0000072971 us-gaap:AutomobileLoanMember wfc:A90119DaysPastDueMember wfc:LoansExcludingGovernmentInsuredOrGuaranteedLoansMember 2020-03-31 0000072971 srt:MaximumMember us-gaap:CreditDefaultSwapMember 2019-01-01 2019-12-31 0000072971 srt:MinimumMember us-gaap:EquityContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember wfc:MeasurementInputCorrelationFactorMember us-gaap:ValuationTechniqueOptionPricingModelMember 2020-03-31 0000072971 wfc:SeriesLPreferredStockMember 2019-01-01 2019-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~FORM 10-Q~~(Mark One)



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~THE SECURITIES EXCHANGE ACT OF 1934~~

For the quarterly period ended ~~September 30, 2017~~March 31, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 001-2979

WELLS FARGO & COMPANY

(Exact name of registrant as specified in its charter)



Delaware	No.	41-0449260
(State of incorporation)	(I.R.S. Employer Identification No.)

420 Montgomery Street, San Francisco, California ~~94163~~94104

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: ~~1-866-249-3302~~ 1-866-249-3302

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $1-2/3	WFC	NYSE
7.5% Non-Cumulative Perpetual Convertible Class A Preferred Stock, Series L	WFC.PRL	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series N	WFC.PRN	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series O	WFC.PRO	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series P	WFC.PRP	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of 5.85% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series Q	WFC.PRQ	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of 6.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series R	WFC.PRR	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series T	WFC.PRT	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series V	WFC.PRV	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series W	WFC.PRW	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series X	WFC.PRX	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series Y	WFC.PRY	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series Z	WFC.PRZ	NYSE
Guarantee of 5.80% Fixed-to-Floating Rate Normal Wachovia Income Trust Securities of Wachovia Capital Trust III	WFC/TP	NYSE
Guarantee of Medium-Term Notes, Series A, due October 30, 2028 of Wells Fargo Finance LLC	WFC/28A	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.YesþNo¨



~~Yes~~ þ		No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).



~~Yes~~ þ		No o

Yesþ No¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerþAccelerated filer ¨



	~~Large accelerated filer~~ þ		~~Accelerated filer~~ o

	~~Non-accelerated filer~~ o ~~(Do not check if a smaller reporting company)~~		~~Smaller reporting company~~ o
			~~Emerging growth company~~ o

Non-accelerated filer ¨Smaller reporting company☐

Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



~~Yes~~ o		No þ

Yes☐ Noþ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



		Shares Outstanding
		~~October 25, 2017~~April 24, 2020
Common stock, $1-2/3 par value		~~4,924,261,449~~4,099,997,545


FORM 10-Q	FORM 10-Q				FORM 10-Q
CROSS-REFERENCE INDEX	CROSS-REFERENCE INDEX				CROSS-REFERENCE INDEX
PART I	Financial Information				Financial Information
Item 1.	Financial Statements			Page	Financial Statements			Page
					Consolidated Statement of Income			59
					Consolidated Statement of Comprehensive Income			60
					Consolidated Balance Sheet			61
					Consolidated Statement of Changes in Equity			62
	Consolidated Statement of Income			73	Consolidated Statement of Cash Flows			64
	Consolidated Statement of Comprehensive Income			74	Notes to Financial Statements
	Consolidated Balance Sheet			75	1	—	Summary of Significant Accounting Policies	65
	Consolidated Statement of Changes in Equity			76	2	—	Business Combinations	70
	Consolidated Statement of Cash Flows			78	3	—	Cash, Loan and Dividend Restrictions	71
	Notes to Financial Statements				4	—	Trading Activities	72
	1	—	Summary of Significant Accounting Policies	79	5	—	Available-for-Sale and Held-to-Maturity Debt Securities	73
	2	—	Business Combinations	81	6	—	Loans and Related Allowance for Credit Losses	80
	3	—	Federal Funds Sold, Securities Purchased under Resale Agreements and Other Short-Term Investments	81	7	—	Leasing Activity	97
	4	—	Investment Securities	82	8	—	Equity Securities	98
	5	—	Loans and Allowance for Credit Losses	89	9	—	Other Assets	100
	6	—	Other Assets	106	10	—	Securitizations and Variable Interest Entities	101
	7	—	Securitizations and Variable Interest Entities	107	11	—	Mortgage Banking Activities	107
	8	—	Mortgage Banking Activities	115	12	—	Intangible Assets	109
	9	—	Intangible Assets	118	13	—	Guarantees, Pledged Assets and Collateral, and Other Commitments	110
	10	—	Guarantees, Pledged Assets and Collateral	120	14	—	Legal Actions	114
	11	—	Legal Actions	124	15	—	Derivatives	119
	12	—	Derivatives	128	16	—	Fair Values of Assets and Liabilities	127
	13	—	Fair Values of Assets and Liabilities	135	17	—	Preferred Stock	140
	14	—	Preferred Stock	156	18	—	Revenue from Contracts with Customers	143
	15	—	Employee Benefits	159	19	—	Employee Benefits and Other Expenses	146
	16	—	Earnings Per Common Share	160	20	—	Earnings and Dividends Per Common Share	147
	17	—	Other Comprehensive Income	161	21	—	Other Comprehensive Income	148
	18	—	Operating Segments	163	22	—	Operating Segments	150
	19	—	Regulatory and Agency Capital Requirements	164	23	—	Regulatory and Agency Capital Requirements	151
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)				Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)
	Summary Financial Data			2	Summary Financial Data			2
	Overview			3	Overview			3
	Earnings Performance			6	Earnings Performance			6
	Balance Sheet Analysis			20	Balance Sheet Analysis			18
	Off-Balance Sheet Arrangements			23	Off-Balance Sheet Arrangements			21
	Risk Management			24	Risk Management			22
	Capital Management			56	Capital Management			45
	Regulatory Matters			63	Regulatory Matters			51
	Critical Accounting Policies			64	Critical Accounting Policies			52
	Current Accounting Developments			65	Current Accounting Developments			54
	Forward-Looking Statements			69	Forward-Looking Statements			55
	Risk Factors			71	Risk Factors			57
	Glossary of Acronyms			165	Glossary of Acronyms			152
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			44	Quantitative and Qualitative Disclosures About Market Risk			39
Item 4.	Controls and Procedures			72	Controls and Procedures			58

PART II	Other Information				Other Information
Item 1.	Legal Proceedings			166	Legal Proceedings			153
Item 1A.	Risk Factors			166	Risk Factors			153
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			166	Unregistered Sales of Equity Securities and Use of Proceeds			153
Item 6.	Exhibits			167	Exhibits			154

Signature	Signature			168	Signature			155

PART I - FINANCIAL INFORMATION

FINANCIAL REVIEW


Summary Financial Data
						% Change															% Change
	Quarter ended					Sep 30, 2017 from				Nine months ended						Quarter ended					Mar 31, 2020 from
($ in millions, except per share amounts)	Sep 30, 2017			Jun 30, 2017	Sep 30, 2016	Jun 30, 2017		Sep 30, 2016		Sep 30, 2017			Sep 30, 2016	% Change		Mar 31, 2020			Dec 31, 2019	Mar 31, 2019	Dec 31, 2019		Mar 31, 2019
For the Period
Wells Fargo net income	$	4,596		5,810	5,644	(21	)%	(19	)	$	15,863		16,664	(5	)%	$	653		2,873	5,860	(77	)%	(89	)
Wells Fargo net income applicable to common stock	4,185			5,404	5,243	(23	)	(20	)	14,645			15,501	(6	)	42			2,546	5,507	(98	)	(99	)
Diluted earnings per common share	0.84			1.07	1.03	(21	)	(18	)	2.91			3.03	(4	)	0.01			0.60	1.20	(98	)	(99	)
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA)	0.94		%	1.21	1.17	(22	)	(20	)	1.10		%	1.19	(8	)	0.13		%	0.59	1.26	(78	)	(90	)
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders' equity (ROE)	9.06			11.95	11.60	(24	)	(22	)	10.83			11.68	(7	)
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)																0.10			5.91	12.71	(98	)	(99	)
Return on average tangible common equity (ROTCE) (1)	10.79			14.26	13.96	(24	)	(23	)	12.94			14.08	(8	)	0.12			7.08	15.16	(98	)	(99	)
Efficiency ratio (2)	65.5			61.1	59.4	7		10		63.1			58.7	7		73.6			78.6	64.4	(6	)	14
Total revenue	$	21,926		22,169	22,328	(1	)	(2	)	$	66,097		66,685	(1	)	$	17,717		19,860	21,609	(11	)	(18	)
Pre-tax pre-provision profit (PTPP) (3)	7,575			8,628	9,060	(12	)	(16	)	24,413			27,523	(11	)	4,669			4,246	7,693	10		(39	)
Dividends declared per common share	0.390			0.380	0.380	3		3		1.150			1.135	1		0.51			0.51	0.45	—		13
Average common shares outstanding	4,948.6			4,989.9	5,043.4	(1	)	(2	)	4,982.1			5,061.9	(2	)	4,104.8			4,197.1	4,551.5	(2	)	(10	)
Diluted average common shares outstanding	4,996.8			5,037.7	5,094.6	(1	)	(2	)	5,035.4			5,118.2	(2	)	4,135.3			4,234.6	4,584.0	(2	)	(10	)
Average loans	$	952,343		956,879	957,484	—		(1	)	$	957,581		945,197	1		$	965,046		956,536	950,010	1		2
Average assets	1,938,523			1,927,079	1,914,586	1		1		1,932,242			1,865,694	4		1,950,659			1,941,843	1,883,091	—		4
Average total deposits	1,306,356			1,301,195	1,261,527	—		4		1,302,273			1,239,287	5		1,337,963			1,321,913	1,262,062	1		6
Average consumer and small business banking deposits (4)	755,094			760,149	739,066	(1	)	2		758,443			726,798	4		779,521			763,169	739,654	2		5
Net interest margin	2.87		%	2.90	2.82	(1	)	2		2.88		%	2.86	1		2.58		%	2.53	2.91	2		(11	)
At Period End
Investment securities	$	414,633		409,594	390,832	1		6		$	414,633		390,832	6
Debt securities																$	501,563		497,125	483,467	1		4
Loans	951,873			957,423	961,326	(1	)	(1	)	951,873			961,326	(1	)	1,009,843			962,265	948,249	5		6
Allowance for loan losses	11,078			11,073	11,583	—		(4	)	11,078			11,583	(4	)	11,263			9,551	9,900	18		14
Goodwill	26,581			26,573	26,688	—		—		26,581			26,688	—		26,381			26,390	26,420	—		—
Equity securities																54,047			68,241	58,440	(21	)	(8	)
Assets	1,934,939			1,930,871	1,942,124	—		—		1,934,939			1,942,124	—		1,981,349			1,927,555	1,887,792	3		5
Deposits	1,306,706			1,305,830	1,275,894	—		2		1,306,706			1,275,894	2		1,376,532			1,322,626	1,264,013	4		9
Common stockholders' equity	182,128			181,428	179,916	—		1		182,128			179,916	1
Wells Fargo stockholders' equity	205,929			205,230	203,028	—		1		205,929			203,028	1
Common stockholders’ equity																162,654			166,669	176,025	(2	)	(8	)
Wells Fargo stockholders’ equity																182,718			187,146	197,832	(2	)	(8	)
Total equity	206,824			206,145	203,958	—		1		206,824			203,958	1		183,330			187,984	198,733	(2	)	(8	)
Tangible common equity (1)	152,901			152,064	149,829	1		2		152,901			149,829	2		134,787			138,506	147,723	(3	)	(9	)
Capital ratios (5)(6):
Capital ratios (5):
Total equity to assets	10.69		%	10.68	10.50	—		2		10.69		%	10.50	2		9.25		%	9.75	10.53	(5	)	(12	)
Risk-based capital:
Common Equity Tier 1	12.10			11.87	10.93	2		11		12.10			10.93	11		10.67			11.14	11.92	(4	)	(10	)
Tier 1 capital	13.95			13.68	12.60	2		11		13.95			12.60	11		12.22			12.76	13.64	(4	)	(10	)
Total capital	17.21			16.91	15.40	2		12		17.21			15.40	12
Total capital (6)																15.21			15.75	16.74	(3	)	(9	)
Tier 1 leverage	9.27			9.28	9.11	—		2		9.27			9.11	2		8.03			8.31	9.15	(3	)	(12	)
Common shares outstanding	4,927.9			4,966.8	5,023.9	(1	)	(2	)	4,927.9			5,023.9	(2	)	4,096.4			4,134.4	4,511.9	(1	)	(9	)
Book value per common share (7)	$	36.96		36.53	35.81	1		3		$	36.96		35.81	3		$	39.71		40.31	39.01	(1	)	2
Tangible book value per common share (1) (7)	31.03			30.62	29.82	1		4		31.03			29.82	4
Common stock price:
High	56.45			56.60	51.00	—		11		59.99			53.27	13
Low	49.28			50.84	44.10	(3	)	12		49.28			44.10	12
Period end	55.15			55.41	44.28	—		25		55.15			44.28	25
Tangible book value per common share (1)(7)																32.90			33.50	32.74	(2	)	—
Team members (active, full-time equivalent)	268,000			270,600	268,800	(1	)	—		268,000			268,800	—		262,800			259,800	262,100	1		—

(1)

Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, ~~and~~ goodwill, ~~and~~ certain identifiable intangible assets ~~(including~~(other than mortgage servicing rights) and goodwill and ~~intangible assets associated with certain of our~~other intangibles on nonmarketable equity ~~investments and held-for-sale assets, but excluding mortgage servicing rights),~~securities, net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity and tangible book value per common share, which utilize tangible common equity, are useful financial measures because they enable investors and others to assess the ~~Company's~~Company’s use of equity. For additional information, including a corresponding reconciliation to ~~GAAP~~generally accepted accounting principles (GAAP) financial measures, see the “Capital Management – Tangible Common Equity” section in this Report.


(2)	The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).


(3)	Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the ~~Company's~~Company’s ability to generate capital to cover credit losses through a credit cycle.


(4)	Consumer and small business banking deposits are total deposits excluding mortgage escrow and wholesale deposits.

(5)

The risk-based capital ratios were calculated under the lower of the Standardized or Advanced Approach determined pursuant to Basel ~~III~~III. Beginning January 1, 2018, the requirements for calculating common equity tier 1 and tier 1 capital, along with risk-weighted assets, became fully phased-in. Accordingly, the information presented reflects fully phased-in common equity tier 1 capital, tier 1 capital and risk-weighted assets, but reflects total capital still in accordance with Transition Requirements. ~~Accordingly, the total capital ratio was calculated under the Advanced Approach and the other ratios were calculated under the Standardized Approach, for each of the periods presented.~~


~~(6)~~	See the “Capital Management” section and Note 1923 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report for additional information.


(6)	The total capital ratio for December 31, 2019, has been revised to the lower ratio under the Standardized Approach due to an increase in the previously disclosed total capital ratio under the Advanced Approach as a result of a decrease in risk-weighted assets (RWAs) due to the correction of duplicated operational loss amounts.


(7)	Book value per common share is common ~~stockholders'~~stockholders’ equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares outstanding.

Overview (continued)

This Quarterly Report, including the Financial Review and the Financial Statements and related Notes, contains forward-looking statements, which may include forecasts of our financial results and condition, expectations for our operations and business, and our assumptions for those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results may differ materially from our forward-looking statements due to several factors. Factors that could cause our actual results to differ materially from our forward-looking statements are described in this Report, including in the “Forward-Looking Statements” section, and in the “Risk Factors” and “Regulation and Supervision” sections of our Annual Report on Form 10-K for the year ended December 31, ~~2016 (2016~~2019 (2019 Form 10-K).

When we refer to “Wells Fargo,” “the Company,” “we,” ~~“our”~~“our,” or “us” in this Report, we mean Wells Fargo & Company and Subsidiaries (consolidated). When we refer to the “Parent,” we mean Wells Fargo & Company. See the Glossary of Acronyms for definitions of terms used throughout this Report.

Financial Review

~~Overview~~

Overview

Wells Fargo & Company is a diversified, community-based financial services company with ~~$1.93~~$1.98 trillion in assets. Founded in 1852 and headquartered in San Francisco, we provide banking, ~~insurance, investments,~~investment and mortgage products and services, as well as consumer and commercial finance, through 7,400 locations, more than ~~8,400 locations,~~ 13,000 ATMs, digital (online, mobile and social), and contact centers (phone, email and correspondence), and we have offices in 4231 countries and territories to support customers who conduct business in the global economy. With approximately ~~268,000~~263,000 active, full-time equivalent team members, we serve one in three households in the United States and ranked No. 2529 on Fortune’s ~~2017~~2019 rankings of America’s largest corporations. We ranked ~~third~~fourth in assets and ~~second~~third in the market value of our common stock among all U.S. banks at ~~September 30, 2017.~~March 31, 2020.

Wells Fargo’s top priority remains meeting its regulatory requirements in order to build the right foundation for all that lies ahead. To do that, the Company is committing the resources necessary to ensure that we operate with the strongest business practices and controls, maintain the highest level of integrity, and have an appropriate culture in place.

In response to the COVID-19 pandemic, we have been working diligently to protect employee safety while continuing to carry out Wells Fargo’s role as a provider of critical and essential services to the public. We ~~use our~~ ~~Vision~~have taken comprehensive steps to help customers, employees and ~~Values~~ to guide us toward growth and success. Our vision is to satisfy our customers’ financial needs, help them succeed financially, be recognized as the premier financial services company in our markets, and be one of America’s great companies. We aspire to create deep and enduring relationships withcommunities.

For our customers, bywe have suspended residential property foreclosure activities, offered fee waivers, and provided payment deferrals, among other actions. We are also rapidly expanding digital access and deploying new tools, including changes to our ATMs and mobile technology for the convenience of our customers. We continue to work with regulatory agencies, government officials, and not-for-profit groups to identify other ways to assist customers facing financial challenges in the current environment.

For our employees, we have enabled approximately 180,000 to work remotely. For jobs that cannot be done from home, we have taken significant actions to help ensure employee safety, including adopting social distancing measures, staggering staff and shifts, and implementing an enhanced cleaning program. We are also making additional cash payments to employees whose roles require them to come into the office.

To support our communities, we are directing $175 million in charitable donations from the Wells Fargo Foundation to help address food, shelter, small business and housing stability, as well as providing ~~them with an exceptional experience and by understanding their needs and delivering~~help to public health organizations fighting to contain the ~~most relevant products, services, advice, and guidance.~~spread of COVID-19.

We have ~~five primary values, which are based~~strong levels of capital and liquidity, and we remain focused on our vision and provide the foundation for everything we do. First, we value and support our people as a competitive advantage and strive to attract, develop, retain, and motivate the most talented people we can find. Second, we strive for the highest ethical standards with our team members, our customers, our communities, and our shareholders. Third, with respect to our customers, we strive to base our decisions and actions on what is right for them in everything we do. Fourth, for team members we strive to build and sustain a diverse and inclusive culture – one where they feel valued and respected for who they are as well as for the skills and experiences they bring to our company. Fifth, we also look to each of our team members to be leaders in establishing, sharing, and communicating our vision. In addition to our five primary values, one of our key day-to-day priorities is to make risk management a competitive advantage by working hard to ensure that appropriate controls are in place to reduce risks to our customers, maintain and increase our competitive market position, and protect Wells Fargo’s long-term safety, soundness, and reputation.

~~In keeping with our primary values and risk management priorities, we announced six long-term goals for the Company in March 2017, which entail becoming the leader in the following areas:~~

~~Customer service and advice – provide best-in-class service and guidance to our customers to help them reach their financial goals.~~

Team member engagement – be a company where people matter, teamwork is rewarded, everyone feels respected and empowered to speak up, diversity and inclusion are embraced, and “how” our work gets done is just as important as getting the work done.

~~Innovation – create new kinds of lasting value~~delivering for our customers and ~~businesses~~communities to get through these unprecedented times.

Federal Reserve Board Consent Order Regarding Governance Oversight and Compliance and Operational Risk Management

On February 2, 2018, the Company entered into a consent order with the Board of Governors of the Federal Reserve System (FRB). As required by ~~using innovative technologies and moving quickly to bring about change.~~

~~Risk management – desire to set~~ the ~~global standard in managing all forms of risk.~~

~~Corporate citizenship – make better every community in which we live and do business.~~

~~Shareholder value – earn~~consent order, the ~~confidence of shareholders by maximizing long-term value.~~

~~Over the past year, our~~Company’s Board of Directors (Board) ~~has taken~~submitted to the FRB a ~~series~~plan to further enhance the Board’s governance and oversight of ~~actions~~the Company, and the Company submitted to ~~enhance Board oversight~~the FRB a plan to further improve the Company’s compliance and ~~governance.~~operational risk management program. The ~~actions~~Company continues to engage with the ~~Board has taken~~FRB as the Company works to ~~date, many~~address the consent order provisions. The consent order also requires the Company, following the FRB’s acceptance and approval of ~~which reflect~~ the ~~feedback~~plans and the Company’s adoption and implementation of the plans, to complete an initial third-party review of the enhancements and improvements provided for in the plans. Until this third-party review is complete and the plans are approved and implemented to the satisfaction of the FRB, the Company’s total consolidated assets as defined under the consent order will be limited to the level as of December 31, 2017. Compliance with this asset cap is measured on a two-quarter daily average basis to allow for management of temporary fluctuations. While our total consolidated assets of $1.98 trillion as of the end of first quarter 2020 were in excess of our total consolidated assets of $1.95 trillion as of December 31, 2017, we ~~received~~continued to operate in compliance with the asset cap because the two-quarter daily average for our assets of $1.943 trillion remained below the asset cap level. We are actively working to create balance sheet capacity to lend to and help our customers during these unprecedented and challenging times created by the COVID-19 pandemic. Due to the COVID-19 pandemic, on April 8, 2020, the FRB amended the consent order to allow the Company to exclude from ~~our shareholders~~the asset cap any on- balance sheet exposure resulting from loans made by the Company in connection with the Small Business Administration’s Paycheck Protection Program and the FRB’s Main Street Lending Program. As required under the amendment to the consent order, certain fees and other ~~stakeholders, include separating~~economic benefits received by the ~~roles of Chairman~~Company from loans made in connection with these programs shall be transferred to the U.S. Treasury or to non-profit organizations approved by the FRB that support small businesses. After removal of the ~~Board~~asset cap, a second third-party review must also be conducted to assess the efficacy and Chief Executive Officer, amending Wells Fargo’s By-Laws to require that the Chairman be an independent director, adding two new independent directors in February 2017, and amending Board committee charters to enhance oversight of conduct risk. In August 2017, the Board announced additional Board composition and governance changes that reflected a thoughtful and deliberate process by the Board that was informed by the Company’s engagement with shareholders and other stakeholders, as well as the Board’s annual self-evaluation that was conducted in advance of its typical year-end timing and facilitated by a third party. The Board’s composition and governance actions taken in third quarter 2017 included the following:

~~Elizabeth A. “Betsy” Duke was elected to serve as our new independent Board chair, effective January 1, 2018;~~

~~Juan A. Pujadas, a retired principal of PricewaterhouseCoopers LLP, was elected to the Board as a new independent director, effective September 1, 2017;~~

~~Changes to the leadership and composition of key Board committees were made, including appointing new chairs~~sustainability of the ~~Board’s Risk Committee~~enhancements and ~~Governance and Nominating Committee, effective September 1, 2017; and~~improvements.

To help facilitate Board refreshment and provide for an appropriate transition of committee membership, three long-serving directors, Cynthia H. Milligan, Stephen W. Sanger and Susan G. Swenson, will retire from the Board at year-end 2017.

~~In addition, the Board announced that it expects to name up to three additional independent directors before the 2018 annual shareholders' meeting. As has been our practice, we will continue~~

~~our engagement efforts with our shareholders and other stakeholders.~~

~~Sales Practices Matters~~

~~As we have previously reported, on September 8, 2016, we announced settlements~~Consent Orders with the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency Regarding Compliance Risk Management Program, Automobile Collateral Protection Insurance Policies, and Mortgage Interest Rate Lock Extensions

On April 20, 2018, the Company entered into consent orders with the Consumer Financial Protection Bureau (CFPB), and the Office of the Comptroller of the Currency (OCC), to pay an aggregate of $1 billion in civil money penalties to resolve matters regarding the Company’s compliance risk management program and past practices involving certain automobile collateral protection insurance (CPI) policies and certain mortgage interest rate lock extensions. As required by the consent orders, the Company submitted to the CFPB and OCC an enterprise-wide compliance risk management plan and a plan to enhance the Company’s internal audit program with respect to federal consumer financial law and the terms of the consent orders. In addition, as required by the consent orders, the Company submitted for non-objection plans to remediate customers affected by the automobile collateral protection insurance and mortgage interest rate lock matters, as well as a plan for the management of remediation activities conducted by the Company.

Retail Sales Practices Matters

In September 2016, we announced settlements with the CFPB, the OCC, and the Office of the Los Angeles City Attorney, and entered into related consent orders with the CFPB and the OCC, in connection with allegations that some of our retail customers received products and services they did not request. As a result, it remains ~~our~~a top priority to rebuild trust through a comprehensive action plan that includes making things right for our customers, team members, and other stakeholders, and ~~to build~~building a better Company for the future.

The job of rebuilding trust in Wells Fargo is a long-term effort – one requiring our commitment and perseverance. As we move forward, Wells Fargo has a specific action plan in place focused on reaching out to stakeholders who may have been affected by improper retail banking sales practices, including our communities, our customers, our regulators, our team members, and our investors.

Our priority of rebuilding trust has included ~~the following additional~~numerous actions ~~which have been~~ focused on identifying potential financial harm ~~and customer remediation:~~

~~Identifying Potential Financial Harm~~

~~In the fall of 2016, the Board and management undertook an enterprise-wide review of sales practices issues. This review is ongoing.~~

A third-party consulting firm performed an initial review of accounts opened from May 2011 to mid-2015 to identify financial harm stemming from potentially unauthorized accounts. The phrase “potentially unauthorized” does not mean that we are certain that the accounts are unauthorized, but rather describes the accounts that the third party analysis identified as showing patterns that could indicate a lack of authorization. Since the analysis was intentionally inclusive and erred on the side of the customer, the number of potentially unauthorized accounts likely includes a population of accounts that were in fact authorized by our customers. The initial account analysis reviewed 93.5 million current and former customer accounts and identified approximately 2.1 million potentially unauthorized accounts.

We expanded the time periods of this review to cover the entire consent order period of January 2011 through September 2016, and to perform a voluntary review of accounts from 2009 to 2010. The expanded analysis reviewed more than 165 million retail banking accounts opened over the nearly eight-year period and identified a new total of approximately 3.5 million potentially unauthorized consumer and small business accounts. The 3.5 million potentially unauthorized accounts total is composed of the following:


◦	The original time period, which was re-examined following refinements to the practices and methodologies previously used by the third party to determine potentially unauthorized accounts: 2.55 million accounts identified as potentially unauthorized; and


◦	~~The additional periods back to January 2009 and forward to September 2016: 981,000 accounts identified as potentially unauthorized.~~

In connection with these 3.5 million potentially unauthorized accounts, approximately 190,000 accounts incurred fees and charges, up from 130,000 previously identified accounts that incurred fees and charges.

In addition, the expanded analysis included a review of online bill pay services, as required by the consent orders. During the almost eight-year review period, the analysis identified approximately 528,000 potentially unauthorized online bill pay enrollments.

▪

For all periods of the expanded analysis (other than some periods in 2009 and 2010 for which we do not have sufficient information), the maximum impact of the 3.5 million potentially unauthorized accounts and 528,000 potentially unauthorized online bill pay enrollments on the originally reported Community Banking cross-sell metric was, in any one quarter, 0.03 products per household (or 0.5% of the originally reported metric). Due to our historical processes, which removed from the calculation of the cross-sell metric certain accounts and other products that were inactive over various time frames, not all of these potentially unauthorized accounts affected the cross-sell metric at any one time.

~~Customer Remediation~~

~~We refunded $3.3 million~~ to customers ~~under the stipulated judgment with the Los Angeles City Attorney~~resulting from these matters and under the CFPB and OCC consent orders, covering the period from May 2011 to mid-2015. In connection with the expanded account analysis, we will now provide a total of $2.9 million in additional refunds and credits on top of the $3.3 million previously refunded as a result of the initial account review. In addition, we will refund $910,000 to customers who incurred fees or charges as a result of potentially unauthorized online bill pay enrollments.

As of September 30, 2017, we had paid $5.45 million in additional payments to customers nationwide through our ongoing complaints process and free mediation services that were put in place in connection with the sales practices matters.

Customers also may receive compensation under the $142 million class-action settlement concerning improper retail sales practices for claims dating back to 2002. After plaintiffs’ attorneys’ fees and costs of administration, the class-action settlement will provide reimbursement of fees not already paid and compensation for increased borrowing costs due to credit-score impact associated with a potentially unauthorized account. Remaining funds will be distributed to the participants in the class on a per account basis.

We are working to complete the requirements of our consent orders, which include the development of an action plan that addresses the findings of the independent review. The independent consultant's report, which is regulatory supervisory information that cannot be publicly disclosed, was received in August 2017.

providing remediation.

For additional information regarding retail sales practices matters, including related legal matters, see the “Risk Factors” section in our ~~2016~~2019 Form 10-K and Note 1114 (Legal Actions) to Financial Statements in this Report.

~~Additional Efforts to Rebuild Trust~~Other Customer Remediation Activities

Our priority of rebuilding trust has also included an effort to identify other areas or instances where customers may have experienced financial ~~harm.~~harm, provide remediation as appropriate, and implement additional operational and control procedures. We are working with our regulatory agencies in this effort. AsWe have previously disclosed key areas of focus as part of ~~this effort,~~our rebuilding trust efforts and are in the process of providing remediation for those matters. We have accrued for the reasonably estimable remediation costs related to our rebuilding trust efforts, which amounts may change based on additional facts and information, as well as ongoing reviews and communications with our regulators.

As our ongoing reviews continue, it is possible that in the future we may identify additional items or areas of potential concern. To the extent issues are ~~focused on the following key areas:~~

~~Overview~~ ~~(continued)~~

~~Practices concerning the origination, servicing, and/or collection of consumer automobile loans,~~identified, we will continue to assess any customer harm and provide remediation as appropriate. For more information, including related ~~insurance products. For example:~~

◦

In July 2017, the Company announced a plan to remediate customers who may have been financially harmed due to issues related to automobile collateral protection insurance (CPI) policies purchased through a third-party vendor on their behalf. Commencing in August 2017, the Company began sending letters and refund checks to affected customers for policies placed between January 1, 2012, and September 30, 2016. The practice of placing CPI was discontinued by the Company on September 30, 2016. The time period in which customers may be eligible to claim or otherwise receive remediation compensation for certain CPI placements has now been extended back to October 15, 2005. The Company currently estimates that it will provide approximately $100 million in cash remediation and $30 million in account adjustments under the plan. The amount of remediation may be affected as the Company continues to work with its regulators on the remediation plan.


◦	The Company has identified certain issues related to the unused portion of guaranteed automobile protection waiver or insurance agreements between the dealer and, by assignment, the lender, which may result in refunds to customers in certain states.

~~In October 2017, the Company announced plans to reach out to all home lending customers who paid fees for mortgage rate lock extensions requested from September 16, 2013, through February 28, 2017,~~legal and to refund customers who believe they should not have paid those fees. The plan to issue refunds follows an internal review that determined that a rate lock extension policy implemented in September 2013 was, at times, not consistently applied, resulting in some borrowers being charged fees in cases where the Company was primarily responsible for the delays that made the extensions necessary. Effective March 1, 2017, the Company changed how it manages the mortgage rate lock extension process to ensure more consistency by establishing a centralized review team that reviews all rate lock extension requests for consistent application of policy. A total of approximately $98 million in rate lock extension fees were assessed to about 110,000 borrowers during the period in question, although the Company believes a substantial number of those fees were appropriately charged under its policy. The amount ultimately refunded likely will be lower, as not all of the fees assessed were actually paid and some fees already have been refunded.

Practices related to certain consumer “add-on” products (e.g., identity theft and debt protection), including those products that are subject to an OCC consent order entered into in June 2015. Based on our ongoing review of "add-on" products, we expect remediation will be required.

Procedures regarding the freezing (and, in many cases, closing) of consumer deposit accounts after the Company detected suspected fraudulent activity (by third-parties or account holders) that affected those accounts.

~~For more information,~~regulatory risk, see the “Risk Factors” section in our ~~2016~~2019 Form 10-K and Note 1114 (Legal Actions) to Financial Statements in this Report.

~~This effort to identify similar instances in which customers may have experienced harm is ongoing, and it is possible that we may identify other areas of potential concern.~~

Financial Performance

Wells Fargo net income was ~~$4.6 billion~~$653 million in ~~third~~first quarter ~~2017~~2020 with diluted earnings per common share (EPS) of ~~$0.84,~~$0.01, compared with ~~$5.6~~$5.9 billion and ~~$1.03,~~$1.20, respectively, a year ago. Third quarter 2017 results included the impact of a $1.0 billion, or ($0.20) per share, discrete litigation accrual, which was not tax-deductible, for previously disclosed, pre-financial crisis mortgage-related regulatory investigations.

~~Other financial~~Our results in ~~third~~first quarter ~~2017 included:~~

~~revenue was~~ ~~$21.9~~2020 were impacted by a $4.0 billion~~, down~~ ~~$402~~ provision for credit losses and an impairment of debt and equity securities of $950 million driven by economic and market conditions. Financial performance items for first quarter 2020 compared with the same period a year ago ~~with net interest income up 4% from a year ago;~~included:


•	revenue of $17.7 billion, down$3.9 billion, with net interest income of $11.3 billion, down$999 million, or 8%, and noninterest income of $6.4 billion, down$2.9 billion, or 31%;


•	a net interest margin of 2.58%, down 33 basis points;


•	noninterest expense of $13.0 billion, down$868 million, or 6%;


•	an efficiency ratio of 73.6%, compared with 64.4%;


•	average loans of $965.0 billion, up$15.0 billion;


•	average deposits of $1.34 trillion, up$75.9 billion;


•	net loan charge-off rate of 0.38% (annualized) of average loans, compared with 0.30% (annualized);


•	nonaccrual loans of $6.2 billion, down$749 million, or 11%; and


•	return on assets (ROA) of 0.13% and return on equity (ROE) of 0.10%, down from 1.26% and 12.71%, respectively.

~~average loans were $952.3 billion, down $5.1 billion, or 1%, from a year ago;~~

~~total deposits were~~ ~~$1.3 trillion, up~~ ~~$30.8 billion, or~~ 2%~~, from a year ago;~~

~~Wealth and Investment Management (WIM) total client assets reached a record high of $1.9 trillion;~~

~~our credit results improved with a net charge-off rate of 0.30% (annualized) of average loans in third quarter 2017, compared with 0.33% a year ago; and~~

~~we returned $4.0 billion to shareholders through common stock dividends and net share repurchases, which was the ninth consecutive quarter of returning more than $3 billion.~~

Balance Sheet and Liquidity

Our balance sheet remained strong during ~~third~~first quarter ~~2017~~2020 with ~~high~~solid levels of liquidity and capital. Our total assets were ~~$1.93~~$1.98 trillion at ~~September 30, 2017.~~March 31, 2020. Cash and other short-term investments ~~increased $5.5~~decreased $6.1 billion from December 31, ~~2016,~~2019, reflecting lower ~~loan balances~~federal funds sold and ~~growth in deposits. Investment~~ securities ~~reached a record $414.6 billion, with approximately $31 billion of gross purchases during third quarter 2017,~~purchased under resale agreements, partially offset by ~~runoff and the sale of approximately $13~~an increase in cash balances. Debt securities increased $4.4 billion ~~of lower-yielding short-duration securities. Loans were down $15.7 billion, or 2%,~~ from December 31, ~~2016, largely~~2019, predominantly due to an increase in held-to-maturity debt securities, partially offset by a decline in ~~junior lien mortgage~~available-for-sale debt securities. Loans increased $47.6 billion from December 31, 2019, predominantly due to increases in commercial and ~~automobile loans.~~industrial loans driven by draws of revolving lines and origination of new lending facilities due to the impact of the COVID-19 pandemic on economic and market conditions. The increase in loans was partially offset by a decrease in credit card loans primarily due to seasonality and fewer new account openings, and declines in consumer real estate mortgages and other revolving credit and installment loans, as originations and draws of existing lines were more than offset by paydowns.

Average deposits in ~~third~~first quarter ~~2017 reached a record $1.31~~2020 were $1.34 trillion, up ~~$44.8~~$75.9 billion ~~or 4%,~~ from ~~third~~first quarter ~~2016. Our average~~2019, which reflected growth from retail banking deposit ~~cost in third quarter 2017 was 26 basis points, up 15 basis points from a year ago, primarily driven by an increase in~~campaigns, as well as the inflow of deposits associated with corporate and commercial ~~and WIM deposit rates.~~loan draws.

Credit Quality

~~Solid overall credit results continued in third quarter 2017 as losses remained low and we continued~~Credit quality declined due to ~~originate high quality loans, reflecting~~the COVID-19 pandemic’s effect on market conditions, which impacted our ~~long-term risk focus.~~ customer base.

Net loan charge-offs were ~~$717~~$909 million, or ~~0.30%~~0.38% (annualized) of average loans, in ~~third~~first quarter ~~2017,~~2020, compared with ~~$805~~$695 million a year ago ~~(0.33%~~(0.30%) (annualized). ~~The decrease~~Our commercial portfolio net loan charge-offs were $324 million, or 25 basis points (annualized) of average commercial loans, in ~~net charge-offs in third~~first quarter ~~2017,~~2020, compared with net loan charge-offs of $145 million, or 11 basis points (annualized), a year ago, ~~was~~predominantly driven by ~~lower~~increased losses in ~~the~~our commercial and industrial loan portfolio ~~including in the~~primarily related to higher oil and gas ~~portfolio.~~net charge-offs reflecting significant declines in oil prices. Our ~~total oil and gas loan exposure, which includes unfunded commitments and loans outstanding, was down 8% from a year ago.~~

~~Our commercial~~consumer portfolio net loan charge-offs were ~~$113~~$585 million, or ~~9 basis points of average commercial loans, in third quarter 2017, compared with net charge-offs of $215 million, or 17 basis points, a year ago. Net consumer credit losses increased to~~ 53 basis points (annualized) of average consumer loans, in ~~third~~ first

Overview (continued)

quarter ~~2017 from~~2020, compared with net loan charge-offs of $550 million, or 51 basis points (annualized) in third quarter 2016. Our commercial real estate portfolios were in a net recovery position for the 19th consecutive quarter, reflecting our conservative risk discipline and improved market conditions. Net

~~losses on our consumer real estate portfolios improved by $84 million, or 122%~~, ~~to a net recovery of $15 million from~~ a year ago, ~~reflecting the benefit of the continued improvement~~primarily driven by increased losses in ~~the housing market and~~ our continued focus on originating high quality loans. Approximately 77% of the consumer first mortgage portfolio outstanding at September 30, 2017, was originated after 2008, when more stringent underwriting standards were implemented.credit card portfolio.

The allowance for credit losses as(ACL) for loans of ~~September 30, 2017, decreased $585 million~~$12.0 billion at March 31, 2020, increased $1.2 billion, compared with a year ago, and ~~decreased $431 million~~increased $1.6 billion from December 31, ~~2016. The~~2019. We had a $2.9 billion increase in the allowance for credit losses ~~at September 30, 2017 included $450 million~~ for ~~coverage~~loans in first quarter 2020, partially offset by a $1.3 billion decline as a result of our ~~preliminary estimate~~adoption on January 1, 2020, of ~~potential hurricane-related~~Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL), compared with a $150 million increase in the allowance in the same period a year ago. The increase in the allowance for credit losses ~~from Hurricanes Harvey, Irma~~for loans reflected forecasted credit deterioration due to the COVID-19 pandemic and ~~Maria.~~credit weakness in the oil and gas portfolio due to the recent sharp declines in oil prices. The allowance coverage for total loans was ~~1.27%~~1.19% at ~~September 30, 2017,~~March 31, 2020, compared with ~~1.32%~~1.14% a year ago and ~~1.30%~~1.09% at December 31, ~~2016.~~2019. The allowance covered ~~4.3~~3.3 times annualized ~~third~~net loan charge-offs in first quarter ~~net charge-offs,~~2020, compared with ~~4.0~~3.8 times ~~a year ago. Future allowance levels will be based on a variety of factors, including loan growth, portfolio performance and general economic conditions.~~in first quarter 2019. Our provision for loan losses was ~~$717 million~~$3.8 billion in ~~third~~first quarter ~~2017, down~~2020, up from ~~$805~~$845 million a year ago, ~~primarily reflecting improvement~~which reflected an increase in the allowance for credit losses for loans due to forecasted credit deterioration due to the COVID-19 pandemic, and higher net loan charge-offs primarily due to the impact of the recent sharp decline in oil prices on our oil and gas portfolio.

Nonperforming assets ~~decreased $512~~(NPAs) at March 31, 2020, of $6.4 billion, increased $759 million, or 5%13%, from ~~June 30, 2017, the sixth consecutive quarter of decreases, with improvement across our consumer~~December 31, 2019, and ~~commercial portfolios and lower foreclosed assets. Nonperforming assets were only 0.98%~~represented 0.63% of total loans ~~the lowest level since the merger with Wachovia in 2008.~~at March 31, 2020. Nonaccrual loans ~~decreased $437~~increased $810 million ~~from the prior quarter primarily due to a $276 million decrease in commercial nonaccruals. In addition, foreclosed assets were down $75 million from the prior quarter.~~

~~Capital~~

~~Our financial performance in third quarter 2017 resulted in strong capital generation, which increased total equity to a record $206.8 billion at September 30, 2017, up $6.3 billion~~ from December 31, ~~2016. Third quarter 2017 was~~2019, driven by increases in commercial and industrial, and commercial real estate mortgage as the effect of the COVID-19 pandemic on market conditions began to impact our customer base. In addition, real estate 1-4 family mortgage nonaccrual loans increased primarily as a result of our adoption of CECL, which required the reclassification of purchased credit-impaired loans as nonaccruing based on performance. Foreclosed assets decreased $51 million from December 31, 2019. For information on how we are assisting our customers in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management” section in this Report.

Capital

We maintained a solid capital position in first quarter ~~our 2017 Capital Plan was effective and we returned $4.0~~2020, with total equity of $183.3 billion to shareholders in third quarter 2017 through common stock dividends and net share repurchases, an increase of 24% from a year ago. Our net payout ratio (which is the ratio of (i) common stock dividends and share repurchases less issuances and stock compensation-related items, divided by (ii) net income applicable to common stock) was 95%, up from 63% in the prior quarter.at March 31, 2020, compared with $188.0 billion at December 31, 2019. We ~~continued to reduce~~reduced our common shares outstanding by 38.0 million shares through the repurchase of ~~49.0~~75.4 million common shares, net of issuances, in the quarter. ~~We also entered into a $1 billion forward repurchase contract~~On March 15, 2020, we, along with ~~an unrelated third party~~the other members of the Financial Services Forum (which consists of the eight largest and most diversified financial institutions headquartered in ~~October 2017 that is expected~~the U.S.), decided to ~~settle in first quarter 2018 for approximately 19 million shares. We expect to reduce our common shares outstanding through~~temporarily suspend share repurchases ~~throughout~~for the remainder of ~~2017.~~the first quarter and for second quarter 2020. This decision is consistent with our objective to use our significant capital and liquidity to provide support to individuals, small businesses, and the broader economy through lending and other important services.

In first quarter 2020, we issued $2.0 billion of Non-Cumulative Perpetual Class A Preferred Stock, Series Z. Additionally, we redeemed the remaining $1.8 billion of our Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series K. We also redeemed $669 million of our Non-Cumulative Perpetual Class A Preferred Stock, Series T.

We believe an important measure of our capital strength is the Common Equity Tier 1 (CET1) ratio, ~~under Basel III, fully phased-in,~~ which was ~~11.82%~~10.67% at ~~September 30, 2017, well~~March 31, 2020, down from 11.14% at December 31, 2019, but still above our internal target ~~level~~ of 10% and the regulatory minimum of 9%. ~~The growth in~~As of March 31, 2020, our ~~CET1 ratio reflected lower~~eligible external total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets ~~(RWA)~~was 23.27%, ~~driven by lower loan balances and commitments, as well as improved RWA efficiency.~~compared with the required minimum of 22.0%. Likewise, our other regulatory capital ratios remained strong. See the “Capital Management” section in this Report for more information regarding our capital, including the calculation of our regulatory capital amounts.

Earnings Performance

Wells Fargo net income for ~~third~~first quarter ~~2017~~2020 was ~~$4.6 billion~~$653 million ($~~0.84~~0.01 diluted earnings per common share), compared with ~~$5.6~~$5.9 billion ($~~1.03~~1.20 diluted per share) for ~~third~~first quarter ~~2016.~~2019. Net income ~~for the~~decreased in first ~~nine months of 2017 was $15.9 billion ($2.91), compared with $16.7 billion ($3.03) for the same period a year ago. Our financial performance in the first nine months of 2017,~~quarter 2020, compared with the same period a year ago, ~~benefited from~~due to a ~~$1.9 billion increase~~$999 million decrease in net interest income, ~~and~~ a ~~$1.1~~$3.2 billion ~~decrease~~increase in our provision for credit losses, ~~offset by~~and a ~~$2.5~~$2.9 billion decrease in noninterest income, partially offset by a $868 million decrease in noninterest expense, and a ~~$2.5 billion increase~~$722 million decrease in ~~noninterest~~income tax expense. In the first nine months of 2017, net interest income represented 56% of revenue, compared with 53% for the same period in 2016. Noninterest income was $28.8 billion in the first nine months of 2017, representing 44% of revenue, compared with $31.3 billion (47%) in the first nine months of 2016.

Revenue, the sum of net interest income and noninterest income, was ~~$21.9~~$17.7 billion in ~~third~~first quarter ~~2017,~~2020, compared with ~~$22.3~~$21.6 billion in ~~third~~the same period a year ago. Net interest income represented 64% of revenue in first quarter ~~2016. Revenue for the first nine months of 2017 was $66.1 billion,~~2020, compared with ~~$66.7 billion for the~~57% in first ~~nine months~~quarter 2019. Noninterest income represented 36% of ~~2016. The decrease~~revenue in ~~revenue for the third~~first quarter ~~and first nine months of 2017,~~2020, compared with ~~the same periods~~43% in ~~2016, was due to a decline in noninterest income, partially offset by an increase in interest income from loans and investment securities.~~first quarter 2019.

~~Earnings Performance (continued~~)

Net Interest Income

Net interest income is the interest earned on debt securities, loans (including yield-related loan fees) and other interest-earning assets minus the interest paid on deposits, short-term borrowings and long-term debt. The net interest margin is the average yield on earning assets minus the average interest rate paid for deposits and our other sources of funding. Net interest income and the net interest margin are presented on a taxable-equivalent basis in Table 1 to consistently reflect income from taxable and tax-exempt loans and debt and equity securities based on a ~~35%~~21% federal statutory tax ~~rate.~~rate for the periods ending March 31, 2020 and 2019.

~~While the Company believes that it has the ability to increase net interest income over time, net~~Net interest income and the net interest margin in any one period can be significantly affected by a variety of factors including the mix ~~and~~of earning assets in our portfolio, the overall size of our earning assets portfolio, and the cost of funding those assets. In addition, ~~some~~ variable sources of interest income, such as ~~resolutions from purchased credit-impaired (PCI) loans,~~ loan fees, periodic dividends, and collection of interest on nonaccrual loans, can ~~vary~~fluctuate from period to period. Net interest income and net interest margin growth has been challenged during the prolonged low interest rate environment as higher yielding loans and securities have run off and been replaced with lower yielding assets.

Net interest income on a taxable-equivalent basis was ~~$12.8 billion and $38.2~~$11.5 billion in ~~the third~~first quarter ~~and first nine months of 2017, respectively,~~2020, compared with ~~$12.3 billion and $36.3~~$12.5 billion for the same ~~periods~~period a year ago. Net interest margin on a taxable-equivalent basis was 2.58% in first quarter 2020, compared with 2.91% for the same period a year ago. The decrease in net interest income and net interest margin ~~was 2.87% and 2.88% for the third~~in first quarter ~~and first nine months of 2017, respectively, up from 2.82% and 2.86% for~~2020, compared with the same ~~periods~~period a year ago, was driven by unfavorable impacts of repricing due to lower market rates and changes in mix of earning assets and funding sources, including sales of high yielding Pick-a-Pay loans in 2019, as well as higher costs on promotional retail banking deposits.

Average earning assets increased $49.8 billion in first quarter 2020 compared with the same period a year ago. The ~~increase in net interest income in the third quarter and first nine months of 2017 from the same periods a year ago resulted from an increase in interest income,~~ change was driven by increases in:


•	average federal funds sold and securities purchased under resale agreements of $24.0 billion;


•	average loans of $15.0 billion;


•	average debt securities of $8.5 billion;


•	average mortgage loans held for sale of $6.5 billion;


•	average equity securities of $4.5 billion; and


•	other earning assets of $3.0 billion;

partially offset by an increase in interest expense on funding sources. The increase in interest income was driven by balance growth in earning assets and the benefit of higher interest rates. Interest expense on funding sources increased in the third quarter and first nine months of 2017, compared with the same periods a year ago, with a significant portion due to growth and repricing of long-term debt. Deposit interest expense was also higher, primarily due to an increase in wholesale pricing resulting from higher interest rates.decreases in:


•	average interest-earning deposits with banks of $11.3 billion; and


•	average loans held for sale of $377 million.

The increase in net interest margin in the third quarter and first nine months of 2017, compared with the same periods a year ago, was predominantly due to repricing benefits of earning assets from higher interest rates exceeding the repricing costs of deposits and market based funding sources.

Average earning assets increased $42.3 billion and $81.9 billion in the third quarter and first nine months of 2017, respectively, compared with the same periods a year ago. Average loans decreased $5.1 billion in the third quarter and increased $12.4 billion in the first nine months of 2017, average investment securities increased $48.6 billion in third quarter 2017 and $61.9 billion in the first nine months of 2017, and average trading assets increased $14.8 billion in the third quarter and $14.9 billion in the first nine months of 2017, compared with the same periods a year ago. In addition, average federal funds sold and other short-term investments decreased $23.2 billion and $12.2 billion in the third quarter and first nine months of 2017, respectively, compared with the same periods a year ago.

Deposits are an important low-cost source of funding and affect both net interest income and the net interest margin. Deposits include noninterest-bearing deposits, interest-bearing checking, market rate and other savings, savings certificates, other time deposits, and deposits in foreign offices. Average deposits ~~of $1.31 trillion and $1.30~~were $1.34 trillion in ~~the third~~first quarter ~~and first nine months of 2017, increased~~2020, compared with $1.26 trillion ~~and $1.24 trillion for~~in the same ~~periods~~period a year ago, and represented ~~137%~~139% of average loans in ~~third~~first quarter ~~2017 (136% in the first nine months of 2017),~~2020, compared with ~~132%~~133% in ~~third~~first quarter ~~2016 (131% in the first nine months of 2016).~~2019. Average deposits were ~~74% and 73%~~75% of average earning assets in ~~the third~~first quarter ~~and first nine months of 2017, respectively,~~2020, compared with 73% in ~~both~~ the ~~third~~same period a year ago. The average deposit cost for first quarter ~~and first nine months of 2016.~~2020 was 52 basis points, down 13 basis points from a year ago, reflecting the lower interest rate environment, partially offset by retail banking promotional pricing for new deposits.

Earnings Performance (continued)

Table 1:Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) (1)~~(2)~~


	Quarter ended September 30,													Quarter ended March 31,
						2017						2016							2020						2019
(in millions)	Average balance			Yields/ rates		Interest income/ expense		Average balance		Yields/ rates		Interest income/ expense		Average balance			Yields/ rates		Interest income/ expense		Average balance		Yields/ rates		Interest income/ expense
Earning assets
Federal funds sold, securities purchased under resale agreements and other short-term investments	$	276,129		1.20	%	$	832	299,351		0.50	%	$	373
Trading assets	103,589			2.96		767		88,838		2.72		605
Investment securities (3):
Available-for-sale securities:
Interest-earning deposits with banks														$	129,522		1.18	%	$	381	140,784		2.33	%	$	810
Federal funds sold and securities purchased under resale agreements														107,555			1.42		380		83,539		2.40		495
Debt securities (2):
Trading debt securities														101,062			3.05		770		89,378		3.58		798
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	14,529			1.31		48		25,817		1.52		99		10,781			1.40		38		14,070		2.14		74
Securities of U.S. states and political subdivisions	52,500			4.16		546		55,170		4.28		590		38,950			3.43		334		48,342		4.02		486
Mortgage-backed securities:
Federal agencies	139,781			2.58		903		105,780		2.39		631		158,639			2.68		1,062		151,494		3.10		1,173
Residential and commercial	11,013			5.43		149		18,080		5.54		250		4,648			2.82		33		5,984		4.31		64
Total mortgage-backed securities	150,794			2.79		1,052		123,860		2.85		881		163,287			2.68		1,095		157,478		3.14		1,237
Other debt and equity securities	48,082			3.75		453		54,176		3.37		459
Total available-for-sale securities	265,905			3.15		2,099		259,023		3.13		2,029
Held-to-maturity securities:
Other debt securities														39,541			3.48		343		46,788		4.46		517
Total available-for-sale debt securities														252,559			2.87		1,810		266,678		3.48		2,314
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	44,708			2.18		246		44,678		2.19		246		45,937			2.19		251		44,754		2.20		243
Securities of U.S. states and political subdivisions	6,266			5.44		85		2,507		5.24		33		13,536			3.84		130		6,158		4.03		62
Federal agency and other mortgage-backed securities	88,272			2.26		498		47,971		1.97		236		98,394			2.55		628		96,004		2.74		656
Other debt securities	1,488			3.05		12		3,909		1.98		19		24			3.10		—		61		3.96		1
Total held-to-maturity securities	140,734			2.38		841		99,065		2.15		534
Total investment securities	406,639			2.89		2,940		358,088		2.86		2,563
Mortgages held for sale (4)	22,923			3.82		219		24,060		3.44		207
Loans held for sale (4)	152			13.35		5		199		3.04		2
Total held-to-maturity debt securities														157,891			2.56		1,009		146,977		2.63		962
Total debt securities														511,512			2.81		3,589		503,033		3.25		4,074
Mortgage loans held for sale (3)														20,361			3.87		197		13,898		4.37		152
Loans held for sale (3)														1,485			3.17		12		1,862		5.25		24
Loans:
Commercial:
Commercial loans:
Commercial and industrial – U.S.	270,091			3.81		2,590		271,226		3.48		2,369		288,502			3.55		2,546		286,577		4.48		3,169
Commercial and industrial – Non U.S.	57,738			2.90		421		51,261		2.40		309
Commercial and industrial – non U.S.														70,659			3.16		556		62,821		3.90		604
Real estate mortgage	129,087			3.83		1,245		128,809		3.48		1,127		121,788			3.92		1,187		121,417		4.58		1,373
Real estate construction	24,981			4.18		263		23,212		3.50		205		20,277			4.54		229		22,435		5.43		301
Lease financing	19,155			4.59		220		18,896		4.70		223		19,288			4.40		212		19,391		4.61		224
Total commercial	501,052			3.76		4,739		493,404		3.42		4,233
Consumer:
Total commercial loans														520,514			3.65		4,730		512,641		4.48		5,671
Consumer loans:
Real estate 1-4 family first mortgage	278,371			4.03		2,809		278,509		3.97		2,764		293,556			3.61		2,650		285,214		3.96		2,821
Real estate 1-4 family junior lien mortgage	41,916			4.95		521		48,927		4.37		537		28,905			5.14		370		33,791		5.75		481
Credit card	35,657			12.41		1,114		34,578		11.60		1,008		39,756			12.21		1,207		38,182		12.88		1,212
Automobile	56,746			5.34		764		62,461		5.60		880		48,258			4.96		596		44,833		5.19		574
Other revolving credit and installment	38,601			6.31		615		39,605		5.92		590		34,057			6.32		534		35,349		7.14		623
Total consumer	451,291			5.14		5,823		464,080		4.97		5,779
Total loans (4)	952,343			4.41		10,562		957,484		4.17		10,012
Total consumer loans														444,532			4.83		5,357		437,369		5.26		5,711
Total loans (3)														965,046			4.20		10,087		950,010		4.84		11,382
Equity securities														37,532			2.22		208		33,080		2.56		211
Other	15,007			1.69		65		6,488		2.30		36		7,431			0.77		14		4,416		1.63		18
Total earning assets	$	1,776,782		3.45	%	$	15,390	1,734,508		3.17	%	$	13,798	$	1,780,444		3.35	%	$	14,868	1,730,622		4.00	%	$	17,166
Funding sources
Deposits:
Interest-bearing checking	$	48,278		0.57	%	$	69	44,056		0.15	%	$	17	$	63,086		0.86	%	$	135	56,253		1.42	%	$	197
Market rate and other savings	681,187			0.17		293		667,185		0.07		110		762,138			0.52		978		688,568		0.50		847
Savings certificates	21,806			0.31		16		25,185		0.30		19		30,099			1.47		110		25,231		1.26		78
Other time deposits	66,046			1.51		252		54,921		0.93		128		81,978			1.74		356		97,830		2.67		645
Deposits in foreign offices	124,746			0.76		240		107,072		0.30		82
Deposits in non-U.S. offices														53,335			1.23		163		55,443		1.89		259
Total interest-bearing deposits	942,063			0.37		870		898,419		0.16		356		990,636			0.71		1,742		923,325		0.89		2,026
Short-term borrowings	99,193			0.91		226		116,228		0.29		86		102,977			1.14		292		108,651		2.23		597
Long-term debt	243,137			2.26		1,377		252,400		1.59		1,006		229,002			2.17		1,240		233,172		3.32		1,927
Other liabilities	24,851			1.74		109		16,771		2.11		88		30,199			1.90		142		25,292		2.28		143
Total interest-bearing liabilities	1,309,244			0.79		2,582		1,283,818		0.48		1,536		1,352,814			1.01		3,416		1,290,440		1.47		4,693
Portion of noninterest-bearing funding sources	467,538			—		—		450,690		—		—		427,630			—		—		440,182		—		—
Total funding sources	$	1,776,782		0.58		2,582		1,734,508		0.35		1,536		$	1,780,444		0.77		3,416		1,730,622		1.09		4,693
Net interest margin and net interest income on a taxable-equivalent basis (5)				2.87	%	$	12,808			2.82	%	$	12,262
Net interest margin and net interest income on a taxable-equivalent basis (4)																	2.58	%	$	11,452			2.91	%	$	12,473
Noninterest-earning assets
Cash and due from banks	$	18,456						18,682						$	20,571						19,614
Goodwill	26,600							26,979						26,387							26,420
Other	116,685							134,417						123,257							106,435
Total noninterest-earning assets	$	161,741						180,078						$	170,215						152,469
Noninterest-bearing funding sources
Deposits	$	364,293						363,108						$	347,327						338,737
Other liabilities	57,052							63,777						62,348							55,565
Total equity	207,934							203,883						188,170							198,349
Noninterest-bearing funding sources used to fund earning assets	(467,538		)					(450,690	)					(427,630		)					(440,182	)
Net noninterest-bearing funding sources	$	161,741						180,078						$	170,215						152,469
Total assets	$	1,938,523						1,914,586						$	1,950,659						1,883,091

Average prime rate																	4.41	%					5.50	%
Average three-month London Interbank Offered Rate (LIBOR)																	1.53						2.69

(1)

~~Our average prime rate was~~ ~~4.25%~~ ~~and~~ ~~3.50%~~ ~~for the quarters ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016, respectively, and~~ ~~4.03%~~ ~~and~~ ~~3.50%~~ ~~for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016, respectively. The average three-month London Interbank Offered Rate (LIBOR) was~~ ~~1.31%~~ ~~and~~ ~~0.79%~~ ~~for the quarters ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016, respectively, and~~ ~~1.20%~~ ~~and~~ ~~0.69%~~ ~~for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016, respectively.~~


~~(2)~~	Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.


~~(3)~~(2)	~~Yields and~~ Yields/rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost for the periods presented.


~~(4)~~(3)	Nonaccrual loans and related income are included in their respective loan categories.

~~(5)~~(4)

Includes taxable-equivalent adjustments of $~~332~~140 million and $~~310~~162 million for the quarters ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively, and~~ ~~$980 million~~ ~~and~~ ~~$909 million~~ ~~for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016~~2019, respectively, predominantly related to tax-exempt income on certain loans and securities. ~~The federal statutory tax rate utilized was 35% for the periods presented.~~

Nine months ended September 30,
      2017
      2016
(in millions)
Average
balance

Yields/
rates

Interest
income/
expense

Average
balance

Yields/
rates

Interest
income/
expense

Earning assets
Federal funds sold, securities purchased under resale agreements and other short-term investments $ 280,477
0.98 % $ 2,062
292,635
0.49 % $ 1,076
Trading assets 98,516
2.90
2,144
83,580
2.86
1,792
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies 19,182
1.48
212
30,588
1.56
358
Securities of U.S. states and political subdivisions 52,748
4.07
1,612
52,637
4.25
1,678
Mortgage-backed securities:
Federal agencies 142,748
2.60
2,782
98,099
2.57
1,889
Residential and commercial 12,671
5.44
516
19,488
5.39
787
Total mortgage-backed securities 155,419
2.83
3,298
117,587
3.03
2,676
Other debt and equity securities 49,212
3.74
1,377
53,680
3.36
1,349
Total available-for-sale securities 276,561
3.13
6,499
254,492
3.18
6,061
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 44,701
2.19
733
44,671
2.19
733
Securities of U.S. states and political subdivisions 6,270
5.35
251
2,274
5.34
91
Federal agency and other mortgage-backed securities 74,525
2.38
1,329
37,087
2.08
577
Other debt securities 2,531
2.48
47
4,193
1.94
61
Total held-to-maturity securities 128,027
2.46
2,360
88,225
2.21
1,462
Total investment securities 404,588
2.92
8,859
342,717
2.93
7,523
Mortgages held for sale (4) 20,869
3.82
598
20,702
3.53
549
Loans held for sale (4) 158
8.44
10
240
3.71
7
Loans:
Commercial:
Commercial and industrial – U.S. 272,621
3.70
7,547
266,622
3.44
6,874
Commercial and industrial – Non U.S. 56,512
2.83
1,196
50,658
2.29
867
Real estate mortgage 130,931
3.69
3,615
125,902
3.43
3,236
Real estate construction 24,949
4.00
747
22,978
3.53
608
Lease financing 19,094
4.78
685
17,629
4.86
643
Total commercial 504,107
3.66
13,790
483,789
3.38
12,228
Consumer:
Real estate 1-4 family first mortgage 276,330
4.04
8,380
276,369
4.01
8,311
Real estate 1-4 family junior lien mortgage 43,589
4.77
1,557
50,585
4.38
1,659
Credit card 35,322
12.19
3,219
33,774
11.58
2,927
Automobile 59,105
5.41
2,392
61,246
5.64
2,588
Other revolving credit and installment 39,128
6.15
1,801
39,434
5.94
1,755
Total consumer 453,474
5.11
17,349
461,408
4.99
17,240
Total loans (4) 957,581
4.34
31,139
945,197
4.16
29,468
Other 10,892
2.06
169
6,104
2.23
101
Total earning assets $ 1,773,081
3.39 % $ 44,981
1,691,175
3.20 % $ 40,516
Funding sources
Deposits:
Interest-bearing checking $ 49,134
0.43 % $ 156
40,858
0.13 % $ 41
Market rate and other savings 682,780
0.13
664
659,257
0.07
327
Savings certificates 22,618
0.30
50
26,432
0.37
73
Other time deposits 59,414
1.42
633
58,087
0.84
364
Deposits in foreign offices 123,553
0.64
587
100,783
0.25
190
Total interest-bearing deposits 937,499
0.30
2,090
885,417
0.15
995
Short-term borrowings 97,837
0.69
505
111,993
0.28
231
Long-term debt 250,755
2.04
3,838
235,209
1.57
2,769
Other liabilities 20,910
1.97
309
16,534
2.10
260
Total interest-bearing liabilities 1,307,001
0.69
6,742
1,249,153
0.45
4,255
Portion of noninterest-bearing funding sources 466,080
—
442,022
—
—
Total funding sources $ 1,773,081
0.51
6,742
1,691,175
0.34
4,255
Net interest margin and net interest income on a taxable-equivalent basis (5)    2.88 % $ 38,239
   2.86 % $ 36,261
Noninterest-earning assets
Cash and due from banks $ 18,443
18,499

Goodwill 26,645
26,696

Other 114,073
129,324

Total noninterest-earning assets $ 159,161
174,519

Noninterest-bearing funding sources
Deposits $ 364,774
353,870

Other liabilities 55,221
62,169

Total equity 205,246
200,502

Noninterest-bearing funding sources used to fund earning assets (466,080 ) (442,022 )
Net noninterest-bearing funding sources $ 159,161
174,519

Total assets $ 1,932,242
1,865,694

Noninterest Income

Table 2:Noninterest Income


	Quarter ended Sep 30,			%		Nine months ended Sep 30,			%		Quarter ended Mar 31,				%
(in millions)	2017		2016	Change		2017		2016	Change		2020			2019	Change
Service charges on deposit accounts	$	1,276	1,370	(7	)%	$	3,865	4,015	(4	)%	$	1,209		1,094	11	%
Trust and investment fees:
Brokerage advisory, commissions and other fees	2,304		2,344	(2	)	6,957		6,874	1		2,482			2,193	13
Trust and investment management	840		849	(1	)	2,506		2,499	—		701			786	(11	)
Investment banking	465		420	11		1,345		1,172	15		391			394	(1	)
Total trust and investment fees	3,609		3,613	—		10,808		10,545	2		3,574			3,373	6
Card fees	1,000		997	—		2,964		2,935	1		892			944	(6	)
Other fees:
Charges and fees on loans	318		306	4		950		936	1
Lending related charges and fees											328			347	(5	)
Cash network fees	126		138	(9	)	386		407	(5	)	106			109	(3	)
Commercial real estate brokerage commissions	120		119	1		303		322	(6	)	1			81	(99	)
Letters of credit fees	77		81	(5	)	227		242	(6	)
Wire transfer and other remittance fees	114		103	11		333		296	13		110			113	(3	)
All other fees	122		179	(32	)	445		562	(21	)	87			120	(28	)
Total other fees	877		926	(5	)	2,644		2,765	(4	)	632			770	(18	)
Mortgage banking:
Servicing income, net	309		359	(14	)	1,165		1,569	(26	)	271			364	(26	)
Net gains on mortgage loan origination/sales activities	737		1,308	(44	)	2,257		3,110	(27	)	108			344	(69	)
Total mortgage banking	1,046		1,667	(37	)	3,422		4,679	(27	)	379			708	(46	)
Insurance	269		293	(8	)	826		1,006	(18	)	95			96	(1	)
Net gains from trading activities	245		415	(41	)	921		943	(2	)	64			357	(82	)
Net gains on debt securities	166		106	57		322		797	(60	)	237			125	90
Net gains from equity investments	238		140	70		829		573	45
Net gains (losses) from equity securities											(1,401		)	814	NM
Lease income	475		534	(11	)	1,449		1,404	3		352			443	(21	)
Life insurance investment income	152		152	—		441		455	(3	)	161			159	1
All other	97		163	(40	)	347		1,216	(71	)	211			415	(49	)
Total	$	9,450	10,376	(9	)	$	28,838	31,333	(8	)	$	6,405		9,298	(31	)

NM – Not meaningful

Noninterest income was ~~$9.5~~$6.4 billion, ~~and $28.8 billion for the third~~or 36% of revenue, in first quarter ~~and first nine months of 2017, respectively,~~2020, compared with ~~$10.4~~$9.3 billion, ~~and $31.3 billion for the same periods a year ago. This income represented~~or 43% of revenue, for ~~third quarter 2017 and 44% for the first nine months of 2017, compared with 46%~~ ~~and~~ ~~47% for~~ the same ~~periods~~period a year ago.

The ~~decline~~decrease in noninterest income in ~~the third~~first quarter ~~and first nine months of 2017,~~2020, compared with the same ~~periods~~period a year ago, was predominantly due to lower other fees, mortgage banking income, ~~lower~~ net gains from trading activities, and ~~lower~~net losses from equity securities, partially offset by higher service charges on deposit ~~accounts. Noninterest income in the first nine months of 2017 also reflected lower net gains on debt securities, insurance income,~~accounts, and ~~all other noninterest income due to unfavorable net hedge ineffectiveness accounting results, but benefited from higher~~ trust and investment ~~fees, net gains~~fees. For more information on ~~equity investments,~~our performance obligations and ~~deferred compensation plan investment results (offset~~the nature of services performed for certain of our revenues discussed below, see Note 18 (Revenue from Contracts with Customers) to Financial Statements in ~~employee benefits expense).~~this Report.

Service charges on deposit accounts ~~were $1.3~~increased to $1.2 billion ~~and $3.9 billion~~ in ~~the third~~first quarter ~~and first nine months of 2017, respectively,~~2020, compared with ~~$1.4 billion and $4.0~~$1.1 billion for the same ~~periods in 2016. The decrease in the third quarter and first nine months of 2017, compared with the same periods~~period a year ago ~~was~~, driven by ~~lower consumer and business checking account service charges, lower~~higher overdraft fees and higher treasury management fees due to the impact of a ~~higher~~lower earnings credit rate applied to commercial accounts given the lower interest rate environment. Overdraft fees were higher due to ~~increased interest rates.~~one additional day in first quarter 2020, compared with the same period a year ago, as well as fee waivers and reversals for customers affected by our data center system outage and the government shutdown in first quarter 2019. As part of our actions to support customers during the COVID-19 pandemic, we have provided certain fee waivers and reversals to our customers, which may negatively impact income from service charges on deposit accounts in future periods.

Brokerage advisory, commissions and other fees ~~are received~~increased to $2.5 billion in first quarter 2020, compared with $2.2 billion for ~~providing full-service and discount brokerage services predominantly~~the same period a year ago, due to ~~retail brokerage clients. Income from these brokerage-related activities include~~higher asset-based fees ~~for advisory accounts, which~~and higher transactional revenue. Retail brokerage client assets totaled $1.4 trillion at March 31, 2020, compared with $1.6 trillion at March 31, 2019. Asset-based fees are ~~based~~generally calculated on the market value of the ~~client’s~~ assets ~~and transactional commissions based on~~as of the ~~number and size~~beginning of transactions executed at the client’s direction. These fees were $2.30 billion and $6.96 billion in the third quarter and first nine months of 2017, respectively, compared with $2.34 billion and $6.87 billion for the same periods in 2016. The decrease in third quarter 2017, compared with the same period in 2016, was driven by lower transactional commission revenue, partially offset by higher asset-based fees. The increase for the first nine months of 2017, compared with the same period in 2016, was due to higher asset-based fees, partially offset by lower transactional commission revenue. Retail brokerage client assets totaled $1.6 trillion at September 30, 2017, compared with $1.5 trillion at September 30, 2016, with alleach quarter. All retail brokerage services are provided by our Wealth and Investment Management (WIM) operating segment. For additional information on retail brokerage client assets, see the discussion and Tables 4d and 4e in the “Operating Segment Results – Wealth and Investment Management – Retail Brokerage Client Assets” section in this Report.

~~We earn trust~~Trust and investment management fees decreased to $701 million in first quarter 2020, from ~~managing~~$786 million for the same period a year ago, predominantly driven by lower trust fees due to the sale of our Institutional Retirement and ~~administering assets, including mutual funds, institutional separate accounts, corporate trust, personal trust,~~

Trust (IRT) business in 2019.

~~Earnings Performance (continued~~)

~~employee benefit trust and agency assets. Trust and investment management fee income is primarily from client~~Our assets under management (AUM) ~~for which the fees are determined based on a tiered scale relative to the market value of the AUM. AUM consists of assets for which we have investment management discretion. Our AUM~~ totaled ~~$678.7~~$693.1 billion at ~~September 30, 2017,~~March 31, 2020, compared with ~~$667.5~~$661.1 billion at ~~September 30, 2016, with substantially~~March 31, 2019. Substantially all of our AUM is managed by our WIM operating segment. ~~Additional~~Our assets under administration (AUA) totaled $1.7 trillion at both March 31, 2020 and 2019. Management believes that AUM and AUA are useful metrics because they allow investors and others to assess how changes in asset amounts may impact the generation of certain asset-based fees.

Earnings Performance (continued)

Our AUM and AUA included IRT client assets of $19 billion and $797 billion, respectively, at March 31, 2020, which we continue to administer at the direction of the buyer pursuant to a transition services agreement that will terminate no later than July 2021.

Additional information regarding our WIM operating segment AUM is provided in Table 4f and the related discussion in the “Operating Segment Results – Wealth and Investment Management – Trust and Investment Client Assets Under Management” section in this Report. ~~In addition~~

Card fees decreased to AUM we have client assets under administration (AUA) that earn various administrative fees which are generally based on the extent of the services provided to administer the account. Our AUA totaled $1.7 trillion at September 30, 2017,$892 million in first quarter 2020, compared with ~~$1.6 trillion at September 30, 2016. Trust and investment management fees were $840~~$944 million ~~and $2.5 billion in the third quarter and first nine months of 2017, respectively, compared with $849 million and $2.5 billion~~ for the same ~~periods in 2016.~~

~~We earn investment banking~~period a year ago, due to higher rewards costs and lower interchange fees from underwriting debt and equity securities, arranging loan syndications, and performing other related advisory services. Investment banking fees increased to $465 million and $1.3 billion in the third quarter and first nine months of 2017, respectively, from $420 million and $1.2 billion for the same periods in 2016. The increase in third quarter 2017, compared with the same period in 2016, was predominantly driven by ~~higher loan syndications. The increase for the first nine months of 2017, compared with the same period in 2016, was~~decreased purchase activity due to ~~growth in equity originations, loan syndications, and advisory services.~~

~~Card fees were $1.0 billion and $3.0 billion in the third quarter and first nine months of 2017, respectively, compared with $997 million and $2.9 billion for the same periods a year ago.~~

Other fees decreased to $877 million and $2.6 billion in the third quarter and first nine months of 2017, respectively, from $926 million and $2.8 billion for the same periods in 2016, driven by lower all other fees. All other fees were $122 million and $445 million in the third quarter and first nine months of 2017, respectively, compared with $179 million and $562 million for the same periods in 2016, driven by lower other fees from discontinued products and the impact of the COVID-19 pandemic on consumer spending, partially offset by strong purchase volume early in the quarter.

Other fees decreased to$632 million in first quarter 2020, compared with $770 million for the same period a year ago, largely driven by the sale of our ~~global fund services~~commercial real estate brokerage business, Eastdil Secured (Eastdil), in fourth quarter ~~2016.~~2019 and lower business payroll income due to the sale of our Business Payroll Services business in first quarter 2019.

Mortgage banking noninterest income, consisting of net servicing income and net gains on mortgage loan origination/sales activities, ~~totaled $1.0 billion and $3.4 billion~~decreased to $379 million in ~~the third~~first quarter ~~and first nine months of 2017, respectively,~~2020, compared with ~~$1.7 billion and $4.7 billion~~$708 million for the same ~~periods~~period a year ago. For more information, see Note 11 (Mortgage Banking Activities) to Financial Statements in this Report.

Net servicing income decreased to $271 million in first quarter 2020, compared with $364 million for the same period a year ago driven by a decrease in contractually specified fees as a result of sales of mortgage servicing rights (MSRs) in 2019 and continued prepayments, as well as higher unreimbursed servicing costs due to the expected impact of the COVID-19 pandemic, such as extended foreclosure timelines and higher defaults. In addition to servicing fees, net ~~mortgage loan~~ servicing income includes amortization of commercial ~~mortgage servicing rights (MSRs),~~MSRs, changes in the fair value of residential MSRs, ~~during the period,~~ as well as changes in the fair value of derivatives (economic hedges) used to hedge the residential MSRs. ~~Net servicing income of $309 million for third quarter 2017 included a $98 million net MSR valuation gain ($142 million decrease in the~~The total fair value of ~~the~~our residential MSRs ~~and a $240 million hedge gain). Net servicing income of $359 million for third~~declined in first quarter 2016 included a $134 million net MSR valuation gain ($8 million decrease in the fair value of the MSRs and a $142 million hedge gain). For the first nine months of 2017, net servicing income of $1.2 billion included a $271 million net MSR valuation gain ($328 million decrease in the fair value of the MSRs and a $599 million hedge gain), and for the same period in 2016 net servicing income of

$1.6 billion included a $786 million net MSR valuation gain ($1.8 billion decrease in the fair value of the MSRs and a $2.6 billion hedge gain). Net servicing income decreased for the first nine months of 2017,2020, compared with the same period a year ago, ~~due to~~driven by lower ~~net MSR valuation~~mortgage interest rates and higher prepayments, which were substantially offset by hedge gains. ~~The decrease~~In addition, the fair value decline in ~~net MSR valuation gains in the~~ first ~~nine months of 2017, compared with the same period in 2016, was primarily~~quarter 2020 included assumption updates attributable to ~~MSR~~higher prepayment estimates. Table 2a presents the components of the market-related valuation ~~adjustments in the first quarter~~changes to our residential MSRs, net of ~~2016 that reflected a reduction in forecasted prepayments due to updated economic, customer data attributes, and mortgage market rate inputs as well as higher actual prepayments experienced in 2017.~~hedge results.

Table 2a: Market-Related Valuation Changes on Residential MSRs, Net of Hedge Results



	Quarter ended Mar 31,
(in millions)	2020			2019
MSR valuation losses	$	(3,257	)	(891	)
Net derivative gains from economic hedges of residential MSRs	3,400			962
Net MSR valuation gain	$	143		71

Our portfolio of ~~mortgage~~ loans serviced for others was ~~$1.70~~$1.6 trillion at ~~September 30, 2017~~both March 31, 2020, and ~~$1.68 trillion~~ at December 31, ~~2016.~~2019. At ~~September 30, 2017,~~March 31, 2020, the ratio of combined residential and commercial MSRs to related loans serviced for others was ~~0.87%~~0.60%, compared with ~~0.85%~~0.79% at December 31, ~~2016.~~2019. See the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section in this Report for additional information

regarding our MSRs risks and hedging approach.

Net gains on mortgage loan origination/sales activities ~~were $737~~decreased to $108 million ~~and $2.3 billion~~ in ~~the third~~first quarter ~~and first nine months of 2017, respectively,~~2020, compared with ~~$1.3 billion and $3.1 billion~~$344 million for the same ~~periods a year ago. The decrease in the third quarter and first nine months of 2017, compared with the same periods~~period a year ago, ~~was primarily due to lower~~as gains from higher residential real estate origination volumes and margins in first quarter 2020 were more than offset by losses driven by the impact of interest rate volatility on hedging activities associated with our residential mortgage loans held for sale ~~funding volume~~portfolio and ~~production margins. Total mortgage loan originations were $59 billion~~pipeline, as well as valuation losses on certain residential and ~~$159 billion~~commercial loans held for ~~the third quarter and first nine months of 2017, respectively, compared with $70 billion and $177 billion for the same periods a year ago.~~ sale due to market conditions.

The production margin on residential held-for-sale mortgage loan originations, which represents net gains on residential mortgage loan origination/sales activities divided by total residential held-for-sale mortgage loan originations, provides a measure of the profitability of our residential mortgage origination ~~activity.~~activity. Table 2a2b presents the information used in determining the production margin.

Table ~~2a:~~2b:Selected Mortgage Production Data


		Quarter ended Sep 30,				Nine months ended Sep 30,			Quarter ended March 31,
		2017			2016	2017	2016		2020			2019
Net gains on mortgage loan origination/sales activities (in millions):
Residential	(A)	$	546		953	1,636	2,229	(A)	$	360		232
Commercial		81			167	263	310		23			47
Residential pipeline and unsold/repurchased loan management (1)		110			188	358	571		(275		)	65
Total		$	737		1,308	2,257	3,110		$	108		344
Residential real estate originations (in billions):
Held-for-sale	(B)	$	44		53	120	130	(B)	$	33		22
Held-for-investment		15			17	39	47		15			11
Total		$	59		70	159	177		$	48		33
Production margin on residential held-for-sale mortgage originations	(A)/(B)	1.24		%	1.81	1.37	1.72
Production margin on residential held-for-sale mortgage loan originations								(A)/(B)	1.08		%	1.05	%


(1)	~~Largely~~Predominantly includes the results of ~~GNMA~~Government National Mortgage Association (GNMA) loss mitigation activities, interest rate management activities and changes in estimate to the liability for mortgage loan repurchase losses.

The production margin was ~~1.24% and 1.37%~~1.08% for ~~the third~~first quarter ~~and first nine months of 2017, respectively,~~2020, compared with ~~1.81% and 1.72%~~1.05% for the same ~~periods in 2016.~~period a year ago. The ~~decline~~increase in production margin in first quarter 2020,compared with the ~~third quarter and first nine months of 2017~~ same period a year ago, was ~~attributable~~due to ~~lower~~ higher margins in both our retail and correspondent production ~~channels~~channel, as well as a shift to more ~~correspondent~~retail origination volume, which has a ~~lower~~higher margin. The higher production ~~margin.~~ margin was reduced by valuation losses on residential mortgage loans held for sale, particularly non-agency loans.

Mortgage applications ~~were $73~~increased to $108 billion ~~and $215 billion for the third~~in first quarter ~~and first nine months of 2017, respectively,~~2020, compared with ~~$100 billion and $272~~$64 billion for the same ~~periods~~period a year ~~ago.~~ago. The 1-4 family first mortgage unclosed application pipeline was ~~$29~~$62 billion at ~~September 30, 2017,~~March 31, 2020, compared with ~~$50~~$32 billion at ~~September 30, 2016.~~March 31, 2019. For additional information about our mortgage banking activities and results, see the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section and Note 811 (Mortgage Banking Activities) and Note 1316 (Fair Values of Assets and Liabilities) to Financial Statements in this Report.

Net gains on mortgage loan origination/sales activities include adjustments to the mortgage repurchase liability. Mortgage loans are repurchased from third parties based on standard representations and warranties, and early payment default clauses in mortgage sale contracts. For the first nine months of 2017, we had a net $45 million release to the repurchase liability, compared with a net $106 million release for the first nine months of 2016. For additional information about mortgage loan repurchases, see the “Risk Management – Credit Risk Management – Liability for Mortgage Loan Repurchase Losses” section and Note 8 (Mortgage Banking Activities) to Financial Statements in this Report.

Insurance income was $269 million and $826 million in the third quarter and first nine months of 2017, respectively, compared with $293 million and $1.0 billion in the same periods a year ago. The decrease in the first nine months of 2017, compared with the same period a year ago, was driven by the divestiture of our crop insurance business in first quarter 2016.

~~Net~~ gains from trading activities, which reflect unrealized changes in fair value of our trading positions and realized gains and losses, ~~were $245 million and $921~~decreased to $64 million in ~~the third~~first quarter ~~and first nine months of 2017, respectively,~~2020, compared with ~~$415 million and $943~~$357 million in the same ~~periods~~period a year ago.The decrease in ~~the third~~first quarter ~~and first nine months of 2017,~~2020, compared with the same ~~periods~~period a year ago, ~~was predominantly driven~~reflected trading volatility created by the COVID-19 pandemic. We had lower ~~customer accommodation~~income in first quarter 2020 from wider

credit spreads for asset-backed securities and credit trading, ~~activity. The decrease in customer accommodation~~as well as lower trading ~~activity in the first nine months of 2017 was~~volumes on asset-backed securities, partially offset by ~~higher deferred compensation plan investment results (offset in employee benefits expense).~~increased demand for interest rate products due to lower interest rates. Net gains from trading activities ~~do not include~~exclude interest and dividend income and expense on trading ~~securities. Those amounts~~securities, which are reported within interest income from ~~trading assets~~debt and equity securities and other interest ~~expense from trading liabilities.~~ income. For additional information about trading activities, see the “Risk Management – Asset/Liability Management – Market ~~Risk – Trading~~Risk-Trading Activities” section and Note 4 (Trading Activities) to Financial Statements in this Report.

Net losses from equity securities were $1.4 billion in first quarter 2020 and included $621 million of deferred compensation plan investment losses (largely offset in employee benefits expense). Net losses from equity securities in first quarter 2020 also included nonmarketable equity securities impairments of $935 million, reflecting lower market valuations. The impairments on equity securities in the venture capital, private equity and certain wholesale businesses represented 17% of the carrying values of these businesses’ portfolio investments subject to the impairment assessment. Table 3a presents results for our deferred compensation plan and related investments.

~~Net gains on debt and equity securities totaled $404~~Lease income decreased to $352 million ~~and $1.2 billion~~ in ~~the third~~first quarter ~~and first nine months of 2017, respectively,~~2020, compared with ~~$246~~$443 million ~~and $1.4 billion in the third quarter and first nine months of 2016, after other-than-temporary impairment (OTTI) write-downs of $91 million and $293 million~~ for the third quarter and first nine months of 2017, respectively, compared with $136 million and $464 million for the same periods in 2016. The increase in net gains on debt and equity securities in third quarter 2017, compared with the same period a year ago, ~~primarily reflected higher net gains from venture capital equity investments. The decrease in net gains on debt and equity securities~~driven by reductions in the size of the equipment leasing portfolio.

All other income decreased to $211 million in first ~~nine months of 2017,~~quarter 2020, compared with ~~the same period a year ago, was driven by lower net gains on debt securities, partially offset by higher net gains from equity investments.~~

~~Lease income was $475~~$415 million ~~and $1.4 billion in the third quarter and first nine months of 2017, respectively, compared with $534 million and $1.4 billion~~ for the same ~~periods a year ago. The decrease in third quarter 2017, compared with the same~~ period ~~a year ago, was driven by lower equipment lease income and the impact of gains on early leveraged lease terminations in third quarter 2016.~~

~~All other income was $97 million and $347 million in the third quarter and first nine months of 2017, respectively, compared with $163 million and $1.2 billion for the same periods~~ a year ago. All other income includes ~~ineffectiveness recognized on derivatives that qualify for hedge accounting, the results of certain economic hedges,~~income or losses ~~on low income~~from equity method investments, including low-income housing tax credit investments (excluding related tax credits recorded in income tax expense), foreign currency adjustments and ~~income from investments accounted for under the equity method, any~~related hedges of ~~which can cause decreases~~foreign currency risks, and ~~net losses in other income.~~ certain economic hedges. The decrease in all other income ~~in the third quarter and first nine months of 2017, compared with the same periods a year ago,~~ was ~~largely due to net hedge ineffectiveness results. All other~~driven by higher income in first quarter 2019 from gains on the ~~first nine months~~sales of ~~2017 also reflected the impact of~~purchased credit-impaired (PCI) loans and a pre-tax gain ~~from~~on the sale of our ~~crop insurance~~Business Payroll Services business, partially offset by transition services fees in first quarter ~~2016, and a gain from~~2020 associated with the sale of our ~~health benefits services~~IRT business and gains on the sales of loans reclassified to held for sale in ~~second~~2019 and sold in first quarter 2016, partially offset by a $309 million gain from the sale of a Pick-a-Pay PCI loan portfolio in second quarter 2017 and higher income from equity method investments. Hedge ineffectiveness was driven by changes in ineffectiveness recognized on interest rate swaps used to hedge our exposure to interest rate risk on long-term debt and cross-currency swaps, cross-currency interest rate swaps and forward contracts used to hedge our exposure to foreign currency risk and interest rate risk involving non-U.S. dollar denominated long-term debt. The portion of the hedge ineffectiveness recognized was partially offset by the results of certain economic hedges and, accordingly, we recognized a net hedge benefit of $93 million for third quarter 2017 and a net hedge loss of $79 million for the first nine months of 2017, compared with a net hedge benefit of $142 million and $577 million for the same periods a year ago. For additional information about derivatives used as part of our asset/liability management, see Note 12 (Derivatives) to Financial Statements in this Report.2020.

Earnings Performance (continued)

Noninterest Expense

Table 3:Noninterest Expense


	Quarter ended Sep 30,				%		Nine months ended Sep 30,			%		Quarter ended Mar 31,			%
(in millions)	2017		2016		Change		2017		2016	Change		2020		2019	Change
Salaries	$	4,356	4,224		3	%	$	12,960	12,359	5	%	$	4,721	4,425	7	%
Commission and incentive compensation	2,553		2,520		1		7,777		7,769	—		2,463		2,845	(13	)
Employee benefits	1,279		1,223		5		4,273		3,993	7		1,130		1,938	(42	)
Equipment	523		491		7		1,629		1,512	8
Technology and equipment												661		661	—
Net occupancy(1)	716		718		—		2,134		2,145	(1	)	715		717	—
Core deposit and other intangibles	288		299		(4	)	864		891	(3	)	23		28	(18	)
FDIC and other deposit assessments	314		310		1		975		815	20		118		159	(26	)
Operating losses												464		238	95
Outside professional services	955		802		19		2,788		2,154	29		727		678	7
Operating losses	1,329		577		130		1,961		1,365	44
Operating leases	347		363		(4	)	1,026		950	8
Contract services	351		313		12		1,025		878	17		630		563	12
Leases (2)												260		286	(9	)
Advertising and promotion												181		237	(24	)
Outside data processing	227		233		(3	)	683		666	3		165		167	(1	)
Travel and entertainment	154		144		7		504		509	(1	)	93		147	(37	)
Postage, stationery and supplies	128		150		(15	)	407		466	(13	)	129		122	6
Advertising and promotion	137		117		17		414		417	(1	)
Telecommunications	90		101		(11	)	272		287	(5	)	92		91	1
Foreclosed assets	66		(17	)	NM		204		127	61		29		37	(22	)
Insurance	24		23		4		72		156	(54	)	25		25	—
All other	514		677		(24	)	1,716		1,703	1		422		552	(24	)
Total	$	14,351	13,268		8		$	41,684	39,162	6		$	13,048	13,916	(6	)

~~NM - Not meaningful~~


(1)	Represents expenses for both leased and owned properties.


(2)	Represents expenses for assets we lease to customers.

Noninterest expense was ~~$14.4~~$13.0 billion in ~~third~~first quarter ~~2017, up 8%~~2020, down 6% from ~~$13.3~~$13.9 billion a year ago, driven by higher operating losses, personnel expenses, outside professional and contract services, and foreclosed assets expense, partially offset by lower other expense. In the first nine months of 2017, noninterest expense was $41.7 billion, up 6% fromin the same period a year ago, ~~due to~~driven by lower personnel expenses, advertising and promotions expense, travel and entertainment expense, and other expense, partially offset by higher ~~personnel expenses,~~operating losses, and outside professional and contract services ~~operating losses, FDIC expense, and foreclosed assets expense, partially offset by lower insurance expense and postage, stationery and supplies~~ expense.

Personnel expenses, which include salaries, commissions, incentive compensation, and employee benefits, were ~~up $221~~down $894 million, or 3%10%, in ~~third~~first quarter ~~2017 compared with the same quarter last year, and up $889 million, or 4%, in the first nine months of 2017~~2020, compared with the same period a year ~~ago.~~ ago, due to lower employee benefits expense from lower deferred compensation expense (largely offset in net losses from equity securities) and lower incentive compensation and commissions, partially offset by higher salaries driven by the impact of staffing mix changes and annual salary increases, as well as one additional payroll day in the quarter. Table 3a presents results for our deferred compensation plan and related investments.

The ~~increase~~decrease in ~~both periods~~incentive compensation and commissions was due to lower stock incentive compensation expense and lower annual ~~salary increases and higher benefits~~bonus expense, partially offset by ~~one fewer payroll day. The increase~~higher revenue-related incentive compensation. We have provided various types of financial support to our employees in response to the ~~first nine months of 2017 was also driven by higher deferred compensation costs (offset in trading revenue).~~

~~FDIC~~COVID-19 pandemic, including additional cash payments for our employees who continue to serve customers, enhanced childcare, and other ~~deposit assessments~~extended benefits. These additional benefits did not meaningfully impact our expenses in first quarter 2020, but are expected to have a greater impact beginning in second quarter 2020 and throughout the remainder of the year. See the “Financial Review – Overview” section in this Report for more information on the actions we have taken to support our employees during the COVID-19 pandemic.

Table 3a:Deferred Compensation Plan and Related Investments



	Quarter ended Mar 31,
(in millions)	2020			2019
Net interest income	$	12		13
Net gains (losses) from equity securities	(621		)	345
Total revenue (losses) from deferred compensation plan investments	(609		)	358
Employee benefits expense (1)	(598		)	357
Income (loss) before income tax expense	$	(11	)	1


(1)	Represents change in deferred compensation plan liability.

Operating losses were up ~~1% and 20%~~$226 million, or 95%, in ~~the third~~first quarter ~~and first nine months of 2017,~~2020, compared with the same ~~periods~~period a year ~~ago. The increase in the first nine months of 2017 was~~ago, due to ~~an increase in deposit assessments as a result of a temporary surcharge which became effective on July 1, 2016. The FDIC expects the surcharge to be in effect for approximately two years.~~higher litigation and remediation accruals.

Outside professional and contract services expense was up ~~17%~~$116 million, or 9%, in first quarter 2020, compared with the

same period a year ago, largely due to an increase in project spending, partially offset by lower legal expenses.

Advertising and ~~26%~~promotion expense was down $56 million, or 24%, in ~~the third~~first quarter ~~and first nine months of 2017,~~2020, compared with the same periods a year ago. The increase in both periods reflected higher project and technology spending on regulatory and compliance related initiatives, as well as higher legal expense related to sales practices matters.

Operating losses were up 130% and 44% in the third quarter and first nine months of 2017, compared with the same periods in 2016, predominantly due to higher litigation accruals for various legal matters, including a non tax-deductible $1 billion discrete litigation accrual in third quarter 2017 for previously disclosed mortgage-related regulatory investigations.

Foreclosed assets expense was up $83 million and $77 million in the third quarter and first nine months of 2017, compared with the same periods a year ago, predominantly due to lower gains on sale of foreclosed properties.

Insurance expense was up 4% in third quarter 2017 and down 54% in the first nine months of 2017, compared with the same periods a year ago. The decrease in the first nine months of 2017 was predominantly driven by the sale of our crop insurance business in first quarter 2016.

~~Postage, stationary, and supplies expense was down 15% and 13% in the third quarter and first nine months of 2017, compared with the same periods~~period a year ago, due to ~~lower mail services~~decreases in marketing and ~~supplies expense.~~brand campaign volumes.

~~All other noninterest expense~~Travel and entertainment was down ~~24%~~$54 million, or 37%, in ~~third~~first quarter ~~2017 and up 1% in the first nine months of 2017,~~2020, compared with the same ~~periods~~period a year ~~ago. The decrease in the third quarter was primarily~~ago, driven by ~~lower donations expense.~~ a reduction in business travel and company events due to ongoing expense management initiatives, as well as the impact of the COVID-19 pandemic.

All other ~~noninterest~~ expense was down $130 million, or 24%, in ~~third~~first quarter ~~2016 included a $107 million contribution to the Wells Fargo Foundation.~~

~~Our efficiency ratio was 65.5% in third quarter 2017,~~2020, compared with ~~59.4% in third quarter 2016. The third quarter 2017 efficiency ratio included~~the same period a ~~456 basis point impact from~~year ago, due to higher gains on the ~~$1 billion discrete litigation accrual.~~extinguishment of debt, lower pension benefit plan expenses, and a lower insurance claims reserve.

Income Tax Expense

Income tax expense was $159 million in first quarter 2020, down 82% from $881 million in the same period a year ago, driven by lower income. Our effective income tax rate was ~~32.4% and 31.5%~~19.5% for ~~third~~first quarter ~~2017 and 2016, respectively. Our effective income tax rate was 29.0% in~~2020, compared with 13.1% for the ~~first nine months of 2017, down from 31.9% in~~

the first nine months of 2016. The increase in the effective income tax rate for third quarter 2017 was primarily from the non-deductible treatment of the $1.0 billion discrete litigation accrual, partially offset by net discrete tax benefits arising from favorable resolutions of priorsame period ~~matters with state taxing authorities.~~a year ago. The effective income tax rate for ~~the~~ first ~~nine months of 2017 also included~~quarter 2020 reflected net discrete income tax ~~benefits associated with~~expense of $141 million driven by the accounting for stock compensation activity, ~~subject to ASU 2016-09~~the net impact of accounting ~~guidance adopted~~for uncertain tax positions, and the outcome of U.S. federal income tax examinations. The lower rate in first quarter ~~2017, and~~2019 was related to net discrete income tax benefits ~~associated with our agreement~~of $297 million related mostly to ~~sell Wells Fargo Insurance Services USA (and related businesses) in second quarter 2017. See Note 1 (Summary~~the results of ~~Significant Accounting Policies) to Financial Statements in this Report~~U.S. federal and state income tax examinations and the accounting for ~~additional information about ASU 2016-09.~~

stock compensation activity.

Operating Segment Results

~~We are~~As of March 31, 2020, we were organized for management reporting purposes into three operating segments: Community Banking; Wholesale Banking; and Wealth and Investment Management (WIM). These

segments are defined by product type and customer segment and their results are based on our management ~~accounting~~reporting process. The management reporting process is based on U.S. GAAP with specific adjustments, such as for ~~which there~~funds transfer pricing for asset/liability management, for shared revenues and expenses, and tax-equivalent adjustments to consistently reflect income from taxable and tax-exempt sources. On February 11, 2020, we announced a new organizational structure with five principal lines of business: Consumer and Small Business Banking; Consumer Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment

Management. This new organizational structure is ~~no comprehensive, authoritative~~intended to help drive operating, control, and business performance. The Company is currently in the process of transitioning to this new organizational structure, including identifying leadership for some of these principal business lines and aligning management reporting and allocation methodologies. These changes will not impact the consolidated financial ~~accounting guidance equivalent~~results of the Company, but are expected to ~~generally accepted accounting principles (GAAP). Commencing~~result in ~~second quarter 2016,~~changes to our operating segments. We will update our operating segment disclosures, including comparative financial results, ~~reflect a shift~~when the Company completes its transition and is managed in expenses between the personnel and other expense categories as a result of the movement of support staff from the Wholesale Banking and WIM segments into a consolidated organization within the Community Banking segment. Since then, personnel expenses associatedaccordance with the ~~transferred support staff have been allocated from Community Banking back to the Wholesale Banking and WIM segments through other expense.~~new organizational structure. Table 4 and the following discussion present our results by operating segment. For additional description of our operating segments, including additional financial information and the underlying management ~~accounting~~reporting process, see Note 1822 (Operating Segments) to Financial Statements in this Report.

We perform a goodwill impairment assessment annually in the fourth quarter. However, in first quarter 2020, we performed an interim, quantitative impairment assessment of our goodwill given deteriorated macroeconomic conditions from the impact of the COVID-19 pandemic. These market conditions led to a sharp decline in share prices for Wells Fargo and other companies across many industries. As part of our interim assessment, we updated our assumptions used in both the income and market approaches for estimating fair values of our reporting units. The update to assumptions incorporated current market-based information such as price-earnings information and a regular update to our internal enterprise-wide forecasts, which reflected lower interest rates and higher expected credit losses, as well as a weaker macroeconomic outlook. While we observed declines in the fair values of our reporting units and the amount of excess fair value over the carrying amount of our reporting units, we did not have evidence of goodwill impairment. Due to the impact of the market disruption on our investment banking fees and trading activities, our corporate and investment banking reporting unit, included within the Wholesale Banking operating segment, had the smallest difference between fair value and carrying value. Given the uncertainty of the severity or length of the current economic downturn, we will continue to monitor market conditions for circumstances that could have a further negative effect on our estimated fair values on our reporting units.

In connection with the planned change to our operating segment disclosures, we will realign our goodwill to the reporting units that underlie our operating segments. We will reassess goodwill for impairment at the time of the realignment.

Table 4:Operating Segment Results – Highlights


(income/expense in millions,	Community Banking			Wholesale Banking			Wealth and Investment Management				Other (1)				Consolidated Company		Community Banking			Wholesale Banking		Wealth and Investment Management		Other (1)				Consolidated Company
average balances in billions)	2017		2016	2017		2016	2017		2016		2017		2016		2017	2016
Quarter ended Sep 30,
balance sheet data in billions)																	2020		2019	2020	2019	2020	2019	2020		2019		2020	2019
Quarter ended Mar 31,
Revenue	$	12,060	12,387	7,085		7,147	4,246		4,099		(1,465	)	(1,305	)	21,926	22,328	$	9,496	11,750	5,817	7,111	3,715	4,079	(1,311	)	(1,331	)	17,717	21,609
Provision (reversal of provision) for credit losses	650		651	69		157	(1	)	4		(1	)	(7	)	717	805	1,718		710	2,288	134	8	4	(9	)	(3	)	4,005	845
Noninterest expense	7,834		6,953	4,248		4,120	3,106		2,999		(837	)	(804	)	14,351	13,268
Net income (loss)	2,229		3,227	2,046		2,047	710		677		(389	)	(307	)	4,596	5,644	155		2,823	311	2,770	463	577	(276	)	(310	)	653	5,860

Average loans	$	473.5	489.2	463.8		454.3	72.4		68.4		(57.4	)	(54.4	)	952.3	957.5	$	462.6	458.2	484.5	476.4	78.5	74.4	(60.6	)	(59.0	)	965.0	950.0
Average deposits	734.5		708.0	463.4		441.2	188.1		189.2		(79.6	)	(76.9	)	1,306.4	1,261.5	798.6		765.6	456.6	409.8	151.4	153.2	(68.6	)	(66.5	)	1,338.0	1,262.1
Nine months ended Sep 30,
Revenue	$	36,442	37,205	21,074		21,389	12,621		11,872		(4,040	)	(3,781	)	66,097	66,685
Provision (reversal of provision) for credit losses	1,919		2,060	(39	)	905	2		(8	)	(5	)	8		1,877	2,965
Noninterest expense	22,278		20,437	12,551		12,124	9,387		9,017		(2,532	)	(2,416	)	41,684	39,162
Net income (loss)	8,231		9,702	6,549		6,041	2,015		1,773		(932	)	(852	)	15,863	16,664
Average loans	$	477.8	486.4	465.0		445.2	71.6		66.4		(56.8	)	(52.8	)	957.6	945.2
Average deposits	726.4		698.3	464.1		431.7	190.6		185.4		(78.8	)	(76.1	)	1,302.3	1,239.3
Goodwill																	16.7		16.7	8.4	8.4	1.3	1.3	—		—		26.4	26.4


(1)	Includes the elimination of certain items that are included in more than one business segment, ~~most~~substantially all of which represents products and services for WIM customers served through Community Banking distribution channels.

