Wells Fargo Reports Record Full Year Net Income

2014 Net Income of $23.1 Billion, Up 5% from 2013; Diluted EPS of $4.10

Q4 Net Income of $5.7 Billion, Up 2% YoY; Diluted EPS of $1.02

SAN FRANCISCO--()--Wells Fargo & Company (NYSE:WFC):

Continued strong financial results:

◦ Full year 2014:

▪ Net income of $23.1 billion, up 5 percent from 2013

▪ Diluted earnings per share (EPS) of $4.10, up 5 percent

▪ Revenue of $84.3 billion, up 1 percent

▪ Pre-tax pre-provision profit (PTPP)1 of $35.3 billion, up 1 percent

▪ Return on assets (ROA) of 1.45 percent and return on equity (ROE) of 13.41 percent

▪ Returned $12.5 billion to shareholders through dividends and net share repurchases, up from $7.2 billion in 2013

◦ Fourth quarter 2014:

▪ Net income of $5.7 billion, up 2 percent from fourth quarter 2013

▪ Diluted EPS of $1.02, up 2 percent

▪ Revenue of $21.4 billion, up 4 percent

▪ PTPP1 of $8.8 billion, up 3 percent

▪ ROA of 1.36 percent and ROE of 12.84 percent

▪ Strong loan and deposit growth:

◦ Total average loans of $849.4 billion, up $36.1 billion, or 4 percent, from fourth quarter 2013

▪ Quarter-end loans of $862.6 billion, up $40.3 billion, or 5 percent

▪ Quarter-end core loans of $801.8 billion, up $60.3 billion, or 8 percent2

◦ Total average deposits of $1.1 trillion, up $89.4 billion, or 8 percent

▪ Continued strength in credit quality:

◦ Net charge-offs of $735 million, down $228 million from fourth quarter 2013

▪ Net charge-off rate of 0.34 percent (annualized), down from 0.47 percent

◦ Nonaccrual loans down $2.8 billion, or 18 percent

◦ $250 million reserve release3

▪ Maintained strong capital levels4 and increased share repurchases:

◦ Common Equity Tier 1 ratio under Basel III (Advanced Approach, fully phased-in) of 10.44 percent

◦ Period-end common shares outstanding down 44.7 million from third quarter 2014

Endnotes can be found at end of release text

Selected Financial Information

 

Quarter ended

 

Year ended Dec. 31,

Dec 31,

 

Sep 30,

 

Dec 31,

 

 
    2014   2014   2013   2014   2013
Earnings
Diluted earnings per common share $ 1.02 1.02 1.00 4.10 3.89
Wells Fargo net income (in billions) 5.71 5.73 5.61 23.06 21.88

Return on assets (ROA)

1.36

%

1.40

1.48

1.45

1.51

Return on equity (ROE)

12.84

13.10

13.81

13.41

13.87

Asset Quality
Net charge-offs (annualized) as a % of avg. total loans 0.34 % 0.32 0.47 0.35 0.56
Allowance for credit losses as a % of total loans 1.53 1.61 1.82 1.53 1.82
Allowance for credit losses as a % of annualized net charge-offs 452 509 392 447 332
Other
Revenue (in billions) $ 21.4 21.2 20.7 84.3 83.8
Efficiency ratio 59.0 % 57.7 58.5 58.1 58.3
Average loans (in billions) $ 849.4 833.2 813.3 834.4 802.7
Average core deposits (in billions) 1,036.0 1,012.2 965.8 1,003.6 942.1
Net interest margin     3.04 %   3.06   3.27   3.11   3.40
 

Wells Fargo & Company (NYSE:WFC) reported diluted earnings per common share of $4.10 for 2014, up 5 percent from $3.89 in 2013. Full year net income was $23.1 billion, compared with $21.9 billion in 2013. For fourth quarter 2014, net income was $5.7 billion, or $1.02 per share, compared with $5.6 billion, or $1.00 per share, for fourth quarter 2013.

"Wells Fargo had another strong year in 2014, with continued strength in the fundamental drivers of long-term performance: growing customers, loans, deposits and capital," said Chairman and CEO John Stumpf. "As a result of this performance, we were able to return more capital to our shareholders during the year. Our success is the result of our 265,000 team members remaining focused on meeting the financial needs of our customers in the communities we serve. As the U.S. economy continues to build momentum, I'm optimistic that our diversified business model will continue to benefit all of our stakeholders in 2015.”

Chief Financial Officer John Shrewsberry said, “Our performance in the fourth quarter was a great example of the benefit of our diversified business model and reflected a continuation of the solid results we generated all year. Compared with the prior quarter, we increased deposits and grew commercial and consumer loans while maintaining our risk and pricing discipline. Revenue increased as net interest income benefited from loan growth and the prudent deployment of our liquidity. Fee income remained strong and diversified. Credit quality continued to improve. We also maintained strong capital and liquidity, and returned more capital to shareholders in the quarter."

Revenue

Revenue was $21.4 billion in the fourth quarter, up from $21.2 billion in third quarter 2014, driven by an increase in net interest income. Revenue sources remained balanced between spread and fee income and the sources of fee income were broad-based.

Net Interest Income

Net interest income in fourth quarter 2014 increased $239 million on a linked-quarter basis to $11.2 billion. The increase resulted primarily from loan growth, an increase in investment securities, higher trading assets and slightly higher income from variable sources, including purchased credit-impaired (PCI) loan resolutions and periodic dividends. This was partially offset by lower income from a reduction in loans held-for-sale and mortgages held-for-sale.

Net interest margin was 3.04 percent, down 2 basis points from third quarter 2014, predominantly due to an increase in the average balance of cash and short-term investments driven by strong customer deposit growth and higher average balances in liquidity-related funding. While the growth in these two categories had minimal impact to net interest income, the increased deposit balances diluted net interest margin by approximately 4 basis points and the liquidity actions diluted the margin by 2 basis points. The net impact of all other balance sheet growth and repricing resulted in 3 basis points of benefit linked quarter due to a larger loan and investment portfolio. Higher interest income from variable sources benefited net interest margin by 1 basis point.

Noninterest Income

Noninterest income in the fourth quarter was $10.3 billion. On a linked-quarter basis, noninterest income was stable as increases in trust and investment fees, card fees, and other income, which included a $217 million gain related to the sale of an $8.3 billion portfolio of government guaranteed student loans, were offset by lower deposit service charges, mortgage banking fees, and market sensitive revenue5, primarily equity gains.

Trust and investment fees were $3.7 billion, up $151 million from third quarter on higher investment banking revenue, including higher loan syndication fees, high-yield debt origination fees and equity underwriting.

Mortgage banking noninterest income was $1.5 billion, down $118 million from third quarter, primarily driven by a decrease in mortgage originations in the fourth quarter. Residential mortgage originations were $44 billion in the fourth quarter, down $4 billion linked quarter, due to the seasonal slowdown in the purchase market. The gain on sale margin was 1.80 percent, compared with 1.82 percent in third quarter.

Noninterest Expense

Noninterest expense of $12.6 billion increased $399 million from third quarter 2014. This increase reflected higher personnel costs, including expenses related to fourth quarter revenue, continued investment in our risk infrastructure and some typically elevated fourth quarter costs. Compared with third quarter, deferred compensation expense was $128 million higher (offset in revenue) due to changes in market levels. Additionally, revenue-driven incentive compensation increased $77 million from the prior quarter. Fourth quarter expenses included typically higher outside professional services, which increased $116 million, equipment (up $124 million) and advertising and promotion (up $42 million). Operating losses were $108 million lower in fourth quarter, driven by lower litigation accruals in the quarter. The efficiency ratio for full year 2014 was 58.1 percent, and the Company expects to operate within its targeted efficiency ratio range of 55 to 59 percent for full year 2015.

Income Taxes

Our effective tax rate was 30.6 percent for fourth quarter 2014, compared with 31.6 percent for third quarter 2014. The lower effective tax rate in fourth quarter 2014 was due primarily to the passage of federal tax legislation renewing certain tax benefits and from the resolution of prior period matters with federal and state taxing authorities.

Loans

Total loans were $862.6 billion at December 31, 2014, up $23.7 billion from September 30, 2014, reflecting broad- based growth in our portfolios. Core loan growth was $26.0 billion, and our non-strategic/liquidating portfolios declined $2.3 billion in the quarter. Loan growth included the acquisition of the Dillard's credit card portfolio as well as $6.5 billion from the financing related to the sale of government guaranteed student loans.

                           
 

December 31, 2014

   

September 30, 2014

 

(in millions)

 

 

Core

 

Non-strategic
and liquidating (a)

 

 

Total

   

 

Core

 

Non-strategic
and liquidating

 

 

Total

Commercial $ 413,701   1,125   414,826 394,894   1,465   396,359
Consumer     388,062   59,663     447,725     380,897   61,627     442,524
Total loans   $ 801,763   60,788     862,551     775,791   63,092     838,883
Change from prior quarter:   $ 25,972   (2,304 )   23,668     12,193   (2,252 )   9,941
 

(a) See NON-STRATEGIC AND LIQUIDATING LOAN PORTFOLIOS table 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.

 

Investment Securities

Investment securities were $312.9 billion at December 31, 2014, up $23.9 billion from third quarter. Purchases of approximately $35 billion, primarily U.S. Treasury and federal agency securities, were partially offset by run-off and maturities.

The Company had net unrealized available-for-sale securities gains of $7.8 billion at December 31, 2014, up from $6.6 billion at September 30, 2014, primarily driven by marketable equity securities.

Deposits

Average total deposits for fourth quarter 2014 were $1.1 trillion, up 8 percent from a year ago and up 8 percent (annualized) from third quarter 2014, driven by both commercial and consumer growth. The average deposit cost for fourth quarter 2014 was 9 basis points, an improvement of 1 basis point from the prior quarter and 2 basis points from a year ago. Average core deposits were $1.0 trillion, up 7 percent from a year ago and up 9 percent (annualized) from third quarter 2014. Average mortgage escrow deposits were $29.2 billion, compared with $28.2 billion a year ago and $30.7 billion in third quarter 2014.

