Wells Fargo & Company · NYSE:WFC
Wells Fargo & — Q4 2014 Earnings Presentation
33 slides from Wells Fargo &'s earnings presentation, Jan 14, 2015
Slide 1: 4Q14 Quarterly Supplement
4Q14 Quarterly Supplement January 14, 2015 © 2015 Wells Fargo & Company. All rights reserved. Exhibit 99.2
Slide 2: Table of contents
Wells Fargo 4Q14 Supplement 1 Appendix Pages 21-32 - Non-strategic/liquidating loan portfolio 22 - Purchased credit-impaired (PCI) portfolios 23 - Residential mortgage trends 24 - Real estate 1-4 family first mortgage portfolio 25 - Real estate 1-4 family junior lien mortgage portfolio 26 - Consum
Slide 3: 4Q14 Highlights
Wells Fargo 4Q14 Supplement 2 5,610 5,893 5,726 5,729 5,709 4Q13 1Q14 2Q14 3Q14 4Q14 4Q14 Highlights Strong earnings of $5.7 billion, up $99 million, or 2% year-over-year (YoY), and stable linked quarter (LQ) Diluted earnings per common share of $1.02, up 2% YoY and stable LQ Revenue growth of
Slide 4: Year-over-year results
Wells Fargo 4Q14 Supplement 3 980.1 1,054.3 99.1 114.0$1,079.2 $1,168.3 2013 2014 Core Deposits Year-over-year results (1) Please see page 1 for information on certain prior period revisions. (2) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes PTPP
Slide 5: 4Q14 Revenue diversification
Wells Fargo 4Q14 Supplement 4 Balanced Spread and Fee Income Diversified Fee Generation Deposit Service Charges 12% Card Fees 9% Total Mortgage Banking 15% Insurance 4% Net Gains from Trading 2% (1) Other noninterest income includes lease income, life insurance investment income and all other nonint
Slide 6: Balance Sheet and credit overview (linked quarter)
Wells Fargo 4Q14 Supplement 5 Balance Sheet and credit overview (linked quarter) Loans Core loans (1) increased $26.0 billion, or 13% annualized, LQ on broad-based growth - Diversified loan growth included $6.5 billion from financing related to government guaranteed student loan sale, as well as t
Slide 7: Income Statement overview (linked quarter)
Wells Fargo 4Q14 Supplement 6 Income Statement overview (linked quarter) Total revenue Revenue of $21.4 billion, up $230 million Net interest income NII up $239 million driven by growth in earning assets NIM down 2 bps to 3.04% reflecting deposit growth and 3Q14 liquidity-related funding actio
Slide 8: Loans
Wells Fargo 4Q14 Supplement 7 Loans (1) Period-end Core loans grew $60.4 billion, or 8%, YoY and $26.0 billion, or 13% annualized, LQ - Commercial loans up $18.8 billion LQ driven by growth in C&I, real estate construction and lease financing • Growth in Asset Backed Finance included $6.5 billion
Slide 9: Broad-based, year-over-year loan growth
Wells Fargo 4Q14 Supplement 8 8 12 16 20 24 28 32 4Q13 4Q14 Credit Card 24 29 34 39 44 49 54 59 4Q13 4Q14 Automobile 125 145 165 185 205 225 4Q13 4Q14 Core 1-4 Family First Mortgage (2) 150 170 190 210 230 250 270 290 4Q13 4Q14 Commercial and Industrial (1) Broad-based, year-over-year loan growth
Slide 10: Commercial and Industrial diversified loan growth
Wells Fargo 4Q14 Supplement 9 $235.4 $271.8 $150 $170 $190 $210 $230 $250 $270 Asset Backed Finance 4Q13 4Q14 Corporate Banking Govt. & Institutional Banking Commercial Banking CRE All Other C&I Commercial and Industrial diversified loan growth WF Capital Finance Equipment Finance Commercial Dealer
Slide 11: Deposits
Wells Fargo 4Q14 Supplement 10 773.0 819.1 825.7 1,060.4 1,127.1 1,149.8 287.4 308.0 324.1 4Q13 3Q14 4Q14 Noninterest-bearing deposits Interest-bearing deposits Deposits Average Deposits up $89.4 billion, or 8%, YoY and $22.7 billion, or 8% annualized, LQ Average deposit cost of 9 bps, down 1 bp
