Wells Fargo & Company · NYSE:WFC
Wells Fargo & — Q1 2019 Earnings Presentation
39 slides from Wells Fargo &'s earnings presentation, Apr 12, 2019
Slide 1: 1Q19 Quarterly Supplement
Exhibit 99.2 1Q19 Quarterly Supplement April 12, 2019 © 2019 Wells Fargo Bank, N.A. All rights reserved.
Slide 2: Table of contents
Table of contents 1Q19 Results Appendix 1Q19 Highlights Pages 2 Real estate 1-4 family mortgage portfolio 29 1Q19 Earnings 3 Consumer credit card portfolio 30 Year-over-year results 4 Auto portfolios 31 Balance Sheet and credit overview (linked quarter) 5 Student lending portfolio 32 Income Statemen
Slide 3: 1Q19 Highlights
1Q19 Highlights Earnings . Net income of $5.9 billion and diluted EPS of $1.20 . Return on assets (ROA) = 1.26% Returns . Return on equity (ROE) = 12.71% . Return on average tangible common equity (ROTCE) (1) = 15.16% . Positive business momentum with strong customer activity - ‘Customer Loyalty’ an
Slide 4: 1Q19 Earnings
1Q19 Earnings . Earnings of $5.9 billion and diluted Wells Fargo Net Income ($ in millions, except EPS) earnings per common share (EPS) of $1.20 included: 6,007 6,064 5,860 - $778 million seasonally higher linked quarter personnel expense (recognized in employee 5,136 5,186 benefits expense, and com
Slide 5: Year-over-year results
Year-over-year results Revenue Noninterest Expense Common Equity Tier 1 Ratio ($ in billions) ($ in billions) (CET1) (fully phased-in) (1) 21.9 21.6 15.0 11.9% 11.9% 13.9 1Q18 1Q19 1Q18 1Q19 1Q18 1Q19 Net Interest Income ($ in billions) Net Charge-offs ($ in millions) Period-end Common Shares and Ne
Slide 6: Balance Sheet and credit overview (linked quarter)
Balance Sheet and credit overview (linked quarter) Loans . Down $4.9 billion - Commercial loans down $1.2 billion as lower commercial & industrial loans and lease financing were partially offset by higher commercial real estate loans - Consumer loans down $3.7 billion as declines in legacy consumer
Slide 7: Income Statement overview (linked quarter)
Income Statement overview (linked quarter) Total revenue . Revenue of $21.6 billion, up $629 million, or 3% . NII down $333 million on 2 fewer days in the quarter, and balance sheet mix and Net interest income repricing; NIM down 3 bps to 2.91% Noninterest income . Noninterest income up $962 million
Slide 8: Loans
Loans Average Loans Outstanding Average ($ in billions) . Total average loans of $950.1 billion, down $876 951.0 944.1 939.5 946.3 950.1 million YoY and up $3.8 billion LQ - Commercial loans up $6.4 billion LQ driven by higher commercial & industrial loans - Consumer loans down $2.6 billion LQ as gr
Slide 9: Commercial loan trends
Commercial loan trends Commercial loans up $8.8 billion YoY and down $1.2 billion LQ: ($ in billions, Period-end balances) B= billion, MM = million Commercial and industrial (C&I) loans down $1.1 billion LQ from a strong 4Q18 370 Commercial and Industrial Including declines… …partially offset by gro
Slide 10: Consumer loan trends
Consumer loan trends Consumer loans down $7.9 billion YoY and included $6.6 billion of strategic sales of Pick-a-Pay PCI loans and Reliable consumer auto loans; down $3.7 billion LQ and included $1.6 billion of Pick-a-Pay PCI loan sales ($ in billions, Period-end balances) B= billion, MM = million .
