Wells Fargo & Company · NYSE:WFC
Wells Fargo & — Q4 2020 Earnings Presentation
24 slides from Wells Fargo &'s earnings presentation, Jan 15, 2021
Slide 1: 4Q20 Financial Results
4Q20 Financial Results January 15, 2021 © 2021 Wells Fargo Bank, N.A. All rights reserved.
Slide 2: Supporting customers, communities and employees in 2020
Supporting customers, communities and employees in 2020 Supporting Our Customers Helping Our Communities and Small Businesses Helped 3.6 million consumer and small business customers by Charitable Contributions: Deployed $475 million in philanthropic deferring payments and waiving fees contribut
Slide 3: 4Q20 results
4Q20 results Net Income of $3.0 billion, or $0.64 per diluted common share – Revenue of $17.9 billion, down 10% – Noninterest expense of $14.8 billion, down 5% Results included: Financial Results ($ in millions, except EPS) Pre-tax Income EPS Restructuring charges impact $ (781) $ (0.14) ROE: 6.
Slide 4: 4Q20 earnings
4Q20 earnings $ in millions (mm), except per share data 4Q20 3Q20 4Q19 vs. 3Q20 vs. 4Q19 Net interest income $ 9,275 9,368 11,200 $ (93) (1,925) Noninterest income 8,650 9,494 8,660 (844) (10) Total revenue 17,925 18,862 19,860 (937) (1,935) Net charge-offs 584 731 769 (147) (185) Change in the allo
Slide 5: Credit quality of the loan portfolio
Credit quality of the loan portfolio Provision Expense and Net Charge-offs on Loans ($ in millions) Allowance for Credit Losses for Loans ($ in millions) 9,565 3,833 20,436 20,471 19,713 2.22% 2.19% 8,767 2.22% 0.46% 12,022 8,929 8,197 0.38% 10,456 0.32% 1,113 0.29% 4,211 6,743 909 0.26% 644 769 751
Slide 6: Consumer loan deferrals due to COVID-19
Consumer loan deferrals due to COVID-19 $14.3 billion unpaid principal balance (UPB) of modified consumer loans were still in deferral as of 12/31/20, down from $22.7 billion as of 9/30/201 As of December 31, 2020 As of September 30, 2020 As of June 30, 2020 Unpaid principal balance Unpaid princip
Slide 7: Average loans and deposits
Average loans and deposits Average Loans Outstanding ($ in billions) Average Deposits and Rates ($ in billions) 956.5 965.0 971.3 1,386.7 1,399.0 1,380.1 931.7 899.7 1,338.0 1,321.9 60.2 49.0 37.7 85.7 80.2 165.2 169.5 169.9 443.9 444.5 426.0 139.0 145.4 434.0 423.2 4.37% 239.6 226.1 205.8 4.20% 258
Slide 8: Net interest income
Net interest income Net Interest Income ($ in millions) Net interest income decreased $1.9 billion, or 17%, YoY reflecting the impact of lower interest rates, which drove a repricing of the balance 11,200 11,312 sheet, lower loans primarily due to weak customer demand and elevated prepayments, low
Slide 9: Noninterest expense
Noninterest expense Noninterest Expense ($ in millions) Noninterest expense down 5% from 4Q19 15,614 15,229 14,551 14,802 - Operating losses down $1.3 billion and included $321 million of customer 13,048 remediation accruals primarily for a variety of historical matters, compared 4,879 4,668 with
Slide 10: Consumer Banking and Lending
Consumer Banking and Lending Summary Financials $ in millions (mm) 4Q20 vs. 3Q20 vs. 4Q19 Total revenue down 5% YoY and 6% from 3Q20 - CSBB revenue down 8% YoY primarily due to the impact of lower interest rates Revenue by line of business: and lower deposit-related fees on reduced transaction act
Slide 11: Consumer Banking and Lending
Consumer Banking and Lending Mortgage Loan Originations ($ in billions) Debit Card Point of Sale (POS) Volume and Transactions1 61.6 102.9 105.3 59.8 59.2 95.2 93.1 53.9 90.6 48.0 28.7 28.8 32.3 21.6 62% 24.9 52% 52% 2.3 2.2 2.3 2.3 50% 51% 2.0 30.5 32.8 32.3 27.5 23.1 4Q19 1Q20 2Q20 3Q20 4Q20 4Q19
Slide 12: Commercial Banking
Commercial Banking Summary Financials Total revenue down 18% YoY and up 1% from 3Q20 $ in millions 4Q20 vs. 3Q20 vs. 4Q19 Revenue by line of business: - Middle Market Banking revenue down 26% YoY and 4% from 3Q20 due to the Middle Market Banking $ 1,149 $ (47) (396) impact of lower interest rates