Capital

Capital levels continued to be strong in the fourth quarter, with Common Equity Tier 1 of $137.2 billion under Basel III (General Approach), or 11.04 percent of risk-weighted assets. The Common Equity Tier 1 ratio under Basel III (Advanced Approach, fully phased-in) was 10.44 percent4. In fourth quarter 2014, the Company purchased 61.6 million shares of its common stock and entered into a $750 million forward repurchase transaction for an additional estimated 14.3 million shares which is expected to settle in first quarter 2015. The Company also paid a quarterly common stock dividend of $0.35 per share, up from $0.30 per share a year ago.

                     
         

Dec 31,

 

Sep 30,

 

Dec 31,

           

2014 (a)

 

2014

  2013
Common Equity Tier 1 (b)

11.04%

11.11 10.82
Tier 1 capital

12.45

12.55 12.33
Tier 1 leverage          

9.45

  9.64   9.60
 

(a) December 31, 2014, ratios are preliminary.

(b) See FIVE QUARTER RISK-BASED CAPITAL COMPONENTS table for more information on Common Equity Tier 1.

 

Credit Quality

“Credit losses were 0.35 percent of average loans in 2014 and remained near historic lows. In the fourth quarter, loan losses remained low, nonperforming assets decreased, and delinquency rates were stable compared with the prior quarter, and we continued to grow the portfolio with high quality loans,” said Chief Risk Officer Mike Loughlin. “Credit losses were $735 million in fourth quarter 2014, compared with $963 million in fourth quarter 2013, a 24 percent improvement. The quarterly loss rate (annualized) was 0.34 percent with commercial losses of 0.03 percent and consumer losses of 0.63 percent. Nonperforming assets declined by $739 million, or 18 percent (annualized), from the prior quarter. We released $250 million from the allowance for credit losses in the fourth quarter, reflecting continued credit quality improvement. Future allowance levels may increase or decrease based on a variety of factors, including loan growth, portfolio performance and general economic conditions."

Net Loan Charge-offs

Net loan charge-offs were $735 million in fourth quarter 2014, or 0.34 percent (annualized) of average loans, compared with $668 million in third quarter 2014, or 0.32 percent (annualized) of average loans.

Net Loan Charge-Offs

 

 

Quarter ended

 

 

December 31, 2014

 

September 30, 2014

 

June 30, 2014

 

($ in millions)

 

Net
loan
charge-
offs

 

As a
% of
average
loans (a)

 

Net
loan
charge-
offs

 

As a
% of
average
loans (a)

 

Net
loan
charge-
offs

 

As a
% of
average
loans (a)

Commercial:          
Commercial and industrial

$

82

0.12 % $ 67 0.11 % $ 60 0.10 %
Real estate mortgage (25 ) (0.09 ) (37 ) (0.13 ) (10 ) (0.04 )
Real estate construction (26 ) (0.56 ) (58 ) (1.27 ) (20 ) (0.47 )
Lease financing     1   0.05   4   0.10   1   0.05
Total commercial     32   0.03   (24 ) (0.02 )   31   0.03
Consumer:
Real estate 1-4 family first mortgage 88 0.13 114 0.17 137 0.21
Real estate 1-4 family junior lien mortgage 134 0.88 140 0.90 160 1.02
Credit card 221 2.97 201 2.87 211 3.20
Automobile 132 0.94 112 0.81 46 0.35
Other revolving credit and installment     128   1.45   125   1.46   132   1.22
Total consumer     703   0.63   692   0.62   686   0.62
Total   $ 735     0.34 %   $ 668     0.32 %   $ 717     0.35 %
 

(a) Quarterly net charge-offs as a percentage of average loans are annualized. See explanation in PURCHASED CREDIT-IMPAIRED (PCI) LOANS section of the accounting for purchased credit-impaired (PCI) loans and the impact on selected financial ratios.

 

Nonperforming Assets

Nonperforming assets decreased by $739 million from third quarter to $15.5 billion. Nonaccrual loans decreased $517 million to $12.8 billion. Foreclosed assets were $2.6 billion, down from $2.8 billion in third quarter 2014 on lower government insured/guaranteed and commercial balances.

Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)

 

 

December 31, 2014

 

September 30, 2014

 

June 30, 2014

 

($ in millions)

 

Total
balances

 

As a
% of
total
loans

 

Total
balances

 

As a
% of
total
loans

 

Total
balances

 

As a
% of
total
loans

Commercial:            
Commercial and industrial

$

538

0.20 % $ 614 0.24 % $ 724 0.29 %
Real estate mortgage 1,490 1.33 1,636 1.46 1,805 1.59
Real estate construction 187 1.00 217 1.20 239 1.38
Lease financing     24   0.20   27   0.22   29   0.24
Total commercial     2,239   0.54   2,494   0.63   2,797   0.71
Consumer:
Real estate 1-4 family first mortgage 8,583 3.23 8,785 3.34 9,026 3.47
Real estate 1-4 family junior lien mortgage 1,848 3.09 1,903 3.13 1,965 3.14
Automobile 137 0.25 143 0.26 150 0.28
Other revolving credit and installment     41   0.11   40   0.11   34   0.10
Total consumer     10,609   2.37   10,871   2.46   11,175   2.55
Total nonaccrual loans     12,848   1.49   13,365   1.59   13,972   1.69
Foreclosed assets:
Government insured/guaranteed (a) 982 1,140 1,257
Non-government insured/guaranteed     1,627     1,691     1,748  
Total foreclosed assets     2,609     2,831     3,005  
Total nonperforming assets   $ 15,457   1.79 % $ 16,196   1.93 % $ 16,977   2.05 %

Change from prior quarter:

Total nonaccrual loans

$

(517

)

$

(607

)

$

(1,095

)

Total nonperforming assets

   

(739

)

       

(781

)

       

(678

)

   
 

(a) During fourth quarter 2014, we adopted Accounting Standards Update (ASU) 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure, effective as of January 1, 2014. This ASU requires that government guaranteed real estate mortgage loans that meet specific criteria be recognized as other receivables upon foreclosure; previously, these assets were included in foreclosed assets. Government guaranteed residential real estate mortgage loans that completed foreclosure during 2014 and met the criteria specified by ASU 2014-14 are excluded from this table and included in Accounts Receivable in Other Assets.

 

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 $920 million at December 31, 2014, compared with $946 million at September 30, 2014. 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 $16.9 billion at December 31, 2014, down from $17.3 billion at September 30, 2014.

Allowance for Credit Losses

The allowance for credit losses, including the allowance for unfunded commitments, totaled $13.2 billion at December 31, 2014, down from $13.5 billion at September 30, 2014. The allowance coverage to total loans was 1.53 percent, compared with 1.61 percent in third quarter 2014. The allowance covered 4.5 times annualized fourth quarter net charge-offs, compared with 5.1 times in the prior quarter. The allowance coverage to nonaccrual loans was 103 percent at December 31, 2014, compared with 101 percent at September 30, 2014. “We believe the allowance was appropriate for losses inherent in the loan portfolio at December 31, 2014,” said Loughlin.

Business Segment Performance

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

                     
          Quarter ended

Dec 31,

  Sep 30,   Dec 31,
(in millions)          

2014

  2014   2013
Community Banking

$

3,435

3,470 3,222
Wholesale Banking

1,970

1,920 2,111
Wealth, Brokerage and Retirement            

514

  550   491
 

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

          Quarter ended

Dec 31,

  Sep 30,   Dec 31,
(in millions)          

2014

  2014   2013
Total revenue

$

12,835

12,828 12,254
Provision for credit losses

518

465 490
Noninterest expense

7,281

7,051 7,073
Segment net income

3,435

3,470 3,222
(in billions)
Average loans

503.8

498.6 502.5
Average assets

974.9

950.2 883.6
Average core deposits

655.6

646.9 620.2
 

Community Banking reported net income of $3.4 billion, down $35 million, or 1 percent, from third quarter 2014. Revenue of $12.8 billion was up slightly as higher net interest income, credit card fees, gains on deferred compensation plan investments (offset in employee benefits expense), and a gain on sale of government guaranteed student loans were largely offset by lower market sensitive revenue, mainly lower gains on sale of debt securities and equity investments. Noninterest expense increased $230 million, or 3 percent, from the prior quarter due to higher equipment expense, project spending, and deferred compensation plan expense (offset in trading revenue), partially offset by lower operating losses. The provision for credit losses increased $53 million from the prior quarter.

Net income was up $213 million, or 7 percent, from fourth quarter 2013. Revenue increased $581 million, or 5 percent, from a year ago primarily due to higher net interest income, trust and investment fees, revenue from debit and credit card volumes, gains on sale of debt securities, and a gain on sale of government guaranteed student loans, partially offset by lower gains on equity investments. Noninterest expense increased $208 million, or 3 percent, from a year ago driven by higher personnel expenses and operating losses, partially offset by lower FDIC expense. The provision for credit losses increased $28 million from a year ago as the $232 million improvement in net charge-offs was more than offset by a lower reserve release.