Earnings Performance (continued)

Community Bankingoffers a complete line of diversified financial products and services for consumers and small businesses ~~including~~with annual sales generally up to $5 million in which the owner generally is the financial decision maker. These financial products and services include checking and savings accounts, credit and debit cards, ~~and~~ automobile, student, mortgage, home equity and small business lending, as well as referrals to Wholesale Banking

and WIM business partners. The Community Banking segment

also includes the results of our Corporate Treasury activities net of allocations (including funds transfer pricing, capital, liquidity and certain corporate expenses) in support of ~~the~~ other ~~operating~~ segments and results of investments in our affiliated venture capital and private equity partnerships. Table 4a provides additional financial information for Community Banking.

Table 4a:Community Banking


	Quarter ended Sep 30,							Nine months ended Sep 30,							Quarter ended Mar 31,
(in millions, except average balances which are in billions)	2017			2016		% Change		2017			2016		% Change		2020			2019		% Change
Net interest income	$	7,645		7,430		3	%	$	22,820		22,277		2	%	$	6,787		7,248		(6	)%
Noninterest income:
Service charges on deposit accounts	738			821		(10	)	2,203			2,347		(6	)	700			610		15
Trust and investment fees:
Brokerage advisory, commissions and other fees (1)	460			479		(4	)	1,356			1,384		(2	)	518			449		15
Trust and investment management (1)	225			222		1		659			631		4		194			210		(8	)
Investment banking (2)	(13		)	(23	)	43		(60		)	(92	)	35		(99		)	(20	)	NM
Total trust and investment fees	672			678		(1	)	1,955			1,923		2		613			639		(4	)
Card fees	910			911		—		2,703			2,670		1		809			858		(6	)
Other fees	362			362		—		1,152			1,100		5		285			332		(14	)
Mortgage banking	936			1,481		(37	)	3,081			4,314		(29	)	340			641		(47	)
Insurance	36			2		NM		64			4		NM		11			11		—
Net gains (losses) from trading activities	18			33		(45	)	87			(54	)	261
Net gains from trading activities															29			5		480
Net gains on debt securities	169			131		29		455			744		(39	)	194			37		424
Net gains from equity investments (3)	195			109		79		731			448		63
Net gains (losses) from equity securities (3)															(1,028		)	601		NM
Other income of the segment	379			429		(12	)	1,191			1,432		(17	)	756			768		(2	)
Total noninterest income	4,415			4,957		(11	)	13,622			14,928		(9	)	2,709			4,502		(40	)

Total revenue	12,060			12,387		(3	)	36,442			37,205		(2	)	9,496			11,750		(19	)

Provision for credit losses	650			651		—		1,919			2,060		(7	)	1,718			710		142
Noninterest expense:
Personnel expense	5,027			4,606		9		15,193			13,886		9		5,455			5,981		(9	)
Equipment	511			462		11		1,569			1,421		10
Technology and equipment															645			641		1
Net occupancy	532			520		2		1,573			1,551		1		529			542		(2	)
Core deposit and other intangibles	112			123		(9	)	335			380		(12	)	1			1		—
FDIC and other deposit assessments	171			159		8		547			453		21		68			106		(36	)
Outside professional services	464			300		55		1,355			749		81		442			316		40
Operating losses	1,294			525		146		1,853			1,224		51		454			219		107
Other expense of the segment	(277		)	258		NM		(147		)	773		NM		(478		)	(117	)	NM
Total noninterest expense	7,834			6,953		13		22,278			20,437		9		7,116			7,689		(7	)
Income before income tax expense and noncontrolling interests	3,576			4,783		(25	)	12,245			14,708		(17	)	662			3,351		(80	)
Income tax expense	1,286			1,546		(17	)	3,817			4,910		(22	)	644			424		52
Net income from noncontrolling interests (4)	61			10		510		197			96		105
Less: Net income (loss) from noncontrolling interests (4)															(137		)	104		NM
Net income	$	2,229		3,227		(31	)	$	8,231		9,702		(15	)	$	155		2,823		(95	)
Average loans	$	473.5		489.2		(3	)	$	477.8		486.4		(2	)	$	462.6		458.2		1
Average deposits	734.5			708.0		4		726.4			698.3		4		798.6			765.6		4

NM -– Not meaningful


(1)	Represents income on products and services for WIM customers served through Community Banking distribution channels ~~and~~which is eliminated in consolidation.


(2)	Includes ~~syndication and~~ underwriting fees paid to Wells Fargo Securities for services related to the issuance of our corporate securities which are offset in our Wholesale Banking ~~segment.~~segment and eliminated in consolidation.


(3)	~~Predominantly~~Primarily represents gains resulting from venture capital investments.


(4)	Reflects results attributable to noncontrolling interests predominantly associated with the Company’s consolidated venture capital investments.

Community Banking reported net income of ~~$2.2 billion,~~$155 million in first quarter 2020, down ~~$998 million, or 31%, from third quarter 2016, and $8.2 billion for the first nine months of 2017, down $1.5~~$2.7 billion, or ~~15%~~95%, compared with the same period a year ago.

Revenue of $9.5 billion in first quarter 2020, decreased $2.3 billion, or 19%, compared with the same period a year ago. ~~Third~~The decrease in revenue was due to net losses on equity securities (including lower deferred compensation plan investment results, which were largely offset in employee benefits expense), lower card fees driven by higher rewards costs and the impact of the COVID-19 pandemic on consumer spending, lower net interest income reflecting the lower interest rate environment, and lower mortgage banking income. These decreases were partially offset by higher gains on debt securities and service charges on deposit accounts due to one additional day in first quarter ~~2017 results~~2020, and that first quarter 2019 included a $1higher level of fee waivers for customers affected by our data center system outage and the government shutdown.

The provision for credit losses in first quarter 2020 increased $1.0 billion ~~discrete litigation accrual (not tax deductible)~~compared with the same period a year ago, predominantly due to a $1.0 billion increase in the allowance for ~~previously disclosed mortgage-related regulatory investigations. Revenue~~credit losses in first quarter 2020 reflecting expected credit deterioration due to the impact of ~~$12.1~~the COVID-19 pandemic.

Noninterest expense of $7.1 billion in first quarter 2020, decreased ~~$327~~$573 million, or ~~3%, from third quarter 2016, and was $36.4 billion for the first nine months of 2017, a decrease of $763 million, or 2%~~7%, compared with the same period ~~last year. The decrease from third quarter 2016 was~~a year ago, predominantly due to lower ~~mortgage banking revenue~~personnel expenses driven by lower deferred compensation expense (largely offset by net losses from equity securities) and ~~deposit service charges,~~lower other expenses, partially offset by higher operating losses driven by an increase in remediation accruals and higher outside professional services expense.

Income tax expense of $644 million in first quarter 2020, increased $220 million from first quarter 2019, driven by a higher effective income tax rate of 19.5% and included net ~~interest~~discrete income tax expense of $141 million driven by the accounting for

stock compensation activity, the net impact of accounting for uncertain tax positions, and ~~gains on equity investments.~~the outcome of U.S. federal income tax examinations.

Average loans of $462.6 billion in first quarter 2020, increased $4.4 billion, or 1%, compared with first quarter 2019. The ~~decrease~~increase in average loans from ~~the~~ first ~~nine months of 2016~~quarter 2019 was ~~predominantly~~ due to ~~lower~~higher real estate 1-4 family first mortgage ~~banking revenue, gains on sales of debt securities,~~loans and ~~other income driven by net hedge ineffectiveness accounting related to our long-term debt hedging results,~~automobile loans, partially offset by ~~higher net interest income and gains on~~

lower junior lien mortgage loans.

equity investments. Average loans of $473.5 billion in third quarter 2017 decreased $15.7 billion, or 3%, from third quarter 2016, and average loans of $477.8 billion in the first nine months of 2017 decreased $8.6 billion, or 2%, from the first nine months of 2016. The decline in average loans was due to lower loan origination in the consumer lending portfolio. Average deposits of ~~$734.5~~$798.6 billion in first quarter 2020 increased ~~$26.5~~$33.0 billion, or 4%, from ~~third~~first quarter ~~2016 and average deposits of $726.4 billion in the first nine months of 2017 increased $28.1 billion, or 4%,~~2019 reflecting growth from the first nine months of 2016. Primary consumer checking customers (customers who actively use their checking account with transactions such as debit card purchases, online bill payments, and direct deposit) as of August 2017 were down 0.2% from August 2016. Noninterest expense increased 13% from third quarter 2016 and 9% from the first nine months of 2016. The increase from third quarter 2016 was driven by higher operating losses (including the $1 billion discrete litigation accrual in third quarter 2017) and higher personnel expenses mainly due to the

impact of annual salary increases and higher professional services driven by increased project spending, partially offset by higher expenses allocated to the Wholesale Banking and Wealth and Investment Management operating segments related to increased project and technology spending on regulatory and compliance related initiatives. The increase from the first nine months of 2016 was predominantly due to higher personnel expenses, including deferred compensation plan expense (offset in trading revenue), and higher operating losses and professional services, partially offset by lower other expense. The provision for credit losses was flat compared with third quarter 2016 and decreased $141 million from the first nine months of 2016 predominantly due to an improvement in the consumer lendingretail banking deposit campaigns.

~~portfolio, primarily consumer real estate, compared with the same periods a year ago.~~

Wholesale Banking provides financial solutions to businesses ~~across the United States and globally~~ with annual sales generally in excess of $5 ~~million.~~million and to financial institutions globally. Products and businesses include ~~Business~~Commercial Banking, Commercial Real Estate, Corporate and Investment Banking, ~~Financial Institutions Group, Government and Institutional Banking, Insurance, Middle Market Banking, Principal Investments,~~Credit Investment Portfolio, Treasury Management, ~~Wells Fargo~~and Commercial ~~Capital, and Wells Fargo Securities.~~Capital. Table 4b provides additional financial information for Wholesale Banking.

Table 4b:Wholesale Banking


	Quarter ended Sep 30,							Nine months ended Sep 30,							Quarter ended Mar 31,
(in millions, except average balances which are in billions)	2017			2016		% Change		2017			2016		% Change		2020			2019	% Change
Net interest income	$	4,353		4,062		7	%	$	12,779		11,729		9	%	$	4,136		4,534	(9	)%
Noninterest income:
Service charges on deposit accounts	539			549		(2	)	1,662			1,667		—		508			483	5
Trust and investment fees:
Brokerage advisory, commissions and other fees	65			91		(29	)	231			276		(16	)	90			78	15
Trust and investment management	130			117		11		390			351		11		131			114	15
Investment banking	478			444		8		1,407			1,265		11		490			412	19
Total trust and investment fees	673			652		3		2,028			1,892		7		711			604	18
Card fees	90			85		6		260			263		(1	)	83			86	(3	)
Other fees	513			562		(9	)	1,487			1,660		(10	)	346			437	(21	)
Mortgage banking	110			186		(41	)	343			367		(7	)	40			68	(41	)
Insurance	224			291		(23	)	736			1,002		(27	)	75			78	(4	)
Net gains from trading activities	156			302		(48	)	614			853		(28	)	41			333	(88	)
Net gains (losses) on debt securities	(5		)	(25	)	80		(135		)	52		NM
Net gains from equity investments	40			26		54		92			118		(22	)
Net gains on debt securities															43			88	(51	)
Net gains (losses) from equity securities															(95		)	77	NM
Other income of the segment	392			457		(14	)	1,208			1,786		(32	)	(71		)	323	NM
Total noninterest income	2,732			3,085		(11	)	8,295			9,660		(14	)	1,681			2,577	(35	)

Total revenue	7,085			7,147		(1	)	21,074			21,389		(1	)	5,817			7,111	(18	)

Provision (reversal of provision) for credit losses	69			157		(56	)	(39		)	905		NM
Provision for credit losses															2,288			134	NM
Noninterest expense:
Personnel expense	1,607			1,806		(11	)	5,048			5,563		(9	)	1,383			1,510	(8	)
Equipment	12			18		(33	)	42			55		(24	)
Technology and equipment															9			9	—
Net occupancy	106			116		(9	)	326			350		(7	)	104			95	9
Core deposit and other intangibles	102			101		1		310			286		8		19			24	(21	)
FDIC and other deposit assessments	120			125		(4	)	358			299		20		44			45	(2	)
Outside professional services	301			269		12		842			759		11		101			184	(45	)
Operating losses	22			55		(60	)	34			130		(74	)	4			1	300
Other expense of the segment	1,978			1,630		21		5,591			4,682		19		2,099			1,970	7
Total noninterest expense	4,248			4,120		3		12,551			12,124		4		3,763			3,838	(2	)
Income before income tax expense and noncontrolling interests	2,768			2,870		(4	)	8,562			8,360		2
Income tax expense	729			827		(12	)	2,034			2,341		(13	)
Net loss from noncontrolling interests	(7		)	(4	)	(75	)	(21		)	(22	)	5
Income (loss) before income tax expense (benefit) and noncontrolling interests															(234		)	3,139	NM
Income tax expense (benefit) (1)															(546		)	369	NM
Less: Net income from noncontrolling interests															1			—	NM
Net income	$	2,046		2,047		—		$	6,549		6,041		8		$	311		2,770	(89	)
Average loans	$	463.8		454.3		2		$	465.0		445.2		4		$	484.5		476.4	2
Average deposits	463.4			441.2		5		464.1			431.7		8		456.6			409.8	11

NM – Not meaningful


(1)	Income tax expense for our Wholesale Banking operating segment included income tax credits related to low-income housing and renewable energy investments of $491 million and $427 million for the first quarter 2020 and 2019, respectively.

Wholesale Banking reported net income of ~~$2.0~~$311 million in first quarter 2020, down $2.5 billion, ~~in third quarter 2017, down $1 million from third quarter 2016. In the first nine months of 2017, net income of $6.5 billion increased $508 million,~~ or 8%89%, from the same period a year ago. Net income results for the first nine months of 2017 included a tax benefit resulting from our agreement to sell Wells Fargo Insurance Services USA and related businesses. Revenue decreased $62 million, or 1%, from third quarter 2016 and $315 million, or 1%, from the first nine months of 2016 as an increase in net interest income was more than offset by lower noninterest income.

Net interest income ~~increased $291~~of $4.1 billion in first quarter 2020 decreased $398 million, ~~or 7%, from third quarter 2016 and $1.1 billion,~~ or 9%, from first quarter 2019, due to the impact of the lower interest rate environment, partially offset by higher loan and deposit volumes and increased spreads on trading assets.

Noninterest income decreased $896 million, or 35%, from first ~~nine months of 2016 driven by strong loan growth, which~~quarter 2019, predominantly due to lower market sensitive revenue (represents net gains (losses) from trading activities, debt securities, and equity securities), lower other income from higher amortization on renewable energy and community lending

~~included the benefit from the GE Capital business acquisitions in 2016,~~investments and ~~rising interest rates. Noninterest~~lower operating lease income, decreased $353 million, or 11%, from third quarter 2016 due predominantly to lower customer accommodation trading, mortgage banking fees, and insurance income. Noninterest income decreased $1.4 billion, or 14%, from the first nine months of 2016 largely due to the first quarter 2016 sale of our crop insurance business, which resulted in lower insurance and gain on sale income, and the second quarter 2016 gain on the sale of our health benefits services business, as well as lower ~~gains on debt securities~~other fees related to our sale of Eastdil in fourth quarter 2019.

The provision for credit losses increased $2.2 billion from first quarter 2019, predominantly due to a $2.1 billion increase in the allowance for credit losses reflecting forecasted credit deterioration due to the COVID-19 pandemic and ~~customer accommodation trading. The decrease~~higher charge-offs in the oil and gas portfolio driven by the significant decline in oil prices.

Noninterest expense decreased $75 million, or 2%, from first quarter 2019, reflecting the sale of Eastdil, as well as lower personnel expense, lease expense within other noninterest ~~income from the first nine months of 2016 was~~expense, and travel expense within other noninterest expense, partially offset by higher ~~investment banking fees as well as higher lease income~~regulatory and risk related expense within other noninterest expense.

Earnings Performance (continued)

~~related to the GE Capital business acquisitions.~~ Average loans of ~~$463.8~~$484.5 billion in ~~third~~first quarter ~~2017~~2020 increased ~~$9.5~~$8.1 billion, or 2%, from ~~third~~first quarter ~~2016, and average loans~~2019, on broad-based growth across the lines of ~~$465.0 billion in the first nine months of 2017 increased $19.8 billion, or 4%, from the first nine months of 2016. Average loan growth was~~businesses driven by ~~growth in asset backed finance, capital finance, government and institutional banking, middle market banking, and structured real estate, as well as~~draws of revolving lines due to the ~~GE Capital business acquisitions in 2016.~~economic slowdown associated with the COVID-19 pandemic. Average deposits of ~~$463.4~~$456.6 billion in first quarter 2020 increased ~~$22.2~~$46.8 billion, or 5%11%, from ~~third~~first quarter ~~2016~~2019, reflecting an inflow of deposits associated with corporate and ~~$32.4 billion, or 8%, from the first nine months of 2016 reflecting growth in corporate banking,~~ commercial real estate, corporate trust, financial institutions and structured real estate. Noninterest expense increased $128 million, or 3%, from third quarter 2016 and $427 million, or 4%, from the first nine months of 2016, due to higher expenses allocated from Community Banking related to increased project and technology spending on regulatory and compliance related initiatives, and higher expense related to growth initiatives. The provision for credit losses decreased $88 million from third

loan draws.

~~quarter 2016 and $944 million from the first nine months of 2016 driven by improvement in the oil and gas portfolio.~~

Wealth and Investment Management provides a full range of personalized wealth management, investment and retirement products and services to clients across ~~U.S. based~~U.S.-based businesses

including Wells Fargo Advisors, The Private Bank, Abbot Downing, ~~Wells Fargo Institutional Retirement and Trust,~~ and Wells Fargo Asset Management. We deliver financial planning, private banking, credit, investment management and fiduciary services to high-net worth and ultra-high-net worth individuals and families. We also serve clients’ brokerage needs ~~supply retirement and trust services to institutional clients~~ and provide investment management capabilities delivered to global institutional clients through separate accounts and the Wells Fargo Funds. The sale of our IRT business closed on July 1, 2019. For additional information on the sale of our IRT business, including its impact on our AUM and AUA, see the “Earnings Performance – Noninterest Income” section in this Report. Table 4c provides additional financial information for WIM.

Table 4c:Wealth and Investment Management


	Quarter ended Sep 30,							Nine months ended Sep 30,							Quarter ended Mar 31,
(in millions, except average balances which are in billions)	2017			2016		% Change		2017			2016		% Change		2020			2019		% Change
Net interest income	$	1,159		977		19	%	$	3,360		2,852		18	%	$	867		1,101		(21	)%
Noninterest income:
Service charges on deposit accounts	2			5		(60	)	12			15		(20	)	5			4		25
Trust and investment fees:
Brokerage advisory, commissions and other fees	2,241			2,256		(1	)	6,741			6,618		2		2,397			2,124		13
Trust and investment management	718			738		(3	)	2,138			2,168		(1	)	582			676		(14	)
Investment banking ~~(1)~~	(1		)	—		NM		(3		)	(1	)	NM		1			5		(80	)
Total trust and investment fees	2,958			2,994		(1	)	8,876			8,785		1		2,980			2,805		6
Card fees	1			2		(50	)	4			5		(20	)	1			1		—
Other fees	5			4		25		14			13		8		4			4		—
Mortgage banking	(2		)	(2	)	—		(7		)	(6	)	(17	)	(3		)	(3	)	—
Insurance	21			—		NM		63			—		NM		19			17		12
Net gains from trading activities	71			80		(11	)	220			144		53
Net gains (losses) from trading activities															(7		)	19		NM
Net gains on debt securities	2			—		NM		2			1		NM		—			—		NM
Net gains from equity investments	3			5		(40	)	6			7		(14	)
Net gains (losses) from equity securities															(278		)	136		NM
Other income of the segment	26			34		(24	)	71			56		27		127			(5	)	NM
Total noninterest income	3,087			3,122		(1	)	9,261			9,020		3		2,848			2,978		(4	)

Total revenue	4,246			4,099		4		12,621			11,872		6		3,715			4,079		(9	)

Provision (reversal of provision) for credit losses	(1		)	4		NM		2			(8	)	125
Provision for credit losses															8			4		100
Noninterest expense:
Personnel expense	1,983			1,966		1		6,068			5,902		3		1,950			2,197		(11	)
Equipment	—			12		(100	)	20			40		(50	)
Technology and equipment															7			11		(36	)
Net occupancy	108			111		(3	)	323			332		(3	)	113			112		1
Core deposit and other intangibles	74			75		(1	)	219			225		(3	)	3			3		—
FDIC and other deposit assessments	39			44		(11	)	118			106		11		12			14		(14	)
Outside professional services	198			241		(18	)	613			668		(8	)	191			184		4
Operating losses	16			(1	)	NM		81			17		376		9			21		(57	)
Other expense of the segment	688			551		25		1,945			1,727		13		818			761		7
Total noninterest expense	3,106			2,999		4		9,387			9,017		4		3,103			3,303		(6	)
Income before income tax expense and noncontrolling interests	1,141			1,096		4		3,232			2,863		13		604			772		(22	)
Income tax expense	427			415		3		1,206			1,087		11		153			192		(20	)
Net income from noncontrolling interests	4			4		—		11			3		267
Less: Net income (loss) from noncontrolling interests															(12		)	3		NM
Net income	$	710		677		5		$	2,015		1,773		14		$	463		577		(20	)
Average loans	$	72.4		68.4		6		$	71.6		66.4		8		$	78.5		74.4		6
Average deposits	188.1			189.2		(1	)	190.6			185.4		3		151.4			153.2		(1	)

NM – Not meaningful


~~(1)~~	~~Includes syndication and underwriting fees paid to Wells Fargo Securities which are offset in our Wholesale Banking segment.~~

WIM reported net income of ~~$710~~$463 million in ~~third~~first quarter ~~2017, up $33 million from third quarter 2016. Net income for the first nine months of 2017 was $2.0 billion, up $242~~2020, down $114 million, or ~~14%, compared with the same period a year ago. Revenue was up $147 million, or 4%~~20%, from ~~third~~first quarter ~~2016, due to an increase in net interest income, and up $749 million, or 6%, from the first nine months of 2016, resulting from increases in both net interest~~

2019.

~~income and noninterest income.~~ Net interest income ~~increased 19%~~of $867 million in first quarter 2020 decreased $234 million, or 21%, from ~~third~~first quarter 2016 and 18% from the first nine months of 2016, due to higher interest rates and growth in investment securities and loan balances. Noninterest income decreased 1% from third quarter 2016 substantially2019, driven by lower ~~brokerage transaction revenue, and increased 3%~~interest rates.

Noninterest income of $2.8 billion in first quarter 2020 decreased $130 million from ~~the~~ first ~~nine months of 2016 substantially~~quarter 2019, predominantly driven by ~~higher asset-based fees and~~

net losses from equity securities driven by a decline in deferred compensation plan ~~investments (offset in~~investment results (largely offset by lower employee benefits expense), partially offset by ~~lower~~higher retail brokerage advisory fees (priced at the beginning of the quarter) and higher brokerage transaction revenue. ~~Asset-based fees were up~~

Noninterest expense of $3.1 billion in first quarter 2020 decreased $200 million, or 6%, from first quarter 2019, predominantly due to ~~higher brokerage advisory account client assets~~lower personnel expense driven by lower deferred compensation plan expense (largely offset by net losses from equity securities), partially offset by higher ~~market valuations and positive net flows.~~ broker commissions within personnel expense.

Average loans of ~~$72.4~~$78.5 billion in ~~third~~first quarter ~~2017~~2020 increased $4.1 billion, or 6%, from ~~third~~first quarter ~~2016. Average loans in the first nine months of 2017 increased 8% from the same period a year ago. Average loan growth was~~2019, driven by growth in ~~non-conforming~~nonconforming mortgage loans. Average deposits of $151.4 billion in ~~third~~first quarter ~~2017 of $188.1~~2020 decreased $1.8 billion, ~~decreased~~or 1% from third quarter 2016. Average deposits in the first nine months of 2017 increased 3% from the same period a year ago. Noninterest expense was up 4% from both the third quarter and first nine months of 2016, due to higher expenses allocated from Community Banking related to increased project and technology spending on regulatory and compliance related initiatives, and higher broker commissions mainly due to higher brokerage revenue. The increase in noninterest expense from the first nine months of 2016 was also affected by higher deferred compensation plan expense (offset in trading revenue). ~~Total provision for credit losses decreased $5 million from third quarter 2016 driven by lower net charge-offs, and increased $10 million from the first nine months of 2016 driven by higher~~

~~net charge-offs.~~

The following discussions provide additional information for client assets we oversee in our retail brokerage advisory and trust and investment management business lines.

Retail Brokerage Client AssetsBrokerage advisory, commissions and other fees are received for providing full-service and discount brokerage services predominantly to retail brokerage clients. Offering advisory account relationships to our brokerage clients is an important component of our broader strategy of meeting their financial needs. Although a majority of our retail brokerage client assets are in accounts that earn brokerage commissions,

the fees from those accounts generally represent transactional commissions based on the number and size of transactions executed at the client’s direction. Fees ~~earned~~ from advisory accounts are ~~asset-based and depend~~based on ~~changes in~~a percentage of the market value of the ~~client’s~~ assets as of the beginning of the quarter, which vary across the account types based on the distinct services provided, and are affected by investment performance as well as ~~the level of assets resulting from~~asset inflows and outflows. A majority of our brokerage advisory, commissions and other fee income is earned from advisory accounts. Table 4d shows advisory account client assets as a percentage of total retail brokerage client assets at ~~September 30, 2017~~March 31, 2020 and ~~2016.~~2019.

Table 4d:Retail Brokerage Client Assets


	September 30,				March 31,
(in billions)	2017			2016
($ in billions)					2020			2019
Retail brokerage client assets	$	1,612.1		1,483.3	$	1,397.9		1,600.6
Advisory account client assets	521.8			458.3	498.8			546.7
Advisory account client assets as a percentage of total client assets	32		%	31	36		%	34

Retail Brokerage advisory accounts include assets that are financial advisor-directed and separately managed by third-party managers, as well as certain client-directed brokerage assets where we earn a fee for advisory and other services, but do not have investment discretion. ~~These advisory accounts generate fees as a percentage of~~For first quarter 2020and 2019, the ~~market value of the assets, which vary across the account types based on the distinct services provided,~~

~~and are affected by investment performance as well as asset inflows and outflows. For the third quarter and first nine months of 2017 and 2016, the~~ average fee rate by account type ranged from 80 to 120 basis points. Table 4e presents retail brokerage advisory account client assets activity by account type for ~~the third~~first quarter 2020 and ~~first nine months of 2017 and 2016.~~2019.

Table 4e:Retail Brokerage Advisory Account Client Assets


	Quarter ended							Nine months ended						Quarter ended
(in billions)	Balance, beginning of period		Inflows (1)	Outflows (2)		Market impact (3)	Balance, end of period	Balance, beginning of period	Inflows (1)	Outflows (2)		Market impact (3)	Balance, end of period	Balance, beginning of period		Inflows (1)	Outflows (2)		Market impact (3)		Balance, end of period
September 30, 2017
March 31, 2020
Client directed (4)	$	163.8	8.2	(8.9	)	3.7	166.8	159.1	28.5	(30.1	)	9.3	166.8	$	169.4	10.1	(9.6	)	(27.2	)	142.7
Financial advisor directed (5)	131.7		6.7	(5.2	)	6.0	139.2	115.7	23.0	(17.4	)	17.9	139.2	176.3		10.7	(8.6	)	(26.0	)	152.4
Separate accounts (6)	137.7		5.6	(5.0	)	4.7	143.0	125.7	20.1	(17.2	)	14.4	143.0	160.1		6.8	(8.5	)	(24.2	)	134.2
Mutual fund advisory (7)	69.3		3.2	(2.3	)	2.6	72.8	63.3	9.9	(8.0	)	7.6	72.8	83.7		3.2	(4.5	)	(12.9	)	69.5
Total advisory client assets	$	502.5	23.7	(21.4	)	17.0	521.8	463.8	81.5	(72.7	)	49.2	521.8	$	589.5	30.8	(31.2	)	(90.3	)	498.8
September 30, 2016
March 31, 2019
Client directed (4)	$	158.5	9.2	(9.5	)	3.1	161.3	154.7	27.4	(27.7	)	6.9	161.3	$	151.5	7.9	(9.3	)	13.5		163.6
Financial advisor directed (5)	104.2		6.3	(4.7	)	4.7	110.5	91.9	21.4	(13.5	)	10.7	110.5	141.9		7.5	(7.7	)	15.2		156.9
Separate accounts (6)	118.9		6.0	(5.6	)	3.5	122.8	110.4	19.0	(15.6	)	9.0	122.8	136.4		5.6	(6.9	)	13.2		148.3
Mutual fund advisory (7)	62.1		2.2	(2.6	)	2.0	63.7	62.9	6.1	(8.5	)	3.2	63.7	71.3		2.8	(3.2	)	7.0		77.9
Total advisory client assets	$	443.7	23.7	(22.4	)	13.3	458.3	419.9	73.9	(65.3	)	29.8	458.3	$	501.1	23.8	(27.1	)	48.9		546.7


(1)	Inflows include new advisory account assets, contributions, dividends and interest.


(2)	Outflows include closed advisory account assets, withdrawals, and client management fees.


(3)	Market impact reflects gains and losses on portfolio investments.


(4)	Investment advice and other services are provided to client, but decisions are made by the client and the fees earned are based on a percentage of the advisory account assets, not the number and size of transactions executed by the client.


(5)	Professionally managed portfolios with fees earned based on respective strategies and as a percentage of certain client assets.


(6)	Professional advisory portfolios managed by Wells Fargo Asset Management ~~advisors~~ or third-party asset managers. Fees are earned based on a percentage of certain client assets.


(7)	Program with portfolios constructed of load-waived, no-load and institutional share class mutual funds. Fees are earned based on a percentage of certain client assets.

Earnings Performance (continued)

Trust and Investment Client Assets Under Management We earn trust and investment management fees from managing and administering assets, including mutual funds, ~~institutional~~ separate accounts, and personal trust ~~employee benefit trust and agency~~ assets, through our asset management and wealth ~~and~~businesses. Prior to the sale of our IRT business, which closed on July 1, 2019, we also earned fees from managing employee benefit trusts through the retirement ~~businesses.~~business. Our asset management business is conducted by Wells Fargo Asset Management (WFAM), which offers Wells Fargo proprietary mutual funds and manages institutional separate ~~accounts. Our~~accounts, and

our wealth business manages assets for high net worth ~~clients, and our retirement business~~

~~provides total retirement management, investments, and trust and custody solutions tailored to meet the needs of institutional~~ clients. Substantially all of our trust and investment management fee income is earned from AUM where we have discretionary management authority over the investments and generate fees as a percentage of the market value of the AUM. For additional information on the sale of our IRT business, including its impact on our AUM and AUA, see the “Earnings Performance – Noninterest Income” section in this Report. Table 4f presents AUM activity for ~~the third~~first quarter 2020 and ~~first nine months of 2017 and 2016.~~2019.

Table 4f:WIM Trust and Investment – Assets Under Management


	Quarter ended							Nine months ended						Quarter ended
(in billions)	Balance, beginning of period		Inflows (1)	Outflows (2)		Market impact (3)	Balance, end of period	Balance, beginning of period	Inflows (1)	Outflows (2)		Market impact (3)	Balance, end of period	Balance, beginning of period		Inflows (1)	Outflows (2)		Market impact (3)		Balance, end of period
September 30, 2017
March 31, 2020
Assets managed by WFAM (4):
Money market funds (5)	$	94.7	7.7	—		—	102.4	102.6	—	(0.2	)	—	102.4	$	130.6	35.6	—		—		166.2
Other assets managed	392.5		25.4	(31.2	)	7.3	394.0	379.6	89.0	(98.8	)	24.2	394.0	378.2		26.2	(28.6	)	(24.2	)	351.6
Assets managed by Wealth and Retirement (6)	175.6		10.1	(8.7	)	4.0	181.0	168.5	29.5	(29.1	)	12.1	181.0
Assets managed by Wealth and IRT (6)														187.4		7.8	(10.6	)	(21.8	)	162.8
Total assets under management	$	662.8	43.2	(39.9	)	11.3	677.4	650.7	118.5	(128.1	)	36.3	677.4	$	696.2	69.6	(39.2	)	(46.0	)	680.6
September 30, 2016
March 31, 2019
Assets managed by WFAM (4):
Money market funds (5)	$	108.9	7.4	—		—	116.3	123.6	—	(7.3	)	—	116.3	$	112.4	—	(2.9	)	—		109.5
Other assets managed	374.9		31.0	(30.3	)	6.2	381.8	366.1	86.9	(85.2	)	14.0	381.8	353.5		19.3	(21.9	)	16.1		367.0
Assets managed by Wealth and Retirement (6)	164.6		8.4	(7.4	)	3.1	168.7	162.1	25.7	(25.4	)	6.3	168.7
Assets managed by Wealth and IRT (6)														170.7		9.2	(10.4	)	11.9		181.4
Total assets under management	$	648.4	46.8	(37.7	)	9.3	666.8	651.8	112.6	(117.9	)	20.3	666.8	$	636.6	28.5	(35.2	)	28.0		657.9


(1)	Inflows include new managed account assets, contributions, dividends and interest.


(2)	Outflows include closed managed account assets, withdrawals and client management fees.


(3)	Market impact reflects gains and losses on portfolio investments.


(4)	Assets managed by WFAM consist of equity, alternative, balanced, fixed income, money market, and stable value, and include client assets that are managed or sub-advised on behalf of other Wells Fargo lines of business.


(5)	Money Market funds activity is presented on a net inflow or net outflow basis, because the gross flows are not meaningful nor used by management as an indicator of performance.


(6)	Includes $~~5.7~~4.9 billion and $~~7.7~~4.8 billion as of ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019, respectively, of client assets invested in proprietary funds managed by WFAM.

Balance Sheet Analysis

At ~~September 30, 2017,~~March 31, 2020, our assets totaled ~~$1.93~~$1.98 trillion, up ~~$4.8~~$53.8 billion from December 31, ~~2016.~~2019. Asset growth ~~was predominantly driven by growth~~reflected increases in ~~trading assets~~debt securities and ~~investment securities, which increased $14.0~~loans of $4.4 billion and ~~$6.7~~$47.6 billion, respectively, ~~from December 31, 2016,~~ partially offset by a $15.7 billion decrease in ~~loans. Total~~federal funds sold and securities purchased under resale agreements, and a $14.2 billion decrease in equity growth of $6.3 billion from December 31, 2016, was the predominant source that funded our asset growth from December 31, 2016. Equity growth benefited from $8.7 billion in earnings net of dividends paid.securities.

The following discussion provides additional information about the major components of our balance sheet. Information regarding our capital and changes in our asset mix is included in the “Earnings Performance – Net Interest Income” and “Capital Management” sections and Note 1923 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.

~~Investment~~Available-for-Sale and Held-to-Maturity Debt Securities

Table 5:~~Investment~~Available-for-Sale and Held-to-Maturity Debt Securities ~~– Summary~~

September 30, 2017 December 31, 2016
(in millions) Amortized Cost

Net
unrealized
gain (loss)

Fair value
Amortized Cost

Net
unrealized
gain (loss)

Fair value
Available-for-sale securities:

Debt securities $ 269,779
1,538
271,317
309,447
(2,294 ) 307,153
Marketable equity securities 606
287
893
706
505
1,211
Total available-for-sale securities 270,385
1,825
272,210
310,153
(1,789 ) 308,364
Held-to-maturity debt securities 142,423
395
142,818
99,583
(428 ) 99,155
Total investment securities (1) $ 412,808
2,220
415,028
409,736
(2,217 ) 407,519



	March 31, 2020				December 31, 2019
(in millions)	Amortized cost, net (1)		Net unrealized gain (loss)	Fair value	Amortized cost	Net unrealized gain (loss)	Fair value
Available-for-sale (2)	248,187		3,042	251,229	260,060	3,399	263,459
Held-to-maturity (3)	169,909		7,653	177,562	153,933	2,927	156,860
Total	$	418,096	10,695	428,791	413,993	6,326	420,319

(1)

Represents amortized cost of the securities, net of the allowance for credit losses, of $161 million related to available-for-sale debt securities and $11 million related to held-to-maturity debt securities at March 31, 2020. The allowance for credit losses related to available-for-sale and held-to-maturity debt securities was $0 at December 31, 2019, due to our adoption of CECL on January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.


(2)	Available-for-sale debt securities are carried on the balance sheet at fair ~~value.~~ value, which includes the allowance for credit losses, subsequent to the adoption of CECL on January 1, 2020.


(3)	Held-to-maturity debt securities are carried on the balance sheet at amortized ~~cost.~~cost, net of allowance for credit losses, subsequent to the adoption of CECL on January 1, 2020.

Table 5 presents a summary of our ~~investment~~available-for-sale and held-to-maturity debt securities, ~~portfolio,~~ which increased ~~$6.7~~$3.7 billion in balance sheet carrying value from December 31, ~~2016,~~2019, predominantly due to purchases of federal agency mortgage-backed securities, partially offset by sales and paydowns on other security classes including securities of U.S. treasury and federal agencies and mortgage-backed securities.higher net unrealized gains.

The total net unrealized gains on available-for-sale debt securities were ~~$1.8~~$3.0 billion at ~~September 30, 2017, up~~March 31, 2020, down from net unrealized ~~losses~~gains of ~~$1.8~~$3.4 billion at December 31, ~~2016, primarily due to lower long-term interest rates, tighter~~2019, driven by wider credit spreads, ~~and the transfer of available-for-sale securities to held-to-maturity.~~which were primarily offset by lower interest rates. For a discussion of our investment management objectives and practices, see the “Balance Sheet Analysis” section in our ~~2016~~2019 Form 10-K. Also, see the “Risk Management – Asset/Liability Management” section in this Report for information on our use of investments to manage liquidity and interest rate risk.

~~We analyze~~After adoption of CECL, we recorded an allowance for credit losses on available-for-sale and held-to-maturity debt securities. Total provision for credit losses on debt securities ~~for other-than-temporary impairment (OTTI) quarterly or more often if a potential loss-triggering event occurs. Of the $293~~was $172 million in ~~OTTI write-downs recognized in earnings in the~~ first nine months of 2017, $107 million related to debt securities, $5 million related to marketable equity securities, which are included in available-for-sale securities, and $181 million related to nonmarketable equity investments, which are included in other assets. OTTI write-downs recognized in earnings related to oil and gas investments totaled $77 million in the first nine months of 2017, of which $24 million related to investment securities and $53 million related to nonmarketable equity investments.quarter 2020. For a discussion of our ~~OTTI~~ accounting policies relating to the allowance for credit losses on debt securities and underlying considerations and analysis, see Note 1 (Summary of Significant Accounting Policies) ~~to Financial Statements in our 2016 Form 10-K~~ and Note ~~4 (Investment~~5 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report.

At ~~September 30, 2017, investment~~March 31, 2020, debt securities included ~~$59.1~~$52.4 billion of municipal bonds, of which ~~95.9%~~97.2% were rated “A-” or better based ~~largely~~predominantly on external ~~and, in some cases, internal~~ ratings. Additionally, some of the debt securities in our total municipal

bond portfolio are guaranteed against loss by bond insurers. These guaranteed bonds are predominantly investment grade and were generally underwritten in accordance with our own investment standards prior to the determination to purchase, without relying on the bond insurer’s guarantee in making the investment decision. The credit quality of our municipal bond holdings are monitored as part of our ongoing ~~impairment analysis.~~evaluation of the appropriateness of the allowance for credit losses on debt securities.

The weighted-average expected maturity of debt securities available-for-sale was ~~6.8~~4.2 years at ~~September 30, 2017.~~March 31, 2020. The expected remaining maturity is shorter than the remaining contractual maturity for the ~~59%~~66% of this portfolio that is ~~MBS~~mortgage-backed securities (MBS) because borrowers generally have the right to prepay obligations before the underlying mortgages mature. The estimated effects of a 200 basis point increase or decrease in interest rates on the fair value and the expected remaining maturity of the MBS available-for-sale portfolio are shown in Table 6.

Table 6:Mortgage-Backed Securities ~~Available for Sale~~

Available-for-Sale


(in billions)	Fair value		Net unrealized gain (loss)		Expected remaining maturity (in years)	Fair value		Net unrealized gain (loss)		Expected remaining maturity (in years)
At September 30, 2017
At March 31, 2020
Actual	$	161.2	0.8		6.5	$	164.6	5.5		3.5
Assuming a 200 basis point:
Increase in interest rates	143.9		(16.5	)	8.5	150.2		(8.9	)	5.6
Decrease in interest rates	167.4		7.0		2.6	168.2		9.1		3.2

The weighted-average expected remaining maturity of debt securities held-to-maturity (HTM) was ~~6.5~~4.5 years at ~~September 30, 2017.~~March 31, 2020. HTM debt securities are measured at amortized cost and, therefore, changes in the fair value of our held-to-maturity MBS resulting from changes in interest rates are not recognized in earnings. See Note ~~4 (Investment~~5 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report for a summary of ~~investment~~debt securities by security type.

Balance Sheet Analysis (continued)

Loan Portfolios

Table 7 provides a summary of total outstanding loans by portfolio segment. Total loans ~~decreased $15.7~~increased $47.6 billion from December 31, ~~2016,~~2019, due to an increase in commercial loans.

Commercial loans increased $52.0 billion from December 31, 2019, predominantly driven by growth in our commercial and industrial loan portfolio, reflecting ~~paydowns, a continued decline in~~significant draws on revolving

~~junior lien mortgage~~lines of credit and additional funding requests within our Corporate & Investment Banking and Commercial Banking businesses due to the impact of COVID-19.

Consumer loans were down $4.4 billion from December 31, 2019, primarily due to a decrease in the credit card portfolio due to seasonality and ~~an expected decline in automobile loans~~fewer new accounts and lower consumer spending as a result of the ~~effect~~impact of ~~tighter underwriting standards implemented last year resulted in lower origination volume.~~COVID-19.

Table 7:Loan Portfolios


(in millions)	September 30, 2017			December 31, 2016	March 31, 2020		December 31, 2019
Commercial	$	500,150		506,536	$	567,735	515,719
Consumer	451,723			461,068	442,108		446,546
Total loans	$	951,873		967,604	$	1,009,843	962,265
Change from prior year-end	$	(15,731	)	51,045	$	47,578	9,155

~~A discussion of average~~Average loan balances and a comparative detail of average loan balances is included in Table 1 under “Earnings Performance – Net Interest Income” earlier in this Report. Additional information on total loans outstanding by portfolio segment and class of financing receivable is included in the “Risk Management – Credit Risk Management” section in this Report. Period-end balances and other loan related

information are in Note 56 (Loans

and Related Allowance for Credit Losses) to Financial Statements in this Report.

~~Table 8 shows~~See the “Balance Sheet Analysis – Loan Portfolios” section in our 2019 Form 10-K for information regarding contractual loan maturities ~~for loan categories normally not subject to regular periodic principal reduction~~ and the ~~contractual~~ distribution of loans ~~in those categories~~ to changes in interest rates.

~~Table 8:Maturities for Selected Commercial Loan Categories~~

September 30, 2017 December 31, 2016
(in millions)
Within
one
year

After one
year
through
five years

After
five
years

Total

Within
one
year

After one
year
through
five years

After
five
years

Total
Selected loan maturities:
Commercial and industrial $ 98,776
203,785
25,383
327,944
105,421
199,211
26,208
330,840
Real estate mortgage 19,720
66,245
42,510
128,475
22,713
68,928
40,850
132,491
Real estate construction 10,431
12,801
1,288
24,520
9,576
13,102
1,238
23,916
Total selected loans $ 128,927
282,831
69,181
480,939
137,710
281,241
68,296
487,247
Distribution of loans to changes in interest
rates:

Loans at fixed interest rates $ 18,405
28,261
26,234
72,900
19,389
29,748
26,859
75,996
Loans at floating/variable interest rates 110,522
254,570
42,947
408,039
118,321
251,493
41,437
411,251
Total selected loans $ 128,927
282,831
69,181
480,939
137,710
281,241
68,296
487,247

Deposits

Deposits were ~~$1.3~~$1.4 trillion at ~~September 30, 2017,~~March 31, 2020, up ~~$627 million~~$53.9 billion from December 31, ~~2016,~~2019, reflecting growth across all deposit gathering businesses driven by seasonality, customers’ flight to quality following the emergence of COVID-19, as well as the inflow of deposits associated with corporate and commercial loan draws. The increase in ~~retail~~ deposits ~~and Treasury institutional~~was partially offset by actions taken to manage to the asset cap resulting in declines in other

time deposits driven by lower brokered certificates of deposit ~~partially offset by lower wealth~~(CDs) and ~~commercial deposits.~~ deposits in non-U.S. offices.

Table 9

8 provides additional information regarding deposits. Information regarding the impact of deposits on net interest income and a comparison of average deposit balances is provided in the “Earnings Performance – Net Interest Income” section and Table 1 earlier in this Report.

Table 9:8:Deposits


($ in millions)	Sep 30, 2017		% of total deposits		Dec 31, 2016		% of total deposits		% Change		Mar 31, 2020		% of total deposits		Dec 31, 2019		% of total deposits		% Change
Noninterest-bearing	$	366,528	28	%	$	375,967	29	%	(3	)	$	379,678	28	%	$	344,496	26	%	10
Interest-bearing checking	47,366		4		49,403		4		(4	)	71,668		5		62,814		5		14
Market rate and other savings	687,323		52		687,846		52		—		781,051		57		751,080		57		4
Savings certificates	21,396		2		23,968		2		(11	)	28,431		2		31,715		2		(10	)
Other time deposits	66,884		5		52,649		4		27		72,928		5		78,609		6		(7	)
Deposits in foreign offices (1)	117,209		9		116,246		9		1
Deposits in non-U.S. offices (1)											42,776		3		53,912		4		(21	)
Total deposits	$	1,306,706	100	%	$	1,306,079	100	%	—		$	1,376,532	100	%	$	1,322,626	100	%	4


(1)	Includes Eurodollar sweep balances of ~~$72.8~~$22.0 billion and ~~$74.8~~$34.2 billion at ~~September 30, 2017,~~March 31, 2020, and December 31, ~~2016,~~2019, respectively.

Fair Value of Financial Instruments

We use fair value measurements to record fair value adjustments to certain financial instruments and to determine fair value disclosures. See the “Critical Accounting Policies” section in our ~~2016~~2019 Form 10-K and Note 16 (Fair Values of Assets and Liabilities) to Financial Statements in this Report for a description of our critical accounting policy related to fair value of financial instruments and a discussion of our fair value measurement techniques.

Table 109 presents the summary of the fair value of financial instruments recorded at fair value on a recurring basis, and the amounts measured using significant Level 3 inputs (before derivative netting adjustments). The fair value of the remaining assets and liabilities were measured using valuation methodologies involving market-based or market-derived information (collectively Level 1 and 2 measurements).

Table ~~10:~~9:Fair Value Level 3 Summary


	September 30, 2017				December 31, 2016		March 31, 2020				December 31, 2019
($ in billions)	Total balance			Level 3 (1)	Total balance	Level 3 (1)	Total balance			Level 3 (1)	Total balance	Level 3 (1)
Assets carried at fair value	$	407.9		24.1	436.3	23.5	$	411.5		23.3	428.6	24.3
As a percentage of total assets	21		%	1	23	1	21		%	1	22	1
Liabilities carried at fair value	$	28.6		2.0	30.9	1.7	$	33.2		1.3	26.5	1.8
As a percentage of total liabilities	2		%	*	2	*	2		%	*	2	*

* Less than 1%.


(1)	Before derivative netting adjustments.

See Note 1316 (Fair Values of Assets and Liabilities) to Financial Statements in this Report for additional information on fair value measurements and a description of the Level 1, 2 and 3 fair value hierarchy.

Equity

Total equity was ~~$206.8~~$183.3 billion at ~~September 30, 2017,~~March 31, 2020, compared with ~~$200.5~~$188.0 billion at December 31, ~~2016.~~2019. The ~~increase~~decrease was predominantly driven by ~~a $8.7~~common stock repurchases of $3.4 billion, ~~increase in retained earnings from earnings net~~preferred stock redemptions of $2.5 billion, and dividends ~~paid,~~of $2.4 billion, partially offset by athe issuance of preferred stock of $2.0 billion and net ~~reduction in common stock due to repurchases.~~

income of $653 million.

Off-Balance Sheet Arrangements

In the ordinary course of business, we engage in financial transactions that are not recorded on the balance sheet, or may be recorded on the balance sheet in amounts that are different from the full contract or notional amount of the transaction. Our off-balance sheet arrangements include commitments to lend and purchase debt and equity securities, transactions with unconsolidated entities, guarantees, derivatives, and other commitments. These transactions are designed to (1) meet the financial needs of customers, (2) manage our credit, market or liquidity risks, and/or (3) diversify our funding sources. For additional information on our contractual obligations that may require future cash payments, see the “Off-Balance Sheet Arrangements – Contractual Cash Obligations” section in our 2019 Form 10-K.

Commitments to Lend ~~and Purchase Securities~~

We enter into commitments to lend ~~funds~~ to customers, which are usually at a stated interest rate, if funded, and for specific purposes and time periods. When we ~~make~~enter into commitments, we are exposed to credit risk. ~~However, the~~The maximum credit risk for these commitments will generally be lower than the contractual amount because a significant portion of these commitments ~~is expected to expire without being used by the customer.~~are not funded. For more information, ~~on lending commitments,~~ see Note 56 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

Commitments to Purchase Debt and Equity Securities

We ~~also~~ enter into commitments to purchase securities under resale agreements. We also may enter into commitments to purchase debt and equity securities to provide capital for customers’ funding, liquidity or other future needs. For more information, ~~on commitments to purchase securities under resale agreements,~~ see Note ~~3 (Federal Funds Sold, Securities Purchased under Resale Agreements~~13 (Guarantees, Pledged Assets and Collateral, and Other ~~Short-Term Investments)~~Commitments) to Financial Statements in this Report.

Transactions with Unconsolidated Entities

In the normal course of business, we enter into various types of on- and off-balance sheet transactions with special purpose entities (SPEs), which are corporations, trusts, limited liability companies or partnerships that are established for a limited purpose. Generally, SPEs are formed in connection with securitization transactions and are considered variable interest entities (VIEs). For more information, ~~on securitizations, including sales proceeds and cash flows from securitizations,~~ see Note 710 (Securitizations and Variable Interest Entities) to Financial Statements in this Report.

Guarantees and ~~Certain Contingent~~Other Arrangements

Guarantees are contracts that contingently require us to make payments to a guaranteed party based on an event or a change in an underlying asset, liability, rate or index. Guarantees are generally in the form of standby letters of credit, ~~securities lending and other indemnifications,~~direct pay letters of credit, written ~~put~~ options, recourse obligations, exchange and clearing house guarantees, indemnifications, and other types of similar arrangements. For more information, ~~on guarantees and certain contingent arrangements,~~ see Note 1013 (Guarantees, Pledged Assets and ~~Collateral)~~Collateral, and Other Commitments) to Financial Statements in this Report.

Derivatives

We use derivatives to manage exposure to market risk, including interest rate risk, credit risk and foreign currency risk, and to assist customers with their risk management objectives. Derivatives are recorded on the balance sheet at fair value, and volume can be measured in terms of the notional amount, which is generally not exchanged, but is used only as the basis on which interest and other payments are determined. The notional amount is not recorded on the balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. For more information, ~~on derivatives,~~ see Note 1215 (Derivatives) to Financial Statements in this Report.

~~Other Commitments~~

We also have other off-balance sheet transactions, including obligations to make rental payments under noncancelable operating leases and commitments to purchase certain debt and equity securities. Our operating lease obligations are discussed in Note 7 (Premises, Equipment, Lease Commitments and Other Assets) to Financial Statements in our 2016 Form 10-K. For more information on commitments to purchase debt and equity securities, see the “Off-Balance Sheet Arrangements – Contractual Cash Obligations” section in our 2016 Form 10-K.

Risk Management

Wells Fargo manages a variety of risks that can significantly affect our financial performance and our ability to meet the expectations of our customers, ~~stockholders,~~shareholders, regulators and other stakeholders. Among the risks that we manage are conduct risk, operational risk, credit risk, and asset/liability management related risks, which include interest rate risk, market risk, liquidity risk, and funding related risks. We operate under a Board-level approved risk framework which outlines our company-wide approach to risk management and oversight, and describes the structures and practices employed to manage current and emerging risks inherent to Wells Fargo. For more information about how we manage ~~these risks,~~risk, see the “Risk Management” section in our ~~2016~~2019 Form 10-K. The discussion that follows ~~provides an update regarding these risks.~~

~~Conduct Risk Management~~

~~Our Board oversees the alignment~~supplements our discussion of ~~team member conduct to the Company’s risk appetite (which the Board approves annually) and culture as reflected in our~~ ~~Vision and Values~~ and Code of Ethics and Business Conduct. The Board’s Risk Committee has primary oversight responsibility for enterprise-wide conduct risk, while certain other Board committees have primary oversight responsibility for specific components of conduct risk.

At the management ~~level, several committees have primary oversight responsibility for key elements~~ of conduct risk, including internal investigations, sales practices oversight, complaints oversight, and ethics oversight. These management-level committees have escalation and informational reporting paths to the relevant Board committee.

Our Conduct Management Office, which reports to our Chief Risk Officer and has an informational reporting path to the Board's Risk Committee, is responsible for fostering and promoting an enterprise-wide culture of prudent conduct risk management and compliance with internal directives, rules, regulations, and regulatory expectations throughout the Company and to provide assurance that the Company’s internal operations and its treatment of customers and other external stakeholders are safe and sound, fair, and ethical.

~~Operational Risk Management~~

Operational risk is the risk of loss resulting from inadequate or failed internal controls and processes, people and systems, or resulting from external events. These losses may be caused by events such as fraud, breaches of customer privacy, business disruptions, vendors that do not adequately or appropriately perform their responsibilities, and regulatory fines and penalties.

Information security is a significant operational risk for financial institutions such as Wells Fargo, and includes the risk of losses resulting from cyber attacks. Wells Fargo and other financial institutions continue to be the target of various evolving and adaptive cyber attacks, including malware and denial-of-service, as part of an effort to disrupt the operations of financial institutions, potentially test their cybersecurity capabilities, or obtain confidential, proprietary or other information. Cyber attacks have also focused on targeting the infrastructure of the internet, causing the widespread unavailability of websites and degrading website performance. Wells Fargo has not experienced any material losses relating to these or other cyber attacks. Addressing cybersecuritycertain risks ~~is a priority for Wells Fargo, and we continue to develop and enhance our controls, processes and systems~~contained in ~~order to protect our networks, computers, software and data from attack, damage or unauthorized access. We are~~

also proactively involved in industry cybersecurity efforts and working with other parties, including our third-party service providers and governmental agencies, to continue to enhance defenses and improve resiliency to cybersecurity threats. See the “Risk ~~Factors”~~Management” section in our ~~2016~~2019 Form ~~10-K for additional information regarding the risks associated with a failure or breach of our operational or security systems or infrastructure, including as a result of cyber attacks.~~

10-K.

Credit Risk Management

We define credit risk as the risk of loss associated with a borrower or counterparty default (failure to meet obligations in accordance with agreed upon terms). Credit risk exists with many of our assets and exposures such as debt security holdings, certain derivatives, and loans.

The Board’s Credit Committee has primary oversight responsibility for credit risk. At the management level, Credit Risk, which is part of the Company’s Independent Risk Management (IRM) organization, has primary oversight responsibility for credit risk. Credit Risk reports to the Chief Risk Officer (CRO) and also provides periodic reports related to credit risk to the Board’s Credit Committee.

Actions to Support Customers During the COVID-19 Pandemic

In response to the COVID-19 pandemic, we have provided accommodations to our customers, including fee reversals for consumer and small business deposit customers, and fee waivers, payment deferrals, and other expanded assistance for mortgage, credit card, automobile, small business, personal and commercial lending customers. We have also provided significant credit to our customers. In March 2020, our commercial customers drew over $80 billion on revolving lines of credit.

From March 9 through April 24, 2020, we helped more than 1.7 million consumer, small business, and commercial customers by deferring payments, reversing and waiving fees, and offering maturity date extensions. We deferred approximately 1.4 million payments, representing more than $4.6 billion of principal and interest payments, of which approximately 50% related to real estate 1-4 family mortgage loans that we service for others. Additionally, we provided over 1.8 million fee waivers exceeding $75 million. For commercial distribution and automobile finance customers, we provided over 175,000 maturity date extensions, representing approximately $6.3 billion of outstanding principal and interest. The accommodations provided to our customers were not limited to customers that were past due. In addition, we do not plan on retaining fees from loans made in connection with the Paycheck Protection Program.

On March 25, 2020, the U.S. Senate approved the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), a bill designed to provide a wide range of economic relief to consumers and businesses in the U.S. In addition, the CARES Act provides banks optional, temporary relief from accounting for certain loan modifications as troubled debt restructurings (TDRs). The modifications must be related to the adverse effects of COVID-19 and certain other criteria are required to be met to apply the relief. In first quarter 2020, we elected to apply the TDR relief provided by the CARES Act, which expires no later than December 31, 2020.

On April 7, 2020, federal banking regulators issued the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) (the Interagency Statement). The

Interagency Statement provides additional TDR relief as it clarifies that it is not necessary to consider the impact of COVID-19 on the financial condition of a borrower in connection with short-term (e.g., six months) loan modifications related to COVID-19 provided the borrower is current at the date the modification program is implemented. For additional information regarding the TDR relief provided by the CARES Act and the clarifying TDR accounting guidance from the Interagency Statement, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report

The TDR relief provided under the CARES Act, as well as from the Interagency Statement, does not change our processes for monitoring the credit quality of our loan portfolios or for updating our measurement of the allowance for credit losses for loans based on expected losses.

Additionally, our election to apply the TDR relief provided by the CARES Act and the Interagency Statement impacts our regulatory capital ratios as these loan modifications related to COVID-19 are not adjusted to a higher risk-weighting normally required with TDR classification.

Loan Portfolios

The following discussion focuses on our loan portfolios, which represent the largest component of assets on our balance sheet for which we have credit risk. Table 1110 presents our total loans outstanding by portfolio segment and class of financing receivable.

Table ~~11:~~10:Total Loans Outstanding by Portfolio Segment and Class of Financing Receivable


(in millions)	Sep 30, 2017		Dec 31, 2016	Mar 31, 2020		Dec 31, 2019
Commercial:
Commercial and industrial	$	327,944	330,840	$	405,020	354,125
Real estate mortgage	128,475		132,491	122,767		121,824
Real estate construction	24,520		23,916	20,812		19,939
Lease financing	19,211		19,289	19,136		19,831
Total commercial	500,150		506,536	567,735		515,719
Consumer:
Real estate 1-4 family first mortgage	280,173		275,579	292,920		293,847
Real estate 1-4 family junior lien mortgage	41,152		46,237	28,527		29,509
Credit card	36,249		36,700	38,582		41,013
Automobile	55,455		62,286	48,568		47,873
Other revolving credit and installment	38,694		40,266	33,511		34,304
Total consumer	451,723		461,068	442,108		446,546
Total loans	$	951,873	967,604	$	1,009,843	962,265

We manage our credit risk by establishing what we believe are sound credit policies for underwriting new business, while monitoring and reviewing the performance of our existing loan portfolios. We employ various credit risk management and monitoring activities to mitigate risks associated with multiple risk factors affecting loans we hold, could acquire or originate including:

Loan concentrations and related credit quality

Counterparty credit risk

Economic and market conditions

Legislative or regulatory mandates

Changes in interest rates

Risk Management - Credit Risk Management (continued)

Merger and acquisition activities

Reputation risk

Our credit risk management oversight process is governed centrally, but provides for decentralized management and accountability by our lines of business. Our overall credit process

includes comprehensive credit policies, disciplined credit underwriting, frequent and detailed risk measurement and modeling, extensive credit training programs, and a continual loan review and audit process.

A key to our credit risk management is adherence to a well-controlled underwriting process, which we believe is appropriate for the needs of our customers as well as investors who purchase the loans or securities collateralized by the loans.

Credit Quality Overview~~Solidcredit~~Credit quality ~~continued~~ in ~~third~~first quarter ~~2017, as our net charge-off rate remained low at 0.30% (annualized) of average total loans. We continued~~2020 declined due to ~~benefit from improvements in~~ the ~~performance of our residential real estate portfolio as well as reduced losses in our oil and gas portfolio. In particular:~~

~~Nonaccrual loans were~~ ~~$8.6 billion~~ at ~~September 30, 2017, down from~~ ~~$10.4 billion~~ at ~~December 31, 2016. Commercial nonaccrual loans~~ ~~declined~~ to ~~$3.1 billion~~ at ~~September 30, 2017, compared with~~ ~~$4.1 billion~~ at ~~December 31, 2016, and consumer nonaccrual loans~~ ~~declined~~ to ~~$5.5 billion~~ at ~~September 30, 2017, compared with~~ ~~$6.3 billion~~ at ~~December 31, 2016. The~~ ~~decline~~ in consumer nonaccrual loans reflected an improved housing market, while the decline in commercial nonaccrual loans was predominantly driven by loans in our oil and gas portfolio. Nonaccrual loans represented ~~0.91%~~ ~~of total loans at~~ ~~September 30, 2017, compared with~~ ~~1.07%~~ at ~~December 31, 2016~~.

~~Net charge-offs (annualized) as a percentage of average total loans decreased to~~ ~~0.30%~~ ~~in both the~~ ~~third~~ ~~quarter and~~ ~~first nine months of 2017, compared with~~ ~~0.33%~~ ~~and~~ ~~0.37%~~ ~~in the same periods a year ago.Net charge-offs (annualized) as a percentage of our average commercial and consumer portfolios were~~ ~~0.09%~~ ~~and~~ ~~0.53%~~ ~~in the~~ ~~third~~ ~~quarter and~~ ~~0.09%~~ ~~and~~ ~~0.54%~~ ~~in the~~ ~~first nine months of 2017, respectively, compared with~~ ~~0.17%~~ ~~and~~ ~~0.51%~~ ~~in the~~ ~~third~~ ~~quarter and~~ ~~0.22%~~ ~~and~~ ~~0.52%~~ ~~in the~~ ~~first nine months of 2016~~.

~~Loans that are not government insured/guaranteed and 90 days or more past due and still accruing were$38 million~~ ~~and~~ ~~$923 million~~ ~~in our commercial and consumer portfolios, respectively, at~~ ~~September 30, 2017, compared with~~ ~~$64 million~~ ~~and~~ ~~$908 million~~ at ~~December 31, 2016~~.

~~Our provision for credit losses was~~ ~~$717 million~~ ~~and~~ ~~$1.9 billion~~ ~~in the~~ ~~third~~ ~~quarter and~~ ~~first nine months of 2017, respectively, compared with~~ ~~$805 million~~ ~~and~~ ~~$3.0 billion~~ ~~for the same periods a year ago.~~

~~The allowance for credit losses totaled~~ ~~$12.1 billion, or~~ ~~1.27%~~ ~~of total loans, at~~ ~~September 30, 2017, down from~~ ~~$12.5 billion, or~~ ~~1.30%, at~~ ~~December 31, 2016~~.

During third quarter 2017, Hurricanes Harvey, Irma and Maria caused considerable damage in several geographic markets where the Company has significant lending exposure. The impact was in both our commercial and consumer lending portfolios. Based on our analysis to dateeffect of the level of insurance coverage, types of loans, location, and potential damage to collateral, we believe the ultimate collectability of these loans will be impacted. Our allowance for credit losses at September 30, 2017 included $450 million for coverage ofCOVID-19 pandemic on market conditions, which impacted our preliminary estimate of potential hurricane-related losses. We will continue to assess the impact to our customers and our business as a result of the hurricanes and refine our estimates as more information becomes available. However, in light of the ongoing recovery challenges in Puerto Rico after Hurricane Maria, it may take longer to assess the hurricane’s impact on our portfolios there.customer base. First quarter 2020 results reflected:

~~We are still evaluating the impact on our portfolio from the California wildfires that occurred in October 2017.~~

•

Nonaccrual loans were $6.2 billion at March 31, 2020, up from $5.3 billion at December 31, 2019, largely driven by a $585 million increase in commercial real estate and commercial and industrial nonaccrual loans, as the effect of the COVID-19 pandemic on market conditions began to impact our customer base. Commercial nonaccrual loans increased to $2.9 billion at March 31, 2020, compared with $2.3 billion at December 31, 2019, and consumer nonaccrual loans increased to $3.3 billion at March 31, 2020, compared with $3.1 billion at December 31, 2019. Nonaccrual loans represented 0.61% of total loans at March 31, 2020, compared with 0.56% at December 31, 2019.


•	Net loan charge-offs (annualized) as a percentage of our average commercial and consumer loan portfolios were 0.25% and 0.53% in first quarter 2020, respectively, compared with 0.11% and 0.51% in first quarter 2019.


•	Loans that are not government insured/guaranteed and 90 days or more past due and still accruing were $53 million and $828 million in our commercial and consumer portfolios, respectively, at March 31, 2020, compared with $78 million and $855 million at December 31, 2019.

•

Our provision for credit losses for loans was $3.8 billion in first quarter 2020, compared with $845 million for the same period a year ago. The increase in provision for credit losses for loans in first quarter 2020, compared with the same period a year ago, reflected an increase in the allowance for credit losses for loans due to forecasted credit deterioration from the impact of the COVID-19 pandemic, and higher net loan charge-offs primarily due to the impact of the recent sharp decline in oil prices on our oil and gas portfolio.


•	The allowance for credit losses for loans totaled $12.0 billion, or 1.19% of total loans, at March 31, 2020, up from $10.5 billion, or 1.09%, at December 31, 2019.

Additional information on our loan portfolios and our credit quality trends follows.

~~PURCHASED CREDIT-IMPAIRED (PCI) LOANS~~Loans acquired with evidence of credit deterioration since their origination and where it is probable that we will not collect all contractually required principal and interest payments are PCI loans. Substantially all of our PCI loans were acquired in the Wachovia acquisition on December 31, 2008. PCI loans are recorded at fair value at the date of acquisition, and the historical allowance for credit losses related to these loans is not carried over. The carrying value of PCI loans at September 30, 2017, totaled $13.6 billion, compared with $16.7 billion at December 31, 2016, and $58.8 billion at December 31, 2008. The decrease from December 31, 2016, was due in part to higher prepayment trends observed in our Pick-a-Pay PCI portfolio, as home price appreciation and the resulting reduction in loan to collateral value ratios enabled more borrowers to qualify for refinancing options, as well as the sale of $569 million of Pick-a-Pay PCI loans in second quarter 2017. PCI loans are considered to be accruing due to the existence of the accretable yield amount, which represents the cash expected to be collected in excess of their carrying value, and not based on consideration given to contractual interest payments. The accretable yield at September 30, 2017, was $9.2 billion.

A nonaccretable difference is established for PCI loans to absorb losses expected on the contractual amounts of those loans in excess of the fair value recorded at the date of acquisition. Amounts absorbed by the nonaccretable difference do not affect the income statement or the allowance for credit losses. Since December 31, 2008, we have released $13.6 billion in nonaccretable difference, including $11.6 billion transferred from the nonaccretable difference to the accretable yield due to decreases in our initial estimate of loss on contractual amounts, and $2.0 billion released to income through loan resolutions. Also, we have provided $1.7 billion for losses on certain PCI loans or pools of PCI loans that have had credit-related decreases to cash flows expected to be collected. The net result is an $11.9 billion reduction from December 31, 2008, through September 30, 2017, in our initial projected losses of $41.0 billion on all PCI loans acquired in the Wachovia acquisition. At September 30, 2017, $454 million in nonaccretable difference remained to absorb losses on PCI loans.

For additional information on PCI loans, see the “Risk Management – Credit Risk Management – Real Estate 1-4 Family First and Junior Lien Mortgage Loans – Pick-a-Pay Portfolio” section in this Report, Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2016 Form 10-K, and Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

Significant Loan Portfolio ReviewsMeasuring and monitoring our credit risk is an ongoing process that tracks delinquencies, collateral values, ~~FICO~~Fair Isaac Corporation (FICO) scores, economic trends by geographic areas, loan-level risk grading for certain portfolios (typically commercial) and other indications of credit risk. Our credit risk monitoring process is designed to enable early identification of developing risk and to support our determination of an appropriate allowance for credit losses. The following discussion provides additional characteristics and analysis of our

significant portfolios. See Note 56 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report for more analysis and credit metric information for each of the following portfolios.

COMMERCIAL AND INDUSTRIAL LOANS AND LEASE FINANCINGFor purposes of portfolio risk management, we aggregate commercial and industrial loans and lease financing according to market segmentation and standard industry codes. We generally subject commercial and industrial loans and lease financing to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to ~~regulatory~~federal banking regulators’ definitions of pass and criticized categories with the criticized ~~divided between~~category including special mention, substandard, doubtful, and loss categories.

The commercial and industrial loans and lease financing portfolio totaled ~~$347.2~~$424.2 billion, or ~~36%~~42% of total loans, at ~~September 30, 2017.~~March 31, 2020. The ~~annualized~~ net charge-off rate (annualized) for this portfolio was ~~0.15%~~0.36% in ~~both the third~~first quarter ~~and first nine months of 2017,~~2020, compared with ~~0.30% and 0.36%~~0.16% for the same ~~periods~~period a year ago. At ~~September 30, 2017, 0.71%~~March 31, 2020, and December 31, 2019, 0.45% and 0.44% of this portfolio was nonaccruing, ~~compared with 0.95% at~~respectively. Nonaccrual loans in this portfolio increased $270 million from December 31, ~~2016, reflecting a decrease of $853 million in nonaccrual loans, predominantly~~2019, due to ~~improvement in~~ the ~~oil and gas portfolio.~~effect of the COVID-19 pandemic on market conditions, which impacted our customer base. Also, ~~$20.0~~$20.5 billion of the commercial and industrial loan and lease financing portfolio was internally classified as criticized in accordance with regulatory guidance at ~~September 30, 2017,~~March 31, 2020, compared with ~~$24.0~~$16.6 billion at December 31, ~~2016.~~ 2019, reflecting the effect of the COVID-19 pandemic on market conditions, which impacted our customer base.

The ~~decrease in criticized loans, which also includes the decrease in nonaccrual loans, was primarily due to improvement in the oil and gas portfolio.~~

~~Most~~majority of our commercial and industrial loans and lease financing portfolio is secured by short-term assets, such as accounts receivable, inventory and debt securities, as well as long-lived assets, such as equipment and other business assets. Generally, the collateral securing this portfolio represents a secondary source of repayment.

Table 1211 provides ~~a breakout of~~our commercial and industrial loans and lease financing by industry, and includes ~~$59.7~~non-U.S. loans of $79.9 billion and $71.7 billion at March 31, 2020, and December 31, 2019, respectively. Significant industry concentrations of non-U.S. loans included $36.8 billion and $31.2 billion in the financials except banks category, and $20.2 billion and $19.9 billion in the banks category at March 31, 2020, and December 31, 2019, respectively. The oil, gas and pipelines category included $1.6 billion of ~~foreign~~non-U.S. loans at ~~September 30, 2017. Foreign~~both March 31, 2020, and December 31, 2019. The industry categories are based on the North American Industry Classification System.

Loans to financials except banks, our largest industry concentration, were $126.3 billion, or 13% of total outstanding loans, ~~totaled $19.4~~at March 31, 2020, compared with $117.3 billion, ~~within the investor~~or 12% of total outstanding loans, at December 31, 2019. This industry category ~~$16.2 billion within the financial institutions category and $1.4 billion within the oil and gas category.~~

~~The investors category includes~~is comprised of loans to ~~special purpose~~investment firms, financial vehicles, ~~(SPVs) formed by sponsoring entities to~~and non-bank creditors, including those that invest in financial assets backed predominantly by commercial ~~and~~or residential real estate or ~~corporate cash flow,~~consumer loan assets. We had $83.1 billion and $75.2 billion of loans originated by our Asset Backed Finance (ABF) lines of business at March 31, 2020, and December 31, 2019, respectively. These ABF loans are ~~repaid from the asset cash flows or the sale of assets by the SPV. We limit loan amounts~~limited to a percentage of the value of the underlying financial assets ~~as determined by us, based on analysis of~~considering underlying credit risk, ~~and other factors such as~~ asset duration, and ongoing performance. These ABF loans may also have other features to manage credit risk such as cross-collateralization, credit enhancements, and contractual re-margining of collateral supporting the loans. Loans to financials except banks included

~~We provide financial institutions with a variety~~

collateralized loan obligations (CLOs) in loan form of ~~relationship focused products~~$7.7 billion and ~~services, including~~$7.0 billion at March 31, 2020, and December 31, 2019, respectively.

Oil, gas and pipelines loans supporting short-term trade finance and working capital needs. The $16.2 billion of foreign loans in the financial institutions category were predominantly originated by our Financial Institutions business.

~~The oil and gas loan portfolio~~ totaled ~~$12.8~~$14.3 billion, or 1% of total outstanding loans, at ~~September 30, 2017,~~March 31, 2020, compared with ~~$14.8~~$13.6 billion, or 2%1% of total outstanding loans, at December 31, ~~2016. Unfunded loan commitments in the oil~~2019. Oil, gas and pipelines loans included $9.5 billion and $9.2 billion of senior secured loans outstanding at March 31, 2020 and December 31, 2019, respectively. Oil, gas ~~loan portfolio totaled $22.6 billion at September 30, 2017. Approximately half of our oil~~ and gas loans were to businesses in the exploration and production (E&P) sector. Most of these E&P loans are secured by oil and/or gas reserves and have underlying borrowing base arrangements which include regular (typically semi-annual) “redeterminations” that consider refinements to borrowing structure and prices used to determine borrowing limits. The majority of the other oil and gas loans were to midstream companies. We proactively monitor our oil and gas loan portfolio and work with customers to address any emerging issues. Oil and gaspipelines nonaccrual loans decreased to ~~$1.6 billion~~$549 million at ~~September 30, 2017,~~ March 31, 2020,

compared with ~~$2.4 billion~~$615 million at December 31, ~~2016,~~2019, due to ~~improved portfolio performance.~~higher net loan charge-offs, as well as loan payments, partially offset by new downgrades to nonaccrual status in first quarter 2020.

In addition to the oil, gas and pipelines category, industries with escalated credit monitoring include retail, entertainment and recreation, transportation services, and commercial real estate. Table ~~12:~~11 and Table 12 include information about our exposure to certain sectors of these industries, including those that have been significantly affected by the COVID-19 pandemic.

Table 11:Commercial and Industrial Loans and Lease Financing by Industry ~~(1)~~

September 30, 2017
(in millions)
Nonaccrual
loans

Total
portfolio

(2)
% of
total
loans

Investors $ 6
60,929
6 %
Financial institutions 2
37,951
4
Cyclical retailers 92
25,919
3
Food and beverage 10
16,876
2
Healthcare 27
15,969
2
Industrial equipment 175
15,177
2
Real estate lessor 10
14,391
2
Technology 33
13,737
1
Oil and gas 1,559
12,825
1
Transportation 130
9,109
1
Public administration 28
9,101
1
Business services 23
8,474
1
Other 383
106,697
(3) 10
Total $ 2,478
347,155
36 %



	March 31, 2020						December 31, 2019
($ in millions)	Nonaccrual loans		Loans outstanding	% of total loans		Total commitments (1)	Nonaccrual loans		Loans outstanding	% of total loans		Total commitments (1)
Financials except banks	$	95	126,270	13	%	204,143	$	112	117,312	12	%	200,848
Equipment, machinery and parts manufacturing	58		25,054	2		44,641	36		23,457	2		42,040
Technology, telecom and media	57		26,896	3		56,462	28		22,447	2		53,343
Real estate and construction	49		27,222	3		48,977	47		22,011	2		48,217
Banks	—		20,282	2		20,948	—		20,070	2		20,728
Retail (2)	204		27,844	3		43,801	105		19,923	2		41,938
Materials and commodities	57		19,118	2		39,385	33		16,375	2		39,369
Automobile related	24		17,436	2		26,032	24		15,996	2		26,310
Food and beverage manufacturing	12		16,908	2		31,004	9		14,991	2		29,172
Health care and pharmaceuticals	81		18,785	2		32,230	28		14,920	2		30,168
Oil, gas and pipelines	549		14,287	1		34,443	615		13,562	1		35,445
Entertainment and recreation (3)	65		16,163	2		20,532	44		13,462	1		19,854
Transportation services (4)	336		11,901	1		17,853	224		10,957	1		17,660
Commercial services	120		12,684	1		22,989	50		10,455	1		22,713
Agribusiness	37		6,994	*		12,137	35		7,539	*		12,901
Utilities	147		8,598	*		21,545	224		5,995	*		19,390
Insurance and fiduciaries	1		7,292	*		16,481	1		5,525	*		15,596
Government and education	7		5,548	*		11,918	6		5,363	*		12,267
Other (5)	11		14,874	1		32,769	19		13,596	*		32,988
Total	$	1,910	424,156	42	%	738,290	$	1,640	373,956	39	%	720,947


*	Less than 1%.


(1)	Industry categories are based on the North American Industry Classification System and the amounts reported include foreign loans. See Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for a breakoutTotal commitments consist of ~~commercial foreign loans.~~loans outstanding plus unfunded credit commitments, excluding issued letters of credit.

(2)

~~Includes~~ ~~$116 million~~ ~~of PCI loans, which are considered to be accruing due~~Loans outstanding to the ~~existence~~restaurant sector were $5.8 billion and $4.3 billion and included $3.9 billion and $3.1 billion of ~~the accretable yield~~loans outstanding to limited service restaurants at March 31, 2020, and ~~not based on consideration given to contractual interest payments.~~December 31, 2019, respectively.


(3)	Less than 1% of loans outstanding and 1% of total commitments were to cruise lines at both March 31, 2020, and December 31, 2019.


(4)	Includes air transportation loans outstanding of $2.4 billion and $1.1 billion at March 31, 2020, and December 31, 2019, respectively.


(5)	No other single industry had total loans in excess of $~~6.8~~5.0 billion. and $4.7 billion at March 31, 2020, and December 31, 2019, respectively.

Risk Management - Credit Risk Management (~~continued~~)(continued)

COMMERCIAL REAL ESTATE (CRE) We generally subject CRE loans to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to regulatory definitions of pass and criticized categories with criticized ~~divided~~segmented among special mention, substandard, doubtful and loss categories. The CRE portfolio, which included ~~$8.7~~$7.8 billion of ~~foreign~~non-U.S. CRE loans, totaled ~~$153.0~~$143.6 billion, or ~~16%~~14% of total loans, at ~~September 30, 2017,~~March 31, 2020, and consisted of ~~$128.5~~$122.8 billion of mortgage loans and ~~$24.5~~$20.8 billion of construction loans.

Table 1312 summarizes CRE loans by state and property type with the related nonaccrual totals. The portfolio is diversified both geographically and by property type. The largest geographic concentrations of CRE loans are in California, New York, ~~Texas~~Florida

and ~~Florida,~~Texas, which combined represented 49% of the total CRE portfolio. By property type, the largest concentrations are office buildings at ~~28%~~26% and apartments at ~~16%~~18% of the portfolio. CRE nonaccrual loans totaled ~~0.4%~~0.67% of the CRE outstanding balance at ~~September 30, 2017,~~March 31, 2020, compared with ~~0.5%~~0.43% at December 31, ~~2016.~~2019. The increase in CRE nonaccrual loans reflected the effect of the COVID-19 pandemic on market conditions, which impacted our customer base. At ~~September 30, 2017,~~March 31, 2020, we had ~~$4.8~~$4.1 billion of criticized CRE mortgage loans, compared with ~~$5.4~~$3.8 billion at December 31, ~~2016,~~2019, and ~~$327~~$222 million of criticized CRE construction loans, compared with ~~$461~~$187 million at December 31, ~~2016.~~2019.

At September 30, 2017, the recorded investment in PCI CRE loans totaled $118 million, down from $12.3 billion when acquired at December 31, 2008, reflecting principal payments, loan resolutions and write-downs.

Table ~~13:~~12:CRE Loans by State and Property Type


	September 30, 2017												March 31, 2020
	Real estate mortgage				Real estate construction			Total					Real estate mortgage			Real estate construction		Total			% of total loans
(in millions)	Nonaccrual loans		Total portfolio	(1)	Nonaccrual loans	Total portfolio	(1)	Nonaccrual loans	Total portfolio	(1)	% of total loans										% of total loans
($ in millions)													Nonaccrual loans		Total portfolio	Nonaccrual loans	Total portfolio	Nonaccrual loans	Total portfolio		% of total loans
By state:																					% of total loans
California	$	127	36,398		2	4,245		129	40,643		4	%	$	172	31,837	1	4,446	173	36,283		4	%
New York	12		10,366		—	2,869		12	13,235		1		21		12,676	2	1,861	23	14,537		1
Florida													22		8,200	1	1,487	23	9,687		*
Texas	102		9,245		—	2,160		102	11,405		1		304		7,848	5	1,393	309	9,241		*
Florida	33		8,016		—	1,830		33	9,846		1
Washington													11		3,979	—	768	11	4,747		*
North Carolina	31		4,100		6	785		37	4,885		1		14		3,868	—	617	14	4,485		*
Georgia													15		3,901	—	465	15	4,366		*
Arizona	27		3,944		—	643		27	4,587		*		40		4,034	—	269	40	4,303		*
Georgia	17		3,356		1	852		18	4,208		*
Virginia	11		3,230		—	893		11	4,123		*
Washington	15		3,381		—	619		15	4,000		*
Illinois	5		3,263		—	590		5	3,853		*
Colorado													16		3,298	—	546	16	3,844		*
New Jersey													18		2,962	—	682	18	3,644		*
Other	213		43,176		29	9,034		242	52,210	(2)	5		311		40,164	12	8,278	323	48,442	(1)	5
Total	$	593	128,475		38	24,520		631	152,995		16	%	$	944	122,767	21	20,812	965	143,579		14	%
By property:
Office buildings	$	130	39,959		2	3,187		132	43,146		5	%	$	140	34,547	5	2,945	145	37,492		4	%
Apartments	24		15,417		—	8,857		24	24,274		3		12		18,642	—	7,103	12	25,745		3
Industrial/warehouse	142		15,801		2	1,847		144	17,648		2		76		15,929	1	1,471	77	17,400		2
Retail (excluding shopping center)	66		16,873		—	617		66	17,490		2		125		14,089	2	223	127	14,312		1
Shopping center	16		11,835		—	1,158		16	12,993		1
Hotel/motel	8		9,685		4	1,716		12	11,401		1		79		10,637	—	1,543	79	12,180		1
Real estate - other	90		6,849		—	170		90	7,019		1
Shopping Center													279		10,707	—	1,361	279	12,068		1
Mixed use properties													95		6,087	—	545	95	6,632		*
Institutional	36		3,247		—	1,564		36	4,811		1		60		3,934	1	2,041	61	5,975		*
Collateral pool													—		2,514	—	200	—	2,714		*
Agriculture	30		2,613		—	19		30	2,632		*		70		2,144	—	9	70	2,153		*
1-4 family structure	—		10		7	2,460		7	2,470		*
Other	51		6,186		23	2,925		74	9,111		1		8		3,537	12	3,371	20	6,908		*
Total	$	593	128,475		38	24,520		631	152,995		16	%	$	944	122,767	21	20,812	965	143,579		14	%


*	Less than 1%.


~~(1)~~	~~Includes a total of~~ ~~$118 million~~ ~~PCI loans, consisting of~~ ~~$108 million~~ ~~of real estate mortgage and~~ ~~$10 million~~ ~~of real estate construction, which are considered to be accruing due to the existence of the accretable yield and not based on consideration given to contractual interest payments.~~


~~(2)~~	~~Includes~~ 40 ~~states; no state had loans in excess of~~ ~~$3.6 billion~~.

(1)Includes 40 states; no state had loans in excess of $3.7 billion.

~~FOREIGN~~

NON-U.S LOANS ~~AND COUNTRY RISK EXPOSURE~~ ~~We classify~~Our classification of non-U.S. loans ~~for financial statement and certain regulatory purposes as foreign primarily~~is based on whether the borrower’s primary address is outside of the United States. At ~~September 30, 2017, foreign~~March 31, 2020, non-U.S. loans totaled ~~$68.8~~$88.0 billion, representing approximately 7%9% of our total consolidated loans outstanding, compared with ~~$65.7~~$80.5 billion, or approximately 7%8% of total consolidated loans outstanding, at December 31, ~~2016. Foreign~~2019. Non-U.S. loans were approximately 4% of our consolidated total assets at ~~September 30, 2017~~both March 31, 2020, and ~~3% at~~ December 31, ~~2016.~~2019.

COUNTRY RISK EXPOSURE Our country risk monitoring process incorporates centralized monitoring of economic, political, social, legal, and transfer risks in countries where we do or plan to do business, along with frequent dialogue with our ~~financial institution~~ customers, counterparties and regulatory ~~agencies, enhanced by centralized monitoring of macroeconomic and capital markets conditions in the respective countries.~~agencies. We establish exposure limits for each country through a centralized oversight process based on customer needs, and inthrough consideration of the relevant ~~economic, political, social, legal,~~ and ~~transfer risks.~~distinct risk of each country. We monitor exposures closely and adjust our country limits in response to changing conditions.

We evaluate our individual country risk exposure based on our assessment of the borrower’s ability to repay, which gives consideration for allowable transfers of risk such as guarantees and collateral and may be different from the reporting based on the borrower’s primary address. Our largest single ~~foreign~~ country exposure outside the U.S. based on our assessment of risk at ~~September 30, 2017,~~March 31, 2020, was the United Kingdom, which totaled ~~$29.6~~$37.6 billion, or approximately 2% of our total assets, and included ~~$7.1~~$11.2 billion of sovereign claims. Our United Kingdom sovereign claims arise predominantly from deposits we have placed with the Bank of England pursuant to regulatory requirements in support of our London branch.

The United Kingdom ~~officially announced its intention to leave~~withdrew from the European Union (Brexit) on ~~March 29, 2017, starting the two-year negotiation process leading~~January 31, 2020, and is currently subject to ~~its departure. We continue to conduct assessments and are executing our implementation plans to ensure we can continue to prudently serve our customers post-Brexit.~~a

~~We conduct periodic stress tests~~transition period during which the terms and conditions of its exit are being negotiated. As the United Kingdom exits from the European Union, our primary goal is to continue to serve our existing clients in the United Kingdom and the European Union as well as to continue to meet the needs of our ~~significant country risk exposures, analyzing~~domestic clients as they do business in those locations. We have an existing authorized bank in Ireland and an asset management entity in Luxembourg. Additionally, we established a broker dealer in France. We are in the ~~direct~~process of leveraging these entities to continue to serve clients in the European Union and ~~indirect impacts~~continue to take actions to update our business operations in the United Kingdom and European Union, including implementing new supplier contracts and staffing arrangements. For additional information on ~~the risk of loss from various macroeconomic and capital markets scenarios. We do not have significant exposure to foreign country~~ risks ~~because our foreign credit exposure is relatively small. However, we have identified exposure to increased loss from U.S. borrowers~~ associated with Brexit, see the ~~potential impact of a regional or worldwide economic downturn on the U.S. economy. We seek to mitigate these potential impacts on the risk of loss through~~“Risk Factors” section in our ~~normal risk management processes which include active monitoring and, if necessary, the application of aggressive loss mitigation strategies.~~2019 Form 10-K.

Table 1413 provides information regarding our top 20 exposures by country (excluding the U.S.) and our Eurozone exposure, based on our assessment of risk, which gives consideration to the country of any guarantors and/or underlying collateral. ~~Our~~With respect to Table 13:

Lending exposure includes outstanding loans, unfunded credit commitments, and deposits with non-U.S. banks. These balances are presented prior to ~~Puerto Rico (considered part~~the deduction of ~~U.S. exposure) is largely through automobile~~allowance for credit losses or collateral received under the terms of the credit agreements, if any.

Securities exposure represents debt and equity securities of non-U.S. issuers. Long and short positions are netted, and net short positions are reflected as negative exposure.

Derivatives and other exposure represents foreign exchange contracts, derivative contracts, securities resale agreements, and securities lending and was not material to our consolidated country exposure. For information on potential credit impacts from recent hurricanes, see the “Risk Management – Credit Risk Management – Credit Quality Overview” section and Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.agreements.

~~Risk Management - Credit Risk Management (continued~~)

Table ~~14:~~13:Select Country Exposures-


	September 30, 2017												March 31, 2020
	Lending (1)			Securities (2)				Derivatives and other (3)		Total exposure			Lending			Securities				Derivatives and other		Total exposure
(in millions)	Sovereign		Non- sovereign	Sovereign		Non- sovereign		Sovereign	Non- sovereign	Sovereign	Non- sovereign (4)	Total	Sovereign		Non- sovereign	Sovereign		Non- sovereign		Sovereign	Non- sovereign	Sovereign	Non- sovereign (1)	Total
Top 20 country exposures:
United Kingdom	$	7,079	20,200	—		1,852		—	473	7,079	22,525	29,604	$	11,182	22,815	—		1,672		1	1,968	11,183	26,455	37,638
Canada	29		18,240	61		189		—	507	90	18,936	19,026	4		16,778	2		120		—	593	6	17,491	17,497
Cayman Islands	—		6,723	—		—		—	151	—	6,874	6,874	—		8,952	—		—		—	328	—	9,280	9,280
Ireland													976		4,857	—		122		—	68	976	5,047	6,023
China													—		4,188	(13	)	444		37	35	24	4,667	4,691
Bermuda													—		4,308	—		125		—	51	—	4,484	4,484
Luxembourg													—		3,925	—		126		—	103	—	4,154	4,154
Japan													20		1,304	1,996		143		—	256	2,016	1,703	3,719
Guernsey													—		3,494	—		3		—	35	—	3,532	3,532
Germany	3,349		1,664	5		162		3	392	3,357	2,218	5,575	—		2,787	10		45		6	59	16	2,891	2,907
Ireland	—		3,528	—		118		—	140	—	3,786	3,786
Bermuda	—		2,827	—		112		—	196	—	3,135	3,135
China	—		2,761	(2	)	182		32	30	30	2,973	3,003
South Korea													—		2,546	3		84		—	15	3	2,645	2,648
Netherlands	—		2,278	22		285		2	247	24	2,810	2,834	—		1,794	—		171		14	241	14	2,206	2,220
India	—		2,092	—		112		—	—	—	2,204	2,204
Luxembourg	—		1,258	—		656		—	120	—	2,034	2,034
Guernsey	—		1,971	—		3		—	3	—	1,977	1,977
Australia	—		1,581	—		282		—	78	—	1,941	1,941
France													—		1,847	—		94		142	13	142	1,954	2,096
Brazil	—		1,689	—		17		—	—	—	1,706	1,706	—		2,062	1		3		6	8	7	2,073	2,080
Chile	—		1,485	—		21		—	—	—	1,506	1,506	—		1,910	—		1		—	—	—	1,911	1,911
South Korea	—		1,352	2		85		2	8	4	1,445	1,449
India													—		1,683	—		114		—	1	—	1,798	1,798
Switzerland	—		1,210	—		(2	)	—	35	—	1,243	1,243	—		1,608	—		38		—	90	—	1,736	1,736
Jersey, Channel lslands	—		645	—		469		—	14	—	1,128	1,128
Japan	285		710	6		42		—	63	291	815	1,106
France	—		798	—		205		—	67	—	1,070	1,070
Mexico	56		925	—		4		—	4	56	933	989
Australia													—		1,505	—		68		—	17	—	1,590	1,590
Singapore													—		1,304	—		24		—	88	—	1,416	1,416
United Arab Emirates													—		1,286	—		82		—	4	—	1,372	1,372
Total top 20 country exposures	$	10,798	73,937	94		4,794		39	2,528	10,931	81,259	92,190	$	12,182	90,953	1,999		3,479		206	3,973	14,387	98,405	112,792
Eurozone exposure:
Eurozone countries included in Top 20 above ~~(5)~~(2)	$	3,349	9,526	27		1,426		5	966	3,381	11,918	15,299	$	976	15,210	10		558		162	484	1,148	16,252	17,400
Austria	—		590	—		3		—	3	—	596	596
Spain	—		362	—		54		—	19	—	435	435	—		385	—		121		—	9	—	515	515
Belgium	—		274	—		(45	)	—	5	—	234	234	—		536	—		(54	)	—	4	—	486	486
Other Eurozone exposure (6)	24		211	—		47		—	—	24	258	282
Austria													—		234	—		1		—	—	—	235	235
Italy													—		108	—		19		—	1	—	128	128
Other Eurozone exposure													—		93	—		27		—	—	—	120	120
Total Eurozone exposure	$	3,373	10,963	27		1,485		5	993	3,405	13,441	16,846	$	976	16,566	10		672		162	498	1,148	17,736	18,884

(1)

Lending exposure includes funded loans and unfunded commitments, leveraged leases, and money market placements presented on a gross basis prior to the deduction of impairment allowance and collateral received under the terms of the credit agreements. For the countries listed above, includes ~~$17 million~~ ~~in PCI loans to customers in Germany and the Netherlands, and~~ ~~$680 million~~ ~~in defeased leases secured primarily by U.S. Treasury and government agency securities.~~


~~(2)~~	~~Represents exposure on debt and equity securities of foreign issuers. Long and short positions are netted and net short positions are reflected as negative exposure.~~

~~(3)~~

Represents counterparty exposure on foreign exchange and derivative contracts, and securities resale and lending agreements. This exposure is presented net of counterparty netting adjustments and reduced by the amount of cash collateral. It includes credit default swaps (CDS) predominantly used for market making activities in the U.S. and London based trading businesses, which sometimes results in selling and purchasing protection on the identical reference entities. Generally, we do not use market instruments such as CDS to hedge the credit risk of our investment or loan positions, although we do use them to manage risk in our trading businesses At ~~September 30, 2017, the gross notional amount of our CDS sold that reference assets in the Top 20 or Eurozone countries was~~ ~~$348 million, which was offset by the notional amount of CDS purchased of~~ ~~$469 million. We did not have any CDS purchased or sold that reference pools of assets that contain sovereign debt or where the reference asset was solely the sovereign debt of a foreign country.~~


~~(4)~~	For countries presented in the table, total non-sovereign exposure comprises $~~39.9~~56.0 billion exposure to financial institutions and $~~42.9~~43.9 billion to non-financial corporations at ~~September 30, 2017~~March 31, 2020.


~~(5)~~(2)	Consists of exposure to Ireland, Luxembourg, Germany, ~~Ireland,~~ Netherlands ~~Luxembourg,~~ and France included in Top 20.


~~(6)~~	~~Includes non-sovereign exposure to Italy, Portugal, and Greece in the amount of~~ ~~$133 million~~, ~~$17 million~~ ~~and~~ ~~$1 million, respectively. We had no sovereign debt exposure to Portugal and Greece, and the exposure to Italy was immaterial at~~ ~~September 30, 2017~~.

Risk Management - Credit Risk Management (continued)

REAL ESTATE 1-4 FAMILY ~~FIRST AND JUNIOR LIEN~~ MORTGAGE LOANSOur real estate 1-4 family mortgage loan portfolio is comprised of both first and junior lien mortgage loans, aswhich are presented in Table ~~15, include loans we have made to customers and retained as part of our asset/liability management strategy, the Pick-a-Pay portfolio acquired from~~

14.

~~Wachovia which is discussed later in this Report and other purchased loans, and loans included on our balance sheet as a result of consolidation of variable interest entities (VIEs).~~

Table ~~15:~~14:Real Estate 1-4 Family ~~First and Junior Lien~~ Mortgage Loans


	September 30, 2017				December 31, 2016				March 31, 2020				December 31, 2019
(in millions)	Balance		% of portfolio		Balance		% of portfolio		Balance		% of portfolio		Balance		% of portfolio
Real estate 1-4 family first mortgage	$	280,173	87	%	$	275,579	86	%	$	292,920	91	%	$	293,847	91	%
Real estate 1-4 family junior lien mortgage	41,152		13		46,237		14		28,527		9		29,509		9
Total real estate 1-4 family mortgage loans	$	321,325	100	%	$	321,816	100	%	$	321,447	100	%	$	323,356	100	%

The real estate 1-4 family mortgage loan portfolio includes some loans with ~~adjustable-rate features and some with~~ an interest-only feature as part of the loan ~~terms.~~terms and some with adjustable-rate features. Interest-only loans were approximately ~~5% and 7%~~3% of total loans at ~~September 30, 2017,~~both March 31, 2020, and December 31, ~~2016, respectively.~~2019. We believe we have manageable adjustable-rate mortgage (ARM) reset risk across our ~~owned~~ mortgage loan ~~portfolios.~~portfolios, including ARM loans that have negative amortizing features that were acquired in prior business combinations. We do not offer option ARM products, nor do we offer variable-rate mortgage products with fixed payment amounts, commonly referred to within the financial services industry as negative amortizing mortgage loans. ~~The option ARMs we do have~~In connection with our adoption of CECL on January 1, 2020, our real estate 1-4 family mortgage purchased credit-impaired (PCI) loans, which had a carrying value of $568 million, were reclassified as purchased credit-deteriorated (PCD) loans. PCD loans are ~~included~~generally accounted for in the Pick-a-Pay portfolio which was acquired from Wachovia. Since our acquisition of the Pick-a-Pay loan portfolio at the end of 2008, the option payment portion of the portfolio has reduced from 86% to 36% at September 30, 2017,same manner as ~~a result of our modification and loss mitigation efforts.~~non-PCD loans. For more information on PCD loans, see ~~the “Pick-a-Pay Portfolio” section~~Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

We continue to modify real estate 1-4 family mortgage loans to assist homeowners and other borrowers experiencing financial difficulties. For more information on our modification programs, see the “Risk Management – Credit Risk Management – Real Estate 1-4 Family ~~First and Junior Lien~~ Mortgage Loans” section in our ~~2016~~ 2019

Form 10-K. For more information on customer accommodations, including loan modifications, in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – Actions to Support Customers During the COVID-19 Pandemic” section in this Report.

Part of our credit monitoring includes tracking delinquency, current FICO scores and loan/combined loan to collateral values (LTV/CLTV) on the entire real estate 1-4 family mortgage loan portfolio. These credit risk indicators ~~which~~on the mortgage portfolio exclude government insured/guaranteed ~~loans, continued to improve in third quarter 2017 on the non-PCI mortgage portfolio.~~loans. Loans 30 days or more delinquent at ~~September 30, 2017,~~March 31, 2020, totaled ~~$5.3~~$3.6 billion, or 2%1% of total ~~non-PCI~~ mortgages, compared with ~~$5.9~~$3.0 billion, or 2%1%, at December 31, ~~2016.~~2019. Loans with FICO scores lower than 640 totaled ~~$12.2~~$7.5 billion, or 4%2% of total ~~non-PCI~~ mortgages at ~~September 30, 2017,~~March 31, 2020, compared with ~~$16.6~~$7.6 billion, or 5%2%, at December 31, ~~2016.~~2019. Mortgages with a LTV/CLTV greater than 100% totaled ~~$6.7~~$2.5 billion at ~~September 30, 2017,~~March 31, 2020, or 2%1% of total ~~non-PCI~~ mortgages, compared with ~~$8.9~~$2.5 billion, or 3%1%, at December 31, ~~2016.~~2019. Information regarding ~~credit quality indicators, including PCI~~ credit quality indicators can be found in Note 56 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

Real estate 1-4 ~~family first and junior lien~~ mortgage loans by state are presented in Table ~~16.~~15. Our real estate 1-4 family mortgage loans ~~(including PCI loans)~~ to borrowers in California represented ~~approximately~~ 13% of total loans at ~~September 30, 2017,~~March 31, 2020, located ~~mostly~~predominantly within the larger metropolitan areas, with no single California metropolitan area consisting of more than 5%4% of total loans. We monitor changes in real estate values and underlying economic or market conditions for all geographic areas of our real estate 1-4 family mortgage ~~portfolio~~portfolios as part of

our credit risk management process. Our underwriting and periodic review of loans and lines secured by residential real estate collateral includes original appraisals adjusted for the change in Home Price Index (HPI) or estimates from automated valuation models (AVMs) to support property values. Additional information about appraisals and AVMs and our policy for their use can be found in Note 56 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report and the “Risk Management – Credit Risk Management – Real Estate 1-4 Family ~~First and Junior Lien~~ Mortgage Loans” section in our ~~2016~~2019 Form 10-K.

Table ~~16:~~15:Real Estate 1-4 Family ~~First and Junior Lien~~ Mortgage Loans by State


	September 30, 2017						March 31, 2020
(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Total real estate 1-4 family mortgage	% of total loans		Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Total real estate 1-4 family mortgage	% of total loans
Real estate 1-4 family loans (excluding PCI):
Real estate 1-4 family loans:
California	$	99,380	11,006	110,386	12	%	$	118,484	7,814	126,298	13	%
New York	26,008		1,989	27,997	3		31,801		1,469	33,270	3
New Jersey							14,074		2,667	16,741	2
Florida	13,278		3,824	17,102	2		11,675		2,523	14,198	1
New Jersey	13,116		3,704	16,820	2
Washington							10,869		644	11,513	1
Virginia	7,899		2,442	10,341	1		8,740		1,645	10,385	1
Washington	8,589		900	9,489	1
Texas	8,732		746	9,478	1		8,954		576	9,530	1
North Carolina	6,053		1,930	7,983	1		5,758		1,338	7,096	1
Pennsylvania	5,681		2,275	7,956	1
Colorado							6,357		644	7,001	1
Other (1)	64,530		12,307	76,837	8		65,369		9,207	74,576	7
Government insured/ guaranteed loans (2)	13,606		—	13,606	1		10,839		—	10,839	1
Real estate 1-4 family loans (excluding PCI)	266,872		41,123	307,995	33
Real estate 1-4 family PCI loans (3)	13,301		29	13,330	1
Total	$	280,173	41,152	321,325	34	%	$	292,920	28,527	321,447	32	%


(1)	Consists of 41 states; ~~no state~~none of which had loans in excess of $6.9 billion.


(2)	Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA).


