information. |
28
Wells Fargo & Company and Subsidiaries
FIVE QUARTER INVESTMENT SECURITIES
| | | | | | | | | | | | | | | | | | | | |
| |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
Available-for-sale securities: | | | | | | | | | | | | | | | | | | | | |
Securities of U.S. Treasury and federal agencies | | $ | 6,359 | | | | 6,280 | | | | 6,406 | | | | 6,383 | | | | 6,884 | |
Securities of U.S. states and political subdivisions | | | 44,140 | | | | 42,536 | | | | 42,293 | | | | 40,890 | | | | 40,456 | |
Mortgage-backed securities: | | | | | | | | | | | | | | | | | | | | |
Federal agencies | | | 118,090 | | | | 117,591 | | | | 118,963 | | | | 110,561 | | | | 105,472 | |
Residential and commercial | | | 30,362 | | | | 31,200 | | | | 32,329 | | | | 33,423 | | | | 35,179 | |
| |
| | | | | |
Total mortgage-backed securities | | | 148,452 | | | | 148,791 | | | | 151,292 | | | | 143,984 | | | | 140,651 | |
Other debt securities | | | 50,253 | | | | 51,015 | | | | 55,828 | | | | 55,425 | | | | 57,390 | |
| |
| | | | | |
Total available-for-sale debt securities | | | 249,204 | | | | 248,622 | | | | 255,819 | | | | 246,682 | | | | 245,381 | |
Marketable equity securities | | | 3,461 | | | | 3,385 | | | | 3,580 | | | | 2,757 | | | | 2,779 | |
| |
| | | | | |
Total available-for-sale securities | | | 252,665 | | | | 252,007 | | | | 259,399 | | | | 249,439 | | | | 248,160 | |
| |
| | | | | |
Held-to-maturity securities: | | | | | | | | | | | | | | | | | | | | |
Securities of U.S. Treasury and federal agencies | | | 5,861 | | | | - | | | | - | | | | - | | | | - | |
Federal agency mortgage-backed securities | | | 6,199 | | | | 6,304 | | | | - | | | | - | | | | - | |
Other debt securities | | | 5,602 | | | | 6,042 | | | | - | | | | - | | | | - | |
| |
| | | | | |
Total held-to-maturity debt securities | | | 17,662 | | | | 12,346 | | | | - | | | | - | | | | - | |
| |
| | | | | |
Total investment securities | | $ | 270,327 | | | | 264,353 | | | | 259,399 | | | | 249,439 | | | | 248,160 | |
| |
FIVE QUARTER LOANS
| | | | | | | | | | | | | | | | | | | | |
| |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
Commercial: | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial (1) | | $ | 196,768 | | | | 193,811 | | | | 188,593 | | | | 186,692 | | | | 184,039 | |
Real estate mortgage | | | 107,969 | | | | 107,100 | | | | 105,540 | | | | 104,673 | | | | 106,119 | |
Real estate construction | | | 16,615 | | | | 16,747 | | | | 16,413 | | | | 16,442 | | | | 16,650 | |
Lease financing | | | 11,841 | | | | 12,034 | | | | 11,688 | | | | 11,766 | | | | 12,402 | |
Foreign (1)(2) | | | 48,088 | | | | 47,551 | | | | 46,621 | | | | 41,792 | | | | 40,900 | |
| |
| | | | | |
Total commercial (1) | | | 381,281 | | | | 377,243 | | | | 368,855 | | | | 361,365 | | | | 360,110 | |
| |
Consumer: | | | | | | | | | | | | | | | | | | | | |
Real estate 1-4 family first mortgage | | | 259,478 | | | | 258,497 | | | | 254,924 | | | | 252,841 | | | | 252,307 | |
Real estate 1-4 family junior lien mortgage | | | 63,965 | | | | 65,914 | | | | 67,675 | | | | 70,059 | | | | 72,543 | |
Credit card | | | 26,061 | | | | 26,870 | | | | 25,448 | | | | 24,815 | | | | 24,120 | |
Automobile | | | 52,607 | | | | 50,808 | | | | 49,693 | | | | 48,648 | | | | 47,259 | |
Other revolving credit and installment | | | 43,051 | | | | 42,954 | | | | 42,540 | | | | 42,139 | | | | 42,023 | |
| |
| | | | | |
Total consumer | | | 445,162 | | | | 445,043 | | | | 440,280 | | | | 438,502 | | | | 438,252 | |
| |
| | | | | |
Total loans (1)(3) | | $ | 826,443 | | | | 822,286 | | | | 809,135 | | | | 799,867 | | | | 798,362 | |
| |
(1) | Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information. |
(2) | Substantially all of our foreign loan portfolio is commercial loans. Loans are classified as foreign primarily based on whether the borrower’s primary address is outside of the United States. |
(3) | Includes $25.9 billion, $26.7 billion, $27.8 billion, $28.8 billion and $29.7 billion of purchased credit-impaired (PCI) loans at March 31, 2014, and December 31, September 30, June 30 and March 31, 2013, respectively. See the PCI loans table for detail of PCI loans. |
29
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS)
| | | | | | | | | | | | | | | | | | | | |
| |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
Nonaccrual loans: | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 630 | | | | 738 | | | | 809 | | | | 1,022 | | | | 1,193 | |
Real estate mortgage | | | 2,030 | | | | 2,252 | | | | 2,496 | | | | 2,708 | | | | 3,098 | |
Real estate construction | | | 296 | | | | 416 | | | | 517 | | | | 665 | | | | 870 | |
Lease financing | | | 31 | | | | 29 | | | | 17 | | | | 20 | | | | 25 | |
Foreign | | | 40 | | | | 40 | | | | 47 | | | | 40 | | | | 56 | |
| |
| | | | | |
Total commercial | | | 3,027 | | | | 3,475 | | | | 3,886 | | | | 4,455 | | | | 5,242 | |
| |
Consumer: | | | | | | | | | | | | | | | | | | | | |
Real estate 1-4 family first mortgage | | | 9,357 | | | | 9,799 | | | | 10,450 | | | | 10,705 | | | | 11,320 | |
Real estate 1-4 family junior lien mortgage | | | 2,072 | | | | 2,188 | | | | 2,333 | | | | 2,522 | | | | 2,712 | |
Automobile | | | 161 | | | | 173 | | | | 188 | | | | 200 | | | | 220 | |
Other revolving credit and installment | | | 33 | | | | 33 | | | | 36 | | | | 33 | | | | 32 | |
| |
Total consumer | | | 11,623 | | | | 12,193 | | | | 13,007 | | | | 13,460 | | | | 14,284 | |
| |
Total nonaccrual loans (1)(2)(3) | | | 14,650 | | | | 15,668 | | | | 16,893 | | | | 17,915 | | | | 19,526 | |
| |
As a percentage of total loans (4) | | | 1.77 | % | | | 1.91 | | | | 2.09 | | | | 2.24 | | | | 2.45 | |
Foreclosed assets: | | | | | | | | | | | | | | | | | | | | |
Government insured/guaranteed (5) | | $ | 2,302 | | | | 2,093 | | | | 1,781 | | | | 1,026 | | | | 969 | |
Non-government insured/guaranteed | | | 1,813 | | | | 1,844 | | | | 2,021 | | | | 2,114 | | | | 2,381 | |
| |
| | | | | |
Total foreclosed assets | | | 4,115 | | | | 3,937 | | | | 3,802 | | | | 3,140 | | | | 3,350 | |
| |
| | | | | |
Total nonperforming assets | | $ | 18,765 | | | | 19,605 | | | | 20,695 | | | | 21,055 | | | | 22,876 | |
| |
| | | | | |
As a percentage of total loans (4) | | | 2.27 | % | | | 2.38 | | | | 2.56 | | | | 2.63 | | | | 2.87 | |
| |
(1) | Includes nonaccrual mortgages held for sale and loans held for sale in their respective loan categories. |
(2) | Excludes PCI loans because they continue to earn interest income from accretable yield, independent of performance in accordance with their contractual terms. |
(3) | Real estate 1-4 family mortgage loans predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) and student loans predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program are not placed on nonaccrual status because they are insured or guaranteed. |
(4) | Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information. |
(5) | 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. Previous enhancements to loan modification programs and release of an FHA foreclosure moratorium contributed to elevated levels of foreclosed assets in the latter half of 2013. As a result, the increase in balance at March 31, 2014, reflects an industry slowdown in meeting U.S. Department of Housing and Urban Development (HUD) conveyance requirements due to industry resource constraints to deal with the elevated levels, as well as other factors, including an increase in foreclosures in states with longer redemption periods, longer occupant evacuation periods, increased maintenance required for aging foreclosures and longer repair authorization periods. |
30
Wells Fargo & Company and Subsidiaries
LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING
| | | | | | | | | | | | | | | | | | | | |
| |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
Loans 90 days or more past due and still accruing: | | | | | | | | | | | | | | | | | | | | |
Total (excluding PCI)(1): | | $ | 21,215 | | | | 23,219 | | | | 22,181 | | | | 22,197 | | | | 23,082 | |
