Wells Fargo & Company · NYSE:WFC
Wells Fargo & — Q2 2020 Earnings Presentation
33 slides from Wells Fargo &'s earnings presentation, Jul 14, 2020
Slide 1: 2Q20 Quarterly Supplement
Exhibit 99.2 2Q20 Quarterly Supplement July 14, 2020 © 2020 Wells Fargo Bank, N.A. All rights reserved.
Slide 2: Table of contents
Table of contents 2Q20 Results Appendix 2Q20 Earnings Pages 2 Deferred compensation plan economic hedge results 24 Providing support during the COVID-19 pandemic 3 Real estate 1-4 family mortgage portfolio 25 Strong capital and liquidity positions 4 Consumer credit card portfolio 26 Loans 5 Auto por
Slide 3: 2Q20 Earnings
2Q20 Earnings . Net loss of $2.4 billion included: ($ in millions, except EPS) 2Q20 1Q20 2Q19 - $9.5 billion of provision expense for credit losses: Net interest income $ 9,880 11,312 12,095 • $8.4 billion increase in the allowance for credit losses Noninterest income 7,956 6,405 9,489 • $1.1 billio
Slide 4: Providing support during the COVID-19 pandemic
Providing support during the COVID-19 pandemic Helped more than 2.7 million customers by deferring payments and waiving fees Consumer and Small - Over 2.5 million payments deferred, representing more than $5 billion in principal Business Customers (1)(2) and interest, including $3.2 billion in mortg
Slide 5: Strong capital and liquidity positions
Strong capital and liquidity positions 2Q20 Common Equity Tier 1 (CET 1) Ratio (1) 2Q20 Liquidity Coverage Ratio (LCR) (2) 129% 29% 10.9% 121% 10.7% above 10% 1.9%, or the regulatory $23.7 100% 9% billion, minimum above the regulatory minimum Regulatory Current Internal 1Q20 Actual 2Q20 Estimate Reg
Slide 6: Loans
Loans Average Loans Outstanding Period-end Loans Outstanding ($ in billions) ($ in billions) 965.0 971.3 1,009.8 947.5 949.8 956.5 949.9 954.9 962.3 935.2 4.80% 4.61% 4.37% 4.20% 3.50% 2Q19 3Q19 4Q19 1Q20 2Q20 2Q19 3Q19 4Q19 1Q20 2Q20 Total average loan yield Commercial Consumer . Total average loan
Slide 7: Consumer loan trends
Consumer loan trends Consumer loans down $15.7 billion YoY; down $20.1 billion LQ as declines in consumer real estate loans, credit card loans and other revolving credit and installment loans were partially offset by modest growth in automobile loans ($ in billions, Period-end balances) B= billion,
Slide 8: Commercial loan trends
Commercial loan trends Commercial loans up $942 million YoY and down $54.5 billion LQ as almost all of the $80 billion of loan draws in March associated with the COVID-19 pandemic were paid down reflecting strength in the capital markets ($ in billions, Period-end balances) B= billion, MM = million
Slide 9: Deposits
Deposits Average Deposits and Rates Period-end Deposits ($ in billions) ($ in billions) 1,410.7 1,386.7 1,288.4 1,376.5 1,269.0 1,338.0 466.1 434.0 347.4 408.5 430.1 341.4 48.2 67.1 34.4 0.70% 86.7 27.8 25.1 927.6 990.6 978.2 894.1 0.52% 746.5 815.5 0.17% 2Q19 1Q20 2Q20 2Q19 1Q20 2Q20 Interest-beari
Slide 10: Net interest income
Net interest income Net Interest Income . Net interest income decreased $2.2 billion, or 18%, YoY ($ in millions) reflecting the lower interest rate environment . Net interest income decreased $1.4 billion, or 13%, LQ 12,095 reflecting balance sheet repricing driven by the impact of 11,625 the lower
Slide 11: Noninterest income
Noninterest income vs vs . Noninterest income up $1.6 billion, or 24% LQ ($ in millions) 2Q20 1Q20 2Q19 . Deposit service charges down $279 million LQ on lower overdraft Noninterest income activity reflecting lower debit card transaction volumes, higher fee Service charges on deposit accounts $ 930
Slide 12: Noninterest expense and efficiency ratio