~~(3)~~	~~Includes~~ ~~$9.1 billion~~ ~~in real estate 1-4 family mortgage PCI loans in California.~~

~~Risk Management - Credit Risk Management (continued~~)

First Lien Mortgage PortfolioOur total real estate 1-4 family first lien mortgage portfolio ~~increased $3.6~~(first mortgage) decreased $927 million in first quarter 2020. Mortgage loan originations of $14.3 billion in ~~third~~first quarter ~~2017 and $4.6 billion in the first nine months of 2017, as non-conforming loan growth was partially~~2020 were more than offset by ~~a decline in Pick-a-Pay~~paydowns.

Net loan balances. We retained $14.2 billion and $36.6 billion in non-conforming originations, consisting of loans that exceed conventional conforming loan amount limits established by federal government-sponsored entities (GSEs) in the third quarter and first nine months of 2017, respectively.

The credit performance associated with our real estate 1-4 family first lien mortgage portfolio continued to improve in third quarter 2017, as measured through net charge-offs and nonaccrual loans. Net charge-offs (annualized) as a percentage of average ~~real estate 1-4 family~~ first ~~lien~~ mortgage loans ~~improved~~

towas 0.00% in first quarter 2020, compared with a net recovery of 0.02% ~~and 0.01% in the third quarter and first nine months of 2017, respectively, compared with a net charge-off of 0.03% and 0.04%~~ for the same ~~periods~~period a year ago. Nonaccrual loans were ~~$4.2~~$2.4 billion at ~~September 30, 2017, compared with $5.0 billion at~~March 31, 2020, up

$222 million from December 31, ~~2016. Improvement~~2019. The increase in ~~the credit performance~~nonaccrual loans from December 31, 2019 was driven by ~~an improving housing environment. Real estate 1-4 family first lien mortgage~~the implementation of CECL, which required PCI loans ~~originated after 2008, which generally utilized tighter underwriting standards, have resulted~~to be classified as nonaccruing based on performance. For additional information, see the “Risk Management – Credit Risk Management – Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)” section in ~~minimal losses to date and were approximately 77% of our total real estate 1-4 family first lien mortgage portfolio as of September 30, 2017.~~this Report.

Table 1716 shows certain delinquency and loss information for the first ~~lien~~ mortgage portfolio and lists the top five states by outstanding balance.

Table ~~17:~~16:First ~~Lien~~ Mortgage Portfolio Performance

Outstanding balance % of loans 30 days or more past due Loss (recovery) rate (annualized) quarter ended
(in millions) Sep 30,
2017
Dec 31,
2016
Sep 30,
2017
Dec 31,
2016 Sep 30,
2017
Jun 30,
2017
Mar 31,
2017
Dec 31,
2016
Sep 30,
2016
California $ 99,380
94,015
0.97 % 1.21 (0.09 ) (0.08 ) (0.05 ) (0.08 ) (0.08 )
New York 26,008
23,815
1.75
1.97 0.05
0.02
0.06
0.04
0.07
Florida 13,278
13,737
4.17
3.62 (0.22 ) (0.18 ) (0.08 ) (0.18 ) (0.04 )
New Jersey 13,116
12,669
2.83
3.66 0.15
0.17
0.22
0.21
0.37
Texas 8,732
8,584
2.60
2.19 —
—
(0.01 ) (0.01 ) 0.06
Other 92,752
91,136
2.11
2.51 0.02
0.01
0.05
0.06
0.10
Total 253,266
243,956
1.79
2.07 (0.03 ) (0.03 ) 0.01
—
0.03
Government insured/guaranteed loans 13,606
15,605

PCI 13,301
16,018

Total first lien mortgages $ 280,173
275,579

~~Pick-a-Pay PortfolioThe Pick-a-Pay portfolio was one of the consumer residential first lien mortgage portfolios we acquired from Wachovia and a majority of the portfolio was identified as PCI loans.~~

The Pick-a-Pay portfolio includes loans that offer payment options (Pick-a-Pay option payment loans), and also includes loans that were originated without the option payment feature, loans that no longer offer the option feature as a result of our modification efforts since the acquisition, and loans where the customer voluntarily converted to a fixed-rate product. The Pick-a-Pay portfolio is included in the consumer real estate 1-4 family

first mortgage class of loans throughout this Report. Table 18 provides balances by types of loans as of September 30, 2017, as a result of modification efforts, compared to the types of loans included in the portfolio at acquisition. Total adjusted unpaid principal balance of PCI Pick-a-Pay loans was $17.3 billion at September 30, 2017, compared with $61.0 billion at acquisition. Due to loan modification and loss mitigation efforts, the adjusted unpaid principal balance of option payment PCI loans has declined to 14% of the total Pick-a-Pay portfolio at September 30, 2017, compared with 51% at acquisition.

~~Table 18:Pick-a-Pay Portfolio – Comparison to Acquisition Date~~

December 31,
September 30, 2017 2016 2008
(in millions)
Adjusted
unpaid
principal
balance (1)

% of
total

Adjusted
unpaid
principal
balance (1)

% of
total

Adjusted
unpaid
principal
balance (1)

% of
total

Option payment loans $ 11,460
36 % $ 13,618
37 % $ 99,937
86 %
Non-option payment adjustable-rate
and fixed-rate loans
3,951
13
4,630
13
15,763
14
Full-term loan modifications 15,958
51
18,598
50
—
—
Total adjusted unpaid principal balance $ 31,369
100 % $ 36,846
100 % $ 115,700
100 %
Total carrying value $ 27,295
32,292
95,315



	Outstanding balance			% of loans 30 days or more past due			Loss (recovery) rate (annualized) quarter ended
(in millions)	Mar 31, 2020		Dec 31, 2019	Mar 31, 2020		Dec 31, 2019	Mar 31, 2020		Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019
California	$	118,484	118,256	0.66	%	0.48	(0.01	)	(0.02	)	(0.01	)	(0.04	)	(0.03	)
New York	31,801		31,336	1.11		0.83	(0.01	)	0.02		0.01		—		0.02
New Jersey	14,074		14,113	1.65		1.40	—		0.02		0.02		(0.06	)	0.08
Florida	11,675		11,804	2.36		1.81	(0.03	)	(0.06	)	(0.07	)	(0.11	)	(0.10	)
Washington	10,869		10,863	0.40		0.29	(0.02	)	(0.02	)	—		(0.03	)	(0.04	)
Other	95,178		95,750	1.36		1.20	0.01		(0.02	)	—		(0.06	)	(0.02	)
Total	282,081		282,122	1.05		0.86	—		(0.02	)	(0.01	)	(0.04	)	(0.02	)
Government insured/guaranteed loans	10,839		11,170
PCI (1)	N/A		555
Total first lien mortgages	$	292,920	293,847

(1)

~~Adjusted unpaid principal balance includes write-downs taken~~In connection with our adoption of CECL on January 1, 2020, PCI loans ~~where severe delinquency (normally 180 days) or~~were reclassified as PCD loans and are therefore included with other ~~indications~~non-PCD loans in this table. For more information, see Note 1 (Summary of ~~severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan.~~Significant Accounting Policies) to Financial Statements in this Report.

Table 19 reflects the geographic distribution of the Pick-a-Pay portfolio broken out between PCI loans and all other loans. The LTV ratio is a useful metric in evaluating future real estate 1-4 family first mortgage loan performance, including potential charge-offs. Because PCI loans were initially recorded at fair value, including write-downs for expected credit losses, the ratio

of the carrying value to the current collateral value will be lower compared with the LTV based on the adjusted unpaid principal balance. For informational purposes, we have included both ratios for PCI loans in the following table.

~~Table 19:Pick-a-Pay Portfolio (1)~~

September 30, 2017
PCI loans All other loans
(in millions)
Adjusted
unpaid
principal
balance (2)

Current
LTV
ratio (3)

Carrying
value (4)

Ratio of
carrying
value to
current
value (5)

Carrying
value (4)

Ratio of
carrying
value to
current
value (5)

California $ 11,753
61 % $ 9,033
47 % $ 6,703
44 %
Florida 1,481
69
1,076
49
�� 1,439
54
New Jersey 586
76
429
55
953
62
New York 446
69
363
52
477
59
Texas 135
48
102
36
570
37
Other 2,928
68
2,208
51
3,942
56
Total Pick-a-Pay loans $ 17,329
64
$ 13,211
48
$ 14,084
50


~~(1)~~	~~The individual states shown in this table represent the top five states based on the total net carrying value of the Pick-a-Pay loans at the beginning of~~ ~~2017~~.


~~(2)~~	Adjusted unpaid principal balance 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 resolution of the loan.

~~(3)~~

The current LTV ratio is calculated as the adjusted unpaid principal balance divided by the collateral value. Collateral values are generally determined using automated valuation models (AVM) and are updated quarterly. AVMs are computer-based tools used to estimate market values of homes based on processing large volumes of market data including market comparables and price trends for local market areas.


~~(4)~~	~~Carrying value does not reflect related allowance for loan losses but does reflect remaining purchase accounting adjustments and any charge-offs.~~


~~(5)~~	~~The ratio of carrying value to current value is calculated as the carrying value divided by the collateral value.~~

Since the Wachovia acquisition, we have completed over 137,800 proprietary and Home Affordability Modification Program (HAMP) Pick-a-Pay loan modifications, including over 200 modifications in third quarter 2017. Pick-a-Pay loan modifications have resulted in over $6.1 billion of principal forgiveness since December 31, 2008. We have also provided interest rate reductions and loan term extensions to enable sustainable homeownership for our Pick-a-Pay customers. As a result of these loss mitigation programs, approximately 71% of our Pick-a-Pay PCI adjusted unpaid principal balance as of September 30, 2017 has been modified.

The predominant portion of our PCI loans is included in the Pick-a-Pay portfolio. We regularly evaluate our estimates of cash flows expected to be collected on our PCI loans. Our cash flows expected to be collected have been favorably affected over time by lower expected defaults and losses as a result of observed and forecasted economic strengthening, particularly in housing prices, and our loan modification efforts. When we periodically update our cash flow estimates we have historically expected that the credit-stressed borrower characteristics and distressed collateral values associated with our Pick-a-Pay PCI loans would limit the ability of these borrowers to prepay their loans, thus increasing the future expected weighted-average life of the portfolio since acquisition. However, the higher prepayment trend that emerged in our Pick-a-Pay PCI loans portfolio in the prior year, which we attribute to the benefits of home price appreciation has continued to result in more loan (unpaid principal balance) to value ratios reaching an important industry refinancing inflection point of below 80%. As a result, we have continued to experience an increased level of borrowers qualifying for products to refinance their loans which may not have previously been available to them. Therefore, during first quarter 2017, we revised our Pick-a-Pay PCI loan cash flow estimates to reflect our expectation that the modified portion of the portfolio will have higher prepayments over the remainder of

its life. The increase in expected prepayments in the first quarter and passage of time lowered our estimated weighted-average life to approximately 6.8 years at September 30, 2017, from 7.4 years at December 31, 2016. The accretable yield balance related to our Pick-a-Pay PCI loan portfolio declined $104 million ($126 million for all PCI loans) during third quarter 2017, driven by realized accretion of $315 million ($340 million for all PCI loans), $233 million reclassification from nonaccretable difference for loans with improving cash flows and a $22 million reduction in expected interest cash flows resulting from improved cash flow timing. The accretable yield percentage for Pick-a-Pay PCI loans for third quarter 2017 was 9.32%, up from 8.22% for fourth quarter 2016, due to an increase in the amount of accretable yield relative to the shortened weighted-average life. Due to the improving cash flow timing, we expect the accretable yield percentage to be 9.83% for fourth quarter 2017.

Since acquisition, due to better than expected performance observed on the PCI portion of the Pick-a-Pay portfolio compared with the original acquisition estimates, we have reclassified $8.9 billion from the nonaccretable difference to the accretable yield. Fluctuations in the accretable yield are driven by changes in interest rate indices for variable rate PCI loans, prepayment assumptions, and expected principal and interest payments over the estimated life of the portfolio, which will be affected by the pace and degree of improvements in the U.S. economy and housing markets and projected lifetime performance resulting from loan modification activity. Changes in the projected timing of cash flow events, including loan liquidations, modifications and short sales, can also affect the accretable yield and the estimated weighted-average life of the portfolio.

For further information on the judgment involved in estimating expected cash flows for PCI loans, see the “Critical Accounting Policies – Purchased Credit-Impaired Loans” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2016 Form 10-K.

Risk Management - Credit Risk Management (~~continued~~)(continued)

For further information on the Pick-a-Pay portfolio, including recast risk, deferral of interest and loan modifications, see the “Risk Management – Credit Risk Management – Pick-a-Pay Portfolio” section in our 2016 Form 10-K.

Junior Lien Mortgage Portfolio The junior lien mortgage portfolio consists of residential mortgage lines and loans that are subordinate in rights to an existing lien on the same property. It is not unusual for these lines and loans to have draw periods, ~~interest only~~interest-only payments, balloon payments, adjustable rates, and similar features. Junior lien loan products are mostly amortizing payment loans with fixed interest rates and repayment periods between five to 30 years.

We continuously monitor the credit performance of our junior lien mortgage portfolio for trends and factors that influence the frequency and severity of ~~loss. We have observed that the severity of~~ loss, ~~for~~such as junior lien ~~mortgages is high and generally not affected by whether we or a third party own or service the related first lien~~ mortgage ~~but the frequency of delinquency is typically lower~~performance when ~~we own or service~~ the first lien mortgage. In general, we have limited information available on the delinquency status of the third party owned or serviced senior lien where we also hold a junior lien. To capture this inherent loss content, our allowance process for junior lien mortgages considers the relative difference in loss experience for

~~junior lien mortgages behind first lien~~ mortgage loans we own or service, compared with those behind first lien mortgage loans owned or serviced by third parties. In addition, our allowance process for junior lien mortgages that are current, but are in their revolving period, considers the inherent loss where the borrowerloan is ~~delinquent on the corresponding first lien mortgage loans.~~

delinquent. Table 2017 shows certain delinquency and loss information for the junior lien mortgage portfolio and lists the top five states by outstanding balance. The decrease in

outstanding balances since December 31, ~~2016,~~2019, predominantly ~~reflects~~reflected loan paydowns. As of ~~September 30, 2017, 10%~~March 31, 2020, 4% of the outstanding balance of the junior lien mortgage portfolio was associated with loans that had a combined loan to value (CLTV) ratio in excess of 100%. Of those junior lien mortgages with a CLTV ratio in excess of 100%, ~~2.96%~~3% were 30 days or more past due. CLTV means the ratio of the total loan balance of first ~~lien~~ mortgages and junior lien mortgages (including unused line amounts for credit line products) to property collateral value. The unsecured portion (the outstanding amount that was in excess of the most recent property collateral value) of the outstanding balances of these loans totaled 3%1% of the junior lien mortgage portfolio at ~~September 30, 2017.~~March 31, 2020. For additional information on consumer loans by LTV/CLTV, see Table ~~5.12~~6.12 in Note 56 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

Table ~~20:~~17:Junior Lien Mortgage Portfolio Performance


	Outstanding balance			% of loans 30 days or more past due			Loss (recovery) rate (annualized) quarter ended										Outstanding balance			% of loans 30 days or more past due			Loss (recovery) rate (annualized) quarter ended
(in millions)	Sep 30, 2017		Dec 31, 2016	Sep 30, 2017		Dec 31, 2016	Sep 30, 2017		Jun 30, 2017		Mar 31, 2017		Dec 31, 2016		Sep 30, 2016		Mar 31, 2020		Dec 31, 2019	Mar 31, 2020		Dec 31, 2019	Mar 31, 2020		Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019
California	$	11,006	12,539	1.89	%	1.86	(0.46	)	(0.42	)	(0.37	)	(0.18	)	(0.13	)	$	7,814	8,054	1.65	%	1.62	(0.36	)	(0.44	)	(0.51	)	(0.40	)	(0.39	)
New Jersey																	2,667		2,744	2.67		2.74	0.13		0.07		0.11		(0.07	)	0.12
Florida	3,824		4,252	2.78		2.17	0.06		(0.10	)	0.30		0.47		0.56		2,523		2,600	2.76		2.93	—		(0.09	)	(0.11	)	(0.11	)	(0.05	)
New Jersey	3,704		4,031	2.79		2.79	0.58		0.44		1.06		1.36		0.96
Virginia	2,442		2,696	1.93		1.97	0.33		0.17		0.48		0.67		0.55		1,645		1,712	2.15		1.97	0.09		(0.02	)	(0.23	)	(0.17	)	0.14
Pennsylvania	2,275		2,494	2.07		2.07	0.47		0.29		0.67		1.01		0.75		1,618		1,674	2.18		2.16	0.11		(0.10	)	(0.05	)	(0.19	)	0.04
Other	17,872		20,189	2.11		2.09	0.06		0.05		0.28		0.39		0.51		12,260		12,712	2.06		2.05	0.01		(0.18	)	(0.29	)	(0.22	)	(0.03	)
Total	41,123		46,201	2.16		2.09	—		(0.03	)	0.21		0.38		0.40		28,527		29,496	2.08		2.07	(0.07	)	(0.21	)	(0.28	)	(0.24	)	(0.11	)
PCI(1)	29		36														N/A		13
Total junior lien mortgages	$	41,152	46,237														$	28,527	29,509


(1)	In connection with our adoption of CECL on January 1, 2020, PCI loans were reclassified as PCD loans and are therefore included with other non-PCD loans in this table. For more information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

Our junior lien, as well as first lien, lines of credit portfolios generally have draw periods of 10, 15 or 20 years with variable interest rate and payment options available during the draw period of (1) interest only or (2) 1.5% of outstanding principal balance plus accrued interest. As of March 31, 2020, lines of credit in a draw period primarily used the interest-only option. During the draw period, the borrower has the option of converting all or a portion of the line from a variable interest rate to a fixed rate with terms including interest-only payments for a fixed period between three to seven years or a fully amortizing payment with a fixed period between five to 30 years. At the end of the draw period, a line of credit generally converts to an amortizing payment schedule with repayment terms of up to 30 years based on the balance at time of conversion. Certain lines and loans have been structured with a balloon payment, which requires full repayment of the outstanding balance at the end of the term period. The conversion of lines or loans to fully amortizing or balloon payoff may result in a significant payment increase, which can affect some borrowers’ ability to repay the outstanding balance.

On a monthly basis, we monitor the payment characteristics of borrowers in our first and junior lien ~~portfolio.~~lines of credit portfolios. In ~~September 2017,~~March 2020, approximately ~~48%~~46% of these borrowers paid only the minimum amount due and approximately ~~46%~~50% paid more than the minimum amount due. The rest were either delinquent or paid

less than the minimum amount due. For the borrowers with an

~~interest only~~ interest-only payment feature, approximately ~~33%~~30% paid only the minimum amount due and approximately ~~62%~~66% paid more than the minimum amount due.

The lines that enter their amortization period may experience higher delinquencies and higher loss rates than the ones in their draw or term period. We have considered this increased inherent risk in our allowance for credit loss estimate.

In anticipation of our borrowers reaching the end of their contractual commitment, we have created a program to inform, educate and help these borrowers transition from interest-only to fully-amortizing payments or full repayment. We monitor the performance of the borrowers moving through the program in an effort to refine our ongoing program strategy.

Table 2118 reflects the outstanding balance of our portfolio of junior lien mortgages, including lines and loans, and ~~senior~~first lien lines segregated into scheduled ~~end of draw~~end-of-draw or ~~end of term~~end-of-term periods and products that are currently amortizing, or in balloon repayment status. ~~It excludes real estate 1-4 family~~At March 31, 2020, $464 million, or 2%, of lines in their draw period were 30 days or more past due, compared with $395 million, or 5%, of amortizing lines of credit. Included in the amortizing amounts in Table 18 is $53 million of end-of-term balloon payments which were past due. The unfunded credit commitments for junior and first lien line reverse mortgages, which total $144 million, because they are predominantly insured by the FHA, and it excludes PCI loans, which total $51 million, because their losses were generally reflected in our nonaccretable difference establishedlines totaled $58.1 billion at ~~the date of acquisition.~~March 31, 2020.

Table ~~21:~~18:Junior Lien Mortgage Line and Loan and ~~Senior~~First Lien Mortgage Line Portfolios Payment Schedule


					Scheduled end of draw / term										Scheduled end of draw / term
(in millions)	Outstanding balance September 30, 2017			Remainder of 2017	2018	2019	2020	2021	2022 and thereafter (1)	Amortizing	Outstanding balance March 31, 2020			Remainder of 2020	2021	2022	2023	2024	2025 and thereafter (1)	Amortizing
Junior lien lines and loans	$	41,123		538	1,771	770	703	1,410	22,562	13,369	$	28,527		218	809	3,177	2,191	1,769	11,693	8,670
First lien lines	13,809			89	578	284	263	616	9,899	2,080	10,210			103	395	1,566	1,186	922	4,368	1,670
Total ~~(3)~~	$	54,932		627	2,349	1,054	966	2,026	32,461	15,449	$	38,737		321	1,204	4,743	3,377	2,691	16,061	10,340
% of portfolios	100		%	1	4	2	2	4	59	28	100		%	1	3	12	9	7	41	27


(1)	Substantially all lines and loans are scheduled to convert to amortizing loans by the end of ~~2026,~~2029, with annual scheduled amounts through ~~that date~~2029 ranging from $~~4.2~~1.8 billion to $~~7.2~~4.6 billion and averaging $~~6.1~~3.1 billion per year.


~~(2)~~	~~Junior and first lien lines are mostly interest-only during their draw period. The unfunded credit commitments for junior and first lien lines totaled~~ ~~$63.1 billion~~ at ~~September 30, 2017~~.

~~(3)~~

~~Includes scheduled end-of-term balloon payments for lines and loans totaling~~ ~~$52 million~~, ~~$257 million~~, ~~$278 million~~, ~~$304 million~~, ~~$479 million~~ ~~and~~ ~~$279 million~~ ~~for~~ ~~2017~~, ~~2018~~, ~~2019~~, ~~2020~~, ~~2021, and 2022 and thereafter, respectively. Amortizing lines and loans include~~ ~~$100 million~~ ~~of end-of-term balloon payments, which are past due. At~~ ~~September 30, 2017~~, ~~$533 million, or~~ 4% ~~of outstanding lines of credit that are amortizing, are 30 days or more past due compared to~~ ~~$649 million~~ or 2% ~~for lines in their draw period.~~

CREDIT CARDS Our credit card portfolio totaled ~~$36.2~~$38.6 billion at ~~September 30, 2017,~~March 31, 2020, which represented 4% of our total outstanding loans. The net charge-off rate (annualized) for our credit card portfolio was ~~3.08%~~3.81% for ~~third~~first quarter ~~2017,~~2020, compared with ~~2.82%~~3.73% for ~~third~~first quarter ~~2016 and 3.43% and 3.07% for the first nine months of 2017 and 2016, respectively, principally from seasoning of newer vintages.~~2019.

AUTOMOBILEOur automobile portfolio ~~predominantly composed of indirect loans,~~ totaled ~~$55.5~~$48.6 billion at ~~September 30, 2017.~~March 31, 2020. The net charge-off rate (annualized) for our automobile portfolio was ~~1.41%~~0.68% for ~~third~~first quarter ~~2017,~~2020, compared with ~~0.87%~~0.82% for ~~third~~first quarter ~~2016 and 1.12% and 0.77% for~~2019. The decrease in the net charge-off rate in first ~~nine months of 2017 and 2016, respectively. The increase in net charge-offs in 2017,~~quarter 2020, compared with ~~2016,~~the same period in 2019, was ~~due to increased loss severities resulting from a temporary moratorium~~driven by lower early losses on certain repossessions for customers who have had collateral protection insurance (CPI) policies purchased on their behalf while we remediate the previously disclosed CPI issues, as well as updated industry regulatory guidance regarding the timing of loss recognition for automobile loans in bankruptcy, and also reflected the current trend of increased charge-offs in the automobile lending industry.

higher quality originations.

OTHER REVOLVING CREDIT AND INSTALLMENTOther revolving credit and installment loans, totaled ~~$38.7~~$33.5 billion at ~~September 30, 2017,~~March 31, 2020, and ~~primarily~~largely included student and securities-based loans. Our private student loan portfolio totaled ~~$12.2~~$10.6 billion at ~~September 30, 2017. All remaining student loans guaranteed by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program (FFELP) were sold as of~~ March 31, ~~2017.~~2020. The net charge-off rate (annualized) for other revolving credit and installment loans was ~~1.44%~~1.59% for ~~third~~first quarter ~~2017,~~2020, compared with ~~1.40%~~1.47% for ~~third~~first quarter ~~2016 and 1.54% and 1.38% for the first nine months of 2017 and 2016, respectively.~~

2019.

Risk Management - Credit Risk Management (~~continued~~)(continued)

NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS)Table 2219 summarizes nonperforming assets (NPAs) for each of the last four quarters. Total NPAs ~~decreased $512~~increased $759 million from ~~second~~fourth quarter ~~2017~~2019 to ~~$9.3 billion with improvement across our consumer and commercial portfolios.~~$6.4 billion. Nonaccrual loans ~~decreased $437~~of $6.2 billion increased $810 million from ~~second~~fourth quarter ~~2017~~2019. Commercial nonaccrual loans increased predominantly due to ~~$8.6 billion reflecting declines~~an increase in commercial and industrial ~~nonaccruals, as well as continued lower consumer~~and real estate ~~nonaccruals. Foreclosed assets~~mortgage nonaccrual loans as a result of ~~$706~~the economic slowdown due to the COVID-19 pandemic impacting our customers. Consumer nonaccrual loans increased driven by higher nonaccruals in the real estate 1-4 family mortgage portfolio, as our adoption of CECL required PCI loans to be classified as nonaccruing based on performance. Prior to January 1, 2020, PCI loans were excluded from nonaccrual loans because they continued to earn interest income from accretable yield, independent of performance in accordance with their contractual terms. However, as a result of our adoption of CECL on January 1, 2020, $275 million of real estate 1-4 family mortgage loans were ~~down $75 million~~reclassified from ~~second quarter 2017.~~PCI to PCD loans, and as a result, were also classified as nonaccrual loans given their contractual delinquency. For more information on PCD

loans, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

For information about when we generally place loans on nonaccrual status, ~~when:~~

see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2019 Form 10-K. As part of our actions to support customers during the ~~full and timely collection of interest or principal becomes uncertain (generally based on an assessment of the borrower’s financial condition and the adequacy of collateral, if any);~~

~~they are 90 days (120 days with respect to real estate 1-4 family first and junior lien mortgages) past due for interest~~

~~or principal, unless both well-secured and~~COVID-19 pandemic, we have provided borrowers relief in the ~~process~~form of ~~collection;~~

~~part of~~loan modifications. Loan delinquency status will not change during any payment deferral period and loans that were accruing at the ~~principal balance has been charged off;~~

~~for junior lien mortgages, we have evidence that~~time the ~~related first lien mortgage may~~relief was provided generally will not be ~~120 days past due or in the process of foreclosure regardless of the junior lien delinquency status; or~~

~~consumer real estate and automobile loans receive notification of bankruptcy, regardless of their delinquency status.~~

~~Credit card loans are not~~ placed on nonaccrual status ~~but are generally fully charged off when~~during the deferral period. For more information on customer accommodations, including loan ~~reaches 180 days past due.~~modifications, in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – Actions to Support Customers During the COVID-19 Pandemic” section in this Report.

Foreclosed assets of $252 million were down $51 million from fourth quarter 2019.

Table ~~22:~~19:Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)


	September 30, 2017					June 30, 2017					March 31, 2017					December 31, 2016					March 31, 2020				December 31, 2019					September 30, 2019					June 30, 2019
($ in millions)	Balance			% of total loans		Balance			% of total loans		Balance			% of total loans		Balance			% of total loans		Balance		% of total loans		Balance			% of total loans		Balance			% of total loans		Balance			% of total loans
Nonaccrual loans:
Commercial:
Commercial and industrial	$	2,397		0.73	%	$	2,632		0.79	%	$	2,898		0.88	%	$	3,216		0.97	%	$	1,779	0.44	%	$	1,545		0.44	%	$	1,539		0.44	%	$	1,634		0.47	%
Real estate mortgage	593			0.46		630			0.48		672			0.51		685			0.52		944		0.77		573			0.47		669			0.55		737			0.60
Real estate construction	38			0.15		34			0.13		40			0.16		43			0.18		21		0.10		41			0.21		32			0.16		36			0.17
Lease financing	81			0.42		89			0.46		96			0.50		115			0.60		131		0.68		95			0.48		72			0.37		63			0.33
Total commercial	3,109			0.62		3,385			0.67		3,706			0.73		4,059			0.80		2,875		0.51		2,254			0.44		2,312			0.45		2,470			0.48
Consumer:
Real estate 1-4 family first mortgage (1)	4,213			1.50		4,413			1.60		4,743			1.73		4,962			1.80		2,372		0.81		2,150			0.73		2,261			0.78		2,425			0.85
Real estate 1-4 family junior lien mortgage(1)	1,101			2.68		1,095			2.56		1,153			2.60		1,206			2.61		769		2.70		796			2.70		819			2.66		868			2.71
Automobile	137			0.25		104			0.18		101			0.17		106			0.17		99		0.20		106			0.22		110			0.24		115			0.25
Other revolving credit and installment	59			0.15		59			0.15		56			0.14		51			0.13		41		0.12		40			0.12		43			0.12		44			0.13
Total consumer ~~(2)~~	5,510			1.22		5,671			1.26		6,053			1.34		6,325			1.37		3,281		0.74		3,092			0.69		3,233			0.73		3,452			0.79
Total nonaccrual loans ~~(5)~~	8,619			0.91		9,056			0.95		9,759			1.02		10,384			1.07		6,156		0.61		5,346			0.56		5,545			0.58		5,922			0.62
Foreclosed assets:
Government insured/guaranteed ~~(6)~~(2)	137					149					179					197					43				50					59					68
Non-government insured/guaranteed	569					632					726					781					209				253					378					309
Total foreclosed assets	706					781					905					978					252				303					437					377
Total nonperforming assets	$	9,325		0.98	%	$	9,837		1.03	%	$	10,664		1.11	%	$	11,362		1.17	%	$	6,408	0.63	%	$	5,649		0.59	%	$	5,982		0.63	%	$	6,299		0.66	%
Change in NPAs from prior quarter	$	(512	)			(827		)			(698		)			(644		)			$	759			(333		)			(317		)			(1,042		)


(1)	~~Includes MHFS of~~ ~~$133 million~~, ~~$140 million~~, ~~$145 million, and~~ ~~$149 million~~ at ~~September 30~~, ~~June 30,~~ ~~and~~ ~~March 31, 2017~~ ~~and~~ ~~December 31, 2016, respectively.~~


~~(2)~~	~~Includes an incremental $171 million of nonaccrual loans at September 30, 2017, reflecting updated industry regulatory guidance related to loans in bankruptcy.~~


~~(3)~~	~~Excludes PCI loans because they continue to earn interest income from accretable yield, independent of performance in accordance with their contractual terms.~~


~~(4)~~	Real estate 1-4 family mortgage loans predominantly insured by the FHA or guaranteed by the VA ~~and student loans largely guaranteed by agencies on behalf of the U.S. Department of Education under the FFELP~~ are not placed on nonaccrual status because they are insured or guaranteed. ~~All remaining student loans guaranteed under the FFELP were sold as of March 31, 2017.~~


~~(5)~~	~~See Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for further information on impaired loans.~~

~~(6)~~(2)

Consistent with regulatory reporting requirements, foreclosed real estate resulting from government insured/guaranteed loans are classified as nonperforming. ~~However, both~~Both principal and interest related to these foreclosed real estate assets are collectible because the loans were predominantly insured by the FHA or guaranteed by the VA. ~~Foreclosure~~Receivables related to the foreclosure of certain government guaranteed residential real estate mortgage loans ~~that meet criteria specified by Accounting Standards Update (ASU) 2014-14,~~ ~~Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure, effective as of January 1, 2014~~ are excluded from this table and included in Accounts Receivable in Other Assets. For more information on ~~the changes in foreclosures for government guaranteed residential real estate mortgage loans,~~foreclosed assets, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2016~~2019 Form 10-K.

Table 2320 provides an analysis of the changes in nonaccrual loans.

Table ~~23:~~20:Analysis of Changes in Nonaccrual Loans


	Quarter ended											Quarter ended
(in millions)	Sep 30, 2017			Jun 30, 2017		Mar 31, 2017		Dec 31, 2016		Sep 30, 2016		Mar 31, 2020			Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019
Commercial nonaccrual loans
Balance, beginning of period	$	3,385		3,706		4,059		4,262		4,507		$	2,254		2,312		2,470		2,797		2,188
Inflows	627			704		945		951		1,180		1,479			652		710		621		1,238
Outflows:
Returned to accruing	(97		)	(61	)	(133	)	(59	)	(80	)	(56		)	(124	)	(52	)	(46	)	(43	)
Foreclosures	(3		)	(15	)	(1	)	(15	)	(1	)	—			—		(78	)	(2	)	(15	)
Charge-offs	(173		)	(116	)	(202	)	(292	)	(290	)	(360		)	(201	)	(194	)	(187	)	(158	)
Payments, sales and other	(630		)	(833	)	(962	)	(788	)	(1,054	)	(442		)	(385	)	(544	)	(713	)	(413	)
Total outflows	(903		)	(1,025	)	(1,298	)	(1,154	)	(1,425	)	(858		)	(710	)	(868	)	(948	)	(629	)
Balance, end of period	3,109			3,385		3,706		4,059		4,262		2,875			2,254		2,312		2,470		2,797
Consumer nonaccrual loans
Balance, beginning of period	5,671			6,053		6,325		6,724		7,456		3,092			3,233		3,452		4,108		4,308
Inflows (1)	887			676		814		863		868		749			473		448		437		552
Outflows:
Returned to accruing	(397		)	(425	)	(428	)	(410	)	(597	)	(254		)	(227	)	(274	)	(250	)	(248	)
Foreclosures	(56		)	(72	)	(81	)	(59	)	(85	)	(21		)	(29	)	(32	)	(34	)	(42	)
Charge-offs	(109		)	(117	)	(151	)	(158	)	(192	)	(48		)	(45	)	(44	)	(34	)	(49	)
Payments, sales and other	(486		)	(444	)	(426	)	(635	)	(726	)	(237		)	(313	)	(317	)	(775	)	(413	)
Total outflows	(1,048		)	(1,058	)	(1,086	)	(1,262	)	(1,600	)	(560		)	(614	)	(667	)	(1,093	)	(752	)
Balance, end of period	5,510			5,671		6,053		6,325		6,724		3,281			3,092		3,233		3,452		4,108
Total nonaccrual loans	$	8,619		9,056		9,759		10,384		10,986		$	6,156		5,346		5,545		5,922		6,905


(1)	~~Quarter ended September 30, 2017, includes an incremental $171~~In connection with our adoption of CECL on January 1, 2020, we classified $275 million of ~~nonaccrual~~PCD loans ~~reflecting updated industry regulatory guidance related to loans in bankruptcy.~~as nonaccruing based on performance.

Typically, changes to nonaccrual loans period-over-period represent inflows for loans that are placed on nonaccrual status in accordance with our policy, offset by reductions for loans that are paid down, charged off, sold, foreclosed, or are no longer classified as nonaccrual as a result of continued performance and an improvement in the borrower’s financial condition and loan repayment capabilities. ~~Also, reductions can come from borrower repayments even if the loan remains on nonaccrual.~~

While nonaccrual loans are not free of loss content, we believe exposure to loss is significantly mitigated by the following factors at ~~September 30, 2017:~~March 31, 2020:


•	94% of total commercial nonaccrual loans and 99% of total consumer nonaccrual loans are secured. Of the consumer nonaccrual loans, 96% are secured by real estate and 88% have a combined LTV (CLTV) ratio of 80% or less.


•	losses of $573 million and $985 million have already been recognized on 11% of commercial nonaccrual loans and 34% of consumer nonaccrual loans, respectively, in accordance with our charge-off policies. Once we write down loans to the net realizable value (fair value of collateral less estimated costs to sell), we re-evaluate each loan regularly and record additional write-downs if needed.

~~98%~~ ~~of total commercial nonaccrual loans and~~ ~~99%~~ ~~of total consumer nonaccrual loans are secured. Of the consumer nonaccrual loans,~~ ~~96%~~ ~~are secured by real estate and~~ ~~81%~~ ~~have a combined LTV (CLTV) ratio of 80% or less.~~

~~losses of~~ ~~$380 million~~ ~~and~~ ~~$1.9 billion~~ ~~have already been recognized on~~ ~~16%~~ ~~of commercial nonaccrual loans and~~ ~~45%~~ of consumer nonaccrual loans, respectively. Generally, when a consumer real estate loan is 120 days past due (except when required earlier by guidance issued by bank regulatory agencies), we transfer it to nonaccrual status. When the loan reaches 180 days past due, or is discharged in bankruptcy, it is our policy to write these loans down to net realizable value (fair value of collateral less estimated costs to sell), except for modifications in their trial period that are not written down as long as trial payments are made on time. Thereafter, we reevaluate each loan regularly and record additional write-downs if needed.

~~88%~~ ~~of commercial nonaccrual loans were current on interest, but were on nonaccrual status because the full or timely collection of interest or principal had become uncertain.~~

~~82%~~ ~~of commercial nonaccrual loans were current on both principal and interest, and will remain on nonaccrual until the full and timely collection of principal and interest becomes certain.~~


•	73% of commercial nonaccrual loans were current on interest and 66% of commercial nonaccrual loans were current on both principal and interest, but were on nonaccrual status because the full or timely collection of interest or principal had become uncertain.


•	of the $1.4 billion of consumer loans in bankruptcy or discharged in bankruptcy, and classified as nonaccrual, $905 million were current.

the remaining risk of loss of all nonaccrual loans has been considered and we believe is adequately covered by the allowance for loan losses.

of ~~$2.4 billion~~ ~~of consumer loans in bankruptcy or discharged in bankruptcy, and classified as nonaccrual,~~ ~~$1.5 billion~~ ~~were current.~~

We continue to work with our customers experiencing financial difficulty to determine if they can qualify for a loan modification so that they can stay in their homes. Under ~~both~~ our proprietary modification ~~programs and the Making Home Affordable (MHA)~~ programs, customers may be required to provide updated documentation, and some programs require completion of payment during trial periods to demonstrate sustained performance before the loan can be removed from nonaccrual status.

Risk Management - Credit Risk Management (~~continued~~)(continued)

Table 2421 provides a summary of foreclosed assets and an analysis of changes in foreclosed assets.

Table ~~24:~~21:Foreclosed Assets


(in millions)	Sep 30, 2017			Jun 30, 2017		Mar 31, 2017		Dec 31, 2016		Sep 30, 2016		Mar 31, 2020			Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019
Summary by loan segment
Government insured/guaranteed	$	137		149		179		197		282		$	43		50		59		68		75
PCI loans:
Commercial	67			79		84		91		98		49			62		180		101		124
Consumer	72			67		80		75		88		160			191		198		208		237
Total PCI loans	139			146		164		166		186
All other loans:
Commercial	226			259		275		287		298
Consumer	204			227		287		328		254
Total all other loans	430			486		562		615		552
Total foreclosed assets	$	706		781		905		978		1,020		$	252		303		437		377		436
Analysis of changes in foreclosed assets (1)
Analysis of changes in foreclosed assets
Balance, beginning of period	$	781		905		978		1,020		1,117		$	303		437		377		436		451
Net change in government insured/guaranteed (2)	(12		)	(30	)	(18	)	(85	)	(39	)
Additions to foreclosed assets (3)	198			233		288		405		261
Net change in government insured/guaranteed (1)												(7		)	(9	)	(9	)	(7	)	(13	)
Additions to foreclosed assets (2)												107			126		235		144		193
Reductions:
Sales	(257		)	(330	)	(307	)	(296	)	(421	)	(154		)	(250	)	(155	)	(199	)	(205	)
Write-downs and gains (losses) on sales	(4		)	3		(36	)	(66	)	102		3			(1	)	(11	)	3		10
Total reductions	(261		)	(327	)	(343	)	(362	)	(319	)	(151		)	(251	)	(166	)	(196	)	(195	)
Balance, end of period	$	706		781		905		978		1,020		$	252		303		437		377		436

(1)

During fourth quarter 2016, we evaluated a population of foreclosed properties that were previously security for FHA insured loans, and made the decision to retain some of the properties as foreclosed real estate, thereby foregoing the FHA insurance claim. Accordingly, the loans for which we decided not to file a claim are reported as additions to foreclosed assets rather than included as net change in government insured/guaranteed foreclosures.


~~(2)~~	Foreclosed government insured/guaranteed loans are temporarily transferred to and held by us as servicer, until reimbursement is received from FHA or VA. ~~The net change in government insured/guaranteed foreclosed assets is generally made up of inflows from mortgages held for investment and MHFS, and outflows when we are reimbursed by FHA/VA.~~


~~(3)~~(2)	Includes loans moved into ~~foreclosure~~foreclosed assets from nonaccrual status ~~PCI loans transitioned directly to foreclosed assets~~ and repossessed automobiles.

Foreclosed assets at ~~September 30, 2017,~~March 31, 2020, included ~~$398~~$180 million of foreclosed residential real estate, of which ~~34%~~24% is predominantly FHA insured or VA guaranteed and expected to have minimal or no loss content. The remaining amount of foreclosed assets ~~balance of $308 million~~ has been written down to estimated net realizable value. Of the ~~$706~~$252 million in foreclosed assets at ~~September 30, 2017, 56%~~March 31, 2020, 71% have been in the foreclosed assets portfolio one year or less.

As part of our actions to support customers during the COVID-19 pandemic, we have suspended certain mortgage foreclosure activities, which may affect the amount of our foreclosed assets for the remainder of the year. For additional information on loans in process of foreclosure, see Note 6 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

TROUBLED DEBT RESTRUCTURINGS (TDRs)

Table ~~25:~~22:Troubled Debt Restructurings (TDRs)


(in millions)	Sep 30, 2017		Jun 30, 2017	Mar 31, 2017	Dec 31, 2016	Sep 30, 2016	Mar 31, 2020		Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Commercial:
Commercial and industrial	$	2,424	2,629	2,484	2,584	2,445	$	1,302	1,183	1,162	1,294	1,740
Real estate mortgage	953		1,024	1,090	1,119	1,256	697		669	598	620	681
Real estate construction	48		62	73	91	95	33		36	40	43	45
Lease financing	39		21	8	6	8	10		13	16	31	46
Total commercial TDRs	3,464		3,736	3,655	3,800	3,804	2,042		1,901	1,816	1,988	2,512
Consumer:
Real estate 1-4 family first mortgage	12,617		13,141	13,680	14,134	14,761	7,284		7,589	7,905	8,218	10,343
Real estate 1-4 family junior lien mortgage	1,919		1,975	2,027	2,074	2,144	1,356		1,407	1,457	1,550	1,604
Credit Card	340		316	308	300	294	527		520	504	486	473
Automobile	88		85	80	85	89	76		81	82	85	85
Other revolving credit and installment	124		118	107	101	93	172		170	167	159	156
Trial modifications	183		215	261	299	348	108		115	123	127	136
Total consumer TDRs ~~(1)~~	15,271		15,850	16,463	16,993	17,729	9,523		9,882	10,238	10,625	12,797
Total TDRs	$	18,735	19,586	20,118	20,793	21,533	$	11,565	11,783	12,054	12,613	15,309
TDRs on nonaccrual status	$	5,218	5,637	5,819	6,193	6,429	$	2,846	2,833	2,775	3,058	4,037
TDRs on accrual status (1)	13,517		13,949	14,299	14,600	15,104
TDRs on accrual status:
Government insured/guaranteed							1,157		1,190	1,199	1,209	1,275
Non-government insured/guaranteed							7,562		7,760	8,080	8,346	9,997
Total TDRs	$	18,735	19,586	20,118	20,793	21,533	$	11,565	11,783	12,054	12,613	15,309


~~(1)~~	~~TDR loans include~~ ~~$1.4 billion~~, ~~$1.4 billion~~, ~~$1.5 billion~~, ~~$1.5 billion, and~~ ~~$1.6 billion~~ at ~~September 30~~, ~~June 30~~ ~~and~~ ~~March 31,2017, and~~ ~~December 31~~ ~~and~~ ~~September 30,2016, respectively, of government insured/guaranteed loans that are predominantly insured by the FHA or guaranteed by the VA and accruing.~~

Table 2522 provides information regarding the recorded investment of loans modified in TDRs. The allowance for loan losses for TDRs was ~~$1.6 billion~~$439 million and ~~$2.2~~$1.0 billion at ~~September 30, 2017,~~March 31, 2020, and December 31, ~~2016,~~2019, respectively. See Note 56 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report for additional information regarding TDRs. In those situations where principal is forgiven, the entire amount of such forgiveness is immediately charged ~~off to the extent not done so prior to the modification.~~off. When we delay the timing on the repayment of a portion of principal (principal forbearance), we charge off the amount of forbearance if that amount is not considered fully collectible. As part of our actions to support customers during the COVID-19 pandemic, we have provided borrowers relief in the form of loan modifications. Under the CARES Act and the Interagency Statement, loan modifications related to the COVID-19 pandemic will not be classified as TDRs if they meet certain eligibility criteria. For more information on the CARES Act and the Interagency Statement, see the “Risk Management – Credit Risk Management – Actions to Support Customers During the COVID-19 Pandemic” section in this Report.

For more information on our nonaccrual policies when a restructuring is involved, see the “Risk Management – Credit Risk Management – Troubled Debt Restructurings (TDRs)” section in our ~~2016~~2019 Form 10-K.

Table 2623 provides an analysis of the changes in TDRs. Loans modified more than once are reported as TDR inflows only in the period they are first modified. Other than resolutions such as foreclosures, sales and transfers to held for sale, we may remove loans held for investment from TDR classification, but only if they have been refinanced or restructured at market terms and qualify as a new ~~loan.~~loans.

Risk Management - Credit Risk Management (~~continued~~)(continued)

Table ~~26:~~23:Analysis of Changes in TDRs


						Quarter ended											Quarter ended
(in millions)	Sep 30, 2017			Jun 30, 2017		Mar 31, 2017		Dec 31, 2016		Sep 30, 2016		Mar 31, 2020			Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019
Commercial:
Commercial TDRs
Balance, beginning of quarter	$	3,736		3,655		3,800		3,804		3,386		$	1,901		1,816		1,988		2,512		2,422
Inflows (1)	333			730		642		615		914		452			476		293		232		539
Outflows
Charge-offs	(74		)	(59	)	(108	)	(120	)	(76	)	(56		)	(48	)	(66	)	(37	)	(44	)
Foreclosures	(2		)	(12	)	—		(13	)	(2	)	—			(1	)	—		—		—
Payments, sales and other (2)	(529		)	(578	)	(679	)	(486	)	(418	)	(255		)	(342	)	(399	)	(719	)	(405	)
Balance, end of quarter	3,464			3,736		3,655		3,800		3,804		2,042			1,901		1,816		1,988		2,512
Consumer:
Consumer TDRs
Balance, beginning of quarter	15,850			16,463		16,993		17,729		18,565		9,882			10,238		10,625		12,797		13,109
Inflows (1)	461			444		517		513		542		312			350		360		336		439
Outflows
Charge-offs	(51		)	(51	)	(51	)	(48	)	(65	)	(63		)	(57	)	(56	)	(61	)	(60	)
Foreclosures	(146		)	(159	)	(179	)	(166	)	(230	)	(57		)	(61	)	(70	)	(74	)	(86	)
Payments, sales and other (2)	(811		)	(801	)	(779	)	(987	)	(1,067	)	(544		)	(580	)	(617	)	(2,364	)	(593	)
Net change in trial modifications (3)	(32		)	(46	)	(38	)	(48	)	(16	)	(7		)	(8	)	(4	)	(9	)	(12	)
Balance, end of quarter	15,271			15,850		16,463		16,993		17,729		9,523			9,882		10,238		10,625		12,797
Total TDRs	$	18,735		19,586		20,118		20,793		21,533		$	11,565		11,783		12,054		12,613		15,309


(1)	Inflows include loans that modify, even if they resolve within the period, as well as gross advances on term loans that modified in a prior period and net advances on revolving TDRs that modified in a prior period.

(2)

Other outflows ~~include~~consist of normal amortization/accretion of loan basis adjustments and loans transferred to held-for-sale. ~~It also includes~~ ~~$6 million~~ ~~and~~ ~~$4 million~~ ofOccasionally, loans that have been refinanced or restructured at market terms ~~and qualifying~~qualify as new loans, ~~and removed from TDR classification for the quarters ended September 30, 2017 and December 31,~~ ~~2016, respectively, while~~ no ~~loans were removed from TDR classification for the quarters ended~~ ~~June 30~~ ~~and~~ ~~March 31~~, ~~2017, and~~ ~~September 30~~, ~~2016~~.

which are also included as other outflows.


(3)	Net change in trial modifications includes: inflows of new TDRs entering the trial payment period, net of outflows for modifications that either (i) successfully perform and enter into a permanent modification, or (ii) did not successfully perform according to the terms of the trial period plan and are subsequently charged-off, foreclosed upon or otherwise resolved.

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING

Loans 90 days or more past due ~~as to interest or principal~~ are still accruing if they are (1) well-secured and in the process of collection or (2) real estate 1-4 family mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. Prior to January 1, 2020, PCI loans ~~are not included in~~were excluded from loans 90 days or more past due and still accruing ~~loans even when they are 90 days or more contractually past due. These PCI loans are considered to be accruing~~ because they ~~continue~~continued to earn interest income from accretable yield, independent of performance in accordance with their contractual terms. In connection with our adoption of CECL, PCI loans were reclassified as PCD loans and classified as accruing or nonaccruing based on performance.

~~Excluding insured/guaranteed loans, loans~~

Loans 90 days or more past due and still accruing, excluding insured/guaranteed loans, at ~~September 30, 2017,~~March 31, 2020, were down ~~$11~~$52 million, or 1%6%, from December 31, ~~2016,~~2019 due to ~~payoffs, modifications and other loss mitigation activities and credit~~

~~stabilization.~~payoffs. Also, fluctuations from quarter to quarter ~~are~~may be influenced by seasonality.

Loans 90 days or more past due and still accruing whose repayments are predominantly insured by the FHA or guaranteed by the VA for mortgages were ~~$9.3~~$6.1 billion at ~~September 30, 2017,~~March 31, 2020, down from ~~$10.9~~$6.4 billion at December 31, ~~2016, due to improving credit trends. All remaining student loans guaranteed by agencies on behalf of the U.S. Department of Education under the FFELP were sold as of March 31, 2017.~~2019.

Table 2724 reflects ~~non-PCI~~ loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed. For additional information on delinquencies by loan class, see Note 56 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

Table ~~27:~~24:Loans 90 Days or More Past Due and Still Accruing


(in millions)	Sep 30, 2017		Jun 30, 2017	Mar 31, 2017	Dec 31, 2016	Sep 30, 2016	Mar 31, 2020		Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Total (excluding PCI (1)):	$	10,227	9,716	10,525	11,858	12,068
Total:							$	7,023	7,285	7,130	7,258	7,870
Less: FHA insured/VA guaranteed ~~(3)~~(1)	9,266		8,873	9,585	10,883	11,198	6,142		6,352	6,308	6,478	6,996
Less: Student loans guaranteed under the FFELP (4)	—		—	—	3	17
Total, not government insured/guaranteed	$	961	843	940	972	853	$	881	933	822	780	874
By segment and class, not government insured/guaranteed: Commercial:
Commercial and industrial	$	27	42	88	28	47	$	24	47	6	17	42
Real estate mortgage	11		2	11	36	4	28		31	28	24	20
Real estate construction	—		10	3	—	—	1		—	—	—	5
Total commercial	38		54	102	64	51	53		78	34	41	67
Consumer:
Real estate 1-4 family first mortgage (3)	190		145	149	175	171
Real estate 1-4 family junior lien mortgage (3)	49		44	42	56	54
Real estate 1-4 family first mortgage							128		112	100	108	117
Real estate 1-4 family junior lien mortgage							25		32	35	27	28
Credit card	475		411	453	452	392	528		546	491	449	502
Automobile	111		91	79	112	81	69		78	75	63	68
Other revolving credit and installment	98		98	115	113	104	78		87	87	92	92
Total consumer	923		789	838	908	802	828		855	788	739	807
Total, not government insured/guaranteed	$	961	843	940	972	853	$	881	933	822	780	874


(1)	~~PCI loans totaled~~ ~~$1.4 billion~~, ~~$1.5 billion~~, ~~$1.8 billion~~, ~~$2.0 billion, and~~ ~~$2.2 billion~~ at ~~September 30~~, ~~June 30~~ ~~and~~ ~~March 31~~, ~~2017~~ ~~and~~ ~~December 31~~ ~~and~~ ~~September 30,2016, respectively.~~


~~(2)~~	Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.


~~(3)~~	~~Includes mortgages held for sale 90 days or more past due and still accruing.~~


~~(4)~~	Represents loans whose repayments are largely guaranteed by agencies on behalf of the U.S. Department of Education under the FFELP. All remaining student loans guaranteed under the FFELP were sold as of March 31, 2017.

Risk Management - Credit Risk Management (~~continued~~)(continued)

NET LOAN CHARGE-OFFS

Table ~~28:~~25:Net Loan Charge-offs


																					Quarter ended																									Quarter ended
	Sep 30, 2017					Jun 30, 2017					Mar 31, 2017					Dec 31, 2016					Sep 30, 2016					Mar 31, 2020					Dec 31, 2019					Sep 30, 2019					Jun 30, 2019					Mar 31, 2019
($ in millions)	Net loan charge- offs			% of avg. loans(1)		Net loan charge- offs			% of avg. loans (1)		Net loan charge- offs			% of avg. loans (1)		Net loan charge-offs			% of avg. loans (1)		Net loan charge-offs			% of avg. loans (1)		Net loan charge- offs			% of avg. loans(1)		Net loan charge- offs			% of avg. loans (1)		Net loan charge- offs			% of avg. loans (1)		Net loan charge-offs			% of avg. loans (1)		Net loan charge-offs			% of avg. loans (1)
Commercial:
Commercial and industrial	$	125		0.15	%	$	78		0.10	%	$	171		0.21	%	$	256		0.31	%	$	259		0.32	%	$	333		0.37	%	$	168		0.19	%	$	147		0.17	%	$	159		0.18	%	$	133		0.15	%
Real estate mortgage	(3		)	(0.01	)	(6		)	(0.02	)	(25		)	(0.08	)	(12		)	(0.04	)	(28		)	(0.09	)	(2		)	(0.01	)	4			0.01		(8		)	(0.02	)	4			0.01		6			0.02
Real estate construction	(15		)	(0.24	)	(4		)	(0.05	)	(8		)	(0.15	)	(8		)	(0.13	)	(18		)	(0.32	)	(16		)	(0.32	)	—			—		(8		)	(0.14	)	(2		)	(0.04	)	(2		)	(0.04	)
Lease financing	6			0.12		7			0.15		5			0.11		15			0.32		2			0.04		9			0.19		31			0.63		8			0.17		4			0.09		8			0.17
Total commercial	113			0.09		75			0.06		143			0.11		251			0.20		215			0.17		324			0.25		203			0.16		139			0.11		165			0.13		145			0.11
Consumer:
Real estate 1-4 family first mortgage	(16		)	(0.02	)	(16		)	(0.02	)	7			0.01		(3		)	—		20			0.03		(3		)	—		(3		)	—		(5		)	(0.01	)	(30		)	(0.04	)	(12		)	(0.02	)
Real estate 1-4 family junior lien mortgage	1			—		(4		)	(0.03	)	23			0.21		44			0.38		49			0.40		(5		)	(0.07	)	(16		)	(0.20	)	(22		)	(0.28	)	(19		)	(0.24	)	(9		)	(0.10	)
Credit card	277			3.08		320			3.67		309			3.54		275			3.09		245			2.82		377			3.81		350			3.48		319			3.22		349			3.68		352			3.73
Automobile	202			1.41		126			0.86		167			1.10		166			1.05		137			0.87		82			0.68		87			0.73		76			0.65		52			0.46		91			0.82
Other revolving credit and installment	140			1.44		154			1.58		156			1.60		172			1.70		139			1.40		134			1.59		148			1.71		138			1.60		136			1.56		128			1.47
Total consumer ~~(2)~~	604			0.53		580			0.51		662			0.59		654			0.56		590			0.51		585			0.53		566			0.51		506			0.46		488			0.45		550			0.51
Total	$	717		0.30	%	$	655		0.27	%	$	805		0.34	%	$	905		0.37	%	$	805		0.33	%	$	909		0.38	%	$	769		0.32	%	$	645		0.27	%	$	653		0.28	%	$	695		0.30	%


(1)	Quarterly net loan charge-offs (recoveries) as a percentage of average respective loans are annualized.


~~(2)~~	~~Quarter ended September 30, 2017, includes an incremental~~ ~~$29 million~~ ~~of charge-offs in accordance with updated industry regulatory guidance regarding the timing of loss recognition for real estate 1-4 family mortgage and automobile loans in bankruptcy.~~

Table 2825 presents net loan charge-offs for ~~third~~first quarter ~~2017~~2020 and the previous four quarters. Net loan charge-offs in ~~third~~first quarter ~~2017~~2020 were ~~$717~~$909 million ~~(0.30%~~(0.38% of average total loans outstanding), compared with ~~$805~~$695 million ~~(0.33%~~(0.30%) in ~~third~~first quarter ~~2016.~~2019.

The ~~decrease~~increase in commercial and industrial net loan charge-offs ~~from third~~in first quarter ~~2016 reflected continued improvement~~2020 was driven by higher losses in our oil and gas portfolio. ~~Our commercial real estate portfolios were~~The increase in ~~a net recovery position. Total~~ consumer net loan charge-offs ~~increased slightly from~~in first quarter 2020 was driven by higher losses in the ~~prior year due to an increase in~~ credit card ~~and automobile~~portfolio.

The COVID-19 pandemic may continue to impact the credit quality of our loan portfolio, including resulting in additional net ~~charge-offs, partially offset by a decrease~~loan charge-offs. For more information on customer accommodations in ~~residential real estate net charge-offs.~~response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – Actions to Support Customers During the COVID-19 Pandemic” section in this Report.

ALLOWANCE FOR CREDIT LOSSES~~The~~We maintain an allowance for credit losses ~~which consists of the allowance~~ for ~~loan losses and the allowance for unfunded credit commitments,~~loans, which is management’s estimate of the expected credit losses ~~inherent~~ in the loan portfolio and unfunded credit commitments, at the balance sheet date, excluding loans and unfunded credit commitments carried at fair ~~value. The detail of the changes in the~~value or held for sale. Additionally, we maintain an allowance for credit losses ~~by portfolio segment (including charge-offs~~for debt securities classified as either available-for-sale or held-to-maturity, other financial assets measured at amortized cost, net investments in leases, and ~~recoveries by loan class) is in Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.~~other off-balance sheet credit exposures.

We apply a disciplined process and methodology to establish our allowance for credit losses each quarter. ~~This~~The process for establishing the allowance for credit losses for loans takes into consideration many factors, including historical and forecasted loss trends, loan-level credit quality ratings and loan grade-specific characteristics. The process involves subjective and complex judgments. In addition, we review a variety of credit metrics and trends. These credit metrics and trends, however, do not solely determine the amount of the allowance as we use several analytical tools. Our estimation approach for the commercial portfolio reflects the estimated probability of default in accordance with the borrower’s financial strength, and the severity of loss in the event of default, considering the quality of any underlying collateral. Probability of default and severity at the time of default are statistically derived through historical observations of defaults and losses after default within each credit risk rating. Our estimation approach for the consumer portfolio uses forecasted losses that represent our best estimate of inherent loss based on historical experience, quantitative and other mathematical techniques. For additional information on our allowance for credit losses, see the “Critical Accounting Policies – Allowance for Credit Losses” section ~~in our 2016 Form 10-K~~ and Note 51 (Summary of Significant Accounting Policies) to Financial Statements in this Report. For additional information on our allowance for credit losses for loans, see Note 6 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report, and for additional information on our allowance for credit losses for debt securities, see the “Balance Sheet Analysis – Available-For-Sale and Held-To-Maturity Debt Securities” section and Note 5 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report.

Table 2926 presents the allocation of the allowance for credit losses for loans by loan segment and class for the most recent quarter end and last four year ends.

~~Table 29:Allocation~~ The detail of the ~~Allowance for Credit Losses (ACL)~~

Sep 30, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
(in millions) ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

Commercial:
Commercial and industrial $ 4,076
34 % $ 4,560
34 % $ 4,231
33 % $ 3,506
32 % $ 3,040
29 %
Real estate mortgage 1,248
14
1,320
14
1,264
13
1,576
13
2,157
14
Real estate construction 1,262
3
1,294
2
1,210
3
1,097
2
775
2
Lease financing 246
2
220
2
167
1
198
1
131
1
Total commercial 6,832
53
7,394
52
6,872
50
6,377
48
6,103
46
Consumer:
Real estate 1-4 family first mortgage 1,173
29
1,270
29
1,895
30
2,878
31
4,087
32
Real estate 1-4 family
junior lien mortgage
672
4
815
5
1,223
6
1,566
7
2,534
8
Credit card 1,900
4
1,605
4
1,412
4
1,271
4
1,224
3
Automobile 853
6
817
6
529
6
516
6
475
6
Other revolving credit and installment 679
4
639
4
581
4
561
4
548
5
Total consumer 5,277
47
5,146
48
5,640
50
6,792
52
8,868
54
Total $ 12,109
100 % $ 12,540
100 % $ 12,512
100 % $ 13,169
100 % $ 14,971
100 %

Sep 30, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Components:
Allowance for loan losses $ 11,078 11,419 11,545 12,319 14,502
Allowance for unfunded
credit commitments
1,031 1,121 967 850 469
Allowance for credit losses $ 12,109 12,540 12,512 13,169 14,971
Allowance for loan losses as a percentage of total loans 1.16 % 1.18 1.26 1.43 1.76
Allowance for loan losses as a percentage of total net charge-offs (1) 390 324 399 418 322
Allowance for credit losses as a percentage of total loans 1.27 1.30 1.37 1.53 1.82
Allowance for credit losses as a percentage of total nonaccrual loans 141 121 110 103 96


~~(1)~~	~~Total net charge-offs are annualized for quarter ended~~ ~~September 30, 2017~~.

~~In addition to~~changes in the allowance for credit losses ~~there was $454 million at September 30, 2017,~~for loans by portfolio segment

(including charge-offs and ~~$954 million at December 31, 2016 of nonaccretable difference to absorb losses for PCI loans, which totaled $13.6 billion at September 30, 2017. The allowance for credit losses~~recoveries by loan class) is lower than otherwise would have been required without PCI loan accounting. As a result of PCI loans, certain ratios of the Company may not be directly comparable with credit-related metrics for other financial institutions. Additionally, loans purchased at fair value, including loans from the GE Capital business acquisitions, generally reflect a lifetime credit loss adjustmentincluded in Note 6 (Loans and therefore do not initially require additions to the allowance as is typically associated with loan growth. For additional information on PCI loans, see the “Risk Management – Credit Risk Management – Purchased Credit-Impaired Loans” section and Note 5 (Loans andRelated Allowance for Credit Losses) to Financial Statements in this Report.

Table 26:Allocation of the Allowance for Credit Losses (ACL) for Loans(1)



	Mar 31, 2020				Dec 31, 2019				Dec 31, 2018				Dec 31, 2017				Dec 31, 2016
($ in millions)	ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans
Commercial:
Commercial and industrial	$	4,231	40	%	$	3,600	37	%	$	3,628	37	%	$	3,752	35	%	$	4,560	34	%
Real estate mortgage	848		12		1,236		13		1,282		13		1,374		13		1,320		14
Real estate construction	36		2		1,079		2		1,200		2		1,238		3		1,294		2
Lease financing	164		2		330		2		307		2		268		2		220		2
Total commercial	5,279		56		6,245		54		6,417		54		6,632		53		7,394		52
Consumer:
Real estate 1-4 family first mortgage	836		29		692		30		750		30		1,085		30		1,270		29
Real estate 1-4 family junior lien mortgage	125		3		247		3		431		3		608		4		815		5
Credit card	3,481		4		2,252		4		2,064		4		1,944		4		1,605		4
Automobile	1,016		5		459		5		475		5		1,039		5		817		6
Other revolving credit and installment	1,285		3		561		4		570		4		652		4		639		4
Total consumer	6,743		44		4,211		46		4,290		46		5,328		47		5,146		48
Total	$	12,022	100	%	$	10,456	100	%	$	10,707	100	%	$	11,960	100	%	$	12,540	100	%

	Mar 31, 2020				Dec 31, 2019				Dec 31, 2018				Dec 31, 2017				Dec 31, 2016
Components:
Allowance for loan losses	$	11,263			9,551				9,775				11,004				11,419
Allowance for unfunded credit commitments	759				905				932				956				1,121
Allowance for credit losses for loans	$	12,022			10,456				10,707				11,960				12,540
Allowance for loan losses as a percentage of total loans	1.12			%	0.99				1.03				1.15				1.18
Allowance for loan losses as a percentage of total net loan charge-offs (2)	308				346				356				376				324
Allowance for credit losses for loans as a percentage of total loans	1.19				1.09				1.12				1.25				1.30
Allowance for credit losses for loans as a percentage of total nonaccrual loans	195				196				165				156				126


(1)	Disclosure is not comparative due to our adoption of CECL on January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.


(2)	Total net loan charge-offs are annualized for quarter ended March 31, 2020.

The ratio of the allowance for credit losses for loans to total nonaccrual loans may fluctuate significantly from period to period due to such factors as the mix of loan types in the portfolio, borrower credit strength and the value and marketability of collateral. ~~Our nonaccrual loans consisted~~

~~primarily of real estate 1-4 family first and junior lien mortgage loans at September 30, 2017.~~

The allowance for credit losses ~~decreased$431 million,~~for loans increased $1.6 billion, or 3%15%, from December 31, ~~2016,~~2019, driven by a $2.9 billion increase in the allowance for credit losses for loans in first quarter 2020, partially offset by a $1.3 billion decline as a result of adopting CECL. The increase in the allowance for credit losses for loans reflected forecasted credit deterioration due to ~~a decrease in our commercial allowance reflecting~~the COVID-19 pandemic and credit ~~quality improvement, including~~weakness in the oil and gas portfolio ~~as well as improvement~~due to the recent sharp declines in ~~our residential real estate portfolios, partially offset by increased allowance in the credit card, automobile and other revolving credit and installment portfolios.~~oil prices. Total provision for credit losses for loans was ~~$717~~$3.8 billion in first quarter 2020, compared with $845 million in ~~third~~first quarter ~~2017,~~2019. The increase in the provision for credit losses for loans in first quarter 2020, compared with ~~$805 million in third quarter 2016, reflecting~~ the same ~~changes mentioned above for~~period a year ago, reflected an

increase in the allowance for credit ~~losses.~~losses for loans due to forecasted credit deterioration as a result of the impact of the COVID-19 pandemic and higher net loan charge-offs largely in the oil and gas portfolio due to the recent sharp declines in oil prices.

In determining our allowance for credit losses for loans in first quarter 2020, our analysis considered multiple factors to evaluate the rapidly evolving impacts related to the COVID-19 pandemic. We evaluated a range of expected losses based on economic forecasts that projected both a limited and a severe downturn in economic conditions. In addition, we reviewed several alternative forecasts that included relatively longer yet less severe downturns, as well as relatively shorter yet deeper downturns followed by a significant rebound near the end of 2020. We also assessed the impact of the federal government’s recent economic stimulus programs coupled with expectations for customer accommodation activity of up to six months. Our

Risk Management - Credit Risk Management (continued)

forecasted view reflected a sustained recession through 2020 with a sustained increase in unemployment and decrease in gross domestic product (GDP) for the rest of the year. We also considered the estimated impact on certain industries that we expect to be directly and most adversely affected by the COVID-19 pandemic, as well as our exposure to the oil and gas industry and the potential for additional draws on commercial loan commitments.

Future amounts of the allowance for credit losses for loans will be based on a variety of factors, including loan balance changes, portfolio credit quality and mix changes, and changes in general economic conditions and expectations (including for unemployment and GDP), among other factors. Based on economic conditions at the end of first quarter 2020, it was difficult to estimate the length and severity of the economic downturn that may result from the COVID-19 pandemic and the impact of other factors that may influence the level of eventual losses and corresponding requirements for future amounts of the allowance for credit losses, including the impact of economic stimulus programs and customer accommodation activity. The ultimate impact of the COVID-19 pandemic will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic. The pandemic could continue to result in the recognition of credit losses in our loan portfolios and increases in our allowance for credit losses, particularly if the impact on the economy worsens.

We believe the allowance for credit losses for loans of ~~$12.1~~$12.0 billion at ~~September 30, 2017,~~March 31, 2020, was appropriate to cover expected credit losses, ~~inherent in the loan portfolio,~~ including unfunded credit commitments, at that date. Approximately $797 million of the allowance at September 30, 2017, was allocated to our oil and gas portfolio, compared with $1.3 billion at December 31, 2016. This represented 6.2% and 8.5% of total oil and gas loans outstanding at September 30, 2017, and December 31, 2016, respectively. The ~~allowance for credit losses at September 30, 2017 also included~~

~~Risk Management - Credit Risk Management (continued~~)

~~$450 million for coverage of our preliminary estimate of potential hurricane-related losses from Hurricanes Harvey, Irma and Maria. However, the~~ entire allowance is available to absorb expected credit losses ~~inherent in~~from the total loan portfolio. The allowance for credit losses for loans is subject to change and reflects existing factors as of the date of determination, including economic or market conditions and ongoing internal and external examination processes. Due to the sensitivity of the allowance for credit losses for loans to changes in the economic and business environment, it is possible that we will incur incremental credit losses not anticipated as of the balance sheet date. Future allowance levels will be based on a variety of factors, including loan growth, portfolio performance and general economic conditions. Our process for determining the allowance for credit losses is discussed in the “Critical Accounting Policies – Allowance for Credit Losses” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2016 Form 10-K.

LIABILITY FOR MORTGAGE LOAN REPURCHASE LOSSES

In connection with our sales and securitization of residential mortgage loans to various parties, we have established a mortgage repurchase liability, initially at fair value, related to various representations and warranties that reflect management’s estimate of losses for loans for which we could have a repurchase obligation, whether or not we currently service those loans, based on a combination of factors. Our mortgage repurchase liability estimation process also incorporates a forecast of repurchase demands associated with mortgage insurance rescission activity.

Because we typically retain the servicing for the mortgage loans we sell or securitize, we believe the quality of our residential mortgage loan servicing portfolio provides helpful information in evaluating our repurchase liability. Of the $1.6 trillion in the residential mortgage loan servicing portfolio at September 30, 2017, 95% was current and less than 1% was subprime at origination. Our combined delinquency and foreclosure rate on this portfolio was 4.83% at September 30, 2017, and at December 31, 2016. Two percent of this portfolio is private label securitizations for which we originated the loans and, therefore have some repurchase risk.

The overall level of unresolved repurchase demands and mortgage insurance rescissions outstanding at September 30, 2017, was $120 million, representing 549 loans, up from a year ago both in number of outstanding loans and in total dollar balances. The increase was largely due to private investor demands we expect to resolve with minimal repurchase risk.

Our liability for mortgage repurchases, included in “Accrued expenses and other liabilities” in our consolidated balance sheet, represents our best estimate of the probable loss that we expect to incur for various representations and warranties in the contractual provisions of our sales of mortgage loans. The liability was $179 million at September 30, 2017, and $229 million at December 31, 2016. In third quarter 2017, we released $6 million due to re-estimation of our liability based on recently observed trends, which increased net gains on mortgage loan origination/sales activities, compared with a release of $13 million in third quarter 2016. Additionally, in third quarter 2017, we recognized a $10 million reserve build for an MSR acquisition. We incurred net losses on repurchased loans and investor reimbursements totaling $3 million in third quarter 2017 and in third quarter 2016.

Because of the uncertainty in the various estimates underlying the mortgage repurchase liability, there is a range of losses in excess of the recorded mortgage repurchase liability that are reasonably possible. The estimate of the range of possible loss for representations and warranties does not represent a probable loss, and is based on currently available information, significant judgment, and a number of assumptions that are subject to change. The high end of this range of reasonably possible losses exceeded our recorded liability by $180 million at September 30, 2017, and was determined based upon modifying the assumptions (particularly to assume significant changes in investor repurchase demand practices) used in our best estimate of probable loss to reflect what we believe to be the high end of reasonably possible adverse assumptions.

For ~~additional~~ information on our repurchase liability, see the “Risk Management – Credit Risk Management – Liability For Mortgage Loan Repurchase Losses” section in our ~~2016~~2019 Form ~~10-K and Note 8 (Mortgage Banking Activities) to Financial Statements in this Report.~~10-K.

RISKS RELATING TO SERVICING ACTIVITIESIn addition to servicing loans in our portfolio, we act as servicer and/or master servicer of residential mortgage loans included in GSE-guaranteed mortgage securitizations, GNMA-guaranteed mortgage securitizations of FHA-insured/VA-guaranteed mortgages and private label mortgage securitizations, as well as for unsecuritized loans owned by institutional investors. In connection with our servicing activities, we ~~have entered into various settlements~~could become subject to consent orders and settlement agreements with federal and state regulators ~~to resolve certain~~for alleged servicing issues and practices. In general, these ~~settlements required~~can require us to provide customers with loan modification relief, refinancing relief, and foreclosure prevention and assistance, as well as ~~imposed~~can impose certain monetary penalties on us.

As a servicer, we are required to advance certain delinquent payments of principal and interest on the mortgage loans we service. Due to an increase in customer requests for payment deferrals as a result of the COVID-19 pandemic, we expect the amount of principal and interest advances we are required to make as a servicer to increase, which may adversely impact our

net servicing income. The amount and timing of reimbursement of these advances varies by investor and the applicable servicing agreements in place.

For additional information about the risks ~~and various settlements~~ related to our servicing activities, see the “Risk Management – Credit Risk Management – Risks Relating to Servicing Activities” section in our ~~2016~~2019 Form 10-K.

Asset/Liability Management

Asset/liability management involves evaluating, monitoring and managing interest rate risk, market risk, liquidity and funding. Primary oversight of interest rate risk and market risk resides with the Finance Committee of our Board, ~~of Directors (Board),~~ which oversees the administration and effectiveness of financial risk management policies and processes used to assess and manage these risks. Primary oversight of liquidity and funding resides with the Risk Committee of the Board. At the management level we utilize a Corporate Asset/Liability ~~Management~~ Committee (Corporate ALCO), which consists of ~~senior financial,~~management from finance, risk and business ~~executives,~~groups, to oversee these risks and ~~report on them periodically~~provide periodic reports to the Board’s Finance Committee and Risk Committee as appropriate. As discussed in more detail for ~~trading~~market risk activities below, we employ separate management level oversight specific to market risk.

INTEREST RATE RISK Interest rate risk, which potentially can have a significant earnings impact, is an integral part of being a financial intermediary. We are subject to interest rate risk because:

assets and liabilities may mature or reprice at different times (for example, if assets reprice faster than liabilities and interest rates are generally ~~falling,~~rising, earnings will initially ~~decline)~~increase);

assets and liabilities may reprice at the same time but by different amounts (for example, when the general level of interest rates is ~~falling,~~rising, we may ~~reduce~~increase rates paid on checking and savings deposit accounts by an amount that is less than the general ~~decline~~rise in market interest rates);

short-term and long-term market interest rates may change by different amounts (for example, the shape of the yield curve may affect new loan yields and funding costs differently);

the remaining maturity of various assets or liabilities may shorten or lengthen as interest rates change (for example, if long-term mortgage interest rates ~~decline~~increase sharply, MBS held in the ~~investment~~debt securities portfolio may ~~prepay significantly earlier~~pay down slower than anticipated, which could ~~reduce~~impact portfolio income); or

interest rates may also have a direct or indirect effect on loan demand, collateral values, credit losses, mortgage origination volume, the fair value of MSRs and other financial instruments, the value of the pension liability and other items affecting earnings.

We assess interest rate risk by comparing outcomes under various net interest income simulations using many interest rate scenarios that differ in the direction of interest rate changes, the degree of change over time, the speed of change and the projected shape of the yield curve. These simulations require assumptions regarding drivers of earnings and balance sheet composition such as loan originations, prepayment speeds on loans and ~~investment~~debt securities, deposit flows and mix, as well as pricing strategies.

Currently, our profile is such that we project net interest income will benefit modestly from higher interest rates as our assets would reprice faster and to a greater degree than our

liabilities, while in the case of lower interest rates, our assets would reprice downward and to a greater degree than our liabilities.

~~As of September 30, 2017, our~~Our most recent simulations estimate net interest income sensitivity over the next two years under a range of both lower and higher interest rates. Measured impacts from standardized ramps (gradual changes) and shocks

~~(instantaneous~~ (instantaneous changes) are summarized in Table ~~30,~~27, indicating net interest income sensitivity relative to the ~~Company's~~Company’s base net interest income plan. Ramp scenarios assume interest rates move gradually in parallel across the yield curve relative to the base scenario in year one, and the full amount of the ramp is held as a constant differential to the base scenario in year two. The following describes the simulation assumptions for the scenarios presented in Table ~~30:~~27:

Simulations are dynamic and reflect anticipated growth across assets and liabilities.

Other macroeconomic variables that could be correlated with the changes in interest rates are held constant.

Mortgage prepayment and origination assumptions vary across scenarios and reflect only the impact of the higher or lower interest rates.

Our base scenario deposit forecast incorporates mix changes consistent with the base interest rate trajectory. Deposit mix is modeled to be the same as in the base scenario across the alternative scenarios. In higher interest rate scenarios, customer activity that shifts balances into higher-yielding products could reduce expected net interest income.

We hold the size of the projected ~~investment~~debt and equity securities ~~portfolio~~portfolios constant across scenarios.

Table ~~30:~~27:Net Interest Income Sensitivity Over Next Two-Year Horizon Relative to Base Expectation


		Lower Rates	Higher Rates				Lower Rates (1)	Higher Rates
($ in billions)	Base	100 bps Ramp Parallel Decrease	100 bps Instantaneous Parallel Increase	200 bps Ramp Parallel Increase	Base		100 bps Ramp Parallel Decrease	100 bps Instantaneous Parallel Increase	200 bps Ramp Parallel Increase
First Year of Forecasting Horizon
Net Interest Income Sensitivity to Base Scenario		(0.7) - (0.2)	1.1 - 1.6	0.9 - 1.4		$	(1.3) - (0.8)	4.7 - 5.2	4.0 - 4.5
Key Rates at Horizon End
Fed Funds Target	2.09	1.09	3.09	4.09	0.27	%	0.00	1.27	2.27
10-year CMT ~~(1)~~(2)	2.97	1.97	3.97	4.97	0.81		0.00	1.81	2.81
Second Year of Forecasting Horizon
Net Interest Income Sensitivity to Base Scenario		(1.1) - (0.6)	1.5 - 2.0	2.1 - 2.6		$	(3.5) - (3.0)	6.8 - 7.3	10.1 - 10.6
Key Rates at Horizon End
Fed Funds Target	2.50	1.50	3.50	4.50	0.42	%	0.00	1.42	2.42
10-year CMT ~~(1)~~(2)	3.59	2.59	4.59	5.59	0.89		0.00	1.89	2.89


(1)	U.S. interest rates are floored at zero where applicable in this scenario analysis


(2)	U.S. Constant Maturity Treasury Rate

The sensitivity results above do not capture interest rate sensitive noninterest income and expense impacts. Our interest rate sensitive noninterest income and expense ~~is significantly~~are predominantly driven by mortgage ~~activity,~~banking activities, and may move in the opposite direction of our net interest income. ~~Typically,~~Mortgage originations generally decline in response to higher interest rates ~~mortgage activity, primarily~~and generally increase, particularly refinancing activity, ~~generally declines. And~~ in response to lower interest ~~rates, mortgage activity generally increases.~~rates. Mortgage results are also impacted by the valuation of MSRs and related hedge positions. See the “Risk Management – Asset/Liability Management –

Mortgage Banking Interest Rate and Market Risk” section in this Report for more information.

Interest rate sensitive noninterest income also results from changes in earnings credit for noninterest-bearing deposits that reduce treasury management deposit service fees. Additionally, for the trading portfolio, our trading assets are (before the effects of certain economic hedges) generally less sensitive to changes in interest rates than the related funding liabilities. As a result, net interest income from the trading portfolio contracts and expands as interest rates rise and fall, respectively. The impact to net interest income does not include the fair value changes of trading securities and loans, which, along with the effects of related economic hedges, are recorded in noninterest income.

We use the ~~investment~~debt securities portfolio and exchange-traded and over-the-counter (OTC) interest rate derivatives to hedge our interest rate exposures. See the “Balance Sheet Analysis – ~~Investment~~Available-for-Sale and Held-to-Maturity Debt Securities” section in this Report for more information on the use of the available-for-sale and ~~held-to-~~

~~Asset/Liability Management (continued~~)

~~maturity~~held-to-maturity securities portfolios. The notional or contractual amount, credit risk amount and fair value of the derivatives used to hedge our interest rate risk exposures as of ~~September 30, 2017,~~March 31, 2020, and December 31, ~~2016,~~2019, are presented in Note 1215 (Derivatives) to Financial Statements in this Report. We use derivatives for asset/liability management in two main ways:

to convert the cash flows from selected asset and/or liability instruments/portfolios including investments, commercial loans and long-term debt, from fixed-rate payments to floating-rate payments, or vice versa; and

to economically hedge our mortgage origination pipeline, funded mortgage loans and MSRs using interest rate swaps, swaptions, futures, forwards and options.

MORTGAGE BANKING INTEREST RATE AND MARKET RISK We originate, fund and service mortgage loans, which subjects us to various risks, including credit, liquidity and interest rate risks. For more information on mortgage banking interest rate and market risk, see the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section in our ~~2016~~2019 Form 10-K.

While our hedging activities are designed to balance our mortgage banking interest rate risks, the financial instruments we use may not perfectly correlate with the values and income being hedged. For example, the change in the value of ARM production held for sale from changes in mortgage interest rates may or may not be fully offset by ~~LIBOR~~ index-based financial instruments used as economic hedges for such ARMs. ~~Additionally, hedge-carry income on our economic~~Hedge results may also be impacted as the overall level of hedges ~~for the MSRs may not continue at recent levels if the spread between short-term and long-term~~changes as interest rates ~~decreases~~change, or as there are other changes in the market for mortgage forwards that may affect the implied ~~carry.~~carry on the MSRs.

The total carrying value of our residential and commercial MSRs was ~~$14.7~~$9.5 billion at ~~September 30, 2017,~~March 31, 2020, and ~~$14.4~~$12.9 billion at December 31, ~~2016.~~2019. The weighted-average note rate on our portfolio of loans serviced for others was ~~4.23%~~4.20% at ~~September 30, 2017,~~March 31, 2020, and ~~4.26%~~4.25% at December 31, ~~2016.~~2019. The carrying value of our total MSRs represented ~~0.87%~~0.60% and 0.79% of mortgage loans serviced for others at ~~September 30, 2017,~~March 31, 2020 and ~~0.85% at~~ December 31, ~~2016.~~2019, respectively.

MARKET RISK ~~– TRADING ACTIVITIES~~The Finance Committee of our Board of Directors reviews the acceptable market risk appetite for our trading activities. We engage in trading activities to accommodate the investment and risk management activities of our customers (which generally comprises a subset of the transactions recorded as trading and derivative assets and liabilities on our balance sheet), and to execute economic hedging to manage certain balance sheet risks. These activities primarily occur within our Wholesale Banking businesses and to a lesser extent other divisions of the Company. All of our trading assets, and derivative assets and liabilities, (including securities, foreign exchange transactions, and commodity transactions) are carried at fair value. Income earned related to these trading activities include net interest income and changes in fair value related to trading assets and derivative assets and liabilities. Net interest income earned from trading activity is reflected in the interest income and interest expense components of our income statement. Changes in fair value related to trading assets, and derivative assets and liabilities are reflected in net gains on trading activities, a component of noninterest income in our income statement.

~~Table 31 presents total revenue from trading activities.~~

~~Table 31:Net Gains (Losses) from Trading Activities~~

Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
Interest income (1) $ 754
593
$ 2,107
1,761
Less: Interest expense (2) 109
88
309
260
Net interest income 645
505
1,798
1,501
Noninterest income:
Net gains (losses) from trading activities (3):
Customer accommodation 188
348
720
947
Economic hedges and other (4) 57
67
201
(4 )
Total net gains from trading activities 245
415
921
943
Total trading-related net interest and noninterest income $ 890
920
$ 2,719
2,444


~~(1)~~	~~Represents interest and dividend income earned on trading securities.~~


~~(2)~~	~~Represents interest and dividend expense incurred on trading securities we have sold but have not yet purchased.~~


~~(3)~~	~~Represents realized gains (losses) from our trading activity and unrealized gains (losses) due to changes in fair value of our trading positions, attributable to the type of business activity.~~


~~(4)~~	~~Excludes economic hedging of mortgage banking and asset/liability management activities, for which hedge results (realized and unrealized) are reported with the respective hedged activities.~~

~~Customer accommodation~~ Customer accommodation activities are conducted to help customers manage their investment and risk management needs. We engage in market-making activities or act as an intermediary to purchase or sell financial instruments in anticipation of or in response to customer needs. This category also includes positions we use to manage our exposure to customer transactions.

In our customer accommodation trading, we serve as intermediary between buyer and seller. For example, we may purchase or sell a derivative to a customer who wants to manage interest rate risk exposure. We typically enter into offsetting derivative or security positions with a separate counterparty or exchange to manage our exposure to the derivative with our customer. We earn income on this activity based on the transaction price difference between the customer and offsetting derivative or security positions, which is reflected in the fair value changes of the positions recorded in net gains on trading activities.

Customer accommodation trading also includes net gains related to market-making activities in which we take positions to facilitate customer order flow. For example, we may own securities recorded as trading assets (long positions) or sold securities we have not yet purchased, recorded as trading liabilities (short positions), typically on a short-term basis, to facilitate support of buying and selling demand from our customers. As a market maker in these securities, we earn income due to: (1) the difference between the price paid or received for the purchase and sale of the security (bid-ask spread), (2) the net interest income, and (3) the change in fair value of the long or short positions during the short-term period held on our balance sheet. Additionally, we may enter into separate derivative or security positions to manage our exposure related to our long or short security positions. Income earned on this type of market-making activity is reflected in the fair value changes of these positions recorded in net gains on trading activities.

~~Economic hedges and other~~ Economic hedges in trading activities are not designated in a hedge accounting relationship and exclude economic hedging related to our asset/liability risk management and mortgage banking risk management activities. Economic hedging activities include the use of trading securities to economically hedge risk exposures related to non-trading activities or derivatives to hedge risk exposures related to trading assets or trading liabilities. Economic hedges are unrelated to our customer accommodation activities. Other activities include financial assets held for investment purposes that we elected to carry at fair value with changes in fair value recorded to earnings in order to mitigate accounting measurement mismatches or avoid embedded derivative accounting complexities.

~~Daily Trading-Related Revenue~~ Table 32 provides information on the distribution of daily trading-related revenues for the Company’s trading portfolio. This trading-related revenue is defined as the change in value of the trading assets and trading liabilities, trading-related net interest income, and trading-related intra-day gains and losses. Net trading-related revenue does not include activity related to long-term positions held for economic hedging purposes, period-end adjustments, and other activity not representative of daily price changes driven by market factors.

~~Table 32:Distribution of Daily Trading-Related Revenues~~

~~Market Risk~~ Market risk is the risk of possible economic loss from adverse changes in market risk factors such as interest rates, credit spreads, foreign exchange rates, equity and commodity prices, ~~mortgage rates,~~and the risk of possible loss due to counterparty exposure. This applies to implied volatility risk, basis

Asset/Liability Management (continued)

risk, and market ~~liquidity. Market~~liquidity risk. It also includes price risk ~~is intrinsic~~in the trading book, mortgage servicing rights and the hedge effectiveness risk associated with the mortgage book, and impairment on private equity investments.

The Board’s Finance Committee has primary oversight responsibility for market risk and oversees the Company’s market risk exposure and market risk management strategies. In addition, the Board’s Risk Committee has certain oversight responsibilities with respect to market risk, including adjusting the Company’s market risk appetite with input from the Finance Committee. The Finance Committee also reports key market risk matters to the ~~Company’s sales~~Risk Committee.

At the management level, the Market and Counterparty Risk Management function, which is part of IRM, has primary oversight responsibility for market risk. The Market and Counterparty Risk Management function reports into the CRO and also provides periodic reports related to market risk to the Board’s Finance Committee.

MARKET RISK – TRADING ACTIVITIESWe engage in trading ~~market making, investing,~~activities to accommodate the investment and risk management ~~activities.~~activities of our customers and to execute economic hedging to manage certain balance sheet risks. These trading activities predominantly occur within our Wholesale Banking businesses and to a lesser extent other divisions of the Company. Debt securities held for trading, equity securities held for trading, trading loans and trading derivatives are financial instruments used in our trading activities, and all are carried at fair value. Income earned on the financial instruments used in our trading activities include net interest income, changes in fair value and realized gains and losses. Net interest income earned from our trading activities is reflected in the interest income and interest expense components of our income statement. Changes in fair

~~The Company uses value-at-risk~~

value of the financial instruments used in our trading activities are reflected in net gains on trading activities, a component of noninterest income in our income statement. For more information on the financial instruments used in our trading activities and the income from these trading activities, see Note 4 (Trading Activities) to Financial Statements in this Report.

Value-at-risk (VaR) ~~metrics complemented with sensitivity analysis and stress testing in measuring and monitoring market risk. VaR~~ is a statistical risk measure used to estimate the potential loss from adverse moves in the financial markets. The Company uses VaR metrics complemented with sensitivity analysis and stress testing in measuring and monitoring market risk. For more information, ~~on VaR,~~including information regarding our monitoring activities, sensitivity analysis and stress testing, see the “Risk Management – Asset/Liability Management – Market Risk – Trading Activities” section in our ~~2016~~2019 Form 10-K.

Trading VaR is the measure used to provide insight into the market risk exhibited by the Company’s trading positions. The

Company calculates Trading VaR for risk management purposes to establish line of business and Company-wide risk limits. Trading VaR is calculated based on all trading positions ~~classified as trading assets or other liabilities, derivative assets or derivative liabilities~~ on our balance sheet.

~~Asset/Liability Management (continued~~)

Table 3328 shows the Company’s Trading General VaR by risk category. As presented in ~~the table,~~Table 28, average Company Trading General VaR was $33 million for the quarter ended March 31, 2020, compared with $31 million for the quarter ended December 31, 2019, and $15 million for the quarter ended ~~September 30, 2017,~~March 31, 2019. The increase in average as well as period end Company Trading General VaR for the quarter ended March 31, 2020, compared with ~~$29 million for~~ the quarter

ended ~~June 30, 2017. The decrease~~March 31, 2019, was ~~mainly~~ driven by recent market volatility, in particular changes in interest rate curves and a significant widening of credit spreads entering the 12-month historical ~~VaR dates dropping out of the 1-year time horizon.~~lookback window used to calculate VaR.

Table ~~33:~~28:Trading 1-Day 99% General VaR by Risk Category


				Quarter ended													Quarter ended
	September 30, 2017							June 30, 2017						March 31, 2020							December 31, 2019						March 31, 2019
(in millions)	Period end			Average		Low	High	Period end		Average		Low	High	Period end			Average		Low	High	Period end		Average		Low	High	Period end		Average		Low	High
Company Trading General VaR Risk Categories
Credit	$	18		26		18	35	23		29		23	36	$	62		28		15	75	15		18		15	26	15		15		11	19
Interest rate	7			13		7	20	10		20		10	27	84			32		5	198	14		21		9	45	42		34		22	44
Equity	13			11		9	14	10		11		9	14	6			7		4	10	5		5		4	8	5		5		4	7
Commodity	2			1		1	2	1		1		1	2	2			2		1	6	2		2		1	4	2		2		1	4
Foreign exchange	0			1		0	1	1		1		0	1	2			1		1	6	1		1		1	1	1		1		1	1
Diversification benefit (1)	(22		)	(37	)			(29	)	(33	)			(63		)	(37	)			(13	)	(16	)			(46	)	(42	)
Company Trading General VaR	$	18		15				16		29				$	93		33				24		31				19		15

(1)

The period-end VaR was less than the sum of the VaR components described above, which is due to portfolio diversification. The diversification effect arises because the risks are not perfectly correlated causing a portfolio of positions to usually be less risky than the sum of the risks of the positions alone. The diversification benefit is not meaningful for low and high metrics since they may occur on different days.

~~Regulatory Market Risk Capital~~ reflects U.S. regulatory agency risk-based capital regulations that are based on the Basel Committee Capital Accord of the Basel Committee on Banking Supervision. The Company must calculate regulatory capital under the Basel III market risk capital rule, which requires banking organizations with significant trading activities to adjust their capital requirements to reflect the market risks of those activities based on comprehensive and risk sensitive methods and models. The market risk capital rule is intended to cover the risk of loss in value of covered positions due to changes in market conditions.

~~Composition of Material Portfolio of Covered Positions~~ The positions that are “covered” by the market risk capital rule are generally a subset of our trading assets, and derivative assets and liabilities, specifically those held by the Company for the purpose of short-term resale or with the intent of benefiting from actual or expected short-term price movements, or to lock in arbitrage profits. Positions excluded from market risk regulatory capital treatment are subject to the credit risk capital rules applicable to the “non-covered” trading positions.

The material portfolio of the Company’s “covered” positions is mostly concentrated in the trading assets, and derivative assets and liabilities within Wholesale Banking where the substantial portion of market risk capital resides. Wholesale Banking engages in the fixed income, traded credit, foreign exchange, equities, and commodities markets businesses. Other business segments hold smaller trading positions covered under the market risk capital rule.

~~Regulatory Market Risk Capital Components~~ The capital required for market risk on the Company’s “covered” positions is determined by internally developed models or standardized specific risk charges. The market risk regulatory capital models are subject to internal model risk management and validation. The models are continuously monitored and enhanced in response to changes in market conditions, improvements in system capabilities, and changes in the Company’s market risk exposure. The Company is required to obtain and has received prior written approval from its regulators before using its internally developed models to calculate the market risk capital charge.

Basel III prescribes various VaR measures in the determination of regulatory capital and RWAs. The Company uses the same VaR models for both market risk management purposes as well as regulatory capital calculations. For regulatory purposes, we use the following metrics to determine the Company’s market risk capital requirements:

~~General VaR~~ measures the risk of broad market movements such as changes in the level of credit spreads, interest rates, equity prices, commodity prices, and foreign exchange rates. General VaR uses historical simulation analysis based on 99% confidence level and a 10-day holding period.

Table 34 shows the General VaR measure categorized by major risk categories. Average 10-day Company Regulatory General VaR was $31 million for the quarter ended September 30, 2017, compared with $30 million for the quarter

~~ended June 30, 2017. The increase was primarily driven by changes in portfolio composition.~~

~~Table 34:Regulatory 10-Day 99% General VaR by Risk Category~~

Quarter ended
September 30, 2017 June 30, 2017
(in millions)
Period
end

Average
Low
High

Period
end

Average
Low
High
Wholesale Regulatory General VaR Risk Categories
Credit $ 51
66
45
86
60
72
57
93
Interest rate 14
23
14
38
17
39
17
71
Equity (1) 7
12
4
23
6
4
2
7
Commodity 6
8
4
21
11
4
3
11
Foreign exchange 3
6
2
16
8
6
3
29
Diversification benefit (2) (57 ) (86 ) (71 ) (96 )
Wholesale Regulatory General VaR $ 24
29
20
36
31
29
24
37
Company Regulatory General VaR 26
31
22
39
35
30
25
40

~~(1)~~

The period-end VaR was less than the sum of the VaR components described above, which is due to portfolio diversification. The diversification benefit arises because the risks are not perfectly correlated causing a portfolio of positions to usually be less risky than the sum of the risks of the positions alone. The diversification benefit is not meaningful for low and high metrics since they may occur on different days.

~~Specific Risk~~ measures the risk of loss that could result from factors other than broad market movements, or name-specific market risk. Specific Risk uses Monte Carlo simulation analysis based on a 99% confidence level and a 10-day holding period.

~~Total VaR~~ ~~(as presented in Table 35) is composed of General VaR and Specific Risk and uses the previous 12 months of historical market data in compliance with regulatory requirements.~~

~~Total Stressed VaR~~ (as presented in Table 35) uses a historical period of significant financial stress over a continuous 12 month period using historically available market data and is composed of Stressed General VaR and Stressed Specific Risk. Total Stressed VaR uses the same methodology and models as Total VaR.

~~Incremental Risk Charge~~ (as presented in Table 35) captures losses due to both issuer default and migration risk at the 99.9% confidence level over the one-year capital horizon under the assumption of constant level of risk or a constant position assumption. The model covers non-securitized credit-sensitive trading products.

The Company calculates Incremental Risk by generating a portfolio loss distribution using Monte Carlo simulation, which assumes numerous scenarios, where an assumption is made that the portfolio’s composition remains constant for a one-year time horizon. Individual issuer credit grade migration and issuer default risk is modeled through generation of the issuer’s credit rating transition based upon statistical modeling. Correlation between credit grade migration and default is captured by a multifactor proprietary model which takes into account industry classifications as well as regional effects. Additionally, the impact of market and issuer specific concentrations is reflected in the modeling framework by assignment of a higher charge for portfolios that have increasing concentrations in particular issuers or sectors. Lastly, the model captures product basis risk; that is, it reflects the material disparity between a position and its hedge.

Table 35 provides information on Total VaR, Total Stressed VaR and the Incremental Risk Charge results for the quarter ended September 30, 2017. Incremental Risk Charge uses the higher of the quarterly average or the quarter end result. For third quarter 2017, the required capital for market risk equals the quarter end results.

~~Table 35:Market Risk Regulatory Capital Modeled Components~~

Quarter ended September 30, 2017 September 30, 2017
(in millions) Average
Low
High
Period end
Risk-
based
capital (1)
Risk-
weighted
assets (1)
Total VaR $ 54
47
65
62
163
2,039
Total Stressed VaR 279
232
321
292
837
10,461
Incremental Risk Charge 32
26
38
34
34
423


~~(1)~~	~~Results represent the risk-based capital and RWAs based on the VaR and Incremental Risk Charge models.~~

~~Securitized Products Charge~~Basel III requires a separate market risk capital charge for positions classified as a securitization or re-securitization. The primary criteria for classification as a securitization are whether there is a transfer of risk and whether the credit risk associated with the underlying exposures has been separated into at least two tranches reflecting different levels of

seniority. Covered trading securitizations positions include consumer and commercial asset-backed securities (ABS), commercial mortgage-backed securities (CMBS), residential mortgage-backed securities (RMBS), and collateralized loan and other debt obligations (CLO/CDO) positions. The securitization capital requirements are the greater of the capital requirements

~~Asset/Liability Management (continued~~)

~~of the net long or short exposure, and are capped at the maximum loss that could be incurred on any given transaction.~~

Table 36 shows the aggregate net fair market value of securities and derivative securitization positions by exposure type that meet the regulatory definition of a covered trading securitization position at~~September 30, 2017, and December 31, 2016.~~

~~Table 36:Covered Securitization Positions by Exposure Type (Net Market Value)~~

(in millions) ABS
CMBS
RMBS
CLO/CDO
September 30, 2017
Securitization exposure:
Securities $ 559
220
744
738
Derivatives 3
(4 ) 1
(2 )
Total $ 562
216
745
736
December 31, 2016
Securitization exposure:
Securities $ 801
397
911
791
Derivatives 3
4
1
(8 )
Total $ 804
401
912
783

~~Securitization Due Diligence and Risk Monitoring~~ The market risk capital rule requires that the Company conduct due diligence on the risk of each securitization position within three days of its purchase. The Company’s due diligence seeks to provide an understanding of the features that would materially affect the performance of a securitization or re-securitization. The due diligence analysis is re-performed on a quarterly basis for each

securitization and re-securitization position. The Company uses an automated solution to track the due diligence associated with securitization activity. The Company aims to manage the risks associated with securitization and re-securitization positions through the use of offsetting positions and portfolio diversification.

~~Standardized Specific Risk Charge~~For debt and equity positions that are not evaluated by the approved internal specific risk models, a regulatory prescribed standard specific risk charge is applied. The standard specific risk add-on for sovereign entities, public sector entities, and depository institutions is based on the Organization for Economic Co-operation and Development (OECD) country risk classifications (CRC) and the remaining contractual maturity of the position. These risk add-ons for debt positions range from 0.25% to 12%. The add-on for corporate debt is based on creditworthiness and the remaining contractual maturity of the position. All other types of debt positions are subject to an 8% add-on. The standard specific risk add-on for equity positions is generally 8%.

~~Comprehensive Risk Charge / Correlation Trading~~The market risk capital rule requires capital for correlation trading positions. The Company's remaining correlation trading exposure covered under the market risk capital rule matured in fourth quarter 2014.

Table 37 summarizes the market risk-based capital requirements charge and market RWAs in accordance with the Basel III market risk capital rule as of September 30, 2017, and December 31, 2016. The market RWAs are calculated as the sum of the components in the table below.

~~Table 37:Market Risk Regulatory Capital and RWAs~~

September 30, 2017 December 31, 2016
(in millions)
Risk-
based
capital

Risk-
weighted
assets

Risk-
based
capital

Risk-
weighted
assets

Total VaR $ 163
2,039
247
3,091
Total Stressed VaR 837
10,461
1,135
14,183
Incremental Risk Charge 34
423
217
2,710
Securitized Products Charge 678
8,469
561
7,007
Standardized Specific Risk Charge 1,248
15,606
1,357
16,962
De minimis Charges (positions not included in models) 10
132
11
147
Total $ 2,970
37,130
3,528
44,100

~~RWA RollforwardTable 38depicts the changes in the market risk regulatory capital and RWAs under Basel III for the first nine months and third quarter of 2017.~~

~~Table 38:Analysis of Changes in Market Risk Regulatory Capital and RWAs~~

(in millions)
Risk-
based
capital

Risk-
weighted
assets

Balance, December 31, 2016 $ 3,528
44,100
Total VaR (84 ) (1,052 )
Total Stressed VaR (298 ) (3,722 )
Incremental Risk Charge (183 ) (2,288 )
Securitized Products Charge 117
1,461
Standardized Specific Risk Charge (108 ) (1,356 )
De minimis Charges (2 ) (13 )
Balance, September 30, 2017 $ 2,970
37,130

Balance, June 30, 2017 $ 3,026
37,827
Total VaR 11
141
Total Stressed VaR (62 ) (774 )
Incremental Risk Charge 4
47
Securitized Products Charge 55
689
Standardized Specific Risk Charge (66 ) (831 )
De minimis Charges 2
31
Balance, September 30, 2017 $ 2,970
37,130

~~The largest contributor to the changes to market risk regulatory capital and RWAs in the first nine months of 2017 was associated with changes in positions due to normal trading activity.~~

~~VaRBacktesting~~The market risk capital rule requires backtesting as one form of validation of the VaR model. Backtesting is a comparison of the daily VaR estimate with the actual clean profit and loss (clean P&L) as defined by the market risk capital rule. Clean P&L is the change in the value of the Company’s covered trading positions that would have occurred had previous end-of-day covered trading positions remained unchanged (therefore, excluding fees, commissions, net interest income, and intraday trading gains and losses). The backtesting analysis compares the daily Total VaR for each of the trading days in the preceding 12 months with the net clean P&L. Clean P&L does not include credit adjustments and other activity not representative of daily price changes driven by market risk factors. The clean P&L measure of revenue is used to evaluate the performance of the Total VaR and is not comparable to our actual daily trading net revenues, as reported elsewhere in this Report.

