Wells Fargo & Company · NYSE:WFC

Wells Fargo & — Q3 2016 Earnings Presentation

41 slides from Wells Fargo &'s earnings presentation, Oct 14, 2016

  1. Slide 1: 3Q16 Quarterly Supplement

    3Q16 Quarterly Supplement October 14, 2016 © 2016 Wells Fargo & Company. All rights reserved.

  2. Slide 2: Table of contents

    Wells Fargo 3Q16 Supplement 1 Appendix Real estate 1-4 family first mortgage portfolio 33 Real estate 1-4 family junior lien mortgage portfolio 34 Consumer credit card portfolio 35 Auto portfolios 36 Student lending portfolio 37 Common Equity Tier 1 (Fully Phased-In) 38 Return on average tangible co

  3. Slide 3: 3Q16 Highlights

    Wells Fargo 3Q16 Supplement 2 5,796 5,575 5,462 5,558 5,644 3Q15 4Q15 1Q16 2Q16 3Q16 3Q16 Highlights  Earnings of $5.6 billion  Diluted earnings per common share of $1.03  Revenue up 2% year-over-year (YoY) and 1% linked quarter (LQ) - Net interest income up 4% YoY and 2% LQ - Noninterest income

  4. Slide 4: Retail Banking sales practices - Background

    Wells Fargo 3Q16 Supplement 3 Retail Banking sales practices - Background Sales Practices Settlement Agreement on September 8, 2016  Agreements reached with the CFPB, OCC and the Office of the L.A. City Attorney; $185 million settlement and $5 million in financial remediation had been fully accrued

  5. Slide 5: Summary of independent account review

    Wells Fargo 3Q16 Supplement 4 Summary of independent account review  PwC was commissioned by Wells Fargo to conduct large-scale data analysis of all 93.5 million deposit and credit card accounts opened from May 2011 to mid-2015 to identify financial harm stemming from potentially unauthorized accou

  6. Slide 6: Process enhancements and monitoring

    Wells Fargo 3Q16 Supplement 5 Process enhancements and monitoring  We have made changes to enhance our oversight, expand customer transparency, and improve the customer experience, including:  We will continue to invest in process enhancements and proactive monitoring, and we’re committed to getti

  7. Slide 7: Connecting with all of our customers

    Wells Fargo 3Q16 Supplement 6 Connecting with all of our customers  Reaching out to all retail customers: 40 million retail and 3 million small business checking, savings, credit card and unsecured line of credit customers across the country during the month of October through ~75 million statement

  8. Slide 8: Connecting with our credit card customers

    Wells Fargo 3Q16 Supplement 7 Connecting with our credit card customers  565,000 un-activated consumer credit cards identified Population - As of 9/30/16, 564,000 accounts identified and tracked • 330,000 have closed their cards • 234,000 accounts were still open o 192,000 were open and never activ

  9. Slide 9: Making it right for customers

    Wells Fargo 3Q16 Supplement 8 Making it right for customers  Focusing on potential additional impacts that identified consumer and small business deposit and credit card customers may have incurred - Contracting with a third party firm to work with us and the credit bureaus on additional impact as

  10. Slide 10: Customer activity metrics and footnotes

    Wells Fargo 3Q16 Supplement 9 Percentage changes are calculated using whole numbers. If the % change were based on the rounded amounts presented, it would produce a different result for Branch banker interactions, Phone Banker Interactions and Consumer Credit Cards POS Active Cards, but all differen

  11. Slide 11: Monitoring customer activity across the Company

    Wells Fargo 3Q16 Supplement 10 Monitoring customer activity across the Company  Other Businesses impacted - Consumer Lending • Mortgage referrals from Retail Banking were down 24% in September from August (Retail Banking referrals accounted for ~10% of 2016 YTD (1) mortgage originations) • Auto ori

  12. Slide 12: Taking important steps forward to address terminations & ethics

    Wells Fargo 3Q16 Supplement 11  Reviewing all EthicsLine procedures for compliance with policies and are investigating any claims of retaliation against team members who contacted the EthicsLine  Assisting former team members who left retail banking due to sales performance and who remain eligible

  13. Slide 13: Team member engagement is critical to Wells Fargo's success

    Wells Fargo 3Q16 Supplement 12 Team member engagement is critical to Wells Fargo’s success Wells Fargo defines engagement as an emotional connection and commitment with the company where team members feel included, valued and supported to do work that energizes them; and where they are inspired to g

  14. Slide 14: Key takeaways from the quarter

    Wells Fargo 3Q16 Supplement 13 Key takeaways from the quarter Strong 3Q16 results with earnings of $5.6 billion, or $1.03 EPS Compared with second quarter:  Solid balance sheet growth: - Strong deposit growth in commercial, and consumer and small business banking - Continued loan growth across cons

  15. Slide 15: Year-over-year results

    Wells Fargo 3Q16 Supplement 14 11.5 12.0 3Q15 3Q16 5,108.5 5,023.9 3Q15 3Q16 1,198.9 1,261.5 3Q15 3Q16 895.1 957.5 3Q15 3Q16 21.9 22.3 3Q15 3Q16 5.8 5.6 3Q15 3Q16 Year-over-year results Diluted earnings per common share Net Income ($ in billions, except EPS) Revenue ($ in billions) Period-end Common