Noninterest expense and efficiency ratio (1) vs vs . Noninterest expense up $1.5 billion LQ ($ in millions) 2Q20 1Q20 2Q19 - Personnel expense up $597 million and included: Noninterest expense (2) • $231 million of expenses in response to COVID-19, including Personnel $ 8,911 7 % 5 bonus payments an
Slide 13: Community Banking
Community Banking vs vs . Net loss of $331 million, down from net income of $155 ($ in millions) 2Q20 1Q20 2Q19 million in 1Q20 and net income of $3.1 billion in 2Q19 Net interest income $ 5,699 (16) % (19) . Provision for credit losses of $3.4 billion included a $2.8 Noninterest income 3,067 13 (35
Slide 14: Community Banking metrics
Community Banking metrics Customers and Active Accounts (in millions) 2Q20 1Q20 4Q19 3Q19 2Q19 vs. 1Q20 vs. 2Q19 Digital (online and mobile) Active Customers (1) 31.1 31.1 30.3 30.2 30.0 0% 4% Mobile Active Customers (1) 25.2 24.9 24.4 24.3 23.9 1% 6% Primary Consumer Checking Customers (2)(3) 24.3
Slide 15: Wholesale Banking
Wholesale Banking vs vs . Net loss of $2.1 billion ($ in millions) 2Q20 1Q20 2Q19 . Net interest income down 6% LQ reflecting the impact of the Net interest income $ 3,891 (6) % (14) lower interest rate environment and lower deposit balances, Noninterest income 2,672 59 6 partially offset by higher
Slide 16: Wealth and Investment Management
Wealth and Investment Management . vs vs Net income of $180 million, down 70% YoY and 61% LQ and ($ in millions) 2Q20 1Q20 2Q19 included a $255 million increase in the allowance for credit losses in the quarter Net interest income $ 736 (15) % (29) . Net interest income down 15% LQ primarily due to
Slide 17: Credit quality of the loan portfolio
Credit quality of the loan portfolio Provision Expense and Net Charge-offs on Loans . Customer forbearance and other deferral activities ($ in millions) 9,565 instituted in response to the COVID-19 pandemic could delay the recognition of net charge-offs, delinquencies, and nonaccrual status for thos
Slide 18: Commercial & Industrial loans and lease financing by industry
Commercial & Industrial loans and lease financing by industry . C&I and lease financing nonaccrual loans of $3.0 billion, up $1.1 billion, or 59%, LQ driven by higher oil and gas, and real estate and construction nonaccruals - 47% of nonaccruals were oil and gas nonaccruals . Criticized assets of $2
Slide 19: Commercial real estate loans by property type
Commercial real estate loans by property type . Nonaccrual loans of $1.3 billion, up $286 million, or 30%, LQ - 59% of nonaccruals were shopping center, retail (excluding shopping center), and hotel/motel nonaccruals - 90% of the increase in nonaccrual loans was from shopping center, hotel/motel, an
Slide 20: Oil and gas loan portfolio credit performance
Oil and gas loan portfolio credit performance . Oil and gas loans outstanding down 12% LQ and Credit performance overview 7% YoY, and total commitments (1) down 5% LQ . $298 million of net charge-offs in 2Q20, up and 8% YoY reflecting the impact of spring $111 million LQ reflecting depressed oil pri
Slide 21: Allowance for credit losses for loans
Allowance for credit losses for loans . Allowance for credit losses for loans (ACL) = $20.4 billion - $8.4 billion increase in the allowance for credit losses for loans reflected increases of $6.4 billion in commercial ACL and $2.0 billion in consumer ACL - Allowance coverage for total loans of 2.19
Slide 22: Allowance for credit losses – key drivers of the $8.4 billion increase
Allowance for credit losses for loans – key drivers of the $8.4 billion increase $8.4 billion increase in our allowance for credit losses for loans reflected: Current economic environment: . Economic conditions worsened significantly compared to prior expectations as unemployment levels reached 14.7