Any observed clean P&L loss in excess of the Total VaR is considered a market risk regulatory capital backtesting exception. The actual number of exceptions (that is, the number of business days for which the clean P&L losses exceed the corresponding 1-day, 99% Total VaR measure) over the preceding 12 months is used to determine the capital multiplier for the capital calculation. The number of actual backtesting exceptions is dependent on current market performance relative to historic market volatility in addition to model performance and assumptions. This capital multiplier increases from a minimum of three to a maximum of four, depending on the number of exceptions. No backtesting exceptions occurred over the preceding 12 months. Backtesting is also performed at line of business levels within the Company.

Table 39 shows daily Total VaR (1-day, 99%) used for regulatory market risk capital backtesting for the 12 months ended September 30, 2017. The Company’s average Total VaR for third quarter 2017 was $19 million with a low of $17 million and a high of $21 million. The decrease in Total 1-day VaR in second quarter 2017 was attributable to a decline in modeled Specific Risk.

~~Asset/Liability Management (continued~~)

~~Table 39: Daily Total 1-Day 99% VaR Measure (Rolling 12 Months)~~

~~Market Risk Governance,Measurement, Monitoring and Model Risk Management~~We employ a well-defined and structured market risk governance process and market risk measurement process, which incorporates value-at-risk (VaR) measurements combined with sensitivity analysis and stress testing to help us monitor our market risk. These monitoring measurements require the use of market risk models, which we govern by our Corporate Model Risk policies and procedures. For more information on our governance, measurement, monitoring, and model risk management practices, see the “Risk Management – Asset/Liability Management – Market Risk – Trading Activities” section in our 2016 Form 10-K.

MARKET RISK – EQUITY ~~INVESTMENTS~~SECURITIESWe are directly and indirectly affected by changes in the equity markets. We make and manage direct ~~equity~~ investments in start-up businesses, emerging growth companies, management buy-outs, acquisitions and corporate recapitalizations. We also invest in non-affiliated funds that make similar private equity investments. These private equity investments are made within capital allocations approved by management and the Board. The Board’s policy is to review business developments, key risks and historical returns for the private equity investment portfolio at least annually. Management reviews these investments at least quarterly and assesses them for possible ~~OTTI.~~other-than-temporary impairment

(OTTI) and observable price changes. For nonmarketable ~~investments,~~equity securities, the analysis is based on facts and circumstances of each individual investment and the expectations for that investment’s cash flows, ~~and~~ capital needs, the viability of its business model, ~~and~~ our exit ~~strategy. Nonmarketable~~strategy, and observable price changes that are similar to the investments held. Investments in nonmarketable equity securities include private equity investments accounted for under the ~~cost method,~~ equity method, ~~and~~ fair value ~~option.~~through net income, and the measurement alternative.

In conjunction with the March 2008 initial public offering (IPO) of Visa, Inc. (Visa), we received approximately 20.7 million shares of Visa Class B common stock, the class which was

apportioned to member banks of Visa at the time of the IPO. To

manage our exposure to Visa and realize the value of the appreciated Visa shares, we incrementally sold these shares

through a series of sales, ~~over the past few years,~~ thereby eliminating this position as of September 30, 2015. As part of these sales, we agreed to compensate the buyer for any additional contributions to a litigation settlement fund for the litigation matters associated with the Class B shares we sold. Our exposure to this retained litigation risk has been updated quarterly and is reflected on our balance sheet. For additional information about the associated litigation matters, see the “Interchange Litigation” section in Note 1114 (Legal Actions) to Financial Statements in this Report.

As part of our business to support our customers, we trade public equities, listed/OTC equity derivatives and convertible bonds. We have parameters that govern these activities. We also have marketable equity securities ~~in the available-for-sale securities portfolio, including securities~~that include investments relating to our venture capital activities. We manage these ~~investments~~marketable equity securities within capital risk limits approved by management and the Board and monitored by Corporate ALCO and the ~~Corporate~~ Market Risk Committee. ~~Gains and losses on~~The fair value changes in these marketable equity securities are recognized in net ~~income when realized and periodically include OTTI charges.~~income. For more information, see Note 8 (Equity Securities) to Financial Statements in this Report.

Changes in equity market prices may also indirectly affect our net income by (1) the value of third party assets under management and, hence, fee income, (2) borrowers whose ability to repay principal and/or interest may be affected by the stock market, or (3) brokerage activity, related commission income and other business activities. Each business line monitors and manages these indirect risks.

~~Table 40 provides information regarding our marketable and nonmarketable equity investments as of September 30, 2017, and December 31, 2016.~~

~~Table 40:Nonmarketable and Marketable Equity Investments~~


~~(1)~~	~~Represents low income housing tax credit investments.~~


~~(2)~~	Represents nonmarketable equity investments for which we have elected the fair value option. See Note 6 (Other Assets) and Note 13 (Fair Values of Assets and Liabilities) to Financial Statements in this Report for additional information.


~~(3)~~	~~Included in other assets on the balance sheet. See Note 6 (Other Assets) to Financial Statements in this Report for additional information.~~


~~(4)~~	~~Included in available-for-sale securities. See Note 4 (Investment Securities) to Financial Statements in this Report for additional information.~~

LIQUIDITY AND FUNDINGThe objective of effective liquidity management is to ensure that we can meet customer loan requests, customer deposit maturities/withdrawals and other cash commitments efficiently under both normal operating conditions and under periods of Wells Fargo-specific and/or market stress. To achieve this objective, the Board ~~of Directors~~ establishes liquidity guidelines that require sufficient asset-based liquidity to cover potential funding requirements and to avoid over-dependence on volatile, less reliable funding markets. These guidelines are monitored on a monthly basis by the Corporate ALCO and on a quarterly basis by the ~~Board of Directors.~~Board. These guidelines are established and monitored for both the consolidated company and for the Parent on a stand-alone basis to ensure that the Parent is a source of strength for its regulated, deposit-taking banking subsidiaries.

Liquidity Standards ~~On September 3, 2014,~~ We are subject to a rule, issued by the FRB, OCC and ~~FDIC issued a final rule~~Federal Deposit Insurance Corporation (FDIC), that ~~implements~~includes a quantitative liquidity requirement consistent with the liquidity coverage ratio (LCR) established by the Basel Committee on Banking Supervision (BCBS). The rule requires banking institutions, such as Wells Fargo, to hold high-quality liquid assets (HQLA), such as central bank reserves and government and corporate debt that can be converted easily and quickly into cash, in an amount equal to or greater than its projected net cash

outflows during a 30-day stress period. The rule is applicable to the Company on a consolidated basis and to our insured depository institutions (IDIs) with total assets greater than $10 billion. In addition, rules issued by the FRB ~~finalized rules imposing~~impose enhanced liquidity management standards on large bank holding companies (BHC) such as Wells ~~Fargo, and finalized a rule that requires large bank holding companies to publicly disclose on a quarterly basis beginning~~

~~April 1, 2017, certain quantitative and qualitative information regarding their LCR calculations.~~Fargo.

The FRB, OCC and FDIC have proposed a rule that would implement a stable funding requirement, the net stable funding ratio (NSFR), which would require large banking organizations, such as Wells Fargo, to maintain a sufficient amount of stable funding in relation to their assets, derivative exposures and commitments over a one-year horizon period. ~~As proposed, the rule would become effective on January 1, 2018.~~

Liquidity Coverage Ratio As of ~~September 30, 2017,~~March 31, 2020, the consolidated Company and Wells Fargo Bank, N.A. were above the minimum LCR requirement of 100%, which is calculated as HQLA divided by projected net cash outflows, as each is defined under the LCR rule. Table 4129 presents the Company’s quarterly average values for the daily-calculated LCR and its components calculated pursuant to the LCR rule requirements.

Table ~~41:~~29: Liquidity Coverage Ratio


(in millions)	Average for Quarter ended September 30, 2017
(in millions, except ratio)				Average for Quarter ended March 31, 2020
HQLA (1)(2)	$	398,381		$	381,950
Projected net cash outflows	311,592			315,980
LCR	128		%	121		%
HQLA in excess of projected net cash outflows	$	86,789


(1)	Excludes excess HQLA at Wells Fargo Bank, N.A.


(2)	Net of applicable haircuts required under the LCR rule.

~~(1) Excludes excess HQLA at Wells Fargo Bank, N.A.~~

~~(2) Net of applicable haircuts required under the LCR rule.~~

Liquidity Sources We maintain liquidity in the form of cash, cash equivalents and unencumbered high-quality, liquid debt securities. These assets make up our primary sources of liquidity which are presented in Table ~~42.~~30. Our primary sources of liquidity are substantially the same in composition as HQLA under the LCR rule; however, our primary sources of liquidity will generally exceed HQLA calculated under the LCR rule due to the applicable haircuts to HQLA and the exclusion of excess HQLA at our subsidiary ~~insured depository institutions~~IDIs required under the LCR rule.

Our cash is predominantly on deposit with the Federal Reserve. ~~Securities~~Debt securities included as part of our primary sources of liquidity are comprised of U.S. Treasury and federal agency debt, and mortgage-backed securities issued by federal agencies within our ~~investment~~debt securities portfolio. We believe these debt securities provide quick sources of liquidity through sales or by pledging to obtain financing, regardless of market conditions. Some of these debt securities are within ~~the~~our held-to-maturity ~~portion of our investment securities~~ portfolio and as such are not intended for sale, but may be pledged to obtain financing. Some of the legal entities within our consolidated group of companies are subject to various regulatory, tax, legal and other restrictions that can limit the transferability of their funds. We believe we maintain adequate liquidity for these entities in consideration of such funds transfer restrictions.

~~Asset/Liability Management (continued~~)

Table ~~42:~~30:Primary Sources of Liquidity


	September 30, 2017				December 31, 2016				March 31, 2020				December 31, 2019
(in millions)	Total		Encumbered	Unencumbered	Total		Encumbered	Unencumbered	Total		Encumbered	Unencumbered	Total	Encumbered	Unencumbered
Interest-earning deposits	$	205,648	—	205,648	$	200,671	—	200,671
Securities of U.S. Treasury and federal agencies	51,632		1,101	50,531	70,898		1,160	69,738
Interest-earning deposits with banks									$	128,071	—	128,071	119,493	—	119,493
Debt securities of U.S. Treasury and federal agencies									61,727		3,785	57,942	61,099	3,107	57,992
Mortgage-backed securities of federal agencies (1)	239,798		46,137	193,661	205,655		52,672	152,983	271,644		40,769	230,875	258,589	41,135	217,454
Total	$	497,078	47,238	449,840	$	477,224	53,832	423,392	$	461,442	44,554	416,888	439,181	44,242	394,939


(1)	Included in encumbered securities at ~~September 30, 2017~~March 31, 2020, were securities with a fair value of $~~8.0~~1.7 billion, which were purchased in ~~September 2017,~~March 2020, but settled in ~~October 2017.~~April 2020.

Asset/Liability Management (continued)

In addition to our primary sources of liquidity shown in

Table ~~42,~~30, liquidity is also available through the sale or financing of other debt securities including trading and/or available-for-sale debt securities, as well as through the sale, securitization or financing of loans, to the extent such debt securities and loans are not encumbered. ~~In addition, other securities in our held-to-maturity portfolio, to~~As of March 31, 2020, we also maintained approximately $273.5 billion of available borrowing capacity at various Federal Home Loan Banks and the ~~extent not encumbered, may be pledged to obtain financing.~~Federal Reserve Discount Window.

Deposits have historically provided a sizable source of relatively low-cost funds. Deposits were ~~137%~~136% of total loans at ~~September 30, 2017~~March 31, 2020, and ~~135%~~137% at December 31, ~~2016.~~2019.

Additional funding is provided by long-term debt and short-term borrowings. Table 31 shows selected information for short-term borrowings, which generally mature in less than 30 days.

Table 31:Short-Term Borrowings



	Quarter ended
(in millions)	Mar 31 2020		Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Balance, period end
Federal funds purchased and securities sold under agreements to repurchase	$	79,036	92,403	110,399	102,560	93,896
Other short-term borrowings	13,253		12,109	13,509	12,784	12,701
Total	$	92,289	104,512	123,908	115,344	106,597
Average daily balance for period
Federal funds purchased and securities sold under agreements to repurchase	$	90,722	103,614	109,499	102,557	95,721
Other short-term borrowings	12,255		12,335	12,343	12,197	12,930
Total	$	102,977	115,949	121,842	114,754	108,651
Maximum month-end balance for period
Federal funds purchased and securities sold under agreements to repurchase (1)	$	91,121	111,727	110,399	105,098	97,650
Other short-term borrowings (2)	13,253		12,708	13,509	12,784	14,129


(1)	Highest month-end balance in each of the last five quarters was in February 2020, and September, May and January 2019.


(2)	Highest month-end balance in each of the last five quarters was in March 2020, and September, June and February 2019.

Long-Term Debt We access domestic and international capital markets for long-term funding (generally greater than one year) through issuances of registered debt securities, private placements and asset-backed secured funding.

~~Table 43 shows selected information for short-term borrowings, which generally mature in less than 30 days.~~

~~Table 43:Short-Term Borrowings~~

Quarter ended
(in millions) Sep 30
2017
Jun 30,
2017
Mar 31,
2017
Dec 31,
2016
Sep 30,
2016
Balance, period end
Federal funds purchased and securities sold under agreements to repurchase $ 79,824
78,683
76,366
78,124
108,468
Commercial paper —
11
10
120
123
Other short-term borrowings 13,987
16,662
18,495
18,537
16,077
Total $ 93,811
95,356
94,871
96,781
124,668
Average daily balance for period
Federal funds purchased and securities sold under agreements to repurchase $ 81,980
79,826
79,942
107,271
101,252
Commercial paper 4
10
51
121
137
Other short-term borrowings 17,209
15,927
18,556
17,306
14,839
Total $ 99,193
95,763
98,549
124,698
116,228
Maximum month-end balance for period
Federal funds purchased and securities sold under agreements to repurchase (1) $ 83,260
78,683
81,284
109,645
108,468
Commercial paper (2) 11
11
78
121
138
Other short-term borrowings (3) 18,301
18,281
19,439
18,537
16,077


~~(1)~~	~~Highest month-end balance in each of the last five quarters was in~~ ~~August, June and February 2017, October and September 2016.~~


~~(2)~~	~~Highest month-end balance in each of the last five quarters was in~~ ~~July, June and January 2017, November and July 2016.~~


~~(3)~~	~~Highest month-end balance in each of the last five quarters was in~~ ~~July, April and February 2017, December and September 2016.~~

~~Long-Term Debt~~ We issue long-term debt in a variety of maturities and currencies to achieve cost-efficient funding and to maintain an appropriate maturity profile. Long-term debt of $238.9 billion at September 30, 2017, decreased $16.2 billion from December 31, 2016. We issued $10.4 billion and $38.4 billion of long-term debt in the third quarter and first nine months of 2017, respectively. Table 44 provides the aggregate carrying value of long-term debt maturities (based on contractual payment dates) for the remainder of 2017 and the following years thereafter, as of September 30, 2017.

~~Table 44:Maturity of Long-Term Debt~~

September 30, 2017
(in millions) Remaining 2017
2018
2019
2020
2021
Thereafter
Total
Wells Fargo & Company (Parent Only)
Senior notes $ 3,084
8,002
6,791
13,300
18,036
71,083
120,296
Subordinated notes —
608
—
—
—
26,380
26,988
Junior subordinated notes —
—
—
—
—
1,658
1,658
Total long-term debt - Parent $ 3,084
8,610
6,791
13,300
18,036
99,121
148,942
Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior notes $ 4,512
31,622
18,888
5,511
10,238
240
71,011
Subordinated notes 1,026
—
—
—
—
5,406
6,432
Junior subordinated notes —
—
—
—
—
340
340
Securitizations and other bank debt 1,732
1,803
728
649
117
3,639
8,668
Total long-term debt - Bank $ 7,270
33,425
19,616
6,160
10,355
9,625
86,451
Other consolidated subsidiaries
Senior notes $ —
807
1,200
—
1,016
404
3,427
Junior subordinated notes —
—
—
—
—
—
—
Securitizations and other bank debt —
73
—
—
—
—
73
Total long-term debt - Other consolidated subsidiaries $ —
880
1,200
—
1,016
404
3,500
Total long-term debt $ 10,354
42,915
27,607
19,460
29,407
109,150
238,893

~~Parent~~ ~~In February 2017, the Parent filed a registration statement with the SEC for the issuance of senior and subordinated notes, preferred stock and other securities.~~The Parent’s ability to issue debt and other securities under this registration statement is limited by the debt issuance authority granted by the Board. As of September 30, 2017, the Parent was authorized by the Board to issue up to $50 billion in outstanding short-term debt and $180 billion in outstanding long-term debt. The Parent’s short-term debt issuance authority granted by the Board is limited to debt issued to affiliates, while the Parent’s long-term debt issuance authority granted by the Board includes debt issued to affiliates and others. At September 30, 2017, the Parent had available $50.0 billion in short-term debt issuance authority and $26.9 billion in long-term debt issuance authority. During the first nine months of 2017, the Parent issued $21.9 billion of senior notes, of which $16.1 billion were registered with the SEC.

~~The Parent’s proceeds~~Proceeds from securities issued were used for general corporate purposes, and, unless otherwise specified in the applicable prospectus or prospectus supplement, we expect the proceeds from securities issued in the future will be used for the

same purposes. Long-term debt of $237.3 billion at March 31, 2020, increased $9.2 billion from December 31, 2019. We issued $18.9 billion of long-term debt in first quarter 2020 and $11.8 billion in April and May 2020. Depending on market conditions, we may purchase our outstanding debt securities from time to time in privately negotiated or open market transactions, by tender offer, or otherwise.

~~Wells Fargo Bank, N.A.~~ As Table 32 provides the aggregate carrying value of ~~September 30, 2017, Wells Fargo Bank, N.A. was authorized by its board of directors to issue $100 billion in outstanding short-term debt and $175 billion in outstanding~~ long-term debt maturities (based on contractual payment dates) for the remainder of 2020 and had available $97.4 billion in short-term debt issuance authority and $98.2 billion in long-term debt issuance authority. In April 2015, Wells Fargo Bank, N.A. established a $100 billion bank note program under which, subject to any other debt outstanding under the limits described above, it may issue $50 billion in outstanding short-term senior notes and $50 billion in outstanding long-term senior or subordinated notes. At September 30, 2017, Wells Fargo Bank, N.A. had remaining issuance capacity under the bank note program of $50.0 billion

in short-term senior notes and $38.0 billion in long-term senior or subordinated notes. During the first nine months of 2017, Wells Fargo Bank, N.A. issued $1.0 billion of unregistered senior notes, none of which were issued under the bank note program. In addition, during the first nine months of 2017, Wells Fargo Bank, N.A. executed advances of $20.4 billion with the Federal Home Loan Bank of Des Moines, andfollowing years thereafter, as of ~~September 30, 2017, Wells Fargo Bank, N.A. had outstanding advances~~March 31, 2020.

Table 32:Maturity of ~~$60.0 billion across the Federal Home Loan Bank System.~~Long-Term Debt



	March 31, 2020
(in millions)	Remaining 2020		2021	2022	2023	2024	Thereafter	Total
Wells Fargo & Company (Parent Only)
Senior notes	$	9,627	17,802	17,782	11,192	9,476	72,658	138,537
Subordinated notes	—		—	—	3,786	770	26,704	31,260
Junior subordinated notes	—		—	—	—	—	1,940	1,940
Total long-term debt – Parent	$	9,627	17,802	17,782	14,978	10,246	101,302	171,737
Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior notes	$	12,373	28,398	5,636	2,989	6	311	49,713
Subordinated notes	—		—	—	1,010	—	4,923	5,933
Junior subordinated notes	—		—	—	—	—	366	366
Securitizations and other bank debt	2,019		1,207	787	264	153	1,890	6,320
Total long-term debt – Bank	$	14,392	29,605	6,423	4,263	159	7,490	62,332
Other consolidated subsidiaries
Senior notes	$	135	1,833	187	475	127	484	3,241
Securitizations and other bank debt	—		—	—	—	—	32	32
Total long-term debt – Other consolidated subsidiaries	$	135	1,833	187	475	127	516	3,273
Total long-term debt	$	24,154	49,240	24,392	19,716	10,532	109,308	237,342

Credit Ratings Investors in the long-term capital markets, as well as other market participants, generally will consider, among other factors, a company’s debt rating in making investment decisions. Rating agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix, the level and quality of earnings, and rating agency assumptions regarding the probability and extent of federal financial assistance or support for certain large financial institutions. Adverse changes in these factors could result in a reduction of our credit rating; however, our debt securities do not contain credit rating covenants.

There were no actions undertaken by the ratings agencies with regard to our credit ratings during first quarter 2020. On ~~September 18, 2017, S&P Global~~April 22, 2020, Fitch Ratings, ~~affirmed all of the Company’s ratings and maintained its negative ratings outlook. On September 20, 2017, DBRS,~~ Inc. ~~(DBRS) downgraded~~(Fitch) affirmed the Company’s long-term ~~ratings by one notch~~ and ~~affirmed the Company’s~~ short-term ~~ratings. DBRS revised the trend on the Company's long-term~~issuer default ratings ~~from negative to stable. On October 3, 2017, Fitch Ratings, Inc. downgraded certain of the Company’s ratings by one notch~~ and revised the ~~ratings~~rating outlook to negative from ~~negative~~stable as Fitch expects significant

operating environment headwinds from the disruption to ~~stable.~~economic activity and financial markets as a result of the COVID-19 pandemic. This rating action followed Fitch’s event-driven review of the commercially-oriented U.S. G-SIBs. Both the Parent and Wells Fargo Bank, N.A. remain among the ~~top-rated~~highest-rated financial firms in the ~~U.S.~~United States.

See the “Risk Factors” section in our ~~2016~~2019 Form 10-K for additional information regarding our credit ratings and the potential impact a credit rating downgrade would have on our liquidity and operations, as well as Note 1215 (Derivatives) to Financial Statements in this Report for information regarding additional collateral and funding obligations required for certain

~~Asset/Liability Management (continued~~)

derivative instruments in the event our credit ratings were to fall below investment grade.

The credit ratings of the Parent and Wells Fargo Bank, N.A. as of ~~September 30, 2017,~~March 31, 2020, are presented in Table ~~45.~~

33.

Table ~~45:~~33:Credit Ratings as of ~~September 30, 2017~~March 31, 2020



	Wells Fargo & Company		Wells Fargo Bank, N.A.
	Senior debt	Short-term borrowings	Long-term deposits	Short-term borrowings
~~Moody's~~Moody’s	A2	P-1	Aa1	P-1
S&P Global Ratings	AA-	~~A-1~~A-2	~~AA-~~A+	~~A-1+~~A-1
Fitch Ratings, Inc.	A+	F1	AA	F1+
DBRS Morningstar	~~AA(low)~~AA (low)	~~R-1(middle)~~R-1 (middle)	AA	~~R-1(high)~~R-1 (high)

FEDERAL HOME LOAN BANK MEMBERSHIP The Federal Home Loan Banks (the FHLBs) are a group of cooperatives that lending institutions use to finance housing and economic development in local communities. We are a member of the FHLBs based in Dallas, Des Moines and San Francisco. Each member of the FHLBs is required to maintain a minimum investment in capital stock of the applicable FHLB. The board of directors of each FHLB can increase the minimum investment requirements in the event it has concluded that additional capital is required to allow it to meet its own regulatory capital requirements. Any increase in the minimum investment requirements outside of specified ranges requires the approval of the Federal Housing Finance ~~Board.~~Agency. Because the extent of any obligation to increase our investment in any of the FHLBs depends entirely upon the occurrence of a future event, potential future payments to the FHLBs are not determinable.

LIBOR TRANSITION Due to uncertainty surrounding the suitability and sustainability of the London Interbank Offered Rate (LIBOR), central banks and global regulators have called for financial market participants to prepare for the discontinuation of LIBOR by the end of 2021. LIBOR is a widely-referenced benchmark rate, which is published in five currencies and a range of tenors, and seeks to estimate the cost at which banks can borrow on an unsecured basis from other banks. We have a significant number of assets and liabilities referenced to LIBOR and other interbank offered rates (IBORs), such as commercial loans, adjustable-rate mortgage loans, derivatives, debt securities, and long-term debt.

Accordingly, we established a LIBOR Transition Office (LTO) in February 2018, with senior management and Board oversight. The LTO is responsible for developing a coordinated strategy to transition the IBOR-linked contracts and processes across Wells Fargo to alternative reference rates and serves as the primary conduit between Wells Fargo and relevant industry groups, such as the Alternative Reference Rates Committee (ARRC).

In addition, the Company is actively working with regulators, industry working groups (such as the ARRC) and trade associations that are developing guidance to facilitate an orderly transition away from the use of LIBOR. We are closely monitoring and seeking to follow the recommendations and guidance announced by such organizations, including those announced by the Bank of England’s Working Group on Sterling Risk-Free Reference Rates. We continue to assess the risks and related impacts associated with a transition away from IBORs. See the “Risk Factors” section in the 2019 Form 10-K for additional information regarding the potential impact of a benchmark rate, such as LIBOR, or other referenced financial metric being significantly changed, replaced, or discontinued.

On March 12, 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-04 – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Update) that provides temporary relief from existing GAAP accounting requirements for entities that perform activities related to reference rate reform. The relief provided by the Update is primarily related to contract modifications and hedge accounting relationships that are impacted by the Company’s reference rate reform activities. For additional information on the Update, see the “Current Accounting Developments” section in this Report.

For additional information on the amount of our IBOR-linked assets and liabilities, as well as the program structure and initiatives created by the LTO, see the “Risk Management – Asset/Liability Management – LIBOR Transition” section in our 2019 Form 10-K.

Capital Management (continued)

Capital Management

We have an active program for managing capital through a comprehensive process for assessing the Company’s overall capital adequacy. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, and to meet both regulatory and market expectations. We primarily fund our working capital needs through the retention of earnings net of both dividends and share repurchases, as well as through the issuance of preferred stock and long and short-term debt. Retained earnings ~~increased $8.7~~decreased $1.4 billion from December 31, ~~2016,~~2019, predominantly ~~from Wells Fargo net income~~as a result of ~~$15.9 billion, less~~ common and preferred stock dividends of ~~$7.0 billion.~~$2.5 billion, partially offset by $653 million of Wells Fargo net income. During ~~third~~first quarter ~~2017,~~2020, we issued ~~10.1 million shares~~ $1.7 billion of common stock, excluding conversions of preferred shares. During first quarter 2020, we repurchased $3.4 billionof common stock. ~~During third quarter 2017,~~The amount of our repurchases are subject to various factors as discussed in the “Securities Repurchases” section below. On March 15, 2020, we ~~repurchased 49.0 million shares~~suspended our share repurchase activities for the remainder of common stock in open market transactions, private transactions and from employee benefit plans, at a cost of $2.6 billion. We also entered into a $1 billion forward repurchase contract with an unrelated third party in October 2017 that is expected to settle inthe first quarter ~~2018~~and for ~~approximately 19 million shares.~~second quarter 2020. For additional information about ~~our forward repurchase agreements,~~share repurchases, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

In January 2020, we issued $2.0 billion of our Preferred Stock, Series Z. In March 2020, we redeemed the remaining $1.8 billion of our Preferred Stock, Series K, and redeemed $669 million of our Preferred Stock, Series T. For more information, see Note 17 (Preferred Stock) to Financial Statements in this Report.

Regulatory Capital Guidelines

The Company and each of our ~~insured depository institutions~~IDIs are subject to various regulatory capital adequacy requirements administered by the FRB and the OCC. Risk-based capital (RBC) guidelines establish a risk-adjusted ratio relating capital to different categories of assets and off-balance sheet exposures as discussed below.

RISK-BASED CAPITAL AND RISK-WEIGHTED ASSETS The Company is subject to ~~final and interim final~~ rules issued by federal banking regulators to implement Basel III capital requirements for U.S. banking organizations. ~~These rules are based on international guidelines for determining regulatory capital issued by the Basel Committee on Banking Supervision (BCBS).~~ The federal banking regulators’ capital rules, among other things, ~~require~~required on a fully phased-in ~~basis:~~basis as of March 31, 2020:

a minimum Common Equity Tier 1 (CET1) ratio of ~~9.0%~~9.00%, comprised of a ~~4.5%~~4.50% minimum requirement plus a capital conservation buffer of ~~2.5%~~2.50% and for us, as a global systemically important bank (G-SIB), a capital surcharge ~~to be calculated annually, which is 2.0% based on our year-end 2015 data;~~of 2.00%;

a minimum tier 1 capital ratio of ~~10.5%~~10.50%, comprised of a ~~6.0%~~6.00% minimum requirement plus the capital conservation buffer of ~~2.5%~~2.50% and the G-SIB capital surcharge of ~~2.0%~~2.00%;

a minimum total capital ratio of ~~12.5%~~12.50%, comprised of a ~~8.0%~~8.00% minimum requirement plus the capital conservation buffer of ~~2.5%~~2.50% and the G-SIB capital surcharge of ~~2.0%~~2.00%;

a potential countercyclical buffer of up to ~~2.5%~~2.50% to be added to the minimum capital ratios, which ~~is currently not in effect but~~ could be imposed by regulators at their discretion if it is determined that a period of excessive credit growth is contributing to an increase in systemic risk; and

a minimum tier 1 leverage ratio of ~~4.0%; and~~

a minimum supplementary leverage ratio (SLR) of 5.0% (comprised of a 3.0% minimum requirement plus a supplementary leverage buffer of 2.0%) for large and internationally active bank holding companies (BHCs)4.00%.

~~We were required to comply with the final Basel III capital rules beginning January 2014, with certain provisions subject to phase-in periods.~~

The Basel III capital ~~rules~~requirements for calculating CET1 and tier 1 capital, along with risk-weighted assets (RWAs), are fully phased-in. However, the requirements for determining tier 2 and total capital are still in accordance with Transition Requirements and are scheduled to be fully ~~phased in~~phased-in by the end of 2021. The Basel III capital rules contain two frameworks for calculating capital requirements, a Standardized Approach ~~which replaced Basel I,~~ and an Advanced Approach applicable to certain institutions, including Wells Fargo. Accordingly, in the assessment of our capital adequacy, we must report the lower of our CET1, tier 1 and total capital ratios calculated under the Standardized Approach and under the Advanced Approach.

Effective October 1, 2020, a stress capital buffer will be added to the minimum capital ratio requirements. The stress capital buffer will be calculated based on the decrease in a financial institution’s risk-based capital ratios under the supervisory severely adverse scenario in the annual Comprehensive Capital Analysis and Review (CCAR), plus four quarters of planned common stock dividends. The stress capital buffer will replace the current 2.50% capital conservation buffer under the Standardized Approach. Because the ~~Company has been designated~~stress capital buffer will be calculated annually as part of CCAR and will be based on data that can differ over time, the amount of the buffer is subject to change in future years.

As a G-SIB, we ~~will~~are also be subject to the FRB’s rule implementing the additional capital surcharge of between ~~1.0-4.5%~~1.00-4.50% on the minimum capital requirements of G-SIBs. Under the rule, we must annually calculate our surcharge under two methods and use the higher of the two surcharges. The first method (method one) ~~will consider~~considers our size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity, consistent with athe methodology developed by the BCBS and the Financial Stability Board (FSB). The second (method two) ~~will use~~uses similar inputs, but ~~will replace~~replaces substitutability with use of short-term wholesale funding and will generally result in higher surcharges than the BCBS methodology. ~~The phase-in period for~~Because the G-SIB surcharge began on January 1, 2016 and will become fully effective on January 1, 2019. Based on year-end 2015 data, our 2017 G-SIB surcharge under method two is 2.0% of the Company’s RWAs, which is the higher of method one and method two. Because the G-SIBcapital surcharge is calculated annually based on data that can differ over time, the amount of the surcharge is subject to change in future years. ~~Under the Standardized Approach (fully phased-in), our CET1 ratio of 11.82% exceeded the minimum of 9.0% by 282 basis points at September 30, 2017.~~

The tables that follow provide information about our ~~risk- based~~risk-based capital and related ratios as calculated under Basel III capital guidelines. ~~For~~Although we continue to report certain capital amounts and ratios in accordance with Transition Requirements for banking industry regulatory reporting purposes, we ~~report our capital in accordance with Transition Requirements but~~ are managing our capital based on a fully phased-in ~~calculation.~~basis. For information about our capital requirements calculated in accordance with Transition Requirements, see Note 1923 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.

~~Capital Management (continued~~)

Table 4634 summarizes our CET1, tier 1 capital, total capital, ~~risk-weighted assets~~RWAs and capital ratios on a fully phased-in basis at ~~September 30, 2017~~March 31, 2020, and December 31, ~~2016. As of September 30, 2017, our CET1 and tier 1 capital ratios were lower using RWAs calculated under the Standardized Approach.~~

2019.

Table ~~46:~~34:Capital Components and Ratios (Fully Phased-In) (1)


		September 30, 2017						December 31, 2016							March 31, 2020					December 31, 2019
(in millions)		Advanced Approach				Standardized Approach		Advanced Approach		Standardized Approach
(in millions, except ratios)													Required Minimum Capital Ratios		Advanced Approach			Standardized Approach		Advanced Approach	Standardized Approach
Common Equity Tier 1	(A)	$	152,808			152,808		146,424		146,424		(A)			$	134,751		134,751		138,760	138,760
Tier 1 Capital	(B)	176,263				176,263		169,063		169,063		(B)			154,277			154,277		158,949	158,949
Total Capital(2)	(C)	207,593				217,279		200,344		210,796		(C)			183,932			191,985		187,813	195,703
Risk-Weighted Assets(3)	(D)	1,243,355				1,292,841		1,298,688		1,358,933		(D)			1,181,271			1,262,808		1,165,079	1,245,853
Common Equity Tier 1 Capital Ratio(3)	(A)/(D)	12.29		%		11.82	*	11.27		10.77	*	(A)/(D)	9.00	%	11.41		%	10.67	*	11.91	11.14	*
Tier 1 Capital Ratio(3)	(B)/(D)	14.18				13.63	*	13.02		12.44	*	(B)/(D)	10.50		13.06			12.22	*	13.64	12.76	*
Total Capital Ratio(3)	(C)/(D)	16.70			*	16.81		15.43	*	15.51		(C)/(D)	12.50		15.57			15.20	*	16.12	15.71	*

*Denotes the lowest capital ratio as determined under the Advanced and Standardized Approaches.


(1)	See Table 35 for information regarding the calculation and components of CET1, tier 1 capital, total capital and RWAs.

(2)

Fully phased-in ~~regulatory~~total capital amounts ~~ratios~~ and ~~RWAs~~ratios are considered non-GAAP financial measures that are used by management, bank regulatory agencies, investors and analysts to assess and monitor the Company’s capital position. See Table 4735 for information regarding the calculation and components of ~~CET1, tier 1 capital,~~our fully phased-in total capital ~~and RWAs, as well as the~~amounts, including a corresponding reconciliation ~~of our regulatory capital amounts~~ to GAAP financial measures.


(3)	RWAs and capital ratios for December 31, 2019, have been revised as a result of a decrease in RWAs under the Advanced Approach due to the correction of duplicated operational loss amounts.

Table 4735 provides information regarding the calculation and composition of our risk-based capital under the Advanced and ~~Standardized Approaches at September 30, 2017 and December 31, 2016.~~

Standardized Approaches at March 31, 2020, and

December 31, 2019.

Table ~~47:~~35:Risk-Based Capital Calculation and Components


		September 30, 2017					December 31, 2016					March 31, 2020					December 31, 2019
(in millions)		Advanced Approach			Standardized Approach		Advanced Approach		Standardized Approach			Advanced Approach			Standardized Approach		Advanced Approach		Standardized Approach
Total equity		$	206,824		206,824		200,497		200,497			$	183,330		183,330		187,984		187,984
Adjustments:
Preferred stock		(25,576		)	(25,576	)	(24,551	)	(24,551	)		(21,347		)	(21,347	)	(21,549	)	(21,549	)
Additional paid-in capital on ESOP preferred stock		(130		)	(130	)	(126	)	(126	)
Additional paid-in capital on preferred stock												140			140		(71	)	(71	)
Unearned ESOP shares		1,904			1,904		1,565		1,565			1,143			1,143		1,143		1,143
Noncontrolling interests		(895		)	(895	)	(916	)	(916	)		(612		)	(612	)	(838	)	(838	)
Total common stockholders' equity		182,127			182,127		176,469		176,469
Total common stockholders’ equity												162,654			162,654		166,669		166,669
Adjustments:
Goodwill		(26,581		)	(26,581	)	(26,693	)	(26,693	)		(26,381		)	(26,381	)	(26,390	)	(26,390	)
Certain identifiable intangible assets (other than MSRs)		(1,913		)	(1,913	)	(2,723	)	(2,723	)		(413		)	(413	)	(437	)	(437	)
Other assets (1)		(2,282		)	(2,282	)	(2,088	)	(2,088	)
Applicable deferred taxes (2)		1,550			1,550		1,772		1,772
Investment in certain subsidiaries and other		(93		)	(93	)	(313	)	(313	)
Common Equity Tier 1 (Fully Phased-In)		152,808			152,808		146,424		146,424
Effect of Transition Requirements		740			740		2,361		2,361
Common Equity Tier 1 (Transition Requirements)		$	153,548		153,548		148,785		148,785
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)												(1,894		)	(1,894	)	(2,146	)	(2,146	)
Applicable deferred taxes related to goodwill and other intangible assets (1)												821			821		810		810
Other												(37		)	(37	)	254		254
Common Equity Tier 1												134,751			134,751		138,760		138,760

Common Equity Tier 1 (Fully Phased-In)		$	152,808		152,808		146,424		146,424
Common Equity Tier 1												$	134,751		134,751		138,760		138,760
Preferred stock		25,576			25,576		24,551		24,551			21,347			21,347		21,549		21,549
Additional paid-in capital on ESOP preferred stock		130			130		126		126
Additional paid-in capital on preferred stock												(140		)	(140	)	71		71
Unearned ESOP shares		(1,904		)	(1,904	)	(1,565	)	(1,565	)		(1,143		)	(1,143	)	(1,143	)	(1,143	)
Other		(347		)	(347	)	(473	)	(473	)		(538		)	(538	)	(288	)	(288	)
Total Tier 1 capital (Fully Phased-In)	(A)	176,263			176,263		169,063		169,063
Effect of Transition Requirements		733			733		2,301		2,301
Total Tier 1 capital (Transition Requirements)		$	176,996		176,996		171,364		171,364
Total Tier 1 capital											(A)	154,277			154,277		158,949		158,949

Total Tier 1 capital (Fully Phased-In)		$	176,263		176,263		169,063		169,063
Long-term debt and other instruments qualifying as Tier 2		29,183			29,183		29,465		29,465			25,836			25,836		26,515		26,515
Qualifying allowance for credit losses (3)		2,423			12,109		2,088		12,540
Qualifying allowance for credit losses (2)												3,990			12,043		2,566		10,456
Other		(276		)	(276	)	(272	)	(272	)		(171		)	(171	)	(217	)	(217	)
Total Tier 2 capital (Fully Phased-In)	(B)	31,330			41,016		31,281		41,733		(B)	29,655			37,708		28,864		36,754
Effect of Transition Requirements		1,196			1,196		1,780		1,780			136			136		520		520
Total Tier 2 capital (Transition Requirements)		$	32,526		42,212		33,061		43,513			$	29,791		37,844		29,384		37,274

Total qualifying capital (Fully Phased-In)	(A)+(B)	$	207,593		217,279		200,344		210,796		(A)+(B)	$	183,932		191,985		187,813		195,703
Total Effect of Transition Requirements		1,929			1,929		4,081		4,081			136			136		520		520
Total qualifying capital (Transition Requirements)		$	209,522		219,208		204,425		214,877			$	184,068		192,121		188,333		196,223

Risk-Weighted Assets (RWAs) (4)(5):
Risk-Weighted Assets (RWAs) (3)(4):
Credit risk		$	910,562		1,255,711		960,763		1,314,833			$	802,686		1,219,948		790,784		1,210,209
Market risk		37,130			37,130		44,100		44,100			42,860			42,860		35,644		35,644
Operational risk		295,663			N/A		293,825		N/A
Total RWAs (Fully Phased-In)		$	1,243,355		1,292,841		1,298,688		1,358,933
Credit risk		$	884,907		1,231,508		936,664		1,292,098
Market risk		37,130			37,130		44,100		44,100
Operational risk		295,663			N/A		293,825		N/A
Total RWAs (Transition Requirements)		$	1,217,700		1,268,638		1,274,589		1,336,198
Operational risk (5)												335,725			—		338,651		—
Total RWAs (5)												$	1,181,271		1,262,808		1,165,079		1,245,853


(1)	~~Represents goodwill and other intangibles on nonmarketable equity investments and on held-for-sale assets, which are included in other assets.~~


~~(2)~~	~~Applicable deferred taxes relate to goodwill and other intangible assets. They were determined~~Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.

~~(3)~~(2)

Under the Advanced Approach the allowance for credit losses that exceeds expected credit losses is eligible for inclusion in Tier 2 Capital, to the extent the excess allowance does not exceed ~~0.6%~~0.60% of Advanced credit RWAs, and under the Standardized Approach, the allowance for credit losses is includable in Tier 2 Capital up to 1.25% of Standardized credit RWAs, with any excess allowance for credit losses being deducted from total RWAs.


~~(4)~~(3)	RWAs calculated under the Advanced Approach utilize a risk-sensitive methodology, which relies upon the use of internal credit models based upon our experience with internal rating grades. Advanced Approach also includes an operational risk component, which reflects the risk of operating loss resulting from inadequate or failed internal processes or systems.

~~(5)~~(4)

Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWAs.


(5)	Amounts for December 31, 2019, have been revised as a result of a decrease in RWAs under the Advanced Approach due to the correction of duplicated operational loss amounts.

Capital Management (continued)

Table 4836 presents the changes in Common Equity Tier 1 under the Advanced Approach for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2020.

Table ~~48:~~36:Analysis of Changes in Common Equity Tier 1(Advanced Approach)


(in millions)
Common Equity Tier 1 (Fully Phased-In) at December 31, 2016	$	146,424
Net income	14,645
Common Equity Tier 1 at December 31, 2019				$	138,760
Net income applicable to common stock				42
Common stock dividends	(5,738		)	(2,096		)
Common stock issued, repurchased, and stock compensation-related items	(4,750		)	(2,882		)
Changes in cumulative other comprehensive income				(253		)
Cumulative effect from change in accounting policies (1)				991
Goodwill	112			9
Certain identifiable intangible assets (other than MSRs)	811			24
Other assets (1)	(195		)
Applicable deferred taxes (2)	(221		)
Investment in certain subsidiaries and other	1,720
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)				252
Applicable deferred taxes related to goodwill and other intangible assets (2)				11
Other				(107		)
Change in Common Equity Tier 1	6,384			(4,009		)
Common Equity Tier 1 (Fully Phased-In) at September 30, 2017	$	152,808
Common Equity Tier 1 at March 31, 2020				$	134,751


(1)	~~Represents goodwill and other intangibles on nonmarketable equity investments and on held-for-sale assets, which are included~~Effective January 1, 2020, we adopted CECL. For more information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in ~~other assets.~~this Report.


(2)	~~Applicable deferred taxes relate to goodwill and other intangible assets. They were determined~~Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.

Table 4937 presents net changes in the components of RWAs under the Advanced and Standardized Approaches for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2020.

Table ~~49:~~37:Analysis of Changes in RWAs


(in millions)	Advanced Approach			Standardized Approach		Advanced Approach			Standardized Approach
RWAs (Fully Phased-In) at December 31, 2016	$	1,298,688		1,358,933
RWAs at December 31, 2019 (1)						$	1,165,079		1,245,853
Net change in credit risk RWAs	(50,201		)	(59,122	)	11,902			9,739
Net change in market risk RWAs	(6,970		)	(6,970	)	7,216			7,216
Net change in operational risk RWAs	1,838			N/A		(2,926		)	—
Total change in RWAs	(55,333		)	(66,092	)	16,192			16,955
RWAs (Fully Phased-In) at September 30, 2017	1,243,355			1,292,841
Effect of Transition Requirements	(25,655		)	(24,203	)
RWAs (Transition Requirements) at September 30, 2017	$	1,217,700		1,268,638
RWAs at March 31, 2020						$	1,181,271		1,262,808


(1)	Amount for December 31, 2019, has been revised as a result of a decease in RWAs under the Advanced Approach due to the correction of duplicated operational loss amounts.

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, ~~and~~ goodwill, ~~and~~ certain identifiable intangible assets ~~(including~~(other than MSRs) and goodwill and ~~intangible assets associated with certain of our~~other intangibles on nonmarketable equity ~~investments but excluding mortgage servicing rights),~~securities, net of applicable deferred taxes. These tangible common equity ratios are as follows:

Tangible book value per common share, which represents tangible common equity divided by common shares ~~outstanding.~~outstanding; and

Return on average tangible common equity (ROTCE), which represents our annualized earnings contribution as a percentage of tangible common equity.

The methodology of determining tangible common equity may differ among companies. Management believes that tangible book value per common share and return on average tangible common equity, which utilize tangible common equity, are useful financial measures because they enable investors and others to assess the ~~Company's~~Company’s use of equity.

Table 5038 provides a reconciliation of these non-GAAP financial measures to GAAP financial measures.

Table ~~50:~~38:Tangible Common Equity


		Balance at period end							Average balance													Balance at period end							Average balance
		Quarter ended							Quarter ended								Nine months ended					Quarter ended							Quarter ended
(in millions, except ratios)		Sep 30, 2017			Jun 30, 2017		Sep 30, 2016		Sep 30, 2017				Jun 30, 2017		Sep 30, 2016		Sep 30, 2017		Sep 30, 2016			Mar 31, 2020			Dec 31, 2019		Mar 31, 2019		Mar 31, 2020			Dec 31, 2019		Mar 31, 2019
Total equity		$	206,824		206,145		203,958		207,934				205,968		203,883		205,246		200,502			$	183,330		187,984		198,733		188,170			192,393		198,349
Adjustments:
Preferred stock		(25,576		)	(25,785	)	(24,594	)	(25,780		)		(25,849	)	(24,813	)	(25,600	)	(24,291	)		(21,347		)	(21,549	)	(23,214	)	(21,794		)	(21,549	)	(23,214	)
Additional paid-in capital on ESOP preferred stock		(130		)	(136	)	(130	)	(136		)		(144	)	(148	)	(142	)	(172	)
Additional paid-in capital on preferred stock																						140			(71	)	(95	)	135			(71	)	(95	)
Unearned ESOP shares		1,904			2,119		1,612		2,114				2,366		1,850		2,226		2,150			1,143			1,143		1,502		1,143			1,143		1,502
Noncontrolling interests		(895		)	(915	)	(930	)	(926		)		(910	)	(927	)	(931	)	(938	)		(612		)	(838	)	(901	)	(785		)	(945	)	(899	)
Total common stockholders' equity	(A)	182,127			181,428		179,916		183,206				181,431		179,845		180,799		177,251
Total common stockholders’ equity																					(A)	162,654			166,669		176,025		166,869			170,971		175,643
Adjustments:
Goodwill		(26,581		)	(26,573	)	(26,688	)	(26,600		)		(26,664	)	(26,979	)	(26,645	)	(26,696	)		(26,381		)	(26,390	)	(26,420	)	(26,387		)	(26,389	)	(26,420	)
Certain identifiable intangible assets (other than MSRs)		(1,913		)	(2,147	)	(3,001	)	(2,056		)		(2,303	)	(3,145	)	(2,314	)	(3,383	)		(413		)	(437	)	(522	)	(426		)	(449	)	(543	)
Other assets (1)		(2,282		)	(2,268	)	(2,230	)	(2,231		)		(2,160	)	(2,131	)	(2,163	)	(2,097	)
Applicable deferred taxes (2)		1,550			1,624		1,832		1,579				1,648		1,855		1,650		1,973
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)																						(1,894		)	(2,146	)	(2,131	)	(2,152		)	(2,223	)	(2,159	)
Applicable deferred taxes related to goodwill and other intangible assets (1)																						821			810		771		818			807		784
Tangible common equity	(B)	$	152,901		152,064		149,829		153,898				151,952		149,445		151,327		147,048		(B)	$	134,787		138,506		147,723		138,722			142,717		147,305
Common shares outstanding	(C)	4,927.9			4,966.8		5,023.9		N/A				N/A		N/A		N/A		N/A		(C)	4,096.4			4,134.4		4,511.9		N/A			N/A		N/A
Net income applicable to common stock ~~(3)~~	(D)	N/A			N/A		N/A		$	4,185			5,404		5,243		14,645		15,501		(D)	N/A			N/A		N/A		$	42		2,546		5,507
Book value per common share	(A)/(C)	$	36.96		36.53		35.81		N/A				N/A		N/A		N/A		N/A		(A)/(C)	$	39.71		40.31		39.01		N/A			N/A		N/A
Tangible book value per common share	(B)/(C)	31.03			30.62		29.82		N/A				N/A		N/A		N/A		N/A		(B)/(C)	32.90			33.50		32.74		N/A			N/A		N/A
Return on average common stockholders’ equity (ROE) (annualized)	(D)/(A)	N/A			N/A		N/A		9.06			%	11.95		11.60		10.83		11.68		(D)/(A)	N/A			N/A		N/A		0.10		%	5.91		12.71
Return on average tangible common equity (ROTCE) (annualized)	(D)/(B)	N/A			N/A		N/A		10.79				14.26		13.96		12.94		14.08		(D)/(B)	N/A			N/A		N/A		0.12			7.08		15.16


(1)	~~Represents goodwill and other intangibles on nonmarketable equity investments and on held-for-sale assets, which are included in other assets.~~


~~(2)~~	~~Applicable deferred taxes relate to goodwill and other intangible assets. They were determined~~Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.


~~(3)~~	~~Quarter ended net income applicable to common stock is annualized for the respective ROE and ROTCE ratios.~~

Capital Management (continued)

SUPPLEMENTARY LEVERAGE RATIO ~~In April 2014, federal banking regulators finalized~~ As a rule that enhances the SLR requirements for BHCs, like Wells Fargo, and their insured depository institutions. The SLR consists of Tier 1 capital divided by the Company’s total leverage exposure. Total leverage exposure consists of the total average on-balance sheet assets, plus off-balance sheet exposures, such as undrawn commitments and derivative exposures, less amounts permitted to be deducted from Tier 1 capital. The rule, which becomes effective on January 1, 2018, will require a covered BHC, we are required to maintain a ~~SLR~~supplementary leverage ratio (SLR) of at least ~~5.0%~~5.00% (comprised of ~~the 3.0%~~a 3.00% minimum requirement plus a supplementary leverage buffer of ~~2.0%~~2.00%) to avoid restrictions on capital distributions and discretionary bonus payments. ~~The rule will also require that all of our insured depository institutions~~Our IDIs are required to maintain a SLR of ~~6.0%~~at least 6.00% to be considered well-capitalized under applicable regulatory capital adequacy guidelines. In ~~September 2014, federal banking regulators finalized additional changes~~April 2018, the FRB and OCC proposed rules (the “Proposed SLR Rules”) that would replace the 2.00% supplementary leverage buffer with a buffer equal to one-half of our G-SIB capital surcharge. The Proposed SLR Rules would similarly tailor the current 6.00% SLR ~~requirements~~requirement for our IDIs. In April 2020, the FRB issued an interim final rule that temporarily allows a BHC to ~~implement revisions to~~exclude on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks from the ~~Basel III~~calculation of its total leverage framework finalized by the BCBS in January 2014. These additional changes, among other things, modify the methodology for including off- balance sheet items, including credit derivatives, repo-style transactions and lines of credit,exposure in the denominator of the ~~SLR, and will become~~SLR. The interim final rule became effective on ~~January~~April 1, ~~2018.~~ 2020, and expires on March 31, 2021.

At ~~September 30, 2017,~~March 31, 2020, our SLR for the Company was ~~7.9% assuming full phase-in of~~6.84%, and we also exceeded the ~~Advanced Approach capital framework. Based on our review, our current leverage levels would exceed the~~ applicable SLR requirements for each of our insured depository institutions as well. The fully phased-in SLR is considered a non-GAAP financial measure that is used by management, bank regulatory agencies, investors and analysts to assess and monitor the Company’s leverage exposure.IDIs. See Table 5139 for information regarding the calculation and components of the SLR.

Table ~~51:Fully Phased-In SLR~~39:Supplementary Leverage Ratio


(in millions, except ratio)	September 30, 2017				Quarter ended March 31, 2020
Tier 1 capital	$	176,263		(A)	$	154,277
Total average assets	1,938,522				1,950,659
Less: deductions from Tier 1 capital	29,705
Less: Goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities)					28,530
Total adjusted average assets	1,908,817				1,922,129
Adjustments:
Derivative exposures	73,681
Plus adjustments for off-balance sheet exposures:
Derivatives (1)					75,994
Repo-style transactions(2)	3,055				4,613
Other off-balance sheet exposures	243,339
Total adjustments	320,075
Other (3)					253,578
Total off-balance sheet exposures					334,185
Total leverage exposure	$	2,228,892		(B)	$	2,256,314
Supplementary leverage ratio	7.9		%	(A)/(B)	6.84		%


(1)	Adjustment represents derivatives and collateral netting exposures as defined for supplementary leverage ratio determination purposes.


(2)	Adjustment represents counterparty credit risk for repo-style transactions where Wells Fargo & Company is the principal (i.e., principal counterparty facing the client).


(3)	Adjustment represents credit equivalent amounts of other off-balance sheet exposures not already included as derivatives and repo-style transactions exposures.

~~OTHER REGULATORY CAPITAL MATTERS~~ ~~In December 2016, the FRB finalized rules~~TOTAL LOSS ABSORBING CAPACITY As a G-SIB, we are required to ~~address the~~have a minimum amount of equity and unsecured long-term debt ~~a U.S. G-SIB must hold to improve its~~for purposes of resolvability and resiliency, often referred to as Total Loss Absorbing Capacity (TLAC). ~~Under the rules, which become effective on January 1, 2019,~~ U.S. G-SIBs ~~will be~~are required to have a minimum TLAC amount (consisting of CET1 capital and additional tier 1 capital issued directly by the top-tier or covered BHC plus eligible external long-term debt) equal to the greater of (i) ~~18%~~18.00% of RWAs and (ii) ~~7.5%~~7.50% of total leverage exposure (the denominator of the SLR calculation). Additionally, U.S. G-SIBs ~~will be~~are required to maintain (i) a TLAC buffer equal to ~~2.5%~~2.50% of RWAs plus ~~the firm’s~~our applicable G-SIB capital surcharge calculated under method one plus any applicable countercyclical buffer ~~that will~~to be added to the ~~18%~~18.00% minimum and (ii) an external

TLAC leverage buffer equal to ~~2.0%~~2.00% of total leverage exposure ~~that will~~to be added to the ~~7.5%~~7.50% minimum, in order to avoid restrictions on capital distributions and discretionary bonus payments. ~~The rules will~~U.S. G-SIBs are also ~~require U.S. G-SIBs~~required to have a minimum amount of eligible unsecured long-term debt equal to the greater of (i) ~~6.0%~~6.00% of RWAs plus ~~the firm’s~~our applicable G-SIB capital surcharge calculated under method two

and (ii) ~~4.5%~~4.50% of the total leverage exposure. ~~In addition,~~Under the ~~rules will impose certain restrictions~~Proposed SLR Rules, the 2.00% external TLAC leverage buffer would be replaced with a buffer equal to one-half of our applicable G-SIB capital surcharge, and the leverage component for calculating the minimum amount of eligible unsecured long-term debt would be modified from 4.50% of total leverage exposure to 2.50% of total leverage exposure plus one-half of our applicable G-SIB capital surcharge. As of March 31, 2020, our eligible external TLAC as a percentage of total risk-weighted assets was 23.27% compared with a required minimum of 22.00%. Similar to the risk-based capital requirements, we determine minimum required TLAC based on the ~~operations~~greater of RWAs determined under the Standardized and liabilities of the top-tier or covered BHC in order to further facilitate an orderly resolution, including prohibitions on the issuance of short-term debt to external investors and on entering into derivatives and certain other types of financial contracts with external counterparties. While the rules permit permanent grandfathering of a significant portion of otherwise ineligible long-term debt that was issued prior to December 31, 2016, long-term debt issued after that date must be fully compliant with the eligibility requirements of the rules in order to count toward the minimum TLAC amount. As a result of the rules, we will need to issue additional long-term debt to remain compliant with the requirements.Advanced approaches.

~~In addition, as~~OTHER REGULATORY CAPITAL AND LIQUIDITY MATTERS As discussed in the “Risk Management – Asset/ Liability Management – Liquidity and Funding – Liquidity Standards” section in this Report, federal banking regulators have issued a final rule regarding the U.S. implementation of the Basel III LCR and a proposed rule regarding the NSFR.

As a result of our adoption of CECL on January 1, 2020, our allowance for credit losses is now measured using an estimate of expected life-time credit losses methodology. Federal banking regulators issued rules permitting banking institutions whose capital levels decreased upon the adoption of CECL to phase in the adoption impact of CECL over a period of three years. Because we recognized a net reduction to our allowance for credit losses and a resulting increase to our capital levels upon the adoption of CECL, we were not eligible for this transition relief. In March 2020, federal banking regulators also issued rules that provide banking institutions an option to reduce any negative capital impact from the adoption of CECL and the difference between the allowance for credit losses under CECL and the previous incurred loss methodology. In first quarter 2020, we were not eligible for this transition relief.

Capital Planning and Stress Testing

Our planned long-term capital structure is designed to meet regulatory and market expectations. We believe that our long-term targeted capital structure enables us to invest in and grow our business, satisfy our customers’ financial needs in varying environments, access markets, and maintain flexibility to return capital to our shareholders. Our long-term targeted capital structure also considers capital levels sufficient to exceed capital requirements including the G-SIB capital surcharge. Accordingly, based on the final Basel III capital rules under the lower of the Standardized or Advanced Approaches CET1 capital ratios, we currently target a long-term CET1 capital ratio at or in excess of ~~10%~~10.00%, which includes a 2%2.00% G-SIB capital surcharge. Our capital targets are subject to change based on various factors, including changes to the regulatory capital framework and expectations for large banks promulgated by bank regulatory agencies, planned capital actions, changes in our risk profile and other factors. As discussed above in the “Capital Management – Regulatory Capital Guidelines – Risk-Based Capital and Risk-Weighted Assets” section of this Report, the FRB has issued a final rule that will replace the current 2.50% capital conservation buffer under the Standardized Approach with a stress capital buffer. Implementation of the stress capital buffer may cause our current long-term CET1 capital ratio target of 10.00% to increase.

Under the FRB’s capital plan rule, large BHCs are required to submit capital plans annually for review to determine if the FRB has any objections before making any capital distributions. The rule requires updates to capital plans in the event of material

changes in a BHC’s risk profile, including as a result of any significant acquisitions. The FRB assesses, among other things, the overall financial condition, risk profile, and capital adequacy of BHCs ~~while considering both quantitative and qualitative factors~~ when evaluating capital plans. The capital plan rule also limits a large BHC’s ability to make capital distributions to the extent its actual capital issuances were less than amounts indicated in its capital plan.

Our ~~2017~~2020 capital plan, which was submitted on April ~~4, 2017,~~3, 2020, as part of CCAR, included a comprehensive capital outlook supported by an assessment of expected sources and uses of capital over a given planning horizon under a range of expected and stress scenarios. As part of the ~~2017~~2020 CCAR, the FRB also generated a supervisory stress test, which assumed a sharp decline in the economy and significant decline in asset pricing using the information provided by the Company to estimate performance. The FRB ~~reviewed~~is expected to review the supervisory stress test results both as required under the Dodd-Frank Act using a common set of capital actions for all large BHCs and by taking into account the Company’s proposed capital actions. The FRB ~~published~~has indicated that it will publish its

supervisory stress test results as required under the Dodd-Frank Act, onand the related CCAR results taking into account the Company’s proposed capital actions, by June ~~22, 2017. On June 28, 2017, the FRB notified us that it did not object to our capital plan included in the 2017 CCAR.~~30, 2020.

~~Federal~~Concurrently with CCAR, federal banking regulators also require large BHCs and banks to conduct their own stress tests to evaluate whether anthe institution has sufficient capital to continue to operate during periods of adverse economic and financial conditions. These stress testing requirements set forth the timing and type of stress test activities large BHCs and banks must undertake as well as rules governing stress testing controls, oversight and disclosure requirements. The rules also limit a large BHC’s ability to make capital distributions to the extent its actual capital issuances were less than amounts indicated in its capital plan. As required under the FRB’s stress testing rule, we must submit a mid-cycle stress test based on second quarter data and scenarios developed by the Company. We submitted the results of the mid-cycle stress test to the FRB and disclosed a summary of the results in October 2017.

Securities Repurchases

From time to time the Board authorizes the Company to repurchase shares of our common stock. Although we announce when the Board authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Future stock repurchases may be private or open-market repurchases, including block transactions, accelerated or delayed block transactions, forward repurchase transactions, and similar transactions. Additionally, we may enter into plans to purchase stock that satisfy the conditions of Rule 10b5-1 of the Securities Exchange Act of 1934. Various factors determine the amount ~~and timing~~ of our share repurchases, including our capital requirements, the number of shares we expect to issue for employee benefit plans and acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations, including the FRB’s response to our capital plan and to changes in our risk profile.

~~In January 2016,~~ Due to the ~~Board authorized~~various factors impacting the ~~repurchase of 350 million shares~~amount of our ~~common stock.~~ share repurchases and the fact that we tend to be in the market regularly to satisfy repurchase considerations under our capital plan, our share repurchases occur at various price levels. We may suspend share repurchase activity at any time. On March 15, 2020, we, along with the other members of the Financial Services Forum, suspended our share repurchase activities for the remainder of the first quarter and for second quarter 2020.

At ~~September 30, 2017,~~March 31, 2020, we had remaining Board authority to repurchase approximately ~~122~~168 million shares, subject to regulatory and legal conditions. For more information about share repurchases during ~~third~~first quarter ~~2017,~~2020, see Part II, Item 2 in this Report.

Historically, our policy has been to repurchase shares under the “safe harbor” conditions of Rule 10b-18 of the Securities Exchange Act of 1934 including a limitation on the daily volume of repurchases. Rule 10b-18 imposes an additional daily volume limitation on share repurchases during a pending merger or acquisition in which shares of our stock will constitute some or all of the consideration. Our management may determine that during a pending stock merger or acquisition when the safe harbor would otherwise be available, it is in our best interest to repurchase shares in excess of this additional daily volume limitation. In such cases, we intend to repurchase shares in compliance with the other conditions of the safe harbor, including the standing daily volume limitation that applies whether or not there is a pending stock merger or acquisition.

In connection with our participation in the Capital Purchase Program (CPP), a part of the Troubled Asset Relief Program (TARP), we issued to the U.S. Treasury Department warrants to purchase 110,261,688 shares of our common stock with an original exercise price of $34.01 per share expiring on October 28, 2018. The terms of the warrants require the exercise price to be adjusted under certain circumstances when the Company’s quarterly common stock dividend exceeds $0.34 per share, which began occurring in second quarter 2014. Accordingly, with each quarterly common stock dividend above $0.34 per share, we must calculate whether an adjustment to the exercise price is required by the terms of the warrants, including whether certain minimum thresholds have been met to trigger an adjustment, and notify the holders of any such change. The Board authorized the repurchase by the Company of up to $1 billion of the warrants. At September 30, 2017, there were 26,560,862 warrants outstanding, exercisable at $33.731 per share, and $452 million of unused warrant repurchase authority. Depending on market conditions, we may purchase from time to time additional warrants in privately negotiated or open market transactions, by tender offer or otherwise.

Regulatory Matters (continued)

Regulatory Matters

Since the enactment of the Dodd-Frank Act in 2010, the U.S. financial services industry has been subject to a significant increase in regulation and regulatory oversight initiatives. This increased regulation and oversight has substantially changed how most U.S. financial services companies conduct business and has increased their regulatory compliance costs.

For a discussion of certain consent orders applicable to the Company, see the “Overview” section in this Report. The following supplements our discussion of the other significant regulations and regulatory oversight initiatives that have affected or may affect our business contained in the “Regulatory Matters” and “Risk Factors” sections in our ~~2016~~2019 Form ~~10-K~~10-K.

REGULATORY DEVELOPMENTS RELATED TO COVID-19In response to the COVID-19 pandemic and ~~the “Regulatory Matters” section in our 2017 First and Second Quarter Reports on Form 10-Q.~~

~~REGULATION OF CONSUMER FINANCIAL PRODUCTS~~ The Dodd-Frank Act established the Consumer Financial Protection Bureau (CFPB) to ensure consumers receive clear and accurate disclosures regarding financial products and to protect them from hidden fees and unfair or abusive practices. With respect to residential mortgage lending, the CFPB issuedrelated events, federal banking regulators have undertaken a number of measures to help stabilize the banking sector, support the broader economy, and facilitate the ability of banking organizations like Wells Fargo to continue lending to consumers and businesses. For example, following the passage of the Coronavirus Aid, Relief and Economic Security Act (CARES Act) in March 2020, federal banking regulators issued interim final rules implementing new origination, notification, disclosure and other requirements, as well as additional limitations on the fees and charges that may be increased from the estimates provided by lenders. In October 2015, the CFPB finalized amendmentsdesigned to ~~the rule implementing the Home Mortgage Disclosure Act, resulting~~encourage financial institutions to participate in a significant expansion of the data points lenders will be required to collect beginning January 1, 2018 and report to the CFPB beginning January 1, 2019. The CFPB also expanded the transactions covered by the rule and increased the reporting frequency from annual to quarterly for large volume lenders,stimulus measures, such as ~~Wells Fargo, beginning January 1, 2020. With respect to other financial products, in October 2016,~~ the ~~CFPB finalized rules, most of which become effective on April 1, 2018, to make prepaid cards subject to similar consumer protections as those provided by more traditional debit~~Small Business Administration’s Paycheck Protection Program and ~~credit cards such as fraud protection and expanded access to account information. In July 2017,~~ the CFPB finalized a rule, which became effective on September 18, 2017, prohibiting covered providers of certain consumer financial products and services, such as Wells Fargo, from using arbitration agreements that prevent consumers from filing or participating in class action litigation. However, Congress subsequently used its powers underFRB’s Main Street Lending Program. Similarly, the ~~Congressional Review Act to overturn the CFPB's arbitration rule and prohibited the CFPB from writing a “substantially similar” rule in the future without congressional action.~~

~~In addition to these rulemaking activities, the CFPB is continuing its on-going supervisory examination activities of the financial services industry with respect to~~FRB launched a number of ~~consumer businesses and products, including mortgage~~ lending and servicing, fair lending requirements, student lending activities, and automobile finance. At this time, the Company cannot predict the full impact of the CFPB’s rulemaking and supervisory authority on our business practices or financial results.

“~~LIVING WILL~~” ~~REQUIREMENTS AND RELATED MATTERS~~

~~Rules adopted by the FRB~~facilities designed to enhance liquidity and the ~~FDIC under the Dodd-Frank Act require large financial institutions,~~functioning of markets, including ~~Wells Fargo, to prepare~~facilities covering money market mutual funds and periodically revise resolution plans, so-called “living-wills”, that would facilitate their resolution in the event of material distress or failure. Under the rules, resolution plans are required to provide strategies for resolution under the Bankruptcy Code and other applicable insolvency regimes that can be accomplished in a reasonable period of time and in a

manner that mitigates the risk that failure would have serious adverse effects on the financial stability of the United States. We submitted our 2017 resolution plan to the FRB and FDIC on June 30, 2017, but have not yet received regulatory feedback on the plan. If the FRB and FDIC determine that our 2017 resolution plan has deficiencies, they may impose more stringent capital, leverage or liquidity requirements on us or restrict our growth, activities or operations until we adequately remedy the deficiencies. If the FRB and FDIC ultimately determine that we have been unable to remedy any deficiencies, they could require us to divest certain assets or operations.

We must also prepare and submit to the FRB a recovery plan that identifies a range of options that we may consider during times of idiosyncratic or systemic economic stress to remedy any financial weaknesses and restore market confidence without extraordinary government support. Recovery options include the possible sale, transfer or disposal of assets,term asset-backed securities loan portfolios or businesses. Our insured national bank subsidiary, Wells Fargo Bank, N.A. (the “Bank”), must also prepare and submit to the OCC a recovery plan that sets forth the bank’s plan to remain a going concern when the bank is experiencing considerable financial or operational stress, but has not yet deteriorated to the point where liquidation or resolution is imminent. If either the FRB or the OCC determine that our recovery plan is deficient, they may impose fines, restrictions on our business or ultimately require us to divest assets.

If Wells Fargo were to fail, it may be resolved in a bankruptcy proceeding or, if certain conditions are met, under the resolution regime created by the Dodd-Frank Act known as the “orderly liquidation authority.” The orderly liquidation authority allows for the appointment of the FDIC as receiver for a systemically important financial institution that is in default or in danger of default if, among other things, the resolution of the institution under the U.S. Bankruptcy Code would have serious adverse effects on financial stability in the United States. If the FDIC is appointed as receiver for Wells Fargo & Company (the “Parent”), then the orderly liquidation authority, rather than the U.S. Bankruptcy Code, would determine the powers of the receiver and the rights and obligations of our security holders. The FDIC’s orderly liquidation authority requires that security holders of a company in receivership bear all losses before U.S. taxpayers are exposed to any losses, and allows the FDIC to disregard the strict priority of creditor claims under the U.S. Bankruptcy Code in certain circumstances.

Whether under the U.S. Bankruptcy Code or by the FDIC under the orderly liquidation authority, Wells Fargo could be resolved using a “multiple point of entry” strategy, in which the Parent and one or more of its subsidiaries would each undergo separate resolution proceedings, or a “single point of entry” strategy, in which the Parent would likely be the only material legal entity to enter resolution proceedings. The FDIC has announced that a single point of entry strategy may be a desirable strategy under its implementation of the orderly liquidation authority, but not all aspects of how the FDIC might exercise this authority are known and additional rulemaking is possible.

The strategy described in our most recent resolution plan submission is a multiple point of entry strategy; however, we have made a decision to move to a single point of entry strategy for our next resolution plan submission. We are not obligated to maintain either a single point of entry or multiple point of entry strategy, and the strategies reflected in our resolution plan submissions are not binding in the event of an actual resolution

~~of Wells Fargo, whether conducted under the U.S. Bankruptcy Code or by the FDIC under the orderly liquidation authority.~~

To facilitate the orderly resolution of systemically important financial institutions in case of material distress or failure, federal banking regulations require that institutions, such as Wells Fargo, maintain a minimum amount of equity and unsecured debt to absorb losses and recapitalize operating subsidiaries.loans. Federal banking regulators have also ~~required measures to facilitate~~issued several joint interim final rules amending the continued operation of operating subsidiaries notwithstanding the failure of their parent companies, such as limitations on parent guarantees, and have issued guidance encouraging institutions to take legally binding measures to provideregulatory capital and ~~liquidity resources~~TLAC rules and other prudential regulations to ease certain ~~subsidiaries~~restrictions on banking organizations and encourage the use of certain FRB-established facilities in order to ~~facilitate an orderly resolution. In response~~further promote lending to ~~the regulators’ guidance~~consumers and to facilitate the orderly resolution of the Company using either a single point of entry or multiple point of entry resolution strategy, on June 28, 2017, the Parent entered into a support agreement (the “Support Agreement”) with WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), and the Bank, Wells Fargo Securities, LLC (“WFS”), and Wells Fargo Clearing Services, LLC (“WFCS”), each an indirect subsidiary of the Parent. Pursuant to the Support Agreement, the Parent transferred a significant amount of its assets, including the majority of its cash, deposits, liquid securities and intercompany loans (but excluding its equity interests in its subsidiaries and certain other assets), to the IHCbusinesses.

In addition, the OCC and ~~will continue~~the FRB have issued guidelines for banks and BHCs related to ~~transfer those types of assets~~working with customers affected by the COVID-19 pandemic, including guidance with respect to waiving fees, offering repayment accommodations, providing payment deferrals, and increasing daily withdrawal limits at automated teller machines. In addition, the federal government has instituted a moratorium on certain mortgage foreclosure activities. Any current or future rules, regulations, and guidance related to the ~~IHC from time~~COVID-19 pandemic and its impacts could require us to ~~time. In the event~~change certain of our ~~material financial distress~~business practices, reduce our revenue and earnings, impose additional costs on us, or ~~failure,~~otherwise adversely affect our business operations and/or competitive position.

COMMUNITY REINVESTMENT ACT (CRA) RATING On May 4, 2020, we announced that we received an “Outstanding” rating from the ~~IHC will be obligated~~OCC on our most recent CRA performance evaluation, which covers the years 2012 to use the transferred assets to provide capital and/or liquidity to the Bank pursuant to the Support Agreement and to WFS and WFCS through repurchase facilities entered into in connection with the Support Agreement. Under the Support Agreement, the IHC will also provide funding and liquidity to the Parent through subordinated notes and a committed line of credit, which, together with the issuance of dividends, is expected to provide the Parent, during business as usual operating conditions, with the same access to cash necessary to service its debts, pay dividends, repurchase its shares, and perform its other obligations as it would have had if it had not entered into these arrangements and transferred any assets. If certain liquidity and/or capital metrics fall below defined triggers, the subordinated notes would be forgiven and the committed line of credit would terminate, which could materially and adversely impact the Parent’s liquidity and its ability to satisfy its debts and other obligations, and could result in the commencement of bankruptcy proceedings by the Parent at an earlier time than might have otherwise occurred if the Support Agreement were not implemented. The Parent's and the IHC's respective obligations under the Support Agreement are secured pursuant to a related security agreement.

2018.

Critical Accounting Policies

Our significant accounting policies (see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2016~~2019 Form 10-K) are fundamental to understanding our results of operations and financial condition because they require that we use estimates and assumptions that may affect the value of our assets or liabilities and financial results. ~~Six~~Five of these policies are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. These policies govern:

the allowance for credit losses;

~~PCI loans;~~

the valuation of residential MSRs;

the fair value of financial instruments;

income taxes; and

liability for contingent litigation losses.

~~Starting second quarter 2017,~~Management and the ~~liability for contingent litigation losses has been designated as one of our~~Board’s Audit Committee have reviewed and approved these critical accounting policies. ~~The remaining five of these~~These policies are described further in the “Financial Review – Critical Accounting Policies” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2016~~2019 Form 10-K. In connection with our adoption ofCECL on January 1, 2020, we have updated our critical accounting policy for the allowance for credit losses.

~~Liability~~Allowance for ~~Contingent Litigation~~Credit Losses

~~The Company~~We maintain an allowance for credit losses (ACL) for loans, which is ~~involved~~management’s estimate of the expected credit losses in ~~a number of judicial, regulatory, arbitration~~the loan portfolio and unfunded credit commitments, at the balance sheet date, excluding loans and unfunded credit commitments carried at fair value or held for sale. Additionally, we maintain an allowance for credit losses for debt securities classified as either held-to-maturity (HTM) or available-for-sale (AFS), other financial assets measured at amortized cost, net investments in leases, and other ~~proceedings concerning matters arising from the conduct~~off-balance sheet credit exposures. In connection with our adoption of ~~its business activities,~~CECL, we updated our approach for estimating expected credit losses, which includes new areas for management judgment, described more fully below, and ~~many~~updated our accounting policies. For more information, see Note 1 (Summary of those proceedings expose the Company to potential financial loss. We establish accruals for these legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. For such accruals, we record the amount we consider to be the best estimate within a range of potential losses that are both probable and estimable; however, if we

cannot determine a best estimate, then we record the low end of the range of those potential losses. The actual costs of resolving legal actions may be substantially higher or lower than the amounts accrued for those actions.

We apply judgment when establishing an accrual for potential losses associated with legal actions and in establishing the range of reasonably possible losses in excess of the accrual. Our judgment in establishing accruals and the range of reasonably possible losses in excess of the Company's accrual for probable and estimable losses is influenced by our understanding of information currently available related to the legal evaluation and potential outcome of actions, including input and advice on these matters from our internal counsel, external counsel and senior management. These matters may be in various stages of investigation, discovery or proceedings. They may also involve a wide variety of claims across our businesses, legal entities and jurisdictions. The eventual outcome may be a scenario that was not considered or was considered remote in anticipated occurrence. Accordingly, our estimate of potential losses will change over time and the actual losses may vary significantly.

The outcomes of legal actions are unpredictable and subject to significant uncertainties, and it is inherently difficult to determine whether any loss is probable or even possible. It is also inherently difficult to estimate the amount of any loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Accordingly, actual losses may be in excess of the established accrual or the range of reasonably possible loss.

~~See Note 11 (Legal Actions)~~Significant Accounting Policies) to Financial Statements in this ~~Report~~Report.

For loans and HTM debt securities, the ACL is measured based on the remaining contractual term of the financial asset (including off-balance sheet credit exposures) adjusted, as appropriate, for ~~further~~prepayments and permitted extension options using historical experience, current conditions, and forecasted information. For AFS debt securities, the ACL is measured using a discounted cash flow approach and is limited to the difference between the fair value of the security and its amortized cost.

~~Management~~Changes in the ACL and, therefore, in the related provision for credit losses can materially affect net income. In applying the judgment and review required to determine the ACL, management considerations include the evaluation of past events, historical experience, changes in economic forecasts and conditions, customer behavior, collateral values, and the ~~Board's Audit~~length of the initial loss forecast period, and ~~Examination Committee~~other influences. From time to time, changes in economic factors or assumptions, business strategy, products or product mix, or debt security investment strategy, may result in a corresponding increase or decrease in our ACL. While our methodology attributes portions of the ACL to specific financial asset classes (loan and debt

security portfolios) or loan portfolio segments (commercial and consumer), the entire ACL is available to absorb credit losses of the company.

Judgment is specifically applied in:

•

Economic assumptions and the length of the initial loss forecast period. Forecasted economic variables, such as gross domestic product (GDP), unemployment rate or collateral asset prices, are used to estimate expected credit losses. While many of these economic variables are evaluated at the macro-economy level, some economic variables may be forecasted at more granular levels, for example, using the metro statistical area (MSA) level for unemployment rates, home prices and commercial real estate prices. Quarterly, we assess the length of the initial loss forecast period and have currently set the period to one year.

•

Reversion of losses beyond the initial forecast period. We use a reversion approach to connect the losses estimated for our initial loss forecast period to the period of our historical loss expectations. We give consideration to the type of portfolio, point in the credit cycle, expected length of recessions and recoveries, as well as other relevant factors. During forecasted periods of expansionary economic conditions, we revert immediately to our historical loss expectations. However, when recessionary conditions are forecasted over the initial loss forecast period, we will utilize a linear reversion to the long-term average losses. The length of reversion period varies by asset type – one year for shorter contractual term loans such as commercial loans and two years for longer contractual term loans such as 1-4 family mortgage loans. We assess the reversion approach on a quarterly basis and the length of the reversion period by asset type annually.

•

Historical loss expectations. At the end of the reversion period, we incorporate the changes in economic variables observed during representative historical time periods that include both recessions and expansions. This analysis is used to compute average losses for any given portfolio and its associated credit characteristics. Annually, we assess the historical time periods and ensure the average loss estimates are representative of our historical loss experience.

•

Credit risk ratings applied to individual commercial loans, unfunded credit commitments, and debt securities. Individually assessed credit risk ratings are considered key credit variables in our modeled approaches to help assess probability of default and loss given default. Borrower quality ratings are aligned to the borrower’s financial strength and contribute to forecasted probability of default curves. Collateral quality ratings combined with forecasted collateral prices (as applicable) contribute to the forecasted severity of loss in the event of default. These credit risk ratings are reviewed by experienced senior credit officers and subjected to reviews by an internal team of credit risk specialists.


•	Usage of credit loss estimation models. We use internally developed models that incorporate credit attributes and economic variables to generate estimates of credit losses. Management uses a combination of judgement and quantitative analytics in the determination of segmentation, modeling approach, and variables that are leveraged in the models. These models are validated in

accordance with the Company’s policies by an internal model validation group.We routinely assess our model performance and apply adjustments when necessary to improve the accuracy of loss estimation. We also assess our models for limitations against the company-wide risk inventory to help ensure that we appropriately capture known and emerging risks in our estimate of expected credit losses and apply overlays as needed.

•

Valuation of collateral. The current fair value of collateral is utilized to assess the expected credit losses when a financial asset is considered to be collateral dependent. We apply judgment when valuing the collateral either through appraisals, evaluation of the cash flows of the property, or other quantitative techniques. Decreases in collateral valuations support incremental charge-downs and increases in collateral valuation are included in the allowance for credit losses as a negative allowance when the financial asset has been previously written-down below current recovery value.

•

Contractual term considerations. The remaining contractual term of a loan is adjusted for expected prepayments and certain expected extensions, renewals, or modifications. We extend the contractual term when we are not able to unconditionally cancel contractual renewals or extension options. We also incorporate into our allowance for credit losses any scenarios where we reasonably expect to provide an extension through a TDR.


•	Qualitative factors which may not be adequately captured in the loss models. These amounts represent management’s judgment of risks inherent in the processes and assumptions used in establishing the ACL. We also consider economic environmental factors, modeling assumptions and performance, process risk, and other subjective factors, including industry trends and emerging risk assessments.

SensitivityThe ACL for loans is sensitive to changes in key assumptions which requires significant judgment to be used by management. Future amounts of the ACL for loans will be based on a variety of factors, including loan balance changes, portfolio credit quality, and general economic conditions. General economic conditions are forecasted using economic variables, which could have ~~reviewed~~varying impacts on different financial assets or portfolios. Additionally, throughout numerous credit cycles, there are observed changes in economic variables such as the unemployment rate, GDP and ~~approved~~real estate prices which may not move in a correlated manner as variables may move in opposite directions or differ across portfolios or geography.

In order to provide a sensitivity analysis, we developed two hypothetical scenarios by applying changes in economic variables to our loan portfolio, which affect the expected balances, credit quality, and mix. The outcomes of both scenarios were influenced by the length of the scenario periods, as well as the duration and timing of changes in economic variables within those scenarios. The scenarios reflect the impact of economic stress and corresponding adverse changes in economic variables for a longer period than the initial loss forecast period used to develop our current ACL for loans. Neither of the scenarios consider any benefit related to economic stimulus programs or other legislative or regulatory relief.

One hypothetical scenario represents an adverse scenario based on changes in economic variables experienced during the last credit crisis. Compared with the economic forecast used to develop our current ACL for loans, this adverse scenario reflects a more substantial and sustained increase in unemployment, a deeper and more sustained decline in GDP along with significant declines in consumer and commercial real estate prices. This adverse scenario resulted in an increase in the ACL for loans of $6.8 billion.

A second more severe scenario is similar to our annual Company-run stress test. Compared with the adverse scenario, the more severe scenario reflects a sustained but sharper increase in unemployment and a more significant and sustained decline in GDP. Declines in real estate prices are consistent with the adverse scenario, with additional stress to consumer and commercial real estate prices based on our regional and industry concentrations, as well as an idiosyncratic stress as a result of declines in oil and gas prices. The more severe scenario resulted in an increase in the ACL for loans of $11.3 billion.

The changes in economic variables in these ~~critical accounting policies.~~scenarios were not contemplated in the economic forecast used to develop our current ACL for loans. In addition, these hypothetical increases in our ACL for loans represent changes to our quantitative estimate and do not incorporate the impact of management judgment for qualitative factors applied in the current ACL for loans, which may have an offsetting impact to the scenario results. Finally, if these hypothetical scenarios were to materialize, the increase in our ACL for loans may be recognized over time if actual loss expectations exceed our historical loss experience.

These sensitivity analyses are hypothetical scenarios and the results do not represent management’s view of expected credit losses at the balance sheet date. The sensitivity analyses exclude the ACL for debt securities given its size relative to the overall ACL. Management believes that the current estimate for the ACL for loans was appropriate at the balance sheet date. Because significant judgment is used, it is possible that others performing similar analyses could reach different conclusions.

~~Current Accounting Developments (continued~~)

Current Accounting Developments

Table 5241 provides the significant accounting ~~pronouncements~~updates applicable to us that have been issued by the ~~FASB~~Financial Accounting Standards Board (FASB) but are not yet effective.

Table ~~52:~~41:Current Accounting Developments – Issued Standards



~~Standard~~	Description	Effective date and financial statement impact
~~Accounting Standards Update (ASU or Update) 2017-12 - Derivatives and Hedging~~ASU 2018-12 – Financial Services – Insurance (Topic ~~815)~~944): Targeted Improvements to the Accounting for ~~Hedging Activities~~Long-Duration Contracts and subsequent related updates
The Update ~~makes targeted~~requires all features in long-duration insurance contracts that meet the definition of a market risk benefit to be measured at fair value through earnings with changes to the hedge accounting model intended to facilitate financial reporting that more closely reflects an entity’s risk management activities and to simplify application of hedge accounting. Changes include expanding the types of risk management strategies eligible for hedge accounting, easing the documentation and effectiveness assessment requirements, changing how ineffectiveness is measured and changing the presentation and disclosure requirements for hedge accounting activities.	~~We adopted the Update~~ in ~~fourth quarter 2017. Our financial statements for the year ended December 31, 2017, will include a cumulative-effect adjustment to opening retained earnings and adjustments~~fair value attributable to our 2017 earnings to reflect application of the new guidance effective January 1, 2017. The new guidance significantly reduces but does not eliminate interest-rate and foreign-currency related hedge ineffectiveness. However, we may continue to experience hedge ineffectiveness volatility related to certain hedges of foreign-currency denominated debt liabilities. The adjustment as of January 1, 2017, reduced retained earnings by approximately $381 million and increasedown credit risk recognized in other comprehensive ~~income by approximately $168 million. Through September 30, 2017, year-to-date net income will increase approximately $169 million ($242 million pre-tax)~~income. Currently, two measurement models exist for these features, fair value and ~~other comprehensive income will decrease by $163 million upon application of the new guidance.~~
~~ASU 2017-08 – Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20):~~ ~~Premium Amortization on Purchased Callable Debt Securities~~	insurance accrual. The Update ~~changes~~requires the ~~accounting~~use of a standardized discount rate and routine updates for ~~certain purchased callable debt securities held at a premium to shorten~~insurance assumptions used in valuing the liability for future policy benefits for traditional long-duration contracts. The Update also simplifies the amortization period for the premium to the earliest call date rather than to the maturity date. Accounting for purchased callable debt securities held at a discount does not change. The discount would continue to amortize to the maturity date.	~~We expect to adopt the guidance in first quarter 2019 using the modified retrospective method with a cumulative-effect adjustment to retained earnings as~~ of the beginning of the year of adoption. Our investment securities portfolio includes holdings of available-for-sale (AFS) and held-to-maturity (HTM) callable debt securities held at a premium. At adoption, the guidance is expected to result in a cumulative effect adjustment which will be primarily offset with a corresponding adjustment to other comprehensive income related to AFS securities. After adoption, the guidance will reduce interest income prior to the call date because the premium will be amortized over a shorter time period. Our implementation effort includes identifying the population of debt securities subject to the new guidance, which are primarily obligations of U.S. states and political subdivisions, and quantifying the expected impacts. The impact of the Update on our consolidated financial statements will be affected by our portfolio composition at the time of adoption, which may change between September 30, 2017 and the adoption date.



~~Standard~~	~~Description~~	~~Effective date and financial statement impact~~
~~ASU 2016-13 – Financial Instruments – Credit Losses (Topic 326):~~ ~~Measurement of Credit Losses on Financial Instruments~~	The Update changes the accounting for credit losses on loans and debt securities. For loans and held-to-maturity debt securities, the Update requires a current expected credit loss (CECL) approach to determine the allowance for credit losses. CECL requires loss estimates for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts. Also, the Update eliminates the existing guidance for PCI loans, but requires an allowance for purchased financial assets with more than insignificant deterioration since origination. In addition, the Update modifies the other-than-temporary impairment model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which allows for reversal of credit impairments in future periods based on improvements in credit.deferred acquisition costs.	The guidance isbecomes effective ~~in first quarter 2020 with a cumulative-effect adjustment~~on January 1, 2022. Certain of our variable annuity reinsurance products meet the definition of market risk benefits and will require the associated insurance related reserves for these products to ~~retained earnings~~be measured at fair value as of the earliest period presented, with the cumulative effect on fair value for changes attributable to our own credit risk recognized in the beginning balance of accumulated other comprehensive income. The cumulative effect of the ~~year~~difference between fair value and carrying value, excluding the effect of ~~adoption. While early adoption is permitted beginning~~our own credit, will be recognized in ~~first quarter 2019,~~the opening balance of retained earnings. As of March 31, 2020, we ~~do not expect to elect that option. We are evaluating the impact~~held $1.1 billion in insurance-related reserves of which $560 million was in scope of the ~~Update on our consolidated financial statements. We expect~~Update. A total of $553 million was associated with products that meet the Update will result in an increase in the allowance for credit losses given the change to estimated losses over the contractual life adjusted for expected prepayments with an anticipated material impact from longer duration portfolios, as well as the additiondefinition of ~~an allowance for debt securities. The~~market risk benefits, and of this amount, ~~of the increase will be impacted by the portfolio composition and credit quality at the adoption date as well as economic conditions and forecasts at that time.~~
~~ASU 2016-02 – Leases (Topic 842)~~	The Update requires lessees to recognize leases on the balance sheet with lease liabilities and corresponding right-of-use assets based on the present value of lease payments. Lessor accounting activities are largely unchanged from existing lease accounting. The Update also eliminates leveraged lease accounting but allows existing leveraged leases to continue their current accounting until maturity, termination or modification.	We expect to adopt the guidance in first quarter 2019 using the modified retrospective method and practical expedients for transition. The practical expedients allow us to largely account for our existing leases consistent with current guidance except for the incremental balance sheet recognition for lessees. We have started our implementation of the Update which has included an initial evaluation of our leasing contracts and activities. As a lessee we are developing our methodology to estimate the right-of use assets and lease liabilities, which is based on the present value of lease payments (the December 31, 2016 future minimum lease payments were $6.9 billion). We do not expect a material change to the timing of expense recognition. Given the limited changes to lessor accounting, we do not expect material changes to recognition or measurement, but we are early in the implementation process and will continue to evaluate the impact. We are evaluating our existing disclosures and may need to provide additional information as a result of adoption of the Update.

~~Current Accounting Developments (continued~~)



~~Standard~~	~~Description~~	~~Effective date and financial statement impact~~
~~ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10):~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~	~~The Update amends the presentation and accounting for certain financial instruments, including liabilities~~$65 million was measured at fair value under current accounting standards. The market risk benefits are largely indexed to U.S. equity and fixed income markets. Upon adoption, we may incur periodic earnings volatility from changes in the fair value ~~option~~of market risk benefits generally due to the long duration of these contracts. We plan to economically hedge this volatility, where feasible. The ultimate impact of these changes will depend on the composition of our market risk benefits portfolio at the date of adoption. Changes in the accounting for the liability of future policy benefits for traditional long-duration contracts and ~~equity investments.~~ deferred acquisition costs will be applied to all outstanding long-duration contracts on the basis of their existing carrying amounts at the beginning of the earliest period presented, and are not expected to be material.
ASU 2020-04 – Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting
The Update provides temporary, optional relief to ease the potential burden of accounting for reference rate reform activities that affect contractual modifications of floating-rate financial instruments indexed to IBORs and hedge accounting relationships. Contractual modifications and changes to existing hedge accounting relationships must meet specific requirements to qualify for the relief. Upon election the guidance ~~also updates~~is applied consistently to all applicable instruments, where a qualifying contractual modification is accounted for as the continuation of an existing contract rather than a new contract. The optional relief facilitates the preservation of existing fair value ~~presentation~~ and ~~disclosure requirements~~cash flow hedge relationships while amending certain contractual terms of hedge accounting relationships, and changes the way the amounts excluded from the evaluation of hedge effectiveness are reported in earnings. Hedging relationships that qualify for ~~financial instruments measured at amortized cost.~~ the relief will not require discontinuation of the existing hedge accounting relationships. The election to apply the optional relief for existing fair value and cash flow hedge accounting relationships may be made on a hedge-by-hedge basis and across multiple reporting periods.	We ~~will adopt~~adopted the guidance ~~in first quarter 2018 with a cumulative-effect adjustment~~on April 1, 2020. We applied the guidance consistently to ~~retained earnings as~~contractual amendments made to all applicable floating rate instruments indexed to IBORs. We elected to apply the guidance on an individual hedge-by-hedge basis for changes to hedge accounting relationships. The financial statement impact of the ~~beginning of the year of adoption, except for changes related to nonmarketable equity investments, which~~Update will change each period as contracts, existing and new, are ~~applied prospectively.~~ ~~Our investments in marketable equity securities classified~~impacted by reference rate reform activities and as available-for-sale as of the adoption date will be accounted for at fair value with unrealized gains or losses reflected in earnings. As of September 30, 2017, the carrying value of these securities was $893 million, which included a $287 million net unrealized pre-tax gain reflected in other comprehensive income. Upon adoption, the amount of net unrealized gain or loss related to our ~~available-for-sale equity securities portfolio as of December 31, 2017 will be reclassified from other comprehensive income to retained earnings.~~ Our investments in nonmarketable equity instruments accounted for under the cost method of accounting, except for Federal bank stock, will be measured either at fair value with unrealized gains and losses reflected in earnings or the measurement alternative. The measurement alternative is similar to the cost method of accounting, except the carrying value is adjusted, through earnings, for subsequent observable transactions in the same or similar investment. We expect to account for substantially all of our private equity cost method investments using the measurement alternative and our auction rate securities portfolio at fair value with unrealized gains and losses reflected in earnings. Upon adoption, we do not expect a significant transition adjustment for the accounting change related to our nonmarketable cost method equity investments. ~~Additionally, for purposes of disclosing the fair value of loans carried at amortized cost, we are evaluating our valuation methods to determine the necessary~~exposure changes to ~~present fair value disclosures based on “exit price” as required by the Update. Accordingly, the fair value amounts disclosed for such loans may change upon adoption.~~

LIBOR and other IBORs.



~~Standard~~	~~Description~~	~~Effective date and financial statement impact~~
~~ASU 2014-09 – Revenue from Contracts With Customers (Topic 606) and subsequent related Updates~~	The Update modifies the guidance used to recognize revenue from contracts with customers for transfers of goods or services and transfers of nonfinancial assets, unless those contracts are within the scope of other guidance. The Update also requires new qualitative and quantitative disclosures, including disaggregation of revenues and descriptions of performance obligations.	We will adopt the guidance in first quarter 2018 using the modified retrospective method with a cumulative-effect adjustment to opening retained earnings. Our revenue is the sum of net interest income and noninterest income. The scope of the guidance explicitly excludes net interest income as well as many other revenues for financial assets and liabilities including loans, leases, securities, and derivatives. Accordingly, the majority of our revenues will not be affected. We have performed an assessment of our revenue contracts as well as worked with industry participants on matters of interpretation and application. Our accounting policies will not change materially since the principles of revenue recognition from the Update are largely consistent with existing guidance and current practices applied by our businesses. We have not identified material changes to the timing or amount of revenue recognition. Based on changes to guidance applied by broker-dealers, we expect a minor change to the presentation of our broker-dealer’s costs for underwriting activities which will be presented in expenses rather than the current presentation against the related revenues. We will provide qualitative disclosures of our performance obligations related to our revenue recognition and we continue to evaluate disaggregation for significant categories of revenue in the scope of the guidance.

~~In addition to the list above, the~~The following ~~updates~~Updates are applicable to us but ~~subject to completion of our assessment,~~ are not expected to have a material impact on our consolidated financial statements:

ASU ~~2017-11, Earnings Per Share~~2020-01 – Investments – Equity Securities (Topic ~~260); Distinguishing Liabilities from~~321),

Investments – Equity Method and Joint Ventures (Topic ~~480);~~

323), and Derivatives and Hedging (Topic 815): ~~(Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement~~Clarifying the

Interactions between Topic 321, Topic 323, and Topic 815 (a

consensus of the ~~Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception~~FASB Emerging Issues Task Force)


•	ASU 2019-12 – Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

~~ASU 2017-09 – Compensation – Stock Compensation (Topic718):~~ ~~Scope of Modification Accounting~~

~~ASU 2017-04 – Goodwill and Other (Topic 350):~~ ~~Simplifying the Test for Goodwill Impairment~~

~~ASU 2017-03 – Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323):~~ ~~Amendments to SEC Paragraphs~~

~~Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update)~~

~~ASU 2017-01 – Business Combinations (Topic 805):~~ ~~Clarifying the Definition of a Business~~

~~ASU 2016-18 – Statement of Cash Flows (Topic 230):~~ ~~Restricted Cash~~

~~ASU 2016-16 – Income Taxes (Topic 740):~~ ~~Intra-Entity Transfers of Assets Other Than Inventory~~

~~ASU 2016-15 – Statement of Cash Flows (Topic 230):~~ ~~Classification of Certain Cash Receipts and Cash Payments~~

~~ASU 2016-04 – Liabilities – Extinguishment of Liabilities (Subtopic 405-20):~~ ~~Recognition of Breakage for Certain Prepaid Stored-Value Products~~

We have determined that other existing accounting updates are either not applicable to us or have completed our assessment and determined will not have a material impact on our consolidated financial statements.

Forward-Looking Statements (continued)

Forward-Looking Statements

This document contains ~~“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.~~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 and others. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “target,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can” and similar references to future periods. In particular, forward-looking statements include, but are not limited to, statements we make about: (i) the future operating or financial performance of the Company, including our outlook for future growth; (ii) our noninterest expense and efficiency ratio; (iii) future credit quality and performance, including our expectations regarding future loan losses and our allowance ~~levels;~~for credit losses; (iv) the appropriateness of the allowance for credit losses; (v) our expectations regarding net interest income and net interest margin; (vi) loan growth or the reduction or mitigation of risk in our loan portfolios; (vii) future capital or liquidity levels, ratios or ~~targets and our estimated Common Equity Tier 1 ratio under Basel III capital standards;~~targets; (viii) the performance of our mortgage business and any related exposures; (ix) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (x) future common stock dividends, common share repurchases and other uses of capital; (xi) our targeted range for return on assets, return on equity, and return on tangible common equity; (xii) expectations regarding our effective income tax rate; (xiii) the outcome of contingencies, such as legal proceedings; and ~~(xiii)~~(xiv) the Company’s plans, objectives and strategies.

Forward-looking statements are not based on historical facts but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:

current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and ~~the overall~~any slowdown in global economic growth;

the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions;

our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;

financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;

developments in our mortgage banking business, including the extent of the success of our ~~success in our~~mortgage loan modification efforts, ~~as well as the effects of regulatory requirements or guidance regarding loan modifications;~~

the amount of mortgage loan repurchase demands that we receive, ~~and our ability to satisfy~~ any ~~such demands without having to repurchase loans related thereto or otherwise indemnify or reimburse third parties, and the credit quality of or losses on such repurchased mortgage loans;~~

negative effects relating to our mortgage servicing, ~~and~~loan modification or foreclosure practices, ~~as well as changes in industry standards or practices,~~and the effects of regulatory or judicial requirements ~~penalties~~ or ~~fines, increased servicing~~guidance impacting our mortgage banking business and ~~other costs or obligations, including loan modification requirements, or delays or moratoriums on foreclosures;~~any changes in industry standards;

our ability to realize ~~our~~any efficiency ratio or expense target as part of our expense management initiatives, including as a result of business and economic cyclicality, seasonality, changes in our business composition and operating environment, growth in our businesses and/or acquisitions, and unexpected expenses relating to, among other things, litigation and regulatory matters;

losses related to recent hurricanes, which primarily affected Texas, Florida and Puerto Rico, and related to recent California wildfires, in each case including from damage or loss to our collateral for loans in our consumer and commercial loan portfolios and from the impact on the ability of our borrowers to repay their loans;

the effect of the current ~~low~~ interest rate environment or changes in interest rates or in the level or composition of our assets or liabilities on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and ~~mortgages~~mortgage loans held for sale;

significant turbulence or a disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for mortgage loans, a reduction in the availability of funding or increased funding costs, and declines in asset values and/or recognition of ~~other-than-temporary impairment on~~impairments of securities held in our ~~investment~~debt securities ~~portfolio;~~and equity securities portfolios;

the effect of a fall in stock market prices on our investment banking business and our fee income from our brokerage, asset and wealth management businesses;

negative effects from the retail banking sales practices matter and from other instances where customers may have experienced financial harm, including on our legal, operational and compliance costs, our ability to engage in certain business activities or offer certain products or services, our ability to keep and attract customers, our ability to attract and retain qualified team members, and our reputation;

~~reputational damage from negative publicity, protests,~~resolution of regulatory matters, litigation, or other legal actions, which may result in, among other things, additional costs, fines, penalties, ~~and~~restrictions on our business activities, reputational harm, or other ~~negative consequences from regulatory violations and legal actions;~~adverse consequences;

a failure in or breach of our operational or security systems or infrastructure, or those of our ~~third party~~third-party vendors or other service providers, including as a result of cyber attacks;

the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;

fiscal and monetary policies of the Federal Reserve Board;

changes to U.S. tax guidance and regulations, as well as the effect of discrete items on our effective income tax rate;

~~the other risk factors~~our ability to develop and ~~uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended~~ ~~December 31, 2016~~.execute effective business plans and strategies; and


•	the other risk factors and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, as supplemented by the “Risk Factors” section in this Report.