  16. Slide 16: Balance Sheet and credit overview (linked quarter)

    Wells Fargo 3Q16 Supplement 15 Balance Sheet and credit overview (linked quarter) Loans  Loans up $4.1 billion on growth in both commercial and consumer loan portfolios Short-term investments/ Fed funds sold  Up $2.8 billion reflecting growth in deposits and long-term debt Trading assets  Up $5.9

  17. Slide 17: Income Statement overview (linked quarter)

    Wells Fargo 3Q16 Supplement 16 Income Statement overview (linked quarter) Total revenue  Revenue of $22.3 billion, up $166 million Net interest income  NII up $219 million on broad-based earning asset growth and one additional day in the quarter  NIM down 4 bps to 2.82% primarily driven by growth

  18. Slide 18: Loans

    Wells Fargo 3Q16 Supplement 17 903.2 916.6 947.3 957.2 961.3 3Q15 4Q15 1Q16 2Q16 3Q16 Loans  Total loans increased $58.1 billion, or 6%, YoY and $4.1 billion LQ - Commercial loans up $1.9 billion LQ on higher commercial real estate and C&I loans - Consumer loans up $2.2 billion LQ as growth in firs

  19. Slide 19: Year-over-year loan growth

    Wells Fargo 3Q16 Supplement 18 30 32 34 36 38 40 42 3Q15 3Q16 Other Revolving Credit and Installment 20 24 28 32 36 3Q15 3Q16 Credit Card 24 29 34 39 44 49 54 59 64 3Q15 3Q16 Automobile 150 170 190 210 230 250 270 290 3Q15 3Q16 Real Estate 1-4 Family First Mortgage 100 105 110 115 120 125 130 135 14

  20. Slide 20: Deposits

    Wells Fargo 3Q16 Supplement 19 857.0 883.7 898.4 341.9 353.0 363.1 1,198.9 1,236.7 1,261.5 3Q15 2Q16 3Q16 Noninterest-bearing deposits Interest-bearing deposits 1,202.2 1,245.5 1,275.9 3Q15 2Q16 3Q16 Deposits  Deposits up $62.6 billion, or 5%, YoY and $24.8 billion, or 2%, LQ - Noninterest-bearing

  21. Slide 21: 3Q16 Revenue diversification

    Wells Fargo 3Q16 Supplement 20 Balanced Spread and Fee Income Diversified Fee Generation (% of noninterest income) 3Q16 Revenue diversification 46% 54% Net Interest Income Noninterest Income 3% 5% 1% 1% 4% 3% 13% 3% 3% 1% 1% 1% 3% 10% 4% 8% 23% 13% All Other Noninterest Income Lease Income Net Gains

  22. Slide 22: Net interest income

    Wells Fargo 3Q16 Supplement 21 11,457 11,588 11,667 11,733 11,952 3Q15 4Q15 1Q16 2Q16 3Q16  Net interest income up $495 million, or 4%, YoY and $219 million, or 2%, LQ reflecting earning asset growth and one additional day in the quarter which contributed ~$73 million  Average earning assets up $4

  23. Slide 23: Noninterest income

    Wells Fargo 3Q16 Supplement 22 Noninterest income  Service charges up $34 million LQ on seasonality  Trust and investment fees up $66 million on higher asset-based fees  Mortgage banking up $253 million reflecting higher mortgage origination revenue - Residential mortgage origination revenue up $

  24. Slide 24: Noninterest expense and efficiency ratio

    Wells Fargo 3Q16 Supplement 23 Noninterest expense and efficiency ratio (1)  Noninterest expense up $402 million LQ - Personnel expense up $20 million • Salaries up $125 million on one extra day in the quarter and higher FTE count • Commission and incentive compensation down $84 million and include

  25. Slide 25: Saving to invest - an ongoing commitment

    Wells Fargo 3Q16 Supplement 24 Operational Investments  Enhanced sales practices oversight and remediation  Risk and compliance, including cybersecurity  Improved data management to allow targeted marketing offers  Data modernization for risk and regulatory data Innovation & Experience Investmen

  26. Slide 26: Community Banking

    Wells Fargo 3Q16 Supplement 25 Community Banking  Net income of $3.2 billion, down 9% YoY and up 2% LQ Regional Banking  Primary consumer checking customers (1)(2) up 4.7% YoY  Primary consumer checking customers (2) in September up 4.5% YoY  Retail banking cross-sell of 6.25 (1)(3) products per

  27. Slide 27: Wholesale Banking

    Wells Fargo 3Q16 Supplement 26 Wholesale Banking  Net income of $2.0 billion, up 6% YoY and down 1% LQ  Net interest income up 4% LQ - Average loans up 1% LQ on growth in asset- backed finance and commercial real estate mortgage - Average and period-end deposits up 4% LQ  Noninterest income down