Regional Banking

• Retail banking

◦ Primary consumer checking customers6 up 5.2 percent year-over-year7

◦ Retail Bank household cross-sell ratio of 6.17 products per household, up from 6.16 year-over-year7

• Small Business/Business Banking

◦ Primary business checking customers6 up 5.4 percent year-over-year7

◦ Combined Business Direct credit card, lines of credit and loan product solutions (primarily under $100,000 sold through our retail banking stores) in 2014 were up 22 percent from 2013

◦ $18 billion in new loan commitments to small business customers (primarily with annual revenues less than $20 million) in 2014

◦ For sixth consecutive year, Wells Fargo was nation's #1 SBA 7(a) small business lender in dollars8

• Online and Mobile Banking

◦ 24.8 million active online customers, up 8 percent year-over-year7

◦ 14.1 million active mobile customers, up 19 percent year-over-year7

◦ Wells Fargo named "Best App" in Money magazine's "Best Banks in America" annual list (October 2014)

Consumer Lending Group

• Home Lending

◦ Originations of $44 billion, down from $48 billion in prior quarter

◦ Applications of $66 billion, up from $64 billion in prior quarter

◦ Application pipeline of $26 billion at quarter end, up from $25 billion at September 30, 2014

◦ Residential mortgage servicing portfolio of $1.8 trillion; ratio of MSRs to related loans serviced for others was 75 basis points, compared with 82 basis points in prior quarter

◦ Average note rate on the servicing portfolio was 4.45 percent, compared with 4.47 percent in prior quarter

• Consumer Credit

◦ Credit card penetration in retail banking households rose to 41.5 percent7, up from 37.0 percent in prior year

◦ Auto originations of $6.7 billion in fourth quarter, down 1 percent from prior year

Wholesale Banking provides 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

Dec 31,

  Sep 30,   Dec 31,
(in millions)          

2014

  2014     2013  
Total revenue

$

6,054

5,902 5,972
Reversal of provision for credit losses

(39

)

(85 ) (125 )
Noninterest expense

3,307

3,250 3,020
Segment net income

1,970

1,920 2,111
(in billions)
Average loans

326.8

316.5 294.6
Average assets

573.3

553.0 509.0
Average core deposits            

292.4

    278.4     258.5  
 

Wholesale Banking reported net income of $2.0 billion, up $50 million, or 3 percent, from third quarter 2014. Revenue of $6.1 billion increased $152 million, or 3 percent, from prior quarter. Net interest income increased $97 million, or 3 percent, due to higher loan and other earning asset balances. Noninterest income increased $55 million, or 2 percent, driven by growth in investment banking fees, loan fees and commercial real estate brokerage fees. Noninterest expense increased $57 million, or 2 percent, linked quarter as seasonally higher project spending as well as higher personnel costs were partially offset by seasonally lower insurance commissions. The provision for credit losses increased $46 million from prior quarter due to a reduced level of net recoveries and lower reserve release.

Net income was down $141 million, or 7 percent, from fourth quarter 2013. Revenue increased $82 million, or 1 percent, from fourth quarter 2013 on strong loan and deposit growth, and higher investment banking, treasury management, commercial real estate brokerage and foreign exchange fees, as well as increased gains on equity investments. Noninterest expense increased $287 million, or 10 percent, from a year ago primarily due to expenses related to growth initiatives, compliance, and regulatory requirements. The provision for credit losses increased $86 million from a year ago primarily due to a $72 million lower reserve release.

  • Average loans increased 11 percent in fourth quarter 2014, compared with fourth quarter 2013, on broad- based growth, including asset-backed finance, capital finance, commercial banking, commercial real estate, corporate banking, equipment finance, government and institutional banking, and real estate capital markets
  • Cross-sell of 7.2 products per relationship, up from 7.1 in fourth quarter 2013 driven by new product sales to existing customers
  • Treasury management revenue up 11 percent from fourth quarter 2013
  • Assets under management of $496 billion, up $9 billion from fourth quarter 2013, including a $5 billion increase in fixed income assets under management reflecting increased market valuations and net inflows
  • Wells Fargo Insurance was named Best Insurance Broker in North America by Global Finance magazine (January 2015)

Wealth, Brokerage and Retirement provides a full range of financial advisory services to clients using a planning approach to meet each client’s financial 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 and reinsurance services for the life insurance industry.

Selected Financial Information                    
          Quarter ended

Dec 31,

  Sep 30,   Dec 31,
(in millions)          

2014

  2014   2013
Total revenue

$

3,647

3,553 3,438
Provision (reversal of provision) for credit losses

8

(25 ) (11 )
Noninterest expense

2,811

2,690 2,655
Segment net income

514

550 491
(in billions)
Average loans

54.8

52.6 48.4
Average assets

192.2

188.8 185.3
Average core deposits            

157.0

  153.6     153.9  
 

Wealth, Brokerage and Retirement (WBR) reported net income of $514 million, down $36 million, or 7 percent, from third quarter 2014. Revenue of $3.6 billion increased $94 million from the prior quarter, driven largely by increased net interest income and higher gains on deferred compensation plan investments (offset in compensation expense). Noninterest expense increased $121 million, or 4 percent, from the prior quarter driven primarily by higher deferred compensation plan expense (offset in trading revenue) and higher project spend for technology platform enhancements. The provision for credit losses increased $33 million from third quarter 2014.

Net income was up $23 million, or 5 percent, from fourth quarter 2013. Revenue increased $209 million, or 6 percent, from a year ago as strong growth in asset-based fees and higher net interest income were partially offset by lower gains on deferred compensation plan investments (offset in compensation expense) and lower brokerage transaction revenue. Noninterest expense increased $156 million, or 6 percent, from a year ago primarily due to increased non-personnel expenses, primarily higher FDIC expense, as well as increased broker commissions, partially offset by lower deferred compensation plan expense (offset in trading revenue). The provision for credit losses was up $19 million from a year ago.

Retail Brokerage

  • Client assets of $1.4 trillion, up 4 percent from prior year
  • Managed account assets of $423 billion, increased $48 billion, or 13 percent, from prior year, reflecting net flows and increased market valuations
  • Strong loan growth, with average balances up 21 percent from prior year largely due to growth in non-conforming mortgages and security-based lending

Wealth Management

  • Client assets of $225 billion, up 5 percent from prior year
  • Loan growth, with average balances up 10 percent over prior year predominantly driven by growth in non-conforming mortgages

Retirement

  • IRA assets of $359 billion, up 5 percent from prior year
  • Institutional Retirement plan assets of $341 billion, up 2 percent from prior year

WBR cross-sell ratio of 10.49 products per household, up from 10.42 a year ago

Conference Call

The Company will host a live conference call on Wednesday, January 14, at 7 a.m. PST (10 a.m. EST). You may participate by dialing 866-872-5161 (U.S. and Canada) or 706-643-1962 (International). The call will also be available online at wellsfargo.com/invest_relations/earnings and at https://engage.vevent.com/rt/ wells_fargo_ao~011415.

A replay of the conference call will be available beginning at 10 a.m. PST (1 p.m. EST) on January 14 through Wednesday, January 21. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID #36848763. The replay will also be available online at wellsfargo.com/invest_relations/earnings and at https://engage.vevent.com/rt/wells_fargo_ao~011415.

Endnotes

1

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

2

See Loans table in release text 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 FIVE QUARTER RISK-BASED CAPITAL COMPONENTS table 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.

5

Consists of net gains from trading activities, debt securities and equity investments.

6

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

7

Data as of November 2014, comparisons with November 2013; November 2014 Retail Bank household cross-sell ratio includes the Dillard's credit card portfolio acquisition.

8

U.S. SBA data, federal fiscal years 2009-2014 (year-ending September).
 

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;
  • 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.

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.7 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 8,700 locations, 12,500 ATMs, and the internet (wellsfargo.com), and has offices in 36 countries to support customers who conduct business in the global economy. With approximately 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune’s 2014 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.

 

Wells Fargo & Company and Subsidiaries

QUARTERLY FINANCIAL DATA

TABLE OF CONTENTS

 

Pages

 
 

Summary Information

Summary Financial Data 17
 

Income

Consolidated Statement of Income 19
Consolidated Statement of Comprehensive Income 21
Condensed Consolidated Statement of Changes in Total Equity 21
Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) 22
Five Quarter Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) 24
Noninterest Income and Noninterest Expense 25
 

Balance Sheet

Consolidated Balance Sheet 27
Investment Securities 29
 

Loans

Loans 29
Nonperforming Assets 30
Loans 90 Days or More Past Due and Still Accruing 31
Purchased Credit-Impaired Loans 32
Pick-A-Pay Portfolio 35
Non-Strategic and Liquidating Loan Portfolios 35
Changes in Allowance for Credit Losses 36
 

Equity

Five Quarter Risk-Based Capital Components 38
Common Equity Tier 1 Under Basel III 39
 

Operating Segments

Operating Segment Results 40
 

Other

Mortgage Servicing and other related data 42
 
Wells Fargo & Company and Subsidiaries

SUMMARY FINANCIAL DATA

       

% Change

     
Quarter ended Dec 31, 2014 from Year ended

 

Dec 31,

Sep 30, Dec 31, Sep 30,   Dec 31,

Dec 31,

Dec 31, %

($ in millions, except per share amounts)

   

2014

  2014   2013   2014   2013    

2014

  2013   Change

For the Period

Wells Fargo net income

$

5,709

5,729 5,610 % 2

$

23,057

21,878 5 %

Wells Fargo net income applicable to common stock

5,382

5,408 5,369

21,821

20,889 4
Diluted earnings per common share

1.02

1.02 1.00 2

4.10

3.89 5
Profitability ratios (annualized):

Wells Fargo net income to average assets (ROA) (1)

1.36

%

1.40 1.48 (3 ) (8 )

1.45

1.51 (4 )

Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)

12.84

13.10 13.81 (2 ) (7 )

13.41

13.87 (3 )
Efficiency ratio (2)

59.0

57.7 58.5 2

1

58.1

58.3
Total revenue

$

21,443

21,213 20,665 1 4

$

84,347

83,780 1
Pre-tax pre-provision profit (PTPP) (3)

8,796

8,965 8,580 (2 ) 3

35,310

34,938 1
Dividends declared per common share

0.35

0.35 0.30 17

1.35

1.15 17
Average common shares outstanding

5,192.5

5,225.9 5,270.3 (1 ) (1 )

5,237.2

5,287.3 (1 )
Diluted average common shares outstanding

5,279.2

5,310.4 5,358.6 (1 ) (1 )

5,324.4

5,371.2 (1 )
Average loans (1)

$

849,429

833,199 813,318 2 4

$

834,432

802,670 4
Average assets (1)

1,663,760

1,617,942 1,505,766 3 10

1,593,349

1,445,983 10
Average core deposits (4)

1,035,999

1,012,219 965,828 2 7

1,003,631

942,120 7
Average retail core deposits (5)

714,572

703,062 679,355 2 5

701,829

669,657 5
Net interest margin (1)

3.04

%

3.06 3.27 (1 ) (7 )

3.11

3.40 (9 )

At Period End

Investment securities

$

312,925

289,009 264,353 8 18

$

312,925

264,353 18
Loans (1)