In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and

financial condition of the Company, market conditions, capital

requirements (including under Basel capital standards), common stock issuance requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the Company’s Board of Directors, and may be subject to regulatory approval or conditions.

For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2019, as supplemented by the “Risk Factors” section in this Report, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.

Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Forward-looking Non-GAAP Financial Measures. From time to time management may discuss forward-looking non-GAAP financial measures, such as forward-looking estimates or targets for return on average tangible common equity. We are unable to provide a reconciliation of forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures because we are unable to provide, without unreasonable effort, a meaningful or accurate calculation or estimation of amounts that would be necessary for the reconciliation due to the complexity and inherent difficulty in forecasting and quantifying future amounts or when they may occur. Such unavailable information could be significant to future results.

Risk Factors

An investment in the Company involves risk, including the possibility that the value of the investment could fall substantially and that dividends or other distributions on the investment could be reduced or eliminated. For a discussion of risk factors that could adversely affect our financial results and condition, and the value of, and return on, an investment in the Company, we refer you to the “Risk Factors” section in our ~~2016~~2019 Form 10-K.

The following risk factor supplements the “Risk Factors” section in our 2019 Form 10-K.

The COVID-19 pandemic has adversely impacted our business and financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets, and increased unemployment levels. In addition, the pandemic has resulted in temporary closures of many businesses and the institution of social distancing and sheltering in place requirements in many states and communities. As a result, the demand for our products and services may be significantly impacted, which could adversely affect our revenue. Furthermore, the pandemic could continue to result in the recognition of credit losses in our loan portfolios and increases in our allowance for credit losses, particularly if businesses remain closed, the impact on the global economy worsens, or more customers draw on their lines of credit or seek additional loans to help finance their businesses. Similarly, because of changing economic and market conditions affecting issuers, we may be required to recognize further impairments on the securities we hold as well as reductions in other comprehensive income. Our business operations may be further disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic, and we have already temporarily closed certain of our branches and offices.

Moreover, the pandemic has created additional operational and compliance risks, including the need to quickly implement and execute new programs and procedures for the products and services we offer our customers, provide enhanced safety measures for our employees and customers, comply with rapidly changing regulatory requirements, address any increased risk of fraudulent activity, and protect the integrity and functionality of our systems and networks as a larger number of our employees work remotely. The pandemic could also result in downgrades to our credit ratings or credit outlook. In response to the pandemic, we have suspended residential property foreclosure sales, evictions, and involuntary automobile repossessions, and are offering fee waivers, payment deferrals, and other expanded assistance for credit card, automobile, mortgage, small business and personal lending customers, and future governmental actions may require these and other types of customer-related responses. In addition, we have temporarily suspended share repurchases and could take other capital actions in response to the COVID-19 pandemic. The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.

Controls and Procedures

Disclosure Controls and Procedures

The Company’s management evaluated the effectiveness, as of ~~September 30, 2017,~~March 31, 2020, of the Company’s disclosure controls and procedures. The Company’s chief executive officer and chief financial officer participated in the evaluation. Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of ~~September 30, 2017.~~March 31, 2020.

Internal Control Over Financial Reporting

Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (GAAP) and includes those policies and procedures that:

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the Company;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No change occurred during ~~third~~first quarter ~~2017~~2020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.



Wells Fargo & Company and Subsidiaries
Consolidated Statement of Income (Unaudited)
	Quarter ended March 31,
(in millions, except per share amounts)	2020			2019
Interest income
Debt securities	$	3,472		3,941
Mortgage loans held for sale	197			152
Loans held for sale	12			24
Loans	10,065			11,354
Equity securities	206			210
Other interest income	775			1,322
Total interest income	14,727			17,003
Interest expense
Deposits	1,742			2,026
Short-term borrowings	291			596
Long-term debt	1,240			1,927
Other interest expense	142			143
Total interest expense	3,415			4,692
Net interest income	11,312			12,311
Provision for credit losses:
Debt securities (1)	172			—
Loans	3,833			845
Net interest income after provision for credit losses	7,307			11,466
Noninterest income
Service charges on deposit accounts	1,209			1,094
Trust and investment fees	3,574			3,373
Card fees	892			944
Other fees	632			770
Mortgage banking	379			708
Insurance	95			96
Net gains from trading activities	64			357
Net gains on debt securities	237			125
Net gains (losses) from equity securities	(1,401		)	814
Lease income	352			443
Other	372			574
Total noninterest income	6,405			9,298
Noninterest expense
Salaries	4,721			4,425
Commission and incentive compensation	2,463			2,845
Employee benefits	1,130			1,938
Technology and equipment	661			661
Net occupancy	715			717
Core deposit and other intangibles	23			28
FDIC and other deposit assessments	118			159
Other	3,217			3,143
Total noninterest expense	13,048			13,916
Income before income tax expense	664			6,848
Income tax expense	159			881
Net income before noncontrolling interests	505			5,967
Less: Net income (loss) from noncontrolling interests	(148		)	107
Wells Fargo net income	$	653		5,860
Less: Preferred stock dividends and other	611			353
Wells Fargo net income applicable to common stock	$	42		5,507
Per share information
Earnings per common share	$	0.01		1.21
Diluted earnings per common share	0.01			1.20
Average common shares outstanding	4,104.8			4,551.5
Diluted average common shares outstanding	4,135.3			4,584.0

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Income (Unaudited)
Quarter ended September 30, Nine months ended September 30,
(in millions, except per share amounts) 2017
2016
2017
2016
Interest income
Trading assets $ 754
593
2,107
1,761
Investment securities 2,662
2,298
8,035
6,736
Mortgages held for sale 219
207
598
549
Loans held for sale 5
2
10
7
Loans 10,522
9,978
31,021
29,377
Other interest income 896
409
2,228
1,175
Total interest income 15,058
13,487
43,999
39,605
Interest expense
Deposits 870
356
2,090
995
Short-term borrowings 226
85
503
229
Long-term debt 1,377
1,006
3,838
2,769
Other interest expense 109
88
309
260
Total interest expense 2,582
1,535
6,740
4,253
Net interest income 12,476
11,952
37,259

35,352
Provision for credit losses 717
805
1,877
2,965
Net interest income after provision for credit losses 11,759
11,147
35,382
32,387
Noninterest income
Service charges on deposit accounts 1,276
1,370
3,865
4,015
Trust and investment fees 3,609
3,613
10,808
10,545
Card fees 1,000
997
2,964
2,935
Other fees 877
926
2,644
2,765
Mortgage banking 1,046
1,667
3,422
4,679
Insurance 269
293
826
1,006
Net gains from trading activities 245
415
921
943
Net gains on debt securities (1) 166
106
322
797
Net gains from equity investments (2) 238
140
829
573
Lease income 475
534
1,449
1,404
Other 249
315
788
1,671
Total noninterest income 9,450
10,376
28,838
31,333
Noninterest expense
Salaries 4,356
4,224
12,960
12,359
Commission and incentive compensation 2,553
2,520
7,777
7,769
Employee benefits 1,279
1,223
4,273
3,993
Equipment 523
491
1,629
1,512
Net occupancy 716
718
2,134
2,145
Core deposit and other intangibles 288
299
864
891
FDIC and other deposit assessments 314
310
975
815
Other 4,322
3,483
11,072
9,678
Total noninterest expense 14,351
13,268
41,684
39,162
Income before income tax expense 6,858
8,255
22,536

24,558
Income tax expense 2,204
2,601
6,486
7,817
Net income before noncontrolling interests 4,654
5,654
16,050

16,741
Less: Net income from noncontrolling interests 58
10
187
77
Wells Fargo net income $ 4,596
5,644
15,863

16,664
Less: Preferred stock dividends and other 411
401
1,218
1,163
Wells Fargo net income applicable to common stock $ 4,185
5,243
14,645
15,501
Per share information
Earnings per common share $ 0.85
1.04
2.94
3.06
Diluted earnings per common share 0.84
1.03
2.91
3.03
Dividends declared per common share 0.390
0.380
1.150
1.135
Average common shares outstanding 4,948.6
5,043.4
4,982.1
5,061.9
Diluted average common shares outstanding 4,996.8
5,094.6
5,035.4
5,118.2

(1)

~~Total other-than-temporary impairment (OTTI)~~Prior to our adoption of Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL), on January 1, 2020, provision for credit losses ~~were~~ ~~$5 million~~from debt securities was not applicable and ~~$36 million~~ ~~for~~ ~~third quarter 2017~~ ~~and~~ ~~2016, respectively. Of total OTTI, losses of~~ ~~$7 million~~ ~~and~~ ~~$51 million~~ ~~were recognized in earnings, and reversal of losses of~~ ~~$(2) million~~ ~~and~~ ~~$(15) million~~ ~~were recognized~~is therefore presented as ~~non-credit-related OTTI in other comprehensive income for~~ ~~third quarter 2017~~ ~~and~~ ~~2016, respectively. Total OTTI losses were~~ $~~54 million~~ ~~and~~ ~~$123 million~~0 for the ~~first nine months~~prior period. For more information, see Note 1 (Summary of ~~2017~~ ~~and~~ ~~2016, respectively. Of total OTTI, losses of~~ ~~$107 million~~ ~~and~~ ~~$142 million~~ ~~were recognized~~Significant Accounting Policies) to Financial Statements in ~~earnings, and reversal of losses of~~ ~~$(53) million~~ ~~and~~ ~~$(19) million~~ ~~were recognized as non-credit-related OTTI in other comprehensive income for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016, respectively.~~


~~(2)~~	~~Includes OTTI losses of~~ ~~$84 million~~ ~~and~~ ~~$85 million~~ ~~for~~ ~~third quarter 2017~~ ~~and~~ ~~2016, respectively, and~~ ~~$186 million~~ ~~and~~ ~~$322 million~~ ~~for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016, respectively.~~this Report.

The accompanying notes are an integral part of these statements.



Wells Fargo & Company and Subsidiaries
Consolidated Statement of Comprehensive Income (Unaudited)
	Quarter ended March 31,
(in millions)	2020			2019
Wells Fargo net income	$	653		5,860
Other comprehensive income (loss), before tax:
Debt securities:
Net unrealized gains (losses) arising during the period	(110		)	2,831
Reclassification of net gains to net income	(172		)	(81	)
Derivative and hedging activities:
Net unrealized gains (losses) arising during the period	124			(35	)
Reclassification of net losses to net income	58			79
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period	3			(4	)
Amortization of net actuarial loss, settlements and other to net income	36			35
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period	(194		)	42
Other comprehensive income (loss), before tax	(255		)	2,867
Income tax benefit (expense) related to other comprehensive income	1			(694	)
Other comprehensive income (loss), net of tax	(254		)	2,173
Less: Other comprehensive loss from noncontrolling interests	(1		)	—
Wells Fargo other comprehensive income (loss), net of tax	(253		)	2,173
Wells Fargo comprehensive income	400			8,033
Comprehensive income (loss) from noncontrolling interests	(149		)	107
Total comprehensive income	$	251		8,140

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Comprehensive Income (Unaudited)
Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
Wells Fargo net income $ 4,596
5,644
15,863
16,664
Other comprehensive income (loss), before tax:
Investment securities:
Net unrealized gains arising during the period 891
112
2,825
2,478
Reclassification of net gains to net income (200 ) (193 ) (522 ) (1,001 )
Derivatives and hedging activities:
Net unrealized gains (losses) arising during the period 36
(445 ) 279
2,611
Reclassification of net gains on cash flow hedges to net income (105 ) (262 ) (460 ) (783 )
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period 11
(447 ) 4
(474 )
Amortization of net actuarial loss, settlements and other to net income 41
39
120
115
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period 40
(10 ) 87
27
Other comprehensive income (loss), before tax 714
(1,206 ) 2,333
2,973
Income tax benefit (expense) related to other comprehensive income (265 ) 461
(852 ) (1,110 )
Other comprehensive income (loss), net of tax 449
(745 ) 1,481
1,863
Less: Other comprehensive income (loss) from noncontrolling interests (34 ) 19
(29 ) (24 )
Wells Fargo other comprehensive income (loss), net of tax 483
(764 ) 1,510
1,887
Wells Fargo comprehensive income 5,079
4,880
17,373
18,551
Comprehensive income from noncontrolling interests 24
29
158
53
Total comprehensive income $ 5,103
4,909
17,531
18,604

The accompanying notes are an integral part of these statements.


Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet
(in millions, except shares)	Sep 30, 2017			Dec 31, 2016		Mar 31, 2020			Dec 31, 2019
Assets	(Unaudited)					(Unaudited)
Cash and due from banks	$	19,206		20,729		$	22,738		21,757
Federal funds sold, securities purchased under resale agreements and other short-term investments	273,105			266,038
Trading assets	88,404			74,397
Investment securities:
Available-for-sale, at fair value	272,210			308,364
Held-to-maturity, at cost (fair value $142,818 and $99,155)	142,423			99,583
Mortgages held for sale (includes $16,484 and $22,042 carried at fair value) (1)	20,009			26,309
Loans held for sale	157			80
Loans (includes $410 and $758 carried at fair value) (1)	951,873			967,604
Interest-earning deposits with banks						128,071			119,493
Total cash, cash equivalents, and restricted cash						150,809			141,250
Federal funds sold and securities purchased under resale agreements						86,465			102,140
Debt securities:
Trading, at fair value						80,425			79,733
Available-for-sale, at fair value (includes amortized cost of $248,187 and $260,060, net of allowance for credit losses of $161 and $0) (1)						251,229			263,459
Held-to-maturity, at amortized cost, net of allowance for credit losses of $11 and $0 (fair value $177,562 and $156,860) (1)						169,909			153,933
Mortgage loans held for sale (includes $16,665 and $16,606 carried at fair value) (2)						21,795			23,342
Loans held for sale (includes $1,673 and $972 carried at fair value) (2)						1,883			977
Loans (includes $160 and $171 carried at fair value) (2)						1,009,843			962,265
Allowance for loan losses	(11,078		)	(11,419	)	(11,263		)	(9,551	)
Net loans	940,795			956,185		998,580			952,714
Mortgage servicing rights:
Measured at fair value	13,338			12,959		8,126			11,517
Amortized	1,406			1,406		1,406			1,430
Premises and equipment, net	8,449			8,333		9,108			9,309
Goodwill	26,581			26,693		26,381			26,390
Derivative assets	12,580			14,498		25,023			14,203
Other assets (includes $4,523 and $3,275 carried at fair value) (1)	116,276			114,541
Total assets (2)	$	1,934,939		1,930,115
Equity securities (includes $28,176 and $41,936 carried at fair value) (2)						54,047			68,241
Other assets						96,163			78,917
Total assets (3)						$	1,981,349		1,927,555
Liabilities
Noninterest-bearing deposits	$	366,528		375,967		$	379,678		344,496
Interest-bearing deposits	940,178			930,112		996,854			978,130
Total deposits	1,306,706			1,306,079		1,376,532			1,322,626
Short-term borrowings	93,811			96,781		92,289			104,512
Derivative liabilities	9,497			14,492		15,618			9,079
Accrued expenses and other liabilities	79,208			57,189		76,238			75,163
Long-term debt	238,893			255,077		237,342			228,191
Total liabilities (3)	1,728,115			1,729,618
Total liabilities (4)						1,798,019			1,739,571
Equity
Wells Fargo stockholders' equity:
Wells Fargo stockholders’ equity:
Preferred stock	25,576			24,551		21,347			21,549
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares	9,136			9,136		9,136			9,136
Additional paid-in capital	60,759			60,234		59,849			61,049
Retained earnings	141,761			133,075		165,308			166,697
Cumulative other comprehensive income (loss)	(1,627		)	(3,137	)	(1,564		)	(1,311	)
Treasury stock – 553,940,326 shares and 465,702,148 shares	(27,772		)	(22,713	)
Treasury stock – 1,385,401,170 shares and 1,347,385,537 shares						(70,215		)	(68,831	)
Unearned ESOP shares	(1,904		)	(1,565	)	(1,143		)	(1,143	)
Total Wells Fargo stockholders' equity	205,929			199,581
Total Wells Fargo stockholders’ equity						182,718			187,146
Noncontrolling interests	895			916		612			838
Total equity	206,824			200,497		183,330			187,984
Total liabilities and equity	$	1,934,939		1,930,115		$	1,981,349		1,927,555


(1)	Prior to our adoption of CECL on January 1, 2020, the allowance for credit losses (ACL) related to available-for-sale (AFS) and held-to-maturity (HTM) debt securities was not applicable and is therefore presented as $0 at December 31, 2019. For more information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.


(2)	Parenthetical amounts represent assets and liabilities ~~for which~~that we are required to carry at fair value or have elected the fair value option.

~~(2)~~(3)

Our consolidated assets at ~~September 30, 2017~~March 31, 2020, and December 31, ~~2016~~2019, include the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Cash and due from banks, $~~115~~19 million and $~~168~~16 million; ~~Federal funds sold, securities purchased under resale agreements and other short-term investments,~~ ~~$402 million~~ ~~and~~ ~~$74 million; Trading assets,~~ ~~$130 million~~ ~~at both period ends; Investment securities,~~ Interest-earning deposits with banks, $0 million ~~at both period ends;~~ and $284 million; Debt securities, $616 million and $540 million; Net loans, $~~11.9~~13.1 billion and $~~12.6~~13.2 billion; Derivative assets, $06 million and $1 million; Equity securities, $95 million and $118 million; Other assets, $~~352~~258 million and $~~452~~239 million; and Total assets, $~~12.9~~14.1 billion and $~~13.4~~14.4 billion, respectively.

~~(3)~~(4)

Our consolidated liabilities at ~~September 30, 2017~~March 31, 2020, and December 31, ~~2016~~2019, include the following VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo: Short-term borrowings, $300 million and $401 million; Derivative liabilities, $268 million and $333 million; Accrued expenses and other liabilities, $~~141~~230 million and $~~107~~235 million; Long-term debt, $~~2.1 billion~~235 million and $~~3.7 billion~~587 million; and Total liabilities, $~~2.3 billion~~773 million and $~~3.8~~1.2 billion, respectively.

~~The accompanying notes are an integral part of these statements.~~

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity (Unaudited)

Preferred stock Common stock
(in millions, except shares) Shares
Amount
Shares
Amount
Balance December 31, 2015 11,259,917
$ 22,214
5,092,128,810
$ 9,136
Cumulative effect from change in consolidation accounting (1)
Balance January 1, 2016 11,259,917
$ 22,214
5,092,128,810
$ 9,136
Net income
Other comprehensive income (loss), net of tax
Noncontrolling interests
Common stock issued 47,151,609

Common stock repurchased (134,787,773 )
Preferred stock issued to ESOP 1,150,000
1,150

Preferred stock released by ESOP
Preferred stock converted to common shares (920,314 ) (920 ) 19,396,555

Common stock warrants repurchased/exercised
Preferred stock issued 86,000
2,150

Common stock dividends
Preferred stock dividends
Tax benefit from stock incentive compensation
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change 315,686

2,380

(68,239,609 )
—
Balance September 30, 2016 11,575,603

$ 24,594

5,023,889,201

$ 9,136
Balance January 1, 2017 11,532,712
$ 24,551
5,016,109,326
$ 9,136
Net income
Other comprehensive income, net of tax
Noncontrolling interests
Common stock issued 45,738,310

Common stock repurchased (145,143,692 )
Preferred stock issued to ESOP 950,000
950

Preferred stock released by ESOP
Preferred stock converted to common shares (614,529 ) (615 ) 11,167,204

Common stock warrants repurchased/exercised
Preferred stock issued 27,600
690

Common stock dividends
Preferred stock dividends
Tax benefit from stock incentive compensation (2)
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change 363,071

1,025

(88,238,178 )
—
Balance September 30, 2017 11,895,783

$ 25,576

4,927,871,148

$ 9,136


~~(1)~~	~~Effective January 1, 2016, we adopted changes in consolidation accounting pursuant to ASU 2015-02 (Amendments to the Consolidation Analysis). Accordingly, we recorded a~~ ~~$121 million~~ ~~increase to beginning noncontrolling interests as a cumulative-effect adjustment.~~


~~(2)~~	~~Effective January 1, 2017, we adopted Accounting Standards Update 2016-09 (Improvements to Employee Share-Based Payment Accounting).~~ ~~Accordingly, tax benefit from stock incentive compensation is reported in income tax expense in the consolidated statement of income.~~

The accompanying notes are an integral part of these statements.

Wells Fargo stockholders' equity
Additional
paid-in
capital

Retained
earnings

Cumulative
other
comprehensive
income

Treasury
stock

Unearned
ESOP
shares

Total
Wells Fargo
stockholders'
equity

Noncontrolling
interests

Total
equity

60,714
120,866
297
(18,867 ) (1,362 ) 192,998
893
193,891
121
121
60,714
120,866
297
(18,867 ) (1,362 ) 192,998
1,014
194,012
16,664
16,664
77
16,741
1,887
1,887
(24 ) 1,863
1
1
(137 ) (136 )
(194 ) (286 ) 2,256
1,776
1,776
500
(6,582 ) (6,082 ) (6,082 )
99
(1,249 ) —
—
(79 ) 999
920
920
(16 ) 936
—
—
(17 ) (17 ) (17 )
(49 ) 2,101
2,101
39
(5,791 ) (5,752 ) (5,752 )
(1,165 ) (1,165 ) (1,165 )
203
203
203
547
547
547
(1,063 ) 10
(1,053 ) (1,053 )
(29 )
9,422

1,887

(3,380 )
(250 )
10,030

(84 )
9,946
60,685

130,288

2,184

(22,247 )
(1,612 )
203,028

930

203,958
60,234
133,075
(3,137 ) (22,713 ) (1,565 ) 199,581
916
200,497
15,863
15,863
187
16,050
1,510
1,510
(29 ) 1,481
1
1
(179 ) (178 )
(87 ) (184 ) 2,183
1,912
1,912
750
(7,813 ) (7,063 ) (7,063 )
31
(981 ) —
—
(27 ) 642
615
615
61
554
—
—
(87 ) (87 ) (87 )
(13 ) 677
677
37
(5,775 ) (5,738 ) (5,738 )
(1,218 ) (1,218 ) (1,218 )
—
—
—
669
669
669
(810 ) 17
(793 ) (793 )
525

8,686

1,510

(5,059 )
(339 )
6,348

(21 )
6,327
60,759

141,761

(1,627 )
(27,772 )
(1,904 )
205,929

895

206,824



Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity (Unaudited)

	Preferred stock					Common stock
(in millions, except shares)	Shares		Amount			Shares		Amount
Balance December 31, 2019	7,492,169		$	21,549		4,134,425,937		$	9,136
Cumulative effect from change in accounting policies (1)
Balance January 1, 2020	7,492,169		$	21,549		4,134,425,937		$	9,136
Net income
Other comprehensive income (loss), net of tax
Noncontrolling interests
Common stock issued						37,351,887
Common stock repurchased						(75,367,520	)
Preferred stock redeemed	(1,828,720	)	(2,215		)
Preferred stock issued to ESOP
Preferred stock released by ESOP
Preferred stock converted to common shares	—		—			—
Preferred stock issued	80,500		2,013
Common stock dividends
Preferred stock dividends
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change	(1,748,220	)	(202		)	(38,015,633	)	—
Balance March 31, 2020	5,743,949		$	21,347		4,096,410,304		$	9,136
Balance December 31, 2018	9,377,216		$	23,214		4,581,253,608		$	9,136
Cumulative effect from change in accounting policies (2)
Balance January 1, 2019	9,377,216		$	23,214		4,581,253,608		$	9,136
Net income
Other comprehensive income (loss), net of tax
Noncontrolling interests
Common stock issued						28,057,901
Common stock repurchased						(97,363,710	)
Preferred stock redeemed	—		—
Preferred stock issued to ESOP
Preferred stock released by ESOP
Preferred stock converted to common shares	(5	)	—			31
Preferred stock issued
Common stock dividends
Preferred stock dividends
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change	(5	)	—			(69,305,778	)	—
Balance March 31, 2019	9,377,211		$	23,214		4,511,947,830		$	9,136

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
Nine months ended September 30,
(in millions) 2017
2016
Cash flows from operating activities:
Net income before noncontrolling interests $ 16,050
16,741
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 1,877
2,965
Changes in fair value of MSRs, MHFS and LHFS carried at fair value 828
1,695
Depreciation, amortization and accretion 3,794
3,598
Other net (gains) losses 659
(74 )
Stock-based compensation 1,595
1,474
Originations and purchases of MHFS and LHFS (1) (134,363 ) (144,022 )
Proceeds from sales of and paydowns on mortgages originated for sale and LHFS (1) 97,116
91,877
Net change in:
Trading assets (1) 28,463
30,774
Deferred income taxes 1,748
(1,617 )
Derivative assets and liabilities (1) (3,777 ) (836 )
Other assets (1) 2,115
(7,895 )
Other accrued expenses and liabilities (1) 2,375
1,502
Net cash provided (used) by operating activities 18,480
(3,818 )
Cash flows from investing activities:
Net change in:
Federal funds sold, securities purchased under resale agreements and other short-term investments (13,896 ) (28,296 )
Available-for-sale securities:
Sales proceeds 37,520
28,147
Prepayments and maturities 35,392
27,768
Purchases (74,260 ) (66,685 )
Held-to-maturity securities:
Paydowns and maturities 7,557
5,085
Purchases —
(23,593 )
Nonmarketable equity investments:
Sales proceeds 2,838
1,298
Purchases (2,027 ) (3,001 )
Loans:
Loans originated by banking subsidiaries, net of principal collected 5,665
(28,155 )
Proceeds from sales (including participations) of loans held for investment 8,473
6,958
Purchases (including participations) of loans (2,436 ) (4,007 )
Principal collected on nonbank entities’ loans 9,072
8,736
Loans originated by nonbank entities (7,400 ) (9,091 )
Net cash paid for acquisitions (23 ) (29,797 )
Proceeds from sales of foreclosed assets and short sales 4,175
5,560
Other, net (1) (1,336 ) (115 )
Net cash provided (used) by investing activities 9,314
(109,188 )
Cash flows from financing activities:
Net change in:
Deposits 627
52,582
Short-term borrowings 4,655
26,882
Long-term debt:
Proceeds from issuance 38,358
67,677
Repayment (60,103 ) (23,505 )
Preferred stock:
Proceeds from issuance 677
2,101
Cash dividends paid (1,226 ) (1,173 )
Common stock:
Proceeds from issuance 905
1,024
Stock tendered for payment of withholding taxes (1) (376 ) (486 )
Repurchased (7,063 ) (6,082 )
Cash dividends paid (5,605 ) (5,609 )
Net change in noncontrolling interests (72 ) (159 )
Other, net (94 ) (70 )
Net cash provided (used) by financing activities (29,317 ) 113,182
Net change in cash and due from banks (1,523 ) 176
Cash and due from banks at beginning of period 20,729
19,111
Cash and due from banks at end of period $ 19,206
19,287
Supplemental cash flow disclosures:
Cash paid for interest $ 6,514
3,920
Cash paid for income taxes 4,687
7,158


(1)	~~Prior periods have been revised~~We adopted CECL effective January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies) to ~~conform to the current period presentation.~~Financial Statements in this Report.


(2)	Effective January 1, 2019, we adopted ASU 2016-02 – Leases (Topic 842) and subsequent related Updates, ASU 2017-08 – Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.




										Three months ended March 31,
						Wells Fargo stockholders’ equity
Additional paid-in capital		Retained earnings		Cumulative other comprehensive income		Treasury stock		Unearned ESOP shares		Total Wells Fargo stockholders’ equity		Noncontrolling interests		Total equity
61,049		166,697		(1,311	)	(68,831	)	(1,143	)	187,146		838		187,984
		991								991				991
61,049		167,688		(1,311	)	(68,831	)	(1,143	)	188,137		838		188,975
		653								653		(148	)	505
				(253	)					(253	)	(1	)	(254	)
—										—		(77	)	(77	)
(17	)	(308	)			2,002				1,677				1,677
—						(3,407	)			(3,407	)			(3,407	)
17		(272	)							(2,470	)			(2,470	)
—								—		—				—
—								—		—				—
—						—				—				—
(45	)									1,968				1,968
18		(2,114	)							(2,096	)			(2,096	)
		(339	)							(339	)			(339	)
181										181				181
(1,354	)					21				(1,333	)			(1,333	)
(1,200	)	(2,380	)	(253	)	(1,384	)	—		(5,419	)	(226	)	(5,645	)
59,849		165,308		(1,564	)	(70,215	)	(1,143	)	182,718		612		183,330
60,685		158,163		(6,336	)	(47,194	)	(1,502	)	196,166		900		197,066
		(492	)	481						(11	)			(11	)
60,685		157,671		(5,855	)	(47,194	)	(1,502	)	196,155		900		197,055
		5,860								5,860		107		5,967
				2,173						2,173		—		2,173
—										—		(106	)	(106	)
—		(329	)			1,468				1,139				1,139
—						(4,820	)			(4,820	)			(4,820	)
		—								—				—
—								—		—				—
—								—		—				—
—						—				—				—
—										—				—
19		(2,073	)							(2,054	)			(2,054	)
		(353	)							(353	)			(353	)
544										544				544
(839	)					27				(812	)			(812	)
(276	)	3,105		2,173		(3,325	)	—		1,677		1		1,678
60,409		160,776		(3,682	)	(50,519	)	(1,502	)	197,832		901		198,733



Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
	Quarter ended March 31,
(in millions)	2020			2019
Cash flows from operating activities:
Net income before noncontrolling interests	$	505		5,967
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	4,005			845
Changes in fair value of MSRs, MLHFS and LHFS carried at fair value	3,486			1,144
Depreciation, amortization and accretion	1,868			1,449
Other net (gains) losses	7,638			(1,418	)
Stock-based compensation	582			902
Originations and purchases of mortgage loans held for sale	(37,216		)	(25,098	)
Proceeds from sales of and paydowns on mortgage loans held for sale	31,922			17,148
Net change in:
Debt and equity securities, held for trading	20,413			6,969
Loans held for sale	(731		)	728
Deferred income taxes	(1,448		)	312
Derivative assets and liabilities	(4,293		)	(1,586	)
Other assets	(10,391		)	1,130
Other accrued expenses and liabilities	933			(541	)
Net cash provided by operating activities	17,273			7,951
Cash flows from investing activities:
Net change in:
Federal funds sold and securities purchased under resale agreements	15,675			(18,414	)
Available-for-sale debt securities:
Proceeds from sales	11,843			1,680
Prepayments and maturities	14,135			6,001
Purchases	(18,658		)	(4,937	)
Held-to-maturity debt securities:
Paydowns and maturities	3,769			2,123
Purchases	(19,141		)	—
Equity securities, not held for trading:
Proceeds from sales and capital returns	1,115			1,180
Purchases	(3,338		)	(1,352	)
Loans:
Loans originated by banking subsidiaries, net of principal collected	(53,400		)	669
Proceeds from sales (including participations) of loans held for investment	1,959			3,410
Purchases (including participations) of loans	(342		)	(331	)
Principal collected on nonbank entities’ loans	3,837			899
Loans originated by nonbank entities	(2,348		)	(1,318	)
Proceeds from sales of foreclosed assets and short sales	500			707
Other, net	91			657
Net cash used by investing activities	(44,303		)	(9,026	)
Cash flows from financing activities:
Net change in:
Deposits	53,903			(22,161	)
Short-term borrowings	(12,223		)	810
Long-term debt:
Proceeds from issuance	18,895			17,338
Repayment	(17,563		)	(11,898	)
Preferred stock:
Proceeds from issuance	1,968			—
Redeemed	(2,470		)	—
Cash dividends paid	(280		)	(294	)
Common stock:
Proceeds from issuance	209			181
Stock tendered for payment of withholding taxes	(306		)	(264	)
Repurchased	(3,407		)	(4,820	)
Cash dividends paid	(2,032		)	(1,997	)
Net change in noncontrolling interests	(29		)	(83	)
Other, net	(76		)	(56	)
Net cash provided (used) by financing activities	36,589			(23,244	)
Net change in cash, cash equivalents, and restricted cash	9,559			(24,319	)
Cash, cash equivalents, and restricted cash at beginning of period	141,250			173,287
Cash, cash equivalents, and restricted cash at end of period	$	150,809		148,968
Supplemental cash flow disclosures:
Cash paid for interest	$	3,479		4,401
Cash paid for income taxes	207			126

The accompanying notes are an integral part of these statements. See Note 1 (Summary of Significant Accounting Policies) for noncash activities.

Note 1: Summary of Significant Accounting Policies (continued)

See the Glossary of Acronyms at the end of this Report for terms used throughout the Financial Statements and related Notes.

Note 1: Summary of Significant Accounting Policies

Wells Fargo & Company is a diversified financial services company. We provide banking, ~~insurance,~~ trust and investments, mortgage banking, investment banking, retail banking, brokerage, and consumer and commercial finance through ~~branches,~~banking locations, the internet and other distribution channels to consumers, businesses and institutions in all 50 states, the District of Columbia, and in foreign countries. When we refer to “Wells Fargo,” “the Company,” “we,” “our” or “us,” we mean Wells Fargo & Company and Subsidiaries (consolidated). Wells Fargo & Company (the Parent) is a financial holding company and a bank holding company. We also hold a majority interest in a real estate investment trust, which has publicly traded preferred stock outstanding.

Our accounting and reporting policies conform with U.S. generally accepted accounting principles (GAAP) and practices in the financial services industry. For discussion of our significant accounting policies, see Note 1 (Summary of Significant Accounting Policies) in our Annual Report on Form 10-K for the year ended December 31, ~~2016 (2016~~2019 (2019 Form 10-K).

To prepare the financial statements in conformity with GAAP, management must make estimates based on assumptions about future economic and market conditions (for example, unemployment, market liquidity, real estate prices, etc.) that affect the reported amounts of assets and liabilities at the date of the financial statements, income and expenses during the reporting period and the related disclosures. Although our estimates contemplate current conditions and how we expect them to change in the future, it is reasonably possible that actual conditions could be ~~significantly different~~worse than anticipated in those estimates, which could materially affect our results of operations and financial condition. Management has made significant estimates in several areas, including:

allowance for credit losses ~~and purchased credit-impaired (PCI) loans~~ (Note 56 (Loans and Related Allowance for Credit Losses));

valuations of residential mortgage servicing rights (MSRs) (Note 710 (Securitizations and Variable Interest Entities) and Note 811 (Mortgage Banking Activities)) ~~and~~;

valuations of financial instruments (Note 1315 (Derivatives) and Note 16 (Fair Values of Assets and Liabilities));

~~income taxes; and~~

liabilities for contingent litigation losses (Note 1114 (Legal Actions)).; and

income taxes.

Actual results could differ from those estimates.

These unaudited interim financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the periods presented. These adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q. The results of operations in the interim financial statements do not necessarily indicate the results that may be expected for the full year. The interim financial information should be read in conjunction with our ~~2016~~2019 Form 10-K.

Accounting Standards Adopted in ~~2017~~2020

In first quarter ~~2017,~~2020, we adopted the following new accounting guidance:

~~Accounting Standards Update (ASU or Update) 2016-09 –~~ ~~Compensation – Stock Compensation (Topic 718):~~


•	Accounting Standards Update (ASU or Update) 2019-04 – Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and

~~Improvements to Employee Share-Based Payment Accounting;~~

~~ASU 2016-07 -~~ ~~Investments - Equity Method~~Hedging, and ~~Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method~~Topic 825, Financial Instruments. This Update includes guidance on recoveries of ~~Accounting;~~

~~ASU 2016-06 -~~ ~~Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments; and~~

~~ASU 2016-05 -~~ ~~Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.~~

~~ASU 2016-09~~Simplifies the accounting for share-based payment awards issued to employees. We have income tax effects based on changes in our stock price from the grant date to the vesting date of the employee stock compensation. The Update requires these income tax effects to be recognizedfinancial assets, which is included in the ~~statement~~discussion for ASU 2016-13 below.


•	ASU 2018-17 – Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities


•	ASU 2018-15 – Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)


•	ASU 2018-13 – Fair Value Measurement (Topic 820):Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.


•	ASU 2017-04 – Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment


•	ASU 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and related subsequent Updates

ASU 2018-17 updates the guidance used by decision-makers of income within income tax expense instead of within additional paid-in capital. In addition, the Update requires changes to the Statement of Cash Flows including the classification between the operating and financing section for tax activityVIEs. Indirect interests held through related ~~to employee stock compensation, which we adopted retrospectively. We recorded excess tax benefits and tax deficiencies within income tax expense~~parties in ~~the statement of income in first quarter 2017,~~common control arrangements will be considered on a ~~prospective basis.~~

~~ASU 2016-07~~ ~~eliminates the requirement~~proportional basis for ~~companies~~determining whether fees paid to ~~retroactively apply the equity method of accounting~~decision-makers and service providers are variable interests. This is consistent with how indirect interests held through related parties under common control are considered for investments when increases in ownership interests or degree of influence result in the adoption of the equity method. Under the guidance, the equity method should be applied prospectively in the period in which the ownership changes occur. We adopted this change in first quarter 2017. The Update did not impact our consolidated financial statements, as the standard is applied ondetermining whether a ~~prospective basis.~~

~~ASU 2016-06~~ clarifies the criteria entities should use when evaluating whether embedded contingent put and call options in debt instruments should be separated from the debt instrument and accounted for separately as derivatives. The Update clarifies that companies should not consider whether the event that triggers the ability to exercise put or call options is related to interest rates or credit risk. We adopted this change in first quarter 2017.reporting entity must consolidate a VIE. The Update did not have a material impact on our consolidated financial statements.

ASU ~~2016-05~~ 2018-15clarifies the accounting for implementation costs related to a cloud computing arrangement that is a service contract and enhances disclosures around implementation costs for internal-use software and cloud computing arrangements. The guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). It also requires the expense related to the capitalized implementation costs be presented in the same line item in the statement of income as the fees associated with the hosting element of the arrangement and capitalized implementation costs be presented in the balance sheet in the same line item that a ~~change in~~prepayment for the ~~counterparty to a derivative instrument that has been designated as an accounting hedge does not require~~fees of the ~~hedging relationship to be dedesignated as long as all other hedge accounting criteria continue to be met. We adopted the guidance in first quarter 2017.~~associated hosting arrangement are presented. The Update did not have a material impact on our consolidated financial statements.

~~Accounting Standards~~ASU 2018-13 clarifies, eliminates and adds certain fair value measurement disclosure requirements for assets and liabilities, which affects our disclosures in Note 16 (Fair Values of Assets and Liabilities). Although the ASU became effective on January 1, 2020, it permitted early adoption of individual requirements without causing others to be early adopted and, as such, we partially adopted the Update during third quarter 2018 and the remainder of the requirements in first quarter 2020. The Update did not have a material impact on our consolidated financial statements.

ASU 2017-04 simplifies the goodwill impairment test by eliminating the requirement to assign the fair value of a reporting unit to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. The Update requires that a goodwill impairment loss is recognized if the fair value of the reporting unit is less than the carrying amount, including goodwill. The goodwill impairment loss is limited to the amount of goodwill allocated to the reporting unit. The guidance did not change the qualitative assessment of goodwill. This guidance is applied on a prospective basis, and accordingly, the Update did not have a material impact on our consolidated financial statements.

ASU 2016-13 changes the accounting for the measurement of credit losses on loans and debt securities. For loans and held-to-maturity (HTM) debt securities, the Update requires a current expected credit loss (CECL) measurement to estimate the allowance for credit losses (ACL) for the remaining contractual term, adjusted for prepayments, of the financial asset (including off-balance sheet credit exposures) using historical experience, current conditions, and reasonable and supportable forecasts.

Also, the Update eliminates the existing guidance for purchased credit-impaired (PCI) loans, but requires an allowance for purchased financial assets with ~~Retrospective Application~~more than an insignificant deterioration of credit since origination. In addition, the Update modifies the other-than-temporary impairment (OTTI) model for available-for-sale (AFS) debt securities to require an allowance for credit impairment instead of a direct write-down, which allows for reversal of credit impairments in future periods based on improvements in credit. Upon adoption, we recognized an overall decrease in our ACL of approximately $1.3 billion (pre-tax) as a cumulative effect adjustment from a change in accounting policies, which increased our retained earnings and regulatory capital amounts and ratios. Loans previously classified as PCI were automatically transitioned to purchased credit-deteriorated (PCD) classification. We recognized an ACL for these new PCD loans and made a corresponding adjustment to the loan balance, with no impact to net income or transition adjustment to retained earnings. For more information on the impact of CECL by type of financial asset, see Table 1.1 below.

Table 1.1:ASU 2016-13 Adoption Impact to Allowance for Credit Losses (1)



				Dec 31, 2019		ASU 2016-13 Adoption Impact				Jan 1, 2020
(in billions)	Balance Outstanding		ACL Balance	Coverage		ASU 2016-13 Adoption Impact			ACL Balance	Coverage
Total commercial (2)	$	515.7	6.2	1.2	%	$	(2.9	)	3.4	0.7	%

Real estate 1-4 family mortgage (3)	323.4		0.9	0.3		—			0.9	0.3
Credit card (4)	41.0		2.3	5.5		0.7			2.9	7.1
Automobile (4)	47.9		0.5	1.0		0.3			0.7	1.5
Other revolving credit and installment (4)	34.3		0.6	1.6		0.6			1.2	3.5
Total consumer	446.5		4.2	0.9		1.5			5.7	1.3
Total loans	962.3		10.5	1.1		(1.3		)	9.1	0.9
Available-for-sale and held-to-maturity debt securities and other assets (5)	420.0		0.1	NM		—			0.1	NM
Total	$	1,382.3	10.6	NM		$	(1.3	)	9.3	NM

NM – Not meaningful


(1)	Amounts presented in this table may not equal the sum of its components due to rounding.


(2)	Decrease reflecting shorter contractual maturities given limitation to contractual terms.


(3)	Impact reflects an increase due to longer contractual terms, offset by expectation of recoveries in collateral value on mortgage loans previously written down significantly below current recovery value.


(4)	Increase due to longer contractual terms or indeterminate maturities.


(5)	Excludes other financial assets in the scope of CECL that do not have an allowance for credit losses based on the nature of the asset.

The ~~following~~adoption of ASU 2016-13 did not result in a change to accounting ~~pronouncements have been issued by~~policies, except as noted herein. Our accounting policy for the ~~FASB but~~ACL was updated and is now inclusive of loans, debt securities and other financing receivables. Other than the ACL and the elimination of PCI loans, there were no changes to accounting policies for loans as described in the 2019 Form 10-K. For debt securities, other than the policies with respect to the ACL, all of the current accounting policies, including those that changed as a result of CECL adoption, are included below under Debt Securities.

Debt Securities

Our investments in debt securities that are not ~~yet effective:~~held for trading purposes are classified as either debt securities available-for-sale (AFS) or held-to-maturity (HTM).

Investments in debt securities for which the Company does not have the positive intent and ability to hold to maturity are classified as AFS. AFS debt securities are measured at fair value, with unrealized gains and losses reported in cumulative other comprehensive income (OCI), net of the allowance for credit

~~ASU 2016-15 –~~ ~~Statement~~losses and applicable income taxes. Investments in debt securities for which the Company has the positive intent and ability to hold to maturity are classified as HTM. HTM debt securities are measured at amortized cost, net of ~~Cash Flows (Topic 230): Classification~~allowance for credit losses.

INTEREST INCOME AND GAIN/LOSS RECOGNITIONUnamortized premiums and discounts are recognized in interest income over the contractual life of ~~Certain Cash Receipts~~the security using the effective interest method, except for purchased callable debt securities carried at a premium. For purchased callable debt securities carried at a premium, the premium is amortized into interest income to the earliest call date using the effective interest method. As principal repayments are received on securities (e.g., mortgage-backed securities (MBS)), a proportionate amount of the related premium or discount is recognized in income so that the effective interest rate on the remaining portion of the security continues unchanged.

We recognize realized gains and ~~Cash Payments~~

losses on the sale of debt securities in net gains (losses) on debt securities within noninterest income using the specific identification method.

Note 1: Summary of Significant Accounting Policies (continued)

~~ASU 2016-18~~ ~~– Statement~~IMPAIRMENT AND CREDIT LOSSES Unrealized losses of ~~Cash Flows (Topic 230):~~ ~~Restricted Cash~~

AFS debt securities are driven by a number of factors, including changes in interest rates and credit spreads which impact most types of debt securities with additional considerations for certain types of debt securities:

Debt securities of U.S. Treasury and federal agencies, including federal agency MBS, are not impacted by credit movements given the explicit or implicit guarantees provided by the U.S. government.

~~ASU 2016-15~~ ~~addresses eight specific cash flow issues with the objective~~Debt securities of ~~reducing the existing diversity in practice for reporting~~U.S. states and political subdivisions are most impacted by changes in the Statement of Cash Flows. The Update is effective for us in first quarter 2018 with retrospective application. Subject to completion of our assessment, we are not expecting this Update to have a material impact on our financial statements.

~~ASU 2016-18~~ ~~requires that amounts described as restricted cash~~relationship between municipal and ~~cash equivalents be included with cash and cash equivalents~~term funding credit curves rather than by changes in the ~~statement~~credit quality of ~~cash flows. In addition,~~the underlying securities.

Structured securities, such as MBS and collateralized loan obligations (CLO), are also impacted by changes in projected collateral losses of assets underlying the security.

For debt securities where fair value is less than amortized cost basis, we recognize impairment in earnings if we have the intent to sell the security or if it is more likely than not that we will be required to ~~disclose information~~sell the security before recovery of its amortized cost basis. Impairment is recognized equal to the entire difference between the amortized cost basis and the fair value of the security and is classified as net gains (losses) from debt securities within noninterest income. Following the recognition of impairment, the security’s new amortized cost basis is the previous basis less impairment.

For debt securities where fair value is less than amortized cost basis where we did not recognize impairment in earnings, we set up an allowance for credit losses as of the balance sheet date. See “Allowance for Credit Losses” section in this Note.

TRANSFERS BETWEEN CATEGORIES OF DEBT SECURITIES AFS debt securities transferred to the HTM classification are recorded at fair value and the unrealized gains or losses resulting from the transfer of these securities continue to be reported in cumulative OCI. The cumulative OCI balance is amortized into earnings over the same period as the unamortized premiums and discounts using the effective interest method. Any allowance for credit losses previously recorded under the AFS model on securities transferred to HTM is reversed and an allowance for credit losses is subsequently recorded under the HTM debt security model.

NONACCRUAL AND PAST DUE, AND CHARGE-OFF POLICIES We generally place debt securities on nonaccrual status using factors similar to those described for loans. When we place a debt security on nonaccrual status, we reverse the accrued unpaid interest receivable against interest income and suspend the

amortization of premiums and accretion of discounts. If the ultimate collectability of the principal is in doubt on a nonaccrual debt security, any cash collected is first applied to reduce the security’s amortized cost basis to zero, followed by recovery of amounts previously charged off, and subsequently to interest income. Generally, we return a debt security to accrual status when all delinquent interest and principal become current under the contractual terms of the security and collectability of remaining principal and interest is no longer doubtful.

Our debt securities are considered past due when contractually required principal or interest payments have not been made on the due dates.

Our charge-off policy for debt securities are similar to those described for loans. Subsequent to charge-off, the debt security will be designated as nonaccrual and follow the process described above for any cash received.

Allowance for Credit Losses

The ACL is management’s estimate of the current expected credit losses in the loan portfolio and unfunded credit commitments, at the balance sheet date, excluding loans and unfunded credit commitments carried at fair value or held for sale. Additionally, we maintain an ACL on AFS and HTM debt securities, other financing receivables measured at amortized cost, and other off-balance sheet credit exposures. While we attribute portions of the allowance to specific financial asset classes (loan and debt security portfolios), loan portfolio segments (commercial and consumer) or major security type, the entire ACL is available to absorb credit losses of the Company.

Our ACL process involves procedures to appropriately consider the unique risk characteristics of our financial asset classes, portfolio segments, and major security types. For each loan portfolio segment and each major HTM debt security type, losses are estimated collectively for groups of loans or securities with similar risk characteristics. For loans and securities that do not share similar risk characteristics with other financial assets, the losses are estimated individually, which primarily includes our impaired large commercial loans and non-accruing HTM debt securities. For AFS debt securities, losses are estimated at the tax-lot level.

Our ACL amounts are influenced by a variety of factors, including changes in loan and debt security volumes, portfolio credit quality, and general economic conditions. General economic conditions are forecasted using economic variables which will create volatility as those variables change over time. See Table 1.2 for key economic variables used for our loan portfolios.

Table 1.2:Key Economic Variables



Loan Portfolio		Key economic variables
Total commercial		• Gross domestic product • Commercial real estate asset prices, where applicable • Unemployment rate • Corporate investment-grade bond spreads
Real estate 1-4 family mortgage		• Home price index • Unemployment rate
Other consumer (including credit card, automobile, and other revolving credit and installment)		• Unemployment rate

Our approach for estimating expected life-time credit losses for loans and debt securities includes the following key components:

An initial loss forecast period of one year for all portfolio segments and classes of financing receivables and off-

balance-sheet credit exposures. This period reflects management’s expectation of losses based on forward-looking economic scenarios over that time.

A historical loss forecast period covering the remaining contractual term, adjusted for expected prepayments and

certain expected extensions, renewals, or modifications, by portfolio segment and class of financing receivables based on the changes in key historical economic variables during representative historical expansionary and recessionary periods.

A reversion period of up to 2 years connecting the initial loss forecast to the historical loss forecast based on economic conditions at the measurement date.

Utilization of discounted cash flow (DCF) methods to measure credit impairment for loans modified in a troubled debt restructuring, unless they are collateral dependent and measured at the fair value of the collateral. The DCF methods obtain estimated life-time credit losses using the initial and historical mean loss forecast periods described above.

For AFS debt securities and certain beneficial interests classified as HTM, we utilize the DCF methods to measure the ACL, which incorporate expected credit losses using the conceptual components described above. The ACL on AFS debt securities is subject to a limitation based on the fair value of the debt securities (fair value floor).

The ACL for financial assets held at amortized cost and AFS debt securities will be reversible with immediate recognition of recovery in earnings if credit improves. The ACL for financial assets held at amortized cost is a valuation account that is deducted from, or added to, the amortized cost basis of the financial assets to present the net amount expected to be collected, which can include a negative allowance limited to the cumulative amounts previously charged off. For financial assets with an ACL estimated using DCF methods, changes in the ACL due to the passage of time are recorded in interest income. The ACL for AFS debt securities reflects the amount of unrealized loss related to expected credit losses, limited by the amount that fair value is less than the amortized cost basis, and cannot have an associated negative allowance.

For certain financial assets, such as residential real estate loans guaranteed by the Government National Mortgage Association (GNMA), an agency of the federal government, U. S. Treasury and Agency mortgage backed debt securities, as well as certain sovereign debt securities, the Company has not recognized an ACL as our expectation of nonpayment of the amortized cost basis, based on historical losses, adjusted for current conditions and reasonable and supportable forecasts, is zero.

A financial asset is collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. When a collateral-dependent financial asset is probable of foreclosure, we will measure the ACL based on the fair value of the collateral. If we intend to sell the underlying collateral, we will measure the ACL based on the collateral’s net realizable value (fair value of collateral, less estimated costs to sell). In most situations, based on our charge-off policies, we will immediately write-down the financial asset to the fair value of the collateral or net realizable value. For consumer loans, collateral-dependent financial assets may have collateral in the form of residential real estate, automobiles or other personal assets. For commercial loans, collateral-dependent financial assets may have collateral in the form of commercial real estate or other business assets.

In general, we do not record an ACL for accrued interest receivables, which are included in other assets. Uncollectible accrued interest is reversed through interest income in a timely manner in line with our non-accrual and past due policies for loans and debt securities. For consumer credit card and certain consumer lines of credit, we include an ACL for accrued interest

and fees since these loans are not placed on nonaccrual status and written off until the loan is 180 days past due.

COMMERCIAL LOAN PORTFOLIO SEGMENT ACL METHODOLOGYGenerally, commercial loans, which include net investments in lease financing, are assessed for estimated losses by grading each loan using various risk factors as identified through periodic reviews. Our estimation approach for the commercial portfolio reflects the estimated probability of default in accordance with the borrower’s financial strength and the severity of loss in the event of default, considering the quality of any underlying collateral. Probability of default and severity at the time of default are statistically derived through historical observations of default and losses after default within each credit risk rating. These estimates are adjusted as appropriate based on additional analysis of long-term average loss experience compared with previously forecasted losses, external loss data or other risks identified from current economic conditions and credit quality trends. The estimated probability of default and severity at the time of default are applied to loan equivalent exposures to estimate losses for unfunded credit commitments.

CONSUMER LOAN PORTFOLIO SEGMENT ACL METHODOLOGYFor consumer loans, we determine the allowance at the individual loan level. When developing historical loss experience, we pool loans, generally by product types with similar risk characteristics, such as residential real estate mortgages and credit cards. As appropriate and to achieve greater accuracy, we may further stratify selected portfolios by sub-product, origination channel, vintage, loss type, geographic location and other predictive characteristics. We use pooled loan data such as historic delinquency and default and loss severity in the development of our consumer loan models, in addition to home price trends, unemployment trends, and other economic variables that may influence the frequency and severity of losses in the consumer portfolio.

AFS PORTFOLIO ACL METHODOLOGY We develop our ACL estimate for AFS debt securities by utilizing a security-level multi-scenario, probability-weighted discounted cash flow model based on a combination of past events, current conditions, as well as reasonable and supportable forecasts. The projected cash flows are discounted at the security’s effective interest rate, except for certain variable rate securities which are discounted using projections of future changes in interest rates, prepayable securities which are adjusted for estimated prepayments, and securities part of a fair value hedge which use hedge-adjusted assumptions. The ACL on an AFS debt security is limited to the difference between its amortized cost basis and fair value (fair value floor) and reversals of the allowance are permitted up to the amount previously recorded.

HTM PORTFOLIO ACL METHODOLOGY For most HTM debt securities, the ACL is measured using an expected loss model, similar to the methodology used for loans. Unlike AFS debt securities, the ACL on an HTM debt security is not limited to the fair value floor.

Certain beneficial interests categorized as HTM debt securities utilize a similar discounted cash flow model as described for AFS debt securities, without the limitation of the fair value floor.

OTHER QUALITATIVE FACTORSThe ACL includes amounts for qualitative factors which may not be adequately reflected in our ~~footnotes about~~loss models. These amounts represent management’s judgment

Note 1: Summary of Significant Accounting Policies (continued)

of risks in the processes and assumptions used in establishing the ACL. Generally, these amounts are established at a granular level below our loan portfolio segments. We also consider economic environmental factors, modeling assumptions and performance, process risk, and other subjective factors, including industry trends and emerging risk assessments.

OFF-BALANCE SHEET CREDIT EXPOSURES Our off-balance sheet credit exposures include unfunded loan commitments (generally in the form of revolving lines of credit), financial guarantees not accounted for as insurance contracts or derivatives, including standby letters of credit, and other similar instruments. For off-balance sheet credit exposures, we recognize an ACL associated with the unfunded amounts. We do not recognize an ACL for commitments that are unconditionally cancelable at our discretion. Additionally, we recognize an ACL for financial guarantees that create off-balance sheet credit exposure, such as loans sold with credit recourse and factoring guarantees. ACL for off-balance sheet credit exposures are reported as a liability in accrued expenses and other liabilities on our consolidated balance sheet.

OTHER FINANCIAL ASSETS Other financial assets are evaluated for expected credit losses. These other financial assets include accounts receivable for fees, receivables from government-sponsored entities, such as Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC), and GNMA, and other accounts receivable from high-credit quality counterparties, such as central clearing counterparties. Many of these financial assets are generally not expected to have an ACL as there is a zero loss expectation (for example, government guarantee) or no historical credit losses. Some financial assets, such as loans to employees, maintain an ACL that is presented on a net basis with the related amortized cost amounts in other assets on our consolidated balance sheet. Given the nature of these financial assets, provision for credit losses is not recognized separately from the ~~restriction on~~regular income or expense associated with these financial assets.

Securities purchased under resale agreements are generally over-collateralized by securities or cash and ~~cash equivalents. The Update~~are generally short-term in nature. We have elected the practical expedient for these financial assets given collateral maintenance provisions. These provisions require that we monitor the collateral value and customers are required to replenish collateral, if needed. Accordingly, we generally do not maintain an ACL for these financial assets.

PURCHASED CREDIT DETERIORATED FINANCIAL ASSETSFinancial assets acquired that are of poor credit quality and with more than an insignificant evidence of credit deterioration since their origination or issuance are PCD assets. PCD assets are recorded at their purchase price plus an ACL estimated at the time of acquisition. Under this approach, there is ~~effective~~no provision for uscredit losses recognized at acquisition; rather, there is a gross-up of the purchase price of the financial asset for the estimate of expected credit losses and a corresponding ACL recorded. Changes in ~~first quarter 2018 with retrospective application. Subject to completion~~estimates of ~~our assessment, we~~expected credit losses after acquisition are ~~not expecting this Update to have a material impact on our~~recognized as provision for credit losses (or reversal of provision for credit losses) in subsequent periods. In general, interest income recognition for PCD financial ~~statements.~~

~~Private Share Repurchases~~

From time to time we enter into private forward repurchase transactions with unrelated third parties to complement our open-market common stock repurchase strategies, to allow us to manage our share repurchases in a mannerassets is consistent with ~~our~~interest income recognition for the similar non-PCD financial asset.

~~capital plans submitted annually under~~Troubled Debt Restructuring Relief

On March 25, 2020, the ~~Comprehensive Capital Analysis~~U.S. Senate approved the Coronavirus, Aid, Relief, and ~~Review (CCAR) and~~Economic Security Act (the CARES Act) providing optional, temporary relief from accounting for certain loan modifications as troubled debt restructurings (TDRs). Under the CARES Act, TDR relief is available to ~~provide an economic benefit~~banks for loan modifications related to the ~~Company.~~adverse effects of Coronavirus Disease 2019 (COVID-19) (COVID-related modifications) granted to borrowers that are current as of December 31, 2019. TDR relief applies to COVID-related modifications made from March 1, 2020, until the earlier of December 31, 2020, or 60 days following the termination of the national emergency declared by the President of the United States. In first quarter 2020, we elected to apply the TDR relief provided by the CARES Act.

~~Our payments to~~On April 7, 2020, federal banking regulators issued the ~~counterparties~~Interagency Statement on Loan Modifications and Reporting for ~~these contracts are recorded in permanent equity~~Financial Institutions Working with Customers Affected by the Coronavirus (Revised) (the Interagency Statement). The guidance in the ~~quarter paid and are~~Interagency Statement provides additional TDR relief as it clarifies that it is not ~~subject~~necessary to ~~re-measurement. The classification~~consider the impact of the ~~up-front payments as permanent equity assures~~COVID-19 pandemic on the financial condition of a borrower in connection with a short-term (e.g., six months) COVID-related modification provided the borrower is current at the date the modification program is implemented.

For COVID-related modifications in the form of payment deferrals, delinquency status will not advance and loans that were accruing at the time the relief is provided will generally not be placed on nonaccrual status during the deferral period. COVID-related modifications that do not meet the provisions of the CARES Act or the Interagency Statement will be assessed for TDR classification.

Share Repurchases

During the first quarter of 2020 and 2019, we ~~have appropriate~~repurchased shares of our common stock under Rule 10b5-1 repurchase ~~timing consistent~~plans. On March 15, 2020, we, along with the other members of the Financial Services Forum, suspended our ~~capital plans, which contemplate a fixed dollar amount available per~~share repurchase activities for the remainder of the first quarter and for second quarter 2020. For more information about share repurchases, ~~pursuant to Federal Reserve Board (FRB) supervisory guidance. In return, the counterparty agrees to deliver a variable number~~see Note 1 (Summary of ~~shares based on a per share discount to the volume-weighted average stock price over the contract period. There are no scenarios where the contracts would not either physically settle~~Significant Accounting Policies) in ~~shares or allow us to choose the settlement method. Our total number of outstanding shares of common stock is not reduced until settlement of the private share repurchase contract.~~our 2019 Form 10-K.

~~We had no unsettled private share repurchase contracts at both September 30, 2017 and September 30, 2016.~~

Supplemental Cash Flow Information

Significant noncash activities are presented ~~below.~~in Table 1.3.

Table ~~1.1:~~1.3:Supplemental Cash Flow Information

Nine months ended September 30,
(in millions) 2017
2016
Trading assets retained from securitization of MHFS $ 43,394
47,291
Transfers from loans to MHFS 4,015
5,257
Transfers from available-for-sale to held-to-maturity securities 50,405
816



	Quarter ended March 31,
(in millions)	2020		2019
Trading debt securities retained from securitization of mortgage loans held for sale (MLHFS)	$	7,538	8,875
Transfers from loans to MLHFS	858		1,292
Transfers from available-for-sale debt securities to held-to-maturity debt securities	—		2,407
Operating lease ROU assets acquired with operating lease liabilities (1)	197		5,127


(1)	Includes amounts attributable to new leases and changes from modified leases. First quarter 2019 also includes $4.9 billion from adoption of ASU 2016-02 – Leases (Topic 842).

Subsequent Events

We have evaluated the effects of events that have occurred subsequent to ~~September 30, 2017,~~March 31, 2020, and there have been no material

events that would require recognition in our ~~third~~first quarter ~~2017~~2020 consolidated financial statements or disclosure in the Notes to the consolidated financial statements.

~~Note 2:~~ ~~Business Combinations~~

We regularly explore opportunities to acquire financial services companies and businesses. Generally, we do not make a public announcement about an acquisition opportunity until a definitive agreement has been signed. For information on additional contingent consideration related to acquisitions, which is considered to be a guarantee, see Note 10 (Guarantees, Pledged Assets and Collateral).

~~On July 1, 2017, we completed a step acquisition involving an investment management firm with approximately $10 billion of~~

~~assets under management. We had previously been the majority owner.~~

~~At September 30, 2017, we had no pending business combinations.~~

Note 3: ~~Federal Funds Sold, Securities Purchased under Resale Agreements and OtherShort-Term Investments~~2: Business Combinations

There were 0 acquisitions during first quarter 2020. As of March 31, 2020, we had 0 pending acquisitions.

Note 3:Cash, Loan and Dividend Restrictions

Cash and cash equivalents may be restricted as to usage or withdrawal. Federal Reserve Board (FRB) regulations require that each of our subsidiary banks maintain reserve balances on deposit with the Federal Reserve Banks. Table 3.1 provides a summary of restrictions on cash equivalents in addition to the ~~detail of federal funds sold, securities purchased under short-term resale agreements(generally less than one year) and other short-term investments. Substantially all of the interest-earning deposits at September 30, 2017, and December 31, 2016, were held at Federal Reserve Banks.~~FRB reserve cash balance requirements.

Table 3.1:~~Fed Funds Sold and Other Short-Term Investments~~Nature of Restrictions on Cash Equivalents

(in millions) Sep 30,
2017
Dec 31,
2016
Federal funds sold and securities purchased under resale agreements $ 66,156
58,215
Interest-earning deposits 205,648
200,671
Other short-term investments 1,301
7,152
Total $ 273,105
266,038



(in millions)	Mar 31, 2020		Dec 31, 2019
Average required reserve balance for FRB (1)	$	11,932	11,374
Reserve balance for non-U.S. central banks	1,133		460
Segregated for benefit of brokerage customers under federal and other brokerage regulations	970		733
Related to consolidated variable interest entities (VIEs) that can only be used to settle liabilities of VIEs	19		300


(1)	Represents average for first quarter 2020 and for the year ended December 31, 2019.

We have a state-chartered subsidiary bank that is subject to state regulations that limit dividends. Under these provisions and regulatory limitations, our national and state-chartered subsidiary banks could have declared additional dividends of $1.9 billion at March 31, 2020, without obtaining prior regulatory approval. We have elected to retain higher capital at our national and state-chartered subsidiary banks in order to meet internal capital policy minimums and regulatory requirements. Our nonbank subsidiaries are also limited by certain federal and state statutory provisions and regulations covering the amount of dividends that may be paid in any given year. In addition, under a Support Agreement dated June 28, 2017, as amended and restated on June 26, 2019, among Wells Fargo & Company, the parent holding company (the “Parent”), WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), Wells Fargo Bank, N.A., Wells Fargo Securities, LLC, Wells Fargo Clearing Services, LLC, and certain other direct and indirect subsidiaries of the Parent designated as material entities for resolution planning purposes or identified as related support entities in our resolution plan, the IHC may be restricted from making dividend payments to the Parent if certain liquidity and/or capital metrics fall below defined triggers or if the Parent’s board of directors authorizes it to file a case under the U.S. Bankruptcy Code. Based on retained earnings at March 31, 2020, our nonbank subsidiaries could have declared additional dividends of $24.8 billion at March 31, 2020, without obtaining prior regulatory approval. For additional information see Note 3 (Cash, Loan and Dividend Restrictions) in our 2019 Form 10-K.

~~As part~~The FRB’s Capital Plan Rule (codified at 12 CFR 225.8 of ~~maintaining our memberships in~~Regulation Y) establishes capital planning and prior notice and approval requirements for capital distributions including dividends by certain ~~clearing organizations, we are required~~large bank holding companies. The FRB has also published guidance regarding its supervisory expectations for capital planning, including capital policies regarding the process relating to ~~stand ready to provide liquidity meant to sustain market clearing activity~~common stock dividend and repurchase decisions in the ~~event unforeseen events occur~~FRB’s SR Letter 15-18. The effect of this guidance is to require the approval of the FRB (or specifically under the Capital Plan Rule, a notice of non-objection) for the repurchase or ~~are deemed likely~~redemption of common or perpetual preferred stock as well as to ~~occur. This~~raise the per share quarterly dividend from its current level of $0.51 per share as declared by the Company’s Board of Directors on April 28, 2020, payable on June 1, 2020.

Note 4: Trading Activities

Table 4.1 presents a summary of our trading assets and liabilities measured at fair value through earnings.

Table 4.1: Trading Assets and Liabilities



	Mar 31,			Dec 31,
(in millions)	2020			2019
Trading assets:
Debt securities	$	80,425		79,733
Equity securities	13,573			27,440
Loans held for sale	1,673			972
Gross trading derivative assets	72,527			34,825
Netting (1)	(49,821		)	(21,463	)
Total trading derivative assets	22,706			13,362
Total trading assets	118,377			121,507
Trading liabilities:
Short sale	17,603			17,430
Gross trading derivative liabilities	67,891			33,861
Netting (1)	(53,598		)	(26,074	)
Total trading derivative liabilities	14,293			7,787
Total trading liabilities	$	31,896		25,217


(1)	Represents balance sheet netting for trading derivative asset and liability balances, and trading portfolio level counterparty valuation adjustments.

Table 4.2 provides a summary of the net interest income earned from trading securities, and net gains and losses due to the realized and unrealized gains and losses from trading activities.

Net interest income also includes ~~commitments~~dividend income on trading securities and dividend expense on trading securities we have ~~entered into to purchase securities under resale agreements from a central clearing organization that, at its option, require us to provide funding under such agreements. We do~~sold, but not ~~have any outstanding amounts funded, and the amount of our unfunded contractual commitment was $1.5 billion and $2.9 billion as of September 30, 2017, and December 31, 2016, respectively.~~yet purchased.

We have classified securities purchased under long-term resale agreements (generally one year or more), which totaled $20.6 billion and $21.3 billion in loans at September 30, 2017, and December 31, 2016, respectively. For additional information on the collateral we receive from other entities under resale agreements and securities borrowings, see the “Offsetting of Resale and Repurchase Agreements and Securities Borrowing and Lending Agreements” section in Note 10 (Guarantees, Pledged Assets and Collateral).

Table 4.2:Net Interest Income and Net Gains (Losses) on Trading Activities



	Quarter ended March 31,
(in millions)	2020			2019
Interest income:
Debt securities	$	766		793
Equity securities	137			115
Loans held for sale	12			23
Total interest income	915			931
Less: Interest expense	141			136
Net interest income	774			795
Net gains (losses) from trading activities (1):
Debt securities	2,355			688
Equity securities	(4,401		)	2,067
Loans held for sale	(12		)	14
Derivatives (2)	2,122			(2,412	)
Total net gains from trading activities	64			357
Total trading-related net interest and noninterest income	$	838		1,152


(1)	Represents realized gains (losses) from our trading activities and unrealized gains (losses) due to changes in fair value of our trading positions.


(2)	Excludes economic hedging of mortgage banking and asset/liability management activities, for which hedge results (realized and unrealized) are reported with the respective hedged activities.

Note ~~4: Investment~~5: Available-for-Sale and Held-to-Maturity Debt Securities

Table ~~4.1~~5.1 provides the amortized cost, net of the allowance for credit losses, and fair value by major categories of available-for-sale debt securities, which are carried at fair value, and held-to-maturity debt securities, which are carried at

amortized ~~cost.~~cost, net of allowance for credit losses. The net unrealized gains (losses) for available-for-sale debt securities are reported ~~on an after-tax basis~~ as a component of cumulative ~~OCI.~~OCI, net of the allowance for credit losses and applicable income taxes. Information on debt securities held for trading is included in Note 4 (Trading Activities).

Outstanding balances exclude accrued interest receivable on available-for-sale and held-to-maturity debt securities which are included in other assets. During the quarter ended March 31, 2020, we reversed accrued interest receivable on our available-for-sale and held-to-maturity debt securities by reversing interest income of $6 million. See Note 9 (Other Assets) for additional information on accrued interest receivable.

Table ~~4.1:Amortized Cost~~5.1:Available-for-Sale and ~~Fair Value~~Held-to-Maturity Debt Securities Outstanding

(in millions) Amortized Cost

Gross
unrealized
gains

Gross
unrealized
losses

Fair
value

September 30, 2017
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies $ 6,408
8
(66 ) 6,350
Securities of U.S. states and political subdivisions 52,854
774
(854 ) 52,774
Mortgage-backed securities:
Federal agencies 149,872
1,237
(928 ) 150,181
Residential 5,942
455
(3 ) 6,394
Commercial 4,586
74
(8 ) 4,652
Total mortgage-backed securities 160,400
1,766
(939 ) 161,227
Corporate debt securities 8,962
443
(65 ) 9,340
Collateralized loan and other debt obligations (1) 35,298
317
(7 ) 35,608
Other (2) 5,857
168
(7 ) 6,018
Total debt securities 269,779
3,476
(1,938 ) 271,317
Marketable equity securities:
Perpetual preferred securities 412
12
(5 ) 419
Other marketable equity securities 194
282
(2 ) 474
Total marketable equity securities 606
294
(7 ) 893
Total available-for-sale securities 270,385
3,770
(1,945 ) 272,210
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 44,712
606
(36 ) 45,282
Securities of U.S. states and political subdivisions 6,321
70
(45 ) 6,346
Federal agency and other mortgage-backed securities (3) 90,071
305
(509 ) 89,867
Collateralized loan obligations 661
3
—
664
Other (2) 658
1
—
659
Total held-to-maturity securities 142,423
985
(590 ) 142,818
Total $ 412,808
4,755
(2,535 ) 415,028
December 31, 2016
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies $ 25,874
54
(109 ) 25,819
Securities of U.S. states and political subdivisions 52,121
551
(1,571 ) 51,101
Mortgage-backed securities:
Federal agencies 163,513
1,175
(3,458 ) 161,230
Residential 7,375
449
(8 ) 7,816
Commercial 8,475
101
(74 ) 8,502
Total mortgage-backed securities 179,363
1,725
(3,540 ) 177,548
Corporate debt securities 11,186
381
(110 ) 11,457
Collateralized loan and other debt obligations (1) 34,764
287
(31 ) 35,020
Other (2) 6,139
104
(35 ) 6,208
Total debt securities 309,447
3,102
(5,396 ) 307,153
Marketable equity securities:
Perpetual preferred securities 445
35
(11 ) 469
Other marketable equity securities 261
481
—
742
Total marketable equity securities 706
516
(11 ) 1,211
Total available-for-sale securities 310,153
3,618
(5,407 ) 308,364
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 44,690
466
(77 ) 45,079
Securities of U.S. states and political subdivisions 6,336
17
(144 ) 6,209
Federal agency and other mortgage-backed securities (3) 45,161
100
(804 ) 44,457
Collateralized loan obligations 1,065
6
(1 ) 1,070
Other (2) 2,331
10
(1 ) 2,340
Total held-to-maturity securities 99,583
599
(1,027 ) 99,155
Total $ 409,736
4,217
(6,434 ) 407,519



(in millions)	Amortized cost, net (1)		Gross unrealized gains	Gross unrealized losses		Fair value
March 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	10,952	88	(4	)	11,036
Securities of U.S. states and political subdivisions (2)	38,686		206	(748	)	38,144
Mortgage-backed securities:
Federal agencies	154,390		5,839	(15	)	160,214
Residential	820		—	(44	)	776
Commercial	3,897		10	(253	)	3,654
Total mortgage-backed securities	159,107		5,849	(312	)	164,644
Corporate debt securities	6,092		38	(275	)	5,855
Collateralized loan and other debt obligations	26,873		63	(1,768	)	25,168
Other (3)	6,477		19	(114	)	6,382
Total available-for-sale debt securities	248,187		6,263	(3,221	)	251,229
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	48,569		2,146	(24	)	50,691
Securities of U.S. states and political subdivisions	14,304		344	(37	)	14,611
Federal agency and other mortgage-backed securities (4)	107,013		5,268	(43	)	112,238
Other debt securities	23		—	(1	)	22
Total held-to-maturity debt securities	169,909		7,758	(105	)	177,562
Total (5)	$	418,096	14,021	(3,326	)	428,791
December 31, 2019
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	14,948	13	(1	)	14,960
Securities of U.S. states and political subdivisions (2)	39,381		992	(36	)	40,337
Mortgage-backed securities:
Federal agencies	160,318		2,299	(164	)	162,453
Residential	814		14	(1	)	827
Commercial	3,899		41	(6	)	3,934
Total mortgage-backed securities	165,031		2,354	(171	)	167,214
Corporate debt securities	6,343		252	(32	)	6,563
Collateralized loan and other debt obligations	29,693		125	(123	)	29,695
Other (3)	4,664		50	(24	)	4,690
Total available-for-sale debt securities	260,060		3,786	(387	)	263,459
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	45,541		617	(19	)	46,139
Securities of U.S. states and political subdivisions	13,486		286	(13	)	13,759
Federal agency and other mortgage-backed securities (4)	94,869		2,093	(37	)	96,925
Other debt securities	37		—	—		37
Total held-to-maturity debt securities	153,933		2,996	(69	)	156,860
Total (5)	$	413,993	6,782	(456	)	420,319

(1)

~~The~~Represents amortized cost of the securities, net of the allowance for credit losses of $161 million related to available-for-sale ~~portfolio includes collateralized~~ debt ~~obligations (CDOs) with a cost basis~~securities and ~~fair value~~$11 million related to held-to-maturity debt securities at March 31, 2020. Prior to our adoption of ~~$914 million~~CECL on January 1, 2020, the allowance for credit losses related to available-for-sale and held-to-maturity debt securities was not applicable and is therefore presented as $~~1.0 billion, respectively,~~0 at ~~September 30, 2017, and~~ ~~$819 million~~ ~~and~~ ~~$847 million, respectively, at~~ December 31, ~~2016~~2019. For more information, see Note 1 (Summary of Significant Accounting Policies).

(2)

Includes investments in tax-exempt preferred debt securities issued by investment funds or trusts that predominantly invest in tax-exempt municipal securities. The ~~“Other” category~~amortized cost net of available-for-sale securities largely includes asset-backed securities collateralized by student loans. Included in the “Other” category of held-to-maturity securities are asset-backed securities collateralized by automobile leases or loans and cash with a cost basisallowance for credit losses and fair value of these types of securities was $~~158 million~~ ~~each~~5.8 billion at ~~September 30, 2017~~both March 31, 2020, and ~~$1.3 billion~~ ~~each at~~ December 31, ~~2016~~2019. ~~Also included in the “Other” category of held-to-maturity securities are asset-backed securities collateralized by dealer floorplan loans with a cost basis and fair value of~~ ~~$500 million~~ ~~and~~ ~~$501 million, respectively at~~ ~~September 30, 2017, and~~ ~~$1.1 billion~~ ~~each at~~ ~~December 31, 2016~~.


(3)	Primarily includes asset-backed securities collateralized by student loans.


(4)	Predominantly consists of federal agency mortgage-backed securities at both ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019.

(5)

We held available-for-sale and held-to-maturity debt securities from Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) that each exceeded 10% of stockholders’ equity, with an amortized cost of $102.4 billion and $88.4 billion and a fair value of $107.0 billion and $92.2 billion at March 31, 2020 and an amortized cost of $98.5 billion and $84.1 billion and a fair value of $100.3 billion and $85.5 billion at December 31, 2019, respectively.

~~Note 4: Investment Securities (continued~~)

~~Gross~~ Table 5.2 details the breakout of purchases of and transfers to held-to-maturity debt securities by major category of security.

Table 5.2:Held-to-Maturity Debt Securities Purchases and Transfers



	Quarter ended March 31,
(in millions)	2020		2019
Purchases of held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	$	3,016	—
Securities of U.S. states and political subdivisions	866		—
Federal agency and other mortgage-backed securities	15,925		16
Total purchases of held-to-maturity debt securities	19,807		16
Transfers from available-for-sale debt securities to held-to-maturity debt securities:
Federal agency and other mortgage-backed securities	—		2,407
Total transfers from available-for-sale debt securities to held-to-maturity debt securities	$	—	2,407

Table 5.3 shows the composition of interest income, provision for credit losses, and gross realized gains and losses

from sales and impairment write-downs included in earnings related to available-for-sale and held-to-maturity debt securities (pre-tax).

Table 5.3:Income Statement Impacts for Available-for-Sale and Held-to-Maturity Debt Securities



	Quarter ended March 31,
(in millions)	2020			2019
Interest income:
Available-for-sale	$	1,726		2,201
Held-to-maturity	980			947
Total interest income (1)	2,706			3,148
Provision for credit losses (2):
Available-for-sale	168			—
Held-to-maturity	4			—
Total provision for credit losses	172			—
Realized gains and losses (3):
Gross realized gains	256			173
Gross realized losses	(4		)	(3	)
Impairment write-downs included in earnings:
Credit-related (4)	—			(16	)
Intent-to-sell	(15		)	(29	)
Total impairment write-downs included in earnings	(15		)	(45	)
Net realized gains	$	237		125


(1)	Total interest income from debt securities excludes interest income from trading debt securities, which is disclosed in Note 4 (Trading Activities).


(2)	Prior to our adoption of CECL on January 1, 2020, the provision for credit losses from debt securities was not applicable and is therefore presented as $0 for the prior period. For more information, see Note 1 (Summary of Significant Accounting Policies).


(3)	Realized gains and losses relate to available-for-sale debt securities. There were 0 realized gains or losses from held-to-maturity debt securities in all periods presented.


(4)	For the quarter ended March 31, 2020, credit-related impairment recognized in earnings is classified as provision for credit losses due to our adoption of CECLon January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies).

Note 5: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

Credit Quality

We monitor credit quality of debt securities by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the allowance for credit losses. The credit quality indicators that we most closely monitor include credit ratings and delinquency status and are based on information as of our financial statement date.

CREDIT RATINGS Credit ratings express opinions about the credit quality of a debt security. We determine the credit rating of a security according to the lowest credit rating made available by national recognized statistical rating organizations (NRSRO). Debt securities rated investment grade, that is those with ratings similar to BBB-/Baa3 or above, as defined by NRSRO, are generally considered by the rating agencies and market participants to be low credit risk. Conversely, debt securities rated

below investment grade, labeled as “speculative grade” by the rating agencies, are considered to be distinctively higher credit risk than investment grade debt securities.

For debt securities not rated by the NRSRO, we determine an internal credit grade of the debt securities (used for credit risk management purposes) equivalent to the credit ratings assigned by major credit agencies. The fair value of available-for-sale debt securities categorized as investment grade based on internal credit grades was $1.2 billion at March 31, 2020, and $2.2 billion at December 31, 2019. Held-to-maturity debt securities categorized as investment grade based on internal credit grades are not significant. If an internal credit grade was not assigned, we categorized the debt security as non-investment grade.

Table 5.4 shows the percentage of fair value of available-for-sale debt securities and amortized cost of held-to-maturity debt securities determined by those rated investment grade, inclusive of those based on internal credit grades.

Table 5.4:Investment Grade Debt Securities



	Available-for-Sale				Held-to-Maturity
($ in millions)	Fair value		% investment grade		Amortized cost	% investment grade
March 31, 2020
Total portfolio	$	251,229	99	%	169,920	99	%

Breakdown by category:
Securities of U.S. Treasury and federal agencies (1)	$	171,250	100	%	154,734	100	%
Securities of U.S. states and political subdivisions	38,144		99		14,313	100
Collateralized loan obligations	24,582		100		N/A	N/A
All other debt securities (2)	17,253		82		873	7
December 31, 2019
Total portfolio	$	263,459	99	%	153,933	99	%

Breakdown by category:
Securities of U.S. Treasury and federal agencies (1)	$	177,413	100	%	139,619	100	%
Securities of U.S. states and political subdivisions	40,337		99		13,486	100
Collateralized loan obligations	29,055		100		N/A	N/A
All other debt securities (2)	16,654		82		828	4


(1)	Includes federal agency mortgage-backed securities.


(2)	Includes non-agency mortgage-backed, corporate, and all other debt securities.

DELINQUENCY STATUS AND NONACCRUAL DEBT SECURITIES Debt security issuers that are delinquent in payment of amounts due under contractual debt agreements have a higher probability of recognition of credit losses. As such, as part of our monitoring of the credit quality of the debt security portfolio, we consider whether debt securities we own are past due in payment of principal or interest payments and whether any securities have been placed into nonaccrual status.

We had 0 debt securities that were past due and still accruing at March 31, 2020 or December 31, 2019. The fair value of available-for-sale debt securities in nonaccrual status was $327 million and $110 million as of March 31, 2020 and

December 31, 2019, respectively. There were 0 held-to-maturity debt securities in nonaccrual status as of March 31, 2020 or December 31, 2019. Purchased debt securities with credit deterioration (PCD) are not considered to be in nonaccrual status, as payments from issuers of these securities remain current.

Table 5.5 presents detail of available-for-sale debt securities purchased with credit deterioration during the period. There were 0 held-to-maturity debt securities purchased with credit deterioration during the quarter ended March 31, 2020. The amounts presented are as of the date of the PCD assets were purchased.

Table 5.5: Debt Securities Purchased with Credit Deterioration



(in millions)	Quarter ended March 31, 2020
Available-for-sale debt securities purchased with credit deterioration (PCD):
Par value	$	164
Allowance for credit losses at acquisition	(11		)
Discount (or premiums) attributable to other factors	3
Purchase price of available-for-sale debt securities purchased with credit deterioration	$	156

Unrealized Losses ~~and Fair Value~~of Available-for-Sale Debt Securities

Table ~~4.2~~5.6 shows the gross unrealized losses and fair value of available-for-sale debt securities ~~in the investment securities portfolio~~ by length of time ~~that~~those individual securities in each category have been in a continuous loss position. Debt securities on which we have ~~taken credit-related OTTI write-downs~~recorded credit impairment are categorized as being “less than 12 months” or

~~than~~ “12 ~~months” or “12~~ months or more” in a continuous loss position based on the point in time that the fair value declined to below the (1) for the current period presented, amortized cost basis ~~and not~~net of allowance for credit losses, or the (2) for the prior period ~~of time since the credit-related OTTI write-down.~~presented, amortized cost basis.

Table ~~4.2:~~5.6:Gross Unrealized Losses and Fair Value – Available-for-Sale Debt Securities



	Less than 12 months				12 months or more			Total
(in millions)	Gross unrealized losses			Fair value	Gross unrealized losses		Fair value	Gross unrealized losses		Fair value
March 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	(4	)	615	—		—	(4	)	615
Securities of U.S. states and political subdivisions	(678		)	22,740	(70	)	1,490	(748	)	24,230
Mortgage-backed securities:
Federal agencies	(3		)	594	(12	)	737	(15	)	1,331
Residential	(44		)	591	—		—	(44	)	591
Commercial	(228		)	3,275	(25	)	243	(253	)	3,518
Total mortgage-backed securities	(275		)	4,460	(37	)	980	(312	)	5,440
Corporate debt securities	(263		)	3,337	(12	)	129	(275	)	3,466
Collateralized loan and other debt obligations	(1,226		)	18,303	(542	)	6,442	(1,768	)	24,745
Other	(91		)	4,085	(23	)	618	(114	)	4,703
Total available-for-sale debt securities	$	(2,537	)	53,540	(684	)	9,659	(3,221	)	63,199
December 31, 2019
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	—		—	(1	)	2,423	(1	)	2,423
Securities of U.S. states and political subdivisions	(10		)	2,776	(26	)	2,418	(36	)	5,194
Mortgage-backed securities:
Federal agencies	(50		)	16,807	(114	)	10,641	(164	)	27,448
Residential	(1		)	149	—		—	(1	)	149
Commercial	(3		)	998	(3	)	244	(6	)	1,242
Total mortgage-backed securities	(54		)	17,954	(117	)	10,885	(171	)	28,839
Corporate debt securities	(9		)	303	(23	)	216	(32	)	519
Collateralized loan and other debt obligations	(13		)	5,070	(110	)	16,789	(123	)	21,859
Other	(12		)	1,587	(12	)	492	(24	)	2,079
Total available-for-sale debt securities	$	(98	)	27,690	(289	)	33,223	(387	)	60,913

Less than 12 months 12 months or more Total
(in millions)
Gross
unrealized
losses

Fair
value

Gross
unrealized
losses

Fair
value

Gross
unrealized
losses

Fair
value

September 30, 2017
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies $ (4 ) 2,582
(62 ) 1,968
(66 ) 4,550
Securities of U.S. states and political subdivisions (23 ) 6,117
(831 ) 19,188
(854 ) 25,305
Mortgage-backed securities:
Federal agencies (383 ) 50,708
(545 ) 22,103
(928 ) 72,811
Residential (2 ) 145
(1 ) 64
(3 ) 209
Commercial (1 ) 393
(7 ) 348
(8 ) 741
Total mortgage-backed securities (386 ) 51,246
(553 ) 22,515
(939 ) 73,761
Corporate debt securities (5 ) 305
(60 ) 886
(65 ) 1,191
Collateralized loan and other debt obligations (1 ) 3,171
(6 ) 581
(7 ) 3,752
Other (1 ) 494
(6 ) 526
(7 ) 1,020
Total debt securities (420 ) 63,915
(1,518 ) 45,664
(1,938 ) 109,579
Marketable equity securities:

Perpetual preferred securities (1 ) 21
(4 ) 67
(5 ) 88
Other marketable equity securities (2 ) 10
—
—
(2 ) 10
Total marketable equity securities (3 ) 31
(4 ) 67
(7 ) 98
Total available-for-sale securities (423 ) 63,946
(1,522 ) 45,731
(1,945 ) 109,677
Held-to-maturity securities:

Securities of U.S. Treasury and federal agencies (36 ) 3,345
—
—
(36 ) 3,345
Securities of U.S. states and political subdivisions (19 ) 2,016
(26 ) 785
(45 ) 2,801
Federal agency and other mortgage-backed
securities
(465 ) 53,128
(44 ) 5,212
(509 ) 58,340
Collateralized loan obligations —
—
—
—
—
—
Other —
—
—
—
—
—
Total held-to-maturity securities (520 ) 58,489
(70 ) 5,997
(590 ) 64,486
Total $ (943 ) 122,435
(1,592 ) 51,728
(2,535 ) 174,163
December 31, 2016
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies $ (109 ) 10,816
—
—
(109 ) 10,816
Securities of U.S. states and political subdivisions (341 ) 17,412
(1,230 ) 16,213
(1,571 ) 33,625
Mortgage-backed securities:
Federal agencies (3,338 ) 120,735
(120 ) 3,481
(3,458 ) 124,216
Residential (4 ) 527
(4 ) 245
(8 ) 772
Commercial (43 ) 1,459
(31 ) 1,690
(74 ) 3,149
Total mortgage-backed securities (3,385 ) 122,721
(155 ) 5,416
(3,540 ) 128,137
Corporate debt securities (11 ) 946
(99 ) 1,229
(110 ) 2,175
Collateralized loan and other debt obligations (2 ) 1,899
(29 ) 3,197
(31 ) 5,096
Other (9 ) 971
(26 ) 1,262
(35 ) 2,233
Total debt securities (3,857 ) 154,765
(1,539 ) 27,317
(5,396 ) 182,082
Marketable equity securities:
Perpetual preferred securities (3 ) 41
(8 ) 45
(11 ) 86
Other marketable equity securities —
—
—
—
—
—
Total marketable equity securities (3 ) 41
(8 ) 45
(11 ) 86
Total available-for-sale securities (3,860 ) 154,806
(1,547 ) 27,362
(5,407 ) 182,168
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies (77 ) 6,351
—
—
(77 ) 6,351
Securities of U.S. states and political subdivisions (144 ) 4,871
—
—
(144 ) 4,871
Federal agency and other mortgage-backed securities (804 ) 40,095
—
—
(804 ) 40,095
Collateralized loan obligations —
—
(1 ) 266
(1 ) 266
Other —
—
(1 ) 633
(1 ) 633
Total held-to-maturity securities (1,025 ) 51,317
(2 ) 899
(1,027 ) 52,216
Total $ (4,885 ) 206,123
(1,549 ) 28,261
(6,434 ) 234,384

We have assessed each debt security with gross unrealized losses included in the previous table for credit impairment. As part of that assessment we evaluated and concluded that we do not intend to sell any of the debt securities, and that it is more likely than not that we will not be required to sell, prior to recovery of the amortized cost basis. ~~For debt securities, we~~We evaluate, where necessary, whether credit impairment exists by comparing the present value of the expected cash flows to the debt securities’ amortized cost basis. ~~For equity securities, we consider numerous factors in determining whether~~In prior periods, credit impairment ~~exists, including our intent and ability~~was recorded as a write-down to ~~hold~~ the ~~securities for a period of time sufficient to recover the~~amortized cost basis of the ~~securities.~~security. In the current period, credit impairment is recorded as an allowance for credit losses.

For descriptions of the factors we consider when analyzing debt securities for impairment as well as methodology and significant inputs used to measure credit losses, see Note 1 (Summary of Significant Accounting Policies).

Note 5: Available-for-Sale and ~~Note 5 (Investment Securities) to Financial Statements in our 2016 Form 10-K. There were no material changes to our methodologies~~Held-to-Maturity Debt Securities (continued)

Allowance for ~~assessing impairment in the first nine months of 2017.~~ Credit Losses for Debt Securities

Table ~~4.3 shows~~5.7 presents the ~~gross unrealized losses and fair value of debt and perpetual preferred investment securities by those rated investment grade and those rated less than investment grade,~~

according to their lowest credit rating by Standard & Poor’s Rating Services (S&P) or Moody’s Investors Service (Moody’s). Credit ratings express opinions about the credit quality of a security. Securities rated investment grade, that is those rated BBB- or higher by S&P or Baa3 or higher by Moody’s, are generally considered by the rating agencies and market participants to be low credit risk. Conversely, securities rated below investment grade, labeled as “speculative grade” by the rating agencies, are considered to be distinctively higher credit risk than investment grade securities. We have also included securities not rated by S&P or Moody’s in the table below based on our internal credit grade of the securities (usedallowance for credit ~~risk management purposes) equivalent to the credit rating assigned by major credit agencies. The unrealized~~ losses on available-for-sale and fair value of unrated securities categorized as investment grade based on internal credit grades were $27 million and $5.7 billion, respectively, at September 30, 2017, and $54 million and $7.0 billion, respectively, at December 31, 2016. If an internal credit grade was not assigned, we categorized the security as non-investment grade. held-to-maturity debt securities.

Table ~~4.3:Gross Unrealized~~5.7:Allowance for Credit Losses ~~and Fair Value by Investment Grade~~

for Debt Securities

Investment grade Non-investment grade
(in millions)
Gross
unrealized
losses

Fair
value

Gross
unrealized
losses

Fair
value

September 30, 2017
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies $ (66 ) 4,550
—
—
Securities of U.S. states and political subdivisions (822 ) 25,098
(32 ) 207
Mortgage-backed securities:
Federal agencies (928 ) 72,811
—
—
Residential (1 ) 134
(2 ) 75
Commercial (2 ) 527
(6 ) 214
Total mortgage-backed securities (931 ) 73,472
(8 ) 289
Corporate debt securities (14 ) 674
(51 ) 517
Collateralized loan and other debt obligations (7 ) 3,752
—
—
Other (5 ) 781
(2 ) 239
Total debt securities (1,845 ) 108,327
(93 ) 1,252
Perpetual preferred securities (4 ) 70
(1 ) 18
Total available-for-sale securities (1,849 )
108,397

(94 )
1,270
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies (36 ) 3,345
—
—
Securities of U.S. states and political subdivisions (45 ) 2,801
—
—
Federal agency and other mortgage-backed securities (508 ) 58,248
(1 ) 92
Collateralized loan obligations —
—
—
—
Other —
—
—
—
Total held-to-maturity securities (589 ) 64,394
(1 ) 92
Total $ (2,438 ) 172,791
(95 ) 1,362
December 31, 2016

Available-for-sale securities:
Securities of U.S. Treasury and federal agencies $ (109 ) 10,816
—
—
Securities of U.S. states and political subdivisions (1,517 ) 33,271
(54 ) 354
Mortgage-backed securities:
Federal agencies (3,458 ) 124,216
—
—
Residential (1 ) 176
(7 ) 596
Commercial (15 ) 2,585
(59 ) 564
Total mortgage-backed securities (3,474 ) 126,977
(66 ) 1,160
Corporate debt securities (31 ) 1,238
(79 ) 937
Collateralized loan and other debt obligations (31 ) 5,096
—
—
Other (30 ) 1,842
(5 ) 391
Total debt securities (5,192 ) 179,240
(204 ) 2,842
Perpetual preferred securities (10 ) 68
(1 ) 18
Total available-for-sale securities (5,202 ) 179,308
(205 ) 2,860
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies (77 ) 6,351
—
—
Securities of U.S. states and political subdivisions (144 ) 4,871
—
—
Federal agency and other mortgage-backed securities (803 ) 40,078
(1 ) 17
Collateralized loan obligations (1 ) 266
—
—
Other (1 ) 633

—
—
Total held-to-maturity securities (1,026 ) 52,199
(1 ) 17
Total $ (6,228 ) 231,507
(206 ) 2,877



	Quarter ended March 31, 2020
(in millions)	Available-for-Sale			Held-to-Maturity
Balance, beginning of period (1)	$	—		—
Cumulative effect from change in accounting policies (2)	24			7
Balance, beginning of period, adjusted	24			7
Provision for credit losses	168			4
Securities purchased with credit deterioration	11			—
Reduction due to intent to sell	(11		)	—
Charge-offs	(32		)	—
Interest income (3)	1			—
Balance, end of period (4)	$	161		11


(1)	Prior to our adoption of CECL on January 1, 2020, the allowance for credit losses related to available-for-sale and held-to-maturity debt securities was not applicable and is therefore presented as $0 at December 31, 2019. For more information, see Note 1 (Summary of Significant Accounting Policies).


(2)	Represents the impact of adoption of CECL on January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies).


(3)	Certain debt securities with an allowance for credit losses calculated by discounting expected cash flows using the securities’ effective interest rate over its remaining life, recognize changes in the allowance for credit losses attributable to the passage of time as interest income.


(4)	Substantially all of allowance for credit losses for debt securities relates to corporate debt securities as of March 31, 2020.

~~Note 4: Investment Securities (continued~~)

Contractual Maturities

Table ~~4.4~~5.8 shows the remaining contractual maturities, amortized cost net of allowance for credit losses, fair value and ~~contractual~~ weighted-average effective yields ~~(taxable-equivalent basis)~~ of available-for-sale debt securities. The remaining contractual principal maturities for MBS do not consider

prepayments. Remaining expected maturities will differ

from contractual maturities because borrowers may have the right to prepay obligations before the underlying mortgages mature.

Table ~~4.4:~~5.8:Contractual Maturities

– Available-for-Sale Debt Securities


					Remaining contractual maturity
	Total				Within one year				After one year through five years				After five years through ten years				After ten years
(in millions)	amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
September 30, 2017
By remaining contractual maturity ($ in millions)																					Total			Within one year		After one year through five years	After five years through ten years	After ten years
March 31, 2020
Available-for-sale debt securities (1):
Fair value:
Securities of U.S. Treasury and federal agencies	$	6,350	1.60	%	$	81	1.36	%	$	6,221	1.60	%	$	48	1.88	%	$	—	—	%
Amortized cost, net																					$	10,952		8,023		28	45	2,856
Fair value																					11,036			8,029		29	49	2,929
Weighted average yield																					2.10		%	2.32		1.97	1.84	1.49
Securities of U.S. states and political subdivisions	52,774		5.77		1,375		2.32		10,788		2.93		2,237		4.65		38,374		6.76
Amortized cost, net																					38,686			3,940		4,196	4,034	26,516
Fair value																					38,144			3,963		4,244	4,039	25,898
Weighted average yield																					3.15			4.58		3.20	2.78	2.98
Mortgage-backed securities:
Federal agencies	150,181		3.24		1		5.03		223		2.78		5,927		2.83		144,030		3.26
Amortized cost, net																					154,390			2		123	1,944	152,321
Fair value																					160,214			2		128	2,005	158,079
Weighted average yield																					3.19			1.93		3.06	2.44	3.20
Residential	6,394		3.88		—		—		27		5.66		11		2.42		6,356		3.88
Amortized cost, net																					820			—		—	—	820
Fair value																					776			—		—	—	776
Weighted average yield																					3.19			—		—	—	3.19
Commercial	4,652		3.74		—		—		—		—		64		2.76		4,588		3.75
Amortized cost, net																					3,897			—		32	194	3,671
Fair value																					3,654			—		31	187	3,436
Weighted average yield																					2.62			—		2.49	2.71	2.62
Total mortgage-backed securities	161,227		3.28		1		5.03		250		3.09		6,002		2.83		154,974		3.30
Amortized cost, net																					159,107			2		155	2,138	156,812
Fair value																					164,644			2		159	2,192	162,291
Weighted average yield																					3.18			1.93		2.94	2.46	3.19
Corporate debt securities	9,340		4.94		976		4.08		3,009		5.57		4,373		4.61		982		5.28
Amortized cost, net																					6,092			373		2,048	2,847	824
Fair value																					5,855			355		1,973	2,755	772
Weighted average yield																					4.97			4.12		5.18	5.03	4.67
Collateralized loan and other debt obligations	35,608		2.97		—		—		100		1.83		16,498		2.95		19,010		3.00
Amortized cost, net																					26,873			—		—	12,014	14,859
Fair value																					25,168			—		—	11,362	13,806
Weighted average yield																					3.21			—		—	3.29	3.15
Other	6,018		2.29		44		3.42		525		2.69		1,584		1.97		3,865		2.35
Total available-for-sale debt securities at fair value	$	271,317	3.72	%	$	2,477	3.00	%	$	20,893	2.90	%	$	30,742	3.23	%	$	217,205	3.88	%
December 31, 2016
Available-for-sale debt securities (1):									`
Fair value:
Securities of U.S. Treasury and federal agencies	$	25,819	1.44	%	$	1,328	0.92	%	$	23,477	1.45	%	$	1,014	1.80	%	$	—	—	%
Securities of U.S. states and political subdivisions	51,101		5.65		2,990		1.69		9,299		2.74		2,391		4.71		36,421		6.78
Mortgage-backed securities:
Federal agencies	161,230		3.09		—		—		128		2.98		5,363		3.16		155,739		3.09
Residential	7,816		3.84		—		—		25		5.21		35		4.34		7,756		3.83
Commercial	8,502		4.58		—		—		—		—		30		3.13		8,472		4.59
Total mortgage-backed securities	177,548		3.19		—		—		153		3.34		5,428		3.16		171,967		3.19
Corporate debt securities	11,457		4.81		2,043		2.90		3,374		5.89		4,741		4.71		1,299		5.38
Collateralized loan and other debt obligations	35,020		2.70		—		—		168		1.34		16,482		2.66		18,370		2.74
Other	6,208		2.18		57		3.06		971		2.35		1,146		2.04		4,034		2.17
Total available-for-sale debt securities at fair value	$	307,153	3.44	%	$	6,418	1.93	%	$	37,442	2.20	%	$	31,202	3.17	%	$	232,091	3.72	%
Amortized cost, net																					6,477			2,021		704	1,296	2,456
Fair value																					6,382			2,021		685	1,287	2,389
Weighted average yield																					1.51			(0.22	)	2.95	1.41	2.57
Total available-for-sale debt securities
Amortized cost, net																					$	248,187		14,359		7,131	22,374	204,323
Fair value																					251,229			14,370		7,090	21,684	208,085
Weighted average yield																					3.13		%	2.63		3.75	3.24	3.14


(1)	Weighted-average yields displayed by maturity bucket are weighted based on ~~fair value and predominantly represent contractual coupon rates~~amortized cost without effect for any related hedging ~~derivatives.~~derivatives and are shown pre-tax.

Note 5: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

Table ~~4.5~~5.9 shows the remaining contractual maturities, amortized cost net of allowance for credit losses, fair value, and

weighted-average effective yields of held-to-maturity debt ~~securities by contractual maturity.~~securities.