Slide 11: Average deposit trends and costs
Average deposit trends and costs Average Deposits and Rates Average ($ in billions) . Average deposits of $1.3 trillion, down $35.1 billion, or 3%, YoY reflecting lower Wholesale 1,297.2 1,268.9 1,262.1 Banking deposits including actions taken in the first half of 2018 to manage to the asset cap, as
Slide 12: Deposit beta experience
Deposit beta experience . Deposit costs have trended higher with the increase in the Fed Funds rate and the repricing lag from prior rate moves . The cumulative beta over the last year (1Q18-1Q19) of 43% increased from the prior twelve months’ (4Q17-4Q18) cumulative beta of 38% 3.00 100% 90% and Fed
Slide 13: Period-end deposit trends
Period-end deposit trends Period-end Deposits Period-end ($ in billions) . Period-end deposits of $1.3 trillion, down $39.7 1,303.7 1,286.2 1,264.0 billion, or 3%, YoY . Period-end deposits down $22.2 billion, or 2%, LQ - Wholesale Banking deposits down $37.0 billion, 433.6 429.7 392.7 or 9%, primar
Slide 14: Net interest income
Net interest income Net Interest Income . Net interest income increased $73 million, or 1%, ($ in millions) YoY, and decreased $333 million, or 3%, LQ; linked quarter decrease reflected: 12,541 12,572 12,644 12,238 12,311 - ~$160 million lower NII from 2 fewer days in the quarter - Balance sheet mix
Slide 15: Noninterest income
Noninterest income . Deposit service charges down $82 million LQ reflecting vs vs ($ in millions) 1Q19 4Q18 1Q18 ~$35 million in fee waivers for customers including those Noninterest income affected by our data center system outage in February, Service charges on deposit accounts $ 1,094 (7) % (7) a
Slide 16: Noninterest expense and efficiency ratio
Noninterest expense and efficiency ratio (1) vs vs . Noninterest expense up $577 million LQ ($ in millions) 1Q19 4Q18 1Q18 - Personnel expense up $1.5 billion Noninterest expense • Salaries down $120 million primarily on two fewer Salaries $ 4,425 (3) % 1 payroll days in the quarter Commission and i
Slide 17: Noninterest expense – linked quarter
Noninterest expense – linked quarter ($ in millions) $1,665 $15,000 ($241) Revenue- ($219) $0 $14,000 related: Third Party $13,916 Lower Services: Infrastructure commission Lower ($580) ($48) $13,339 and incentive outside “Running the “Running the Compensation compensation professional Business” – B
Slide 18: Noninterest expense – year over year
Noninterest expense – year over year ($ in millions) $16,000 $578 $15,042 ($134) ($22) $15,000 Compensation Revenue- Third Party & Benefits: related: Services: $353 million Lower Lower higher deferred commission professional $59 $47 $13,916 $14,000 compensation and incentive services compensation In
Slide 19: Committed to and on track to meet 2019 expense target
Committed to and on track to meet 2019 expense target . We are currently on track to meet our 2019 expense target of $52.0-$53.0 billion provided at our 2018 Investor Day . Our 2019 expense target excludes annual operating losses in excess of $600 million, such as litigation and remediation accruals
Slide 20: Investments in the business have increased from Investor Day expectations
Investments in the business have increased from Investor Day expectations . Actual and anticipated investment spend for 2018 – 2019 has increased $1.4 billion from our expectations at our 2018 Investor Day - Most significant increase is in the Regulatory Compliance and Operational Risk category . Hi
Slide 21: Actual and projected savings exceeding original expectations
Actual and projected savings exceeding original expectations Continued focus on efficiency has resulted in actual and anticipated savings exceeding 2018 Investor Day expectations Actual Savings and Updated Expectations Compared with Expected Expense Savings by Major Category Savings as of 2018 Inves
Slide 22: Community Banking
Community Banking . Net income of $2.8 billion, up 48% YoY primarily vs vs ($ in millions) 1Q19 4Q18 1Q18 due to lower operating losses and lower income Net interest income $ 7,248 (1) % 1 tax expense, and down 11% LQ on seasonally Noninterest income 4,502 9 (3) higher personnel expense Provision fo
Slide 23: Community Banking metrics
Community Banking metrics Customers and Active Accounts vs. vs. (in millions) 1Q19 4Q18 3Q18 2Q18 1Q18 4Q18 1Q18 Digital (o nline and mo bile) Active Custo mers (1) (2) 29.8 29.2 29.0 28.9 28.8 2% 3% Mo bile Active Custo mers (1) (2) 23.3 22.8 22.5 22.0 21.8 2% 7% Primary Consumer Checking Customers
Slide 24: Community Banking metrics