862,551

838,883 822,286 3 5

862,551

822,286 5
Allowance for loan losses

12,319

12,681 14,502 (3 ) (15 )

12,319

14,502

(15

)

Goodwill

25,705

25,705 25,637

25,705

25,637
Assets (1)

1,687,155

1,636,855 1,523,502 3 11

1,687,155

1,523,502 11
Core deposits (4)

1,054,348

1,016,478 980,063 4 8

1,054,348

980,063 8
Wells Fargo stockholders’ equity

184,394

182,481 170,142 1 8

184,394

170,142 8
Total equity

185,262

182,990 171,008 1 8

185,262

171,008 8
Capital ratios:
Total equity to assets (1)

10.98

%

11.18 11.22 (2 ) (2 )

10.98

11.22

(2

)

Risk-based capital (6):

Tier 1 capital

12.45

12.55 12.33 (1 ) 1

12.45

12.33 1
Total capital

15.54

15.58 15.43 1

15.54

15.43 1
Tier 1 leverage (6)

9.45

9.64 9.60 (2 ) (2 )

9.45

9.60

(2

)

Common Equity Tier 1 (6)(7)

11.04

11.11 10.82 (1 ) 2

11.04

10.82 2
Common shares outstanding

5,170.3

5,215.0 5,257.2 (1 ) (2 )

5,170.3

5,257.2

(2

)

Book value per common share

$

32.19

31.55 29.48 2 9

$

32.19

29.48 9
Common stock price:
High

55.95

53.80 45.64 4 23

55.95

45.64 23
Low

46.44

49.47 40.07 (6 ) 16

44.17

34.43 28
Period end

54.82

51.87 45.40 6 21

54.82

45.40 21
Team members (active, full-time equivalent)    

264,500

    263,900   264,900            

264,500

  264,900    
 

(1) Financial information for certain periods prior to 2014 was revised to reflect our determination that certain factoring arrangements did not qualify as loans. Accordingly, we revised our commercial loan balances for year-end 2012 and each of the quarters in 2013 in order to present the Company’s lending trends on a comparable basis 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, September 30, June 30, and 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 financial guarantees and financial 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 December 31, 2014, ratios are preliminary.
(7) See the “Five Quarter Risk-Based Capital Components” table for additional information.
 
Wells Fargo & Company and Subsidiaries

FIVE QUARTER SUMMARY FINANCIAL DATA

  Quarter ended

Dec 31,

 

Sep 30,

  Jun 30,   Mar 31,  

Dec 31,

($ in millions, except per share amounts)  

2014

  2014   2014   2014   2013

For the Quarter

Wells Fargo net income

$

5,709

5,729 5,726 5,893 5,610
Wells Fargo net income applicable to common stock

5,382

5,408 5,424 5,607 5,369
Diluted earnings per common share

1.02

1.02 1.01 1.05 1.00
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) (1)

1.36

%

1.40 1.47 1.57 1.48

Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)

12.84

13.10 13.40 14.35 13.81
Efficiency ratio (2)

59.0

57.7 57.9 57.9 58.5
Total revenue

$

21,443

21,213 21,066 20,625 20,665
Pre-tax pre-provision profit (PTPP) (3)

8,796

8,965 8,872 8,677 8,580
Dividends declared per common share

0.35

0.35 0.35 0.30 0.30
Average common shares outstanding

5,192.5

5,225.9 5,268.4 5,262.8 5,270.3
Diluted average common shares outstanding

5,279.2

5,310.4 5,350.8 5,353.3 5,358.6
Average loans (1)

849,429

833,199 831,043 823,790 813,318
Average assets (1)

1,663,760

1,617,942 1,564,003 1,525,905 1,505,766
Average core deposits (4)

1,035,999

1,012,219 991,727 973,801 965,828
Average retail core deposits (5)

714,572

703,062 698,763 690,643 679,355
Net interest margin (1)

3.04

%

3.06 3.15 3.20 3.27

At Quarter End

Investment securities

$

312,925

289,009 279,069 270,327 264,353
Loans (1)

862,551

838,883 828,942 826,443 822,286
Allowance for loan losses

12,319

12,681 13,101 13,695 14,502
Goodwill

25,705

25,705 25,705 25,637 25,637
Assets (1)

1,687,155

1,636,855 1,598,874 1,546,707 1,523,502
Core deposits (4)

1,054,348

1,016,478 1,007,485 994,185 980,063
Wells Fargo stockholders’ equity

184,394

182,481 180,859 175,654 170,142
Total equity

185,262

182,990 181,549 176,469 171,008
Capital ratios:
Total equity to assets (1)

10.98

%

11.18 11.35 11.41 11.22
Risk-based capital (6):
Tier 1 capital

12.45

12.55 12.72 12.63 12.33
Total capital

15.54

15.58 15.89 15.71 15.43
Tier 1 leverage (6)

9.45

9.64 9.86 9.84 9.60
Common Equity Tier 1 (6)(7)

11.04

11.11 11.31 11.36 10.82
Common shares outstanding

5,170.3

5,215.0 5,249.9 5,265.7 5,257.2
Book value per common share

$

32.19

31.55 31.18 30.48 29.48
Common stock price:
High

55.95

53.80 53.05 49.97 45.64
Low

46.44

49.47 46.72 44.17 40.07
Period end

54.82

51.87 52.56 49.74 45.40
Team members (active, full-time equivalent)    

264,500

    263,900   263,500   265,300   264,900
 

(1) Financial information for certain periods prior to 2014 was revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table 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 December 31, 2014, ratios are preliminary.
(7) See the “Five Quarter Risk-Based Capital Components” table for additional information.
 
Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME

 

Quarter ended Dec 31,

 

%

   

Year ended Dec 31,

 

%

(in millions, except per share amounts)   2014   2013     Change     2014   2013     Change
Interest income    
Trading assets $ 477 378 26 % $ 1,685 1,376 22 %
Investment securities 2,150 2,119 1 8,438 8,116 4
Mortgages held for sale 187 221 (15 ) 767 1,290 (41 )
Loans held for sale 25 3 733 78 13 500
Loans 9,091 8,907 2 35,652 35,571
Other interest income     253   208   22   932   723   29

Total interest income

   

12,183

 

11,836

 

3

 

47,552

 

47,089

 

1

Interest expense
Deposits 269 297 (9 ) 1,096 1,337 (18 )
Short-term borrowings 18 14 29 59 60 (2 )
Long-term debt 620 635 (2 ) 2,488 2,585 (4 )
Other interest expense     96   87   10   382   307   24

Total interest expense

   

1,003

 

1,033

 

(3

)

 

4,025

 

4,289

 

(6

)

Net interest income 11,180 10,803 3 43,527 42,800 2
Provision for credit losses     485   363   34   1,395   2,309   (40 )
Net interest income after provision for credit losses     10,695   10,440   2   42,132   40,491   4
Noninterest income
Service charges on deposit accounts 1,241 1,283 (3 ) 5,050 5,023 1
Trust and investment fees 3,705 3,458 7 14,280 13,430 6
Card fees 925 827 12 3,431 3,191 8
Other fees 1,124 1,119 4,349 4,340
Mortgage banking 1,515 1,570 (4 ) 6,381 8,774 (27 )
Insurance 382 453 (16 ) 1,655 1,814 (9 )
Net gains from trading activities 179 325 (45 ) 1,161 1,623 (28 )
Net gains (losses) on debt securities 186 (14 ) NM 593 (29 ) NM
Net gains from equity investments 372 654 (43 ) 2,380 1,472 62
Lease income 127 148 (14 ) 526 663 (21 )
Other     507   39   NM   1,014   679   49
Total noninterest income     10,263   9,862   4   40,820   40,980  
Noninterest expense
Salaries 3,938 3,811 3 15,375 15,152 1
Commission and incentive compensation 2,582 2,347 10 9,970 9,951
Employee benefits 1,124 1,160 (3 ) 4,597 5,033 (9 )
Equipment 581 567 2 1,973 1,984 (1 )
Net occupancy 730 732 2,925 2,895 1
Core deposit and other intangibles 338 375 (10 ) 1,370 1,504 (9 )
FDIC and other deposit assessments 231 196 18 928 961 (3 )
Other     3,123   2,897   8   11,899   11,362   5
Total noninterest expense     12,647   12,085   5   49,037   48,842  
Income before income tax expense 8,311 8,217 1 33,915 32,629 4
Income tax expense     2,519   2,504   1   10,307   10,405   (1 )
Net income before noncontrolling interests 5,792 5,713 1 23,608 22,224 6
Less: Net income from noncontrolling interests     83   103   (19 )   551   346   59
Wells Fargo net income   $ 5,709   5,610   2 $ 23,057   21,878   5
Less: Preferred stock dividends and other     327   241   36   1,236   989   25
Wells Fargo net income applicable to common stock   $ 5,382   5,369   $ 21,821   20,889   4
Per share information
Earnings per common share $ 1.04 1.02 2 $ 4.17 3.95 6
Diluted earnings per common share 1.02 1.00 2 4.10 3.89 5
Dividends declared per common share 0.35 0.30 17 1.35 1.15 17
Average common shares outstanding 5,192.5 5,270.3 (1 ) 5,237.2 5,287.3 (1 )
Diluted average common shares outstanding     5,279.2   5,358.6     (1 )       5,324.4   5,371.2     (1 )

NM - Not meaningful

 
Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME

 

 

Quarter ended

(in millions, except per share amounts)

 

Dec 31,

2014

 

Sep 30,

2014

 

Jun 30,

2014

 

Mar 31,

2014

 

Dec 31,

2013

Interest Income        
Trading assets $ 477 427 407 374 378
Investment securities 2,150 2,066 2,112 2,110 2,119
Mortgages held for sale 187 215 195 170 221
Loans held for sale 25 50 1 2 3
Loans 9,091 8,963 8,852 8,746 8,907
Other interest income     253   243   226   210   208  

Total interest income

   

12,183

 

11,964

 

11,793

 

11,612

 