Table ~~4.5:Amortized Cost by~~5.9: Contractual ~~Maturity~~

Maturities – Held-to-Maturity Debt Securities

Remaining contractual maturity
Total
Within one year
After one year
through five years

After five years
through ten years
After ten years
(in millions) amount
Yield
Amount
Yield
Amount
Yield
Amount
Yield
Amount
Yield
September 30, 2017
Held-to-maturity securities (1):
Amortized cost:
Securities of U.S. Treasury and federal agencies $ 44,712
2.12 % $ —
— % $ 32,323
2.04 % $ 12,389
2.32 % $ —
— %
Securities of U.S. states and political subdivisions 6,321
6.04
—
—
49
7.71
655
6.44
5,617
5.98
Federal agency and other mortgage-backed securities 90,071
3.11
—
—
—
—
—

—
90,071
3.11
Collateralized loan obligations 661
2.81
—
—
—
—
661
2.81
—
—
Other 658
2.17
—
—
658
2.17
—
—
—
—
Total held-to-maturity debt securities at amortized cost $ 142,423
2.92 % $ —
— % $ 33,030
2.05 % $ 13,705
2.54 % $ 95,688
3.27 %
December 31, 2016
Held-to-maturity securities (1):
Amortized cost:
Securities of U.S. Treasury and federal agencies $ 44,690
2.12 % $ —
— % $ 31,956
2.05 % $ 12,734
2.30 % $ —
— %
Securities of U.S. states and political subdivisions 6,336
6.04
—
—
24
8.20
436
6.76
5,876
5.98
Federal agency and other mortgage-backed securities 45,161
3.23
—
—
—
—
—
—
45,161
3.23
Collateralized loan obligations 1,065
2.58
—
—
—
—
1,065
2.58
—
—
Other 2,331
1.83
—
—
1,683
1.81
648
1.89
—
—
Total held-to-maturity debt securities at amortized cost $ 99,583
2.87 % $ —
— % $ 33,663
2.04 % $ 14,883
2.43 % $ 51,037
3.55 %



By remaining contractual maturity ($ in millions)	Total			Within one year	After one year through five years	After five years through ten years	After ten years
March 31, 2020
Held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	48,569		8,336	36,454	—	3,779
Fair value	50,691			8,494	38,170	—	4,027
Weighted average yield	2.14		%	2.24	2.18	—	1.56
Securities of U.S. states and political subdivisions
Amortized cost, net	14,304			11	713	1,724	11,856
Fair value	14,611			11	731	1,794	12,075
Weighted average yield	2.71			1.95	2.22	2.86	2.72
Federal agency and other mortgage-backed securities
Amortized cost, net	107,013			—	15	104	106,894
Fair value	112,238			—	13	111	112,114
Weighted average yield	2.96			—	2.99	1.37	2.96
Other debt securities
Amortized cost, net	23			—	—	23	—
Fair value	22			—	—	22	—
Weighted average yield	3.01			—	—	3.01	—
Total held-to-maturity debt securities
Amortized cost, net	$	169,909		8,347	37,182	1,851	122,529
Fair value	177,562			8,505	38,914	1,927	128,216
Weighted average yield	2.70		%	2.24	2.18	2.78	2.89


(1)	Weighted-average yields displayed by maturity bucket are weighted based on amortized cost and ~~predominantly represent contractual coupon rates.~~

~~Table 4.6 shows the fair value of held-to-maturity debt securities by contractual maturity.~~

~~Table 4.6:Fair Value by Contractual Maturity~~

Remaining contractual maturity
Total
Within one year

After one year
through five years

After five years
through ten years

After ten years
(in millions) amount
Amount
Amount
Amount
Amount
September 30, 2017
Held-to-maturity securities:
Fair value:
Securities of U.S. Treasury and federal agencies $ 45,282
—
32,733
12,549
—
Securities of U.S. states and political subdivisions 6,346
—
48
664
5,634
Federal agency and other mortgage-backed securities 89,867
—
—
—
89,867
Collateralized loan obligations 664
—
—
664
—
Other 659
—
659
—
—
Total held-to-maturity debt securities at fair value $ 142,818
—
33,440
13,877
95,501
December 31, 2016
Held-to-maturity securities:
Fair value:
Securities of U.S. Treasury and federal agencies $ 45,079
—
32,313
12,766
—
Securities of U.S. states and political subdivisions 6,209
—
24
430
5,755
Federal agency and other mortgage-backed securities 44,457
—
—
—
44,457
Collateralized loan obligations 1,070
—
—
1,070
—
Other 2,340
—
1,688
652
—
Total held-to-maturity debt securities at fair value $ 99,155
—
34,025
14,918
50,212

~~Note 4: Investment Securities (continued~~)

~~Realized Gains and Losses~~

~~Table 4.7 shows the gross realized gains and losses on sales and OTTI write-downs related to the available-for-sale securities~~

~~portfolio, which includes marketable equity securities, as well as net realized gains and losses on nonmarketable equity investments (see Note 6 (Other Assets)).~~

~~Table 4.7:Realized Gains and Losses~~

Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
Gross realized gains $ 298
266
859
1,215
Gross realized losses (18 ) (23 ) (102 ) (67 )
OTTI write-downs (8 ) (52 ) (112 ) (147 )
Net realized gains from available-for-sale securities 272
191
645
1,001
Net realized gains from nonmarketable equity investments 132
55
506
369
Net realized gains from debt securities and equity investments $ 404
246
1,151
1,370

~~Other-Than-Temporary Impairment~~

~~Table 4.8 shows the detail of total OTTI write-downs included in earnings for available-for-sale debt securities, marketable equity~~

~~securities and nonmarketable equity investments. There were no OTTI write-downs on held-to-maturity securities during the first nine months of 2017 and~~ ~~2016~~.

~~Table 4.8:OTTI Write-downs~~

Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
OTTI write-downs included in earnings
Debt securities:
Securities of U.S. states and political subdivisions $ 1
30
9
40
Mortgage-backed securities:
Residential 1
4
7
28
Commercial 4
10
70
11
Corporate debt securities 1
7
21
57
Other debt securities —
—
—
6
Total debt securities 7
51
107
142
Equity securities:
Marketable equity securities:
Other marketable equity securities 1
1
5
5
Total marketable equity securities 1
1
5
5
Total investment securities (1) 8
52
112
147
Nonmarketable equity investments (1) 83
84
181
317
Total OTTI write-downs included in earnings (1) $ 91
136
293
464

~~(1)~~

~~The quarters ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016, include~~ ~~$19 million~~ ~~and~~ ~~$32 million, respectively, in OTTI write-downs of oil and gas investments, of which~~ ~~$2 million~~ ~~and~~ ~~$6 million, respectively, related to investment securities and~~ ~~$17 million~~ ~~and~~ ~~$26 million, respectively, related to nonmarketable equity investments. Oil and gas related OTTI for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016, totaled~~ ~~$77 million~~ ~~and~~ ~~$185 million, respectively, of which~~ ~~$24 million~~ ~~and~~ ~~$57 million, respectively, related to investment securities and~~ ~~$53 million~~ ~~and~~ ~~$128 million, respectively, related to nonmarketable equity investments.~~

~~Other-Than-Temporarily Impaired Debt Securities~~

~~Table 4.9 shows the detail of OTTI write-downs on available-for-sale debt securities included in earnings and the related changes in OCI for the same securities.~~

~~Table 4.9:OTTI Write-downs Included in Earnings~~

Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
OTTI on debt securities
Recorded as part of gross realized losses:
Credit-related OTTI $ 6
21
105
102
Intent-to-sell OTTI 1
30
2
40
Total recorded as part of gross realized losses 7
51
107
142
Changes to OCI for losses (reversal of losses) in non-credit-related OTTI (1):
Securities of U.S. states and political subdivisions —
—
(5 ) —
Residential mortgage-backed securities (1 ) (4 ) (1 ) 1
Commercial mortgage-backed securities —
(11 ) (47 ) (9 )
Corporate debt securities —
—
1
(13 )
Other debt securities (1 ) —
(1 ) 2
Total changes to OCI for non-credit-related OTTI (2 ) (15 ) (53 ) (19 )
Total OTTI losses recorded on debt securities $ 5
36
54
123

~~(1)~~

Represents amounts recorded to OCI for impairment, due to factors other than credit, on debt securities that have also had credit-related OTTI write-downs during the period. Increases represent initial or subsequent non-credit-related OTTI on debt securities. Decreases represent partial to full reversal of impairment due to recoveries in the fair value of securities due to non-credit factors.are shown pre-tax.

Table 4.10 presents a rollforward of the OTTI credit loss that has been recognized in earnings as a write-down of available-for-sale debt securities we still own (referred to as “credit-impaired” debt securities) and do not intend to sell. Recognized credit loss

represents the difference between the present value of expected future cash flows discounted using the security’s current effective interest rate and the amortized cost basis of the security prior to considering credit loss.

~~Table 4.10:Rollforward of OTTI Credit Loss~~

Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
Credit loss recognized, beginning of period $ 1,120
1,080
1,043
1,092
Additions:
For securities with initial credit impairments —
16
8
54
For securities with previous credit impairments 6
5
97
48
Total additions 6
21
105
102
Reductions:
For securities sold, matured, or intended/required to be sold (96 ) (22 ) (114 ) (111 )
For recoveries of previous credit impairments (1) (1 ) (2 ) (5 ) (6 )
Total reductions (97 ) (24 ) (119 ) (117 )
Credit loss recognized, end of period $ 1,029
1,077
1,029
1,077


~~(1)~~	Recoveries of previous credit impairments result from increases in expected cash flows subsequent to credit loss recognition. Such recoveries are reflected prospectively as interest yield adjustments using the effective interest method.

~~Note 5: Loans and Allowance for Credit Losses (continued~~)

Note 5:6: Loans and Related Allowance for Credit Losses

Table ~~5.1~~6.1 presents total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include ~~a total net reduction of $3.7 billion and $4.4 billion at September 30, 2017, andDecember 31, 2016, respectively, for~~

unearned income, net deferred loan fees or costs, and unamortized discounts and premiums. These amounts were less than 1% of our total loans outstanding at March 31, 2020, and December 31, 2019.

Outstanding balances exclude accrued interest receivable on loans which are included in other assets. During the quarter ended

March 31, 2020, we reversed accrued interest receivable by reversing interest income of $9 million for our commercial portfolio segment and $63 million for our consumer portfolio segment. See Note 9 (Other Assets) for additional information on accrued interest receivable.

Table ~~5.1:~~6.1:Loans Outstanding


(in millions)	Sep 30, 2017		Dec 31, 2016	Mar 31, 2020		Dec 31, 2019
Commercial:
Commercial and industrial	$	327,944	330,840	$	405,020	354,125
Real estate mortgage	128,475		132,491	122,767		121,824
Real estate construction	24,520		23,916	20,812		19,939
Lease financing	19,211		19,289	19,136		19,831
Total commercial	500,150		506,536	567,735		515,719
Consumer:
Real estate 1-4 family first mortgage	280,173		275,579	292,920		293,847
Real estate 1-4 family junior lien mortgage	41,152		46,237	28,527		29,509
Credit card	36,249		36,700	38,582		41,013
Automobile	55,455		62,286	48,568		47,873
Other revolving credit and installment	38,694		40,266	33,511		34,304
Total consumer	451,723		461,068	442,108		446,546
Total loans	$	951,873	967,604	$	1,009,843	962,265

Our ~~foreign~~non-U.S. loans are reported by respective class of financing receivable in the table above. Substantially all of our ~~foreign~~non-U.S. loan portfolio is commercial loans. ~~Loans are classified as foreign primarily based on whether the borrower’s primary~~

~~address is outside of the United States.~~ Table ~~5.2~~6.2 presents total non-U.S. commercial ~~foreign~~ loans outstanding by class of financing receivable.

Table ~~5.2:~~6.2:Non-U.S. Commercial ~~Foreign~~ Loans Outstanding



(in millions)	Mar 31, 2020		Dec 31, 2019
Non-U.S. Commercial Loans
Commercial and industrial	$	78,753	70,494
Real estate mortgage	6,309		7,004
Real estate construction	1,478		1,434
Lease financing	1,120		1,220
Total non-U.S. commercial loans	$	87,660	80,152

Note 6: Loans and Related Allowance for Credit Losses (continued)

(in millions) Sep 30,
2017
Dec 31,
2016
Commercial foreign loans:
Commercial and industrial $ 58,570
55,396
Real estate mortgage 8,032
8,541
Real estate construction 647
375
Lease financing 1,141
972
Total commercial foreign loans $ 68,390
65,284

Loan Purchases, Sales, and Transfers

Table ~~5.3~~6.3 summarizes the proceeds paid or received for purchases and sales of loans and transfers from loans held for investment to mortgages/loans held for ~~sale at lower of cost or fair value. This loan activity also includes participating interests, whereby we~~

~~receive or transfer a portion of a loan.~~sale. The table excludes ~~PCI loans and~~ loans for which we have elected the fair value option ~~including~~and government insured/guaranteed real estate 1-4 family first mortgage loans ~~originated for sale~~ because

their loan activity normally does not impact the ~~allowance~~ACL. In first quarter 2020, we sold $709 million of 1-4 family first mortgage loans for ~~credit losses.~~ a gain of $463 million, which is included in other noninterest income on our consolidated income statement. These whole loans were reclassified to MLHFS in 2019.

Table ~~5.3:~~6.3:Loan Purchases, Sales, and Transfers



	2020							2019
(in millions)	Commercial			Consumer		Total		Commercial		Consumer		Total
Quarter ended March 31,
Purchases	$	341		1		342		329		3		332
Sales	(813		)	(26	)	(839	)	(421	)	(179	)	(600	)
Transfers (to) from MLHFS/LHFS	77			2		79		(3	)	—		(3	)

2017 2016
(in millions) Commercial
Consumer (1)
Total
Commercial (2)
Consumer (1)
Total
Quarter ended September 30,
Purchases $ 449
—
449
1,902
—
1,902
Sales (310 ) (145 ) (455 ) (324 ) (306 ) (630 )
Transfers to MHFS/LHFS 374
—
374
(44 ) (1 ) (45 )
Nine months ended September 30,
Purchases $ 2,418
2
2,420
29,155
—
29,155
Sales (1,649 ) (291 ) (1,940 ) (932 ) (985 ) (1,917 )
Transfers to MHFS/LHFS (284 ) (1 ) (285 ) (145 ) (5 ) (150 )

~~(1)~~

Excludes activity in government insured/guaranteed real estate 1-4 family first mortgage loans. As servicer, we are able to buy delinquent insured/guaranteed loans out of the Government National Mortgage Association (GNMA) pools, and manage and/or resell them in accordance with applicable requirements. These loans are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Accordingly, these loans have limited impact on the allowance for loan losses.


~~(2)~~	~~Purchases include loans and capital leases from the 2016 GE Capital business acquisitions.~~

Commitments to Lend

A commitment to lend is a legally binding agreement to lend funds to a customer, usually at a stated interest rate, if funded, and for specific purposes and time periods. We generally require a fee to extend such commitments. Certain commitments are subject to loan agreements with covenants regarding the financial performance of the customer or borrowing base formulas on an ongoing basis that must be met before we are required to fund the commitment. We may reduce or cancel consumer commitments, including home equity lines and credit card lines, in accordance with the contracts and applicable law.

We may, as a representative for other lenders, advance funds or provide for the issuance of letters of credit under syndicated loan or letter of credit agreements. Any advances are generally repaid in less than a week and would normally require default of both the customer and another lender to expose us to loss. ~~These~~The unfunded amount of these temporary advance arrangements totaled approximately ~~$84 billion and $77~~$72.7 billion at ~~September 30, 2017 and December~~March 31, ~~2016, respectively.~~2020.

We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At ~~September 30, 2017,~~March 31, 2020, and December 31, ~~2016,~~2019, we had ~~$1.2 billion~~$981.3 million and ~~$1.1 billion,~~$862 million, respectively, of outstanding issued commercial letters of credit. We also originate multipurpose lending commitments under which borrowers have the option to draw on the facility for different purposes in one of several forms, including a standby letter of credit. See Note 1013 (Guarantees, Pledged Assets and ~~Collateral)~~Collateral, and Other Commitments) for additional information on standby letters of credit.

When we make commitments, we are exposed to credit risk. The maximum credit risk for these commitments will generally be lower than the contractual amount because a significant portion of these commitments ~~is expected to expire without being used by the customer. In addition, we~~are not funded. We manage the potential risk in commitments to lend by limiting the total amount of commitments, both by individual customer and in total, by monitoring the size and maturity structure of these commitments and by applying the same credit standards for these commitments as for all of our credit activities.

For loans and commitments to lend, we generally require collateral or a guarantee. We may require various types of collateral, including commercial and consumer real estate, automobiles, other short-term liquid assets such as accounts receivable or inventory and long-lived assets, such as equipment and other business assets. Collateral requirements for each loan or commitment may vary based on the loan product and our assessment of a customer’s credit risk according to the specific credit underwriting, including credit terms and structure.

The contractual amount of our unfunded credit commitments, including unissued standby and commercial letters of credit, is summarized by portfolio segment and class of financing receivable in Table ~~5.4.~~6.4. The table excludes the issued standby and commercial letters of credit and temporary advance arrangements described above.

Table ~~5.4:~~6.4:Unfunded Credit Commitments


(in millions)	Sep 30, 2017		Dec 31, 2016	Mar 31, 2020		Dec 31, 2019
Commercial:
Commercial and industrial	$	321,797	319,662	$	314,135	346,991
Real estate mortgage	7,686		7,833	9,360		8,206
Real estate construction	16,025		18,840	17,236		17,729
Lease financing	—		16
Total commercial	345,508		346,351	340,731		372,926
Consumer:
Real estate 1-4 family first mortgage	33,985		33,498	42,691		34,391
Real estate 1-4 family junior lien mortgage	39,437		41,431	36,301		36,916
Credit card	108,240		101,895	118,339		114,933
Other revolving credit and installment	27,796		28,349	25,187		25,898
Total consumer	209,458		205,173	222,518		212,138
Total unfunded credit commitments	$	554,966	551,524	$	563,249	585,064

~~Note 5: Loans and~~

Allowance for Credit Losses (~~continued~~)

~~Allowance~~ for ~~Credit Losses~~

impact to our customers and our business as a result of the hurricanes and refine our estimates as more information becomes available. However, in light of the ongoing recovery challenges in Puerto Rico after Hurricane Maria, it may take longer to assess the hurricane’s impact on our portfolios there. We are still evaluating the impact on our portfolio from the California wildfires that occurred in October 2017.Loans

Table ~~5.5~~6.5 presents the allowance for credit losses for loans, which consists of the allowance for loan losses and the allowance for unfunded credit commitments. On January 1, 2020, we adopted CECL. Additional information on our adoption of CECL is included in Note 1 (Summary of Significant Accounting Policies). In first quarter 2020, after the adoption of CECL, we added a net $2.9 billion to our ACL for loans predominantly driven by the

expected impacts from the COVID-19 pandemic. These expected impacts were most significantly affected by anticipated changes to economic variables, as well as higher expected losses from certain industries in our commercial portfolio segment that we expect to be directly and most adversely affected by the COVID-19 pandemic. In addition, the increase included expected impacts on oil and gas loans due to lower oil prices and deteriorating credit trends.

Table ~~5.5:~~6.5:Allowance for Credit Losses for Loans


	Quarter ended September 30,					Nine months ended September 30,				Quarter ended March 31,
(in millions)	2017			2016		2017		2016		2020		2019
Balance, beginning of period	$	12,146		12,749		12,540		12,512		10,456		10,707
Cumulative effect from change in accounting policies (1)										(1,337	)	—
Allowance for purchased credit-deteriorated (PCD) loans (2)										8		—
Balance, beginning of period, adjusted										9,127		10,707
Provision for credit losses	717			805		1,877		2,965		3,833		845
Interest income on certain impaired loans (1)	(43		)	(54	)	(137	)	(153	)
Interest income on certain loans (3)										(38	)	(39	)
Loan charge-offs:
Commercial:
Commercial and industrial	(194		)	(324	)	(608	)	(1,110	)	(377	)	(176	)
Real estate mortgage	(21		)	(7	)	(34	)	(13	)	(3	)	(12	)
Real estate construction	—			—		—		(1	)	—		(1	)
Lease financing	(11		)	(4	)	(31	)	(25	)	(13	)	(11	)
Total commercial	(226		)	(335	)	(673	)	(1,149	)	(393	)	(200	)
Consumer:
Real estate 1-4 family first mortgage	(67		)	(106	)	(191	)	(366	)	(23	)	(43	)
Real estate 1-4 family junior lien mortgage	(70		)	(119	)	(225	)	(385	)	(30	)	(34	)
Credit card	(337		)	(296	)	(1,083	)	(930	)	(471	)	(437	)
Automobile	(274		)	(215	)	(741	)	(602	)	(156	)	(187	)
Other revolving credit and installment	(170		)	(170	)	(544	)	(508	)	(165	)	(162	)
Total consumer (2)	(918		)	(906	)	(2,784	)	(2,791	)
Total consumer										(845	)	(863	)
Total loan charge-offs	(1,144		)	(1,241	)	(3,457	)	(3,940	)	(1,238	)	(1,063	)
Loan recoveries:
Commercial:
Commercial and industrial	69			65		234		210		44		43
Real estate mortgage	24			35		68		90		5		6
Real estate construction	15			18		27		30		16		3
Lease financing	5			2		13		10		4		3
Total commercial	113			120		342		340		69		55
Consumer:
Real estate 1-4 family first mortgage	83			86		216		284		26		55
Real estate 1-4 family junior lien mortgage	69			70		205		200		35		43
Credit card	60			51		177		153		94		85
Automobile	72			78		246		248		74		96
Other revolving credit and installment	30			31		94		100		31		34
Total consumer	314			316		938		985		260		313
Total loan recoveries	427			436		1,280		1,325		329		368
Net loan charge-offs	(717		)	(805	)	(2,177	)	(2,615	)	(909	)	(695	)
Other	6			(1	)	6		(15	)	9		3
Balance, end of period	$	12,109		12,694		12,109		12,694		12,022		10,821
Components:
Allowance for loan losses	$	11,078		11,583		11,078		11,583		11,263		9,900
Allowance for unfunded credit commitments	1,031			1,111		1,031		1,111		759		921
Allowance for credit losses	$	12,109		12,694		12,109		12,694
Allowance for credit losses for loans										12,022		10,821
Net loan charge-offs (annualized) as a percentage of average total loans	0.30		%	0.33		0.30		0.37		0.38		0.30
Allowance for loan losses as a percentage of total loans	1.16			1.20		1.16		1.20		1.12		1.04
Allowance for credit losses as a percentage of total loans	1.27			1.32		1.27		1.32
Allowance for credit losses for loans as a percentage of total loans										1.19		1.14


(1)	~~Certain impaired~~Represents the overall decrease in our allowance for credit losses for loans as a result of our adoption of CECL on January 1, 2020.


(2)	Represents the allowance estimated for PCI loans that automatically became PCD loans with the adoption of CECL. For more information, see Note 1 (Summary of Significant Accounting Policies).


(3)	Loans with an allowance ~~calculated~~measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in allowance attributable to the passage of time as interest income.


~~(2)~~	~~Quarter and nine months ended September 30, 2017, include an incremental~~ ~~$29 million~~ ~~of charge-offs in accordance with updated industry regulatory guidance regarding the timing of loss recognition for real estate 1-4 family mortgage and automobile loans in bankruptcy.~~

Note 6: Loans and Related Allowance for Credit Losses (continued)

Table ~~5.6~~6.6 summarizes the activity in the allowance for credit losses for loans by our commercial and consumer portfolio segments.

Table ~~5.6:~~6.6:Allowance for Credit Losses for Loans Activity by Portfolio Segment



							2020									2019
(in millions)	Commercial			Consumer			Total			Commercial			Consumer			Total
Quarter ended March 31,
Balance, beginning of period	$	6,245		4,211			10,456			6,417			4,290			10,707
Cumulative effect from change in accounting policies (1)	(2,861		)	1,524			(1,337		)	—			—			—
Allowance for purchased credit-deteriorated (PCD) loans (2)	—			8			8			—			—			—
Balance, beginning of period, adjusted	3,384			5,743			9,127			6,417			4,290			10,707
Provision for credit losses	2,240			1,593			3,833			164			681			845
Interest income on certain loans (3)	(14		)	(24		)	(38		)	(11		)	(28		)	(39		)

Loan charge-offs	(393		)	(845		)	(1,238		)	(200		)	(863		)	(1,063		)
Loan recoveries	69			260			329			55			313			368
Net loan charge-offs	(324		)	(585		)	(909		)	(145		)	(550		)	(695		)
Other	(7		)	16			9			3			—			3
Balance, end of period	$	5,279		$	6,743		$	12,022		$	6,428		$	4,393		$	10,821

2017


2016
(in millions) Commercial
Consumer
Total
Commercial
Consumer
Total
Quarter ended September 30,
Balance, beginning of period $ 6,961
5,185
12,146
7,441
5,308
12,749
Provision (reversal of provision) for credit losses (9 ) 726
717
158
647
805
Interest income on certain impaired loans (13 ) (30 ) (43 ) (14 ) (40 ) (54 )

Loan charge-offs (226 ) (918 ) (1,144 ) (335 ) (906 ) (1,241 )
Loan recoveries 113
314
427
120
316
436
Net loan charge-offs (113 ) (604 ) (717 ) (215 ) (590 ) (805 )
Other 6
—
6
(1 ) —
(1 )
Balance, end of period $ 6,832
5,277
12,109
7,369
5,325
12,694

Nine months ended September 30,
Balance, beginning of period $ 7,394
5,146
12,540
6,872
5,640
12,512
Provision (reversal of provision) for credit losses (195 ) 2,072
1,877
1,350
1,615
2,965
Interest income on certain impaired loans (42 ) (95 ) (137 ) (29 ) (124 ) (153 )

Loan charge-offs (673 ) (2,784 ) (3,457 ) (1,149 ) (2,791 ) (3,940 )
Loan recoveries 342
938
1,280
340
985
1,325
Net loan charge-offs (331 ) (1,846 ) (2,177 ) (809 ) (1,806 ) (2,615 )
Other 6
—
6
(15 ) —
(15 )
Balance, end of period $ 6,832
5,277
12,109
7,369
5,325
12,694


(1)	Represents the overall decrease in our allowance for credit losses for loans as a result of our adoption of CECL on January 1, 2020.


(2)	Represents the allowance estimated for PCI loans that automatically became PCD loans with the adoption of CECL. For more information, see Note 1 (Summary of Significant Accounting Policies).


(3)	Loans with an allowance measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in allowance attributable to the passage of time as interest income.

Table ~~5.7~~6.7 disaggregates our allowance for credit losses for loans and recorded investment in loans by impairment methodology. This is no longer relevant after December 31, 2019,

given our adoption of CECL on January 1, 2020, which has a single impairment methodology.

Table ~~5.7:~~6.7:Allowance for Credit Losses for Loans by Impairment Methodology


	Allowance for credit losses				Recorded investment in loans			Allowance for credit losses for loans				Recorded investment in loans
(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total	Commercial		Consumer	Total	Commercial	Consumer	Total
September 30, 2017
December 31, 2019
Collectively evaluated (1)	$	6,032	4,094	10,126	495,395	423,102	918,497	$	5,778	3,364	9,142	512,586	436,081	948,667
Individually evaluated (2)	786		1,183	1,969	4,521	15,291	19,812	467		847	1,314	3,133	9,897	13,030
PCI (3)	14		—	14	234	13,330	13,564	—		—	—	—	568	568
Total	$	6,832	5,277	12,109	500,150	451,723	951,873	$	6,245	4,211	10,456	515,719	446,546	962,265
December 31, 2016
Collectively evaluated (1)	$	6,392	3,553	9,945	500,487	428,009	928,496
Individually evaluated (2)	1,000		1,593	2,593	5,372	17,005	22,377
PCI (3)	2		—	2	677	16,054	16,731
Total	$	7,394	5,146	12,540	506,536	461,068	967,604


(1)	Represents non-impaired loans evaluated collectively ~~evaluated~~ for ~~impairment in accordance with Accounting Standards Codification (ASC) 450-20,~~ ~~Loss Contingencies~~ ~~(formerly FAS 5), and pursuant to amendments by ASU 2010-20 regarding allowance for non-impaired loans.~~ impairment.


(2)	Represents impaired loans evaluated individually ~~evaluated~~ for ~~impairment in accordance with ASC 310-10,~~ ~~Receivables~~ ~~(formerly FAS 114), and pursuant to amendments by ASU 2010-20 regarding allowance for impaired loans.~~ impairment.


(3)	Represents the allowance for loan losses and related loan carrying value ~~determined in accordance with ASC 310-30, Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality~~ ~~(formerly SOP 03-3) and pursuant to amendments by ASU 2010-20 regarding allowance~~ for PCI loans.

Credit Quality

We monitor credit quality by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the allowance for credit losses. The following sections provide the credit quality indicators we most closely monitor. The credit quality indicators are generally based on information as of our financial statement date, with the exception of updated Fair Isaac Corporation (FICO) scores and updated loan-to-value (LTV)/

combined LTV (CLTV). We obtain FICO scores at loan origination and the scores are generally updated at least quarterly, except in limited circumstances, including compliance with the Fair Credit Reporting Act (FCRA). Generally, the LTV and CLTV indicators are updated in the second month of each quarter, with updates no older than ~~June 30, 2017. See~~December 31, 2019. Amounts disclosed in the ~~“Purchased Credit-Impaired Loans” section in this Note for~~ credit quality tables that follow are not comparative between reported periods due to our adoption of CECL on January 1, 2020. For more information, ~~on our PCI portfolio.~~see Note 1 (Summary of Significant Accounting Policies).

~~Note 5: Loans and Allowance for Credit Losses (continued~~)

COMMERCIAL CREDIT QUALITY INDICATORS ~~In addition to monitoring commercial loan concentration risk, we~~ We manage a consistent process for assessing commercial loan credit quality. Generally, commercial loans are subject to individual risk assessment using our internal borrower and collateral quality ~~ratings.~~ratings, which is our primary credit quality indicator. Our ratings are aligned to ~~Pass~~federal banking regulators’ definitions of pass and ~~Criticized~~criticized categories with the criticized category including special mention, substandard, doubtful, and loss categories. ~~The Criticized category includes Special Mention, Substandard, and Doubtful categories which are defined by bank regulatory agencies.~~

Table ~~5.8~~6.8 provides a breakdown of outstanding commercial loans by risk category. OfIn connection with our adoption of CECL, credit quality information is provided with the ~~$18.7 billion~~year of origination for term loans. Revolving loans may convert to term loans as a result of a contractual provision in ~~criticized commercial and industrial loans and $5.1 billion~~the original loan agreement or if modified in criticized commercial real estate (CRE) loans at September 30, 2017, $2.4 billion and $631 million, respectively, have been placed on nonaccrual status and written down to net realizable collateral value.a TDR.

Table ~~5.8:~~6.8:Commercial Loans Categories by Risk ~~Category~~Categories and Vintage(1)



	Term loans by origination year								Revolving loans	Revolving loans converted to term loans	Total
(in millions)	2020		2019	2018	2017	2016		Prior	Revolving loans	Revolving loans converted to term loans	Total
March 31, 2020
Commercial and industrial
Pass	$	32,531	53,904	23,788	11,603	7,815		5,061	250,893	209	385,804
Criticized	885		1,053	948	721	433		458	14,718	—	19,216
Total commercial and industrial	33,416		54,957	24,736	12,324	8,248		5,519	265,611	209	405,020
Real estate mortgage
Pass	7,336		31,320	23,268	14,577	15,376		21,087	5,563	128	118,655
Criticized	60		452	515	741	546		1,525	273	—	4,112
Total real estate mortgage	7,396		31,772	23,783	15,318	15,922		22,612	5,836	128	122,767
Real estate construction
Pass	1,293		7,226	5,528	3,024	1,290		472	1,750	7	20,590
Criticized	2		98	93	6	8		14	1	—	222
Total real estate construction	1,295		7,324	5,621	3,030	1,298		486	1,751	7	20,812
Lease financing
Pass	1,439		5,566	3,769	2,447	1,844		2,739	—	—	17,804
Criticized	83		422	365	196	139		127	—	—	1,332
Total lease financing	1,522		5,988	4,134	2,643	1,983		2,866	—	—	19,136
Total commercial loans	$	43,629	100,041	58,274	33,315	27,451		31,483	273,198	344	567,735
						Commercial and industrial		Real estate mortgage	Real estate construction	Lease financing	Total
December 31, 2019
By risk category:
Pass						$	338,740	118,054	19,752	18,655	495,201
Criticized						15,385		3,770	187	1,176	20,518
Total commercial loans						$	354,125	121,824	19,939	19,831	515,719


(1)	Disclosure is not comparative due to our adoption of CECL on January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies).

Note 6: Loans and Related Allowance for Credit Losses (continued)

(in millions)
Commercial
and
industrial

Real
estate
mortgage

Real
estate
construction

Lease
financing

Total
September 30, 2017
By risk category:
Pass $ 309,149
123,547
24,189
18,004
474,889
Criticized 18,679
4,820
321
1,207
25,027
Total commercial loans (excluding PCI) 327,828
128,367
24,510
19,211
499,916
Total commercial PCI loans (carrying value) 116
108
10
—
234
Total commercial loans $ 327,944
128,475
24,520
19,211
500,150
December 31, 2016
By risk category:
Pass $ 308,166
126,793
23,408
17,899
476,266
Criticized 22,437
5,315
451
1,390
29,593
Total commercial loans (excluding PCI) 330,603
132,108
23,859
19,289
505,859
Total commercial PCI loans (carrying value) 237
383
57
—
677
Total commercial loans $ 330,840
132,491
23,916
19,289
506,536

Table ~~5.9~~6.9 provides past due information for commercial loans, which we monitor as part of our credit risk management ~~practices.~~

practices; however, delinquency is not a primary credit quality indicator for commercial loans.

Table ~~5.9:~~6.9:Commercial ~~Loans~~Loan Categories by Delinquency Status



(in millions)	Commercial and industrial		Real estate mortgage	Real estate construction	Lease financing	Total
March 31, 2020
By delinquency status:
Current-29 days past due (DPD) and still accruing	$	402,706	121,621	20,696	18,793	563,816
30-89 DPD and still accruing	511		174	94	212	991
90+ DPD and still accruing	24		28	1	—	53
Nonaccrual loans	1,779		944	21	131	2,875
Total commercial loans	$	405,020	122,767	20,812	19,136	567,735
December 31, 2019
By delinquency status:
Current-29 DPD and still accruing	$	352,110	120,967	19,845	19,484	512,406
30-89 DPD and still accruing	423		253	53	252	981
90+ DPD and still accruing	47		31	—	—	78
Nonaccrual loans	1,545		573	41	95	2,254
Total commercial loans	$	354,125	121,824	19,939	19,831	515,719

(in millions)
Commercial
and
industrial

Real
estate
mortgage

Real
estate
construction

Lease
financing

Total
September 30, 2017
By delinquency status:
Current-29 days past due (DPD) and still accruing $ 324,706
127,438
24,378
18,993
495,515
30-89 DPD and still accruing 698
325
94
137
1,254
90+ DPD and still accruing 27
11
—
—
38
Nonaccrual loans 2,397
593
38
81
3,109
Total commercial loans (excluding PCI) 327,828
128,367
24,510
19,211
499,916
Total commercial PCI loans (carrying value) 116
108
10
—
234
Total commercial loans $ 327,944
128,475
24,520
19,211
500,150
December 31, 2016
By delinquency status:
Current-29 DPD and still accruing $ 326,765
131,165
23,776
19,042
500,748
30-89 DPD and still accruing 594
222
40
132
988
90+ DPD and still accruing 28
36
—
—
64
Nonaccrual loans 3,216
685
43
115
4,059
Total commercial loans (excluding PCI) 330,603
132,108
23,859
19,289
505,859
Total commercial PCI loans (carrying value) 237
383
57
—
677
Total commercial loans $ 330,840
132,491
23,916
19,289
506,536

CONSUMER CREDIT QUALITY INDICATORSWe have various classes of consumer loans that present unique credit risks. Loan delinquency, FICO credit scores and LTV for ~~loan types~~1-4 family mortgage loans are ~~common~~the primary credit quality indicators that we monitor and utilize in our evaluation of the appropriateness of the allowance for credit losses for the consumer portfolio segment.

Many of our loss estimation techniques used for the allowance for credit losses rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality and the establishment of our allowance for credit losses.

Table ~~5.10~~6.10 provides the outstanding balances of our consumer portfolio by delinquency status.

In connection with our adoption of CECL, credit quality information is provided with the year of origination for term loans. Revolving loans may convert to term loans as a result of a contractual provision in the original loan agreement or if modified in a TDR. The revolving loans converted to term loans in the credit card loan category represent credit card loans with modified terms that require payment over a specific term.

Table ~~5.10:~~6.10:Consumer ~~Loans~~Loan Categories by Delinquency Status and Vintage (1)


								Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Credit card	Automobile	Other revolving credit and installment	Total	2020		2019	2018	2017	2016	Prior	Revolving loans		Total
September 30, 2017
March 31, 2020																Revolving loans converted to term loans
Real estate 1-4 family first mortgage
By delinquency status:
Current-29 DPD	$	248,896	40,242	35,297	53,684	38,316	416,435	$	14,238	59,044	25,047	36,185	41,121	93,490	7,981	2,020		279,126
30-59 DPD	1,895		308	282	1,287	146	3,918	14		65	30	39	64	1,184	38	57		1,491
60-89 DPD	687		147	195	349	102	1,480	2		3	6	5	8	370	20	27		441
90-119 DPD	339		86	168	127	79	799	—		—	3	—	6	190	8	17		224
120-179 DPD	263		94	288	7	26	678	—		—	1	4	7	142	11	22		187
180+ DPD	1,186		246	19	1	25	1,477	—		—	4	7	5	466	5	125		612
Government insured/guaranteed loans (1)	13,606		—	—	—	—	13,606
Total consumer loans (excluding PCI)	266,872		41,123	36,249	55,455	38,694	438,393
Total consumer PCI loans (carrying value)	13,301		29	—	—	—	13,330
Total consumer loans	$	280,173	41,152	36,249	55,455	38,694	451,723
December 31, 2016
Government insured/guaranteed loans (2)								2		32	150	271	498	9,726	—	—		10,679
Loans held at fair value								—		—	—	—	—	160	—	—		160
Total real estate 1-4 family first mortgage								14,256		59,144	25,241	36,511	41,709	105,728	8,063	2,268		292,920
Real estate 1-4 family junior mortgage
By delinquency status:
Current-29 DPD	$	239,061	45,238	35,773	60,572	39,833	420,477	8		44	51	48	39	1,491	19,178	7,058		27,917
30-59 DPD	1,904		296	275	1,262	177	3,914	—		—	—	—	—	34	76	119		229
60-89 DPD	700		160	200	330	111	1,501	—		—	—	1	1	15	28	58		103
90-119 DPD	307		102	169	116	93	787	—		—	—	—	—	8	19	32		59
120-179 DPD	323		108	279	5	30	745	—		—	—	—	—	6	17	44		67
180+ DPD	1,661		297	4	1	22	1,985	—		—	—	—	1	16	10	125		152
Government insured/guaranteed loans (1)	15,605		—	—	—	—	15,605
Total consumer loans (excluding PCI)	259,561		46,201	36,700	62,286	40,266	445,014
Total consumer PCI loans (carrying value)	16,018		36	—	—	—	16,054
Total real estate 1-4 family junior mortgage								8		44	51	49	41	1,570	19,328	7,436		28,527
Credit cards
By delinquency status:
Current-29 DPD								—		—	—	—	—	—	37,320	259		37,579
30-59 DPD								—		—	—	—	—	—	260	18		278
60-89 DPD								—		—	—	—	—	—	184	13		197
90-119 DPD								—		—	—	—	—	—	167	14		181
120-179 DPD								—		—	—	—	—	—	335	10		345
180+ DPD								—		—	—	—	—	—	2	—		2
Total credit cards								—		—	—	—	—	—	38,268	314		38,582
Automobile
By delinquency status:
Current-29 DPD								6,334		19,682	9,085	5,509	4,857	2,145	—	—		47,612
30-59 DPD								8		158	134	111	168	104	—	—		683
60-89 DPD								—		49	40	32	53	34	—	—		208
90-119 DPD								—		18	13	9	15	10	—	—		65
120-179 DPD								—		—	—	—	—	—	—	—		—
180+ DPD								—		—	—	—	—	—	—	—		—
Total automobile								6,342		19,907	9,272	5,661	5,093	2,293	—	—		48,568
Other revolving credit and installment
By delinquency status:
Current-29 DPD								948		3,580	2,207	1,468	1,298	5,751	17,766	202		33,220
30-59 DPD								1		9	10	12	9	66	19	7		133
60-89 DPD								—		5	6	5	5	32	9	4		66
90-119 DPD								—		4	6	6	6	31	9	3		65
120-179 DPD								—		—	—	—	—	—	15	2		17
180+ DPD								—		—	—	—	—	1	2	7		10
Total other revolving credit and installment								949		3,598	2,229	1,491	1,318	5,881	17,820	225		33,511
Total consumer loans	$	275,579	46,237	36,700	62,286	40,266	461,068	$	21,555	82,693	36,793	43,712	48,161	115,472	83,479	10,243		442,108

(continued on following page)

Note 6: Loans and Related Allowance for Credit Losses (continued)

(continued from previous page)



	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Credit card	Automobile	Other revolving credit and installment	Total
December 31, 2019
By delinquency status:
Current-29 DPD	$	279,722	28,870	39,935	46,650	33,981	429,158
30-59 DPD	1,136		216	311	882	140	2,685
60-89 DPD	404		115	221	263	81	1,084
90-119 DPD	197		69	202	77	74	619
120-179 DPD	160		71	343	1	18	593
180+ DPD	503		155	1	—	10	669
Government insured/guaranteed loans (2)	10,999		—	—	—	—	10,999
Loans held at fair value	171		—	—	—	—	171
Total consumer loans (excluding PCI)	293,292		29,496	41,013	47,873	34,304	445,978
Total consumer PCI loans (carrying value) (3)	555		13	—	—	—	568
Total consumer loans	$	293,847	29,509	41,013	47,873	34,304	446,546


(1)	Disclosure is not comparative due to our adoption of CECL on January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies).


(2)	Represents loans whose repayments are predominantly insured by the ~~FHA~~Federal Housing Administration (FHA) or guaranteed by the ~~VA.~~Department of Veterans Affairs (VA). Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled $~~8.8~~6.1 billion at ~~September 30, 2017~~March 31, 2020, compared with $~~10.1~~6.4 billion at December 31, ~~2016~~2019.


(3)	26% of the adjusted unpaid principal balance for consumer PCI loans was 30+ DPD at December 31, 2019.

Of the ~~$3.0~~$2.0 billion of consumer loans not government insured/guaranteed that are 90 days or more past due at ~~September 30, 2017, $923~~March 31, 2020, $828 million was accruing, compared with ~~$3.5~~$1.9 billion past due and ~~$908~~$855 million accruing at December 31, ~~2016.~~2019.

Real estate 1-4 family first mortgage loans 180 days or more past due totaled $1.2 billion, or 0.4% of total first mortgages (excluding PCI), at September 30, 2017, compared with $1.7 billion, or 0.6%, at December 31, 2016.

~~Note 5: Loans and Allowance for Credit Losses (continued~~)

Table ~~5.11~~6.11 provides a breakdown of our consumer portfolio by FICO. The September 30, 2017 FICO scores for real estate 1-4 family first and junior lien mortgages reflect a new FICO score version we adopted in first quarter 2017 to monitor and manage those portfolios. In general the impact for us is a shift to higher scores, particularly to the 800+ level, as the new FICO score version utilizes a more refined approach that better distinguishes borrower credit risk. Most Substantially allof the scored consumer portfolio has

an updated FICO of 680 and above, reflecting a strong current borrower credit profile. FICO is not available for certain loan types, or may not be required if we deem it unnecessary due to strong collateral and other borrower attributes. Loans not requiring a FICO score totaled $8.9 billion and $9.1 billion at March 31, 2020 and December 31, 2019, respectively. Substantially all loans not requiring a FICO score are securities-based loans originated through retail ~~brokerage, and totaled $8.1 billion at September 30, 2017, and $8.0 billion at December 31, 2016.~~brokerage.

Table ~~5.11:~~6.11:Consumer ~~Loans~~Loan Categories by FICO and Vintage(1)


								Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	Real estate 1-4 family first mortgage (1)		Real estate 1-4 family junior lien mortgage (1)	Credit card	Automobile	Other revolving credit and installment (1)	Total	2020		2019	2018	2017	2016	Prior	Revolving loans		Total
September 30, 2017
March 31, 2020																Revolving loans converted to term loans
By FICO:
Real estate 1-4 family first mortgage
< 600								$	2	27	43	60	92	2,643	209	229		3,305
600-639								10		105	67	68	128	1,663	148	115		2,304
640-679								80		481	297	311	368	3,075	298	171		5,081
680-719								458		1,870	905	1,181	1,301	5,847	665	264		12,491
720-759								1,896		6,104	2,198	2,901	3,147	9,491	1,024	291		27,052
760-799								6,242		16,885	5,542	7,135	7,458	15,595	1,609	298		60,764
800+								5,522		33,344	15,917	24,461	28,544	55,278	3,824	512		167,402
No FICO available								45		296	122	123	173	2,249	286	388		3,682
Government insured/guaranteed loans (2)								1		32	150	271	498	9,887	—	—		10,839
Total real estate 1-4 family first mortgage								14,256		59,144	25,241	36,511	41,709	105,728	8,063	2,268		292,920
Real estate 1-4 family junior lien mortgage
< 600								—		—	—	—	—	133	370	611		1,114
600-639								—		—	—	—	—	82	310	361		753
640-679								—		—	—	—	—	134	686	610		1,430
680-719								—		—	—	—	—	250	1,697	1,102		3,049
720-759								—		—	—	—	—	274	2,751	1,243		4,268
760-799								—		—	—	—	—	228	3,785	1,198		5,211
800+								—		—	—	—	—	359	9,220	2,009		11,588
No FICO available								8		44	51	49	41	110	509	302		1,114
Total real estate 1-4 family junior lien mortgage								8		44	51	49	41	1,570	19,328	7,436		28,527
Credit Card
< 600								—		—	—	—	—	—	3,117	119		3,236
600-639								—		—	—	—	—	—	2,657	49		2,706
640-679								—		—	—	—	—	—	6,291	61		6,352
680-719								—		—	—	—	—	—	9,324	53		9,377
720-759								—		—	—	—	—	—	7,866	24		7,890
760-799								—		—	—	—	—	—	5,176	6		5,182
800+								—		—	—	—	—	—	3,678	1		3,679
No FICO available								—		—	—	—	—	—	159	1		160
Total credit card								—		—	—	—	—	—	38,268	314		38,582
Automobile
< 600								419		2,045	1,163	825	1,082	541	—	—		6,075
600-639								687		1,849	715	425	453	216	—	—		4,345
640-679								1,031		2,830	1,168	644	596	262	—	—		6,531
680-719								1,104		3,383	1,549	885	749	318	—	—		7,988
720-759								1,045		3,334	1,554	911	723	312	—	—		7,879
760-799								991		3,335	1,533	890	652	270	—	—		7,671
800+								1,065		3,112	1,580	1,064	808	349	—	—		7,978
No FICO available								—		19	10	17	30	25	—	—		101
Total automobile								6,342		19,907	9,272	5,661	5,093	2,293	—	—		48,568
Other revolving credit and installment
< 600	$	5,416	1,842	3,436	9,245	871	20,810	3		49	65	50	47	204	219	27		664
600-639	3,630		1,313	2,970	5,961	919	14,793	12		66	59	40	41	198	188	15		619
640-679	7,123		2,512	5,468	8,146	1,994	25,243	51		226	169	105	96	410	525	23		1,605
680-719	15,039		5,001	7,300	9,189	3,696	40,225	124		472	310	195	172	719	1,005	29		3,026
720-759	28,453		6,506	7,721	8,018	5,203	55,901	191		683	399	248	226	969	1,169	28		3,913
760-799	54,885		7,561	6,108	6,612	6,493	81,659	249		857	445	288	265	1,179	1,524	18		4,825
800+	133,164		15,574	2,880	7,987	8,620	168,225	274		1,024	621	452	453	2,118	2,690	44		7,676
No FICO available	5,556		814	366	297	2,761	9,794	45		221	161	113	18	84	1,564	41		2,247
FICO not required	—		—	—	—	8,137	8,137	—		—	—	—	—	—	8,936	—		8,936
Government insured/guaranteed loans (2)	13,606		—	—	—	—	13,606
Total consumer loans (excluding PCI)	266,872		41,123	36,249	55,455	38,694	438,393
Total consumer PCI loans (carrying value)	13,301		29	—	—	—	13,330
Total other revolving credit and installment								949		3,598	2,229	1,491	1,318	5,881	17,820	225		33,511
Total consumer loans	$	280,173	41,152	36,249	55,455	38,694	451,723	$	21,555	82,693	36,793	43,712	48,161	115,472	83,479	10,243		442,108
December 31, 2016
By FICO:
< 600	$	6,720	2,591	3,475	9,934	976	23,696
600-639	5,400		1,917	3,109	6,705	1,056	18,187
640-679	10,975		3,747	5,678	10,204	2,333	32,937
680-719	23,300		6,432	7,382	11,233	4,302	52,649
720-759	38,832		9,413	7,632	8,769	5,869	70,515
760-799	103,608		14,929	6,191	8,164	8,348	141,240
800+	49,508		6,391	2,868	6,856	6,434	72,057
No FICO available	5,613		781	365	421	2,906	10,086
FICO not required	—		—	—	—	8,042	8,042
Government insured/guaranteed loans (2)	15,605		—	—	—	—	15,605
Total consumer loans (excluding PCI)	259,561		46,201	36,700	62,286	40,266	445,014
Total consumer PCI loans (carrying value)	16,018		36	—	—	—	16,054
Total consumer loans	$	275,579	46,237	36,700	62,286	40,266	461,068

(continued on next page)

Note 6: Loans and Related Allowance for Credit Losses (continued)

(continued from prior page)



	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Credit card	Automobile	Other revolving credit and installment	Total
December 31, 2019
By FICO:
< 600	$	3,264	1,164	3,373	6,041	704	14,546
600-639	2,392		782	2,853	4,230	670	10,927
640-679	5,068		1,499	6,626	6,324	1,730	21,247
680-719	12,844		3,192	9,732	7,871	3,212	36,851
720-759	27,879		4,407	8,376	7,839	4,097	52,598
760-799	61,559		5,483	5,648	7,624	4,915	85,229
800+	165,460		11,851	4,037	7,900	7,585	196,833
No FICO available	3,656		1,118	368	44	2,316	7,502
FICO not required	—		—	—	—	9,075	9,075
Government insured/guaranteed loans (2)	11,170		—	—	—	—	11,170
Total consumer loans (excluding PCI)	293,292		29,496	41,013	47,873	34,304	445,978
Total consumer PCI loans (carrying value) (3)	555		13	—	—	—	568
Total consumer loans	$	293,847	29,509	41,013	47,873	34,304	446,546


(1)	~~The~~ ~~September 30, 2017, amounts reflect updated FICO score version implemented in first quarter 2017.~~ Disclosure is not comparative due to our adoption of CECL on January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies).


(2)	Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.


(3)	41% of the adjusted unpaid principal balance for consumer PCI loans had FICO scores less than 680 and 19% where no FICO was available to us at December 31, 2019.

LTV refers to the ratio comparing the loan’s unpaid principal balance to the property’s collateral value. CLTV refers to the combination of first mortgage and junior lien mortgage (including unused line amounts for credit line products) ratios. LTVs and CLTVs are updated quarterly using a cascade approach which first uses values provided by automated valuation models (AVMs) for the property. If an AVM is not available, then the value is estimated using the original appraised value adjusted by the change in Home Price Index (HPI) for the property location. If an HPI is not available, the original appraised value is used. The HPI value is normally the only method considered for high value properties, generally with an original value of $1 million or more, as the AVM values have proven less accurate for these properties.

Table ~~5.12~~6.12 shows the most updated LTV and CLTV distribution of the real estate 1-4 family first and junior lien mortgage loan portfolios. We consider the trends in residential real estate markets as we monitor credit risk and establish our allowance for credit losses. In the event of a default, any loss should be limited to the portion of the loan amount in excess of the net realizable value of the underlying real estate collateral value. Certain loans do not have an LTV or CLTV due to industry data availability and portfolios acquired from or serviced by other institutions.

Table ~~5.12:~~6.12:Consumer ~~Loans~~Loan Categories by LTV/CLTV and Vintage(1)


	September 30, 2017				December 31, 2016			Term loans by origination year							Revolving loans		Revolving loans converted to term loans
(in millions)	Real estate 1-4 family first mortgage by LTV		Real estate 1-4 family junior lien mortgage by CLTV	Total	Real estate 1-4 family first mortgage by LTV	Real estate 1-4 family junior lien mortgage by CLTV	Total	2020		2019	2018	2017	2016	Prior			Revolving loans converted to term loans	Total
March 31, 2020															Revolving loans
Real estate 1-4 family first mortgage
By LTV/CLTV:
0-60%	$	130,463	16,168	146,631	121,430	16,464	137,894	$	4,143	16,842	8,032	14,961	22,878	76,122	5,503		1,644		150,125
60.01-80%	104,674		13,447	118,121	101,726	15,262	116,988	9,526		34,239	14,133	19,674	17,326	17,228	1,672		401		114,199
80.01-100%	14,179		7,136	21,315	15,795	8,765	24,560	544		7,791	2,714	1,412	814	1,757	585		155		15,772
100.01-120% (1)	2,000		2,746	4,746	2,644	3,589	6,233
> 120% (1)	840		1,154	1,994	1,066	1,613	2,679
100.01-120% (2)								—		80	96	86	72	310	169		39		852
> 120% (2)								—		47	29	27	29	124	71		14		341
No LTV/CLTV available	1,110		472	1,582	1,295	508	1,803	42		113	87	80	92	300	63		15		792
Government insured/guaranteed loans (2)	13,606		—	13,606	15,605	—	15,605
Government insured/guaranteed loans (3)								1		32	150	271	498	9,887	—		—		10,839
Total real estate 1-4 family first mortgage								14,256		59,144	25,241	36,511	41,709	105,728	8,063		2,268		292,920
Real estate 1-4 family junior lien mortgage
By LTV/CLTV:
0-60%								—		—	—	—	—	634	9,526		4,023		14,183
60.01-80%								—		—	—	—	—	450	6,827		2,055		9,332
80.01-100%								—		—	—	—	—	290	2,165		971		3,426
100.01-120% (2)								—		—	—	—	—	102	566		262		930
> 120% (2)								—		—	—	—	—	33	216		80		329
No LTV/CLTV available								8		44	51	49	41	61	28		45		327
Total real estate 1-4 family junior lien mortgage								8		44	51	49	41	1,570	19,328		7,436		28,527
Total								$	14,264	59,188	25,292	36,560	41,750	107,298	27,391		9,704		321,447
December 31, 2019															Real estate 1-4 family first mortgage by LTV		Real estate 1-4 family junior lien mortgage by CLTV		Total
By LTV/CLTV:
0-60%															$	151,478	14,603		166,081
60.01-80%															114,795		9,663		124,458
80.01-100%															13,867		3,574		17,441
100.01-120% (2)															860		978		1,838
> 120% (2)															338		336		674
No LTV/CLTV available															784		342		1,126
Government insured/guaranteed loans (3)															11,170		—		11,170
Total consumer loans (excluding PCI)	266,872		41,123	307,995	259,561	46,201	305,762								293,292		29,496		322,788
Total consumer PCI loans (carrying value)	13,301		29	13,330	16,018	36	16,054
Total consumer PCI loans (carrying value) (4)															555		13		568
Total consumer loans	$	280,173	41,152	321,325	275,579	46,237	321,816								$	293,847	29,509		323,356


(1)	Disclosure is not comparative due to our adoption of CECL on January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies).


(2)	Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV.


~~(2)~~(3)	Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.


(4)	9% of the adjusted unpaid principal balance for consumer PCI loans have LTV/CLTV amounts greater than 80% at December 31, 2019.

Note 6: Loans and Related Allowance for Credit Losses (continued)

NONACCRUAL LOANSTable ~~5.13~~6.13 provides loans on nonaccrual status. ~~PCI~~In connection with our adoption of CECL, nonaccrual loans ~~are excluded~~may have an allowance for credit losses or a negative allowance for credit losses from ~~this table because they continue to earn interest fromaccretable yield, independent~~expected recoveries of ~~performance in accordance with their contractual terms.~~amounts previously written off.

Table ~~5.13:~~6.13:Nonaccrual Loans(1)


				Amortized cost
(in millions)	Sep 30, 2017		Dec 31, 2016	Nonaccrual loans		Nonaccrual loans without related allowance for credit losses (2)	Recognized interest income
March 31, 2020
Commercial:
Commercial and industrial	$	2,397	3,216	$	1,779	243	16
Real estate mortgage	593		685	944		194	8
Real estate construction	38		43	21		5	4
Lease financing	81		115	131		10	—
Total commercial	3,109		4,059	2,875		452	28
Consumer:
Real estate 1-4 family first mortgage (1)	4,213		4,962
Real estate 1-4 family first mortgage				2,372		1,382	44
Real estate 1-4 family junior lien mortgage	1,101		1,206	769		431	16
Automobile	137		106	99		—	3
Other revolving credit and installment	59		51	41		—	1
Total consumer (2)	5,510		6,325
Total consumer				3,281		1,813	64
Total nonaccrual loans				$	6,156	2,265	92
December 31, 2019
Commercial:
Commercial and industrial				$	1,545
Real estate mortgage				573
Real estate construction				41
Lease financing				95
Total commercial				2,254
Consumer:
Real estate 1-4 family first mortgage				2,150
Real estate 1-4 family junior lien mortgage				796
Automobile				106
Other revolving credit and installment				40
Total consumer				3,092
Total nonaccrual loans (excluding PCI)	$	8,619	10,384	$	5,346


(1)	~~Includes MHFS~~Disclosure is not comparative due to our adoption of ~~$133 million~~ ~~and~~ ~~$149 million~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively.~~ CECL on January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies).


(2)	~~Includes~~Nonaccrual loans may not have an ~~incremental~~ ~~$171 million~~ ~~of nonaccrual loans at September 30, 2017, reflecting updated industry regulatory guidance related to loans in bankruptcy.~~ allowance for credit losses if the loss expectations are zero given solid collateral value.

LOANS IN PROCESS OF FORECLOSUREOur recorded investment in consumer mortgage loans collateralized by residential real estate property that are in process of foreclosure was ~~$6.7~~$3.4 billion and ~~$8.1~~$3.5 billion at ~~September 30, 2017~~March 31, 2020, and December 31, ~~2016,~~2019, respectively, which included ~~$4.1~~$2.7 billion and ~~$4.8~~$2.8 billion, respectively, of loans that are government insured/guaranteed. WeUnder the Consumer Financial Protection Bureau guidelines, we do not commence the foreclosure process on ~~consumer~~ real estate 1-4 family mortgage loans ~~when a borrower becomes~~until after the loan is 120 days ~~delinquent in accordance with Consumer Finance Protection Bureau Guidelines.~~delinquent. Foreclosure procedures and timelines vary depending on whether the property address resides in a judicial or non-judicial state. Judicial states require the foreclosure to be processed through the state’s courts while non-judicial states are processed without court intervention. Foreclosure timelines vary according to state law. In connection with our actions to support customers during the COVID-19 pandemic, we have suspended certain mortgage foreclosure activities.

~~Note 5: Loans and Allowance for Credit Losses (continued~~)

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUINGCertain loans 90 days or more past due ~~as to interest or principal~~ are still accruing, because they are (1) well-secured and in the process of collection or (2) real estate 1-4 family mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. PCI loans of $1.4 billion at September 30, 2017, and $2.0 billion at December 31, 2016, are not included in these past due and still accruing loans even when they are 90 days or more contractually past due. These PCI loans are considered to be accruing~~because they continue to earn interest from accretable yield, independent of performance in accordance with their contractual terms.~~

Table ~~5.14~~6.14 shows ~~non-PCI~~ loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed.

Table ~~5.14:~~6.14:Loans 90 Days or More Past Due and Still Accruing


(in millions)	Sep 30, 2017		Dec 31, 2016	Mar 31, 2020		Dec 31, 2019
Total (excluding PCI):	$	10,227	11,858
Less: FHA insured/guaranteed by the VA (1)(2)	9,266		10,883
Less: Student loans guaranteed under the Federal Family Education Loan Program (FFELP) (3)	—		3
Total:				$	7,023	7,285
Less: FHA insured/VA guaranteed (1)				6,142		6,352
Total, not government insured/guaranteed	$	961	972	$	881	933
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial	$	27	28	$	24	47
Real estate mortgage	11		36	28		31
Real estate construction				1		—
Total commercial	38		64	53		78
Consumer:
Real estate 1-4 family first mortgage ~~(2)~~	190		175	128		112
Real estate 1-4 family junior lien mortgage ~~(2)~~	49		56	25		32
Credit card	475		452	528		546
Automobile	111		112	69		78
Other revolving credit and installment	98		113	78		87
Total consumer	923		908	828		855
Total, not government insured/guaranteed	$	961	972	$	881	933


(1)	Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.


~~(2)~~	~~Includes mortgages held for sale 90 days or more past due and still accruing.~~


~~(3)~~	Represents loans whose repayments are largely guaranteed by agencies on behalf of the U.S. Department of Education under the FFELP. All remaining student loans guaranteed under the FFELP were sold as of March 31, 2017.

Note 6: Loans and Related Allowance for Credit Losses (continued)

IMPAIRED LOANS In connection with our adoption of CECL, we no longer provide information on impaired loans. We have retained impaired loans information for the period ended December 31, 2019. Table ~~5.15~~6.15 summarizes key information for impaired loans. Our impaired loans at December 31, 2019, predominantly ~~include~~included loans on nonaccrual status in the commercial portfolio segment and loans modified in a TDR, whether on accrual or nonaccrual status. ~~These impaired~~Impaired loans generally ~~have~~had estimated losses which are included in the allowance for credit losses. We did have impaired loans with no allowance for credit losses when the loss

content has been previously recognized through charge-offs, ~~and we do not anticipate additional charge-offs~~such as collateral dependent loans, or ~~losses, or certain~~

when loans are currently performing in accordance with their terms and ~~for which~~ no loss has been estimated. Impaired loans ~~exclude~~excluded PCI ~~loans.~~ loans and loans that had been fully charged off or otherwise had zero recorded investment.

Table ~~5.15 includes~~6.15 included trial modifications that totaled ~~$183 million at September 30, 2017, and $299~~$115 million at December 31, ~~2016.~~2019.

For additional information on our legacy impaired loans and allowance for credit losses, see Note 1 (Summary of Significant Accounting Policies) in our ~~2016~~2019 Form 10-K.

Table ~~5.15:~~6.15:Impaired Loans Summary


			Recorded investment					Recorded investment
(in millions)	Unpaid principal balance (1)		Impaired loans	Impaired loans with related allowance for credit losses	Related allowance for credit losses	Unpaid principal balance		Impaired loans	Impaired loans with related allowance for credit losses	Related allowance for credit losses
September 30, 2017
December 31, 2019
Commercial:
Commercial and industrial	$	4,259	3,098	2,779	518	$	2,792	2,003	1,903	311
Real estate mortgage	1,541		1,263	1,243	230	1,137		974	803	110
Real estate construction	87		53	53	11	81		51	41	11
Lease financing	143		107	107	27	131		105	105	35
Total commercial	6,030		4,521	4,182	786	4,141		3,133	2,852	467
Consumer:
Real estate 1-4 family first mortgage	14,635		12,756	6,353	781	8,107		7,674	4,433	437
Real estate 1-4 family junior lien mortgage	2,206		1,981	1,466	237	1,586		1,451	925	144
Credit card	341		340	340	129	520		520	520	209
Automobile	158		88	33	5	138		81	42	8
Other revolving credit and installment	134		126	115	31	178		171	155	49
Total consumer ~~(2)~~(1)	17,474		15,291	8,307	1,183	10,529		9,897	6,075	847
Total impaired loans (excluding PCI)	$	23,504	19,812	12,489	1,969	$	14,670	13,030	8,927	1,314
December 31, 2016
Commercial:
Commercial and industrial	$	5,058	3,742	3,418	675
Real estate mortgage	1,777		1,418	1,396	280
Real estate construction	167		93	93	22
Lease financing	146		119	119	23
Total commercial	7,148		5,372	5,026	1,000
Consumer:
Real estate 1-4 family first mortgage	16,438		14,362	9,475	1,117
Real estate 1-4 family junior lien mortgage	2,399		2,156	1,681	350
Credit card	300		300	300	104
Automobile	153		85	31	5
Other revolving credit and installment	109		102	91	17
Total consumer (2)	19,399		17,005	11,578	1,593
Total impaired loans (excluding PCI)	$	26,547	22,377	16,604	2,593


(1)	~~Excludes the unpaid principal balance for loans that have been fully charged off or otherwise have zero recorded investment.~~

~~(2)~~

~~Includes~~Included the recorded investment of $~~1.4~~1.2 billion ~~and~~ ~~$1.5 billion~~ at ~~September 30, 2017~~ ~~and~~ December 31, ~~2016, respectively,~~2019 of government insured/guaranteed loans that are predominantly insured by the FHA or guaranteed by the VA and generally do not have an ~~allowance.~~ACL. Impaired loans may also have limited, if any, ~~allowance~~ACL when the recorded investment of the loan approximates estimated net realizable value as a result of charge-offs prior to a TDR modification.

~~Note 5: Loans and Allowance for Credit Losses (continued~~)

~~Commitments to lend additional funds on loans whose terms have been modified in a TDRamounted to $628 million and $403 million at September 30, 2017 and December 31, 2016, respectively.~~

Table ~~5.16~~6.16 provides the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans by portfolio segment and class.

Table ~~5.16:~~6.16:Average Recorded Investment in Impaired Loans



	Year ended December 31,
	2019
(in millions)	Average recorded investment		Recognized interest income
Commercial:
Commercial and industrial	$	2,150	129
Real estate mortgage	1,067		59
Real estate construction	52		6
Lease financing	93		1
Total commercial	3,362		195
Consumer:
Real estate 1-4 family first mortgage	9,031		506
Real estate 1-4 family junior lien mortgage	1,586		99
Credit card	488		64
Automobile	84		12
Other revolving credit and installment	162		13
Total consumer	11,351		694
Total impaired loans (excluding PCI)	$	14,713	889



Interest income:
Cash basis of accounting	$	241
Other (1)	648
Total interest income	$	889

Quarter ended September 30, Nine months ended September 30,
2017 2016 2017 2016
(in millions)
Average
recorded
investment

Recognized
interest
income

Average
recorded
investment

Recognized
interest
income

Average
recorded
investment

Recognized
interest
income

Average
recorded
investment

Recognized
interest
income

Commercial:
Commercial and industrial $ 3,208
22
3,961
25
3,460
91
3,350
65
Real estate mortgage 1,293
19
1,644
33
1,351
70
1,699
99
Real estate construction 58
—
108
3
69
3
117
8
Lease financing 105
1
99
—
110
1
89
—
Total commercial 4,664
42
5,812
61
4,990
165
5,255
172
Consumer:
Real estate 1-4 family first mortgage 13,044
180
15,471
203
13,594
555
16,224
635
Real estate 1-4 family junior lien mortgage 2,009
30
2,268
32
2,072
92
2,327
99
Credit card 326
9
292
9
314
26
294
26
Automobile 86
2
90
3
84
8
95
9
Other revolving credit and installment 123
2
91
2
114
6
84
5
Total consumer 15,588
223
18,212
249
16,178
687
19,024
774
Total impaired loans (excluding PCI) $ 20,252
265
24,024
310
21,168
852
24,279
946
Interest income:
Cash basis of accounting $ 64
87
219
274
Other (1) 201
223
633
672
Total interest income $ 265
310
852
946


(1)	~~Includes~~Included interest recognized on accruing TDRs, interest recognized related to certain impaired loans which have an allowance calculated using discounting, and amortization of purchase accounting adjustments related to certain impaired loans.

TROUBLED DEBT RESTRUCTURINGS (TDRs) When, for economic or legal reasons related to a borrower’s financial difficulties, we grant a concession for other than an insignificant period of time to a borrower that we would not otherwise consider, the related loan is classified as a TDR, the balance of which totaled ~~$18.7~~$11.6 billion and ~~$20.8~~$11.8 billion at ~~September 30, 2017~~March 31, 2020, and December 31, ~~2016,~~2019, respectively. We do not consider loan resolutions such as foreclosure or short sale to be a TDR. In addition, COVID-related modifications are generally not classified as TDRs due to the relief under the CARES Act. For more information on the TDR relief, see Note 1 (Summary of Significant Accounting Policies).

We may require some consumer borrowers experiencing financial difficulty to make trial payments generally for a period of three to four months, according to the terms of a planned permanent modification, to determine if they can perform according to those terms. These arrangements represent trial modifications, which we classify and account for as TDRs. While loans are in trial payment programs, their original terms are not considered modified and they continue to advance through delinquency status and accrue interest according to their original terms.

Commitments to lend additional funds on loans whose terms have been modified in a TDR amounted to $403 million and $500 million at March 31, 2020, and December 31, 2019, respectively.

Note 6: Loans and Related Allowance for Credit Losses (continued)

Table ~~5.17~~6.17 summarizes our TDR modifications for the periods presented by primary modification type and includes the financial effects of these modifications. For those loans that modify more than once, the table reflects each modification that

occurred during the period. Loans that both modify and pay off

within the period, as well as changes in recorded investment during the period for loans modified in prior periods, are not included in the table.

~~Table 5.17:TDR Modifications~~

Primary modification type (1) Financial effects of modifications
(in millions) Principal (2)

Interest
rate
reduction

Other
concessions (3)

Total

Charge-
offs (4)

Weighted
average
interest
rate
reduction

Recorded
investment
related to
interest rate
reduction (5)

Quarter ended September 30, 2017
Commercial:
Commercial and industrial $ —
19
481
500
60
0.34 % $ 18
Real estate mortgage 1
12
98
111
7
1.58
13
Real estate construction —
—
1
1
—
1.85
—
Lease financing —
—
23
23
—
—
—
Total commercial 1
31
603
635
67
0.85
31
Consumer:
Real estate 1-4 family first mortgage 48
15
272
335
2
2.62
41
Real estate 1-4 family junior lien mortgage 3
23
20
46
4
3.97
26
Credit card —
74
—
74
—
12.00
74
Automobile 1
4
20
25
12
5.53
4
Other revolving credit and installment —
11
1
12
—
7.72
12
Trial modifications (6) —
—
(10 ) (10 ) —
—
—
Total consumer 52
127
303
482
18
7.68
157
Total $ 53
158
906
1,117
85
6.56 % $ 188
Quarter ended September 30, 2016
Commercial:
Commercial and industrial $ —
10
1,032
1,042
61
1.28 % $ 10
Real estate mortgage —
28
168
196
1
0.99
29
Real estate construction —
12
—
12
—
0.80
12
Lease financing —
—
4
4
—
—
—
Total commercial —
50
1,204
1,254
62
1.01
51
Consumer:
Real estate 1-4 family first mortgage 84
79
330
493
11
2.56
138
Real estate 1-4 family junior lien mortgage 5
25
22
52
9
3.08
29
Credit card —
46
—
46
—
12.13
46
Automobile 1
4
15
20
11
6.42
4
Other revolving credit and installment —
9
3
12
—
6.86
9
Trial modifications (6) —
—
15
15
—
—
—
Total consumer 90
163
385
638
31
4.82
226
Total $ 90
213
1,589
1,892
93
4.13 % $ 277

~~Note 5: Loans and Allowance for Credit Losses (continued~~)

Table 6.17:TDR Modifications


	Primary modification type (1)							Financial effects of modifications					Primary modification type (1)					Financial effects of modifications
(in millions)	Principal (2)		Interest rate reduction	Other concessions (3)		Total		Charge- offs (4)	Weighted average interest rate reduction		Recorded investment related to interest rate reduction (5)
Nine months ended September 30, 2017
($ in millions)													Principal (2)		Interest rate reduction	Other concessions (3)	Total	Charge- offs (4)	Weighted average interest rate reduction		Recorded investment related to interest rate reduction (5)
Quarter ended March 31, 2020
Commercial:
Commercial and industrial	$	17	38	2,323		2,378		154	0.61	%	$	37	$	18	15	314	347	44	0.65	%	$	15
Real estate mortgage	5		51	416		472		20	1.31		52		—		13	152	165	—	0.97		13
Real estate construction	—		1	24		25		—	0.90		1		—		—	6	6	—	2.49		—
Lease financing	—		—	37		37		—	—		—		—		—	—	—	—	—		—
Total commercial	22		90	2,800		2,912		174	1.02		90		18		28	472	518	44	0.82		28
Consumer:
Real estate 1-4 family first mortgage	196		132	797		1,125		14	2.59		227		21		3	166	190	—	1.63		17
Real estate 1-4 family junior lien mortgage	23		70	64		157		13	3.26		80		1		6	14	21	—	2.38		6
Credit card	—		188	—		188		—	12.21		188		—		95	—	95	—	12.33		95
Automobile	2		11	52		65		30	5.92		11		2		2	10	14	6	4.69		2
Other revolving credit and installment	—		38	5		43		1	7.41		38		—		12	2	14	—	8.22		12
Trial modifications (6)	—		—	(54	)	(54	)	—	—		—		—		—	2	2	—	—		—
Total consumer	221		439	864		1,524		58	6.41		544		24		118	194	336	6	10.00		132
Total	$	243	529	3,664		4,436		232	5.64	%	$	634	$	42	146	666	854	50	8.38	%	$	160
Nine months ended September 30, 2016
Quarter ended March 31, 2019
Commercial:
Commercial and industrial	$	42	123	2,361		2,526		304	1.95	%	$	123	$	—	11	554	565	13	0.68	%	$	11
Real estate mortgage	—		81	462		543		1	1.14		81		—		2	73	75	—	0.95		2
Real estate construction	—		26	62		88		—	0.94		26		—		—	3	3	—	—		—
Lease financing	—		—	8		8		—	—		—		—		—	—	—	—	—		—
Total commercial	42		230	2,893		3,165		305	1.55		230		—		13	630	643	13	0.73		13
Consumer:
Real estate 1-4 family first mortgage	272		222	1,094		1,588		36	2.66		395		35		3	294	332	1	1.95		19
Real estate 1-4 family junior lien mortgage	17		81	82		180		30	3.03		96		2		11	25	38	1	2.29		12
Credit card	—		131	—		131		—	12.02		131		—		97	—	97	—	13.20		97
Automobile	2		11	44		57		27	6.45		11		2		1	12	15	6	5.38		1
Other revolving credit and installment	—		25	8		33		1	6.64		25		—		11	3	14	—	7.58		11
Trial modifications (6)	—		—	47		47		—	—		—		—		—	—	—	—	—		—
Total consumer	291		470	1,275		2,036		94	4.80		658		39		123	334	496	8	10.27		140
Total	$	333	700	4,168		5,201		399	3.96	%	$	888	$	39	136	964	1,139	21	9.44	%	$	153

(1)

Amounts represent the recorded investment in loans after recognizing the effects of the TDR, if any. TDRs may have multiple types of concessions, but are presented only once in the first modification type based on the order presented in the table above. The reported amounts include loans remodified of $~~394~~263 million and $~~484~~360 million for the ~~quarters ended~~ ~~September 30, 2017~~first quarter of 2020 and ~~2016, and~~ ~~$1.7 billion~~ ~~and~~ ~~$1.1 billion, for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016~~2019, respectively.


(2)	Principal modifications include principal forgiveness at the time of the modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with a zero percent contractual interest rate.


(3)	Other concessions include loans discharged in bankruptcy, loan renewals, term extensions and other interest and noninterest adjustments, but exclude modifications that also forgive principal and/or reduce the contractual interest rate.

(4)

Charge-offs include write-downs of the investment in the loan in the period it is contractually modified. The amount of charge-off will differ from the modification terms if the loan has been charged down prior to the modification based on our policies. In addition, there may be cases where we have a charge-off/down with no legal principal modification. Modifications resulted in deferring or legally forgiving principal (actual ~~contingent~~ or ~~deferred)~~contingent) of $429 million and $163 million for the ~~quarters ended~~ ~~September 30~~, ~~2017~~first quarter of 2020 and ~~2016, and~~ ~~$23 million~~ ~~and~~ ~~$54 million~~ ~~for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016~~2019, respectively.


(5)	Reflects the effect of reduced interest rates on loans with an interest rate concession as one of ~~their~~its concession types, which includes loans reported as a principal primary modification type that also have an interest rate concession.

(6)

Trial modifications are granted a delay in payments due under the original terms during the trial payment period. However, these loans continue to advance through delinquency status and accrue interest according to their original terms. Any subsequent permanent modification generally includes interest rate related concessions; however, the exact concession type and resulting financial effect are usually not known until the loan is permanently modified. Trial modifications for the period are presented net of previously reported trial modifications that became permanent in the current period.

Table ~~5.18~~6.18 summarizes permanent modification TDRs that have defaulted in the current period within 12 months of their permanent modification date. We are reporting these defaulted TDRs based on a payment default definition of 90 days past due for the commercial portfolio segment and 60 days past due for the consumer portfolio segment.

Table ~~5.18:~~6.18:Defaulted TDRs



	Recorded investment of defaults
	Quarter ended March 31,
(in millions)	2020		2019
Commercial:
Commercial and industrial	$	185	23
Real estate mortgage	21		28
Real estate construction	—		3
Total commercial	206		54
Consumer:
Real estate 1-4 family first mortgage	10		11
Real estate 1-4 family junior lien mortgage	2		5
Credit card	26		21
Automobile	2		3
Other revolving credit and installment	1		2
Total consumer	41		42
Total	$	247	96

Recorded investment of defaults
Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
Commercial:
Commercial and industrial $ 14
39
106
84
Real estate mortgage 16
7
47
58
Real estate construction 4
—
4
3
Total commercial 34
46
157
145
Consumer:
Real estate 1-4 family first mortgage 32
36
83
97
Real estate 1-4 family junior lien mortgage 5
6
14
15
Credit card 20
15
52
41
Automobile 4
4
11
10
Other revolving credit and installment 1
—
3
2
Total consumer 62
61
163
165
Total $ 96
107
320
310

~~Purchased Credit-Impaired Loans~~

Substantially all of our PCI loans were acquired from Wachovia on December 31, 2008, at which time we acquired commercial and consumer loans with a carrying value of $18.7 billion and $40.1 billion, respectively. The unpaid principal balance on December 31, 2008 was $98.2 billion for the total of commercial and consumer PCI loans. Table 5.19 presents PCI loans net of any remaining purchase accounting adjustments. Real estate 1-4 family first mortgage PCI loans are predominantly Pick-a-Pay loans.

~~Table 5.19:PCI Loans~~

(in millions) Sep 30,
2017
Dec 31,
2016
Commercial:
Commercial and industrial $ 116
237
Real estate mortgage 108
383
Real estate construction 10
57
Total commercial 234
677
Consumer:
Real estate 1-4 family first mortgage 13,301
16,018
Real estate 1-4 family junior lien mortgage 29
36
Total consumer 13,330
16,054
Total PCI loans (carrying value) $ 13,564
16,731
Total PCI loans (unpaid principal balance) $ 20,023
24,136

Note 7: Leasing Activity (continued)

~~Note 5: Loans and Allowance for Credit Losses (continued~~)

~~ACCRETABLE YIELD~~The excess of cash flows expected to be collected over the carrying value of PCI loans is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the loan, or pools of loans. The accretable yield is affected by:

changes in interest rate indices for variable rate PCI loans – expected future cash flows are based on the variable rates in effect at the time of the regular evaluations of cash flows expected to be collected;

~~changes in prepayment assumptions – prepayments affect the estimated life of PCI loans which may change the amount of interest income, and possibly principal, expected to be collected; and~~

~~changes in the expected principal and interest payments over the estimated weighted-average life – updates to expected cash flows are driven by the credit outlook and actions taken~~

~~with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected.~~

The change in the accretable yield related to PCI loans since the merger with Wachovia is presented in Table 5.20. Changes during the first nine months of 2017 reflect an expectation, as a result of our quarterly evaluation of PCI cash flows, that prepayment of modified Pick-a-Pay loans will increase over their estimated weighted-average life and that expected loss has decreased as a result of reduced loan to value ratios and sustained higher housing prices in addition to improved cash flow timing. Changes during the first nine months of 2017 also reflect a $309 million gain on the sale of $569 million Pick-a-Pay PCI loans in second quarter 2017.

~~Table 5.20:Change in Accretable Yield~~

(in millions) Quarter
ended
Sep 30,
2017
Nine months ended
Sep 30,
2017
2009-2016
Balance, beginning of period $ 9,369
11,216
10,447
Change in accretable yield due to acquisitions —
2
159
Accretion into interest income (1) (340 ) (1,071 ) (15,577 )
Accretion into noninterest income due to sales (2) —
(334 ) (467 )
Reclassification from nonaccretable difference for loans with improving credit-related cash flows 234
640
10,955
Changes in expected cash flows that do not affect nonaccretable difference (3) (20 ) (1,210 ) 5,699
Balance, end of period $ 9,243
9,243
11,216


~~(1)~~	~~Includes accretable yield released as a result of settlements with borrowers, which is included in interest income.~~


~~(2)~~	~~Includes accretable yield released as a result of sales to third parties, which is included in noninterest income.~~


~~(3)~~	Represents changes in cash flows expected to be collected due to the impact of modifications, changes in prepayment assumptions, changes in interest rates on variable rate PCI loans and sales to third parties.

~~COMMERCIAL PCI CREDIT QUALITY INDICATORSTable 5.21 provides a breakdown of commercial PCI loans by risk category.~~

~~Table 5.21:Commercial PCI Loans by Risk Category~~

(in millions)
Commercial
and
industrial

Real
estate
mortgage

Real
estate
construction

Total
September 30, 2017
By risk category:
Pass $ 18
81
4
103
Criticized 98
27
6
131
Total commercial PCI loans $ 116
108
10
234
December 31, 2016
By risk category:
Pass $ 92
263
47
402
Criticized 145
120
10
275
Total commercial PCI loans $ 237
383
57
677

~~Table 5.22 provides past due information for commercial PCI loans.~~

~~Table 5.22:Commercial PCI Loans by Delinquency Status~~

(in millions)
Commercial
and
industrial

Real
estate
mortgage

Real
estate
construction

Total
September 30, 2017
By delinquency status:
Current-29 DPD and still accruing $ 114
87
10
211
30-89 DPD and still accruing 2
—
—
2
90+ DPD and still accruing —
21
—
21
Total commercial PCI loans $ 116
108
10
234
December 31, 2016
By delinquency status:
Current-29 DPD and still accruing $ 235
353
48
636
30-89 DPD and still accruing 2
10
—
12
90+ DPD and still accruing —
20
9
29
Total commercial PCI loans $ 237
383
57
677

~~CONSUMER PCI CREDIT QUALITY INDICATORS~~Our consumer PCI loans were aggregated into several pools of loans at acquisition. Below, we have provided credit quality indicators based on the unpaid principal balance (adjusted for write-downs) of the individual loans included in the pool, but we have not

~~allocated the remaining purchase accounting adjustments, which were established at a pool level. Table 5.23 provides the delinquency status of consumer PCI loans.~~

~~Table 5.23:Consumer PCI Loans by Delinquency Status~~ -

September 30, 2017 December 31, 2016
(in millions)
Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Total

Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Total
By delinquency status:
Current-29 DPD and still accruing $ 13,672
149
13,821
16,095
171
16,266
30-59 DPD and still accruing 1,410
6
1,416
1,488
7
1,495
60-89 DPD and still accruing 605
3
608
668
2
670
90-119 DPD and still accruing 257
1
258
233
2
235
120-179 DPD and still accruing 191
1
192
238
2
240
180+ DPD and still accruing 1,425
5
1,430
2,081
8
2,089
Total consumer PCI loans (adjusted unpaid principal balance) $ 17,560
165
17,725
20,803
192
20,995
Total consumer PCI loans (carrying value) $ 13,301
29
13,330
16,018
36
16,054

~~Note 5: Loans and Allowance for Credit Losses (continued~~)

~~Table 5.24 provides FICO scores forconsumer PCI loans.~~

~~Table 5.24:Consumer PCI Loans by FICO~~

September 30, 2017 (1) December 31, 2016
(in millions)
Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Total

Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Total
By FICO:
< 600 $ 4,175
37
4,212
4,292
46
4,338
600-639 2,153
21
2,174
3,001
26
3,027
640-679 2,496
27
2,523
3,972
35
4,007
680-719 2,359
32
2,391
3,170
37
3,207
720-759 1,840
23
1,863
1,767
24
1,791
760-799 957
13
970
962
15
977
800+ 471
7
478
254
4
258
No FICO available 3,109
5
3,114
3,385
5
3,390
Total consumer PCI loans (adjusted unpaid principal balance) $ 17,560
165
17,725
20,803
192
20,995
Total consumer PCI loans (carrying value) $ 13,301
29
13,330
16,018
36
16,054


~~(1)~~	~~September 30, 2017~~ ~~amounts reflect updated FICO score version implemented in first quarter 2017.~~

~~Table 5.25 shows the distribution of consumer PCIloans by LTV for real estate 1-4 family first mortgages and byCLTV for real estate 1-4 family junior lien mortgages.~~

~~Table 5.25:Consumer PCI Loans by LTV/CLTV~~

September 30, 2017 December 31, 2016
(in millions)
Real estate
1-4 family
first
mortgage
by LTV

Real estate
1-4 family
junior lien
mortgage
by CLTV

Total

Real estate
1-4 family
first
mortgage
by LTV

Real estate
1-4 family
junior lien
mortgage
by CLTV

Total
By LTV/CLTV:
0-60% $ 7,642
41
7,683
7,513
38
7,551
60.01-80% 7,079
66
7,145
9,000
76
9,076
80.01-100% 2,358
42
2,400
3,458
54
3,512
100.01-120% (1) 392
12
404
669
18
687
> 120% (1) 87
3
90
161
5
166
No LTV/CLTV available 2
1
3
2
1
3
Total consumer PCI loans (adjusted unpaid principal balance) $ 17,560
165
17,725
20,803
192
20,995
Total consumer PCI loans (carrying value) $ 13,301
29
13,330
16,018
36
16,054


~~(1)~~	~~Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV.~~

Note 6: ~~Other Assets~~7: Leasing Activity

The information below provides a summary of our leasing activities as a lessor and lessee. See Note 7 (Leasing Activities) in our 2019 Form 10-K for additional information about our leasing activities.

As a Lessor

Table ~~6.1~~7.1 presents the ~~components~~composition of ~~other assets.~~our leasing revenue.

Table ~~6.1:Other Assets~~7.1:Leasing Revenue

(in millions) Sep 30,
2017
Dec 31,
2016
Nonmarketable equity investments:
Cost method:
Federal bank stock $ 5,839
6,407
Private equity 1,428
1,465
Auction rate securities 400
525
Total cost method 7,667
8,397
Equity method:
LIHTC (1) 9,884
9,714
Private equity 3,758
3,635
Tax-advantaged renewable energy 1,954
2,054
New market tax credit and other 291
305
Total equity method 15,887
15,708
Fair value (2) 4,523
3,275
Total nonmarketable equity investments 28,077
27,380
Corporate/bank-owned life insurance 19,479
19,325
Accounts receivable (3) 38,284
31,056
Interest receivable 5,579
5,339
Core deposit intangibles 981
1,620
Customer relationship and other amortized intangibles 918
1,089
Foreclosed assets:
Residential real estate:
Government insured/guaranteed (3) 137
197
Non-government insured/guaranteed 261
378
Non-residential real estate 308
403
Operating lease assets 9,672
10,089
Due from customers on acceptances 228
196
Other 12,352
17,469
Total other assets $ 116,276
114,541



	Quarter ended March 31,
(in millions)	2020			2019
Interest income on lease financing	$	211		223
Other lease revenues:
Variable revenues on lease financing	27			24
Fixed revenues on operating leases	314			373
Variable revenues on operating leases	13			18
Other lease-related revenues (1)	(2		)	28
Lease income	352			443
Total leasing revenue	$	563		666


(1)	~~Represents low income housing tax credit investments.~~Predominantly includes net gains (losses) on disposition of assets leased under operating leases or lease financings.

As a Lessee

Substantially all of our leases are operating leases. Table 7.2 presents balances for our operating leases.

Table 7.2:Operating Lease Right of Use (ROU) Assets and Lease Liabilities



(in millions)	Mar 31, 2020		Dec 31, 2019
ROU assets	$	4,650	4,724
Lease liabilities	5,224		5,297

Table 7.3 provides the composition of our lease costs, which are predominantly included in net occupancy expense.

Table 7.3:Lease Costs



	Quarter ended March 31,
(in millions)	2020			2019
Fixed lease expense – operating leases	$	291		297
Variable lease expense	66			73
Other (1)	(14		)	(8	)
Total lease costs	$	343		362


(1)	Predominantly includes gains recognized from sale leaseback transactions and sublease rental income.

Note 8: Equity Securities

Table 8.1 provides a summary of our equity securities by business purpose and accounting method, including equity securities with readily determinable fair values (marketable) and those without readily determinable fair values (nonmarketable).

Table 8.1: Equity Securities



(in millions)	Mar 31, 2020		Dec 31, 2019
Held for trading at fair value:
Marketable equity securities	$	13,573	27,440
Not held for trading:
Fair value:
Marketable equity securities (1)	7,708		6,481
Nonmarketable equity securities	6,895		8,015
Total equity securities at fair value	14,603		14,496
Equity method:
Low-income housing tax credit investments	11,290		11,343
Private equity	3,351		3,459
Tax-advantaged renewable energy	3,991		3,811
New market tax credit and other	387		387
Total equity method	19,019		19,000
Other:
Federal Reserve Bank stock and other at cost (2)	4,512		4,790
Private equity (3)	2,340		2,515
Total equity securities not held for trading	40,474		40,801
Total equity securities	$	54,047	68,241


(1)	Includes $3.1 billion and $3.8 billion at March 31, 2020, and December 31, 2019, respectively, related to securities held as economic hedges of our deferred compensation plan obligations.


(2)	~~Represents nonmarketable equity~~ Includes $4.5 billion and $4.8 billion at March 31, 2020, and December 31, 2019, respectively, related to investments ~~for which we have elected the fair value option. See Note 13 (Fair Values of Assets~~in Federal Reserve Bank and ~~Liabilities) for additional information.~~Federal Home Loan Bank stock.


(3)	Represents nonmarketable equity securities accounted for under the measurement alternative.

Equity Securities Held for Trading

Equity securities held for trading purposes are marketable equity securities traded on organized exchanges. These securities are held as part of our customer accommodation trading activities. For more information on these activities, see Note 4 (Trading Activities).

Equity Securities Not Held for Trading

We also hold equity securities unrelated to trading activities. These securities include private equity and tax credit investments, securities held as economic hedges or to meet regulatory requirements (for example, Federal Reserve Bank and Federal Home Loan Bank stock).

FAIR VALUEMarketable equity securities held for purposes other than trading partially consist of exchange-traded equity funds held to economically hedge obligations related to our deferred compensation plans and, to a lesser extent, other holdings of publicly traded equity securities held for investment purposes. We account for certain nonmarketable equity securities under the fair value method, and substantially all of these securities are economically hedged with equity derivatives.

EQUITY METHODOur equity method investments consist of tax credit and private equity investments, the majority of which are our low-income housing tax credit (LIHTC) investments.

We invest in affordable housing projects that qualify for the LIHTC, which are designed to promote private development of low-income housing. These investments generate a return mostly through realization of federal tax credit and other tax benefits. In first quarter 2020, we recognized pre-tax losses of $339 million related to our LIHTC investments, compared with $273 million in first quarter 2019. These losses were recognized in other noninterest income. We also recognized total tax benefits of $398 million in first quarter 2020, which included tax credits recorded to income taxes of $314 million. In first quarter 2019, total tax benefits were $370 million, which included tax credits of $302 million. We are periodically required to provide additional financial support during the investment period. A liability is recognized for unfunded commitments that are both legally binding and probable of funding. These commitments are predominantly funded within three years of initial investment. Our liability for these unfunded commitments was $4.2 billion at March 31, 2020, and $4.3 billion at December 31, 2019. This liability for unfunded commitments is included in long-term debt.

OTHERThe remaining portion of our nonmarketable equity securities portfolio consists of securities accounted for using the cost or measurement alternative.

Note 8: Equity Securities (continued)

Realized Gains and Losses Not Held for Trading

Table 8.2 provides a summary of the net gains and losses from equity securities not held for trading. Gains and losses for securities held for trading are reported in net gains from trading activities.

Table 8.2:Net Gains (Losses) from Equity Securities Not Held for Trading



	Quarter ended March 31,
(in millions)	2020			2019
Net gains (losses) from equity securities carried at fair value:
Marketable equity securities	$	(803	)	377
Nonmarketable equity securities	(1,104		)	936
Total equity securities carried at fair value	(1,907		)	1,313
Net gains (losses) from nonmarketable equity securities not carried at fair value:
Impairment write-downs	(935		)	(36	)
Net unrealized gains related to measurement alternative observable transactions	222			185
Net realized gains on sale	—			237
All other	—			—
Total nonmarketable equity securities not carried at fair value	(713		)	386
Net gains (losses) from economic hedge derivatives (1)	1,219			(885	)
Total net gains (losses) from equity securities not held for trading	$	(1,401	)	814


(1)	Includes net gains (losses) on derivatives not designated as hedging instruments.

Measurement Alternative

Table 8.3 provides additional information about the impairment write-downs and observable price adjustments related to

nonmarketable equity securities accounted for under the measurement alternative. Gains and losses related to these adjustments are also included in Table 8.2.

Table 8.3:Net Gains (Losses) from Measurement Alternative Equity Securities



	Quarter ended March 31,
(in millions)	2020			2019
Net gains (losses) recognized in earnings during the period:
Gross unrealized gains due to observable price changes	$	222		185
Gross unrealized losses due to observable price changes	—			—
Impairment write-downs	(354		)	(22	)
Realized net gains from sale	2			23
Total net gains (losses) recognized during the period	$	(130	)	186

Table 8.4 presents cumulative carrying value adjustments to nonmarketable equity securities accounted for under the measurement alternative that were still held at the end of each reporting period presented.

Table 8.4:Measurement Alternative Cumulative Gains (Losses)



(in millions)	Mar 31, 2020			Dec 31, 2019
Cumulative gains (losses):
Gross unrealized gains due to observable price changes	$	1,084		973
Gross unrealized losses due to observable price changes	(42		)	(42	)
Impairment write-downs	(473		)	(134	)

Note 9: Other Assets

Table 9.1 presents the components of other assets.

Table 9.1:Other Assets



(in millions)	Mar 31, 2020		Dec 31, 2019
Corporate/bank-owned life insurance	$	20,128	20,070
Accounts receivable (1)	46,762		29,137
Interest receivable:
AFS and HTM debt securities	1,705		1,729
Loans	3,038		3,099
Trading and other	708		758
Customer relationship and other amortized intangibles	399		423
Foreclosed assets:
Residential real estate:
Government insured/guaranteed (1)	43		50
Non-government insured/guaranteed	137		172
Other	72		81
Operating lease assets (lessor)	8,124		8,221
Operating lease ROU assets (lessee)	4,650		4,724
Due from customers on acceptances	128		253
Other	10,269		10,200
Total other assets	$	96,163	78,917

(1)

Certain government-guaranteed residential real estate mortgage loans upon foreclosure are included in Accounts receivable. ~~Both principal and interest related to these foreclosed real estate assets are collectible because the loans were predominantly insured by the FHA or guaranteed by the VA.~~ For more information, ~~on the classification of certain government-guaranteed mortgage loans upon foreclosure,~~ see Note 1 (Summary of Significant Accounting Policies) ~~to Financial Statements~~ in our ~~2016~~2019 Form 10-K.

~~Table 6.2 presents income (expense) related to nonmarketable equity investments.~~

~~Table 6.2:Nonmarketable Equity Investments~~

Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
Net realized gains from nonmarketable equity investments $ 132
55
506
369
All other (184 ) (83 ) (424 ) (404 )
Total $ (52 ) (28 ) 82
(35 )

~~Low Income Housing Tax Credit Investments~~ We invest in affordable housing projects that qualify for the low income housing tax credit (LIHTC), which is designed to promote private development of low income housing. These investments generate a return mostly through realization of federal tax credits.

Total LIHTC investments were $9.9 billion and $9.7 billion at September 30, 2017 and December 31, 2016, respectively. In the third quarter and first nine months of 2017, we recognized pre-tax losses of $227 million and $684 million, respectively, related to our LIHTC investments, compared with $199 million and $600 million, respectively, for the same periods a year ago. We also recognized total tax benefits of $360 million and $1.1 billion in the third quarter and first nine months of 2017, which included tax credits recorded in income taxes of $275 million and$796 million for the same periods, respectively. In the third quarter and first nine months of 2016, total tax benefits were $308 million and $919 million, respectively, which included tax credits of $233 million and $693 million for the same periods, respectively. We are periodically required to provide additional financial support during the investment period. Our liability for these unfunded commitments was $3.1 billion at September 30, 2017 and $3.6 billion at December 31, 2016. Predominantly all of this liability is expected to be paid over the next three years. This liability is included in long-term debt.

Note 7:10: Securitizations and Variable Interest Entities (continued)

Note 7:10: Securitizations and Variable Interest Entities

Involvement with ~~SPEs~~Special Purpose Entities (SPEs)

In the normal course of business, we enter into various types of on- and off-balance sheet transactions with SPEs, which are corporations, trusts, limited liability companies or partnerships that are established for a limited purpose. ~~Generally, SPEs are formed in connection with securitization transactions and are considered variable interest entities (VIEs).~~ For further description

of our involvement with SPEs, see Note 810 (Securitizations and Variable Interest Entities) ~~to Financial Statements~~ in our ~~2016~~2019 Form 10-K.

We have segregated our involvement with VIEs between those VIEs which we consolidate, those which we do not consolidate and those for which we account for the transfers of financial assets as secured borrowings. Secured borrowings are transactions involving transfers of our financial assets to third parties that are accounted for as financings with the assets pledged as collateral. Accordingly, the transferred assets remain recognized on our balance sheet. Subsequent tables within this Note further segregate these transactions by structure type.

Table ~~7.1~~10.1 provides the classifications of assets and liabilities in our balance sheet for our transactions with VIEs.

Table ~~7.1:~~10.1:Balance Sheet Transactions with VIEs


(in millions)	VIEs that we do not consolidate		VIEs that we consolidate	Transfers that we account for as secured borrowings		Total	VIEs that we do not consolidate		VIEs that we consolidate	Transfers that we account for as secured borrowings		Total
September 30, 2017
Cash	$	—	115		—	115
Federal funds sold, securities purchased under resale agreements and other short-term investments	—		402		—	402
Trading assets	1,150		130		201	1,481
Investment securities (1)	4,944		—		364	5,308
March 31, 2020
Cash and due from banks							$	—	19		—	19
Interest-earning deposits with banks							—		—		—	—
Debt securities (1):
Trading debt securities							1,326		316		—	1,642
Available-for-sale debt securities							1,718		300		—	2,018
Held-to-maturity debt securities							1,158		—		—	1,158
Loans	4,491		11,905		508	16,904	2,196		13,102		77	15,375
Mortgage servicing rights	13,340		—		—	13,340	8,709		—		—	8,709
Derivative assets	80		—		—	80	269		6		—	275
Equity securities							11,337		95		—	11,432
Other assets	10,355		352		7	10,714	1,030		258		—	1,288
Total assets	34,360		12,904		1,080	48,344	27,743		14,096		77	41,916
Short-term borrowings	—		—		523	523	—		500		—	500
Derivative liabilities	101		26	(2)	—	127	2		8		—	10
Accrued expenses and other liabilities	240		141	(2)	32	413	154		231		—	385
Long-term debt	3,103		2,103	(2)	489	5,695	4,722		235		76	5,033
Total liabilities	3,444		2,270		1,044	6,758	4,878		974		76	5,928
Noncontrolling interests	—		119		—	119	—		33		—	33
Net assets	$	30,916	10,515		36	41,467	$	22,865	13,089		1	35,955
December 31, 2016
Cash	$	—	168		—	168
Federal funds sold, securities purchased under resale agreements and other short-term investments	—		74		—	74
Trading assets	2,034		130		201	2,365
Investment securities (1)	8,530		—		786	9,316
December 31, 2019
Cash and due from banks							$	—	16		—	16
Interest-earning deposits with banks							—		284		—	284
Debt securities (1):
Trading debt securities							792		339		—	1,131
Available-for-sale debt securities							1,696		201		—	1,897
Held-to-maturity debt securities							791		—		—	791
Loans	6,698		12,589		138	19,425	2,127		13,170		80	15,377
Mortgage servicing rights	13,386		—		—	13,386	11,884		—		—	11,884
Derivative assets	91		1		—	92	142		1		—	143
Equity securities							11,401		118		—	11,519
Other assets	10,281		452		11	10,744	1,268		239		—	1,507
Total assets	41,020		13,414		1,136	55,570	30,101		14,368		80	44,549
Short-term borrowings	—		—		905	905	—		401		—	401
Derivative liabilities	59		33	(2)	—	92	1		3		—	4
Accrued expenses and other liabilities	306		107	(2)	2	415	189		235		—	424
Long-term debt	3,598		3,694	(2)	136	7,428	4,817		587		79	5,483
Total liabilities	3,963		3,834		1,043	8,840	5,007		1,226		79	6,312
Noncontrolling interests	—		138		—	138	—		43		—	43
Net assets	$	37,057	9,442		93	46,592	$	25,094	13,099		1	38,194


(1)	Excludes certain debt securities related to loans serviced for the Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and ~~GNMA.~~


~~(2)~~	~~There were~~ no ~~VIE liabilities with recourse to the general credit of Wells Fargo for the periods presented.~~ Government National Mortgage Association (GNMA).

Transactions with Unconsolidated VIEs

Our transactions with unconsolidated VIEs include predominantly securitizations of residential and commercial mortgage loans, ~~CRE loans, student loans, automobile loans~~ and ~~leases, certain dealer floorplan loans; investment and financing activities involving collateralized debt obligations (CDOs) backed by asset-backed and CRE securities,~~investments in tax credit ~~structures, collateralized loan obligations (CLOs) backed by corporate loans, and other types of structured financing.~~structures. We have various forms of involvement with VIEs, including servicing, holding senior or subordinated interests, and entering into liquidity arrangements ~~credit default swaps~~ and ~~other~~ derivative contracts. Involvements with these unconsolidated VIEs are recorded on our balance sheet in ~~trading assets, investment~~debt and equity securities, loans, MSRs, derivative assets and liabilities, other assets, other liabilities, and long-term debt, as appropriate.

Table ~~7.2~~10.2 provides a summary of our exposure to unconsolidated VIEs with which we have significant continuing involvement but for which we are not the primary beneficiary.