Less: FHA insured/guaranteed by the VA (2)(3) | | | 19,405 | | | | 21,274 | | | | 20,214 | | | | 20,112 | | | | 20,745 | |
Less: Student loans guaranteed under the FFELP (4) | | | 860 | | | | 900 | | | | 917 | | | | 931 | | | | 977 | |
| |
| | | | | |
Total, not government insured/guaranteed | | $ | 950 | | | | 1,045 | | | | 1,050 | | | | 1,154 | | | | 1,360 | |
| |
By segment and class, not government insured/guaranteed: | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 11 | | | | 11 | | | | 125 | | | | 37 | | | | 47 | |
Real estate mortgage | | | 13 | | | | 35 | | | | 40 | | | | 175 | | | | 164 | |
Real estate construction | | | 69 | | | | 97 | | | | 1 | | | | 4 | | | | 47 | |
Foreign | | | 2 | | | | - | | | | 1 | | | | - | | | | 7 | |
| |
| | | | | |
Total commercial | | | 95 | | | | 143 | | | | 167 | | | | 216 | | | | 265 | |
| |
Consumer: | | | | | | | | | | | | | | | | | | | | |
Real estate 1-4 family first mortgage (3) | | | 333 | | | | 354 | | | | 383 | | | | 476 | | | | 563 | |
Real estate 1-4 family junior lien mortgage (3) | | | 88 | | | | 86 | | | | 89 | | | | 92 | | | | 112 | |
Credit card | | | 308 | | | | 321 | | | | 285 | | | | 263 | | | | 306 | |
Automobile | | | 41 | | | | 55 | | | | 48 | | | | 32 | | | | 33 | |
Other revolving credit and installment | | | 85 | | | | 86 | | | | 78 | | | | 75 | | | | 81 | |
| |
| | | | | |
Total consumer | | | 855 | | | | 902 | | | | 883 | | | | 938 | | | | 1,095 | |
| |
| | | | | |
Total, not government insured/guaranteed | | $ | 950 | | | | 1,045 | | | | 1,050 | | | | 1,154 | | | | 1,360 | |
| |
(1) | The carrying value of purchased credit-impaired (PCI) loans contractually 90 days or more past due was $4.3 billion, $4.5 billion, $4.9 billion, $5.4 billion and $5.8 billion, at March 31, 2014 and December 31, September 30, June 30 and March 31, 2013, respectively. These amounts are excluded from the above table as PCI loan accretable yield interest recognition is independent from the underlying contractual loan delinquency status. |
(2) | Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA. |
(3) | Includes mortgages held for sale 90 days or more past due and still accruing. |
(4) | Represents loans whose repayments are predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program (FFELP). |
31
Wells Fargo & Company and Subsidiaries
PURCHASED CREDIT-IMPAIRED (PCI) LOANS
Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. PCI loans predominantly represent loans acquired from Wachovia that were deemed to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include statistics such as past due and nonaccrual status, recent borrower credit scores and recent LTV percentages. PCI loans are initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, the associated allowance for credit losses related to these loans is not carried over at the acquisition date.
Under the accounting guidance for PCI loans, the excess of cash flows expected to be collected over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the remaining life of the loan, or pool of loans, in situations where there is a reasonable expectation about the timing and amount of cash flows expected to be collected. Accordingly, such loans are not classified as nonaccrual and they are considered to be accruing because their interest income relates to the accretable yield recognized under accounting for PCI loans and not to contractual interest payments. The difference between the contractually required payments and the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the nonaccretable difference.
Subsequent to acquisition, we regularly evaluate our estimates of cash flows expected to be collected. These evaluations, performed quarterly, require the continued usage of key assumptions and estimates, similar to the initial estimate of fair value. If we have probable decreases in the expected cash flows (other than due to decreases in interest rate indices and changes in prepayment assumptions), we charge the provision for credit losses, resulting in an increase to the allowance for loan losses. If we have probable and significant increases in the expected cash flows subsequent to establishing an additional allowance, we first reverse any previously established allowance and then increase interest income over the remaining life of the loan, or pool of loans.
As a result of PCI loan accounting, certain credit-related ratios cannot be used to compare a portfolio that includes PCI loans against one that does not, or to compare ratios across quarters or years. The ratios particularly affected include the allowance for loan losses and allowance for credit losses as percentages of loans, of nonaccrual loans and of nonperforming assets; nonaccrual loans and nonperforming assets as a percentage of total loans; and net charge-offs as a percentage of loans.
| | | | | | | | | | | | |
| |
| | |
| | March 31, | | | December 31, | |
| | | | | | | | |
| | | |
(in millions) | | 2014 | | | 2013 | | | 2008 | |
| |
| | | |
Commercial: | | | | | | | | | | | | |
Commercial and industrial | | $ | 184 | | | | 215 | | | | 4,580 | |
Real estate mortgage | | | 1,098 | | | | 1,136 | | | | 5,803 | |
Real estate construction | | | 392 | | | | 433 | | | | 6,462 | |
Foreign | | | 531 | | | | 720 | | | | 1,859 | |
| |
| | | |
Total commercial | | | 2,205 | | | | 2,504 | | | | 18,704 | |
| |
| | | |
Consumer: | | | | | | | | | | | | |
Real estate 1-4 family first mortgage | | | 23,530 | | | | 24,100 | | | | 39,214 | |
Real estate 1-4 family junior lien mortgage | | | 117 | | | | 123 | | | | 728 | |
Automobile | | | - | | | | - | | | | 151 | |
| |
| | | |
Total consumer | | | 23,647 | | | | 24,223 | | | | 40,093 | |
| |
| | | |
Total PCI loans (carrying value) | | $ | 25,852 | | | | 26,727 | | | | 58,797 | |
| |
32
Wells Fargo & Company and Subsidiaries
CHANGES IN NONACCRETABLE DIFFERENCE FOR PCI LOANS
The difference between the contractually required payments and the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the nonaccretable difference. A nonaccretable difference is established in purchase accounting for PCI loans to absorb losses expected at that time on those loans. Amounts absorbed by the nonaccretable difference do not affect the income statement or the allowance for credit losses. Substantially all our commercial and industrial, CRE and foreign PCI loans are accounted for as individual loans. Conversely, Pick-a-Pay and other consumer PCI loans have been aggregated into several pools based on common risk characteristics. Each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Resolutions of loans may include sales to third parties, receipt of payments in settlement with the borrower, or foreclosure of the collateral. Our policy is to remove an individual loan from a pool based on comparing the amount received from its resolution with its contractual amount. Any difference between these amounts is absorbed by the nonaccretable difference. This removal method assumes that the amount received from resolution approximates pool performance expectations. The accretable yield percentage is unaffected by the resolution and any changes in the effective yield for the remaining loans in the pool are addressed by our quarterly cash flow evaluation process for each pool. For loans that are resolved by payment in full, there is no release of the nonaccretable difference for the pool because there is no difference between the amount received at resolution and the contractual amount of the loan. Modified PCI loans are not removed from a pool even if those loans would otherwise be deemed troubled debt restructurings (TDRs). Modified PCI loans that are accounted for individually are considered TDRs, and removed from PCI accounting, if there has been a concession granted in excess of the original nonaccretable difference. The following table provides an analysis of changes in the nonaccretable difference.