11,836

 
Interest expense
Deposits 269 273 275 279 297
Short-term borrowings 18 15 14 12 14
Long-term debt 620 629 620 619 635
Other interest expense     96   106   93   87   87  

Total interest expense

   

1,003

 

1,023

 

1,002

 

997

 

1,033

 
Net interest income 11,180 10,941 10,791 10,615 10,803
Provision for credit losses     485   368   217   325   363  
Net interest income after provision for credit losses     10,695   10,573   10,574   10,290   10,440  
Noninterest income
Service charges on deposit accounts 1,241 1,311 1,283 1,215 1,283
Trust and investment fees 3,705 3,554 3,609 3,412 3,458
Card fees 925 875 847 784 827
Other fees 1,124 1,090 1,088 1,047 1,119
Mortgage banking 1,515 1,633 1,723 1,510 1,570
Insurance 382 388 453 432 453
Net gains from trading activities 179 168 382 432 325
Net gains (losses) on debt securities 186 253 71 83 (14 )
Net gains from equity investments 372 712 449 847 654
Lease income 127 137 129 133 148
Other     507   151   241   115   39  
Total noninterest income     10,263   10,272   10,275   10,010   9,862  
Noninterest expense
Salaries 3,938 3,914 3,795 3,728 3,811
Commission and incentive compensation 2,582 2,527 2,445 2,416 2,347
Employee benefits 1,124 931 1,170 1,372 1,160
Equipment 581 457 445 490 567
Net occupancy 730 731 722 742 732
Core deposit and other intangibles 338 342 349 341 375
FDIC and other deposit assessments 231 229 225 243 196
Other     3,123   3,117   3,043   2,616   2,897  
Total noninterest expense     12,647   12,248   12,194   11,948   12,085  
Income before income tax expense 8,311 8,597 8,655 8,352 8,217
Income tax expense     2,519   2,642   2,869   2,277   2,504  
Net income before noncontrolling interests 5,792 5,955 5,786 6,075 5,713
Less: Net income from noncontrolling interests     83   226   60   182   103  
Wells Fargo net income   $ 5,709   5,729   5,726   5,893   5,610  
Less: Preferred stock dividends and other     327   321   302   286   241  
Wells Fargo net income applicable to common stock   $ 5,382   5,408   5,424   5,607   5,369  
Per share information
Earnings per common share $ 1.04 1.04 1.02 1.07 1.02
Diluted earnings per common share 1.02 1.02 1.01 1.05 1.00
Dividends declared per common share 0.35 0.35 0.35 0.30 0.30
Average common shares outstanding 5,192.5 5,225.9 5,268.4 5,262.8 5,270.3
Diluted average common shares outstanding     5,279.2   5,310.4   5,350.8   5,353.3   5,358.6  
 

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

Quarter ended Dec 31,

 

%

 

Year ended Dec 31,

 

%

(in millions)   2014     2013     Change   2014     2013     Change
Wells Fargo net income   $ 5,709     5,610   2 % $ 23,057     21,878   5 %

Other comprehensive income (loss), before tax:

   
Investment securities:
Net unrealized gains (losses) arising during the period 1,560 (1,739 ) NM 5,426 (7,661 ) NM

Reclassification of net gains to net income

(327

)

(88

)

(272 )

(1,532

)

(285

)

438

Derivatives and hedging activities:
Net unrealized gains (losses) arising during the period 730 (22 ) NM 952 (32 ) NM

Reclassification of net gains on cash flow hedges to net income

(197

)

(71

)

177

(545

)

(296

)

84

Defined benefit plans adjustments:
Net actuarial gains (losses) arising during the period (1,104 ) 458 NM (1,116 ) 1,533 NM
Amortization of net actuarial loss, settlements and other to net income

18

55

(67

)

74

276

(73

)

Foreign currency translation adjustments:
Net unrealized losses arising during the period

(28

)

(17

)

65 (60 ) (44 ) 36
Reclassification of net (gains) losses to net income            

6

    (12 ) NM
Other comprehensive income (loss), before tax 652 (1,424 ) NM 3,205

(6,521

)

NM
Income tax (expense) benefit related to other comprehensive income     (213 )   522   NM   (1,300 )   2,524   NM
Other comprehensive income (loss), net of tax 439 (902 ) NM 1,905 (3,997 ) NM
Less: Other comprehensive income (loss) from noncontrolling interests     39     1   NM   (227 )   267   NM
Wells Fargo other comprehensive income (loss), net of tax     400     (903 ) NM   2,132     (4,264 ) NM
Wells Fargo comprehensive income 6,109 4,707 30 25,189 17,614 43
Comprehensive income from noncontrolling interests     122     104   17   324     613   (47 )
Total comprehensive income   $ 6,231     4,811     30     $ 25,513     18,227     40  

NM - Not meaningful

 

FIVE QUARTER CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

 

 

Quarter ended

 

(in millions)

 

Dec 31,

2014

   

Sep 30,

2014

   

Jun 30,

2014

   

Mar 31,

2014

   

Dec 31,

2013

 
Balance, beginning of period $ 182,990   181,549   176,469   171,008   168,813
Wells Fargo net income 5,709 5,729 5,726 5,893 5,610
Wells Fargo other comprehensive income (loss), net of tax 400 (999 ) 1,365 1,366 (903 )
Common stock issued 508 402 579 994 353
Common stock repurchased (1) (2,945 ) (2,490 ) (2,954 ) (1,025 ) (1,378 )
Preferred stock released by ESOP 166 170 430 305 122
Preferred stock issued 780 1,995 828
Common stock warrants exercised/repurchased (9 )
Common stock dividends (1,816 ) (1,828 ) (1,844 ) (1,579 ) (1,582 )
Preferred stock dividends and other (327 ) (321 ) (302 ) (286 ) (241 )
Noncontrolling interests and other, net     586     (2 )   85     (207 )   (614 )
Balance, end of period   $ 185,262     182,990     181,549     176,469     171,008  
 

(1) For the quarter ended December 31, 2014, includes $750 million related to a private forward repurchase transaction that is expected to settle in first quarter 2015 for an estimated 14.3 million shares of common stock. For the quarters ended September 30, 2014, June 30, 2014, and December 31, 2013, includes $1.0 billion, $1.0 billion, and $500 million, respectively, related to private forward repurchase transactions that settled in subsequent quarters for 19.8 million, 19.5 million, and 11.1 million shares of common stock, respectively.

 
Wells Fargo & Company and Subsidiaries

AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)

 

 

Quarter ended December 31,

2014

  2013
(in millions)  

Average
balance

 

Yields/
rates

 

Interest
income/
expense

 

Average
balance

 

Yields/
rates

 

Interest
income/
expense

Earning assets

$

268,109

 

0.28

%

 

$

188

205,276   0.28 %   $ 148

Federal funds sold, securities purchased under resale agreements and other short-term investments

60,383

3.21

485

45,379 3.40 386
Trading assets

 

 

 

 

 

 

Investment securities (3):
Available-for-sale securities:

Securities of U.S. Treasury and federal agencies

19,506

1.55

76

6,611

1.67

27

Securities of U.S. states and political subdivisions

43,891

4.30

472

42,025 4.38 460
Mortgage-backed securities:
Federal agencies

109,270

2.78

760

117,910 2.94 866
Residential and commercial    

24,711

 

5.89

 

364

29,233   6.35   464
Total mortgage-backed securities

133,981

3.36

1,124

147,143 3.62 1,330
Other debt and equity securities    

44,980

 

3.87

 

438

55,325   3.43   478
Total available-for-sale securities    

242,358

 

3.48

 

2,110

251,104   3.65   2,295
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies

32,930

2.25

187

Securities of U.S. states and political subdivisions

902

4.92

11

Federal agency mortgage-backed securities

5,586

2.07

29

2,780 3.11 22
Other debt securities    

6,118

 

1.81

 

27

65   1.99  
Total held-to-maturity securities    

45,536

 

2.22

 

254

2,845   3.09   22
Total investment securities

287,894

3.28

2,364

253,949 3.65 2,317
Mortgages held for sale (4)

19,191

3.90

187

21,396 4.13 221
Loans held for sale (4)

6,968

1.43

25

138 8.21 3
Loans:
Commercial:
Commercial and industrial - U.S. (5)

218,297

3.32

1,825

189,939 3.54 1,696
Commercial and industrial - Non U.S.

43,049

2.03

221

41,062 1.88 194
Real estate mortgage

112,277

3.69

1,044

110,674 3.90 1,087
Real estate construction

18,336

4.33

200

16,744 4.76 201
Lease financing    

12,268

 

5.35

 

164

12,085   5.68   171
Total commercial (5)    

404,227

 

3.39

 

3,454

370,504   3.59   3,349
Consumer:
Real estate 1-4 family first mortgage

264,799

4.16

2,754

257,265 4.15 2,672
Real estate 1-4 family junior lien mortgage

60,177

4.28

648

66,809 4.29 721
Credit card

29,477

11.71

870

25,865 12.23 798
Automobile

55,457

6.08

849

50,213 6.70 849
Other revolving credit and installment    

35,292

 

6.01

 

534

42,662   4.94   531
Total consumer    

445,202

 

5.06

 

5,655

442,814   5.01   5,571
Total loans (4)(5)

849,429

4.27

9,109

813,318 4.36 8,920
Other    

4,829

 

5.30

 

64

4,728   5.22   61
Total earning assets (5)  

$

1,496,803

 

3.31

%

$

12,422

1,344,184   3.57 % $ 12,056
 

Funding sources

Deposits:
Interest-bearing checking

$

40,498

0.06

%

$

6

35,171 0.07 % $ 6
Market rate and other savings

593,940

0.07

99

568,750 0.08 110
Savings certificates

35,870

0.80

72

43,067 0.94 102
Other time deposits

56,119

0.39

55

39,700 0.48 47
Deposits in foreign offices    

99,289

 

0.15

 

37

86,333   0.15   32
Total interest-bearing deposits

825,716

0.13

269

773,021 0.15 297
Short-term borrowings

64,676

0.12

19

52,286 0.12 15
Long-term debt

183,286

1.35

620

153,470 1.65 635
Other liabilities    

15,580

 

2.44

 

96

12,822   2.70   87
Total interest-bearing liabilities

1,089,258

0.37

1,004

991,599 0.42 1,034
Portion of noninterest-bearing funding sources (5)    

407,545

 

  352,585    
Total funding sources (5)  

$

1,496,803

 

0.27

   

1,004

1,344,184   0.30     1,034

Net interest margin and net interest income on a taxable-equivalent basis (5)(6)

3.04

%

 

$

11,418

3.27 %   $ 11,022

Noninterest-earning assets

Cash and due from banks

$

16,932

15,998

Goodwill

25,705

25,637

Other    

124,320

 

119,947

 
Total noninterest-earning assets  

$

166,957

 

161,582

 
 

Noninterest-bearing funding sources

Deposits

$

324,080

287,379

Other liabilities (5)

65,672

57,138

Total equity

184,750

169,650

Noninterest-bearing funding sources used to fund earning assets (5)

   

(407,545

)

(352,585

)

Net noninterest-bearing funding sources  

$

166,957

 

161,582

 

Total assets (5)

 

$

1,663,760

 

1,505,766

 

 

(1) Our average prime rate was 3.25% for the quarters ended December 31, 2014 and 2013. The average three-month London Interbank Offered Rate (LIBOR) was 0.24% for thesame quarters.