Slide 13: Corporate and Investment Banking
Corporate and Investment Banking Summary Financials Total revenue down 7% YoY and 6% from 3Q20 $ in millions 4Q20 vs. 3Q20 vs. 4Q19 – Banking revenue down 13% YoY primarily due to lower Treasury Management Revenue by line of business: and Payments revenue predominantly driven by the impact of lowe
Slide 14: Wealth and Investment Management
Wealth and Investment Management Summary Financials Net interest income down 19% YoY driven by the impact of lower interest rates, $ in millions 4Q20 vs. 3Q20 vs. 4Q19 partially offset by higher loan and deposit balances Net interest income $ 715 $ (3) (170) Noninterest income up 5% from 3Q20 pr
Slide 15: Corporate
Corporate Summary Financials $ in millions 4Q20 vs. 3Q20 vs. 4Q19 Net interest income down YoY primarily due to the impact of lower interest rates Net interest income $ (273) $ 35 (622) Noninterest income 1,248 (229) 224 Noninterest income down from 3Q20 on lower results in our affiliated privat
Slide 16: 2021 net interest income expectations
2021 net interest income expectations 2021 Net Interest Income Expectations Currently expect 2021 net interest income to be flat to down 4% from the annualized 4Q20 level of $36.8 billion ~0% to 4% decline – Expectations reflect the announced sale of our student loan portfolio which accounts for a
Slide 17: Building a stronger Wells Fargo
Building a stronger Wells Fargo Our goal is to build a more efficient company with a streamlined organizational structure and less complexity in processes and products to better serve our customers Summary Breakdown of Efficiency Initiatives Building the right risk and control infrastructure to st
Slide 18: Business-specific initiatives
Selected efficiency initiatives Real Estate and Third Party Spend Organizational Structure Optimization Company-wide initiatives Efficiencies Eliminated management layers and increased span Continue to invest in risk, regulatory, control, and ~46mm sq. ft. of office real estate expected to be
Slide 19: 2021 expense outlook
2021 expense outlook 2021 Expense Expectations ($ in billions) Operating losses $57.6 ($2.2) – Have been elevated over a number of years; 2020 impacted by customer remediation accruals of $2.2 billion ($1.5) ~$54 $0.5 ($1.5) – Still have outstanding litigation and regulatory issues that can be Cus
Slide 20: Path to higher returns
Path to higher returns Path to Higher ROTCE Clear path to generate better returns by executing on efficiency initiatives, improving risk and controls, ~15% investing in our businesses, and optimizing capital Returns comparable to peers achievable over time; requires: ~1% ~10% ~1-2% ‒ Moderate ba
Slide 21: Appendix
Appendix
Slide 22: Tangible Common Equity
Tangible Common Equity We also evaluate our business based on certain ratios that utilize tangible common equity. Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, goodwill, certain identifiable intangible assets (othe
Slide 23: Common Equity Tier 1 under Basel III
Common Equity Tier 1 under Basel III RISK-BASED CAPITAL RATIOS UNDER BASEL III (1) Estimated Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, (in billions, except ratio) 2020 2020 2020 2020 2019 Total equity $ 185.9 182.0 180.1 183.3 188.0 Adjustments: Preferred stock (21.1) (21.1) (21.1) (21.3) (21.5) Addit
Slide 24: Disclaimer and forward-looking statements
Disclaimer and forward-looking statements Financial results reported in this document are preliminary. Final financial results and other disclosures will be reported in our Annual Report on Form 10-K for the year ended December 31, 2020, and may differ materially from the results and disclosures in
Wells Fargo & Company — Q4 2020 Earnings Presentation on 6ix