| | | | | | | | | | | | | | | | |
| |
(in millions) | | Commercial | | | Pick-a-Pay | | | Other consumer | | | Total | |
| |
| | | | |
Balance, December 31, 2008 | | $ | 10,410 | | | | 26,485 | | | | 4,069 | | | | 40,964 | |
| | | | |
Addition of nonaccretable difference due to acquisitions | | | 213 | | | | - | | | | - | | | | 213 | |
| | | | |
Release of nonaccretable difference due to: | | | | | | | | | | | | | | | | |
Loans resolved by settlement with borrower (1) | | | (1,512) | | | | - | | | | - | | | | (1,512) | |
Loans resolved by sales to third parties (2) | | | (308) | | | | - | | | | (85) | | | | (393) | |
Reclassification to accretable yield for loans with improving credit-related cash flows (3) | | | (1,605) | | | | (3,897) | | | | (823) | | | | (6,325) | |
Use of nonaccretable difference due to: | | | | | | | | | | | | | | | | |
Losses from loan resolutions and write-downs (4) | | | (6,933) | | | | (17,884) | | | | (2,961) | | | | (27,778) | |
| |
| | | | |
Balance, December 31, 2013 | | | 265 | | | | 4,704 | | | | 200 | | | | 5,169 | |
| | | | |
Addition of nonaccretable difference due to acquisitions | | | - | | | | - | | | | - | | | | - | |
| | | | |
Release of nonaccretable difference due to: | | | | | | | | | | | | | | | | |
Loans resolved by settlement with borrower (1) | | | (5) | | | | - | | | | - | | | | (5) | |
Loans resolved by sales to third parties (2) | | | (14) | | | | - | | | | - | | | | (14) | |
Reclassification to accretable yield for loans with improving credit-related cash flows (3) | | | (101) | | | | - | | | | (9) | | | | (110) | |
Use of nonaccretable difference due to: | | | | | | | | | | | | | | | | |
Losses from loan resolutions and write-downs (4) | | | - | | | | - | | | | 21 | | | | 21 | |
| |
| | | | |
Balance, March 31, 2014 | | $ | 145 | | | | 4,704 | | | | 212 | | | | 5,061 | |
| |
(1) | Release of the nonaccretable difference for settlement with borrower, on individually accounted PCI loans, increases interest income in the period of settlement. Pick-a-Pay and Other consumer PCI loans do not reflect nonaccretable difference releases for settlements with borrowers due to pool accounting for those loans, which assumes that the amount received approximates the pool performance expectations. |
(2) | Release of the nonaccretable difference as a result of sales to third parties increases noninterest income in the period of the sale. |
(3) | Reclassification of nonaccretable difference to accretable yield for loans with increased cash flow estimates will result in increased interest income as a prospective yield adjustment over the remaining life of the loan or pool of loans. |
(4) | Write-downs to net realizable value of PCI loans are absorbed by the nonaccretable difference when severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan. Also includes foreign exchange adjustments related to underlying principal for which the nonaccretable difference was established. |
33
Wells Fargo & Company and Subsidiaries
CHANGES IN ACCRETABLE YIELD RELATED TO PCI LOANS
The excess of cash flows expected to be collected over the carrying value of PCI loans is referred to as the accretable yield and is accreted into interest income over the estimated lives of the PCI loans using the effective yield method. The accretable yield is affected by:
| • | | Changes in interest rate indices for variable rate PCI loans – Expected future cash flows are based on the variable rates in effect at the time of the quarterly assessment of expected cash flows; |
| • | | Changes in prepayment assumptions – Prepayments affect the estimated life of PCI loans which may change the amount of interest income, and possibly principal, expected to be collected; and |
| • | | Changes in the expected principal and interest payments over the estimated life – Updates to changes in expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected. |
The change in the accretable yield related to PCI loans is presented in the following table.
| | | | |
| |
| |
(in millions) | | | |
| |
| |
Balance, December 31, 2008 | | $ | 10,447 | |
Addition of accretable yield due to acquisitions | | | 132 | |
Accretion into interest income (1) | | | (11,184) | |
Accretion into noninterest income due to sales (2) | | | (393) | |
Reclassification from nonaccretable difference for loans with improving credit-related cash flows | | | 6,325 | |
Changes in expected cash flows that do not affect nonaccretable difference (3) | | | 12,065 | |
| |
| |
Balance, December 31, 2013 | | | 17,392 | |
Addition of accretable yield due to acquisitions | | | - | |
Accretion into interest income (1) | | | (375) | |
Accretion into noninterest income due to sales (2) | | | (35) | |
Reclassification from nonaccretable difference for loans with improving credit-related cash flows | | | 110 | |
Changes in expected cash flows that do not affect nonaccretable difference (3) | | | (6) | |
| |
| |
Balance, March 31, 2014 | | $ | 17,086 | |
| |
(1) | Includes accretable yield released as a result of settlements with borrowers, which is included in interest income. |
(2) | Includes accretable yield released as a result of sales to third parties, which is included in noninterest income. |
(3) | Represents changes in cash flows expected to be collected due to the impact of modifications, changes in prepayment assumptions, changes in interest rates on variable rate PCI loans and sales to third parties. |
CHANGES IN ALLOWANCE FOR PCI LOAN LOSSES
When it is estimated that the expected cash flows have decreased subsequent to acquisition for a PCI loan or pool of loans, an allowance is established and a provision for additional loss is recorded as a charge to income. The following table summarizes the changes in allowance for PCI loan losses.