(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) Financial information for certain periods prior to 2014 was revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the SUMMARY FINANCIAL DATA table for more information.

(6) Includes taxable-equivalent adjustments of $238 million and $219 million for the quarters ended December 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.

 

Wells Fargo & Company and Subsidiaries

AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
       
                    Year ended December 31,

2014

2013
Interest     Interest
Average Yields/ income/ Average Yields/ income/

(in millions)

  balance     rates   expense   balance   rates   expense

Earning assets

Federal funds sold, securities purchased under resale agreements and other short-term investments

$

241,282

0.28

%

$

673

154,902 0.32 % $ 489
Trading assets

55,140

3.10

1,712

44,745 3.14 1,406
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies

10,400

1.64

171

6,750 1.66 112
Securities of U.S. states and political subdivisions

43,138

4.29

1,852

39,922 4.38 1,748
Mortgage-backed securities:
Federal agencies

114,076

2.84

3,235

107,148 2.83 3,031
Residential and commercial    

26,475

 

6.03

 

1,597

30,717   6.47   1,988
Total mortgage-backed securities

140,551

3.44

4,832

137,865 3.64 5,019
Other debt and equity securities    

47,488

 

3.66

 

1,741

55,002   3.53   1,940
Total available-for-sale securities    

241,577

 

3.56

 

8,596

239,539   3.68   8,819
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies

17,239

2.23

385

Securities of U.S. states and political subdivisions

246

4.93

12

Federal agency mortgage-backed securities

5,921

2.55

151

701 3.09 22
Other debt securities    

5,913

 

1.85

 

109

16   1.99  
Total held-to-maturity securities    

29,319

 

2.24

 

657

717   3.06   22
Total investment securities

270,896

3.42

9,253

240,256 3.68 8,841
Mortgages held for sale (4)

19,018

4.03

767

35,273 3.66 1,290
Loans held for sale (4)

4,226

1.85

78

163 7.95 13
Loans:
Commercial:
Commercial and industrial - U.S. (5)

204,819

3.35

6,869

185,813 3.66 6,807
Commercial and industrial - Non U.S.

42,661

2.03

867

40,987 2.03 832
Real estate mortgage

112,710

3.64

4,100

107,316 3.94 4,233
Real estate construction

17,676

4.21

744

16,537 4.76 787
Lease financing    

12,257

 

5.63

 

690

12,373   6.10   755
Total commercial (5)    

390,123

 

3.40

 

13,270

363,026  

3.70

  13,414
Consumer:
Real estate 1-4 family first mortgage

261,620

4.19

10,961

254,012 4.22 10,717
Real estate 1-4 family junior lien mortgage

62,510

4.30

2,686

70,264 4.29 3,014
Credit card

27,491

11.98

3,294

24,757 12.46 3,084
Automobile

53,854

6.27

3,377

48,476 6.94 3,365
Other revolving credit and installment    

38,834

 

5.48

 

2,127

42,135   4.80   2,024
Total consumer    

444,309

 

5.05

 

22,445

439,644   5.05   22,204
Total loans (4)(5)

834,432

4.28

35,715

802,670 4.44 35,618
Other    

4,673

 

5.54

 

259

4,354   5.39   235
Total earning assets (5)  

$

1,429,667

 

3.39

%

$

48,457

1,282,363   3.73 % $ 47,892

Funding sources

Deposits:
Interest-bearing checking

$

39,729

0.07

%

$

26

35,570 0.06 % $ 22
Market rate and other savings

585,854

0.07

403

550,394 0.08 450
Savings certificates

38,111

0.85

323

49,510 1.13 559
Other time deposits

51,434

0.40

207

28,090 0.69 194
Deposits in foreign offices    

95,889

 

0.14

 

137

76,894   0.15   112
Total interest-bearing deposits

811,017

0.14

1,096

740,458 0.18 1,337
Short-term borrowings

60,111

0.10

62

54,716 0.13 71
Long-term debt

167,420

1.49

2,488

134,937 1.92 2,585
Other liabilities    

14,401

 

2.65

 

382

12,471   2.46   307
Total interest-bearing liabilities

1,052,949

0.38

4,028

942,582 0.46 4,300
Portion of noninterest-bearing funding sources (5)    

376,718

      339,781    
Total funding sources (5)  

$

1,429,667

 

0.28

   

4,028

1,282,363   0.33     4,300

Net interest margin and net interest income on a taxable-equivalent basis (5)(6)

3.11

%

 

$

44,429

3.40 %   $ 43,592

Noninterest-earning assets

Cash and due from banks

$

16,361

16,272
Goodwill

25,687

25,637
Other    

121,634

  121,711  
Total noninterest-earning assets  

$

163,682

  163,620  

Noninterest-bearing funding sources

Deposits

$

303,127

280,229
Other liabilities (5)

56,985

58,178
Total equity

180,288

164,994
Noninterest-bearing funding sources used to fund earning assets (5)    

(376,718

)

(339,781 )
Net noninterest-bearing funding sources  

$

163,682

  163,620  

Total assets (5)

 

$

1,593,349

  1,445,983  
 
(1) Our average prime rate was 3.25% for the year ended December 31, 2014 and 2013. The average three-month London Interbank Offered Rate (LIBOR) was 0.23% and 0.27% for the same periods, respectively.
(2) Yield/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
(3) 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) Financial information for certain periods prior to 2014 was revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table for more information.

(6) Includes taxable-equivalent adjustments of $902 million and $792 million for the year ended December 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.
 

Wells Fargo & Company and Subsidiaries

AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
 
Quarter ended
   

Dec 31, 2014

 

Sep 30, 2014

 

Jun 30, 2014

 

Mar 31, 2014

 

Dec 31, 2013

Average   Yields/   Average   Yields/   Average   Yields/   Average   Yields/   Average   Yields/
($ in billions)   balance   rates   balance   rates   balance   rates   balance   rates   balance   rates

Earning assets

Federal funds sold, securities purchased under resale agreements and other short-term investments

$

268.1

0.28

%

$ 253.2 0.28 % $ 229.8 0.28 % $ 213.3 0.27 % $ 205.3 0.28 %
Trading assets

60.4

3.21

57.5

3.00

54.4 3.05 48.2 3.17 45.4

3.40

Investment securities (2):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies

19.5

1.55

8.8 1.69 6.6 1.78 6.6 1.68 6.6 1.67
Securities of U.S. states and political subdivisions

43.9

4.30

43.3 4.24 42.7 4.26 42.6 4.37

42.0

4.38
Mortgage-backed securities:
Federal agencies

109.3

2.78

113.0

2.76 116.5 2.85 117.6 2.94 117.9 2.94
Residential and commercial    

24.7

 

5.89

 

26.0

  5.98   27.3   6.11  

28.0

  6.12   29.2   6.35
Total mortgage-backed securities

134.0

3.36

139.0

3.36 143.8 3.47 145.6 3.55 147.1 3.62
Other debt and equity securities    

45.0

 

3.87

  47.1   3.45   48.7   3.76   49.2   3.59   55.4   3.43
Total available-for-sale securities    

242.4

 

3.48

  238.2   3.48   241.8   3.62  

244.0

  3.65   251.1   3.65
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies

32.9

2.25

23.7 2.22 10.8

2.20

1.1 2.18
Securities of U.S. states and political subdivisions

0.9

4.92

Federal agency mortgage-backed securities

5.6

2.07

5.9 2.23 6.1 2.74 6.2 3.11 2.7 3.11
Other debt securities    

6.1

 

1.81

  5.9   1.83   5.2   1.90   6.4   1.86   0.1   1.99
Total held-to-maturity securities    

45.5

 

2.22

  35.5   2.17   22.1   2.28   13.7   2.45   2.8   3.09
Total investment securities

287.9

3.28

273.7 3.31 263.9 3.51 257.7 3.59 253.9 3.65
Mortgages held for sale

19.2

3.90

21.5 4.01 18.8 4.16 16.6 4.11 21.4 4.13
Loans held for sale

7.0

1.43

9.5

2.10

0.2 2.55 0.1 6.28 0.1 8.21
Loans:
Commercial:
Commercial and industrial - U.S. (3)

218.3

3.32

207.6 3.29 199.2 3.39 193.9 3.43 189.9 3.54
Commercial and industrial - Non U.S.