We do not consider our continuing involvement in an unconsolidated VIE to be significant when it relates to third-party sponsored VIEs for which we were not the transferor (unless we are servicer and have other significant forms of involvement) or if we were the sponsor only or sponsor

~~and servicer but do not have any other forms of significant involvement.~~

~~Significant continuing involvement includes~~include transactions where we were the sponsor or ~~transferor~~servicer and also have other significant forms of continuing

involvement. Sponsorship includes transactions ~~with unconsolidated VIEs~~ where we solely or materially participated in the initial design or structuring of the ~~entity~~VIE or ~~marketing of~~marketed the transaction to investors. ~~When~~We consider investments in securities, loans, guarantees, liquidity agreements, commitments and certain derivatives to be other forms of continuing involvement that may be significant. We also include transactions where we ~~transfer~~transferred assets to a VIE, ~~and~~ account for the transfer as a sale, ~~we are considered~~and service the ~~transferor. We consider investments in securities (other than those held temporarily in trading), loans, guarantees, liquidity agreements, written options and servicing of~~VIE collateral ~~to be~~or have other forms of continuing involvement that may be ~~significant.~~significant (as described above). We ~~have excluded~~exclude certain transactions with unconsolidated VIEs ~~from the balances presented in the following table where we have determined that~~when our continuing involvement is ~~not significant due to the~~ temporary in nature ~~and size of our variable interests, because we were not the transferor~~ or ~~because we were not involved~~insignificant in ~~the design of the unconsolidated VIEs.~~size. We also exclude ~~from the table~~ secured borrowing transactions with unconsolidated VIEs (for information on these transactions, see the Transactions with Consolidated VIEs and Secured Borrowings section in this Note).

Table ~~7.2:~~10.2:Unconsolidated VIEs

Carrying value – asset (liability)
(in millions)
Total
VIE
assets

Debt and
equity
interests (1)

Servicing
assets

Derivatives

Other
commitments
and
guarantees

Net
assets

September 30, 2017
Residential mortgage loan securitizations:
Conforming (2) $ 1,172,135
2,056
12,387
—
(188 ) 14,255
Other/nonconforming 15,226
774
85
—
—
859
Commercial mortgage securitizations 142,525
2,535
868
70
(33 ) 3,440
Collateralized debt obligations:
Debt securities 1,074
—
—
5
(20 ) (15 )
Loans (3) 1,494
1,457
—
—
—
1,457
Asset-based finance structures 3,569
2,666
—
—
—
2,666
Tax credit structures 29,295
10,820
—
—
(3,103 ) 7,717
Collateralized loan obligations 18
4
—
—
—
4
Investment funds 216
51
—
—
—
51
Other (4) 2,521
577
—
(95 ) —
482
Total $ 1,368,073
20,940
13,340
(20 ) (3,344 ) 30,916
Maximum exposure to loss

Debt and
equity
interests (1)

Servicing
assets

Derivatives

Other
commitments
and
guarantees

Total
exposure

Residential mortgage loan securitizations:
Conforming $ 2,056
12,387
—
976
15,419
Other/nonconforming 774
85
—
—
859
Commercial mortgage securitizations 2,535
868
73
9,901
13,377
Collateralized debt obligations:
Debt securities —
—
5
20
25
Loans (3) 1,457
—
—
—
1,457
Asset-based finance structures 2,666
—
—
71
2,737
Tax credit structures 10,820
—
—
947
11,767
Collateralized loan obligations 4
—
—
—
4
Investment funds 51
—
—
—
51
Other (4) 577
—
120
157
854
Total $ 20,940
13,340
198
12,072
46,550

~~(continued on following page)~~

~~Note 7: Securitizations and Variable Interest Entities (continued~~)

~~(continued from previous page)~~

Carrying value – asset (liability)
(in millions)
Total
VIE
assets

Debt and
equity
interests (1)

Servicing
assets

Derivatives

Other
commitments
and
guarantees

Net
assets

December 31, 2016
Residential mortgage loan securitizations:
Conforming (2) $ 1,166,296
3,026
12,434
—
(232 ) 15,228
Other/nonconforming 18,805
873
109
—
(2 ) 980
Commercial mortgage securitizations 166,596
4,258
843
87
(35 ) 5,153
Collateralized debt obligations:
Debt securities 1,472
—
—
—
(25 ) (25 )
Loans (3) 1,545
1,507
—
—
—
1,507
Asset-based finance structures 9,152
6,522
—
—
—
6,522
Tax credit structures 29,713
10,669
—
—
(3,609 ) 7,060
Collateralized loan obligations 78
10
—
—
—
10
Investment funds 214
48
—
—
—
48
Other (4) 1,733
630
—
(56 ) —
574
Total $ 1,395,604
27,543
13,386
31
(3,903 ) 37,057
Maximum exposure to loss

Debt and
equity
interests (1)

Servicing
assets

Derivatives

Other
commitments
and
guarantees

Total
exposure

Residential mortgage loan securitizations:
Conforming $ 3,026
12,434
—
979
16,439
Other/nonconforming 873
109
—
2
984
Commercial mortgage securitizations 4,258
843
94
9,566
14,761
Collateralized debt obligations:
Debt securities —
—
—
25
25
Loans (3) 1,507
—
—
—
1,507
Asset-based finance structures 6,522
—
—
72
6,594
Tax credit structures 10,669
—
—
1,104
11,773
Collateralized loan obligations 10
—
—
—
10
Investment funds 48
—
—
—
48
Other (4) 630
—
93
—
723
Total $ 27,543
13,386
187
11,748
52,864



			Carrying value – asset (liability)
(in millions)	Total VIE assets		Debt and equity interests (1)		Servicing assets and advances	Derivatives	Debt, guarantees, and other commitments		Net assets
March 31, 2020
Residential mortgage loan securitizations:
Conforming (2)	$	1,082,170	2,103		8,607	—	(649	)	10,061
Other/nonconforming	5,226		120		89	—	—		209
Commercial mortgage loan securitizations	174,761		2,440		1,043	196	(18	)	3,661
Tax credit structures	39,499		12,841		—	—	(4,201	)	8,640
Other asset-based finance structures	1,314		190		—	71	(8	)	253
Other	1,118		41		—	—	—		41
Total	$	1,304,088	17,735		9,739	267	(4,876	)	22,865
			Maximum exposure to loss
			Debt and equity interests (1)		Servicing assets and advances	Derivatives	Debt, guarantees, and other commitments		Total exposure
Residential mortgage loan securitizations:
Conforming (2)			$	1,582	8,607	—	973		11,162
Other/nonconforming			120		89	—	—		209
Commercial mortgage loan securitizations			2,440		1,043	196	11,776		15,455
Tax credit structures			12,841		—	—	1,684		14,525
Other asset-based finance structures			190		—	76	79		345
Other			41		—	—	157		198
Total			$	17,214	9,739	272	14,669		41,894

			Carrying value – asset (liability)
(in millions)	Total VIE assets		Debt and equity interests (1)		Servicing assets and advances	Derivatives	Debt, guarantees, and other commitments		Net assets
December 31, 2019
Residential mortgage loan securitizations:
Conforming (2)	$	1,098,103	1,528		11,931	—	(683	)	12,776
Other/nonconforming	5,178		6		152	—	—		158
Commercial mortgage loan securitizations	169,736		2,239		1,069	80	(43	)	3,345
Tax credit structures	39,091		12,826		—	—	(4,260	)	8,566
Other asset-based finance structures	1,355		157		—	61	(20	)	198
Other	1,167		51		—	—	—		51
Total	$	1,314,630	16,807		13,152	141	(5,006	)	25,094
			Maximum exposure to loss
			Debt and equity interests (1)		Servicing assets and advances	Derivatives	Debt, guarantees, and other commitments		Total exposure
Residential mortgage loan securitizations:
Conforming (2)			$	972	11,931	—	937		13,840
Other/nonconforming			6		152	—	—		158
Commercial mortgage loan securitizations			2,239		1,069	80	11,667		15,055
Tax credit structures			12,826		—	—	1,701		14,527
Other asset-based finance structures			157		—	63	91		311
Other			51		—	—	157		208
Total			$	16,251	13,152	143	14,553		44,099


(1)	Includes total equity interests of $~~10.4~~11.3 billion and $~~10.3~~11.4 billion at ~~September 30, 2017~~March 31, 2020, and December 31, ~~2016~~2019, respectively. Also includes debt interests in the form of both loans and securities. Excludes certain debt securities held related to loans serviced for FNMA, FHLMC and GNMA.

(2)

~~Excludes~~Carrying values include assets and related liabilities ~~with a recorded~~of $521 million and $556 million at March 31, 2020, and December 31, 2019, respectively, related to certain unexercised unconditional repurchase options. These amounts represent the carrying value ~~on our balance sheet~~ of ~~$1.3 billion~~the loans and ~~$1.2 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively, for certain delinquent loans that are eligible for repurchase from GNMA loan securitizations. The recorded carrying value represents the amount~~associated debt that would be payable if the ~~Company~~option was exercised to ~~exercise the~~ repurchase ~~option. The carrying~~eligible loans from GNMA loan securitizations. These amounts are excluded from maximum exposure to loss as we are not obligated to exercise the ~~table because the loans eligible for repurchase do not represent interests in the VIEs.~~options.

~~(3)~~

Represents senior loans to trusts that are collateralized by asset-backed securities. The trusts invest in senior tranches from a diversified pool of U.S. asset securitizations, of which all are current and ~~100%~~ ~~were rated as investment grade by the primary rating agencies at both~~ ~~September 30, 2017, and~~ ~~December 31, 2016. These senior loans are accounted for at amortized cost and are subject to the Company’s allowance and credit charge-off policies.~~


~~(4)~~	Includes structured financing and credit-linked note structures. Also contains investments in auction rate securities (ARS) issued by VIEs that we do not sponsor and, accordingly, are unable to obtain the total assets of the entity.

Note 10: Securitizations and Variable Interest Entities (continued)

In Table ~~7.2,~~10.2, “Total VIE assets” represents the remaining principal balance of assets held by unconsolidated VIEs using the most current information available. For VIEs that obtain exposure to assets synthetically through derivative instruments, the remaining notional amount of the derivative is included in the asset balance. “Carrying value” is the amount in our consolidated balance sheet related to our involvement with the unconsolidated VIEs. “Maximum exposure to loss” ~~from our involvement with off-balance sheet entities, which is a required disclosure under GAAP,~~ is determined as the carrying value of our ~~involvement with off-balance sheet (unconsolidated)~~investment in the VIEs excluding the unconditional repurchase options that have not been exercised, plus the remaining undrawn liquidity and lending commitments, the notional amount of net written derivative contracts, and generally the notional amount of, or stressed loss estimate for, other commitments and guarantees. It represents estimated loss that would be incurred under severe, hypothetical circumstances, for which we believe the possibility is extremely remote, such as where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. Accordingly, this ~~required~~ disclosure is not an indication of expected loss.

For complete descriptions of our ~~types of~~ transactions with unconsolidated VIEs with which we have a significant continuing involvement, but we are not the primary beneficiary, see Note 8

~~(Securitizations~~10 (Securitizations and Variable Interest Entities) ~~to Financial Statements~~ in our ~~2016~~2019 Form 10-K.

~~INVESTMENT FUNDS~~ ~~Subsequent to adopting ASU 2015-02 (Amendments to the Consolidation Analysis) in first quarter 2016, we do not consolidate these investment funds because we do not hold variable interests that are considered significant to the funds.~~

We voluntarily waived a portion of our management fees for certain money market funds that are exempt from the consolidation analysis to ensure the funds maintained a minimum level of daily net investment income. The amount of fees waived in the third quarter and first nine months of 2017 was $12 million ~~and~~ ~~$39 million, respectively, compared with $28 million and $84 million, respectively, in the same periods of 2016.~~

~~OTHER TRANSACTIONS WITH VIEs~~ Other VIEs include certain entities that issue auction rate securities (ARS) which are debt instruments with long-term maturities, that re-price more frequently, and preferred equities with no maturity. At September 30, 2017, we held $400 million of ARS issued by VIEs compared with $453 million at December 31, 2016. We acquired the ARS pursuant to agreements entered into in 2008 and 2009.

~~We do not consolidate the VIEs that issued the ARS because we do not have power over the activities of the VIEs.~~

~~TRUST PREFERRED SECURITIES~~VIEs that we wholly own issue debt securities or preferred equity to third party investors. All of the proceeds of the issuance are invested in debt securities or preferred equity that we issue to the VIEs. The VIEs’ operations and cash flows relate only to the issuance, administration and repayment of the securities held by third parties. We do not consolidate these VIEs because the sole assets of the VIEs are receivables from us, even though we own all of the voting equity shares of the VIEs, have fully guaranteed the obligations of the VIEs and may have the right to redeem the third party securities under certain circumstances. In our consolidated balance sheet at September 30, 2017, and December 31, 2016, we reported the debt securities issued to the VIEs as long-term junior subordinated debt with a carrying value of $2.0 billion and $2.1 billion, respectively, and the preferred equity securities issued to the VIEs as preferred stock with a carrying value of $2.5 billion at both dates. These amounts are in addition to the involvements in these VIEs included in the preceding table.

In the first nine months of 2017, we redeemed $150 million of trust preferred securities which were partially included in Tier 2 capital (50% credit in 2017) in the transitional framework and were not included under the fully-phased framework under the Basel III standards.

Loan Sales and Securitization Activity

We periodically transfer consumer and ~~CRE~~commercial loans and other types of financial assets in securitization and whole loan sale transactions. We typically retain the servicing rights from these sales and may continue to hold other beneficial interests in the transferred financial assets. We may also provide liquidity to investors in the beneficial interests and credit ~~enhancements in the form of standby letters of credit.~~enhancements. Through these transfers we may be exposed to liability under limited amounts of recourse as well as standard representations and warranties we make to purchasers and issuers.

Table ~~7.3~~10.3 presents ~~the cash flows for our~~information about transfers ~~accounted for as sales.~~

~~Table 7.3:Cash Flows From Sales and Securitization Activity~~

2017 2016
(in millions)
Mortgage
loans

Other
financial
assets

Mortgage
loans

Other
financial
assets

Quarter ended September 30,



Proceeds from securitizations and whole loan sales $ 61,756
—
66,830
53
Fees from servicing rights retained 826
—
891
—
Cash flows from other interests held (1) 408
—
930
—
Repurchases of assets/loss reimbursements (2):
Non-agency securitizations and whole loan transactions 5
—
4
—
Agency securitizations (3) 20
—
22
—
Servicing advances, net of repayments (90 ) —
(52 ) —
Nine months ended September 30,
Proceeds from securitizations and whole loan sales $ 172,837
25
178,301
186
Fees from servicing rights retained 2,520
—
2,636
—
Cash flows from other interests held (1) 1,883
—
1,964
1
Repurchases of assets/loss reimbursements (2):
Non-agency securitizations and whole loan transactions 12
—
22
—
Agency securitizations (3) 66
—
104
—
Servicing advances, net of repayments (252 ) —
(159 ) —


~~(1)~~	~~Cash flows from other interests held include principal and interest payments received on retained bonds and excess cash flows received on interest-only strips.~~


~~(2)~~	~~Consists of cash paid to repurchase loans from investors and cash paid to investors to reimburse them for losses on individual loans that are already liquidated.~~

~~(3)~~

~~Represent loans repurchased from GNMA, FNMA, and FHLMC under representation and warranty provisions included in our loan sales contracts.~~ ~~Third~~ ~~quarter and~~ ~~first nine months of 2017~~ ~~exclude~~ ~~$2.1 billion~~ ~~and $6.0 billion, respectively in delinquent insured/guaranteed loans that we service and have exercised our option to purchase out of GNMA pools, compared with~~ ~~$2.4 billion~~ ~~and~~ ~~$7.3 billion, respectively, in the same periods of~~ ~~2016. These loans are predominantly insured by the FHA or guaranteed by the VA.~~

~~In the third quarter and first nine months of 2017, we recognized net gains of $91 million~~ ~~and~~ $616 million, respectively, from transfers accounted for as sales of financial assets, compared with $141 million and $436 million, respectively, in the same periods of 2016. These net gains largely relate to commercial mortgage securitizations and residential mortgage securitizations where the loans were not already carried at fair value.

~~Sales with continuing involvement~~ during the ~~third quarter and first nine months~~period of ~~2017 and 2016 largely related to securitizations of residential mortgages that are sold to the government-sponsored entities (GSEs), including FNMA, FHLMC and GNMA (conforming residential mortgage~~

~~securitizations). During the third quarter and first nine months of 2017, we transferred $57.8 billion~~ ~~and~~ ~~$163.0 billion, respectively, in fair value of residential mortgages~~assets to unconsolidated VIEs ~~and~~or third-party investors ~~and~~for which we recorded the transfers as sales ~~compared~~and have continuing involvement with ~~$63.3 billion and $165.6 billion, respectively, in~~ the ~~same periods of 2016. Substantially all of these transfers did not result in a gain or loss because the loans were already carried at fair value.~~transferred assets. In connection with ~~all of~~ these transfers, ~~in the first nine months of 2017,~~ we recorded ~~a $1.5 billion~~ servicing ~~asset, measured at fair value using a Level 3 measurement technique,~~assets, securities, ~~of $2.2 billion, classified as Level 2,~~ and a ~~$20 million~~ liability for repurchase losses which reflects management’s estimate of probable losses related to

~~Note 7: Securitizations and Variable Interest Entities (continued~~)

various representations and warranties for the loans ~~transferred,~~transferred. Each of these interests are initially measured at fair value. InServicing rights are classified as Level 3 measurements, and securities are initially predominantly classified as Level 2.

Sales with continuing involvement include securitizations of conforming residential mortgages that are sold to the ~~first nine months of 2016, we recorded~~GSEs or GNMA. Substantially all transfers to these entities resulted in no gain or loss because the loans were already measured at fair value on a ~~$1.3 billion servicing asset, securities of $3.0 billion, and a $26 million liability.~~recurring basis.

Table 10.3:Transfers With Continuing Involvement



	Quarter ended March 31,
(in millions)			2020		2019
	Residential mortgages		Commercial mortgages	Residential mortgages	Commercial mortgages
Net gains (losses) on sale	$	52	69	14	47
Asset balances sold	47,857		2,728	34,103	2,702
Servicing rights recognized	446		34	320	26
Securities recognized	2,313		62	912	—
Liability for repurchase losses recognized	3		—	3	—

Table ~~7.4~~10.4 presents the key weighted-average assumptions we used to measure residential ~~mortgage servicing rights~~MSRs at the date of securitization.

Table ~~7.4:~~10.4:Residential Mortgage Servicing Rights


	Residential mortgage servicing rights				Residential mortgage servicing rights
	2017			2016	2020			2019
Quarter ended September 30,
Quarter ended March 31,
Prepayment speed (1)	12.1		%	12.4	12.7		%	13.5
Discount rate	6.9			6.2	6.5			8.1
Cost to service ($ per loan) (2)	$	122		124	$	91		94
Nine months ended September 30,
Prepayment speed (1)	11.7		%	12.5
Discount rate	6.9			6.5
Cost to service ($ per loan) (2)	$	135		136


(1)	The prepayment speed assumption for residential ~~mortgage servicing rights~~MSRs includes a blend of prepayment speeds and default rates. Prepayment speed assumptions are influenced by mortgage interest rate inputs as well as our estimation of drivers of borrower behavior.


(2)	Includes costs to service and unreimbursed foreclosure costs, which can vary period to period ~~depending on~~due to changes in model assumptions and the mix of modified government-guaranteed loans sold to GNMA.

~~During~~Table 10.5 presents the ~~third quarter and first nine months of 2017, we transferred $4.6 billion~~ ~~and~~ ~~$11.2 billion, respectively, in carrying value of commercial mortgages~~proceeds related to ~~unconsolidated VIEs and third-party investors and recorded the~~ transfers accounted for as sales ~~compared~~in which we have continuing involvement with ~~$4.0 billion~~the transferred financial assets, as well as current period cash flows from continuing involvement with previous transfers accounted for as sales. Cash flows from other interests held predominantly include principal and ~~$13.9 billion, respectively,~~interest payments received on retained bonds. Repurchases of assets represents cash paid to repurchase loans from investors under representation and warranty obligations or in ~~the same periods of 2016. These transfers resulted in gains of $89 million~~ ~~and~~ $265 million in the third quarter and first nine months of 2017, respectively, because the loans were carried at lower of cost or market value (LOCOM), compared with gains of $134 million and $327 million, respectively, in the same periods of 2016. In connection with ~~these transfers, in~~ the ~~first nine months~~exercise of ~~2017,~~cleanup calls on securitizations. Loss reimbursements is cash paid to reimburse investors for losses on individual loans that are already liquidated. Government insured loans are delinquent loans that we ~~recorded a servicing asset~~service and have exercised our option to purchase out of ~~$123 million, initially measured at fair value using a Level 3 measurement technique, and securities of $65 million, classified as Level 2. In~~GNMA pools. These loans are insured by the ~~first nine months of 2016, we recorded a servicing asset of $204 million and securities of $236 million.~~

FHA or guaranteed by the VA.

Table 10.5:Cash Inflows (Outflows) From Sales and Securitization Activity



	Mortgage loans
(in millions)	2020			2019
Quarter ended March 31,
Proceeds from securitizations and whole loan sales	$	50,229		36,507
Fees from servicing rights retained	756			780
Cash flows from other interests held	167			111
Repurchases of assets/loss reimbursements:
Non-agency securitizations and whole loan transactions	—			—
Government insured loans	(1,440		)	(1,942	)
Agency securitizations	(26		)	(17	)
Servicing advances, net of recoveries (1)	33			39


(1)	Cash flows from servicing advances includes principal and interest payments to investors required by servicing agreements.

Retained Interests from UnconsolidatedVIEs

Table ~~7.5~~10.6 provides key economic assumptions and the sensitivity of the current fair value of residential ~~mortgage servicing rights~~MSRs and other interests held related to unconsolidated VIEs to immediate adverse changes in those assumptions. Amounts for residential MSRs include purchased servicing rights as well as servicing rights resulting from the transfer of loans. See Note 16 (Fair Values of Assets and Liabilities) for additional information on key economic assumptions for residential MSRs. “Other interests held” ~~relate to~~were obtained when we securitized residential and commercial mortgage ~~loan securitizations.~~loans. Residential mortgage-backed securities retained

in securitizations issued through GSEs ~~such as FNMA, FHLMC and~~or GNMA, are excluded from the table because these securities have a remote risk of credit loss due to

the GSE or government guarantee. These securities also have economic characteristics similar to GSE or GNMA mortgage-backed securities that we purchase, which are not included in the table. Subordinated interests include only those bonds whose credit rating was below AAA by a major rating agency at issuance. Senior interests include only those bonds whose credit rating was AAA by a major rating agency at issuance. The information presented excludes trading positions held in inventory.

Table ~~7.5:~~10.6:Retained Interests from Unconsolidated VIEs



				Other interests held
	Residential mortgage servicing rights				Commercial
($ in millions, except cost to service amounts)					Subordinated bonds			Senior bonds
Fair value of interests held at March 31, 2020	$	8,126			924			326
Expected weighted-average life (in years)	4.3				7.1			5.6
Key economic assumptions:
Prepayment speed assumption	15.7		%
Decrease in fair value from:
10% adverse change	$	475
25% adverse change	1,105
Discount rate assumption	7.1		%		5.4			3.5
Decrease in fair value from:
100 basis point increase	$	293			54			16
200 basis point increase	563				103			30
Cost to service assumption ($ per loan)	112
Decrease in fair value from:
10% adverse change	234
25% adverse change	585
Credit loss assumption					3.7		%	—
Decrease in fair value from:
10% higher losses					$	28		—
25% higher losses					31			—
Fair value of interests held at December 31, 2019	$	11,517			909			352
Expected weighted-average life (in years)	5.3				7.3			5.5
Key economic assumptions:
Prepayment speed assumption	11.9		%
Decrease in fair value from:
10% adverse change	$	537
25% adverse change	1,261
Discount rate assumption	7.2		%		4.0			2.9
Decrease in fair value from:
100 basis point increase	$	464			53			16
200 basis point increase	889				103			32
Cost to service assumption ($ per loan)	102
Decrease in fair value from:
10% adverse change	253
25% adverse change	632
Credit loss assumption					3.1		%	—
Decrease in fair value from:
10% higher losses					$	1		—
25% higher losses					4			—

Other interests held

Residential
mortgage
servicing
rights (1)

Interest-only
strips

Consumer
Commercial (2)
($ in millions, except cost to service amounts)
Subordinated
bonds

Subordinated
bonds

Senior
bonds

Fair value of interests held at September 30, 2017 $ 13,338
23
—
561
526
Expected weighted-average life (in years) 6.1
3.8
0.0
5.7
5.2
Key economic assumptions:
Prepayment speed assumption (3) 10.8 % 17.4
—

Decrease in fair value from:
10% adverse change $ 575
1
—

25% adverse change 1,359
2
—

Discount rate assumption 6.7 % 12.7
—
3.0
2.9
Decrease in fair value from:
100 basis point increase $ 647
—
—
25
22
200 basis point increase 1,236
1
—
47
44
Cost to service assumption ($ per loan) 145

Decrease in fair value from:
10% adverse change 476

25% adverse change 1,189

Credit loss assumption — % 2.0
—
Decrease in fair value from:
10% higher losses $ —
—
—
25% higher losses —
—
—
Fair value of interests held at December 31, 2016 $ 12,959
28
1
249
552
Expected weighted-average life (in years) 6.3
3.9
8.3
3.1
5.1
Key economic assumptions:
Prepayment speed assumption (3) 10.3 % 17.4
13.5

Decrease in fair value from:
10% adverse change $ 583
1
—

25% adverse change 1,385
2
—

Discount rate assumption 6.8 % 13.3
10.7
5.2
2.7
Decrease in fair value from:
100 basis point increase $ 649
1
—
7
23
200 basis point increase 1,239
1
—
12
45
Cost to service assumption ($ per loan) 155

Decrease in fair value from:
10% adverse change 515

25% adverse change 1,282

Credit loss assumption 3.0 % 4.7
—
Decrease in fair value from:
10% higher losses $ —
—
—
25% higher losses —
—
—


~~(1)~~	~~See narrative following this table for a discussion of commercial mortgage servicing rights.~~


~~(2)~~	Prepayment speed assumptions do not significantly impact the value of commercial mortgage securitization bonds as the underlying commercial mortgage loans experience significantly lower prepayments due to certain contractual restrictions, impacting the borrower’s ability to prepay the mortgage.


~~(3)~~	The prepayment speed assumption for residential mortgage servicing rights includes a blend of prepayment speeds and default rates. Prepayment speed assumptions are influenced by mortgage interest rate inputs as well as our estimation of drivers of borrower behavior.

Note 7:10: Securitizations and Variable Interest Entities (continued)

In addition to residential ~~mortgage servicing rights (MSRs)~~MSRs included in the previous table, we have a small portfolio of commercial MSRs which are carried at lower of cost or market value (LOCOM) with a fair value of ~~$2.0~~$1.5 billion and $1.9 billion at ~~both September 30, 2017,~~March 31, 2020, and December 31, ~~2016. The nature of our commercial MSRs, which are carried at LOCOM, is different from our residential MSRs.~~2019, respectively. Prepayment activity on serviced loans does not significantly impact the value of commercial MSRs because, unlike residential mortgages, commercial mortgages experience significantly lower prepayments due to certain contractual restrictions, impacting the borrower’s ability to prepay the mortgage. Additionally, for our commercial MSR portfolio, we are typically master/primary servicer, but not the special servicer, who is separately responsible for the servicing and workout of delinquent and foreclosed loans. It is the special servicer, similar to our role as servicer of residential mortgage loans, who is affected by higher servicing and foreclosure costs due to an increase in delinquent and foreclosed loans. Accordingly, prepayment speeds and costs to service are not key assumptions ~~for commercial MSRs as they~~ do not significantly impact values of commercial MSRs and commercial mortgage bonds as commercial loans generally include contractual restrictions on prepayment. Servicing costs are not a driver of our MSR value as we are typically primary or master servicer; the ~~valuation.~~higher costs of servicing delinquent and foreclosed loans is generally born by the special servicer. The primary economic driver impacting the fair value of our commercial MSRs is forward interest rates, which are derived from market observable yield curves used to price capital markets instruments. Market interest rates significantly affect interest earned on custodial deposit balances. The sensitivity of the current fair value to an immediate adverse 25% change in the assumption about interest earned on deposit balances at ~~September 30, 2017,~~March 31, 2020, and December 31, ~~2016,~~2019, results in a decrease in fair value of ~~$238~~$146 million and ~~$259~~$205 million, respectively. See Note 811 (Mortgage Banking Activities) for further information on our commercial MSRs.

We also have a loan to an unconsolidated third party VIE that we extended in fourth quarter 2014 in conjunction with our sale of government guaranteed student loans. The loan is carried at amortized cost and approximates fair value at September 30, 2017, and December 31, 2016. The carrying amount of the loan at September 30, 2017, and December 31, 2016, was $1.3 billion and $3.2 billion, respectively. The estimated fair value of the loan is considered a Level 3 measurement that is determined using

discounted cash flows that are based on changes in the discount rate due to changes in the risk premium component (credit spreads). The primary economic assumption impacting the fair value of our loan is the discount rate. Changes in the credit loss assumption are not expected to affect the estimated fair value of the loan due to the government guarantee of the underlying collateral. The sensitivity of the current fair value to an immediate adverse increase of 200 basis points in the risk premium component of the discount rate assumption is a decrease in fair value of $23 million and $154 million at September 30, 2017, and December 31, 2016, respectively.

The sensitivities in the preceding ~~paragraphs~~paragraph and table are hypothetical and caution should be exercised when relying on this data. Changes in value based on variations in assumptions

generally cannot be extrapolated because the relationship of the change in the assumption to the change in value may not be linear. Also, the effect of a variation in a particular assumption on the value of the other interests held is calculated independently without changing any other assumptions. In reality, changes in one factor may result in changes in others (for example, changes in prepayment speed estimates could result in changes in the credit losses), which might magnify or counteract the sensitivities.

Off-Balance Sheet Loans

Table ~~7.6~~10.7 presents information about the principal balances of off-balance sheet loans that were sold or securitized, including residential mortgage loans sold to FNMA, FHLMC, GNMA and other investors, for which we have some form of continuing involvement (including servicer). Delinquent loans include loans 90 days or more past due and loans in bankruptcy, regardless of delinquency status. For loans sold or securitized where servicing is our only form of continuing involvement, we would only experience a loss if we were required to repurchase a delinquent loan or foreclosed asset due to a breach in representations and warranties associated with our loan sale or servicing contracts.

Table ~~7.6:~~10.7:Off-Balance Sheet Loans Sold or Securitized


						Net charge-offs							Net charge-offs (2)
	Total loans			Delinquent loans and foreclosed assets (1)		Nine months ended September 30,		Total loans			Delinquent loans and foreclosed assets (1)		Quarter ended Mar 31,
(in millions)	Sep 30, 2017		Dec 31, 2016	Sep 30, 2017	Dec 31, 2016	2017	2016	Mar 31, 2020		Dec 31, 2019	Mar 31, 2020	Dec 31, 2019	2020	2019
Commercial:
Real estate mortgage	$	98,350	106,745	2,879	3,325	718	210	$	113,196	112,507	679	776	71	79
Total commercial	98,350		106,745	2,879	3,325	718	210	113,196		112,507	679	776	71	79
Consumer:
Real estate 1-4 family first mortgage	1,135,409		1,160,191	12,434	16,453	546	764	986,570		1,008,446	6,326	6,664	31	67
Real estate 1-4 family junior lien mortgage								12		13	2	2	—	—
Total consumer	1,135,409		1,160,191	12,434	16,453	546	764	986,582		1,008,459	6,328	6,666	31	67
Total off-balance sheet sold or securitized loans (2)	$	1,233,759	1,266,936	15,313	19,778	1,264	974
Total off-balance sheet sold or securitized loans (3)								$	1,099,778	1,120,966	7,007	7,442	102	146


(1)	Includes $~~1.4 billion~~365 million and $~~1.7 billion~~492 million of commercial foreclosed assets and $~~1.1 billion~~354 million and $~~1.8 billion~~356 million of consumer foreclosed assets at ~~September 30, 2017~~March 31, 2020, and December 31, ~~2016~~2019, respectively.

(2)

At ~~September 30, 2017, and~~ ~~December 31, 2016, the table includes total loans of~~ ~~$1.2 trillion~~ ~~at both dates, delinquent loans of~~ ~~$7.6 billion~~ ~~and~~ ~~$9.8 billion, and foreclosed assets of~~ ~~$730 million~~ ~~and~~ ~~$1.3 billion, respectively, for FNMA, FHLMC and GNMA.~~ Net charge-offs exclude loans sold to FNMA, FHLMC and GNMA as we do not service or manage the underlying real estate upon foreclosure and, as such, do not have access to net charge-off information.


(3)	At March 31, 2020, and December 31, 2019, the table includes total loans of $1.0 trillion at both dates, delinquent loans of $5.2 billion at both dates, and foreclosed assets of $259 million and $251 million, respectively, for FNMA, FHLMC and GNMA.

Transactions with Consolidated VIEs and Secured Borrowings

Table ~~7.7~~10.8 presents a summary of financial assets and liabilities for asset transfers accounted for as secured borrowings and involvements with consolidated VIEs. Carrying values of “Assets” are presented using GAAP measurement methods, which may include fair value, credit impairment or other adjustments, and

therefore in some instances will differ from “Total VIE assets.” For VIEs that obtain exposure synthetically through derivative instruments, the remaining notional amount of the derivative is included in “Total VIE assets.” On the consolidated balance sheet, we separately disclose the consolidated assets of certain VIEs that can only be used to settle the liabilities of those VIEs.

Table ~~7.7:~~10.8:Transactions with Consolidated VIEs and Secured Borrowings



			Carrying value
(in millions)	Total VIE assets		Assets	Liabilities		Noncontrolling interests		Net assets
March 31, 2020
Secured borrowings:
Residential mortgage securitizations	$	77	77	(76	)	—		1
Total secured borrowings	77		77	(76	)	—		1
Consolidated VIEs:
Commercial and industrial loans and leases	7,760		7,755	(226	)	(11	)	7,518
Nonconforming residential mortgage loan securitizations	679		567	(236	)	—		331
Commercial real estate loans	5,022		5,022	—		—		5,022
Municipal tender option bond securitizations	500		505	(502	)	—		3
Other	247		247	(10	)	(22	)	215
Total consolidated VIEs	14,208		14,096	(974	)	(33	)	13,089
Total secured borrowings and consolidated VIEs	$	14,285	14,173	(1,050	)	(33	)	13,090
December 31, 2019
Secured borrowings:
Residential mortgage securitizations	$	81	80	(79	)	—		1
Total secured borrowings	81		80	(79	)	—		1
Consolidated VIEs:
Commercial and industrial loans and leases	8,054		8,042	(529	)	(16	)	7,497
Nonconforming residential mortgage loan securitizations	935		809	(290	)	—		519
Commercial real estate loans	4,836		4,836	—		—		4,836
Municipal tender option bond securitizations	401		402	(401	)	—		1
Other	279		279	(6	)	(27	)	246
Total consolidated VIEs	14,505		14,368	(1,226	)	(43	)	13,099
Total secured borrowings and consolidated VIEs	$	14,586	14,448	(1,305	)	(43	)	13,100

Carrying value
(in millions)
Total VIE
assets

Assets
Liabilities

Noncontrolling
interests

Net assets
September 30, 2017
Secured borrowings:
Municipal tender option bond securitizations $ 670
572
(539 ) —
33
Commercial real estate loans 392
392
(388 ) —
4
Residential mortgage securitizations 119
116
(117 ) —
(1 )
Total secured borrowings 1,181
1,080
(1,044 ) —
36
Consolidated VIEs:
Commercial and industrial loans and leases 8,546
8,051
(1,425 ) (14 ) 6,612
Nonconforming residential mortgage loan securitizations 2,812
2,486
(837 ) —
1,649
Commercial real estate loans 2,120
2,120
—
—
2,120
Structured asset finance 13
8
(6 ) —
2
Investment funds 135
135
(1 ) (72 ) 62
Other 118
104
(1 ) (33 ) 70
Total consolidated VIEs 13,744
12,904
(2,270 ) (119 ) 10,515
Total secured borrowings and consolidated VIEs $ 14,925
13,984
(3,314 ) (119 ) 10,551
December 31, 2016
Secured borrowings:
Municipal tender option bond securitizations $ 1,473
998
(907 ) —
91
Residential mortgage securitizations 139
138
(136 ) —
2
Total secured borrowings 1,612
1,136
(1,043 ) —
93
Consolidated VIEs:
Commercial and industrial loans and leases 8,821
8,623
(2,819 ) (14 ) 5,790
Nonconforming residential mortgage loan securitizations 3,349
2,974
(1,003 ) —
1,971
Commercial real estate loans 1,516
1,516
—
—
1,516
Structured asset finance 23
13
(9 ) —
4
Investment funds 142
142
(2 ) (67 ) 73
Other 166
146
(1 ) (57 ) 88
Total consolidated VIEs 14,017
13,414
(3,834 ) (138 ) 9,442
Total secured borrowings and consolidated VIEs $ 15,629
14,550
(4,877 ) (138 ) 9,535

~~INVESTMENT FUNDS~~ ~~Subsequent to adopting ASU 2015-02 (Amendments to~~We have raised financing through the ~~Consolidation Analysis~~)securitization of certain financial assets in ~~first quarter 2016,~~transactions with VIEs accounted for as secured borrowings. We also consolidate VIEs where we ~~consolidate~~are the primary beneficiary. In certain ~~investment funds because~~transactions, we ~~have both the power to manage fund assets and hold variable interests that are considered significant.~~

~~OTHER CONSOLIDATED VIE STRUCTURESIn addition to the structure types included~~provide contractual support in the ~~previous table, at December 31, 2016, we had approximately $6.0 billion~~form of ~~private placement debt financing~~limited recourse and liquidity to facilitate the remarketing of short-term securities issued through a consolidated VIE. The issuance was classified as long-term debt in our consolidated financial statements. At December 31, 2016, we pledged approximately $434 million in loans (principal and interest eligible to ~~be capitalized) and $6.1 billion in available-for-sale~~third-party investors. Other than this limited contractual support, the assets of the VIEs are the sole source of repayment of the securities ~~to collateralize the VIE’s borrowings. These assets were not transferred to the VIE, and accordingly we excluded the VIE from the previous table. During second quarter 2017, the private~~

~~placement debt financing was repaid, and the entity was no longer considered a VIE.~~held by third parties.

For complete descriptions of our accounting for transfers accounted for as secured borrowings and ~~involvements~~involvement with consolidated VIEs, see Note 810 (Securitizations and Variable Interest Entities) ~~to Financial Statements~~ in our ~~2016~~2019 Form 10-K.

Other Transactions

In addition to the transactions included in the previous tables, we have used wholly-owned trust preferred security VIEs to issue debt securities or preferred equity exclusively to third-party investors. As the sole assets of the VIEs are receivables from us, we do not consolidate the VIEs even though we own all of the voting equity shares of the VIEs, have fully guaranteed the obligations of the VIEs, and may have the right to redeem the third-party securities under certain circumstances. In our

consolidated balance sheet we reported the debt securities issued to the VIEs as long-term junior subordinated debt with a carrying value of $686 million and $2.1 billion at March 31, 2020, and December 31, 2019, respectively. During first quarter 2020, we liquidated certain of our trust preferred security VIEs. As part of these liquidations, the preferred securities issued by the trusts were canceled and junior subordinated debentures with a total carrying value of $1.4 billion were distributed to the preferred security holders. Prior to the liquidations, we held $10 million of these preferred securities, which were exchanged for junior subordinated debentures upon liquidation and subsequently retired with no impact to earnings. See Note 17 (Preferred Stock) for additional information about trust preferred securities.

Certain money market funds are also excluded from the previous tables because they are exempt from the consolidation analysis. We voluntarily waived a portion of our management fees for these money market funds to maintain a minimum level of daily net investment income. The amount of fees waived was $11 million and $10 million in first quarter 2020 and 2019, respectively.

Note 8:11: Mortgage Banking Activities (continued)

Note 8:11: Mortgage Banking Activities

Mortgage banking activities ~~included in the Community Banking and Wholesale Banking operating segments,~~ consist of residential and commercial mortgage originations, ~~sale activity~~sales and servicing.

We apply the amortization method to commercial MSRs and ~~apply~~ the fair value method to residential MSRs. Table ~~8.1~~11.1 presents the changes in MSRs measured using the fair value method.

Table ~~8.1:~~11.1:Analysis of Changes in Fair Value MSRs



	Quarter ended March 31,
(in millions)	2020			2019
Fair value, beginning of period	$	11,517		14,649
Servicing from securitizations or asset transfers (1)	461			341
Sales and other (2)	(31		)	(281	)
Net additions	430			60
Changes in fair value:
Due to changes in valuation model inputs or assumptions:
Mortgage interest rates (3)	(3,022		)	(940	)
Servicing and foreclosure costs (4)	(73		)	12
Discount rates (5)	27			100
Prepayment estimates and other (6)	(189		)	(63	)
Net changes in valuation model inputs or assumptions	(3,257		)	(891	)
Changes due to collection/realization of expected cash flows over time (7)	(564		)	(482	)
Total changes in fair value	(3,821		)	(1,373	)
Fair value, end of period	$	8,126		13,336

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2017
2016
2017
2016
Fair value, beginning of period $ 12,789
10,396
12,959
12,415
Purchases 541
—
541
—
Servicing from securitizations or asset transfers (1) 605
609
1,624
1,452
Sales and other (2) 64
4
9
(18 )
Net additions 1,210
613
2,174
1,434
Changes in fair value:
Due to changes in valuation model inputs or assumptions:
Mortgage interest rates (3) (171 ) 39
(324 ) (1,824 )
Servicing and foreclosure costs (4) 60
(10 ) 73
13
Prepayment estimates and other (5) (31 ) (37 ) (77 ) 22
Net changes in valuation model inputs or assumptions (142 ) (8 ) (328 ) (1,789 )
Changes due to collection/realization of expected cash flows over time (519 ) (586 ) (1,467 ) (1,645 )
Total changes in fair value (661 ) (594 ) (1,795 ) (3,434 )
Fair value, end of period $ 13,338
10,415
13,338
10,415


(1)	Includes impacts associated with exercising cleanup calls on securitizations as well as our right to repurchase delinquent loans from GNMA loan securitization pools. Total reported MSRs may increase upon repurchase due to servicing liabilities associated with these delinquent GNMA loans.


(2)	Includes sales and transfers of MSRs, which can result in an increase of total reported MSRs if the sales or transfers are related to nonperforming loan portfolios or portfolios with servicing liabilities.


(3)	Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates (such as changes in estimated interest earned on custodial deposit balances).


(4)	Includes costs to service and unreimbursed foreclosure costs.


(5)	Reflects discount rate assumption change, excluding portion attributable to changes in mortgage interest rates.


(6)	Represents changes driven by ~~other~~updates to valuation model inputs or assumptions including prepayment speed estimation changes and other assumption updates. Prepayment speed estimation changes are influenced by observed changes in borrower behavior and other external factors that occur independent of interest rate changes.


(7)	Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.

Table ~~8.2~~11.2 presents the changes in amortized MSRs.

Table ~~8.2:~~11.2:Analysis of Changes in Amortized MSRs


	Quarter ended Sep 30,					Nine months ended Sep 30,				Quarter ended March 31,
(in millions)	2017			2016		2017		2016		2020			2019
Balance, beginning of period	$	1,399		1,353		1,406		1,308		$	1,430		1,443
Purchases	31			18		75		63		8			24
Servicing from securitizations or asset transfers	41			69		123		204		34			26
Amortization	(65		)	(67	)	(198	)	(202	)	(66		)	(66	)
Balance, end of period (1)	$	1,406		1,373		1,406		1,373		$	1,406		1,427
Fair value of amortized MSRs:
Beginning of period	$	1,989		1,620		1,956		1,680		$	1,872		2,288
End of period	1,990			1,627		1,990		1,627		1,490			2,149


(1)	Commercial amortized MSRs are evaluated for impairment purposes by the following risk strata: agency (GSEs) for multi-family properties and non-agency. There was no0 valuation allowance recorded for the periods presented on the commercial amortized MSRs.

We present the components of our managed servicing portfolio in Table ~~8.3~~11.3 at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced.

Table ~~8.3:~~11.3:Managed Servicing Portfolio



(in billions)	Mar 31, 2020			Dec 31, 2019
Residential mortgage servicing:
Serviced and subserviced for others	$	1,041		1,065
Owned loans serviced	341			343
Total residential servicing	1,382			1,408
Commercial mortgage servicing:
Serviced and subserviced for others	573			575
Owned loans serviced	124			124
Total commercial servicing	697			699
Total managed servicing portfolio	$	2,079		2,107
Total serviced for others, excluding subserviced for others	$	1,602		1,629
Ratio of MSRs to related loans serviced for others	0.60		%	0.79

(in billions) Sep 30, 2017
Dec 31, 2016
Residential mortgage servicing:
Serviced for others $ 1,223
1,205
Owned loans serviced 340
347
Subserviced for others 3
8
Total residential servicing 1,566
1,560
Commercial mortgage servicing:
Serviced for others 480
479
Owned loans serviced 128
132
Subserviced for others 8
8
Total commercial servicing 616
619
Total managed servicing portfolio $ 2,182
2,179
Total serviced for others $ 1,703
1,684
Ratio of MSRs to related loans serviced for others 0.87 % 0.85

Table ~~8.4~~11.4 presents the components of mortgage banking noninterest income.

Table ~~8.4:~~11.4:Mortgage Banking Noninterest Income


		Quarter ended Sep 30,					Nine months ended Sep 30,					Quarter ended March 31,
(in millions)		2017			2016		2017		2016			2020			2019
Servicing income, net:
Servicing fees:
Contractually specified servicing fees		$	889		954		2,696		2,857			$	808		840
Late charges		41			45		133		135			27			33
Ancillary fees		51			56		160		171			30			38
Unreimbursed direct servicing costs (1)		(186		)	(177	)	(430	)	(533	)		(107		)	(70	)
Net servicing fees		795			878		2,559		2,630			758			841
Changes in fair value of MSRs carried at fair value:
Due to changes in valuation model inputs or assumptions (2)	(A)	(142		)	(8	)	(328	)	(1,789	)	(A)	(3,257		)	(891	)
Changes due to collection/realization of expected cash flows over time(3)		(519		)	(586	)	(1,467	)	(1,645	)		(564		)	(482	)
Total changes in fair value of MSRs carried at fair value		(661		)	(594	)	(1,795	)	(3,434	)		(3,821		)	(1,373	)
Amortization		(65		)	(67	)	(198	)	(202	)		(66		)	(66	)
Net derivative gains from economic hedges ~~(3)~~(4)	(B)	240			142		599		2,575		(B)	3,400			962
Total servicing income, net		309			359		1,165		1,569			271			364
Net gains on mortgage loan origination/sales activities(5)		737			1,308		2,257		3,110			108			344
Total mortgage banking noninterest income		$	1,046		1,667		3,422		4,679			$	379		708
Market-related valuation changes to MSRs, net of hedge results ~~(3)~~(4)	(A)+(B)	$	98		134		271		786		(A)+(B)	$	143		71


(1)	Includes costs associated with foreclosures, unreimbursed interest advances to investors, and other interest costs.


(2)	Refer to the analysis of changes in fair value MSRs presented in Table ~~8.1~~11.1 in this Note for more detail.


(3)	Represents the reduction in in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.


(4)	Represents results from economic hedges used to hedge the risk of changes in fair value of MSRs. See Note ~~12 (Derivatives Not Designated as Hedging Instruments)~~15 (Derivatives) for additional discussion and detail.

~~Note 8: Mortgage Banking Activities (continued~~)

Table 8.5 summarizes the changes in our liability for mortgage loan repurchase losses. This liability is in “Accrued expenses and other liabilities” in our consolidated balance sheet and adjustments to the repurchase liability are recorded in net gains on mortgage loan origination/sales activities in “Mortgage banking” in our consolidated income statement.

loss, and is based on currently available information, significant judgment, and a number of assumptions that are subject to change. The high end of this range of reasonably possible losses exceeded our recorded liability by $180 million at September 30, 2017, and was determined based upon modifying the assumptions (particularly to assume significant changes in investor repurchase demand practices) used in our best estimate of probable loss to reflect what we believe to be the high end of reasonably possible adverse assumptions.

~~Table 8.5:Analysis of Changes in Liability for Mortgage Loan Repurchase Losses~~

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2017
2016
2017
2016
Balance, beginning of period $ 178
255
229
378
Assumed with MSR purchases (1) 10
—
10
—
Provision for repurchase losses:
Loan sales 6
11
20
26
Change in estimate (2) (12 ) (24 ) (65 ) (132 )
Net reductions to provision (6 ) (13 ) (45 ) (106 )
Losses (3 ) (3 ) (15 ) (33 )
Balance, end of period $ 179
239
179
239


~~(1)~~(5)	~~Represents repurchase liability associated with portfolio~~ Includes net losses of $(929) million and $(151) million in first quarter 2020 and 2019, respectively, related to derivatives used as economic hedges of mortgage loans ~~underlying mortgage servicing rights acquired during the period.~~


~~(2)~~	~~Results from changes in investor demand~~held for sale and ~~mortgage insurer practices, credit deterioration and changes in the financial stability of correspondent lenders.~~derivative loan commitments.

Note 12: Intangible Assets (continued)

Note 9:12: Intangible Assets

Table ~~9.1~~12.1 presents the gross carrying value of intangible assets and accumulated amortization.

Table ~~9.1:~~12.1:Intangible Assets


	September 30, 2017					December 31, 2016				March 31, 2020					December 31, 2019
(in millions)	Gross carrying value		Accumulated amortization		Net carrying value	Gross carrying value	Accumulated amortization		Net carrying value	Gross carrying value		Accumulated amortization		Net carrying value	Gross carrying value	Accumulated amortization		Net carrying value
Amortized intangible assets (1):
MSRs (2)	$	3,793	(2,387	)	1,406	3,595	(2,189	)	1,406	$	4,465	(3,059	)	1,406	4,422	(2,992	)	1,430
Core deposit intangibles	12,834		(11,853	)	981	12,834	(11,214	)	1,620
Customer relationship and other intangibles	3,991		(3,073	)	918	3,928	(2,839	)	1,089	879		(480	)	399	947	(524	)	423
Total amortized intangible assets	$	20,618	(17,313	)	3,305	20,357	(16,242	)	4,115	$	5,344	(3,539	)	1,805	5,369	(3,516	)	1,853
Unamortized intangible assets:
MSRs (carried at fair value) (2)	$	13,338				12,959				$	8,126				11,517
Goodwill	26,581					26,693				26,381					26,390
Trademark	14					14				14					14


(1)	~~Excludes fully amortized intangible assets.~~Balances are excluded commencing in the period following full amortization.


(2)	See Note 811 (Mortgage Banking Activities) for additional information on MSRs.

Table ~~9.2~~12.2 provides the current year and estimated future amortization expense for amortized intangible assets. We based our projections of amortization expense shown below on existing

asset balances at ~~September 30, 2017.~~March 31, 2020. Future amortization expense may vary from these projections.

Table ~~9.2:~~12.2:Amortization Expense for Intangible Assets



(in millions)	Amortized MSRs		Customer relationship and other intangibles	Total
Three months ended March 31, 2020 (actual)	$	67	24	91
Estimate for the remainder of 2020	$	202	71	273
Estimate for year ended December 31,
2021	235		81	316
2022	210		68	278
2023	181		59	240
2024	156		48	204
2025	130		39	169

(in millions) Amortized MSRs

Core deposit
intangibles

Customer
relationship
and other
intangibles (1)

Total
Nine months ended September 30, 2017 (actual) $ 198
639
235
1,072
Estimate for the remainder of 2017 $ 64
212
76
352
Estimate for year ended December 31,
2018 240
769
301
1,310
2019 212
—
116
328
2020 192
—
96
288
2021 166
—
82
248
2022 146
—
68
214


~~(1)~~	~~The~~ ~~nine months endedSeptember 30, 2017~~ ~~balance includes~~ ~~$11 million~~ ~~for lease intangible amortization.~~

Table ~~9.3~~12.3 shows the allocation of goodwill to our reportable operating segments.

~~Table 9.3:Goodwill~~

(in millions)
Community
Banking

Wholesale
Banking

Wealth and Investment Management

Consolidated
Company

December 31, 2015 $ 16,849
7,475
1,205

25,529
Reduction in goodwill related to divested businesses and other —
(84 ) (2 ) (86 )
Goodwill from business combinations —
1,245
—
1,245
September 30, 2016 $ 16,849
8,636
1,203
26,688
December 31, 2016 $ 16,849
8,585
1,259
26,693
Reclassification of goodwill held for sale to Other Assets (1) —
(116 ) —
(116 )
Reduction in goodwill related to divested businesses and other —
(20 ) —
(20 )
Goodwill from business combinations —
—
24
24
September 30, 2017 (1) $ 16,849
8,449
1,283
26,581


~~(1)~~	~~Goodwill reclassified to held-for-sale in other assets of~~ ~~$116 million~~ ~~for the nine months ended~~ ~~September 30, 2017~~ ~~relates to the sales agreement for Wells Fargo Insurance Services USA (and related businesses) and Wells Fargo Shareowner Services.~~ No ~~goodwill was classified as held-for-sale in other assets at~~ ~~December 31, 2016~~ ~~and~~ ~~2015~~.

We assess goodwill for impairment at a

reporting unit level, which is generally one level below the operating segments. ~~See Note 18 (Operating Segments) for further information on management reporting.~~

Table 12.3:Goodwill



(in millions)	Community Banking		Wholesale Banking		Wealth and Investment Management	Consolidated Company
December 31, 2018	$	16,685	8,450		1,283	26,418
Foreign currency translation	—		2		—	2
March 31, 2019	$	16,685	8,452		1,283	26,420
December 31, 2019	$	16,685	8,429		1,276	26,390
Foreign currency translation	—		(9	)	—	(9	)
March 31, 2020	$	16,685	8,420		1,276	26,381

Note ~~10:~~13: Guarantees, Pledged Assets and Collateral, and Other Commitments

arrangements. For complete descriptions of our guarantees, see Note 1416 (Guarantees, Pledged Assets and ~~Collateral) to Financial Statements~~Collateral, and Other Commitments) in our ~~2016~~2019 Form 10-K. Table ~~10.1~~13.1 shows carrying value, maximum exposure to loss on our guarantees and the related non-investment grade amounts.

Table ~~10.1:~~13.1:Guarantees – Carrying Value and Maximum Exposure to Loss

Maximum exposure to loss
(in millions)
Carrying
value of obligation (asset)

Expires in
one year
or less

Expires after
one year
through
three years

Expires after
three years
through
five years

Expires
after five
years

Total

Non-
investment
grade

September 30, 2017
Standby letters of credit (1) $ 37
14,045
8,621
3,251
689
26,606
8,325
Securities lending and other indemnifications (2) —
—
—
2
929
931
2
Written put options (3) (407 ) 15,576
11,921
4,392
1,260
33,149
19,817
Loans and MHFS sold with recourse (4) 51
203
508
914
9,160
10,785
7,964
Factoring guarantees (5) —
775
—
—
—
775
711
Other guarantees 1
4
4
2
4,093
4,103
7
Total guarantees $ (318 ) 30,603
21,054
8,561
16,131
76,349
36,826
December 31, 2016
Standby letters of credit (1) $ 38
16,050
8,727
3,194
658
28,629
9,898
Securities lending and other indemnifications (2) —
—
—
1
1,166
1,167
2
Written put options (3) 37
10,427
10,805
4,573
1,216
27,021
15,915
Loans and MHFS sold with recourse (4) 55
84
637
947
8,592
10,260
7,228
Factoring guarantees (5) —
1,109
—
—
—
1,109
1,109
Other guarantees 6
19
21
17
3,580
3,637
15
Total guarantees $ 136
27,689
20,190
8,732
15,212
71,823
34,167



				Maximum exposure to loss
(in millions)	Carrying value of obligation (asset)			Expires in one year or less	Expires after one year through three years	Expires after three years through five years	Expires after five years	Total	Non- investment grade
March 31, 2020
Standby letters of credit	$	83		12,016	3,839	2,756	429	19,040	7,183
Direct pay letters of credit	—			1,674	3,955	836	40	6,505	1,321
Written options (1)	690			18,799	10,315	2,387	327	31,828	24,176
Loans and MLHFS sold with recourse (2)	28			111	712	1,333	10,039	12,195	10,000
Exchange and clearing house guarantees	—			—	—	—	5,054	5,054	—
Other guarantees and indemnifications (3)	1			610	3	1	450	1,064	559
Total guarantees	$	802		33,210	18,824	7,313	16,339	75,686	43,239
December 31, 2019
Standby letters of credit	$	36		11,569	4,460	2,812	467	19,308	7,104
Direct pay letters of credit	—			1,861	3,815	824	105	6,605	1,184
Written options (1)	(345		)	17,088	10,869	2,341	273	30,571	18,113
Loans and MLHFS sold with recourse (2)	52			114	576	1,356	10,050	12,096	9,835
Exchange and clearing house guarantees	—			—	—	—	4,817	4,817	—
Other guarantees and indemnifications (3)	1			785	1	3	809	1,598	698
Total guarantees	$	(256	)	31,417	19,721	7,336	16,521	74,995	36,934

(1)

~~Total maximum exposure to loss includes direct pay letters of credit (DPLCs) of~~ ~~$8.6 billion~~ ~~and~~ ~~$9.2 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016~~, respectively. We issue DPLCs to provide credit enhancements for certain bond issuances. Beneficiaries (bond trustees) may draw upon these instruments to make scheduled principal and interest payments, redeem all outstanding bonds because a default event has occurred, or for other reasons as permitted by the agreement. We also originate multipurpose lending commitments under which borrowers have the option to draw on the facility in one of several forms, including as a standby letter of credit. Total maximum exposure to loss includes the portion of these facilities for which we have issued standby letters of credit under the commitments.

~~(2)~~

~~Includes indemnifications provided to certain third-party clearing agents. Outstanding customer obligations under these arrangements were~~ ~~$92 million~~ ~~and~~ ~~$175 million~~ ~~with related collateral of~~ ~~$837 million~~ ~~and~~ ~~$991 million~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively. Estimated maximum exposure to loss was~~ ~~$929 million~~ at ~~September 30, 2017~~ ~~and~~ ~~$1.2 billion~~ at ~~December 31, 2016~~.


~~(3)~~	Written ~~put~~ options, which are in the form of derivatives, are also included in the derivative disclosures in Note 1215 (Derivatives). Carrying value net asset position is a result of certain deferred premium option trades.

~~(4)~~(2)

Represent recourse provided, predominantly to the GSEs, on loans sold under various programs and arrangements. ~~Under these arrangements, we repurchased~~ ~~$1 million~~ ~~and~~ ~~$3 million~~ ~~respectively, of loans associated with these agreements in the~~ ~~third~~ ~~quarter and~~ ~~first nine months of 2017, and~~ ~~$2 million~~ ~~and~~ ~~$4 million~~ ~~in the same periods of~~ ~~2016, respectively.~~

~~(5)~~(3)

~~Consists~~

Includes indemnifications provided to certain third-party clearing agents. Outstanding customer obligations under these arrangements were $27 million and $80 million with related collateral of ~~guarantees made under certain factoring arrangements to purchase trade receivables from third parties, generally upon their request, if receivable debtors default on their payment obligations.~~$389 million and $696 million at March 31, 2020, and December 31, 2019, respectively.

“Maximum exposure to loss” and “Non-investment grade” are required disclosures under GAAP. Maximum exposure to loss represents the estimated loss that would be incurred under an assumed hypothetical circumstance, despite what we believe is a remote possibility, where the value of our interests and any associated collateral declines to zero. Maximum exposure to loss estimates in Table 13.1 do not reflect economic hedges or collateral we could use to offset or recover losses we may incur under our guarantee agreements. Accordingly, this required disclosure is not an indication of expected loss. We believe the carrying value is more representative of our exposure to loss than maximum exposure to loss. The carrying value represents the fair value of the guarantee, if any, and also includes an ACL for guarantees, if applicable.

Non-investment grade represents those guarantees on which we have a higher risk of ~~being required to perform~~performance under the terms of the guarantee. If the underlying assets under the guarantee are non-investment grade (that is, an external rating that is below investment grade or an internal credit default grade that is equivalent to a below investment grade external rating), we consider the risk of performance to be high. Internal credit default grades are determined based upon the same credit policies that we use to evaluate the risk of payment or performance when making loans and other extensions of credit. Credit quality indicators we usually consider in evaluating risk of

payments or performance are described in Note 56 (Loans and Related Allowance for Credit Losses).

~~Maximum exposure to loss represents~~The Parent fully and unconditionally guarantees the ~~estimated loss that would be incurred under an assumed hypothetical circumstance, despite what we believe is a remote possibility, where the value~~payment of ~~our interests~~principal, interest, and any ~~associated collateral declines to zero. Maximum exposure to loss estimates in Table 10.1 do not reflect economic hedges or collateral we could use to offset or recover losses we~~other amounts that may ~~incur under our guarantee agreements. Accordingly, this required disclosure is not an indication~~be due on securities that its 100% owned finance subsidiary, Wells Fargo Finance LLC, may issue. These guaranteed liabilities were $2.1 billion and $1.6 billion at March 31, 2020 and December 31, 2019, respectively. These guarantees rank on parity with all of ~~expected loss. We believe~~ the carrying value, which is either fair value for derivative-related products or the allowance for lending-related commitments, is more representative of our exposure to loss than maximum exposure to loss.Parent’s other unsecured and unsubordinated indebtedness.

Note ~~10:~~13: Guarantees, Pledged Assets and Collateral, and Other Commitments (continued)

Pledged Assets

Table 13.2 provides the carrying amount of on-balance sheet pledged assets and the fair value of other pledged collateral. Other pledged collateral is collateral we have received from third parties, have the right to repledge and is not recognized on our balance sheet.

TRADING RELATED ACTIVITY Our trading businesses may pledge debt and equity securities in connection with securities sold under agreements to repurchase (repurchase agreements) and securities lending arrangements. The collateral that we pledge related to our trading activities may include our own collateral as well as collateral that we have received from third parties and have the right to repledge. Substantially all of the trading activity pledged collateral is eligible to be repledged or sold by the secured party.

NON-TRADING RELATED ACTIVITYAs part of our liquidity management strategy, we may pledge ~~various~~loans, debt securities, and

other assets to secure trust and public deposits, borrowings and letters of credit from the ~~FHLB~~Federal Home Loan Bank (FHLB) and FRB ~~securities sold under agreements to repurchase (repurchase agreements), securities lending arrangements,~~ and for other purposes as required or permitted by law or insurance statutory requirements. ~~The~~Substantially all of the non-trading activity pledged collateral is not eligible to be repledged or sold by the secured party.

VIE RELATED We pledge assets in connection with various types of ~~collateral we pledge include securities issued by federal agencies, GSEs, domestic and foreign companies and various commercial and consumer loans. Table 10.2 provides the total carrying amount of~~transactions entered into with VIEs. These pledged assets ~~by asset type and pledged off-~~

balance sheet securities for securities financings. The table excludes pledged consolidated VIE assets of $12.9 billion and $13.4 billion at September 30, 2017, and December 31, 2016, respectively, which can only be used to settle the liabilities of those entities. ~~The table~~We also ~~excludes $1.1 billion in assets pledged in transactions with VIE's accounted~~have loans recorded on our balance sheet which represent certain delinquent loans that are eligible for ~~as secured borrowings at both September 30, 2017, and December 31, 2016, respectively.~~repurchase from GNMA loan securitizations. See Note 710 (Securitizations and Variable Interest Entities) for additional information on consolidated VIE assets and VIEs accounted for as secured borrowings.

Table ~~10.2:~~13.2:Pledged Assets (1)

(in millions) Sep 30,
2017
Dec 31,
2016
Trading assets and other (1) $ 100,160
84,603
Investment securities (2) 67,142
90,946
Mortgages held for sale and loans (3) 480,422
516,112
Total pledged assets $ 647,724
691,661



(in millions)	Mar 31, 2020		Dec 31, 2019
Related to trading activities:
Repledged third-party owned debt and equity securities	$	61,479	60,083
Trading debt securities and other	39,828		51,083
Equity securities	1,122		1,379
Total pledged assets related to trading activities	102,429		112,545
Related to non-trading activities:
Loans	400,111		406,106
Debt securities:
Available-for-sale	59,116		61,126
Held-to-maturity	3,884		3,685
Mortgage loans held for sale	1,877		2,266
Total pledged assets related to non-trading activities	464,988		473,183
Related to VIEs:
Consolidated VIE assets	14,096		14,368
VIEs accounted for as secured borrowings	77		80
Loans eligible for repurchase from GNMA securitizations	533		568
Total pledged assets related to VIEs	14,706		15,016
Total pledged assets	$	582,123	600,744

(1)

~~Consists of trading assets of~~ ~~$40.1 billion~~ ~~and~~ ~~$33.2 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively and off-balance sheet securities of~~ ~~$60.1 billion~~ ~~and~~ ~~$51.4 billion~~ ~~as of~~Prior period amounts have been revised to conform with the ~~same dates, respectively, that are pledged as collateral for repurchase agreements and other securities financings. Total trading assets and other includes~~ ~~$100.1 billion~~ ~~and~~ ~~$84.2 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively that permit the secured parties to sell or repledge the collateral.~~

~~(2)~~

~~Includes carrying value of~~ ~~$5.0 billion~~ ~~and~~ ~~$6.2 billion~~ ~~(fair value of~~ ~~$5.0 billion~~ ~~and $6.2 billion) in collateral for repurchase agreements at~~ ~~September 30, 2017, and~~ ~~December 31, 2016, respectively, which are pledged under agreements that do not permit the secured parties to sell or repledge the collateral. Also includes~~ ~~$84 million~~ ~~and~~ ~~$617 million~~ ~~in collateral pledged under repurchase agreements at~~ ~~September 30, 2017, and~~ ~~December 31, 2016~~, respectively, that permit the secured parties to sell or repledge the collateral. All other pledged securities are pursuant to agreements that do not permit the secured party to sell or repledge the collateral.

~~(3)~~

~~Includes mortgages held for sale of~~ ~~$1.3 billion~~ ~~and~~ ~~$15.8 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively. Substantially all of the total mortgages held for sale and loans are pledged under agreements that do not permit the secured parties to sell or repledge the collateral. Amounts exclude~~ ~~$1.3 billion~~ ~~and~~ ~~$1.2 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively, of pledged loans recorded on our balance sheet representing certain delinquent loans that are eligible for repurchase from GNMA loan securitizations.~~

current period presentation.

Securities Financing Activities

We enter into resale and repurchase agreements and securities borrowing and lending agreements (collectively, “securities financing activities”) typically to finance trading positions (including securities and derivatives), acquire securities to cover short trading positions, accommodate customers’ financing needs, and settle other securities obligations. These activities are conducted through our ~~broker dealer~~broker-dealer subsidiaries and to a lesser extent through other bank entities. Most of our securities financing activities involve high quality, liquid securities such as U.S. Treasury securities and government agency securities, and to a lesser extent, less liquid securities, including equity securities, corporate bonds and asset-backed securities. We account for these transactions as collateralized financings in which we typically receive or pledge securities as collateral. We believe these financing transactions generally do not have material credit risk given the collateral provided and the related monitoring processes.

OFFSETTING OF ~~RESALE AND REPURCHASE AGREEMENTS AND~~ SECURITIES ~~BORROWING AND LENDING AGREEMENTS~~FINANCING ACTIVITIES Table ~~10.3~~13.3 presents resale and repurchase agreements subject to master repurchase agreements (MRA) and securities borrowing and lending agreements subject to master securities lending agreements (MSLA). We account for

transactions subject to these agreements as collateralized financings, and those with a single counterparty are presented net on our balance sheet, provided certain criteria are met that permit balance sheet netting. Most transactions subject to these agreements do not meet those criteria and thus are not eligible for balance sheet netting.

Collateral we pledged consists of non-cash instruments, such as securities or loans, and is not netted on the balance sheet against the related liability. Collateral we received includes securities or loans and is not recognized on our balance sheet. Collateral pledged or received may be increased or decreased over time to maintain certain contractual thresholds, as the assets underlying each arrangement fluctuate in value. Generally, these agreements require collateral to exceed the asset or liability

recognized on the balance sheet. The following table includes the amount of collateral pledged or received related to exposures subject to enforceable MRAs or MSLAs. While these agreements are typically over-collateralized, U.S. GAAP requires disclosure in this table to limit the reported amount of such collateral to the

amount of the related recognized asset or liability for each counterparty.

In addition to the amounts included in Table ~~10.3,~~13.3, we also have balance sheet netting related to derivatives that is disclosed in Note 1215 (Derivatives).

Table ~~10.3:~~13.3:Offsetting – ~~Resale and Repurchase Agreements~~Securities Financing Activities


(in millions)	Sep 30, 2017			Dec 31, 2016		Mar 31, 2020			Dec 31, 2019
Assets:
Resale and securities borrowing agreements
Gross amounts recognized	$	109,529		91,123		$	128,844		140,773
Gross amounts offset in consolidated balance sheet (1)	(22,954		)	(11,680	)	(22,762		)	(19,180	)
Net amounts in consolidated balance sheet (2)	86,575			79,443		106,082			121,593
Collateral not recognized in consolidated balance sheet (3)	(85,777		)	(78,837	)	(105,136		)	(120,786	)
Net amount (4)	$	798		606		$	946		807
Liabilities:
Repurchase and securities lending agreements
Gross amounts recognized (5)	$	102,281		89,111		$	101,516		111,038
Gross amounts offset in consolidated balance sheet (1)	(22,954		)	(11,680	)	(22,762		)	(19,180	)
Net amounts in consolidated balance sheet (6)	79,327			77,431		78,754			91,858
Collateral pledged but not netted in consolidated balance sheet (7)	(79,060		)	(77,184	)	(78,412		)	(91,709	)
Net amount (8)	$	267		247		$	342		149


(1)	Represents recognized amount of resale and repurchase agreements with counterparties subject to enforceable MRAs that have been offset in the consolidated balance sheet.

(2)

At ~~September 30, 2017~~,Includes $86.4 billion and ~~December 31, 2016, includes~~ ~~$66.0~~$102.1 billion ~~and~~ ~~$58.1 billion, respectively,~~ classified on our consolidated balance sheet in federal funds sold and securities purchased under resale agreements at March 31, 2020, and ~~other short-term investments~~December 31, 2019, respectively. Also includes securities purchased under long-term resale agreements (generally one year or more) classified in loans, which totaled $19.7 billion and ~~$20.6~~$19.5 billion, at March 31, 2020, and ~~$21.3 billion, respectively, in loans.~~

December 31, 2019, respectively.

(3)

Represents the fair value of collateral we have received under enforceable MRAs or MSLAs, limited ~~for~~in the table ~~presentation purposes~~above to the amount of the recognized asset due from each counterparty. At ~~September 30, 2017~~,March 31, 2020, and December 31, ~~2016~~,2019, we have received total collateral with a fair value of ~~$120.5~~$138.7 billion and ~~$102.3~~$150.9 billion,, respectively, all of which, we have the right to sell or repledge. These amounts include securities we have sold or repledged to others with a fair value of ~~$58.4~~$61.1 billion at ~~September 30, 2017~~,March 31, 2020, and ~~$50.0~~$59.1 billion at December 31, ~~2016~~.

2019.


(4)	Represents the amount of our exposure that is not collateralized and/or is not subject to an enforceable MRA or MSLA.


(5)	For additional information on underlying collateral and contractual maturities, see the “Repurchase and Securities Lending Agreements” section in this Note.


(6)	Amount is classified in short-term borrowings on our consolidated balance sheet.

(7)

Represents the fair value of collateral we have pledged, related to enforceable MRAs or MSLAs, limited ~~for~~in the table ~~presentation purposes~~above to the amount of the recognized liability owed to each counterparty. At ~~September 30, 2017~~,March 31, 2020, and December 31, ~~2016~~,2019, we have pledged total collateral with a fair value of ~~$104.2~~$103.4 billion and ~~$91.4~~$113.3 billion,, respectively, substantially all of which may be sold or repledged by the ~~counterparty does not have the right to sell or repledge~~ ~~$5.0 billion~~ ~~as of~~ ~~September 30, 2017~~ ~~and~~ ~~$6.6 billion~~ ~~as of~~ ~~December 31, 2016~~.

counterparty.


(8)	Represents the amount of our obligation that is not covered by pledged collateral and/or is not subject to an enforceable MRA or MSLA.

~~Note 10: Guarantees, Pledged Assets and Collateral (continued~~)

REPURCHASE AND SECURITIES LENDING AGREEMENTS Securities sold under repurchase agreements and securities lending arrangements are effectively short-term collateralized borrowings. In these transactions, we receive cash in exchange for transferring securities as collateral and recognize an obligation to reacquire the securities for cash at the ~~transaction's~~transaction’s maturity. These types of transactions create risks, including (1) the counterparty may fail to return the securities at maturity, (2) the fair value of the securities transferred may decline below the amount of our obligation to reacquire the securities, and therefore create an obligation for us to pledge additional amounts, and (3) the counterparty may accelerate the maturity

on demand, requiring us to reacquire the security prior to contractual maturity. We attempt to mitigate these risks ~~by the fact that most~~in various ways. Most of our ~~securities financing activities involve~~collateral consists of highly liquid ~~securities,~~securities. In addition, we underwrite and monitor the financial strength of our counterparties, we monitor the fair value of collateral pledged relative to contractually required repurchase amounts, and we monitor that our collateral is properly returned through the clearing and settlement process in advance of our cash repayment. Table ~~10.4~~13.4 provides the ~~underlying collateral types~~gross amounts recognized on the balance sheet (before the effects of offsetting) of our ~~gross obligations under~~liabilities for repurchase and securities lending ~~agreements.~~agreements disaggregated by underlying collateral type.

Note 13: Guarantees, Pledged Assets and Collateral, and Other Commitments (continued)

Table ~~10.4:~~13.4:Gross Obligations by Underlying Collateral ~~Types of Gross Obligations~~Type


(in millions)	Sep 30, 2017		Dec 31, 2016	Mar 31, 2020		Dec 31, 2019
Repurchase agreements:
Securities of U.S. Treasury and federal agencies	$	44,312	34,335	$	50,787	48,161
Securities of U.S. States and political subdivisions	120		81	89		104
Federal agency mortgage-backed securities	33,456		32,669	32,027		44,737
Non-agency mortgage-backed securities	1,548		2,167	1,263		1,818
Corporate debt securities	7,381		6,829	10,048		7,126
Asset-backed securities	1,873		3,010	1,460		1,844
Equity securities	368		1,309	721		1,674
Other	1,300		1,704	514		705
Total repurchases	90,358		82,104	96,909		106,169
Securities lending:
Securities lending arrangements:
Securities of U.S. Treasury and federal agencies	134		152	134		163
Federal agency mortgage-backed securities	80		104
Non-agency mortgage-backed securities	—		1
Corporate debt securities	592		653	364		223
Equity securities (1)	11,117		6,097	4,100		4,481
Other				9		2
Total securities lending	11,923		7,007	4,607		4,869
Total repurchases and securities lending	$	102,281	89,111	$	101,516	111,038


(1)	Equity securities are generally exchange traded and represent collateral received from third parties that has been repledged. We received the collateral through either ~~re-hypothecated under~~ margin lending agreements or ~~obtained through~~ contemporaneous securities borrowing transactions with other counterparties.

Table ~~10.5~~13.5 provides the contractual maturities of our gross obligations under repurchase and securities lending agreements.

Table ~~10.5:~~13.5:Contractual Maturities of Gross Obligations


(in millions)	Overnight/continuous		Up to 30 days	30-90 days	>90 days	Total gross obligation	Overnight/continuous		Up to 30 days	30-90 days	>90 days	Total gross obligation
September 30, 2017
March 31, 2020
Repurchase agreements	$	73,953	8,212	3,898	4,295	90,358	$	75,413	7,681	10,680	3,135	96,909
Securities lending	9,765		405	1,753	—	11,923
Securities lending arrangements							4,392		65	150	—	4,607
Total repurchases and securities lending (1)	$	83,718	8,617	5,651	4,295	102,281	$	79,805	7,746	10,830	3,135	101,516
December 31, 2016
December 31, 2019
Repurchase agreements	$	60,516	9,598	6,762	5,228	82,104	$	79,793	17,681	4,825	3,870	106,169
Securities lending	5,565		167	1,275	—	7,007
Securities lending arrangements							4,724		—	145	—	4,869
Total repurchases and securities lending (1)	$	66,081	9,765	8,037	5,228	89,111	$	84,517	17,681	4,970	3,870	111,038


(1)	Securities lending is executed under agreements that allow either party to terminate the transaction without notice, while repurchase agreements have a term structure to them that technically matures at a point in time. The overnight/continuous repurchase agreements require election of both parties to roll the trade rather than the election to terminate the arrangement as in securities lending.

OTHER COMMITMENTS To meet the financing needs of our customers, we may enter into commitments to purchase debt and equity securities to provide capital for their funding, liquidity or other future needs. As of March 31, 2020, and December 31, 2019, we had commitments to purchase debt securities of $89 million and $18 million, respectively, and commitments to purchase equity securities of $2.7 billion as of both periods.

As part of maintaining our memberships in certain clearing organizations, we are required to stand ready to provide liquidity to sustain market clearing activity in the event unforeseen events occur or are deemed likely to occur. Certain of these obligations are guarantees of other members’ performance and accordingly are included in Other guarantees and indemnifications in

Table 13.1.

Also, we have commitments to purchase loans and securities under resale agreements from certain counterparties, including central clearing organizations. The amount of our unfunded contractual commitments was $10.8 billion and $7.5 billion as of March 31, 2020, and December 31, 2019, respectively.

Given the nature of these commitments, they are excluded from Table 6.4 (Unfunded Credit Commitments) in Note 6 (Loans and Related Allowance for Credit Losses).

Note ~~11:~~14: Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory, governmental, arbitration, and other proceedings or investigations concerning matters arising from the conduct of our business activities, and many of those proceedings and investigations expose Wells Fargo to potential financial loss. These proceedings and investigations include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate-related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant legal actions pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. We establish accruals for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. For such accruals, we record the amount we consider to be the best estimate within a range of potential losses that are both probable and estimable; however, if we cannot determine a best estimate, then we record the low end of the range of those potential losses. The actual costs of resolving legal actions may be substantially higher or lower than the amounts accrued for those actions.

ATM ACCESS FEE LITIGATIONIn October 2011, plaintiffs filed a putative class action, Mackmin, ~~et.~~et al. v. Visa, Inc. ~~et.~~et al., against Wells Fargo & Company, Wells Fargo Bank, N.A., Visa, MasterCard, and several other banks in the United States District Court for the District of Columbia. Plaintiffs allege that the Visa and MasterCard requirement that if an ATM operator charges an access fee on Visa and MasterCard transactions, then that fee cannot be greater than the access fee charged for transactions on other networks, violates antitrust rules. Plaintiffs seek treble damages, restitution, injunctive relief, and attorneys’ fees where available under federal and state law. Two other antitrust cases ~~which~~that make similar allegations were filed in the same court, but these cases did not name Wells Fargo as a defendant. On February 13, 2013, the district court granted defendants’ motions to dismiss the ~~three~~3 actions. Plaintiffs appealed the dismissals and, on August 4, 2015, the United States Court of Appeals for the District of Columbia Circuit vacated the district court’s decisions and remanded the ~~three~~3 cases to the district court for further proceedings. On June 28, 2016, the United States Supreme Court granted defendants’ petitions for writ of certiorari to review the decisions of the United States Court of Appeals for the District of Columbia. On November 17, 2016, the United States Supreme Court dismissed the petitions as improvidently granted, and the ~~three~~3 cases returned to the district court for further proceedings. On March 18, 2020, the Company reached a settlement in principle pursuant to which the Company will pay $20.8 million to resolve the cases, subject to final documentation of the settlement agreement.

AUTOMOBILE LENDING MATTERS As On April 20, 2018, the Company ~~centralizes operations in its dealer services business~~entered into consent orders with the Office of the Comptroller of the Currency (OCC) and ~~tightens controls and oversight of third-party~~the Consumer Financial Protection Bureau (CFPB) to resolve, among other things, investigations by

the agencies into the Company’s compliance risk management program and its past practices involving certain automobile collateral protection insurance (CPI) policies and certain mortgage interest rate lock extensions. The consent orders require remediation to customers and the ~~Company anticipates it will identify and remediate issues related~~payment of a total of $1.0 billion in civil money penalties to ~~historical practices concerning~~ the ~~origination, servicing, and/or collection of consumer automobile loans, including related insurance products. For example, in~~agencies. In July 2017, the Company announced a plan to remediate customers who may have been

financially harmed due to issues related to automobile ~~collateral protection insurance (CPI)~~CPI policies purchased through a third-party vendor on their behalf. The Company determined that certain external vendor processes and operational controls were inadequate and, as a result, customers may have been charged premiums for CPI even if they were paying for their own vehicle insurance, as required, and in some cases the CPI premiums may have contributed to a default that led to their vehicle’s repossession. The Company discontinued the practice of placing CPI in September 2016. Multiple putative class action cases alleging, among other things, unfair and deceptive practices relating to these CPI policies, have been filed against the Company and consolidated into ~~one~~1 multi-district litigation in the United States District Court for the Central District of California. ~~Further, a former team member~~The Company has ~~alleged retaliation for raising concerns regarding automobile lending practices.~~reached an agreement to resolve the multi-district litigation pursuant to which the Company has agreed to pay, consistent with its remediation obligations under the consent orders, approximately $547 million in remediation to customers with CPI policies placed between October 15, 2005, and September 30, 2016. The settlement amount is not incremental to the Company’s remediation obligations under the consent orders, but instead encompasses those obligations, including remediation payments to date. The settlement amount is subject to change as the Company finalizes its remediation activity under the consent orders. In addition, the Company has ~~identified certain issues~~agreed to contribute $1 million to a common fund for the class. The district court granted final approval of the settlement on November 21, 2019. A putative class of shareholders also filed a securities fraud class action against the Company and its executive officers alleging material misstatements and omissions of CPI-related information in the Company’s public disclosures. In January 2020, the court dismissed this action as to all defendants except the Company and a former executive officer and limited the action to two alleged misstatements. In addition, the Company is subject to a class action lawsuit in the United States District Court for the Central District of California alleging that customers are entitled to refunds related to the unused portion of guaranteed automobile protection (GAP) waiver or insurance agreements between the customer and dealer and, by assignment, the ~~lender, which may result in refunds to customers in certain states.~~lender. Allegations related to ~~both~~ the CPI and GAP programs are among the subjects of ~~two~~ shareholder derivative lawsuits pending in federal and state court in California. The court dismissed the state court action in September 2018, but plaintiffs filed an amended complaint in ~~California~~November 2018. The parties to the state ~~court.~~court action have entered into an agreement to resolve the action pursuant to which the Company will pay plaintiffs’ attorneys’ fees and undertake certain business and governance practices. The state court granted final approval of the settlement on January 15, 2020, and a notice of appeal has been filed. These and other issues related to the origination, servicing, ~~and/or~~and collection of consumer automobile loans, including related insurance products, have also subjected the Company to formal or informal inquiries, investigations, or examinations from federal and state government agencies. In December 2018, the Company entered into an agreement with all 50 state Attorneys General and the District of Columbia to resolve an investigation into the Company’s retail sales practices, CPI and GAP, and mortgage interest rate lock matters, pursuant to which the Company paid $575 million.

CONSUMER DEPOSIT ACCOUNT RELATED REGULATORY INVESTIGATION The ~~Consumer Financial Protection Bureau (the “CFPB”) has commenced~~CFPB is conducting an investigation into

Note 14: Legal Actions (continued)

whether customers were unduly harmed by the Company’s ~~procedures regarding~~historical practices associated with the freezing (and, in many cases, closing) of consumer deposit accounts after the Company detected suspected fraudulent activity (by ~~third-parties~~third parties or account holders) that affected those accounts.

~~INADVERTENT CLIENT INFORMATION DISCLOSURE~~ ~~In July 2017,~~CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY ACT/PAYMENT PROTECTION PROGRAMPlaintiffs have filed putative class actions in state and federal court in Texas, California, and Colorado against the ~~Company inadvertently provided certain client information in response to a third-party subpoena issued in a civil litigation.~~Company. The ~~Company obtained permanent injunctions in New Jersey~~actions seek damages and ~~New York state courts requiring the electronic data and all copies to be delivered~~injunctive relief related to the ~~New Jersey state court~~Company’s offering of Paycheck Protection Program (PPP) loans under the Coronavirus Aid, Relief, and ~~the Company for safekeeping.~~Economic Security Act. The Company has ~~made voluntary self-disclosure to various~~also received formal and informal inquiries from federal and state governmental agencies regarding its offering of PPP loans.

FIDUCIARY AND CUSTODY ACCOUNT FEE CALCULATIONS Federal government agencies are conducting formal or informal inquiries, investigations, or examinations regarding fee calculations within certain fiduciary and ~~federal regulatory agencies. Notifications~~custody accounts in the Company’s investment and fiduciary services business, which is part of the wealth management business within the Wealth and Investment Management (WIM) operating segment. The Company has determined that there have been ~~sent~~instances of incorrect fees being applied to ~~clients whose personal identifying data was contained~~certain assets and accounts, resulting in both overcharges and undercharges to customers.

FOREIGN EXCHANGE BUSINESSThe United States Department of Justice (Department of Justice) is investigating certain activities in the ~~inadvertent production.~~Company’s foreign exchange business, including whether customers may have received pricing inconsistent with commitments made to those customers. Previous investigations by other federal government agencies have been resolved.

INTERCHANGE LITIGATIONPlaintiffs representing a putative class of merchants have filed putative class actions, and individual merchants have filed individual actions, against Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A., and Wachovia Corporation regarding the interchange fees associated with Visa and MasterCard payment card transactions. Visa, MasterCard, and several other banks and bank holding companies are also named as defendants in these actions. These actions have been consolidated in the United States District Court for the Eastern District of New York. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard, and payment card issuing banks unlawfully

~~Note 11: Legal Actions (continued~~)

colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012, Visa, MasterCard, and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve the consolidated class action and reached a separate settlement in principle of the consolidated individual actions. The settlement payments to be made by all defendants in the consolidated class and individual actions totaled approximately $6.6 billion before reductions applicable to certain merchants opting out of the settlement. The class settlement also provided for the distribution to class merchants of 10 basis points of default interchange across all

credit rate categories for a period of eight consecutive months. The district court granted final approval of the settlement, which was appealed to the United States Court of Appeals for the Second Circuit by settlement objector merchants. Other merchants opted out of the settlement and are pursuing several individual actions. On June 30, 2016, the Second Circuit vacated the settlement agreement and reversed and remanded the consolidated action to the United States District Court for the Eastern District of New York for further proceedings. On November 23, 2016, prior class counsel filed a petition to the United States Supreme Court, seeking review of the reversal of the settlement by the Second Circuit, and the Supreme Court denied the petition on March 27, 2017. On November 30, 2016, the district court appointed lead class counsel for a damages class and an equitable relief class. The parties have entered into a settlement agreement to resolve the money damages class claims pursuant to which defendants will pay a total of approximately $6.2 billion, which includes approximately $5.3 billion of funds remaining from the 2012 settlement and $900 million in additional funding. The Company’s allocated responsibility for the additional funding is approximately $94.5 million. The court granted final approval of the settlement on December 13, 2019, which was appealed to the United States Court of Appeals for the Second Circuit by settlement objector merchants. Several of the opt-out and direct action litigations ~~were~~have been settled ~~during the pendency of the Second Circuit appeal~~ while others remain pending. Discovery is proceeding in the opt-out litigations and the ~~remanded~~equitable relief class ~~cases.~~case.

LOW INCOME HOUSING TAX CREDITSFederal government agencies have undertaken formal or informal inquiries or investigations regarding the manner in which the Company purchased, and negotiated the purchase of, certain federal low income housing tax credits in connection with the financing of low income housing developments.

MOBILE DEPOSIT PATENT LITIGATION The Company is a defendant in 2 separate cases brought by United Services Automobile Association (USAA) in the United States District Court for the Eastern District of Texas alleging claims of patent infringement regarding mobile deposit capture technology patents held by USAA. Trial in the first case commenced on October 30, 2019, and resulted in a $200 million verdict against the Company. Trial in the second case commenced on January 6, 2020, and resulted in a $102.7 million verdict against the Company. The Company has filed post-trial motions to, among other things, vacate the verdicts, and USAA has filed post-trial motions seeking future royalty payments and damages for willful infringement.

MORTGAGE ~~BANKRUPTCY~~ LOAN MODIFICATION LITIGATION Plaintiffs representing a putative class of mortgage borrowers ~~who were debtors in Chapter 13 bankruptcy cases,~~have filed aseparate putative class ~~action,~~ ~~Cotton, et al.~~actions, Hernandez v. Wells Fargo, et alal., Coordes v. Wells Fargo, et al., Ryder v. Wells Fargo, Liguori v. Wells Fargo, and Dore v. Wells Fargo, against Wells Fargo ~~& Company and Wells Fargo~~ Bank, N.A., in the United States ~~Bankruptcy~~District Court for the Northern District of California, the United States District Court for the District of Washington, the United States District Court for the Southern District of Ohio, the United States District Court for the Southern District of New York, and the United States District Court for the Western District of ~~North Carolina on June 7, 2017. The plaintiffs~~Pennsylvania, respectively. Plaintiffs allege that Wells Fargo improperly ~~and unilaterally modified~~denied mortgage loan modifications or repayment plans to customers in the ~~mortgages~~foreclosure process due to the overstatement of borrowers who were debtors in Chapter 13 bankruptcy cases. The plaintiffs allege that Wells Fargo implemented these modifications by improperly filing mortgage payment change notices in Chapter 13 bankruptcy cases, in violation of bankruptcy rules and process. The amended complaint asserts claims based on, among other things, alleged fraud, violations of bankruptcy rules and laws, and unfair and deceptive trade practices. The amended complaint seeks monetary damages,foreclosure attorneys’ fees that were included for purposes of determining whether a customer in the foreclosure process qualified for a mortgage loan modification or

repayment plan. The district court in the Hernandez case certified a nationwide breach of contract class for foreclosed borrowers and ~~declaratory and injunctive relief.~~

~~MORTGAGE INTEREST RATE LOCK RELATED REGULATORY INVESTIGATION~~ ~~The CFPB has commenced~~denied certification on claims pertaining to other impacted borrowers. In March 2020, the Company entered into an ~~investigation into the Company’s policies and procedures regarding the circumstances in~~agreement pursuant to which the Company ~~required customers~~will pay $18.5 million to ~~pay fees for~~resolve the ~~extension~~claims of ~~interest rate lock periods for residential mortgages. On October 4, 2017,~~ the Company announced plans to reach out to all home lending customers who paid fees for mortgage rate lock extensions requested from September 16, 2013, through February 28, 2017, and to refund customers who believe they shouldn't have paid those fees. The Company is named in two putativecertified class ~~actions, filed~~ in the ~~United States~~

Hernandez case.

District Courts for the Central District of California and the Northern District of California, alleging violations of federal and state consumer fraud statutes relating to mortgage rate lock extension fees. In addition, former team members have asserted claims, including in pending litigation, that they were terminated for raising concerns regarding these policies and procedures. Allegations related to mortgage interest rate lock extension fees are also among the subjects of two shareholder derivative lawsuits filed in California state court.

~~MORTGAGE RELATED~~MORTGAGE-RELATED REGULATORY INVESTIGATIONS Federal and state government agencies, including the ~~United States~~ Department of Justice, ~~(the “Department of Justice”), continue investigations~~have been investigating or ~~examinations of~~examining certain mortgage related activities of Wells Fargo and predecessor institutions. Wells Fargo, for itself and for predecessor institutions, has responded, ~~and~~or continues to respond, to requests from these agencies seeking information regarding the origination, underwriting, and securitization of residential mortgages, including sub-prime mortgages. These agencies have advanced theories of purported liability with respect to certain of these activities. ~~The Department of Justice and Wells Fargo continue~~An agreement, pursuant to ~~discuss~~which the ~~matter, including potential settlement of the Department of Justice's concerns; however, litigation with these agencies, including with~~Company paid $2.09 billion, was reached in August 2018 to resolve the Department of Justice ~~remains~~investigation, which related to certain 2005-2007 residential mortgage-backed securities activities. In addition, the Company reached an agreement with the Attorney General of the State of Illinois in November 2018 pursuant to which the Company paid $17 million in restitution to certain Illinois state pension funds to resolve a ~~possibility.~~claim relating to certain residential mortgage-backed securities activities. Other financial institutions have entered into similar settlements with these agencies, the nature of which related to the specific activities of those financial institutions, including the imposition of significant financial penalties and remedial actions.

NOMURA/NATIXIS MORTGAGE-RELATED LITIGATION In August 2014 and August 2015, Nomura Credit & Capital Inc. (Nomura) and Natixis Real Estate Holdings, LLC (Natixis) filed a total of 7 third-party complaints against Wells Fargo Bank, N.A., in New York state court. In the underlying first-party actions, Nomura and Natixis have been sued for alleged breaches of representations and warranties made in connection with residential mortgage-backed securities sponsored by them. In the third-party actions, Nomura and Natixis allege that Wells Fargo, as master servicer, primary servicer or securities administrator, failed to notify Nomura and Natixis of their own breaches, failed to properly oversee the primary servicers, and failed to adhere to accepted servicing practices. Natixis additionally alleges that Wells Fargo failed to perform default oversight duties. Wells Fargo has asserted counterclaims alleging that Nomura and Natixis failed to provide Wells Fargo notice of their representation and warranty breaches.

OFAC RELATED INVESTIGATION The Company has self-identified an issue whereby certain foreign banks utilized a Wells Fargo software-based solution to conduct import/export trade-related financing transactions with countries and entities prohibited by the Office of Foreign Assets Control ~~(“OFAC”)~~(OFAC) of the United States Department of the Treasury. We do not believe any funds related to these transactions flowed through accounts at Wells Fargo as a result of the aforementioned conduct. The Company has made voluntary self-disclosures to OFAC and is cooperating with an inquiry from the Department of Justice.

ORDER OF POSTING LITIGATION Plaintiffs filed a series of putative class actions against Wachovia Bank, N.A., and Wells Fargo Bank, N.A., as well as many other banks, challenging the “high to low” order in which the banks post debit card transactions to consumer deposit accounts. Most of these actions were consolidated in multi-district litigation proceedings ~~(the “MDL proceedings”)~~(MDL

proceedings) in the United States District Court for the Southern District of Florida. The court in the MDL proceedings has certified a class of putative plaintiffs, and Wells Fargo moved to compel arbitration of the claims of unnamed class members. The court denied the motions to compel arbitration onin October ~~17, 2016.~~2016, and Wells Fargo ~~has~~ appealed this decision to the United States Court of Appeals for the Eleventh Circuit. In May 2018, the Eleventh Circuit ruled in Wells Fargo’s favor and found that Wells Fargo had not waived its arbitration rights and remanded the case to the district court for further proceedings. On September 26, 2019, the district court entered an order granting Wells Fargo’s motion and dismissed the claims of unnamed class members in favor of arbitration. Plaintiffs appealed this decision to the United States Court of Appeals for the Eleventh Circuit.

RETAIL SALES PRACTICES MATTERS A number of bodies or entities, including (a) federal, state, and local government agencies, including the Department of Justice, the United States Securities and Exchange Commission (SEC), and the United States Department of Labor, (b) state attorneys general, including the New York Attorney General, and (c) Congressional committees, have undertaken formal or informal inquiries, investigations, or examinations arising out of certain retail sales practices of the Company that were the subject of settlements with the CFPB, the OCC, and the Office of the Los Angeles City Attorney announced by the Company on September 8, 2016. These matters are at varying stages. The Company has responded, and continues to respond, to requests from a number of the foregoing. In October 2018, the Company entered into an agreement to resolve the New York Attorney General’s investigation pursuant to which the Company paid $65 million to the State of New York. In December 2018, the Company entered into an agreement with all 50 state Attorneys General and the District of Columbia to resolve an investigation into the Company’s retail sales practices, CPI and GAP, and mortgage interest rate lock matters, pursuant to which the Company paid $575 million. On February 21, 2020, the Company entered into an agreement with the Department of Justice to resolve the Department of Justice’s criminal investigation into the Company’s retail sales practices, as well as a separate agreement to resolve the Department of Justice’s civil investigation. As part of the Department of Justice criminal settlement, no charges will be filed against the Company provided the Company abides by all the terms of the agreement. The Department of Justice criminal settlement also includes the Company’s agreement that the facts set forth in the settlement document constitute sufficient facts for the finding of criminal violations of statutes regarding bank records and personal information. On February 21, 2020, the Company also entered into an order to resolve the SEC’s investigation arising out of the Company’s retail sales practices. The SEC order contains a finding, to which the Company consented, that the facts set forth include violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. As part of the resolution of the Department of Justice and SEC investigations, the Company has agreed to make payments totaling $3.0 billion. In addition, as part of the settlements and included in the $3.0 billion amount, the Company has agreed to the creation of a $500 million Fair Fund for the benefit of investors who were harmed by the conduct covered in the SEC settlement.

In addition, a number of lawsuits have been filed by non-governmental parties seeking damages or other remedies related to these retail sales practices. First, various class plaintiffs, purporting to represent consumers who allege that they received

Note 14: Legal Actions (continued)

products or services without their authorization or consent, have brought separate putative class actions against the Company in the United States District Court for the Northern District of California and various other jurisdictions. In April 2017, the Company entered into a settlement agreement in the first-filed action, Jabbari v. Wells Fargo Bank, N.A., pursuant to which the Company will pay $142 million to resolve claims regarding certain products or services provided without authorization or consent for the time period May 1, 2002 to April 20, 2017. The district court issued an order granting final approval of the settlement on June 14, 2018. Several appeals of the district court’s order granting final approval of the settlement have been filed with the United States Court of Appeals for the Ninth Circuit. Second, Wells Fargo shareholders brought a consolidated securities fraud class action in the United States District Court for the Northern District of California alleging certain misstatements and omissions in the Company’s disclosures related to sales practices matters. The Company entered into a settlement agreement to resolve this matter pursuant to which the Company paid $480 million. The district court issued an order granting final approval of the settlement on December 20, 2018. Third, Wells Fargo shareholders have brought numerous shareholder derivative lawsuits asserting breach of fiduciary duty claims against, among others, current and former directors and officers for their alleged involvement with and failure to detect and prevent sales practices issues. These actions are currently pending in the United States District Court for the Northern District of California and California state court as coordinated proceedings. An additional lawsuit, which asserts similar claims and is pending in Delaware state court, has been stayed. The parties have entered into settlement agreements to resolve the shareholder derivative lawsuits pursuant to which insurance carriers will pay the Company approximately $240 million for alleged damage to the Company, and the Company will pay plaintiffs’ attorneys’ fees. The federal court granted final approval of the settlement for its action on April 7, 2020. The state court granted final approval of the settlement for its action on January 15, 2020, and a notice of appeal has been filed. Fourth, multiple employment litigation matters are pending against Wells Fargo, including (a) a purported Employee Retirement Income Security Act (ERISA) class action in the United States District Court for the District of Minnesota on behalf of 401(k) plan participants; this action has been dismissed and is now on appeal; and (b) multiple single-plaintiff Sarbanes-Oxley Act complaints and state law whistleblower actions filed with the United States Department of Labor or in various state courts alleging adverse employment actions for raising sales practice misconduct issues.

RMBS TRUSTEE LITIGATION In November 2014, a group of institutional investors ~~(the “Institutional~~(Institutional Investor ~~Plaintiffs”)~~Plaintiffs), including funds affiliated with BlackRock, Inc., filed a putative class action in the United States District Court for the Southern District of New York against Wells Fargo Bank, N.A., alleging claims against the Company in its capacity as trustee for a number of residential mortgage-backed securities (RMBS) trusts ~~(the “Federal~~(Federal Court ~~Complaint”)~~Complaint). Similar complaints have been filed against other trustees in various courts, including in the Southern District of New York, in New

York state court, and in other states, by RMBS investors. The Federal Court Complaint ~~alleges~~alleged that Wells Fargo Bank, N.A., as trustee, caused losses to investors and ~~asserts~~asserted causes of action based upon, among other things, the ~~trustee's~~trustee’s alleged failure to notify and enforce repurchase obligations of mortgage loan sellers for purported breaches of representations and warranties, notify investors of alleged events of default, and abide by appropriate standards of care following alleged events of

default. Plaintiffs ~~seek~~sought money damages in an unspecified amount, reimbursement of expenses, and equitable relief. In December 2014 and December 2015, certain other investors filed ~~four~~additional complaints alleging similar claims against Wells Fargo Bank, N.A., in the Southern District of New York ~~(the “Related~~(Related Federal ~~Cases”), and the various cases pending against Wells Fargo are proceeding before the same judge. On~~Cases). In January ~~19,~~ 2016, the Southern District of New York entered an order in connection with the Federal Court Complaint dismissing claims related to certain of the trusts at issue ~~(the “Dismissed Trusts”)~~(Dismissed Trusts). The ~~Company's~~Company’s subsequent motion to dismiss the Federal Court Complaint and the complaints for the Related Federal Cases was granted in part and denied in part in March ~~2017~~.2017. In May 2017, the Company filed third-party complaints against certain investment advisors affiliated with the Institutional Investor Plaintiffs seeking contribution with respect to claims alleged in the Federal Court ~~Complaint.~~Complaint (Third-Party Claims).

A complaint raising similar allegations to the Federal Court Complaint was filed in May 2016 in New York state court by a different plaintiff investor. In addition, the Institutional Investor Plaintiffs subsequently filed a complaint relating to the Dismissed Trusts and certain additional trusts in California state court (the “California Action”). The California Action was subsequently dismissed in September 2016. In December 2016, the Institutional Investor Plaintiffs filed a new putative class action complaint in New York state court in respect of 261 RMBS trusts, including the Dismissed Trusts, for which Wells Fargo Bank, N.A., serves or served as trustee ~~(the “State~~(State Court ~~Action”)~~Action). ~~The Company has moved~~A complaint raising similar allegations to ~~dismiss~~those in the ~~State~~Federal Court ~~Action.~~Complaint was filed in May 2016 in New York state court by IKB International and IKB Deutsche Industriebank (IKB Action).

In July 2017, certain of the plaintiffs from the State Court Action filed a civil complaint relating to Wells Fargo Bank, N.A.'s’s setting aside reserves for legal fees and expenses in connection with the liquidation of ~~eleven~~11 RMBS trusts at issue in the State Court ~~Action.~~Action (Declaratory Judgment Action). The complaint ~~seeks,~~sought, among other relief, declarations that ~~Wells Fargo Bank, N.A.~~the Company is not entitled to indemnification, the advancement of funds, or the taking of reserves from trust funds for legal fees and expenses it incurs in defending the claims in the State Court Action.