| | | | | | | | | | | | | | | | |
| |
(in millions) | | Commercial | | | Pick-a-Pay | | | Other consumer | | | Total | |
| |
Balance, December 31, 2008 | | $ | - | | | | - | | | | - | | | | - | |
Provision for losses due to credit deterioration | | | 1,641 | | | | - | | | | 107 | | | | 1,748 | |
Charge-offs | | | (1,615) | | | | - | | | | (103) | | | | (1,718) | |
| |
| | | | |
Balance, December 31, 2013 | | | 26 | | | | - | | | | 4 | | | | 30 | |
Provision for losses due to credit deterioration / (reversal of provision) | | | (5) | | | | - | | | | 1 | | | | (4) | |
Charge-offs | | | (3) | | | | - | | | | (2) | | | | (5) | |
| |
Balance, March 31, 2014 | | $ | 18 | | | | - | | | | 3 | | | | 21 | |
| |
34
Wells Fargo & Company and Subsidiaries
PICK-A-PAY PORTFOLIO (1)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | March 31, 2014 | |
| | | | |
| | PCI loans | | | | | All other loans | |
| | | | | | | | | | |
(in millions) | | Adjusted unpaid principal balance (2) | | | Current LTV ratio (3) | | | Carrying value (4) | | | Ratio of carrying value to current value (5) | | | | | Carrying value (4) | | | Ratio of carrying value to current value (5) | |
| |
| | | | | | | |
California | | $ | 19,459 | | | | 88 | % | | $ | 16,029 | | | | 71 | % | | | | $ | 12,781 | | | | 64 | % |
Florida | | | 2,329 | | | | 97 | | | | 1,813 | | | | 69 | | | | | | 2,667 | | | | 78 | |
New Jersey | | | 995 | | | | 86 | | | | 878 | | | | 69 | | | | | | 1,710 | | | | 74 | |
New York | | | 596 | | | | 83 | | | | 542 | | | | 68 | | | | | | 776 | | | | 72 | |
Texas | | | 258 | | | | 69 | | | | 229 | | | | 60 | | | | | | 1,040 | | | | 55 | |
Other states | | | 4,587 | | | | 88 | | | | 3,801 | | | | 71 | | | | | | 7,267 | | | | 74 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total Pick-a-Pay loans | | $ | 28,224 | | | | | | | $ | 23,292 | | | | | | | | | $ | 26,241 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
|
| |
(1) | The individual states shown in this table represent the top five states based on the total net carrying value of the Pick-a-Pay loans at the beginning of 2014. |
(2) | Adjusted unpaid principal balance includes write-downs taken on loans where severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan. |
(3) | The current LTV ratio is calculated as the adjusted unpaid principal balance divided by the collateral value. Collateral values are generally determined using automated valuation models (AVM) and are updated quarterly. AVMs are computer-based tools used to estimate market values of homes based on processing large volumes of market data including market comparables and price trends for local market areas. |
(4) | Carrying value, which does not reflect the allowance for loan losses, includes remaining purchase accounting adjustments, which, for PCI loans may include the nonaccretable difference and the accretable yield and, for all other loans, an adjustment to mark the loans to a market yield at date of merger less any subsequent charge-offs. |
(5) | The ratio of carrying value to current value is calculated as the carrying value divided by the collateral value. |
NON-STRATEGIC AND LIQUIDATING LOAN PORTFOLIOS
| | | | | | | | | | | | | | | | | | | | |
| |
| | | | | |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
| | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | |
Legacy Wachovia commercial and industrial, commercial real estate and foreign PCI loans (1) | | $ | 1,720 | | | | 2,013 | | | | 2,342 | | | | 2,532 | | | | 2,770 | |
| |
| | | | | |
Total commercial | | | 1,720 | | | | 2,013 | | | | 2,342 | | | | 2,532 | | | | 2,770 | |
| |
| | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | |
Pick-a-Pay mortgage (1) | | | 49,533 | | | | 50,971 | | | | 52,805 | | | | 54,755 | | | | 56,608 | |
Liquidating home equity | | | 3,505 | | | | 3,695 | | | | 3,911 | | | | 4,173 | | | | 4,421 | |
Legacy Wells Fargo Financial indirect auto | | | 132 | | | | 207 | | | | 299 | | | | 428 | | | | 593 | |
Legacy Wells Fargo Financial debt consolidation | | | 12,545 | | | | 12,893 | | | | 13,281 | | | | 13,707 | | | | 14,115 | |
Education Finance-government guaranteed | | | 10,204 | | | | 10,712 | | | | 11,094 | | | | 11,534 | | | | 11,922 | |
Legacy Wachovia other PCI loans (1) | | | 355 | | | | 375 | | | | 406 | | | | 435 | | | | 462 | |
| |
| | | | | |
Total consumer | | | 76,274 | | | | 78,853 | | | | 81,796 | | | | 85,032 | | | | 88,121 | |
| |
| | | | | |
Total non-strategic and liquidating loan portfolios | | $ | 77,994 | | | | 80,866 | | | | 84,138 | | | | 87,564 | | | | 90,891 | |
| |
(1) | Net of purchase accounting adjustments related to PCI loans. |
35
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CHANGES IN ALLOWANCE FOR CREDIT LOSSES
| | | | | | | | | | | | | | | | | | | | |
| | Quarter ended | |
| | | | |
| | | | | |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
| | | | | |
Balance, beginning of quarter | | $ | 14,971 | | | | 15,647 | | | | 16,618 | | | | 17,193 | | | | 17,477 | |
Provision for credit losses | | | 325 | | | | 363 | | | | 75 | | | | 652 | | | | 1,219 | |
Interest income on certain impaired loans (1) | | | (56) | | | | (55) | | | | (63) | | | | (73) | | | | (73) | |
Loan charge-offs: | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | (158) | | | | (199) | | | | (151) | | | | (184) | | | | (181) | |
Real estate mortgage | | | (20) | | | | (37) | | | | (44) | | | | (49) | | | | (60) | |
Real estate construction | | | (1) | | | | (10) | | | | (6) | | | | (7) | | | | (5) | |
Lease financing | | | (4) | | | | (3) | | | | (3) | | | | (24) | | | | (3) | |
Foreign | | | (5) | | | | (4) | | | | (4) | | | | (8) | | | | (11) | |
| |
| | | | | |
Total commercial | | | (188) | | | | (253) | | | | (208) | | | | (272) | | | | (260) | |
| |
| | | | | |
Consumer: | | | | | | | | | | | | | | | | | | | | |
Real estate 1-4 family first mortgage | | | (223) | | | | (269) | | | | (303) | | | | (392) | | | | (475) | |
Real estate 1-4 family junior lien mortgage | | | (249) | | | | (291) | | | | (345) | | | | (428) | | | | (514) | |
Credit card | | | (267) | | | | (251) | | | | (239) | | | | (266) | | | | (266) | |
Automobile | | | (180) | | | | (182) | | | | (153) | | | | (126) | | | | (164) | |
Other revolving credit and installment | | | (177) | | | | (195) | | | | (191) | | | | (185) | | | | (182) | |
| |
| | | | | |
Total consumer | | | (1,096) | | | | (1,188) | | | | (1,231) | | | | (1,397) | | | | (1,601) | |
| |
| | | | | |
Total loan charge-offs | | | (1,284) | | | | (1,441) | | | | (1,439) | | | | (1,669) | | | | (1,861) | |
| |
| | | | | |
Loan recoveries: | | | | | | | | | | | | | | | | | | | | |
Commercial: | | | | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 113 | | | | 92 | | | | 93 | | | | 107 | | | | 88 | |
Real estate mortgage | | | 42 | | | | 78 | | | | 64 | | | | 54 | | | | 31 | |
Real estate construction | | | 24 | | | | 23 | | | | 23 | | | | 52 | | | | 39 | |
Lease financing | | | 3 | | | | 3 | | | | 3 | | | | 6 | | | | 4 | |
Foreign | | | 1 | | | | 4 | | | | 6 | | | | 9 | | | | 8 | |
| |
| | | | | |
Total commercial | | | 183 | | | | 200 | | | | 189 | | | | 228 | | | | 170 | |
| |
Consumer: | | | | | | | | | | | | | | | | | | | | |
Real estate 1-4 family first mortgage | | | 53 | | | | 74 | | | | 61 | | | | 64 | | | | 46 | |
Real estate 1-4 family junior lien mortgage | | | 57 | | | | 65 | | | | 70 | | | | 69 | | | | 65 | |