Slide 12: Net interest income
Wells Fargo 4Q14 Supplement 11 Net interest income (TE) (1) up $255 million LQ on growth in earning assets Average earning assets up $43.5 billion, or 3%, LQ - Loans up $16.2 billion - Short-term investments/fed funds sold up $14.9 billion - Investment securities up $14.2 billion - Trading asset
Slide 13: Noninterest income
Wells Fargo 4Q14 Supplement 12 Noninterest income Deposit service charges down $70 million LQ driven by lower customer overdraft activity Trust and investment fees up $151 million, or 4%, LQ driven by higher investment banking Card fees up $50 million on higher transaction volumes reflecting s
Slide 14: Noninterest expense and efficiency ratio
Wells Fargo 4Q14 Supplement 13 Noninterest expense and efficiency ratio (1) Noninterest expense up $399 million LQ - Personnel expense up $272 million • Salaries up $24 million reflecting higher FTEs including risk-related FTEs • Commission and incentive compensation up $55 million driven by highe
Slide 15: Community Banking
Wells Fargo 4Q14 Supplement 14 Community Banking Net income of $3.4 billion, up 7% YoY on higher net interest income and gain on sale of government guaranteed student loans Regional Banking (1) Primary consumer checking customers (2) up 5.2% YoY Primary business checking customers (2) up 5.4%
Slide 16: Wholesale Banking
Wells Fargo 4Q14 Supplement 15 Wholesale Banking Net income of $2.0 billion, down 7% YoY and up 3% LQ Net interest income up 3% LQ reflecting average loan growth of 3% Noninterest income up 2% LQ on higher investment banking, loan fees and commercial real estate brokerage fees Noninterest ex
Slide 17: Wealth, Brokerage and Retirement
Wells Fargo 4Q14 Supplement 16 Wealth, Brokerage and Retirement Net income up 5% YoY and down 7% LQ Net interest income up 7% LQ; average loans up 4% Noninterest income up 1% LQ primarily driven by higher deferred compensation gains Noninterest expense up 4% LQ primarily driven by higher def
Slide 18: Credit quality
Wells Fargo 4Q14 Supplement 17 0.4 0.3 0.2 0.4 0.5 1.0 0.8 0.7 0.7 0.7 0.47% 0.41% 0.35% 0.32% 0.34% 4Q13 1Q14 2Q14 3Q14 4Q14 Provision Expense Net Charge-offs Net charge-off rate Credit quality Provision expense of $485 million, up $117 million from 3Q14 Net charge-offs of $735 million, up $67
Slide 19: Capital position
Wells Fargo 4Q14 Supplement 18 11.36% 11.31% 11.11% 11.04% 1Q14 2Q14 3Q14 4Q14 Capital remained strong Common Equity Tier 1 ratio under Basel III (General Approach) of 11.04%, down 7 bps LQ primarily due to balance sheet growth Common Equity Tier 1 ratio under Basel III (Advanced Approach, ful
Slide 20: Capital return
Wells Fargo 4Q14 Supplement 19 Our strong capital levels have allowed us to return more capital to shareholders - Returned $3.9 billion to shareholders in 4Q14 Capital return (1) Dividend payout ratio means the ratio of (i) common stock dividends, divided by (ii) net income applicable to common st
Slide 21: Summary
Wells Fargo 4Q14 Supplement 20 Summary 2014 Record earnings of $23.1 billion, up $1.2 billion, or 5% from 2013 Record diluted earnings per share (EPS) of $4.10, up 5% Returned $12.5 billion to shareholders through common stock dividends and net share repurchases - Net payout ratio (1) of 57% 4
Slide 22: Appendix
Appendix
Slide 23: Non-strategic/liquidating loan portfolio