Community Banking metrics Balances and Activity vs. vs. (in millions, exc ept where noted) 1Q19 4Q18 3Q18 2Q18 1Q18 4Q18 1Q18 Consumer and Small Business Banking Deposits (Average) ($ in billions) $ 739.7 736.3 743.5 754.0 755.5 0% -2% Teller and ATM Transactio ns (1) 313.8 334.8 343.6 351.4 343.3 -
Slide 25: Wholesale Banking
Wholesale Banking . Net income of $2.8 billion, down 4% YoY on vs vs ($ in millions) 1Q19 4Q18 1Q18 lower noninterest income, and up 4% LQ reflecting higher noninterest income and lower Net interest income $ 4,534 (4) % - noninterest expense Noninterest income 2,577 18 (6) . Net interest income flat
Slide 26: Wealth and Investment Management
Wealth and Investment Management . Net income of $577 million, down 19% YoY and down vs vs 16% LQ primarily driven by lower asset-based fees and ($ in millions) 1Q19 4Q18 1Q18 higher seasonal personnel expenses Net interest income $ 1,101 (1) % (1) . Net interest income down 1% LQ Noninterest income
Slide 27: Credit quality
Credit quality Provision Expense and Net Charge-offs . Net charge-offs of $695 million, down $26 ($ in millions) million LQ on lower consumer losses driven by 845 seasonality 741 721 680 695 . 0.30% net charge-off rate, stable LQ 602 580 521 - Commercial losses of 11 bps, up 1 bp LQ driven 452 by lo
Slide 28: Capital
Capital Common Equity Tier 1 Ratio Capital Position (Fully Phased-In) (1) . Common Equity Tier 1 ratio (fully phased-in) of 11.9% at 3/31/19 (1) was well above both the regulatory minimum of 9% and our current 11.9% 12.0% 11.9% 11.9% 11.7% internal target of 10% Capital Return . Period-end common sh
Slide 29: Appendix
Appendix
Slide 30: Real estate 1-4 family mortgage portfolio
Real estate 1-4 family mortgage portfolio ($ in millions) 1Q19 4Q18 1Q18 Linked Quarter Change Year-over-Year Change Real estate 1-4 family first mortgage loans: $ 284,545 285,065 282,658 $ (520) - % $ 1,887 1 % Nonaccrual loans 3,026 3,183 3,673 (157) (5) (647) (18) as % of loans 1.06 % 1.12 1.30 (
Slide 31: Consumer credit card portfolio
Consumer credit card portfolio ($ in millions, except where noted) 1Q19 4Q18 1Q18 Linked Quarter Change Year-over-Year Change Credit card outstandings $ 38,279 39,025 36,103 $ (746) (2) % $ 2,176 6 % Net charge-offs 352 338 332 14 4 20 6 as % of avg loans 3.73 % 3.54 3.69 19 bps 4 bps 30+ days past
Slide 32: Auto portfolios
Auto portfolios ($ in millions) 1Q19 4Q18 1Q18 Linked Quarter Change Year-over-Year Change Consumer: Auto outstandings $ 44,913 45,069 49,554 $ (156) - % $ (4,641) (9) % Indirect outstandings 43,918 44,008 48,198 (90) - (4,280) (9) Direct outstandings 995 1,061 1,356 (66) (6) (361) (27) Nonaccrual l
Slide 33: Student lending portfolio
Student lending portfolio ($ in millions) 1Q19 4Q18 1Q18 Linked Quarter Change Year-over-Year Change Private outstandings $ 11,139 11,220 11,879 $ (81) (1) % $ (740) (6) % Net charge-offs 27 36 27 (9) (25) - - as % of avg loans 0.94 % 1.26 0.90 (32) bps 4 bps 30+ days past due $ 176 190 184 $ (14) (
Slide 34: Deferred compensation plan investment results
Deferred compensation plan investment 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 deferra
Slide 35: Trading-related revenue
Trading-related revenue ($ in millions) 1Q19 4Q18 1Q18 Linked Quarter Change Year-over-Year Change Trading-related revenue Net interest income $ 795 789 652 $ 6 1 % $ 143 22 % Net gains on trading activities 357 10 243 347 n.m. 114 47 Trading-related revenue $ 1,152 799 895 $ 353 44 % $ 257 29 % . T
Slide 36: Noninterest expense analysis (reference for slides 16-17)
Noninterest expense analysis (reference for slides 16-17) For analytical purposes, we have grouped our noninterest expense into six categories: Compensation & Benefits: Salaries, benefits and non-revenue-related incentive compensation Revenue-related: Incentive compensation directly tied to generati
Slide 37: Common Equity Tier 1 (Fully Phased-In)
Common Equity Tier 1 (Fully Phased -In) Wells Fargo & Company and Subsidiaries COMMON EQUITY TIER 1 UNDER BASEL III (FULLY PHASED-IN) (1) Estimated Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, (in billions, except ratio) 2019 2018 2018 2018 2018 Total equity $ 198.7 197.1 199.7 206.1 205.9 Adjustments: P
Slide 38: Return on average tangible common equity (ROTCE)
Return on average tangible common equity (ROTCE) Wells Fargo & Company and Subsidiaries TANGIBLE COMMON EQUITY (1) Quarter ended (in millions, except ratios) Mar 31, 2019 Return on average tangible common equity (1): Net income applicable to common stock (A) $ 5,507 Average total equity 198,349 Adju
Slide 39: Forward-looking statements and additional information
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 other documents filed or furnis
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