43.0

2.03

42.4 2.11

43.0

2.06 42.2 1.92 41.1 1.88
Real estate mortgage

112.3

3.69

113.0

3.69 112.8 3.61 112.8 3.56 110.7

3.90

Real estate construction

18.3

4.33

17.8 3.94 17.5 4.18 17.1 4.38 16.7 4.76
Lease financing    

12.3

 

5.35

  12.3   5.38   12.2   5.68   12.2   6.12   12.1   5.68
Total commercial (3)    

404.2

 

3.39

  393.1   3.37   384.7   3.42   378.2   3.43   370.5   3.59
Consumer:
Real estate 1-4 family first mortgage

264.8

4.16

262.2 4.23

260.0

4.20

259.5 4.17 257.3 4.15
Real estate 1-4 family junior lien mortgage

60.2

4.28

61.6

4.30

63.3 4.31

65.0

4.30

66.8 4.29
Credit card

29.5

11.71

27.7 11.96 26.4 11.97 26.3 12.32 25.9 12.23
Automobile

55.4

6.08

54.6 6.19 53.5 6.34 51.8

6.50

50.2

6.70

Other revolving credit and installment    

35.3

 

6.01

 

34.0

  6.03   43.1   5.07  

43.0

 

5.00

  42.6   4.94
Total consumer    

445.2

 

5.06

  440.1   5.11   446.3   5.02   445.6   5.02   442.8   5.01
Total loans (3)

849.4

4.27

833.2 4.29

831.0

4.28 823.8 4.29 813.3 4.36
Other    

4.8

 

5.30

  4.7   5.41   4.5   5.74   4.6   5.72   4.7   5.22
Total earning assets (3)  

$

1,496.8

 

3.31

%

$ 1,453.3   3.34 % $ 1,402.6   3.43 % $ 1,364.3   3.49 % $ 1,344.1   3.57 %

Funding sources

Deposits:
Interest-bearing checking

$

40.5

0.06

%

$ 41.4 0.07 % $ 40.2 0.07 % $ 36.8 0.07 % $ 35.2 0.07 %
Market rate and other savings

593.9

0.07

586.4 0.07 583.9 0.07

579.0

0.07 568.7 0.08
Savings certificates

35.9

0.80

37.3 0.84 38.8 0.86 40.5 0.89 43.1 0.94
Other time deposits

56.1

0.39

55.1 0.39 48.5 0.41 45.8 0.42 39.7 0.48
Deposits in foreign offices    

99.3

 

0.15

  98.9   0.14   94.2   0.15   91.1   0.14   86.3   0.15
Total interest-bearing deposits

825.7

0.13

819.1 0.13 805.6 0.14 793.2 0.14

773.0

0.15
Short-term borrowings

64.7

0.12

62.3

0.10

58.9

0.10

54.5 0.09 52.3 0.12
Long-term debt

183.3

1.35

173.0

1.46 159.2 1.56 153.8 1.62 153.5 1.65
Other liabilities    

15.6

 

2.44

  15.5   2.73   13.6   2.73   12.9   2.72   12.8  

2.70

Total interest-bearing liabilities

1,089.3

0.37

1,069.9

0.38

1,037.3

0.39

1,014.4

0.40

991.6 0.42
Portion of noninterest-bearing funding sources (3)    

407.5

 

  383.4     365.3     349.9     352.5  
Total funding sources (3)  

$

1,496.8

 

0.27

  $ 1,453.3   0.28   $ 1,402.6   0.28   $ 1,364.3   0.29   $ 1,344.1   0.30  

Net interest margin on a taxable-equivalent basis (3)

3.04

%

3.06 % 3.15 % 3.20 % 3.27 %

Noninterest-earning assets

Cash and due from banks

$

16.9

16.2 15.9 16.4

16.0

Goodwill

25.7

25.7 25.7 25.6 25.6
Other    

124.4

    122.7     119.8     119.6    

120.0

 
Total noninterest-earnings assets  

$

167.0

    164.6     161.4     161.6     161.6  

Noninterest-bearing funding sources

Deposits

$

324.1

308.0

295.9 284.1 287.4
Other liabilities (3)

65.7

57.9 51.1 52.9 57.1
Total equity

184.7

182.1 179.7 174.5 169.6
Noninterest-bearing funding sources used to fund earning assets (3)    

(407.5

)

  (383.4 )   (365.3 )   (349.9 )   (352.5 )
Net noninterest-bearing funding sources  

$

167.0

    164.6     161.4     161.6     161.6  

Total assets (3)

 

$

1,663.8

   

1,617.9

   

1,564.0

   

1,525.9

   

1,505.7

 
 

(1) Our average prime rate was 3.25% for quarters ended December 31, September 30, June 30 and March 31, 2014, and December 31, 2013. The average three-month London Interbank Offered Rate (LIBOR) was 0.24%, 0.23%, 0.23%, 0.24% and 0.24% 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) Financial information for certain periods prior to 2014 was revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table for more information.

 

Wells Fargo & Company and Subsidiaries

NONINTEREST INCOME

 

Quarter ended Dec 31,

 

%

 

Year ended Dec 31,

 

%

(in millions)   2014   2013     Change   2014   2013     Change
Service charges on deposit accounts $ 1,241   1,283 (3 )% $ 5,050   5,023 1 %
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,335 2,150 9 9,183 8,395 9
Trust and investment management 849 850 3,387 3,289 3
Investment banking     521   458   14   1,710   1,746   (2 )
Total trust and investment fees     3,705   3,458   7   14,280   13,430   6
Card fees 925 827 12 3,431 3,191 8
Other fees:
Charges and fees on loans 311 379 (18 ) 1,316 1,540 (15 )
Merchant processing fees 187 172 9 726 669 9
Cash network fees 125 122 2 507 493 3
Commercial real estate brokerage commissions 155 129 20 469 338 39
Letters of credit fees 102 99 3 390 410 (5 )
All other fees     244   218   12   941   890   6
Total other fees     1,124   1,119    

4,349

  4,340  
Mortgage banking:
Servicing income, net 685 709 (3 ) 3,337 1,920 74
Net gains on mortgage loan origination/sales activities     830   861   (4 )   3,044   6,854   (56 )
Total mortgage banking     1,515   1,570   (4 )   6,381   8,774   (27 )
Insurance 382 453 (16 ) 1,655 1,814 (9 )
Net gains from trading activities 179 325 (45 ) 1,161 1,623 (28 )
Net gains (losses) on debt securities 186 (14 ) NM 593 (29 ) NM
Net gains from equity investments 372 654 (43 ) 2,380 1,472 62
Lease income 127 148 (14 ) 526 663 (21 )
Life insurance investment income 145 125 16 558 566 (1 )
All other     362   (86 ) NM   456   113   304
Total   $ 10,263   9,862     4     $ 40,820   40,980      
NM - Not meaningful
 

NONINTEREST EXPENSE

 

Quarter ended Dec 31,

 

%

 

Year ended Dec 31,

 

%

(in millions)   2014   2013   Change   2014   2013   Change
Salaries $ 3,938   3,811 3 % $ 15,375   15,152 1 %
Commission and incentive compensation 2,582 2,347 10 9,970 9,951
Employee benefits 1,124 1,160 (3 ) 4,597 5,033 (9 )
Equipment 581 567 2 1,973 1,984 (1 )
Net occupancy 730 732 2,925 2,895 1
Core deposit and other intangibles 338 375 (10 ) 1,370 1,504 (9 )
FDIC and other deposit assessments 231 196 18 928 961 (3 )
Outside professional services 800 754 6 2,689 2,519 7
Operating losses 309 181 71 1,249 821 52
Outside data processing 270 264 2 1,034 983 5
Contract services 245 261 (6 ) 975 935 4
Travel and entertainment 216 234 (8 ) 904 885 2
Postage, stationery and supplies 190 189 1 733 756 (3 )
Advertising and promotion 195 165 18 653 610 7
Foreclosed assets 164 103 59 583 605 (4 )
Telecommunications 106 118 (10 ) 453 482 (6 )
Insurance 60 59 2 422 437 (3 )
Operating leases 58 51 14 220 204 8
All other     510   518 (2 )   1,984   2,125 (7 )
Total   $ 12,647   12,085   5     $ 49,037   48,842    
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER NONINTEREST INCOME

 

Quarter ended

 

Dec 31,

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

(in millions)

  2014   2014   2014   2014     2013  
Service charges on deposit accounts $ 1,241 1,311 1,283 1,215 1,283
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,335 2,327 2,280 2,241 2,150
Trust and investment management 849 856 838 844 850
Investment banking     521   371   491   327     458  
Total trust and investment fees     3,705   3,554   3,609   3,412     3,458  
Card fees 925 875 847 784 827
Other fees:
Charges and fees on loans 311 296 342 367 379
Merchant processing fees 187 184 183 172 172
Cash network fees 125 134 128 120 122
Commercial real estate brokerage commissions 155 143 99 72 129
Letters of credit fees 102 100 92 96 99
All other fees     244   233   244   220     218  
Total other fees   $ 1,124   1,090   1,088   1,047     1,119  
Mortgage banking:
Servicing income, net 685 679 1,035 938 709
Net gains on mortgage loan origination/sales activities     830   954   688   572     861  
Total mortgage banking     1,515   1,633   1,723   1,510     1,570  
Insurance 382 388 453 432 453
Net gains from trading activities 179 168 382 432 325
Net gains (losses) on debt securities 186 253 71 83 (14 )
Net gains from equity investments 372 712 449 847 654
Lease income 127 137 129 133 148
Life insurance investment income 145 143 138 132 125
All other     362   8   103   (17 )   (86 )
Total   $ 10,263   10,272   10,275   10,010     9,862  
 

FIVE QUARTER NONINTEREST EXPENSE

 

Quarter ended

 

Dec 31,

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

(in millions)

  2014   2014   2014   2014   2013
Salaries $ 3,938 3,914 3,795 3,728 3,811
Commission and incentive compensation 2,582 2,527 2,445 2,416 2,347
Employee benefits 1,124 931 1,170 1,372 1,160
Equipment 581 457 445 490 567
Net occupancy 730 731 722 742 732
Core deposit and other intangibles 338 342 349 341 375
FDIC and other deposit assessments 231 229 225 243 196
Outside professional services 800 684 646 559 754
Operating losses 309 417 364 159 181
Outside data processing 270 264 259 241 264
Contract services 245 247 249 234 261
Travel and entertainment 216 226 243 219 234
Postage, stationery and supplies 190 182 170 191 189
Advertising and promotion 195 153 187 118 165
Foreclosed assets 164 157 130 132 103
Telecommunications 106 122 111 114 118
Insurance 60 97 140 125 59
Operating leases 58 58 54 50 51
All other     510   510   490   474   518
Total   $ 12,647   12,248   12,194   11,948   12,085
 