Credit card | | | 36 | | | | 31 | | | | 32 | | | | 32 | | | | 31 | |
Automobile | | | 90 | | | | 74 | | | | 75 | | | | 84 | | | | 88 | |
Other revolving credit and installment | | | 40 | | | | 34 | | | | 37 | | | | 40 | | | | 42 | |
| |
| | | | | |
Total consumer | | | 276 | | | | 278 | | | | 275 | | | | 289 | | | | 272 | |
| |
| | | | | |
Total loan recoveries | | | 459 | | | | 478 | | | | 464 | | | | 517 | | | | 442 | |
| |
| | | | | |
Net loan charge-offs | | | (825) | | | | (963) | | | | (975) | | | | (1,152) | | | | (1,419) | |
| |
| | | | | |
Allowances related to business combinations/other | | | (1) | | | | (21) | | | | (8) | | | | (2) | | | | (11) | |
| |
| | | | | |
Balance, end of quarter | | $ | 14,414 | | | | 14,971 | | | | 15,647 | | | | 16,618 | | | | 17,193 | |
| |
| | | | | |
Components: | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses | | $ | 13,695 | | | | 14,502 | | | | 15,159 | | | | 16,144 | | | | 16,711 | |
Allowance for unfunded credit commitments | | | 719 | | | | 469 | | | | 488 | | | | 474 | | | | 482 | |
| |
| | | | | |
Allowance for credit losses | | $ | 14,414 | | | | 14,971 | | | | 15,647 | | | | 16,618 | | | | 17,193 | |
| |
Net loan charge-offs (annualized) as a percentage of average total loans | | | 0.41 | % | | | 0.47 | | | | 0.48 | | | | 0.58 | | | | 0.72 | |
Allowance for loan losses as a percentage of: | | | | | | | | | | | | | | | | | | | | |
Total loans (2) | | | 1.66 | | | | 1.76 | | | | 1.87 | | | | 2.02 | | | | 2.09 | |
Nonaccrual loans | | | 93 | | | | 93 | | | | 90 | | | | 90 | | | | 86 | |
Nonaccrual loans and other nonperforming assets | | | 73 | | | | 74 | | | | 73 | | | | 77 | | | | 73 | |
Allowance for credit losses as a percentage of: | | | | | | | | | | | | | | | | | | | | |
Total loans (2) | | | 1.74 | | | | 1.82 | | | | 1.93 | | | | 2.08 | | | | 2.15 | |
Nonaccrual loans | | | 98 | | | | 96 | | | | 93 | | | | 93 | | | | 88 | |
Nonaccrual loans and other nonperforming assets | | | 77 | | | | 76 | | | | 76 | | | | 79 | | | | 75 | |
| | | | | | | | | | | | | | | | | | | | |
| |
(1) | Certain impaired loans with an allowance calculated by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize reductions in allowance as interest income. |
(2) | Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information. |
36
Wells Fargo & Company
FIVE QUARTER RISK-BASED CAPITAL COMPONENTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | | | | Under Basel III (General Approach) (1) | | | Under Basel I | |
| | | | | | | | | | | | |
(in billions) | | | | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
| | | | | | |
Total equity | | | | | | $ | 176.5 | | | | 171.0 | | | | 168.8 | | | | 163.8 | | | | 163.4 | |
Noncontrolling interests | | | | | | | (0.8) | | | | (0.9) | | | | (1.6) | | | | (1.4) | | | | (1.3) | |
| |
| | | | | | |
Total Wells Fargo stockholders’ equity | | | | | | | 175.7 | | | | 170.1 | | | | 167.2 | | | | 162.4 | | | | 162.1 | |
| |
| | | | | | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | |
Preferred stock | | | | | | | (15.2) | | | | (15.2) | | | | (14.3) | | | | (12.6) | | | | (12.6) | |
Cumulative other comprehensive income (2) | | | | | | | (2.2) | | | | (1.4) | | | | (2.2) | | | | (1.8) | | | | (5.1) | |
Goodwill and other intangible assets (2)(3) | | | | | | | (25.6) | | | | (29.6) | | | | (29.8) | | | | (30.0) | | | | (30.2) | |
Investment in certain subsidiaries and other | | | | | | | - | | | | (0.4) | | | | (0.6) | | | | (0.5) | | | | (0.6) | |
| |
| | | | | | |
Common Equity Tier 1 (1)(4) | | | (A | ) | | | 132.7 | | | | 123.5 | | | | 120.3 | | | | 117.5 | | | | 113.6 | |
| |
| | | | | | |
Preferred stock | | | | | | | 15.2 | | | | 15.2 | | | | 14.3 | | | | 12.6 | | | | 12.6 | |
Qualifying hybrid securities and noncontrolling interests | | | | | | | - | | | | 2.0 | | | | 2.9 | | | | 2.9 | | | | 2.9 | |
Other | | | | | | | (0.3) | | | | - | | | | - | | | | - | | | | - | |
| |
| | | | | | |
Total Tier 1 capital | | | | | | | 147.6 | | | | 140.7 | | | | 137.5 | | | | 133.0 | | | | 129.1 | |
| |
| | | | | | |
Long-term debt and other instruments qualifying as Tier 2 | | | | | | | 21.7 | | | | 20.5 | | | | 18.9 | | | | 18.0 | | | | 18.4 | |
Qualifying allowance for credit losses | | | | | | | 14.0 | | | | 14.3 | | | | 14.3 | | | | 13.8 | | | | 13.8 | |
Other | | | | | | | 0.2 | | | | 0.7 | | | | 0.6 | | | | 0.2 | | | | 0.3 | |
| |
| | | | | | |
Total Tier 2 capital | | | | | | | 35.9 | | | | 35.5 | | | | 33.8 | | | | 32.0 | | | | 32.5 | |
| |
| | | | | | |
Total qualifying capital | | | (B | ) | | $ | 183.5 | | | | 176.2 | | | | 171.3 | | | | 165.0 | | | | 161.6 | |
| |
| | | | | | |
Basel I (General Approach) RWAs (5)(6): | | | | | | | | | | | | | | | | | | | | | | | | |
Credit risk | | | | | | $ | 1,118.7 | | | | 1,105.2 | | | | 1,099.2 | | | | 1,061.1 | | | | 1,056.5 | |
Market risk | | | | | | | 49.7 | | | | 36.3 | | | | 35.9 | | | | 36.3 | | | | 37.8 | |
| |
| | | | | | |
Total Basel I (General Approach) RWAs | | | (C | ) | | $ | 1,168.4 | | | | 1,141.5 | | | | 1,135.1 | | | | 1,097.4 | | | | 1,094.3 | |
| |
| | | | | | |
Capital Ratios (6): | | | | | | | | | | | | | | | | | | | | | | | | |
Common equity tier 1 to total RWAs | | | (A | )/(C) | | | 11.36 | % | | | 10.82 | | | | 10.60 | | | | 10.71 | | | | 10.39 | |
Total capital to total RWAs | | | (B | )/(C) | | | 15.70 | | | | 15.43 | | | | 15.09 | | | | 15.03 | | | | 14.76 | |
| |
(1) | Basel III revises the definition of capital, increases minimum capital ratios, and introduces a minimum Common Equity Tier 1 ratio. These changes are being phased in effective January 1, 2014 through the end of 2021 and the capital ratios will be determined using Basel I (General Approach) RWAs during 2014. |
(2) | Under transition provisions to Basel III, cumulative other comprehensive income (previously deducted under Basel I) is included in Common Equity Tier 1 over a specified phase-in period. In addition, certain intangible assets includable in Common Equity Tier 1 are phased out over a specified period. |
(3) | Goodwill and other intangible assets are net of any associated deferred tax liabilities. |
(4) | Common Equity Tier 1 (formerly Tier 1 common equity under Basel I) is a non-GAAP financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews Common Equity Tier 1 along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the corresponding reconciliation to total equity, because of current interest in such information on the part of market participants. |
(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) | The Company’s March 31, 2014, RWAs and capital ratios are preliminary. |
COMMON EQUITY TIER 1 UNDER BASEL III (ADVANCED APPROACH, FULLY PHASED-IN) (1) (2)
| | | | | | | | | | | | |
| | | | | | | | | | | | |
(in billions) | | | | | | | | | | Mar. 31, 2014 | |
| |
| | | | | |
Common Equity Tier 1 (transition amount) under Basel III | | | | | | | | | | $ | 132.7 | |
| |
| | | | | |
Adjustments from transition amount to fully phased-in under Basel III (3): | | | | | | | | | | | | |
Cumulative other comprehensive income | | | | | | | | | | | 2.8 | |
Other | | | | | | | | | | | (3.4) | |
| |
Total adjustments | | | | | | | | | | | (0.6) | |
| |
| | | | | |
Common Equity Tier 1 (fully phased-in) under Basel III | | | | | | | | (C) | | $ | 132.1 | |
| |
| | | | | |