Wells Fargo 4Q14 Supplement 22 (1) Net of purchase accounting adjustments. (2) At the end of 2Q14, $9.7 billion in Education Finance-government guaranteed loans were transferred to loans held for sale. -$109.9 Non-strategic/liquidating loan portfolio -$2.9 -$130.0 -$12.7 -$2.2 -$2.3 ($ in billions)
Slide 24: Purchased credit-impaired (PCI) portfolios
Wells Fargo 4Q14 Supplement 23 Purchased credit-impaired (PCI) portfolios (1) Includes write-downs taken on loans where severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final res
Slide 25: Residential mortgage trends
Wells Fargo 4Q14 Supplement 24 Residential mortgage trends Mortgage production $44 billion of mortgage originations, down 8% LQ - 60% of originations were for purchases, compared with 70% in 3Q14 Mortgage repurchase liability $615 million balance - Total provision for repurchases losses: $39 mil
Slide 26: Real estate 1-4 family first mortgage portfolio
Wells Fargo 4Q14 Supplement 25 Real estate 1-4 family first mortgage portfolio First lien mortgage loans up 1% as growth in core first lien mortgage was partially offset by continued run-off in the liquidating portfolio Core first lien up $3.8 billion, or 2%, reflecting nonconforming mortgage or
Slide 27: Real estate 1-4 family junior lien mortgage portfolio
Wells Fargo 4Q14 Supplement 26 Real estate 1-4 family junior lien mortgage portfolio Junior lien mortgage loans down 2% LQ as high quality new originations were more than offset by paydowns Core junior nonaccruals down $51 million, or 3%, LQ Core junior net charge-offs of $111 million, or 77 b
Slide 28: Consumer credit card portfolio
Wells Fargo 4Q14 Supplement 27 Consumer credit card portfolio Credit card outstandings up 10% LQ and 16% YoY reflecting continued new account growth and growth in private label and co-brand outstandings driven by the Dillard’s card portfolio acquisition - Credit card household penetration (2) of 4
Slide 29: Auto portfolios
Wells Fargo 4Q14 Supplement 28 Auto portfolios (1) Consumer Portfolio Auto outstandings of $55.7 billion up 1% LQ and 10% YoY - 4Q14 originations of $6.7 billion down 12% LQ on seasonality and down 1% YoY reflecting continued discipline in a competitive market Nonaccrual loans declined $6 millio
Slide 30: Student lending portfolio
Wells Fargo 4Q14 Supplement 29 Student lending portfolio Private Portfolio $11.9 billion private loan outstandings stable LQ and up 5% YoY - Average FICO of 753 and 80% of the total outstandings have been co-signed Net charge-offs increased $8 million LQ due to seasonality of repayment 30+ day
Slide 31: Common Equity Tier 1 under Basel III (General Approach)
Wells Fargo 4Q14 Supplement 30 Common Equity Tier 1 under Basel III (General Approach) Wells Fargo & Company and Subsidiaries FIVE QUARTER RISK-BASED CAPITAL COMPONENTS Under Basel I Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, 2014 2014 2014 2014 2013 $ 185.3 183.0 181.5 176.5 171.0 (0.9) (0.5) (0.6) (0
Slide 32: Common Equity Tier 1 under Basel III (Advanced Approach, fully phased-in)
Wells Fargo 4Q14 Supplement 31 Common Equity Tier 1 under Basel III (Advanced Approach, fully phased-in) Wells Fargo & Company and Subsidiaries COMMON EQUITY TIER 1 UNDER BASEL III (ADVANCED APPROACH, FULLY PHASED-IN) (1)(2) Dec 31, 2014 $ 137.2 2.6 (2.8) (0.2) Common Equity Tier 1 (fully phased-in)
Slide 33: Forward-looking statements and additional information
Wells Fargo 4Q14 Supplement 32 Forward-looking statements and additional information 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
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