Slide 23: Capital
Capital Common Equity Tier 1 Ratio (1) Capital Position . Despite significant increases in the allowance for credit 12.0% losses in the last two quarters, the Common Equity 11.6% Tier 1 (CET1) ratio of 10.9% at 6/30/20 (1) continued to 11.1% 10.9% be above both the regulatory minimum of 9% and our 1
Slide 24: Appendix
Appendix
Slide 25: Deferred compensation plan economic hedge results
Deferred compensation plan economic hedge results . Wells Fargo’s deferred compensation plan allows eligible team members the opportunity to defer receipt of current compensation to a future date . Certain team members within Wholesale Banking, and Wealth and Investment Management have mandatory def
Slide 26: Real estate 1-4 family mortgage portfolio
Real estate 1-4 family mortgage portfolio ($ in millions) 2Q20 1Q20 2Q19 Linked Quarter Change Year-over-Year Change Real estate 1-4 family first mortgage loans: $ 277,945 292,920 286,427 $ (14,975) (5) % $ (8,482) (3) % Nonaccrual loans 2,393 2,372 2,425 21 1 (32) (1) as % of loans 0.86 % 0.81 % 0.
Slide 27: Consumer credit card portfolio
Consumer credit card portfolio ($ in millions, except where noted) 2Q20 1Q20 2Q19 Linked Quarter Change Year-over-Year Change Credit card outstandings $ 36,018 38,582 38,820 $ (2,564) (7) % $ (2,802) (7) % Net charge-offs 327 377 349 (50) (13) (22) (6) as % of avg loans 3.60 % 3.81 % 3.68 % (21) bps
Slide 28: Auto portfolios
Auto portfolios ($ in millions) 2Q20 1Q20 2Q19 Linked Quarter Change Year-over-Year Change Consumer: Auto outstandings $ 48,808 48,568 45,664 $ 240 - % $ 3,144 7 % Nonaccrual loans 129 99 115 30 30 14 12 as % of loans 0.26 % 0.20 % 0.25 % 6 bps 1 bps Net charge-offs $ 106 82 52 $ 24 29 $ 54 n.m. as
Slide 29: Student lending portfolio
Student lending portfolio ($ in millions) 2Q20 1Q20 2Q19 Linked Quarter Change Year-over-Year Change Private outstandings $ 10,258 10,555 10,860 $ (297) (3) % $ (602) (6) % Net charge-offs 17 32 32 (15) (47) (15) (47) as % of avg loans 0.68 % 1.21 % 1.16 % (53) bps (48) bps 30+ days past due $ 208 1
Slide 30: Trading-related revenue
Trading-related revenue ($ in millions) 2Q20 1Q20 2Q19 Linked Quarter Change Year-over-Year Change Trading-related revenue Net interest income $ 617 774 776 $ (157) (20) % $ (159) (20) % Net gains from trading activities 807 64 229 743 n.m. 578 252 Trading-related revenue $ 1,424 838 1,005 $ 586 70
Slide 31: Wholesale Banking adjusted efficiency ratio for income tax credits
Wholesale Banking adjusted efficiency ratio for income tax credits We also evaluate our Wholesale Banking operating segment based on an adjusted efficiency ratio for income tax credits. The adjusted efficiency ratio for income tax credits is a non-GAAP financial measure and represents noninterest ex
Slide 32: Common Equity Tier 1 under Basel III
Common Equity Tier 1 Wells Fargo & Company and Subsidiaries COMMON EQUITY TIER 1 UNDER BASEL III (1) Estimated Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (in billions, except ratio) 2020 2020 2019 2019 2019 Total equity $ 180.1 183.3 188.0 194.4 200.0 Adjustments: Preferred stock (21.1 ) (21.3 ) (21.5
Slide 33: Forward-looking statements
Forward-looking statements This document contains forward-looking statements. In addition, we may make forward-looking statements in our other documents filed or furnished with the SEC, and our management may make forward-looking statements orally to analysts, investors, representatives of the media
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