Total RWAs anticipated under Basel III (4) | | | | | | | | (D) | | $ | 1,315.2 | |
| |
| | | |
Common Equity Tier 1 to total RWAs anticipated under Basel III (Advanced Approach, fully phased-in) | | | | (C)/(D) | | | 10.04 | % |
| |
(1) | Common Equity Tier 1 is a non-GAAP financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews Common Equity Tier 1 along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the corresponding reconciliation to total equity, because of current interest in such information on the part of market participants. |
(2) | The Basel III Common Equity Tier 1 and RWAs are estimated based on the Basel III capital rules adopted July 2, 2013, by the FRB. The rules establish a new comprehensive capital framework for U.S. banking organizations that implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. The rules are being phased in effective January 1, 2014 through the end of 2021. |
(3) | Assumes cumulative other comprehensive income is fully phased in and certain other intangible assets are fully phased out under Basel III capital rules. |
(4) | The final Basel III capital rules provide for two capital frameworks: the Standardized Approach intended to replace Basel I, and the Advanced Approach applicable to certain institutions. Under the final rules, we will be subject to the lower of our Common Equity Tier 1 ratio calculated under the Standardized Approach and under the Advanced Approach in the assessment of our capital adequacy. Accordingly, the estimate of RWAs has been determined under the Advanced Approach because management expects RWAs to be higher using the Advanced Approach, and thus result in a lower Common Equity Tier 1, compared with the Standardized Approach. Basel III capital rules adopted by the Federal Reserve Board incorporate different classification of assets, with risk weights based on Wells Fargo’s internal models, along with adjustments to address a combination of credit/counterparty, operational and market risks, and other Basel III elements. |
37
Wells Fargo & Company and Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS(1)
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Quarter ended | |
| | | | |
(income/expense in millions, average balances in billions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
| | | | | |
COMMUNITY BANKING | | | | | | | | | | | | | | | | | | | | |
Net interest income (2) | | $ | 7,275 | | | | 7,225 | | | | 7,244 | | | | 7,251 | | | | 7,119 | |
Provision for credit losses | | | 419 | | | | 490 | | | | 240 | | | | 763 | | | | 1,262 | |
Noninterest income | | | 5,318 | | | | 5,029 | | | | 5,000 | | | | 5,691 | | | | 5,780 | |
Noninterest expense | | | 6,774 | | | | 7,073 | | | | 7,060 | | | | 7,213 | | | | 7,377 | |
| |
| | | | | |
Income before income tax expense | | | 5,400 | | | | 4,691 | | | | 4,944 | | | | 4,966 | | | | 4,260 | |
Income tax expense | | | 1,376 | | | | 1,373 | | | | 1,505 | | | | 1,633 | | | | 1,288 | |
| |
| | | | | |
Net income before noncontrolling interests | | | 4,024 | | | | 3,318 | | | | 3,439 | | | | 3,333 | | | | 2,972 | |
Less: Net income from noncontrolling interests | | | 180 | | | | 96 | | | | 98 | | | | 88 | | | | 48 | |
| |
| | | | | |
Segment net income | | $ | 3,844 | | | | 3,222 | | | | 3,341 | | | | 3,245 | | | | 2,924 | |
| |
| | | | | |
Average loans | | $ | 505.0 | | | | 502.5 | | | | 497.7 | | | | 498.2 | | | | 498.9 | |
Average assets | | | 892.6 | | | | 883.6 | | | | 836.6 | | | | 820.9 | | | | 799.6 | |
Average core deposits | | | 626.5 | | | | 620.2 | | | | 618.2 | | | | 623.0 | | | | 619.2 | |
|
| |
| | | | | |
WHOLESALE BANKING | | | | | | | | | | | | | | | | | | | | |
Net interest income (2) | | $ | 2,891 | | | | 3,133 | | | | 3,059 | | | | 3,101 | | | | 3,005 | |
Reversal of provision for credit losses | | | (93) | | | | (125) | | | | (144) | | | | (118) | | | | (58) | |
Noninterest income | | | 2,689 | | | | 2,839 | | | | 2,812 | | | | 3,034 | | | | 3,081 | |
Noninterest expense | | | 3,215 | | | | 3,020 | | | | 3,084 | | | | 3,183 | | | | 3,091 | |
| |
| | | | | |
Income before income tax expense | | | 2,458 | | | | 3,077 | | | | 2,931 | | | | 3,070 | | | | 3,053 | |
Income tax expense | | | 714 | | | | 960 | | | | 952 | | | | 1,065 | | | | 1,007 | |
| |
| | | | | |
Net income before noncontrolling interests | | | 1,744 | | | | 2,117 | | | | 1,979 | | | | 2,005 | | | | 2,046 | |
Less: Net income from noncontrolling interests | | | 2 | | | | 6 | | | | 6 | | | | 1 | | | | 1 | |
| |
| | | | | |
Segment net income | | $ | 1,742 | | | | 2,111 | | | | 1,973 | | | | 2,004 | | | | 2,045 | |
| |
| | | | | |
Average loans (4) | | $ | 301.9 | | | | 294.6 | | | | 287.7 | | | | 285.1 | | | | 283.1 | |
Average assets (4) | | | 517.4 | | | | 509.0 | | | | 498.1 | | | | 498.1 | | | | 494.7 | |
Average core deposits | | | 259.0 | | | | 258.5 | | | | 235.3 | | | | 230.5 | | | | 224.1 | |
| |
| | | | | |
WEALTH, BROKERAGE AND RETIREMENT | | | | | | | | | | | | | | | | | | | | |
Net interest income (2) | | $ | 768 | | | | 770 | | | | 749 | | | | 700 | | | | 669 | |
Provision (reversal of provision) for credit losses | | | (8) | | | | (11) | | | | (38) | | | | 19 | | | | 14 | |
Noninterest income | | | 2,700 | | | | 2,668 | | | | 2,558 | | | | 2,561 | | | | 2,528 | |
Noninterest expense | | | 2,711 | | | | 2,655 | | | | 2,619 | | | | 2,542 | | | | 2,639 | |
| |
| | | | | |
Income before income tax expense | | | 765 | | | | 794 | | | | 726 | | | | 700 | | | | 544 | |
Income tax expense | | | 290 | | | | 302 | | | | 275 | | | | 266 | | | | 207 | |
| |
| | | | | |
Net income before noncontrolling interests | | | 475 | | | | 492 | | | | 451 | | | | 434 | | | | 337 | |
Less: Net income from noncontrolling interests | | | - | | | | 1 | | | | 1 | | | | - | | | | - | |
| |
| | | | | |
Segment net income | | $ | 475 | | | | 491 | | | | 450 | | | | 434 | | | | 337 | |
| |
| | | | | |
Average loans | | $ | 50.0 | | | | 48.4 | | | | 46.7 | | | | 45.4 | | | | 43.8 | |
Average assets | | | 190.6 | | | | 185.3 | | | | 180.8 | | | | 177.1 | | | | 180.3 | |
Average core deposits | | | 156.0 | | | | 153.9 | | | | 150.6 | | | | 146.4 | | | | 149.4 | |
| |
| | | | | |
OTHER(3) | | | | | | | | | | | | | | | | | | | | |
Net interest income (2) | | $ | (319) | | | | (325) | | | | (304) | | | | (302) | | | | (294) | |
Provision (reversal of provision) for credit losses | | | 7 | | | | 9 | | | | 17 | | | | (12) | | | | 1 | |
Noninterest income | | | (697) | | | | (674) | | | | (640) | | | | (658) | | | | (629) | |
Noninterest expense | | | (752) | | | | (663) | | | | (661) | | | | (683) | | | | (707) | |
| |
| | | | | |
Loss before income tax benefit | | | (271) | | | | (345) | | | | (300) | | | | (265) | | | | (217) | |
Income tax benefit | | | (103) | | | | (131) | | | | (114) | | | | (101) | | | | (82) | |
| |
| | | | | |
Net loss before noncontrolling interests | | | (168) | | | | (214) | | | | (186) | | | | (164) | | | | (135) | |
Less: Net income from noncontrolling interests | | | - | | | | - | | | | - | | | | - | | | | - | |
| |
| | | | | |
Other net loss | | $ | (168) | | | | (214) | | | | (186) | | | | (164) | | | | (135) | |
|
| |
| | | | | |
Average loans | | $ | (33.1) | | | | (32.2) | | | | (30.0) | | | | (30.3) | | | | (29.1) | |
Average assets | | | (74.7) | | | | (72.1) | | | | (68.5) | | | | (68.9) | | | | (71.7) | |