Wells Fargo & Company and Subsidiaries

CONSOLIDATED BALANCE SHEET

 

 

Dec 31,

   

Dec 31,

   

%

(in millions, except shares)

   

2014

   

2013

   

Change

Assets

Cash and due from banks

$

19,571

19,919 (2 )%

Federal funds sold, securities purchased under resale agreements and other short-term investments

258,429

213,793 21
Trading assets

78,255

62,813 25
Investment securities:
Available-for-sale, at fair value

257,442

252,007 2
Held-to-maturity, at cost (fair value $56,359 and $12,247)

55,483

12,346 349
 
Mortgages held for sale (includes $15,565 and $13,879 carried at fair value) (1)

19,536

16,763 17
Loans held for sale (includes $1 and $1 carried at fair value) (1)

722

133 443
Loans (includes $7,164 and $5,995 carried at fair value) (1)(2)

862,551

822,286 5
Allowance for loan losses    

(12,319

)

    (14,502 ) (15 )
Net loans (2)    

850,232

      807,784   5
Mortgage servicing rights:
Measured at fair value

12,738

15,580 (18 )
Amortized

1,242

1,229 1
Premises and equipment, net

8,743

9,156 (5 )
Goodwill

25,705

25,637
Other assets (includes $2,512 and $1,386 carried at fair value) (1)    

99,057

      86,342   15
Total assets (2)  

$

1,687,155

      1,523,502   11

Liabilities

Noninterest-bearing deposits

$

321,963

288,117 12
Interest-bearing deposits    

846,347

      791,060   7
Total deposits

1,168,310

1,079,177 8
Short-term borrowings

63,518

53,883 18
Accrued expenses and other liabilities (2)

86,122

66,436 30
Long-term debt    

183,943

      152,998   20
Total liabilities (2)    

1,501,893

      1,352,494   11

Equity

Wells Fargo stockholders’ equity:

Preferred stock

19,213

16,267 18

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

60,537

60,296
Retained earnings

107,040

92,361 16
Cumulative other comprehensive income

3,518

1,386 154
Treasury stock – 311,462,276 shares and 224,648,769 shares

(13,690

)

(8,104 ) 69
Unearned ESOP shares    

(1,360

)

    (1,200 ) 13
Total Wells Fargo stockholders’ equity

184,394

      170,142 8
Noncontrolling interests    

868

      866  
Total equity    

185,262

      171,008   8
Total liabilities and equity (2)  

$

1,687,155

      1,523,502       11  
(1)   Parenthetical amounts represent assets and liabilities for which we have elected the fair value option.
(2)

Financial information for certain periods prior to 2014 was revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table for more information.

 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED BALANCE SHEET

(in millions)

 

Dec 31,

2014

 

Sep 30,

2014

 

Jun 30,

2014

 

Mar 31,

2014

 

Dec 31,

2013

Assets          
Cash and due from banks

$

19,571

18,032 20,635 19,731 19,919
Federal funds sold, securities purchased under resale agreements and other short-term investments

258,429

261,932

238,719

222,781

213,793

Trading assets 78,255 67,755 71,674 63,753 62,813
Investment securities:
Available-for-sale, at fair value 257,442 248,251 248,961 252,665 252,007
Held-to-maturity, at cost 55,483 40,758 30,108 17,662 12,346
Mortgages held for sale 19,536 20,178 21,064 16,233 16,763
Loans held for sale 722 9,292 9,762 91 133
Loans (1) 862,551 838,883 828,942 826,443 822,286
Allowance for loan losses     (12,319 )   (12,681 )   (13,101 )   (13,695 )   (14,502 )
Net loans (1)     850,232     826,202     815,841     812,748     807,784  
Mortgage servicing rights:
Measured at fair value 12,738 14,031 13,900 14,953 15,580
Amortized 1,242 1,224 1,196 1,219 1,229
Premises and equipment, net 8,743 8,768 8,977 9,020 9,156
Goodwill 25,705 25,705 25,705 25,637 25,637
Other assets     99,057     94,727     92,332     90,214     86,342  
Total assets (1)   $ 1,687,155     1,636,855     1,598,874     1,546,707     1,523,502  
Liabilities
Noninterest-bearing deposits $ 321,963 313,791 308,099 294,863 288,117
Interest-bearing deposits     846,347     816,834     810,478     799,713     791,060  
Total deposits 1,168,310 1,130,625 1,118,577 1,094,576 1,079,177
Short-term borrowings 63,518 62,927 61,849 57,061 53,883
Accrued expenses and other liabilities (1) 86,122 75,727 69,021 65,179 66,436
Long-term debt     183,943     184,586     167,878     153,422     152,998  
Total liabilities (1)     1,501,893     1,453,865     1,417,325     1,370,238     1,352,494  

Equity

Wells Fargo stockholders’ equity:

Preferred stock 19,213 19,379 18,749 17,179 16,267
Common stock 9,136 9,136 9,136 9,136 9,136
Additional paid-in capital 60,537 60,100 59,926 60,618 60,296
Retained earnings 107,040 103,494 99,926 96,368 92,361
Cumulative other comprehensive income 3,518 3,118 4,117 2,752 1,386
Treasury stock (13,690 ) (11,206 ) (9,271 ) (8,206 ) (8,104 )
Unearned ESOP shares     (1,360 )   (1,540 )   (1,724 )   (2,193 )   (1,200 )
Total Wells Fargo stockholders’ equity 184,394 182,481 180,859 175,654 170,142
Noncontrolling interests     868     509     690     815     866  
Total equity     185,262     182,990     181,549     176,469     171,008  
Total liabilities and equity (1)   $ 1,687,155     1,636,855     1,598,874     1,546,707     1,523,502  
(1)  

Financial information for certain periods prior to 2014 was revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table for more information.

 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER INVESTMENT SECURITIES

 

Dec 31,

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

(in millions)   2014   2014   2014   2014   2013
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies

$

25,804

14,794

6,414 6,359 6,280
Securities of U.S. states and political subdivisions 44,944 45,805 44,779 44,140 42,536
Mortgage-backed securities:
Federal agencies 110,089 112,613 116,908 118,090 117,591
Residential and commercial     26,263   27,491   29,433   30,362   31,200
Total mortgage-backed securities 136,352 140,104 146,341 148,452 148,791
Other debt securities     46,666   45,013   48,312   50,253   51,015
Total available-for-sale debt securities 253,766 245,716 245,846 249,204 248,622
Marketable equity securities     3,676   2,535   3,115   3,461   3,385
Total available-for-sale securities     257,442   248,251   248,961   252,665   252,007
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 40,886 28,887 17,777 5,861
Securities of U.S. states and political subdivisions 1,962 123 41
Federal agency mortgage-backed securities 5,476 5,770 6,030 6,199 6,304
Other debt securities     7,159   5,978   6,260   5,602   6,042
Total held-to-maturity debt securities     55,483   40,758   30,108   17,662   12,346
Total investment securities   $ 312,925   289,009   279,069   270,327   264,353
 
FIVE QUARTER LOANS
 

Dec 31,

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

(in millions)   2014   2014   2014   2014   2013
Commercial:
Commercial and industrial (1)

$

271,795

254,199 248,192 239,233 235,358
Real estate mortgage 111,996 112,064 113,564 112,920 112,427
Real estate construction 18,728 18,090 17,272 16,816 16,934
Lease financing     12,307   12,006   12,252   12,164   12,371
Total commercial     414,826   396,359   391,280   381,133   377,090
Consumer:

Real estate 1-4 family first mortgage

265,386 263,337 260,114 259,488 258,507
Real estate 1-4 family junior lien mortgage 59,717 60,875 62,487 63,998 65,950
Credit card 31,119 28,280 27,226 26,073 26,882
Automobile 55,740 55,242 54,095 52,607 50,808
Other revolving credit and installment     35,763   34,790   33,740   43,144   43,049
Total consumer     447,725   442,524   437,662   445,310   445,196
Total loans (2)   $ 862,551   838,883   828,942   826,443   822,286
 

(1) Financial information for certain periods prior to 2014 was revised to reflect our determination that certain factoring arrangements did not qualify as loans. See footnote (1) to the Summary Financial Data table for more information.

(2) Includes $23.3 billion, $24.2 billion, $25.0 billion, $25.9 billion and $26.7 billion of purchased credit-impaired (PCI) loans at December 31, September 30, June 30 and March 31, 2014, and December 31, 2013, respectively. See the PCI loans table for detail of PCI loans.

 

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. The following table presents total commercial foreign loans outstanding by class of financing receivable.

 
 

Dec 31,

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

(in millions)   2014   2014   2014   2014   2013
Commercial foreign loans:
Commercial and industrial

$

44,707

41,829 42,136 42,465 41,547
Real estate mortgage 4,776 4,856 5,146 4,952 5,328
Real estate construction 218 209 216 201 187
Lease financing     336   332   344   322   338
Total commercial foreign loans   $ 50,037   47,226   47,842   47,940   47,400
 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS)

 

Dec 31,

 

Sep 30,

 

Jun 30,

 

Mar 31,

 

Dec 31,

(in millions)   2014     2014     2014     2014     2013  

Nonaccrual loans:

Commercial:
Commercial and industrial

$

538

614 724 664 775
Real estate mortgage 1,490 1,636 1,805 2,034 2,254
Real estate construction 187 217 239 296 416
Lease financing     24     27     29     32     30  
Total commercial     2,239     2,494     2,797     3,026     3,475  
Consumer:
Real estate 1-4 family first mortgage 8,583 8,785 9,026 9,357 9,799
Real estate 1-4 family junior lien mortgage 1,848 1,903 1,965 2,073 2,188
Automobile 137 143 150 161 173
Other revolving credit and installment     41     40     34     33     33  
Total consumer     10,609     10,871     11,175     11,624     12,193  
Total nonaccrual loans (1)(2)(3)     12,848     13,365