  28. Slide 28: Wealth and Investment Management

    Wells Fargo 3Q16 Supplement 27 ($ in billions, except where noted) 3Q16 vs 2Q16 vs 3Q15 Key Metrics: WIM Client assets (1) ($ in trillions) $ 1.7 2 % 9 Retail Brokerage Financial advisors 15,086 - 1 Advisory assets $ 458 3 12 Client assets ($ in trillions) 1.5 2 10 Wealth Management Client assets 23

  29. Slide 29: Credit quality

    Wells Fargo 3Q16 Supplement 28 Credit quality Nonperforming Assets ($ in billions) Provision Expense and Net Charge-offs ($ in millions)  Net charge-offs of $805 million, down $119 million, or 13%, LQ on lower oil and gas, credit card and consumer real estate losses and continued commercial real es

  30. Slide 30: Oil and gas loan portfolio

    Wells Fargo 3Q16 Supplement 29 17.4 17.1 16.0 43.0 39.1 38.3 3Q15 2Q16 3Q16 Outstandings Exposure Oil and gas loan portfolio Loans Outstanding and Exposure (1) ($ in billions) (1) Exposure = Loans outstanding + unfunded commitments. (1) Credit performance overview  $168 million of net charge-offs i

  31. Slide 31: Capital

    Wells Fargo 3Q16 Supplement 30 10.6% 10.8% 10.6% 10.6% 10.7% 3Q15 4Q15 1Q16 2Q16 3Q16 Estimated  Common Equity Tier 1 ratio well above the regulatory minimum and buffers and our internal buffer - Common Equity Tier 1 ratio (fully phased- in) of 10.7% at 9/30/16 (1)  Period-end common shares outsta

  32. Slide 32: 3Q16 Summary

    Wells Fargo 3Q16 Supplement 31 3Q16 Summary  Strong earnings of $5.6 billion - Diluted EPS of $1.03  Revenue of $22.3 billion, up 2% YoY  Solid returns - ROA = 1.17% - ROE = 11.60% • ROTCE (1) = 13.96%  Strong loan and deposit growth - Average loans up $62.4 billion, or 7%, YoY - Average deposit

  33. Slide 33: Appendix

    Appendix

  34. Slide 34: Real estate 1-4 family first mortgage portfolio

    Wells Fargo 3Q16 Supplement 33 Real estate 1-4 family first mortgage portfolio (1) Nonconforming mortgages originated post February 2009. (2) The current loan-to-value (LTV) ratio is calculated as the net carrying value divided by the collateral value. ($ in millions) 3Q16 2Q16 Real estate 1-4 famil

  35. Slide 35: Real estate 1-4 family junior lien mortgage portfolio

    Wells Fargo 3Q16 Supplement 34 Real estate 1-4 family junior lien mortgage portfolio  Junior lien mortgage loans down $1.7 billion, or 3%, LQ as paydowns more than offset new originations  Junior lien nonaccrual loans down $71 million, or 5%, LQ  Junior lien net charge-offs of $49 million, or 40

  36. Slide 36: Consumer credit card portfolio

    Wells Fargo 3Q16 Supplement 35 Consumer credit card portfolio  Credit card outstandings up 3% LQ and up 8% YoY reflecting account growth - Credit card household penetration (3) (4) of 45.4%, down 25 bps LQ driven by inactive closure campaign in June, and up 55 bps YoY - Purchase dollar volume up 1%

  37. Slide 37: Auto portfolios

    Wells Fargo 3Q16 Supplement 36 Auto portfolios Consumer Portfolio  Auto outstandings of $62.9 billion up 2% LQ and 6% YoY - 3Q16 originations of $8.1 billion down 2% LQ on seasonality and down 2% YoY  Nonaccrual loans declined $3 million LQ and $15 million YoY  Net charge-offs up $47 million LQ d

  38. Slide 38: Student lending portfolio

    Wells Fargo 3Q16 Supplement 37 Student lending portfolio  $12.5 billion private loan outstandings up 2% LQ on seasonality and up 2% YoY - Average FICO of 759 and 81% of the total outstandings have been co-signed - Originations up 3% YoY  Net charge-offs decreased $3 million LQ due to seasonality o

  39. Slide 39: Common Equity Tier 1 (Fully Phased-In)

    Wells Fargo 3Q16 Supplement 38 Common Equity Tier 1 (Fully Phased-In) Wells Fargo & Company and Subsidiaries COMMON EQUITY TIER 1 UNDER BASEL III (FULLY PHASED-IN) (1) Estimated (in billions, except ratio) Sep 30, 2016 Jun 30, 2016 Mar 31, 2016 Dec 31, 2015 Sep 30, 2015 Total equity $ 204.0 202.7 19

  40. Slide 40: Return on average tangible common equity (ROTCE)

    Wells Fargo 3Q16 Supplement 39 Return on average tangible common equity (ROTCE) Wells Fargo & Company and Subsidiaries TANGIBLE COMMON EQUITY (1) (in millions, except ratios) Quarter ended Sep 30, 2016 Return on average tangible common equity (1): Net income applicable to common stock (A) $ 5,243 Av

  41. Slide 41: Forward-looking statements and additional information

    Wells Fargo 3Q16 Supplement 40 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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