Average core deposits | | | (67.7) | | | | (66.8) | | | | (63.8) | | | | (63.8) | | | | (66.8) | |
|
| |
| | | | | |
CONSOLIDATED COMPANY | | | | | | | | | | | | | | | | | | | | |
Net interest income (2) | | $ | 10,615 | | | | 10,803 | | | | 10,748 | | | | 10,750 | | | | 10,499 | |
Provision for credit losses | | | 325 | | | | 363 | | | | 75 | | | | 652 | | | | 1,219 | |
Noninterest income | | | 10,010 | | | | 9,862 | | | | 9,730 | | | | 10,628 | | | | 10,760 | |
Noninterest expense | | | 11,948 | | | | 12,085 | | | | 12,102 | | | | 12,255 | | | | 12,400 | |
| |
| | | | | |
Income before income tax expense | | | 8,352 | | | | 8,217 | | | | 8,301 | | | | 8,471 | | | | 7,640 | |
Income tax expense | | | 2,277 | | | | 2,504 | | | | 2,618 | | | | 2,863 | | | | 2,420 | |
| |
| | | | | |
Net income before noncontrolling interests | | | 6,075 | | | | 5,713 | | | | 5,683 | | | | 5,608 | | | | 5,220 | |
Less: Net income from noncontrolling interests | | | 182 | | | | 103 | | | | 105 | | | | 89 | | | | 49 | |
| |
Wells Fargo net income | | $ | 5,893 | | | | 5,610 | | | | 5,578 | | | | 5,519 | | | | 5,171 | |
| |
| | | | | |
Average loans (4) | | $ | 823.8 | | | | 813.3 | | | | 802.1 | | | | 798.4 | | | | 796.7 | |
Average assets (4) | | | 1,525.9 | | | | 1,505.8 | | | | 1,447.0 | | | | 1,427.2 | | | | 1,402.9 | |
Average core deposits | | | 973.8 | | | | 965.8 | | | | 940.3 | | | | 936.1 | | | | 925.9 | |
|
| |
(1) | The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment. |
(2) | Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to other segments. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of excess liabilities from another segment. |
(3) | Includes corporate items not specific to a business segment and the elimination of certain items that are included in more than one business segment, substantially all of which represents products and services for wealth management customers provided in Community Banking stores. |
(4) | Prior period financial information has been revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table on page 17 for more information. |
38
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING
| | | | | | | | | | | | | | | | | | | | |
| |
| | Quarter ended | |
| | | | |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
| | | | | |
MSRs measured using the fair value method: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Fair value, beginning of quarter | | $ | 15,580 | | | | 14,501 | | | | 14,185 | | | | 12,061 | | | | 11,538 | |
| | | | | |
Servicing from securitizations or asset transfers | | | 289 | | | | 520 | | | | 954 | | | | 1,060 | | | | 935 | |
Sales | | | - | | | | - | | | | - | | | | (160) | | | | (423) | |
| |
| | | | | |
Net additions | | | 289 | | | | 520 | | | | 954 | | | | 900 | | | | 512 | |
| |
| | | | | |
Changes in fair value: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Due to changes in valuation model inputs or assumptions: | | | | | | | | | | | | | | | | | | | | |
Mortgage interest rates (1) | | | (509) | | | | 1,048 | | | | 61 | | | | 2,223 | | | | 1,030 | |
Servicing and foreclosure costs (2) | | | (34) | | | | (54) | | | | (34) | | | | (82) | | | | (58) | |
Prepayment estimates and other (3) | | | 102 | | | | (11) | | | | (240) | | | | (274) | | | | (211) | |
| |
| | | | | |
Net changes in valuation model inputs or assumptions | | | (441) | | | | 983 | | | | (213) | | | | 1,867 | | | | 761 | |
| |
| | | | | |
Other changes in fair value (4) | | | (475) | | | | (424) | | | | (425) | | | | (643) | | | | (750) | |
| |
| | | | | |
Total changes in fair value | | | (916) | | | | 559 | | | | (638) | | | | 1,224 | | | | 11 | |
| |
Fair value, end of quarter | | $ | 14,953 | | | | 15,580 | | | | 14,501 | | | | 14,185 | | | | 12,061 | |
| |
(1) | Primarily represents prepayment speed changes due to changes in mortgage interest rates, but also includes other valuation changes due to changes in mortgage interest rates (such as changes in estimated interest earned on custodial deposit balances). |
(2) | Includes costs to service and unreimbursed foreclosure costs. |
(3) | Represents changes driven by other valuation model inputs or assumptions including prepayment speed estimation changes and other assumption updates. Prepayment speed estimation changes are influenced by observed changes in borrower behavior that occur independent of interest rate changes. |
(4) | Represents changes due to collection/realization of expected cash flows over time. |
| | | | | | | | | | | | | | | | | | | | |
| |
| | Quarter ended | |
| | | | |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
| | | | | |
Amortized MSRs: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Balance, beginning of quarter | | $ | 1,229 | | | | 1,204 | | | | 1,176 | | | | 1,181 | | | | 1,160 | |
Purchases | | | 40 | | | | 64 | | | | 59 | | | | 26 | | | | 27 | |
Servicing from securitizations or asset transfers | | | 14 | | | | 28 | | | | 32 | | | | 31 | | | | 56 | |
Amortization | | | (64) | | | | (67) | | | | (63) | | | | (62) | | | | (62) | |
| |
| | | | | |
Balance, end of quarter | | | 1,219 | | | | 1,229 | | | | 1,204 | | | | 1,176 | | | | 1,181 | |
| |
|
| |
| | | | | |
Fair value of amortized MSRs: | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Beginning of quarter | | $ | 1,575 | | | | 1,525 | | | | 1,533 | | | | 1,404 | | | | 1,400 | |
End of quarter | | | 1,624 | | | | 1,575 | | | | 1,525 | | | | 1,533 | | | | 1,404 | |
| |
39
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED)
| | | | | | | | | | | | | | | | | | | | |
| |
| |
| | Quarter ended | |
| | | | |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
| | | | | |
Servicing income, net: | | | | | | | | | | | | | | | | | | | | |
Servicing fees (1) | | $ | 1,070 | | | | 934 | | | | 966 | | | | 1,030 | | | | 997 | |
Changes in fair value of MSRs carried at fair value: | | | | | | | | | | | | | | | | | | | | |
Due to changes in valuation model inputs or assumptions (2) | | | (441) | | | | 983 | | | | (213) | | | | 1,867 | | | | 761 | |
Other changes in fair value (3) | | | (475) | | | | (424) | | | | (425) | | | | (643) | | | | (750) | |
| |
| | | | | |
Total changes in fair value of MSRs carried at fair value | | | (916) | | | | 559 | | | | (638) | | | | 1,224 | | | | 11 | |
Amortization | | | (64) | | | | (67) | | | | (63) | | | | (62) | | | | (62) | |
Net derivative gains (losses) from economic hedges (4) | | | 848 | | | | (717) | | | | 239 | | | | (1,799) | | | | (632) | |
| |
| | | | | |
Total servicing income, net | | $ | 938 | | | | 709 | | | | 504 | | | | 393 | | | | 314 | |
| |
| | | | | |
Market-related valuation changes to MSRs, net of hedge results (2)+(4) | | $ | 407 | | | | 266 | | | | 26 | | | | 68 | | | | 129 | |
| |
(1) | Includes contractually specified servicing fees, late charges and other ancillary revenues. |
(2) | Refer to the changes in fair value MSRs table on the previous page for more detail. |
(3) | Represents changes due to collection/realization of expected cash flows over time. |
(4) | Represents results from free-standing derivatives (economic hedges) used to hedge the risk of changes in fair value of MSRs. |
| | | | | | | | | | | | | | | | | | | | |
| |
(in billions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
Managed servicing portfolio (1): | | | | | | | | | | | | | | | | | | | | |
Residential mortgage servicing: | | | | | | | | | | | | | | | | | | | | |
Serviced for others | | $ | 1,470 | | | | 1,485 | | | | 1,494 | | | | 1,487 | | | | 1,486 | |
Owned loans serviced | | | 337 | | | | 338 | | | | 344 | | | | 358 | | | | 367 | |
Subservicing | | | 5 | | | | 6 | | | | 6 | | | | 6 | | | | 7 | |
| |
| | | | | |
Total residential servicing | | | 1,812 | | | | 1,829 | | | | 1,844 | | | | 1,851 | | | | 1,860 | |
| |
| | | | | |
Commercial mortgage servicing: | | | | | | | | | | | | | | | | | | | | |
Serviced for others | | | 424 | | | | 419 | | | | 416 | | | | 409 | | | | 404 | |
Owned loans serviced | | | 108 | | | | 107 | | | | 106 | | | | 105 | | | | 106 | |
Subservicing | | | 7 | | | | 7 | | | | 11 | | | | 11 | | | | 14 | |
| |
Total commercial servicing | | | 539 | | | | 533 | | | | 533 | | | | 525 | | | | 524 | |
| |
| | | | | |
Total managed servicing portfolio | | $ | 2,351 | | | | 2,362 | | | | 2,377 | | | | 2,376 | | | | 2,384 | |
| |
| | | | | |
Total serviced for others | | $ | 1,894 | | | | 1,904 | | | | 1,910 | | | | 1,896 | | | | 1,890 | |
Ratio of MSRs to related loans serviced for others | | | 0.85 | % | | | 0.88 | | | | 0.82 | | | | 0.81 | | | | 0.70 | |
Weighted-average note rate (mortgage loans serviced for others) | | | 4.51 | | | | 4.52 | | | | 4.54 | | | | 4.59 | | | | 4.69 | |
| |
(1) | The components of our managed servicing portfolio are presented at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced. |
SELECTED FIVE QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA
| | | | | | | | | | | | | | | | | | | | |
| |
| |
| | Quarter ended | |
| | | | |
(in billions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
| | | | | |
Application data: | | | | | | | | | | | | | | | | | | | | |
Wells Fargo first mortgage quarterly applications | | $ | 60 | | | | 65 | | | | 87 | | | | 146 | | | | 140 | |
Refinances as a percentage of applications | | | 39 | % | | | 42 | | | | 36 | | | | 54 | | | | 65 | |
Wells Fargo first mortgage unclosed pipeline, at quarter end | | $ | 27 | | | | 25 | | | | 35 | | | | 63 | | | | 74 | |
| |
| | | | | | | | | | | | | | | | | | | | |
| |
| | | | | |
Residential real estate originations: | | | | | | | | | | | | | | | | | | | | |
Wells Fargo first mortgage loans: | | | | | | | | | | | | | | | | | | | | |
Retail | | $ | 20 | | | | 26 | | | | 44 | | | | 62 | | | | 59 | |
Correspondent/Wholesale | | | 16 | | | | 23 | | | | 35 | | | | 50 | | | | 49 | |
Other (1) | | | - | | | | 1 | | | | 1 | | | | - | | | | 1 | |
| |
| | | | | |
Total quarter-to-date | | $ | 36 | | | | 50 | | | | 80 | | | | 112 | | | | 109 | |
| |
Total year-to-date | | $ | 36 | | | | 351 | | | | 301 | | | | 221 | | | | 109 | |
| |
(1) | Consists of home equity loans and lines. |
40
Wells Fargo & Company and Subsidiaries
CHANGES IN MORTGAGE REPURCHASE LIABILITY
| | | | | | | | | | | | | | | | | | | | |
| |
| | Quarter ended | |
| | | | |
(in millions) | | Mar. 31, 2014 | | | Dec. 31, 2013 | | | Sept. 30, 2013 | | | June 30, 2013 | | | Mar. 31, 2013 | |
| |
Balance, beginning of period | | $ | 899 | | | | 1,421 | | | | 2,222 | | | | 2,317 | | | | 2,206 | |
Provision for repurchase losses: | | | | | | | | | | | | | | | | | | | | |
Loan sales | | | 10 | | | | 16 | | | | 28 | | | | 40 | | | | 59 | |
Change in estimate (1) | | | (4) | | | | 10 | | | | - | | | | 25 | | | | 250 | |
| |
| | | | | |
Total additions | | | 6 | | | | 26 | | | | 28 | | | | 65 | | | | 309 | |
| | | | | |
Losses (2) | | | (106) | | | | (548) | | | | (829) | | | | (160) | | | | (198) | |
| |
| | | | | |
Balance, end of period | | $ | 799 | | | | 899 | | | | 1,421 | | | | 2,222 | | | | 2,317 | |
| |
(1) | Results from changes in investor demand and mortgage insurer practices, credit deterioration and changes in the financial stability of correspondent lenders. |
(2) | Quarter ended September 30, 2013, reflects $746 million as a result of the agreement with Freddie Mac that substantially resolves all repurchase liabilities related to loans sold to Freddie Mac prior to January 1, 2009. Quarter ended December 31, 2013, reflects $508 million as a result of the agreement with Fannie Mae that substantially resolves all repurchase liabilities related to loans sold to Fannie Mae that were originated prior to January 1, 2009. |
UNRESOLVED REPURCHASE DEMANDS AND MORTGAGE INSURANCE RESCISSIONS
| | | | | | | | | | | | | | | | |
| |
($ in millions) | | Government sponsored entities (1) | | | Private | | | Mortgage insurance rescissions with no demand (2) | | | Total | |
| |
March 31, 2014 | | | | | | | | | | | | | | | | |
Number of loans | | | 599 | | | | 391 | | | | 409 | | | | 1,399 | |
Original loan balance (3) | | $ | 126 | | | | 89 | | | | 90 | | | | 305 | |
| | | | |
December 31, 2013 | | | | | | | | | | | | | | | | |
Number of loans | | | 674 | | | | 2,260 | | | | 394 | | | | 3,328 | |
Original loan balance (3) | | $ | 124 | | | | 497 | | | | 87 | | | | 708 | |
| | | | |
September 30, 2013 | | | | | | | | | | | | | | | | |
Number of loans | | | 4,422 | | | | 1,240 | | | | 385 | | | | 6,047 | |
Original loan balance (3) | | $ | 958 | | | | 264 | | | | 87 | | | | 1,309 | |
| | | | |
June 30, 2013 | | | | | | | | | | | | | | | | |
Number of loans | | | 6,313 | | | | 1,206 | | | | 561 | | | | 8,080 | |
Original loan balance (3) | | $ | 1,413 | | �� | | 258 | | | | 127 | | | | 1,798 | |
| | | | |
March 31, 2013 | | | | | | | | | | | | | | | | |
Number of loans | | | 5,910 | | | | 1,278 | | | | 652 | | | | 7,840 | |
Original loan balance (3) | | $ | 1,371 | | | | 278 | | | | 145 | | | | 1,794 | |
| |
(1) | Includes repurchase demands of 25 and $3.2 million, 42 and $6 million, 1,247 and $225 million, 942 and $190 million, and 674 and $147 million at March 31, 2014, and December 31, September 30, June 30 and March 31, 2013, respectively, received from investors on mortgage servicing rights acquired from other originators. We generally have the right of recourse against the seller and may be able to recover losses related to such repurchase demands subject to counterparty risk associated with the seller. |
(2) | As part of our representations and warranties in our loan sales contracts, we typically represent to GSEs and private investors that certain loans have mortgage insurance to the extent there are loans that have loan to value ratios in excess of 80% that require mortgage insurance. To the extent the mortgage insurance is rescinded by the mortgage insurer due to a claim of breach of a contractual representation or warranty, the lack of insurance may result in a repurchase demand from an investor. Similar to repurchase demands, we evaluate mortgage insurance rescission notices for validity and appeal for reinstatement if the rescission was not based on a contractual breach. When investor demands are received due to lack of mortgage insurance, they are reported as unresolved repurchase demands based on the applicable investor category for the loan (GSE or private). |
(3) | While the original loan balances related to these demands are presented above, the establishment of the repurchase liability is based on a combination of factors, such as our appeals success rates, reimbursement by correspondent and other third party originators, and projected loss severity, which is driven by the difference between the current loan balance and the estimated collateral value less costs to sell the property. |