In ~~September 2017, one of~~May 2019, the ~~plaintiffs in~~New York state court approved a settlement agreement among the Institutional Investor Plaintiffs and the Company pursuant to which, among other terms, the Company paid $43 million to resolve the Federal Court Complaint and the State Court Action. The settlement also resolved the Third Party Claims and the Declaratory Judgment Action. The settlement did not affect the Related Federal Cases or the IKB Action, which remain pending.

SEMINOLE TRIBE TRUSTEE LITIGATION The Seminole Tribe of Florida filed a ~~similar~~ complaint in Florida state court alleging that Wells Fargo, as trustee, charged excess fees in connection with the ~~Southern District~~administration of ~~New York seeking declaratory~~a minor’s trust and ~~injunctive relief and money damages on an individual and class action basis.~~

~~SALES PRACTICES MATTERS~~ ~~Federal, state and local government agencies, including~~failed to invest the Department of Justice, the United States Securities and Exchange Commission and the United States Department of Labor, and state attorneys general and prosecutors’ offices, as well as Congressional committees, have undertaken formal or informal inquiries, investigations or examinations arising out of certain sales practicesassets of the ~~Company that were~~trust prudently. The complaint was later amended to include 3 individual current and former beneficiaries as plaintiffs and to remove the ~~subject of settlements with~~Tribe as a party to the ~~Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the Office of the Los Angeles City Attorney announced by~~case. In December 2016, the Company filed a motion to dismiss the amended complaint on ~~September 8, 2016.~~the grounds that the Tribe is a necessary party and that the individual beneficiaries lack standing to bring claims. The ~~Company has responded, and~~

motion was denied in June 2018. The case is pending trial.

~~continues to respond, to requests from a number of the foregoing seeking information regarding these sales practices and the circumstances of the settlements and related matters.~~

In addition, a number of lawsuits have also been filed by non-governmental parties seeking damages or other remedies related to these sales practices. First, various class plaintiffs purporting to represent consumers who allege that they received products or services without their authorization or consent have brought separate putative class actions against the Company in the United States District Court for the Northern District of California and various other jurisdictions. In April 2017,WHOLESALE BANKING CONSENT ORDER INVESTIGATIONOn November 19, 2015, the Company entered into a ~~settlement agreement in the first-filed action,~~ ~~Jabbari v. Wells Fargo Bank, N.A., to resolve claims regarding certain products or services provided without authorization or~~ consent for the time period May 1, 2002 to April 20, 2017. Pursuant to the settlement, the Company will pay $142 million for remediation, attorneys’ fees, and settlement fund claims administration. In the unlikely event that the $142 million settlement total is not enough to provide remediation, pay attorneys' fees, pay settlement fund claims administration costs, and have at least $25 million left over to distribute to all class members, the Company will contribute additional funds to the settlement. In addition, in the unlikely event that the number of unauthorized accounts identified by settlement class members in the claims process and not disputed by the claims administrator exceeds plaintiffs’ 3.5 million account estimate, the Company will proportionately increase the $25 million reserve so that the ratio of reserve to unauthorized accounts is no less than what was implied by plaintiffs’ estimate at the time of the district court’s preliminary approval of the settlement in July 2017. A final approval hearing has been scheduled for the first quarter of 2018. Second, Wells Fargo shareholders are pursuing a consolidated securities fraud class action in the United States District Court for the Northern District of California alleging certain misstatements and omissions in the Company’s disclosures related to sales practices matters. Third, Wells Fargo shareholders have brought numerous shareholder derivative lawsuits asserting breach of fiduciary duty claims, among others, against current and former directors and officers for their alleged failure to detect and prevent sales practices issues, which were consolidated into two separate actions in the United States District Court for the Northern District of California and California state court, as well as two separate actions in Delaware state court. Fourth, a range of employment litigation has been brought against Wells Fargo, including an Employee Retirement Income Security Act (ERISA) class action in the United States District Court for the District of Minnesota brought on behalf of 401(k) plan participants; class actions pending in the United States District Courts for the Northern District of California and Eastern District of New York on behalf of employees who allege that they protested sales practice misconduct and/or were terminated for not meeting sales goals; various wage and hour class actions brought in federal and state court in California, New Jersey, Florida, and Pennsylvania on behalf of non-exempt branch based employees alleging sales pressure resulted in uncompensated overtime; and multiple single plaintiff Sarbanes-Oxley Act complaints and state law whistleblower actions filedorder with the ~~United States Department~~OCC, pursuant to which the Wholesale Banking group was required to implement customer due diligence standards that include collection of ~~Labor or~~current beneficial ownership information for certain business customers. The Company is responding to inquiries from various federal government agencies regarding potentially inappropriate conduct in ~~various state courts alleging adverse employment actions for raising sales practice misconduct issues.~~connection with the collection of beneficial ownership information.

OUTLOOKAs described above, the Company establishes accruals for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. The high end of the range of reasonably possible potential losses in excess of the Company’s accrual for probable

~~Note 11: Legal Actions (continued~~)

and estimable losses was approximately ~~$3.3~~$2.5 billion as of September 30, 2017. The high end of the range as of September 30, 2017, remained unchanged from June 30, 2017, reflecting a decrease from the $1 billion discrete litigation accrual in third quarter 2017 for the Company's existing mortgage-related regulatory investigations, offset by the possibility of increased risk in a variety of matters, including the Company's existing mortgage-related regulatory investigations.March 31, 2020. The outcomes of legal actions are unpredictable and subject to significant uncertainties, and it is inherently difficult to determine whether any loss is probable or even possible. It is also inherently difficult to estimate the amount of any loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Accordingly, actual losses may be in excess of the established accrual or the range of reasonably possible loss. Wells Fargo is unable to determine whether the ultimate resolution of ~~either~~ the ~~mortgage related regulatory investigations or the~~retail sales practices matters will have a material adverse effect on its consolidated financial condition. Based on information currently available, advice of counsel, available insurance coverage, and established reserves, Wells Fargo believes that the eventual outcome of other actions against Wells Fargo and/or its subsidiaries will not, individually or in the aggregate, have a material adverse effect on Wells Fargo’s consolidated financial condition. However, it is possible that the ultimate resolution of a matter, if unfavorable, may be material to Wells Fargo’s results of operations for any particular period.

Note 15: Derivatives (continued)

Note ~~12:~~15: Derivatives

We use derivatives to manage exposure to market risk, including interest rate risk, credit risk and foreign currency risk, and to assist customers with their risk management objectives. We designate certain derivatives as hedging instruments in a qualifying hedge accounting ~~relationship~~relationships (fair value or cash flow ~~hedge)~~hedges). Our remaining derivatives consist of economic hedges that do not qualify for hedge accounting, and derivatives held for customer accommodation trading or other purposes. For more information on our derivative activities, see Note 1618 (Derivatives) ~~to Financial Statements~~ in our ~~2016~~2019 Form 10-K.

Table ~~12.1~~15.1 presents the total notional or contractual amounts and fair values for our derivatives. Derivative transactions can be measured in terms of the notional amount, but this amount is not recorded on the balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. The notional amount is generally not exchanged but is used only as the basis on which interest and other payments are determined.

Table ~~12.1:~~15.1:Notional or Contractual Amounts and Fair Values of Derivatives

September 30, 2017 December 31, 2016

Notional or
contractual
amount

Fair value

Notional or
contractual
amount

Fair value
(in millions)
Derivative
assets

Derivative
liabilities

Derivative
assets
Derivative
liabilities
Derivatives designated as hedging instruments
Interest rate contracts (1) $ 243,338
2,589
1,190
235,222
6,587
2,710
Foreign exchange contracts (1) 33,398
1,219
1,211
25,861
673
2,779
Total derivatives designated as qualifying hedging instruments 3,808
2,401
7,260
5,489
Derivatives not designated as hedging instruments
Economic hedges:
Interest rate contracts (2) 228,310
219
299
228,051
1,098
1,441
Equity contracts 10,650
640
134
7,964
545
83
Foreign exchange contracts 17,678
66
467
20,435
626
165
Credit contracts – protection purchased 123
52
—
482
102
—
Subtotal 977
900
2,371
1,689
Customer accommodation trading and
other derivatives:
Interest rate contracts 6,717,492
15,533
14,144
6,018,370
57,583
61,058
Commodity contracts 66,743
1,574
1,172
65,532
3,057
2,551
Equity contracts 173,306
6,156
7,501
151,675
4,813
6,029
Foreign exchange contracts 367,266
7,487
7,128
318,999
9,595
9,798
Credit contracts – protection sold 9,754
154
219
10,483
85
389
Credit contracts – protection purchased 20,263
214
257
19,964
365
138
Other contracts 955
—
26
961
—
47
Subtotal 31,118
30,447
75,498
80,010
Total derivatives not designated as hedging instruments 32,095
31,347
77,869
81,699
Total derivatives before netting 35,903
33,748
85,129
87,188
Netting (3) (23,323 ) (24,251 ) (70,631 ) (72,696 )
Total $ 12,580
9,497
14,498
14,492

~~(1)~~

~~Notional amounts presented exclude~~ ~~$500 million~~ ~~and~~ ~~$1.9 billion~~ ~~of interest rate contracts at~~ ~~September 30, 2017, and~~ ~~December 31, 2016, respectively, for certain derivatives that are combined for designation as a hedge on a single instrument. The notional amount for foreign exchange contracts at~~ ~~September 30, 2017, and~~ ~~December 31, 2016, excludes~~ ~~$13.3 billion~~ ~~and~~ ~~$9.6 billion, respectively, for certain derivatives that are combined for designation as a hedge on a single instrument.~~


~~(2)~~	~~Includes economic hedge derivatives used to hedge the risk of changes in the fair value of residential MSRs, MHFS, loans, derivative loan commitments and other interests held.~~


~~(3)~~	~~Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Table 12.2 for further information.~~

~~Note 12: Derivatives (continued~~)



	March 31, 2020							December 31, 2019
	Notional or contractual amount					Fair value		Notional or contractual amount			Fair value
(in millions)	Notional or contractual amount		Derivative assets			Derivative liabilities		Notional or contractual amount	Derivative assets		Derivative liabilities
Derivatives designated as hedging instruments
Interest rate contracts	$	187,167	3,715			2,199		182,789	2,595		1,237
Foreign exchange contracts	31,800		231			1,812		32,386	341		1,170
Total derivatives designated as qualifying hedging instruments			3,946			4,011			2,936		2,407
Derivatives not designated as hedging instruments
Economic hedges:
Interest rate contracts	358,717		2,732			1,766		235,810	207		160
Equity contracts	16,614		1,969			106		19,263	1,126		224
Foreign exchange contracts	46,486		1,332			233		26,595	118		286
Credit contracts – protection purchased	499		34			—		1,400	27		—
Subtotal			6,067			2,105			1,478		670
Customer accommodation trading and other derivatives:
Interest rate contracts	12,578,353		52,162			43,587		11,117,542	21,245		17,969
Commodity contracts	85,629		2,316			6,838		79,737	1,421		1,770
Equity contracts	316,754		11,181			10,248		272,145	7,410		10,240
Foreign exchange contracts	343,627		7,128			7,979		364,469	4,755		4,791
Credit contracts – protection sold	15,035		13			78		12,215	12		65
Credit contracts – protection purchased	25,144		106			15		24,030	69		18
Subtotal			72,906			68,745			34,912		34,853
Total derivatives not designated as hedging instruments			78,973			70,850			36,390		35,523
Total derivatives before netting			82,919			74,861			39,326		37,930
Netting			(57,896		)	(59,243	)		(25,123	)	(28,851	)
Total			$	25,023		15,618			14,203		9,079

Table ~~12.2~~15.2 provides information on the gross fair values of derivative assets and liabilities, the balance sheet netting adjustments and the resulting net fair value amount recorded on our balance sheet, as well as the non-cash collateral associated with such arrangements. We execute ~~largely~~substantially all of our derivative transactions under master netting arrangements and reflect all derivative balances and related cash collateral subject to enforceable master netting arrangements on a net basis within the balance sheet. The “Gross amounts recognized” column in the following table includes ~~$27.2~~$73.1 billion and ~~$28.8~~$69.2 billion of gross derivative assets and liabilities, respectively, at ~~September 30, 2017,~~March 31, 2020, and ~~$74.4~~$33.7 billion and ~~$78.4~~$33.5 billion, respectively, at December 31, ~~2016,~~2019, with counterparties subject to enforceable master netting arrangements that are ~~carried on the~~eligible for balance sheet ~~net~~netting adjustments. The majority of ~~offsetting amounts.~~these amounts are interest rate contracts executed in over-the-counter (OTC) markets. The remaining gross derivative assets and liabilities of ~~$8.7~~$9.8 billion and ~~$4.9~~$5.7 billion, respectively, at ~~September 30, 2017,~~March 31, 2020, and ~~$10.7~~$5.6 billion and ~~$8.7~~$4.4 billion, respectively, at December 31, ~~2016,~~2019, include those with counterparties subject to master netting arrangements for which we have not assessed the enforceability because they are with counterparties where we do not currently have positions to offset, those subject to master netting arrangements where we have not been able to confirm the enforceability and those not subject to master netting arrangements. As such, we do not net derivative balances or collateral within the balance sheet for these counterparties. Cash collateral receivables and payables that have not been offset against our derivatives were $4.4 billion and $6.4 billion, respectively, at March 31, 2020, and $6.3 billion and $1.4 billion, respectively, at December 31, 2019.

We determine the balance sheet netting adjustments based on the terms specified within each master netting arrangement. We disclose the balance sheet netting amounts within the column titled “Gross amounts offset in consolidated balance sheet.” Balance sheet netting adjustments are determined at the counterparty level for which there may be multiple contract types. For disclosure purposes, we allocate these netting adjustments to the contract type for each counterparty proportionally based upon the “Gross amounts recognized” by counterparty. As a result, the net amounts disclosed by contract type may not represent the actual exposure upon settlement of the contracts.

We do not net non-cash collateral that we receive and pledge on the balance sheet. For disclosure purposes, we present the fair value of this non-cash collateral in the column titled “Gross amounts not offset in consolidated balance sheet (Disclosure-only netting)” within the table. We determine and allocate the Disclosure-only netting amounts in the same manner as balance sheet netting amounts.

The “Net amounts” column within Table ~~12.2~~15.2 represents the aggregate of our net exposure to each counterparty after considering the balance sheet and Disclosure-only netting adjustments. We manage derivative exposure by monitoring the credit risk associated with each counterparty using counterparty specific credit risk limits, using master netting arrangements and obtaining collateral. Derivative contracts executed in ~~over-the-counter~~OTC markets include bilateral contractual arrangements that are not cleared through a central clearing organization but are typically subject to master netting arrangements. ~~The percentage of our bilateral derivative transactions outstanding at period end in such markets, based on gross fair value, is provided within the following table.~~ Other derivative contracts ~~executed in over-the-counter or exchange-traded markets~~that are settled through a central clearing organization ~~and~~whether OTC or exchange-traded, are excluded from ~~this~~that percentage. In addition to the netting amounts included in the table, we also have balance sheet netting related to resale and repurchase agreements that are disclosed within Note 1013 (Guarantees, Pledged Assets and ~~Collateral)~~Collateral, and Other Commitments).

Note 15: Derivatives (continued)

Table ~~12.2:~~15.2:Gross Fair Values of Derivative Assets and Liabilities


(in millions)	Gross amounts recognized (1)		Gross amounts offset in consolidated balance sheet (1)(2)		Net amounts in consolidated balance sheet	Gross amounts not offset in consolidated balance sheet (Disclosure-only netting) (3)		Net amounts	Percent exchanged in over-the-counter market (1)(4)		Gross amounts recognized		Gross amounts offset in consolidated balance sheet (1)		Net amounts in consolidated balance sheet	Gross amounts not offset in consolidated balance sheet (Disclosure-only netting)		Net amounts	Percent exchanged in over-the-counter market
September 30, 2017
March 31, 2020
Derivative assets
Interest rate contracts	$	18,341	(11,991	)	6,350	(313	)	6,037	99	%	$	58,609	(39,677	)	18,932	(1,302	)	17,630	87	%
Commodity contracts	1,574		(672	)	902	(5	)	897	83		2,316		(1,534	)	782	(3	)	779	62
Equity contracts	6,796		(4,149	)	2,647	(473	)	2,174	75		13,150		(9,929	)	3,221	(802	)	2,419	66
Foreign exchange contracts	8,772		(6,306	)	2,466	(63	)	2,403	100		8,691		(6,660	)	2,031	(107	)	1,924	100
Credit contracts – protection sold	154		(14	)	140	—		140	10		13		(13	)	—	—		—	44
Credit contracts – protection purchased	266		(191	)	75	(1	)	74	94		140		(83	)	57	(3	)	54	85
Total derivative assets	$	35,903	(23,323	)	12,580	(855	)	11,725			$	82,919	(57,896	)	25,023	(2,217	)	22,806
Derivative liabilities
Interest rate contracts	$	15,633	(12,932	)	2,701	(1,567	)	1,134	99	%	$	47,552	(42,276	)	5,276	(995	)	4,281	87	%
Commodity contracts	1,172		(361	)	811	(13	)	798	80		6,838		(1,689	)	5,149	(2	)	5,147	90
Equity contracts	7,635		(3,708	)	3,927	(365	)	3,562	85		10,354		(7,546	)	2,808	(164	)	2,644	56
Foreign exchange contracts	8,806		(7,049	)	1,757	(429	)	1,328	100		10,024		(7,661	)	2,363	(99	)	2,264	100
Credit contracts – protection sold	219		(196	)	23	(17	)	6	89		78		(68	)	10	—		10	87
Credit contracts – protection purchased	257		(5	)	252	—		252	7		15		(3	)	12	—		12	69
Other contracts	26		—		26	—		26	100
Total derivative liabilities	$	33,748	(24,251	)	9,497	(2,391	)	7,106			$	74,861	(59,243	)	15,618	(1,260	)	14,358
December 31, 2016
December 31, 2019
Derivative assets
Interest rate contracts	$	65,268	(59,880	)	5,388	(987	)	4,401	34	%	$	24,047	(14,878	)	9,169	(445	)	8,724	95	%
Commodity contracts	3,057		(707	)	2,350	(30	)	2,320	74		1,421		(888	)	533	(2	)	531	80
Equity contracts	5,358		(3,018	)	2,340	(365	)	1,975	75		8,536		(5,570	)	2,966	(69	)	2,897	65
Foreign exchange contracts	10,894		(6,663	)	4,231	(362	)	3,869	97		5,214		(3,722	)	1,492	(22	)	1,470	100
Credit contracts – protection sold	85		(48	)	37	—		37	61		12		(9	)	3	—		3	84
Credit contracts – protection purchased	467		(315	)	152	(1	)	151	98		96		(56	)	40	(1	)	39	97
Total derivative assets	$	85,129	(70,631	)	14,498	(1,745	)	12,753			$	39,326	(25,123	)	14,203	(539	)	13,664
Derivative liabilities
Interest rate contracts	$	65,209	(58,956	)	6,253	(3,129	)	3,124	30	%	$	19,366	(16,595	)	2,771	(545	)	2,226	94	%
Commodity contracts	2,551		(402	)	2,149	(37	)	2,112	38		1,770		(677	)	1,093	(2	)	1,091	82
Equity contracts	6,112		(2,433	)	3,679	(331	)	3,348	85		10,464		(6,647	)	3,817	(319	)	3,498	81
Foreign exchange contracts	12,742		(10,572	)	2,170	(251	)	1,919	100		6,247		(4,866	)	1,381	(169	)	1,212	100
Credit contracts – protection sold	389		(295	)	94	(44	)	50	98		65		(60	)	5	(3	)	2	98
Credit contracts – protection purchased	138		(38	)	100	(2	)	98	50		18		(6	)	12	—		12	93
Other contracts	47		—		47	—		47	100
Total derivative liabilities	$	87,188	(72,696	)	14,492	(3,794	)	10,698			$	37,930	(28,851	)	9,079	(1,038	)	8,041

(1)

In~~second quarter,2017, we adopted Settlement to Market treatment for the cash collateralizing our interest rate derivative contracts with certain centrally cleared counterparties.~~As a result of this adoption, the “gross amounts recognized” and “gross amounts offset in the consolidated balance sheet” columns do not include exposure with certain centrally cleared counterparties because the contracts are considered settled by the collateral. Likewise, what remains in these gross amount columns consists primarily of over-the-counter (OTC) market contracts for most of the contract types as reflected by the high percentage of OTC contracts in the “percent exchanged in over-the counter market” column as of September 30, 2017.

~~(2)~~

Represents amounts with counterparties subject to enforceable master netting arrangements that have been offset in the consolidated balance sheet, including related cash collateral and portfolio level counterparty valuation adjustments. Counterparty valuation adjustments ~~were~~ ~~$273 million~~ ~~and~~ ~~$348 million~~related to derivative assets were $877 millionand $98231 million and ~~$114 million~~debit valuation adjustments related to derivative liabilities were $280 million and $100 millionat ~~September 30, 2017~~March 31, 2020, and December 31, ~~2016~~2019, respectively. Cash collateral totaled $~~3.1~~9.8 billion and $~~4.2~~11.7 billion, netted against derivative assets and liabilities, respectively, at ~~September 30, 2017~~March 31, 2020, and $~~4.8~~2.9 billion and $~~7.1~~6.8 billion, respectively, at December 31, ~~2016~~2019.


~~(3)~~	Represents non-cash collateral pledged and received against derivative assets and liabilities with the same counterparty that are subject to enforceable master netting arrangements. U.S. GAAP does not permit netting of such non-cash collateral balances in the consolidated balance sheet but requires disclosure of these amounts.

~~(4)~~

Represents derivatives executed in over-the-counter markets that are not settled through a central clearing organization. Over-the-counter percentages are calculated based on gross amounts recognized as of the respective balance sheet date. The remaining percentage represents derivatives settled through a central clearing organization, which are executed in either over-the-counter or exchange-traded markets.

~~Note 12: Derivatives (continued~~)

Fair Value and Cash Flow Hedges

For fair value hedges, we use interest rate swaps to convert certain of our fixed-rate long-term debt and time certificates of deposit to floating rates to hedge our exposure to interest rate risk. We also enter into cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge our exposure to foreign currency risk and interest rate risk associated with the issuance of non-U.S. dollar denominated long-term debt. In addition, we use ~~derivatives~~interest rate swaps, cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge against changes in fair value of certain ~~financial instruments, including~~investments in available-for-sale debt securities ~~mortgages~~due to changes in interest rates, foreign currency rates, or both. We also use interest rate swaps to hedge against changes in fair value for certain mortgage loans held for ~~sale, and long-term debt.~~sale. For ~~more information on~~certain fair value hedges ~~see Note 1 (Summary~~ of ~~Significant Accounting Policies) and Note 16 (Derivatives)~~foreign currency risk, changes in fair value of cross-currency swaps attributable to ~~Financial Statements in our 2016 Form 10-K.~~

~~Table 12.3 shows~~changes in cross-currency basis spreads are excluded from the ~~net gains (losses)~~assessment of hedge effectiveness and recorded in other comprehensive income. See Note 26 (Other Comprehensive Income) for the amounts recognized in ~~the income statement related to derivatives in fair value hedging relationships.~~other comprehensive income.

~~Table 12.3:Derivatives in Fair Value Hedging Relationships~~

Interest rate
contracts hedging:

Foreign exchange
contracts hedging:

Total net
gains
(losses)
on fair
value
hedges

(in millions)
Available-
for-sale
securities

Mortgages
held for
sale

Long-term
debt

Available-
for-sale
securities

Long-term
debt

Quarter ended September 30, 2017





Net interest income (expense) recognized on derivatives $ (110 ) (1 ) 271
4
(60 ) 104
Gains (losses) recorded in noninterest income

Recognized on derivatives (6 ) —
(161 ) (87 ) 996
742
Recognized on hedged item (6 ) (2 ) 173
86
(878 ) (627 )
Net recognized on fair value hedges (ineffective portion) (1) $ (12 ) (2 ) 12
(1 ) 118
115
Quarter ended September 30, 2016





Net interest income (expense) recognized on derivatives $ (117 ) (1 ) 471
2
9
364
Gains (losses) recorded in noninterest income




Recognized on derivatives 21
6
(271 ) 30
312
98
Recognized on hedged item (10 ) (7 ) 354
(32 ) (234 ) 71
Net recognized on fair value hedges (ineffective portion) (1) $ 11
(1 ) 83
(2 ) 78
169
Nine months ended September 30, 2017





Net interest income (expense) recognized on derivatives (1) $ (363 ) (5 ) 1,070
10
(142 ) 570
Gains (losses) recorded in noninterest income

Recognized on derivatives (167 ) (11 ) (294 ) (216 ) 2,579
1,891
Recognized on hedged item 121
4
314
216
(2,554 ) (1,899 )
Net recognized on fair value hedges (ineffective portion) $ (46 )
(7 )
20

—

25
(8 )
Nine months ended September 30, 2016





Net interest income (expense) recognized on derivatives (1) $ (468 ) (5 ) 1,436
4
40
1,007
Gains (losses) recorded in noninterest income




Recognized on derivatives (2,674 ) (36 ) 4,815
98
1,475
3,678
Recognized on hedged item 2,699
32
(4,215 ) (106 ) (1,242 ) (2,832 )
Net recognized on fair value hedges (ineffective portion) $ 25
(4 ) 600
(8 ) 233
846

~~(1)~~

~~The third quarter and~~ ~~first nine months of 2017~~ ~~included~~ ~~$(1) million~~ ~~and~~ ~~$(2) million, respectively, and the third quarter and~~ ~~first nine months of 2016~~ ~~included~~ ~~$(3) million~~ ~~and~~ ~~$(10) million, respectively, of the time value component recognized as net interest income (expense) on forward derivatives hedging foreign currency that were excluded from the assessment of hedge effectiveness.~~

~~Cash Flow Hedges~~

WeFor cash flow hedges, we use ~~derivatives~~interest rate swaps to hedge ~~certain financial instruments against future interest rate increases and to limit~~ the variability ~~of cash flows~~in interest payments received on certain ~~financial instruments~~floating-rate commercial loans and paid on certain floating-rate debt due to changes in the ~~benchmark~~contractually specified interest rate. ~~For more information~~We also use cross-currency swaps to hedge variability in interest payments on fixed-rate foreign currency-denominated long-term debt due to changes in foreign exchange rates.

We estimate $218 million pre-tax of deferred net losses related to cash flow hedges ~~see Note 1 (Summary of Significant Accounting Policies) and Note 16 (Derivatives) to Financial Statements in our 2016 Form 10-K.~~

~~Based upon current interest rates, we estimate that $224 million (pre tax) of deferred net gains on derivatives~~ in OCI

at ~~September 30, 2017,~~March 31, 2020, will be reclassified into net interest income during the next twelve months. ~~Future changes~~The deferred losses expected to be reclassified into net

interest ~~rates may significantly change actual amounts reclassified~~income are predominantly related to ~~earnings. We~~discontinued hedges of floating rate loans. For cash flow hedges as of March 31, 2020, we are hedging our foreign currency exposure to the variability of future cash flows for all forecasted transactions for a maximum of 510 years. For more information on our accounting hedges, see Note 1 (Summary of Significant

Accounting Policies) and Note 18 (Derivatives) in our 2019 Form 10-K.

Table ~~12.4 shows~~15.3 and Table 15.4 show the net gains (losses) ~~recognized~~ related to derivatives in fair value and cash flow hedging ~~relationships.~~

relationships, respectively.

Table ~~12.4:~~15.3:Gains (Losses) Recognized on Fair Value Hedging Relationships



	Net interest income									Noninterest income		Total recorded in net income		Total recorded in OCI
(in millions)	Debt securities			Mortgage loans held for sale		Deposits		Long-term debt		Other		Derivative gains (losses)		Derivative gains (losses)
Quarter ended March 31, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income	$	3,472		197		(1,742	)	(1,240	)	372		N/A		182

Interest contracts:
Amounts related to interest settlements on derivatives	(46		)	—		70		174		—		198
Recognized on derivatives	(1,871		)	(50	)	530		9,775		—		8,384		—
Recognized on hedged items	1,856			50		(511	)	(9,426	)	—		(8,031	)
Total gains (losses) (pre-tax) on interest rate contracts	(61		)	—		89		523		—		551		—
Foreign exchange contracts:
Amounts related to interest settlements on derivatives	6			—		—		(85	)	—		(79	)
Recognized on derivatives	(1		)	—		—		107		(785	)	(679	)	144
Recognized on hedged items	2			—		—		(174	)	764		592
Total gains (losses) (pre-tax) on foreign exchange contracts	7			—		—		(152	)	(21	)	(166	)	144
Total gains (losses) (pre-tax) recognized on fair value hedges	$	(54	)	—		89		371		(21	)	385		144



Quarter ended March 31, 2019
Total amounts presented in the consolidated statement of income and other comprehensive income	$	3,941		152		(2,026	)	(1,927	)	574		N/A		44

Interest contracts:
Amounts related to interest settlements on derivatives	16			—		(23	)	(7	)	—		(14	)
Recognized on derivatives	(814		)	(8	)	207		1,986		—		1,371		—
Recognized on hedged items	817			7		(190	)	(1,947	)	—		(1,313	)
Total gains (losses) (pre-tax) on interest rate contracts	19			(1	)	(6	)	32		—		44		—
Foreign exchange contracts:
Amounts related to interest settlements on derivatives	10			—		—		(142	)	—		(132	)
Recognized on derivatives	(4		)	—		—		292		(402	)	(114	)	(26	)
Recognized on hedged items	5			—		—		(266	)	391		130
Total gains (losses) (pre-tax) on foreign exchange contracts	11			—		—		(116	)	(11	)	(116	)	(26	)
Total gains (losses) (pre-tax) recognized on fair value hedges	$	30		(1	)	(6	)	(84	)	(11	)	(72	)	(26	)

Note 15: Derivatives in(continued)

Table 15.4:Gains (Losses) Recognized on Cash Flow Hedging Relationships

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2017
2016
2017
2016
Gains (losses) (pre tax) recognized in OCI on derivatives $ 36
(445 ) 279
2,611
Gains (pre tax) reclassified from cumulative OCI into net income (1) 105
262
460
783
Gains (losses) (pre tax) recognized in noninterest income for hedge ineffectiveness (2) (4 ) —
(7 ) 1



	Net interest Income					Total recorded in net income		Total recorded in OCI
(in millions)	Loans			Long-term debt		Derivative gains (losses)		Derivative gains (losses)
Quarter ended March 31, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income	$	10,065		(1,240	)	N/A		182
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(56		)	—		(56	)	56
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A			N/A		N/A		—
Total gains (losses) (pre-tax) on interest rate contracts	(56		)	—		(56	)	56
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	—			(2	)	(2	)	2
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A			N/A		N/A		(20	)
Total gains (losses) (pre-tax) on foreign exchange contracts	—			(2	)	(2	)	(18	)
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	(56	)	(2	)	(58	)	38
Quarter ended March 31, 2019
Total amounts presented in the consolidated statement of income and other comprehensive income	$	11,354		(1,927	)	N/A		44
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(78		)	—		(78	)	78
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A			N/A		N/A		—
Total gains (losses) (pre-tax) on interest rate contracts	(78		)	—		(78	)	78
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	—			(1	)	(1	)	1
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A			N/A		N/A		(9	)
Total gains (losses) (pre-tax) on foreign exchange contracts	—			(1	)	(1	)	(8	)
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	(78	)	(1	)	(79	)	70

Table 15.5 shows the carrying amount and associated cumulative basis adjustment related to the application of hedge

accounting that is included in the carrying amount of hedged assets and liabilities in fair value hedging relationships.

Table 15.5:Hedged Items in Fair Value Hedging Relationship



	Hedged Items Currently Designated					Hedged Items No Longer Designated (1)
(in millions)	Carrying Amount of Assets/(Liabilities) (2)(4)			Hedge Accounting Basis Adjustment Assets/(Liabilities) (3)		Carrying Amount of Assets/(Liabilities) (4)		Hedge Accounting Basis Adjustment Assets/(Liabilities)
March 31, 2020
Available-for-sale debt securities (5)	$	34,959		2,750		9,567		261
Mortgage loans held for sale	514			24		—		—
Deposits	(41,081		)	(837	)	(35	)	2
Long-term debt	(147,069		)	(15,325	)	(21,214	)	131
December 31, 2019
Available-for-sale debt securities (5)	$	36,896		1,110		9,486		278
Mortgage loans held for sale	961			(12	)	—		—
Deposits	(43,716		)	(324	)	—		—
Long-term debt	(127,423		)	(5,827	)	(25,750	)	173


(1)	~~See Note 17 (Other Comprehensive Income)~~Represents hedged items no longer designated in qualifying fair value hedging relationships for ~~detail on components of net income.~~which an associated basis adjustment exists at the balance sheet date.


(2)	~~None~~ Does not include the carrying amount of hedged items where only foreign currency risk is the designated hedged risk. The carrying amount excluded $3.0 billion for debt securities and $(5.0) billion for long-term debt as of March 31, 2020, and $1.2 billion for debt securities and $(5.2) billion for long-term debt as of December 31, 2019.

(3)

The balance includes $649 million and $136 million of debt securities and long-term debt cumulative basis adjustments, respectively, as of March 31, 2020, and $790 million and $109 million of debt securities and long-term debt cumulative basis adjustments, respectively, as of December 31, 2019, on terminated hedges whereby the hedged items have subsequently been re-designated into existing hedges.


(4)	Represents the full carrying amount of the ~~change in value~~hedged asset or liability item as of the ~~derivatives~~balance sheet date, except for circumstances in which only a portion of the asset or liability was ~~excluded from~~designated as the ~~assessment of hedge effectiveness.~~ hedged item in which case only the portion designated is presented.


(5)	Carrying amount represents the amortized cost.

Derivatives Not Designated as Hedging Instruments

Derivatives not designated as hedging instruments include economic hedges and derivatives entered into for customer accommodation trading purposes.

We use economic ~~hedges primarily~~hedge derivatives to ~~hedge the~~manage our exposure to interest rate risk, ~~of changes in the fair value of certain residential MHFS, residential MSRs measured at fair value, loans, derivative loan commitments~~equity price risk, foreign currency risk, and ~~other interests held.~~credit risk. We also use economic hedge derivatives to mitigate the periodic earnings volatility caused by ~~ineffectiveness~~mismatches between

the changes in fair value of the hedged item and hedging instrument recognized on our fair value accounting hedges. ~~The resulting gain or loss on these economic hedge derivatives is reflected in mortgage banking noninterest income, net gains (losses) from equity investments and other noninterest income.~~

~~The derivatives used to hedge MSRs measured at fair value, resulted in net derivative gains of $240 million~~ ~~and~~ ~~$599 million in the third quarter and first nine months of 2017, respectively, and $142 million~~ ~~and~~ $2.6 billion in the third quarter and first nine months of 2016, respectively, which are included in mortgage banking noninterest income. The aggregate fair value of these derivatives was a net liability of $9 million at September 30, 2017, and net liability of $617 million at

December 31, 2016. The change in fair value of these derivatives for each period end is due to changes in the underlying market indices and interest rates as well as the purchase and sale of derivative financial instruments throughout the period as part of our dynamic MSR risk management process.

Interest rate lock commitments for mortgage loans that we intend to sell are considered derivatives. The aggregate fair value of derivative loan commitments on the balance sheet was a net asset of $25 million and net liability of $6 million at September 30, 2017, and December 31, 2016, respectively, and is included in the caption “Interest rate contracts” under “Customer accommodation trading and other derivatives” in Table 12.1 in this Note.

For more information on economic hedges and other derivatives, see Note 1618 (Derivatives) to Financial Statements in our ~~2016~~2019 Form 10-K.

Table ~~12.5~~15.6 shows the net gains (losses) recognized ~~in the~~by income statement lines, related to derivatives not designated as hedging instruments.

Table ~~12.5:~~15.6:Gains (Losses) on Derivatives Not Designated as Hedging Instruments

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2017
2016
2017
2016
Net gains (losses) recognized on economic hedges derivatives:
Interest rate contracts
Recognized in noninterest income:

Mortgage banking (1) $ 138
4
480
1,435
Other (2) (19 ) (56 ) (64 ) (308 )
Equity contracts (3) (489 ) (372 ) (1,175 ) (84 )
Foreign exchange contracts (2) (300 ) 175
(834 ) 504
Credit contracts (2) (6 ) 12
8
12
Subtotal (4) (676 ) (237 ) (1,585 ) 1,559
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest rate contracts
Recognized in noninterest income:

Mortgage banking (5) 152
510
599
1,485
Other (6) 17
210
80
(520 )
Commodity contracts (6) 63
45
138
162
Equity contracts (6) (851 ) (982 ) (2,525 ) (1,277 )
Foreign exchange contracts (6) 155
188
356
686
Credit contracts (6) (31 ) (25 ) (59 ) (66 )
Other (2) 8
15
22
(15 )
Subtotal (487 ) (39 ) (1,389 ) 455
Net gains (losses) recognized related to derivatives not designated as hedging instruments $ (1,163 ) (276 ) (2,974 ) 2,014



	Noninterest income
(in millions)	Mortgage banking		Net gains (losses) from equity securities	Net gains (losses) from trading activities		Other		Total
Quarter ended March 31, 2020
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	2,471	—	—		29		2,500
Equity contracts	—		1,219	—		(28	)	1,191
Foreign exchange contracts	—		—	—		627		627
Credit contracts	—		—	—		16		16
Subtotal (2)	2,471		1,219	—		644		4,334
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts (3)	553		—	(2,463	)	—		(1,910	)
Commodity contracts	—		—	112		—		112
Equity contracts	—		—	4,749		73		4,822
Foreign exchange contracts	—		—	(557	)	—		(557	)
Credit contracts	—		—	281		—		281
Subtotal	553		—	2,122		73		2,748
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	3,024	1,219	2,122		717		7,082




	Noninterest income
(in millions)	Mortgage banking		Net gains (losses) from equity securities		Net gains (losses) from trading activities		Other		Total
Quarter ended March 31, 2019
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	811	—		—		5		816
Equity contracts	—		(885	)	—		7		(878	)
Foreign exchange contracts	—		—		—		(24	)	(24	)
Credit contracts	—		—		—		15		15
Subtotal	811		(885	)	—		3		(71	)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	118		—		(284	)	—		(166	)
Commodity contracts	—		—		51		—		51
Equity contracts	—		—		(2,149	)	(273	)	(2,422	)
Foreign exchange contracts	—		—		14		—		14
Credit contracts	—		—		(44	)	—		(44	)
Subtotal	118		—		(2,412	)	(273	)	(2,567	)
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	929	(885	)	(2,412	)	(270	)	(2,638	)


(1)	~~Reflected in mortgage~~ Mortgage banking ~~noninterest income including~~amounts for first quarter 2020 are comprised of gains (losses) ~~on the~~of $3.4 billion related to derivatives used as economic hedges of MSRs measured at fair value ~~interest rate lock commitments and mortgages held for sale.~~


~~(2)~~	~~Included in other noninterest income.~~


~~(3)~~	~~Included in net gains from equity investments and other noninterest income.~~

~~(4)~~

~~Includes hedging~~offset by gains (losses) of $~~(18)~~(929) million related to derivatives used as economic hedges of mortgage loans held for sale and ~~$(64) million~~derivative loan commitments. The corresponding amounts for ~~the third~~first quarter ~~and first nine months~~2019 are comprised of ~~2017, respectively, and~~ ~~$(29) million~~ ~~and~~ ~~$(272) million~~ ~~for the third quarter and first nine months~~gains (losses) of ~~2016~~$962 million offset by gains (losses) of $(151) million, ~~respectively, which partially offset hedge accounting ineffectiveness.~~respectively.


~~(5)~~	~~Reflected in mortgage banking noninterest income including gains (losses) on interest rate lock commitments and net gains from trading activities in noninterest income.~~


~~(6)~~	~~Included in net gains from trading activities in noninterest income.~~

Note ~~12:~~15: Derivatives (continued)

Credit Derivatives

Credit derivative contracts are arrangements whose value is derived from the transfer of credit risk of a reference asset or entity from one party (the purchaser of credit protection) to another party (the seller of credit protection). We use credit derivatives to assist customers with their risk management objectives. We may also use credit derivatives in structured product transactions or liquidity agreements written to special purpose vehicles. The maximum exposure of sold credit derivatives is managed through posted collateral, purchased credit derivatives and similar products in order to achieve our desired credit risk profile. This credit risk management provides

an ability to recover a significant portion of any amounts that would be paid under the sold credit derivatives. We would be

required to perform under sold credit derivatives in the event of default by the referenced obligors. Events of default include events such as bankruptcy, capital restructuring or lack of principal and/or interest payment. In certain cases, other triggers may exist, such as the credit downgrade of the referenced obligors or the inability of the special purpose vehicle for which we have provided liquidity to obtain funding.

Table ~~12.6~~15.7 provides details of sold and purchased credit derivatives.

Table ~~12.6:~~15.7:Sold and Purchased Credit Derivatives


			Notional amount									Notional amount
(in millions)	Fair value liability		Protection sold (A)	Protection sold – non- investment grade	Protection purchased with identical underlyings (B)	Net protection sold (A) - (B)	Other protection purchased	Range of maturities	Fair value asset		Fair value liability	Protection sold (A)	Protection sold – non- investment grade	Protection purchased with identical underlyings (B)	Net protection sold (A) - (B)	Other protection purchased	Range of maturities
September 30, 2017
March 31, 2020
Credit default swaps on:
Corporate bonds	$	26	1,932	535	1,255	677	1,379	2017 - 2027	$	11	11	3,602	825	2,492	1,110	2,753	2020 - 2029
Structured products	91		210	205	184	26	140	2020 - 2047	—		13	37	37	36	1	110	2034 - 2047
Credit protection on:
Default swap index	—		3,553	537	62	3,491	5,665	2017 - 2027	2		1	4,339	1,118	1,577	2,762	5,497	2020 - 2029
Commercial mortgage-backed securities index	92		441	—	410	31	146	2047 - 2058	—		28	318	60	293	25	50	2047 - 2058
Asset-backed securities index	9		42	—	38	4	5	2045 - 2046	—		8	41	41	41	—	1	2045 - 2046
Other	1		3,576	3,576	—	3,576	11,102	2017 - 2028	—		17	6,698	6,230	—	6,698	12,793	2020 - 2049
Total credit derivatives	$	219	9,754	4,853	1,949	7,805	18,437		$	13	78	15,035	8,311	4,439	10,596	21,204
December 31, 2016
December 31, 2019
Credit default swaps on:
Corporate bonds	$	22	4,324	1,704	3,060	1,264	1,804	2017 - 2026	$	8	1	2,855	707	1,885	970	2,447	2020 - 2029
Structured products	193		405	333	295	110	79	2020 - 2047	—		25	74	69	63	11	111	2022 - 2047
Credit protection on:
Default swap index	—		1,515	257	139	1,376	3,668	2017 - 2021	1		—	2,542	120	550	1,992	8,105	2020 - 2029
Commercial mortgage-backed securities index	156		627	—	584	43	71	2047 - 2058	3		26	322	67	296	26	50	2047 - 2058
Asset-backed securities index	17		45	—	40	5	187	2045 - 2046	—		8	41	41	41	—	1	2045 - 2046
Other	1		3,567	3,568	—	3,567	10,519	2017 - 2047	—		5	6,381	5,738	—	6,381	11,881	2020 - 2049
Total credit derivatives	$	389	10,483	5,862	4,118	6,365	16,328		$	12	65	12,215	6,742	2,835	9,380	22,595

Protection sold represents the estimated maximum exposure to loss that would be incurred under an assumed hypothetical circumstance, where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. We believe this hypothetical circumstance to be aan extremely remote possibility and accordingly, this required disclosure is not an indication of expected loss. The amounts under non-investment grade represent the notional amounts of those credit derivatives on which we have a higher risk of being required to perform under the terms of the credit derivative and are a function of the underlying assets.

We consider the risk of performance to be high if the underlying assets under the credit derivative have an external rating that is below investment grade or an internal credit default grade that is equivalent thereto. We believe the net protection sold, which is representative of the net notional amount of protection sold and purchased with identical underlyings, in combination with other protection purchased, is more representative of our exposure to loss than either non-investment grade or protection sold. Other protection purchased represents additional protection, which may offset the exposure to loss for protection sold, that was not purchased with an identical underlying of the protection sold.

Credit-Risk Contingent Features

Certain of our derivative contracts contain provisions whereby if the credit rating of our debt were to be downgraded by certain major credit rating agencies, the counterparty could demand additional collateral or require termination or replacement of derivative instruments in a net liability position. ~~The aggregate fair value of all derivative instruments~~Table 15.8 illustrates our exposure to such derivatives with ~~such credit-risk-related~~credit-risk contingent features, ~~that are in a net liability position was $9.2 billion at September 30, 2017,~~collateral we have posted, and ~~$12.8 billion at December 31, 2016, for which~~the additional collateral we ~~posted $8.0 billion and $8.9 billion, respectively, in collateral in the normal course of business. A credit rating below investment grade is the credit-risk-related contingent feature that~~would be required to post if ~~triggered requires the maximum amount of collateral to be posted. If~~ the credit rating of our debt ~~had been~~was downgraded below investment grade, on September 30, 2017, or December 31, 2016, we would have been required to post additional collateral of $1.2 billion or $4.0 billion, respectively, or potentially settle the contract in an amount equal to its fair value. Some contracts require that we provide more collateral than the fair value of derivatives that are in a net liability position if a downgrade occurs.grade.

Table 15.8:Credit-Risk Contingent Features



(in billions)	Mar 31, 2020		Dec 31, 2019
Net derivative liabilities with credit-risk contingent features	$	16.1	10.4
Collateral posted	13.9		9.1
Additional collateral to be posted upon a below investment grade credit rating (1)	2.2		1.3


(1)	Any credit rating below investment grade requires us to post the maximum amount of collateral.

~~Counterparty Credit Risk~~

By using derivatives, we are exposed to counterparty credit risk if counterparties to the derivative contracts do not perform as expected. If a counterparty fails to perform, our counterparty credit risk is equal to the amount reported as a derivative asset on our balance sheet. The amounts reported as a derivative asset are derivative contracts in a gain position, and to the extent subject to legally enforceable master netting arrangements, net of derivatives in a loss position with the same counterparty and cash collateral received. We minimize counterparty credit risk through credit approvals, limits, monitoring procedures, executing master netting arrangements and obtaining collateral, where appropriate. To the extent the master netting arrangements and other criteria meet the applicable requirements, including determining the legal enforceability of the arrangement, it is our policy to present derivative balances and related cash collateral amounts net on the balance sheet. We incorporate credit valuation adjustments (CVA) to reflect counterparty credit risk in determining the fair value of our derivatives. Such adjustments, which consider the effects of enforceable master netting agreements and collateral arrangements, reflect market-based views of the credit quality of each counterparty. Our CVA calculation is determined based on observed credit spreads in the credit default swap market and indices indicative of the credit quality of the counterparties to our derivatives.

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

Note ~~13:~~16: Fair Values of Assets and Liabilities

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Assets and liabilities recorded at fair value on a recurring basis are presented in Table ~~13.2~~16.2 in this Note. From time to time, we may be required to record fair value adjustments on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application of LOCOM accounting, or write-downs of individual ~~assets.~~assets or application of the measurement alternative for nonmarketable equity securities. Assets recorded on a nonrecurring basis are presented in Table ~~13.14~~16.9 in this Note.

Table 16.15 includes estimates of fair value for financial instruments that are not recorded at fair value.

See Note 1 (Summary of Significant Accounting Policies) ~~to Financial Statements~~ in our ~~2016~~2019 Form 10-K for discussion of how we determine fair value. For descriptions of the valuation methodologies we use for assets and liabilities recorded at fair value on a recurring or nonrecurring basis and for estimating fair value for financial instruments that are not recorded at fair value, see Note 1719 (Fair Values of Assets and Liabilities) ~~to Financial Statements~~ in our ~~2016~~2019 Form 10-K.

FAIR VALUE HIERARCHY We ~~group~~classify our assets and liabilities measured at fair value as either Level 1, Level 2 or Level 3 in ~~three levels~~the fair value hierarchy. The highest priority (Level 1) is assigned to valuations based on ~~the~~unadjusted quoted prices in active markets ~~in which the assets and liabilities are traded~~ and the ~~reliability~~lowest priority (Level 3) is assigned to valuations based on significant unobservable inputs. See Note 1 (Summary of Significant Accounting Policies) in our 2019 Form 10-K for a detailed description of the ~~assumptions used~~fair value hierarchy.

In the determination of the classification of financial instruments in Level 2 or Level 3 of the fair value hierarchy, we consider all available information, including observable market data, indications of market liquidity and orderliness, and our understanding of the valuation techniques and significant inputs used. For securities in inactive markets, we use a predetermined percentage to evaluate the impact of fair value adjustments

derived from weighting both external and internal indications of value to determine ~~fair value. These levels are:~~

if the instrument is classified as Level ~~1 – Valuation~~2 or Level 3. Otherwise, the classification of Level 2 or Level 3 is based upon ~~quoted prices for identical instruments traded in active markets.~~

~~Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical~~the specific facts and circumstances of each instrument or ~~similar instruments in markets that~~instrument category and judgments are ~~not active, and model-based valuation techniques for which all significant assumptions are observable in~~made regarding the ~~market.~~

significance of the Level 3 ~~– Valuation~~inputs to the instruments’ fair value measurement in its entirety. If Level 3 inputs are considered significant, the instrument is generated from techniques that use significant assumptions that are not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

classified as Level 3.

~~In accordance with new accounting guidance that we adopted effective January 1, 2016, we~~We do not classify ~~an investment~~equity securities in the fair value hierarchy if we use the non-published net asset value (NAV) per share (or its equivalent) that has been communicated to us as an investor as a practical expedient to measure fair value. We generally use NAV per share as the fair value measurement for certain nonmarketable equity fund investments. ~~This guidance was required to be applied retrospectively. Accordingly, certain prior period fair value disclosures have been revised to conform with current period presentation.~~ Marketable equity ~~investments~~securities with published NAVs ~~continue to be~~are classified in the fair value hierarchy.

Fair Value Measurements from Vendors

For certain assets and liabilities, we obtain fair value measurements from vendors ~~which predominantly consist of third-party pricing services,~~ and we record the unadjusted fair value in our financial statements. For additional information, see Note 1719 (Fair Values of Assets and Liabilities) ~~to Financial Statements~~ in our ~~2016~~2019 Form 10-K.

Table ~~13.1.~~16.1 presents unadjusted fair value measurements ~~provided by brokers or~~obtained from third-party pricing services byclassified within the fair value ~~hierarchy level. Fair~~hierarchy. Unadjusted fair value measurements obtained from brokers and fair value measurements obtained from brokers or third-party pricing services that we have adjusted to determine the fair value ~~recorded in our financial statements~~ are excluded from Table ~~13.1.~~16.1.

The unadjusted fair value measurements obtained from brokers for available-for-sale debt securities were $18 million in Level 2 assets and $123 million in Level 3 assets at March 31, 2020, and $45 million and $126 million at December 31, 2019, respectively.

Table ~~13.1:~~16.1:Fair Value Measurements ~~by Brokers or~~obtained from Third-Party Pricing Services

   Brokers Third-party pricing services
(in millions) Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
September 30, 2017
Trading assets $ —
—
—
674
211
—
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies —
—
—
3,400
2,950
—
Securities of U.S. states and political subdivisions —
—
—
—
52,068
50
Mortgage-backed securities —
37
—
—
160,628
76
Other debt securities (1) —
684
1,146
—
46,098
22
Total debt securities —
721
1,146
3,400
261,744
148
Total marketable equity securities —
—
—
—
264
—
Total available-for-sale securities —
721
1,146
3,400
262,008
148
Derivatives assets —
—
—
19
—
—
Derivatives liabilities —
—
—
(16 ) —
—
Other liabilities (2) —
—
—
—
—
—
December 31, 2016
Trading assets $ —
—
—
899
60
—
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies —
—
—
22,870
2,949
—
Securities of U.S. states and political subdivisions —
—
—
—
49,837
208
Mortgage-backed securities —
171
—
—
176,923
92
Other debt securities (1) —
450
968
—
49,162
54
Total debt securities —
621
968
22,870
278,871
354
Total marketable equity securities —
—
—
—
358
—
Total available-for-sale securities —
621
968
22,870
279,229
354
Derivatives assets —
—
—
22
—
—
Derivatives liabilities —
—
—
(109 ) (1 ) —
Other liabilities (2) —
—
—
—
—
—



	March 31, 2020					December 31, 2019
(in millions)	Level 1		Level 2		Level 3	Level 1		Level 2		Level 3
Trading debt securities	2,027		357		—	634		329		—
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	11,036		—		—	13,460		1,500		—
Securities of U.S. states and political subdivisions	—		37,793		66	—		39,868		34
Mortgage-backed securities	—		163,329		185	—		167,172		42
Other debt securities (1)	—		34,603		743	—		38,067		650
Total available-for-sale debt securities	11,036		235,725		994	13,460		246,607		726
Marketable equity securities	—		98		—	—		110		—
Derivative assets	41		6		—	12		1		—
Derivative liabilities	(25	)	(8	)	—	(11	)	(3	)	—


(1)	Includes corporate debt securities, collateralized loan and other debt obligations, asset-backed securities, and other debt securities.


~~(2)~~	~~Includes short sale liabilities and other liabilities.~~

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Table ~~13.2~~16.2 presents the balances of assets and liabilities recorded at fair value on a recurring basis.

Table ~~13.2:~~16.2:Fair Value on a Recurring Basis


(in millions)	Level 1			Level 2		Level 3			Netting			Total			Level 1			Level 2		Level 3			Netting (1)		Total
September 30, 2017
Trading assets
March 31, 2020
Trading debt securities:
Securities of U.S. Treasury and federal agencies	$	16,882		3,012		—			—			19,894			$	35,069		4,638		—			—		39,707
Securities of U.S. states and political subdivisions	—			4,401		3			—			4,404			—			2,972		—			—		2,972
Collateralized loan obligations	—			359		383			—			742			—			472		154			—		626
Corporate debt securities	—			11,098		34			—			11,132			—			12,392		34			—		12,426
Mortgage-backed securities	—			23,966		—			—			23,966			—			23,738		177			—		23,915
Asset-backed securities	—			799		—			—			799			—			742		24			—		766
Equity securities	25,980			270		—			—			26,250
Total trading securities (1)	42,862			43,905		420			—			87,187
Other trading assets	—			1,161		56			—			1,217
Total trading assets	42,862			45,066		476			—			88,404
Other trading debt securities															—			13		—			—		13
Total trading debt securities															35,069			44,967		389			—		80,425
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	3,400			2,950		—			—			6,350			11,036			—		—			—		11,036
Securities of U.S. states and political subdivisions	—			52,068		706		(2)	—			52,774			—			37,793		351			—		38,144
Mortgage-backed securities:
Federal agencies	—			150,181		—			—			150,181			—			160,214		—			—		160,214
Residential	—			6,393		1			—			6,394			—			745		31			—		776
Commercial	—			4,576		76			—			4,652			—			3,500		154			—		3,654
Total mortgage-backed securities	—			161,150		77			—			161,227			—			164,459		185			—		164,644
Corporate debt securities	56			8,904		380			—			9,340			33			4,692		1,130			—		5,855
Collateralized loan and other debt obligations (3)	—			34,594		1,014		(2)	—			35,608
Collateralized loan and other debt obligations															—			24,532		636			—		25,168
Asset-backed securities:
Automobile loans and leases	—			544		—			—			544			—			884		—			—		884
Home equity loans	—			283		—			—			283			—			12		—			—		12
Other asset-backed securities	—			4,556		635		(2)	—			5,191			—			3,380		110			—		3,490
Total asset-backed securities	—			5,383		635			—			6,018			—			4,276		110			—		4,386
Other debt securities	—			—		—			—			—			—			1,996		—			—		1,996
Total debt securities	3,456			265,049		2,812			—			271,317
Marketable equity securities:
Perpetual preferred securities	155			264		—			—			419
Other marketable equity securities	474			—		—			—			474
Total marketable equity securities	629			264		—			—			893
Total available-for-sale securities	4,085			265,313		2,812			—			272,210
Mortgages held for sale	—			15,452		1,032			—			16,484
Total available-for-sale debt securities															11,069			237,748		2,412		(2)	—		251,229
Mortgage loans held for sale															—			13,508		3,157			—		16,665
Loans held for sale															—			1,654		19			—		1,673
Loans	—			—		410			—			410			—			—		160			—		160
Mortgage servicing rights (residential)	—			—		13,338			—			13,338			—			—		8,126			—		8,126
Derivative assets:
Interest rate contracts	26			18,143		172			—			18,341			152			57,695		762			—		58,609
Commodity contracts	—			1,546		28			—			1,574			—			2,301		15			—		2,316
Equity contracts	1,708			3,867		1,221			—			6,796			4,418			7,371		1,361			—		13,150
Foreign exchange contracts	19			8,733		20			—			8,772			41			8,626		24			—		8,691
Credit contracts	—			275		145			—			420			—			76		77			—		153
Netting	—			—		—			(23,323	)	(4)	(23,323		)	—			—		—			(57,896	)	(57,896	)
Total derivative assets	1,753			32,564		1,586			(23,323	)		12,580			4,611			76,069		2,239			(57,896	)	25,023
Other assets – excluding nonmarketable equity investments at NAV	—			50		4,473			—			4,523
Equity securities – excluding securities at NAV:
Marketable															20,983			295		3			—		21,281
Nonmarketable															—			15		6,751			—		6,766
Total equity securities															20,983			310		6,754			—		28,047
Total assets included in the fair value hierarchy	$	48,700		358,445		24,127			(23,323	)		407,949			$	71,732		374,256		23,256			(57,896	)	411,348
Other assets – nonmarketable equity investments at NAV (5)												—
Equity securities at NAV (3)																									129
Total assets recorded at fair value												$	407,949												411,477
Derivative liabilities:
Interest rate contracts	$	(18	)	(15,557	)	(58	)		—			(15,633		)	$	(158	)	(47,317	)	(77	)		—		(47,552	)
Commodity contracts	—			(1,156	)	(16	)		—			(1,172		)	—			(6,779	)	(59	)		—		(6,838	)
Equity contracts	(1,125		)	(4,698	)	(1,812	)		—			(7,635		)	(4,600		)	(4,610	)	(1,144	)		—		(10,354	)
Foreign exchange contracts	(16		)	(8,777	)	(13	)		—			(8,806		)	(25		)	(9,969	)	(30	)		—		(10,024	)
Credit contracts	—			(384	)	(92	)		—			(476		)	—			(63	)	(30	)		—		(93	)
Other derivative contracts	—			—		(26	)		—			(26		)
Netting	—			—		—			24,251		(4)	24,251			—			—		—			59,243		59,243
Total derivative liabilities	(1,159		)	(30,572	)	(2,017	)		24,251			(9,497		)	(4,783		)	(68,738	)	(1,340	)		59,243		(15,618	)
Short sale liabilities:
Securities of U.S. Treasury and federal agencies	(10,401		)	(728	)	—			—			(11,129		)	(9,881		)	(103	)	—			—		(9,984	)
Mortgage-backed securities															—			(92	)	—			—		(92	)
Corporate debt securities	—			(5,643	)	—			—			(5,643		)	—			(5,520	)	—			—		(5,520	)
Equity securities	(2,283		)	(7	)	—			—			(2,290		)	(1,984		)	—		—			—		(1,984	)
Other securities	—			(34	)	(3	)		—			(37		)	—			(23	)	—			—		(23	)
Total short sale liabilities	(12,684		)	(6,412	)	(3	)		—			(19,099		)	(11,865		)	(5,738	)	—			—		(17,603	)
Other liabilities	—			—		(3	)		—			(3		)	—			—		(2	)		—		(2	)
Total liabilities recorded at fair value	$	(13,843	)	(36,984	)	(2,023	)		24,251			(28,599		)	$	(16,648	)	(74,476	)	(1,342	)		59,243		(33,223	)

(1)

~~Net gains (losses) from trading activities recognized in the income statement~~Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Note 15 (Derivatives) for ~~the~~ ~~first nine monthsSeptember 30,2017~~ ~~and~~ ~~2016~~ ~~both include~~ ~~$1.4 billion~~ ~~in net unrealized gains (losses) on trading securities held at~~ ~~September 30, 2017~~ ~~and~~ ~~2016, respectively.~~

additional information.


(2)	~~Balances consist~~ Largely consists of securities that are ~~mostly~~investment grade based on ratings received from the ratings agencies or internal credit grades categorized as investment grade if external ratings are not available. The securities are classified as Level 3 due to limited market activity.


(3)	Consists of certain nonmarketable equity securities that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.

(continued on following page)

Note 16: Fair Values of Assets and Liabilities (continued)

(continued from previous page)



(in millions)	Level 1			Level 2		Level 3			Netting (1)		Total
December 31, 2019
Trading debt securities:
Securities of U.S. Treasury and federal agencies	$	32,335		4,382		—			—		36,717
Securities of U.S. states and political subdivisions	—			2,434		—			—		2,434
Collateralized loan obligations	—			555		183			—		738
Corporate debt securities	—			11,006		38			—		11,044
Mortgage-backed securities	—			27,712		—			—		27,712
Asset-backed securities	—			1,081		—			—		1,081
Other trading debt securities	—			5		2			—		7
Total trading debt securities	32,335			47,175		223			—		79,733
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	13,460			1,500		—			—		14,960
Securities of U.S. states and political subdivisions	—			39,924		413			—		40,337
Mortgage-backed securities:
Federal agencies	—			162,453		—			—		162,453
Residential	—			827		—			—		827
Commercial	—			3,892		42			—		3,934
Total mortgage-backed securities	—			167,172		42			—		167,214
Corporate debt securities	37			6,159		367			—		6,563
Collateralized loan and other debt obligations	—			29,055		640			—		29,695
Asset-backed securities:
Automobile loans and leases	—			951		—			—		951
Home equity loans	—			—		—			—		—
Other asset-backed securities	—			3,635		103			—		3,738
Total asset-backed securities	—			4,586		103			—		4,689
Other debt securities	—			1		—			—		1
Total available-for-sale debt securities	13,497			248,397		1,565		(2)	—		263,459
Mortgage loans held for sale	—			15,408		1,198			—		16,606
Loans held for sale	—			956		16			—		972
Loans	—			—		171			—		171
Mortgage servicing rights (residential)	—			—		11,517			—		11,517
Derivative assets:
Interest rate contracts	26			23,792		229			—		24,047
Commodity contracts	—			1,413		8			—		1,421
Equity contracts	2,946			4,135		1,455			—		8,536
Foreign exchange contracts	12			5,197		5			—		5,214
Credit contracts	—			49		59			—		108
Netting	—			—		—			(25,123	)	(25,123	)
Total derivative assets	2,984			34,586		1,756			(25,123	)	14,203
Equity securities – excluding securities at NAV:
Marketable	33,702			216		3			—		33,921
Nonmarketable	—			22		7,847			—		7,869
Total equity securities	33,702			238		7,850			—		41,790
Total assets included in the fair value hierarchy	$	82,518		346,760		24,296			(25,123	)	428,451
Equity securities at NAV (3)											146
Total assets recorded at fair value											428,597
Derivative liabilities:
Interest rate contracts	$	(23	)	(19,328	)	(15	)		—		(19,366	)
Commodity contracts	—			(1,746	)	(24	)		—		(1,770	)
Equity contracts	(2,011		)	(6,729	)	(1,724	)		—		(10,464	)
Foreign exchange contracts	(11		)	(6,213	)	(23	)		—		(6,247	)
Credit contracts	—			(53	)	(30	)		—		(83	)
Netting	—			—		—			28,851		28,851
Total derivative liabilities	(2,045		)	(34,069	)	(1,816	)		28,851		(9,079	)
Short sale liabilities:
Securities of U.S. Treasury and federal agencies	(9,035		)	(31	)	—			—		(9,066	)
Mortgage-backed securities	—			(2	)	—			—		(2	)
Corporate debt securities	—			(5,915	)	—			—		(5,915	)
Equity securities	(2,447		)	—		—			—		(2,447	)
Other securities	—			—		—			—		—
Total short sale liabilities	(11,482		)	(5,948	)	—			—		(17,430	)
Other liabilities	—			—		(2	)		—		(2	)
Total liabilities recorded at fair value	$	(13,527	)	(40,017	)	(1,818	)		28,851		(26,511	)


(1)	Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Note 15 (Derivatives) for additional information.


(2)	A significant portion of the balance consists of securities that are investment grade based on ratings received from the ratings agencies or internal credit grades categorized as investment grade if external ratings are not available. The securities are classified as Level 3 due to limited market activity.


(3)	~~Includes collateralized debt obligations of~~ ~~$1.0 billion~~.


~~(4)~~	~~Represents balance sheet netting of derivative asset and liability balances and related cash collateral. See Note 12 (Derivatives) for additional information.~~


~~(5)~~	Consists of certain nonmarketable equity ~~investments~~securities that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.

~~(continued on following page)~~

~~(continued from previous page)~~

(in millions)
Level 1
Level 2
Level 3
Netting
Total
December 31, 2016
Trading assets
Securities of U.S. Treasury and federal agencies $ 14,950
2,710
—
—
17,660
Securities of U.S. states and political subdivisions —
2,910
3
—
2,913
Collateralized loan obligations —
501
309
—
810
Corporate debt securities —
9,481
34
—
9,515
Mortgage-backed securities —
20,254
—
—
20,254
Asset-backed securities —
1,128
—
—
1,128
Equity securities 20,462
290
—
—
20,752
Total trading securities (1) 35,412
37,274
346
—
73,032
Other trading assets —
1,337
28
—
1,365
Total trading assets 35,412
38,611
374
—
74,397
Securities of U.S. Treasury and federal agencies 22,870
2,949
—
—
25,819
Securities of U.S. states and political subdivisions —
49,961
1,140
(2) —
51,101
Mortgage-backed securities:
Federal agencies —
161,230
—
   —
161,230
Residential —
7,815
1
   —
7,816
Commercial —
8,411
91
   —
8,502
Total mortgage-backed securities —
177,456
92
—
177,548
Corporate debt securities 58
10,967
432
   —
11,457
Collateralized loan and other debt obligations (3) —
34,141
879
(2) —
35,020
Asset-backed securities:
Automobile loans and leases —
9
—
—
9
Home equity loans —
327
—
   —
327
Other asset-backed securities —
4,909
962
(2) —
5,871
Total asset-backed securities —
5,245
962
   —
6,207
Other debt securities —
1
—
   —
1
Total debt securities 22,928
280,720
3,505
   —
307,153
Marketable equity securities:
Perpetual preferred securities 112
357
—
—
469
Other marketable equity securities 741
1
—
   —
742
Total marketable equity securities 853
358
—
—
1,211
Total available-for-sale securities 23,781
281,078
3,505
—
308,364
Mortgages held for sale    —
21,057
985
—
22,042
Loans —
—
758
—
758
Mortgage servicing rights (residential) —
—
12,959
—
12,959
Derivative assets:
Interest rate contracts 44
64,986
238
—
65,268
Commodity contracts —
3,020
37
—
3,057
Equity contracts 1,314
2,997
1,047
—
5,358
Foreign exchange contracts 22
10,843
29
—
10,894
Credit contracts —
280
272
—
552
Netting —
—
—
(70,631 ) (4) (70,631 )
Total derivative assets 1,380
82,126
1,623
(70,631 ) 14,498
Other assets – excluding nonmarketable equity investments at NAV —
16
3,259
—
3,275
Total assets included in the fair value hierarchy $ 60,573
422,888
23,463
(70,631 ) 436,293
Other assets – nonmarketable equity investments at NAV (5) —
Total assets recorded at fair value

$ 436,293
Derivative liabilities:
Interest rate contracts $ (45 ) (65,047 ) (117 ) —
(65,209 )
Commodity contracts —
(2,537 ) (14 ) —
(2,551 )
Equity contracts (919 ) (3,879 ) (1,314 ) —
(6,112 )
Foreign exchange contracts (109 ) (12,616 ) (17 ) —
(12,742 )
Credit contracts —
(332 ) (195 ) —
(527 )
Other derivative contracts —
—
(47 ) —
(47 )
Netting —
—
—
72,696
(4) 72,696
Total derivative liabilities (1,073 ) (84,411 ) (1,704 ) 72,696
(14,492 )
Short sale liabilities:

Securities of U.S. Treasury and federal agencies (9,722 ) (701 ) —
—
(10,423 )
Corporate debt securities —
(4,063 ) —
—
(4,063 )
Equity securities (1,795 ) —
—
—
(1,795 )
Other securities —
(98 ) —
—
(98 )
Total short sale liabilities (11,517 ) (4,862 ) —
—
(16,379 )
Other liabilities —
—
(4 ) —
(4 )
Total liabilities recorded at fair value $ (12,590 ) (89,273 ) (1,708 ) 72,696
(30,875 )


~~(1)~~	~~Net gains (losses) from trading activities recognized in the income statement for the year ended~~ ~~December 31, 2016, include~~ ~~$820 million~~ ~~in net unrealized gains (losses) on trading securities held at~~ ~~December 31, 2016~~.


~~(2)~~	Balances consist of securities that are mostly investment grade based on ratings received from the ratings agencies or internal credit grades categorized as investment grade if external ratings are not available. The securities are classified as Level 3 due to limited market activity.


~~(3)~~	~~Includes collateralized debt obligations of~~ ~~$847 million~~.


~~(4)~~	~~Represents balance sheet netting of derivative asset and liability balances and related cash collateral. See Note 12 (Derivatives) for additional information.~~


~~(5)~~	~~Consists of certain nonmarketable equity investments that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.~~

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

Changes in Fair Value Levels

We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy and transfer between Level 1, Level 2, and Level 3 accordingly. Observable market data includes but is not limited to quoted prices and market transactions. Changes in economic conditions or market liquidity generally will drive changes in availability of observable market data. Changes in availability of observable market data, which also may result in

changing the valuation technique used, are generally the cause of transfers between Level 1, Level 2,and Level 3.

~~Transfers into and out of Level 1, Level 2, and Level 3 are provided within Table 13.3 for the periods presented.~~ The amounts reported as transfers represent the fair value as of the beginning of the quarter in which the transfer occurred.

~~Table 13.3:Transfers Between Fair Value Levels~~

   Transfers Between Fair Value Levels
   Level 1 Level 2 Level 3 (1)
(in millions) In Out In Out In Out Total
Quarter ended September 30, 2017
Trading assets $ —
—
—
(20 ) 20
—
—
Available-for-sale securities —
—
838
—
—
(838 ) —
Mortgages held for sale —
—
2
(55 ) 55
(2 ) —
Other assets —
—
—
—
—
—
—
Net derivative assets and liabilities (2) —
—
6
15
(15 ) (6 ) —
Short sale liabilities —
—
—
—
—
—
—
Total transfers $ —
—
846
(60 ) 60
(846 ) —
Quarter ended September 30, 2016
Trading assets $ 1
(44 ) 44
(2 ) 1
—
—
Available-for-sale securities —
—
465
—
—
(465 ) —
Mortgages held for sale —
—
3
(18 ) 18
(3 ) —
Other assets —
—
—
—
—
—
—
Net derivative assets and liabilities (2) —
—
79
(14 ) 14
(79 ) —
Short sale liabilities —
1
(1 ) —
—
—
—
Total transfers $ 1
(43 ) 590
(34 ) 33
(547 ) —
Nine months ended September 30, 2017
Trading assets $ —
—
1
(39 ) 39
(1 ) —
Available-for-sale securities —
—
1,334
(5 ) 5
(1,334 ) —
Mortgages held for sale —
—
8
(116 ) 116
(8 ) —
Other assets —
—
—
(1 ) 1
—
�� —
Net derivative assets and liabilities (2) —
—
89
37
(37 ) (89 ) —
Short sale liabilities —
—
—
—
—
—
—
Total transfers $ —
—
1,432
(124 ) 124
(1,432 ) —
Nine months ended September 30, 2016
Trading assets $ 5
(48 ) 59
(6 ) 1
(11 ) —
Available-for-sale securities —
—
481
(80 ) 80
(481 ) —
Mortgages held for sale —
—
12
(72 ) 72
(12 ) —
Other assets —
—
—
—
—
—
—
Net derivative assets and liabilities (2) —
—
129
(42 ) 42
(129 ) —
Short sale liabilities (1 ) 1
(1 ) 1
—
—
—
Total transfers $ 4
(47 ) 680
(199 ) 195
(633 ) —


~~(1)~~	~~All transfers in and out of Level 3 are disclosed within the recurring Level 3 rollforward tables in this Note.~~


~~(2)~~	~~Includes transfers of net derivative assets and net derivative liabilities between levels due to changes in observable market data.~~

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the quarter ended ~~September 30, 2017,~~March 31, 2020, are presented in Table ~~13.4.~~16.3.

Table ~~13.4:~~16.3:Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – Quarter ended ~~September 30, 2017~~

March 31, 2020


				Total net gains (losses) included in			Purchases, sales, issuances and settlements, net (1)												Net unrealized gains (losses) included in income related to assets and liabilities held at period end							Total net gains (losses) included in					Purchases, sales, issuances and settlements, net (1)												Net unrealized gains (losses) related to assets and liabilities held at period end included in
(in millions)	Balance, beginning of period			Net income		Other compre- hensive income			Transfers into Level 3			Transfers out of Level 3			Balance, end of period			(2)			Balance, beginning of period				Net income			Other compre- hensive income			Purchases, sales, issuances and settlements, net (1)		Transfers into Level 3 (2)			Transfers out of Level 3 (3)			Balance, end of period			Net income		(4)		Other compre- hensive income
Quarter ended September 30, 2017							Purchases, sales, issuances and settlements, net (1)
Trading assets:
Quarter ended March 31, 2020
Trading debt securities:
Securities of U.S. states and political subdivisions	$	9		—		—	(6	)		—			—			3			—			$	—			—			—		—			—			—			—			—				—
Collateralized loan obligations	403			—		—	(20	)		—			—			383			(4	)		183				(69	)		—		19			21			—			154			(69	)			—
Corporate debt securities	26			—		—	6			2			—			34			—			38				(4	)		—		3			—			(3	)		34			(3	)			—
Mortgage-backed securities	—			—		—	—			—			—			—			—			—				(42	)		—		171			48			—			177			(42	)			—
Asset-backed securities	—			—		—	—			—			—			—			—			—				(2	)		—		(5	)		31			—			24			(2	)			—
Equity securities	—			—		—	—			—			—			—			—
Total trading securities	438			—		—	(20	)		2			—			420			(4	)
Other trading assets	39			—		—	(1	)		18			—			56			—
Total trading assets	477			—		—	(21	)		20			—			476			(4	)	(3)
Available-for-sale securities:
Other trading debt securities																						2				(1	)		—		(1	)		—			—			—			(1	)			—
Total trading debt securities																						223				(118	)		—		187			100			(3	)		389			(117	)	(5)		—
Available-for-sale debt securities:
Securities of U.S. states and political subdivisions	1,557			3		3	(19	)		—			(838	)		706			—			413				—			(2	)	(21	)		32			(71	)		351			—				—
Mortgage-backed securities:
Residential	1			—		—	—			—			—			1			—			—				(5	)		(3	)	26			13			—			31			(5	)			(3	)
Commercial	75			—		1	—			—			—			76			—			42				3			(13	)	(2	)		124			—			154			—				(12	)
Total mortgage-backed securities	76			—		1	—			—			—			77			—			42				(2	)		(16	)	24			137			—			185			(5	)			(15	)
Corporate debt securities	376			1		4	(1	)		—			—			380			—			367				(52	)		(16	)	—			831			—			1,130			(54	)			(16	)
Collateralized loan and other debt obligations	1,002			7		25	(20	)		—			—			1,014			—			640				3			(53	)	(12	)		58			—			636			—				(53	)
Asset-backed securities:
Automobile loans and leases	—			—		—	—			—			—			—			—
Other asset-backed securities	872			1		2	(240	)		—			—			635			—			103				—			(4	)	(18	)		29			—			110			—				(4	)
Total asset-backed securities	872			1		2	(240	)		—			—			635			—			103				—			(4	)	(18	)		29			—			110			—				(4	)
Total debt securities	3,883			12		35	(280	)		—			(838	)		2,812			—		(4)
Marketable equity securities:
Perpetual preferred securities	—			—		—	—			—			—			—			—
Other marketable equity securities	—			—		—	—			—			—			—			—
Total marketable equity securities	—			—		—	—			—			—			—			—		(5)
Total available-for-sale securities	3,883			12		35	(280	)		—			(838	)		2,812			—
Mortgages held for sale	995			(10	)	—	(6	)		55			(2	)		1,032			(11	)	(6)
Total available-for-sale debt securities																						1,565				(51	)		(91	)	(27	)		1,087			(71	)		2,412			(59	)	(6	)	(88	)
Mortgage loans held for sale																						1,198				(61	)		—		700			1,322			(2	)		3,157			(64	)	(7	)	—
Loans held for sale																						16				(2	)		—		(2	)		7			—			19			1				—
Loans	443			—		—	(33	)		—			—			410			(3	)	(6)	171				—			—		(11	)		—			—			160			(2	)	(7	)	—
Mortgage servicing rights (residential) (7)	12,789			(661	)	—	1,210			—			—			13,338			(142	)	(6)
Mortgage servicing rights (residential) (8)																						11,517				(3,821	)		—		430			—			—			8,126			(3,257	)	(7	)	—
Net derivative assets and liabilities:
Interest rate contracts	115			158		—	(159	)		—			—			114			8			214				744			—		(273	)		—			—			685			531				—
Commodity contracts	17			(16	)	—	9			2		��	—			12			7			(16		)		(80	)		—		58			(6	)		—			(44	)		(27	)			—
Equity contracts	(471		)	(70	)	—	(27	)		(17	)		(6	)		(591	)		(130	)		(269		)		430			—		73			(10	)		(7	)		217			451				—
Foreign exchange contracts	4			3		—	—			—			—			7			1			(18		)		10			—		2			—			—			(6	)		(2	)			—
Credit contracts	72			(6	)	—	(13	)		—			—			53			(6	)		29				15			—		3			—			—			47			17				—
Other derivative contracts	(34		)	8		—	—			—			—			(26	)		8
Total derivative contracts	(297		)	77		—	(190	)		(15	)		(6	)		(431	)		(112	)	(8)	(60		)		1,119			—		(137	)		(16	)		(7	)		899			970		(9	)	—
Other assets	3,960			513		—	—			—			—			4,473			513		(5)
Short sale liabilities	—			—		—	(3	)		—			—			(3	)		—		(3)
Equity securities:
Marketable																						3				—			—		—			—			—			3			—				—
Nonmarketable																						7,847				(1,101	)		—		—			7			(2	)		6,751			(1,103	)			—
Total equity securities																						7,850				(1,101	)		—		—			7			(2	)		6,754			(1,103	)	(10	)	—
Other liabilities	(3		)	—		—	—			—			—			(3	)		—		(6)	(2		)		—			—		—			—			—			(2	)		—		(7	)	—


(1)	See Table ~~13.5~~16.4 for detail.


(2)	All assets and liabilities transferred into level 3 were previously classified within level 2.


(3)	All assets and liabilities transferred out of level 3 are classified as level 2.


(4)	Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.


~~(3)~~(5)	Included in net gains ~~(losses)~~ from trading activities ~~and other noninterest income~~ in the income statement.


~~(4)~~(6)	Included in net gains ~~(losses)~~ from debt securities and provision for credit losses - debt securities in the income statement.


~~(5)~~	~~Included in net gains (losses) from equity investments in the income statement.~~


~~(6)~~(7)	Included in mortgage banking and other noninterest income in the income statement.


~~(7)~~(8)	For more information on the changes in mortgage servicing rights, see Note 811 (Mortgage Banking Activities).


~~(8)~~(9)	Included in mortgage banking income, net gains from trading activities and from equity ~~investments~~securities and other noninterest income in the income statement.


(10)	Included in net gains (losses) from equity securities in the income statement.

(continued on following page)

Note ~~13:~~16: Fair Values of Assets and Liabilities (continued)

(continued from previous page)

Table ~~13.5~~16.4 presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for ~~the~~ quarter ended ~~September 30, 2017.~~March 31, 2020.

Table ~~13.5:~~16.4:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Quarter ended ~~September 30, 2017~~March 31, 2020


(in millions)	Purchases		Sales		Issuances	Settlements		Net		Purchases		Sales		Issuances	Settlements		Net
Quarter ended September 30, 2017
Trading assets:
Quarter ended March 31, 2020
Trading debt securities:
Securities of U.S. states and political subdivisions	$	30	(35	)	—	(1	)	(6	)	$	—	—		—	—		—
Collateralized loan obligations	51		(36	)	—	(35	)	(20	)	85		(56	)	—	(10	)	19
Corporate debt securities	9		(3	)	—	—		6		10		(7	)	—	—		3
Mortgage-backed securities	—		—		—	—		—		195		(24	)	—	—		171
Asset-backed securities	—		—		—	—		—		—		(5	)	—	—		(5	)
Equity securities	—		—		—	—		—
Total trading securities	90		(74	)	—	(36	)	(20	)
Other trading assets	—		(1	)	—	—		(1	)
Total trading assets	90		(75	)	—	(36	)	(21	)
Available-for-sale securities:
Other trading debt securities										—		(1	)	—	—		(1	)
Total trading debt securities										290		(93	)	—	(10	)	187
Available-for-sale debt securities:
Securities of U.S. states and political subdivisions	—		(68	)	98	(49	)	(19	)	—		—		—	(21	)	(21	)
Mortgage-backed securities:
Residential	—		—		—	—		—		26		—		—	—		26
Commercial	—		—		—	—		—		—		—		—	(2	)	(2	)
Total mortgage-backed securities	—		—		—	—		—		26		—		—	(2	)	24
Corporate debt securities	—		—		—	(1	)	(1	)	—		—		—	—		—
Collateralized loan and other debt obligations	6		—		—	(26	)	(20	)	—		—		—	(12	)	(12	)
Asset-backed securities:
Automobile loans and leases	—		—		—	—		—
Other asset-backed securities	—		—		16	(256	)	(240	)	—		(5	)	—	(13	)	(18	)
Total asset-backed securities	—		—		16	(256	)	(240	)	—		(5	)	—	(13	)	(18	)
Total debt securities	6		(68	)	114	(332	)	(280	)
Marketable equity securities:
Perpetual preferred securities	—		—		—	—		—
Other marketable equity securities	—		—		—	—		—
Total marketable equity securities	—		—		—	—		—
Total available-for-sale securities	6		(68	)	114	(332	)	(280	)
Mortgages held for sale	17		(130	)	147	(40	)	(6	)
Total available-for-sale debt securities										26		(5	)	—	(48	)	(27	)
Mortgage loans held for sale										23		(69	)	843	(97	)	700
Loans held for sale										—		(1	)	—	(1	)	(2	)
Loans	2		—		5	(40	)	(33	)	1		—		2	(14	)	(11	)
Mortgage servicing rights (residential) (1)	541		64		605	—		1,210		—		(32	)	461	1		430
Net derivative assets and liabilities:
Interest rate contracts	—		—		—	(159	)	(159	)	—		—		—	(273	)	(273	)
Commodity contracts	—		—		—	9		9		—		—		—	58		58
Equity contracts	—		(48	)	—	21		(27	)	—		—		—	73		73
Foreign exchange contracts	—		—		—	—		—		—		—		—	2		2
Credit contracts	1		—		—	(14	)	(13	)	6		(3	)	—	—		3
Other derivative contracts	—		—		—	—		—
Total derivative contracts	1		(48	)	—	(143	)	(190	)	6		(3	)	—	(140	)	(137	)
Other assets	—		—		—	—		—
Short sale liabilities	—		(3	)	—	—		(3	)
Equity securities:
Marketable										—		—		—	—		—
Nonmarketable										—		—		—	—		—
Total equity securities										—		—		—	—		—
Other liabilities	—		—		—	—		—		—		—		—	—		—


(1)	For more information on the changes in mortgage servicing rights, see Note 811 (Mortgage Banking Activities).

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for ~~the~~ quarter ended ~~September 30, 2016,~~March 31, 2019, are presented in Table ~~13.6.~~16.5.

Table ~~13.6:~~16.5:Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – Quarter ended ~~September 30, 2016~~

March 31, 2019

Balance,
beginning
of period

Total net gains
(losses) included in

Purchases,
sales,
issuances
and
settlements,
net (1)





Net unrealized
gains (losses)
included in
income related
to assets and
liabilities held
at period end


(in millions)
Net
income

Other
compre-
hensive
income

Transfers
into
Level 3

Transfers
out of
Level 3

Balance,
end of
period

(2)
Quarter ended September 30, 2016
Trading assets:
Securities of U.S. states and
political subdivisions
$ 7
—
—
(4 ) —
—
3
—

Collateralized loan obligations 249
—
—
39
—
—
288
(1 )
Corporate debt securities 36
1
—
9
—
—
46
1

Mortgage-backed securities —
—
—
—
—
—
—
—

Asset-backed securities —
—
—
—
—
—
—
—

Equity securities —
—
—
(1 ) 1
—
—
—

Total trading securities 292
1
—
43
1
—
337
—

Other trading assets 33
(3 ) —
—
—
—
30
(2 )
Total trading assets 325
(2 ) —
43
1
—
367
(2 ) (3)
Available-for-sale securities:
Securities of U.S. states and
political subdivisions
1,793
1
(15 ) (114 ) —
(465 ) 1,200
—

Mortgage-backed securities:
Residential 1
—
—
—
—
—
1
—

Commercial 94
—
1
(2 ) —
—
93
(1 )
Total mortgage-backed securities 95
—
1
(2 ) —
—
94
(1 )
Corporate debt securities 471
3
5
(4 ) —
—
475
—

Collateralized loan and other
debt obligations
951
19
2
(12 ) —
—
960
—

Asset-backed securities:
Automobile loans and leases —
—
—
—
—
—
—
—

Other asset-backed securities 1,117
(1 ) —
(70 ) —
—
1,046
—

Total asset-backed securities 1,117
(1 ) —
(70 ) —
—
1,046
—

Total debt securities 4,427
22
(7 ) (202 ) —
(465 ) 3,775
(1 ) (4)
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
—
—
—

Other marketable equity securities —
—
—
—
—
—
—
—

Total marketable equity securities —
—
—
—
—
—
—
—
(5)
Total available-for-sale
securities
4,427
22
(7 ) (202 ) —
(465 ) 3,775
(1 )
Mortgages held for sale 1,084
(10 ) —
18
18
(3 ) 1,107
(11 ) (6)
Loans 5,032
(25 ) —
(219 ) —
—
4,788
(26 ) (6)
Mortgage servicing rights (residential) (7) 10,396
(594 ) —
613
—
—
10,415
(8 ) (6)
Net derivative assets and liabilities:
Interest rate contracts 690
504
—
(561 ) —
—
633
186

Commodity contracts 21
(3 ) —
—
1
1
20
(1 )
Equity contracts (252 ) (33 ) —
(7 ) (3 ) (80 ) (375 ) (54 )
Foreign exchange contracts —
1
—
—
16
—
17
2

Credit contracts 61
17
—
(8 ) —
—
70
14

Other derivative contracts (88 ) 15
—
—
—
—
(73 ) 16

Total derivative contracts 432
501
—
(576 ) 14
(79 ) 292
163
(8)
Other assets 3,038
380
—
—
—
—
3,418
381
(5)
Short sale liabilities —
—
—
—
—
—
—
—
(3)
Other liabilities (5 ) 1
—
—
—
—
(4 ) —
(6)



	Balance, beginning of period			Total net gains (losses) included in				Purchases, sales, issuances and settlements, net (1)							Net unrealized gains (losses) included in income related to assets and liabilities held at period end
(in millions)	Balance, beginning of period			Net income		Other compre- hensive income		Purchases, sales, issuances and settlements, net (1)		Transfers into Level 3 (2)	Transfers out of Level 3 (3)		Balance, end of period				(4)
Quarter ended March 31, 2019
Trading debt securities:
Securities of U.S. states and political subdivisions	$	3		—		—		(2	)	—	(1	)	—		—
Collateralized loan obligations	237			(3	)	—		41		—	—		275		1
Corporate debt securities	34			2		—		4		1	—		41		2
Other trading debt securities	16			(1	)	—		—		—	—		15		—
Total trading debt securities	290			(2	)	—		43		1	(1	)	331		3		(5)
Available-for-sale debt securities:
Securities of U.S. states and political subdivisions	444			—		3		23		—	—		470		—
Mortgage-backed securities:
Residential	—			—		—		—		—	—		—		—
Commercial	41			—		—		—		—	—		41		—
Total mortgage-backed securities	41			—		—		—		—	—		41		—
Corporate debt securities	370			1		4		2		—	—		377		—
Collateralized loan and other debt obligations	800			6		(4	)	(47	)	—	—		755		—
Asset-backed securities:
Other asset-backed securities	389			—		(1	)	(26	)	—	—		362		—
Total asset-backed securities	389			—		(1	)	(26	)	—	—		362		—
Total available-for-sale debt securities	2,044			7		2		(48	)	—	—		2,005		—		(6)
Mortgage loans held for sale	997			15		—		(66	)	56	(4	)	998		15		(7)
Loans held for sale	60			—		—		11		37	(37	)	71		—
Loans	244			—		—		(19	)	—	—		225		(2	)	(7)
Mortgage servicing rights (residential) (8)	14,649			(1,373	)	—		60		—	—		13,336		(891	)	(7)
Net derivative assets and liabilities:
Interest rate contracts	25			187		—		(111	)	—	—		101		132
Commodity contracts	4			(51	)	—		27		2	—		(18	)	(15	)
Equity contracts	(17		)	(119	)	—		(3	)	9	(32	)	(162	)	(114	)
Foreign exchange contracts	(26		)	7		—		3		—	—		(16	)	11
Credit contracts	35			8		—		6		—	—		49		13
Total derivative contracts	21			32		—		(78	)	11	(32	)	(46	)	27		(9)
Equity securities:
Nonmarketable	5,468			926		—		(1	)	—	(12	)	6,381		926
Total equity securities	5,468			926		—		(1	)	—	(12	)	6,381		926		(10)
Other liabilities	(2		)	—		—		—		—	—		(2	)	—		(7)


(1)	See Table ~~13.7~~16.6 for detail.


(2)	All assets and liabilities transferred into level 3 were previously classified within level 2.


(3)	All assets and liabilities transferred out of level 3 are classified as level 2.


(4)	Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.


~~(3)~~(5)	Included in net gains ~~(losses)~~ from trading activities ~~and other noninterest income~~ in the income statement.


~~(4)~~(6)	Included in net gains ~~(losses)~~ from debt securities in the income statement.


~~(5)~~	~~Included in net gains (losses) from equity investments in the income statement.~~


~~(6)~~(7)	Included in mortgage banking and other noninterest income in the income statement.


~~(7)~~(8)	For more information on the changes in mortgage servicing rights, see Note 811 (Mortgage Banking Activities).


~~(8)~~(9)	Included in mortgage banking income, net gains from trading activities and from equity ~~investments~~securities and other noninterest income in the income statement.


(10)	Included in net gains (losses) from equity securities in the income statement.

(continued on following page)

Note ~~13:~~16: Fair Values of Assets and Liabilities (continued)

(continued from previous page)

Table ~~13.7~~16.6 presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for ~~the~~ quarter ended ~~September 30, 2016.~~March 31, 2019.

Table ~~13.7:~~16.6:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Quarter ended ~~September 30, 2016~~March 31, 2019



(in millions)	Purchases		Sales		Issuances	Settlements		Net
Quarter ended March 31, 2019
Trading debt securities:
Securities of U.S. states and political subdivisions	$	—	—		—	(2	)	(2	)
Collateralized loan obligations	130		(87	)	—	(2	)	41
Corporate debt securities	5		(1	)	—	—		4
Other trading debt securities	—		—		—	—		—
Total trading debt securities	135		(88	)	—	(4	)	43
Available-for-sale debt securities:
Securities of U.S. states and political subdivisions	—		—		49	(26	)	23
Mortgage-backed securities:
Residential	—		—		—	—		—
Commercial	—		—		—	—		—
Total mortgage-backed securities	—		—		—	—		—
Corporate debt securities	3		—		—	(1	)	2
Collateralized loan and other debt obligations	—		—		—	(47	)	(47	)
Asset-backed securities:
Other asset-backed securities	—		(3	)	66	(89	)	(26	)
Total asset-backed securities	—		(3	)	66	(89	)	(26	)
Total available-for-sale debt securities	3		(3	)	115	(163	)	(48	)
Mortgage loans held for sale	16		(93	)	46	(35	)	(66	)
Loans held for sale	12		(1	)	—	—		11
Loans	2		—		3	(24	)	(19	)
Mortgage servicing rights (residential) (1)	—		(281	)	341	—		60
Net derivative assets and liabilities:
Interest rate contracts	—		—		—	(111	)	(111	)
Commodity contracts	—		—		—	27		27
Equity contracts	—		—		—	(3	)	(3	)
Foreign exchange contracts	—		—		—	3		3
Credit contracts	6		—		—	—		6
Total derivative contracts	6		—		—	(84	)	(78	)
Equity securities:
Nonmarketable	—		(1	)	—	—		(1	)
Total equity securities	—		(1	)	—	—		(1	)
Other liabilities	—		—		—	—		—

(in millions) Purchases
Sales
Issuances
Settlements
Net
Quarter ended September 30, 2016
Trading assets:
Securities of U.S. states and political subdivisions $ —
—
—
(4 ) (4 )
Collateralized loan obligations 75
(36 ) —
—
39
Corporate debt securities 19
(10 ) —
—
9
Mortgage-backed securities —
—
—
—
—
Asset-backed securities —
—
—
—
—
Equity securities —
(1 ) —
—
(1 )
Total trading securities 94
(47 ) —
(4 ) 43
Other trading assets —
—
—
—
—
Total trading assets 94
(47 ) —
(4 ) 43
Available-for-sale securities:
Securities of U.S. states and political subdivisions —
—
—
(114 ) (114 )
Mortgage-backed securities:
Residential —
—
—
—
—
Commercial —
—
—
(2 ) (2 )
Total mortgage-backed securities —
—
—
(2 ) (2 )
Corporate debt securities 1
(4 ) —
(1 ) (4 )
Collateralized loan and other debt obligations 121
(45 ) —
(88 ) (12 )
Asset-backed securities:
Automobile loans and leases —
—
—
—
—
Other asset-backed securities —
—
16
(86 ) (70 )
Total asset-backed securities —
—
16
(86 ) (70 )
Total debt securities 122
(49 ) 16
(291 ) (202 )
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
Other marketable equity securities —
—
—
—
—
Total marketable equity securities —
—
—
—
—
Total available-for-sale securities 122
(49 ) 16
(291 ) (202 )
Mortgages held for sale 23
(113 ) 161
(53 ) 18
Loans —
—
76
(295 ) (219 )
Mortgage servicing rights (residential) (1) —
3
609
1
613
Net derivative assets and liabilities:
Interest rate contracts —
—
—
(561 ) (561 )
Commodity contracts —
—
—
—
—
Equity contracts —
—
—
(7 ) (7 )
Foreign exchange contracts —
—
—
—
—
Credit contracts 2
(1 ) —
(9 ) (8 )
Other derivative contracts —
—
—
—
—
Total derivative contracts 2
(1 ) —
(577 ) (576 )
Other assets —
—
—
—
—
Short sale liabilities —
—
—
—
—
Other liabilities —
—
—
—
—


(1)	For more information on the changes in mortgage servicing rights, see Note 811 (Mortgage Banking Activities).

~~The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the first nine months of 2017, are presented in Table 13.8.~~

~~Table 13.8:Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – Nine months ended September 30, 2017~~

Total net gains
(losses) included in

Purchases,
sales,
issuances
and
settlements,
net (1)





Net unrealized
gains (losses)
included in
income related
to assets and
liabilities held
at period end


(in millions)
Balance,
beginning
of period

Net
income

Other
compre-
hensive
income

Transfers
into
Level 3

Transfers
out of
Level 3

Balance,
end of
period

(2)
Nine months ended September 30, 2017
Trading assets:
Securities of U.S. states and
political subdivisions
$ 3
—
—
—
—
—
3
—

Collateralized loan obligations 309
(3 ) —
77
—
—
383
(12 )
Corporate debt securities 34
1
—
(5 ) 5
(1 ) 34
—

Mortgage-backed securities —
—
—
—
—
—
—
—

Asset-backed securities —
—
—
—
—
—
—
—

Equity securities —
—
—
—
—
—
—
—

Total trading securities 346
(2 ) —
72
5
(1 ) 420
(12 )
Other trading assets 28
(3 ) —
(3 ) 34
—
56
(2 )
Total trading assets 374
(5 ) —
69
39
(1 ) 476
(14 ) (3)
Available-for-sale securities:
Securities of U.S. states and
political subdivisions
1,140
4
7
884
5
(1,334 ) 706
—

Mortgage-backed securities:
Residential 1
—
—
—
—
—
1
—

Commercial 91
(6 ) —
(9 ) —
—
76
(11 )
Total mortgage-backed securities 92
(6 ) —
(9 ) —
—
77
(11 )
Corporate debt securities 432
(13 ) 14
(53 ) —
—
380
—

Collateralized loan and other
debt obligations
879
17
70
48
—
—
1,014
—

Asset-backed securities:
Automobile loans and leases —
—
—
—
—
—
—
—

Other asset-backed securities 962
1
5
(333 ) —
—
635
—

Total asset-backed securities 962
1
5
(333 ) —
—
635
—

Total debt securities 3,505
3
96
537
5
(1,334 ) 2,812
(11 ) (4)
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
—
—
—

Other marketable equity securities —
—
—
—
—
—
—
—

Total marketable
equity securities
—
—
—
—
—
—
—
—
(5)
Total available-for-sale
securities
3,505
3
96
537
5
(1,334 ) 2,812
(11 )
Mortgages held for sale 985
(20 ) —
(41 ) 116
(8 ) 1,032
(21 ) (6)
Loans 758
(6 ) —
(342 ) —
—
410
(9 ) (6)
Mortgage servicing rights (residential) (7) 12,959
(1,795 ) —
2,174
—
—
13,338
(328 ) (6)
Net derivative assets and liabilities:
Interest rate contracts 121
625
—
(632 ) —
—
114
(10 )
Commodity contracts 23
(14 ) —
3
2
(2 ) 12
9

Equity contracts (267 ) (128 ) —
(70 ) (39 ) (87 ) (591 ) (223 )
Foreign exchange contracts 12
(5 ) —
—
—
—
7
(1 )
Credit contracts 77
29
—
(53 ) —
—
53
(42 )
Other derivative contracts (47 ) 22
—
(1 ) —
—
(26 ) 22

Total derivative contracts (81 ) 529
—
(753 ) (37 ) (89 ) (431 ) (245 ) (8)
Other assets 3,259
1,214
—
(1 ) 1
—
4,473
1,215
(5)
Short sale liabilities —
—
—
(3 ) —
—
(3 ) —
(3)
Other liabilities (4 ) 1
—
—
—
—
(3 ) —
(6)


~~(1)~~	~~See Table 13.9 for detail.~~


~~(2)~~	Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.


~~(3)~~	~~Included in net gains (losses) from trading activities and other noninterest income in the income statement.~~


~~(4)~~	~~Included in net gains (losses) from debt securities in the income statement.~~


~~(5)~~	~~Included in net gains (losses) from equity investments in the income statement.~~


~~(6)~~	~~Included in mortgage banking and other noninterest income in the income statement.~~


~~(7)~~	~~For more information on the changes in mortgage servicing rights, see Note 8 (Mortgage Banking Activities).~~


~~(8)~~	~~Included in mortgage banking, trading activities, equity investments and other noninterest income in the income statement.~~

~~(continued on following page)~~

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

~~(continued from previous page)~~

Table 13.9 presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the first nine months of 2017.

~~Table 13.9:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Nine months ended September 30, 2017~~

(in millions) Purchases
Sales
Issuances
Settlements
Net
Nine months ended September 30, 2017
Trading assets:
Securities of U.S. states and political subdivisions $ 37
(36 ) —
(1 ) —
Collateralized loan obligations 337
(165 ) —
(95 ) 77
Corporate debt securities 18
(23 ) —
—
(5 )
Mortgage-backed securities —
—
—
—
—
Asset-backed securities —
—
—
—
—
Equity securities —
—
—
—
—
Total trading securities 392
(224 ) —
(96 ) 72
Other trading assets —
(1 ) —
(2 ) (3 )
Total trading assets 392
(225 ) —
(98 ) 69
Available-for-sale securities:
Securities of U.S. states and political subdivisions —
(68 ) 1,099
(147 ) 884
Mortgage-backed securities:
Residential —
—
—
—
—
Commercial —
—
—
(9 ) (9 )
Total mortgage-backed securities —
—
—
(9 ) (9 )
Corporate debt securities 4
—
—
(57 ) (53 )
Collateralized loan and other debt obligations 135
—
—
(87 ) 48
Asset-backed securities:
Automobile loans and leases —
—
—
—
—
Other asset-backed securities —
—
198
(531 ) (333 )
Total asset-backed securities —
—
198
(531 ) (333 )
Total debt securities 139
(68 ) 1,297
(831 ) 537
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
Other marketable equity securities —
—
—
—
—
Total marketable equity securities —
—
—
—
—
Total available-for-sale securities 139
(68 ) 1,297
(831 ) 537
Mortgages held for sale 57
(374 ) 386
(110 ) (41 )
Loans 5
(129 ) 14
(232 ) (342 )
Mortgage servicing rights (residential) (1) 541
9
1,624
—
2,174
Net derivative assets and liabilities:
Interest rate contracts —
—
—
(632 ) (632 )
Commodity contracts —
—
—
3
3
Equity contracts —
(117 ) —
47
(70 )
Foreign exchange contracts —
—
—
—
—
Credit contracts 5
(2 ) —
(56 ) (53 )
Other derivative contracts —
—
—
(1 ) (1 )
Total derivative contracts 5
(119 ) —
(639 ) (753 )
Other assets —
(1 ) —
—
(1 )
Short sale liabilities —
(3 ) —
—
(3 )
Other liabilities —
—
—
—
—


~~(1)~~	~~For more information on the changes in mortgage servicing rights, see Note 8 (Mortgage Banking Activities).~~

~~The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the first nine months of 2016, are presented in Table 13.10.~~

~~Table 13.10:Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – Nine months ended September 30, 2016~~

Balance,
beginning
of period

Total net gains
(losses) included in

Purchases,
sales,
issuances
and
settlements,
net (1)





Net unrealized
gains (losses)
included in
income related
to assets and
liabilities held
at period end


(in millions)
Net
income

Other
compre-
hensive
income

Transfers
into
Level 3

Transfers
out of
Level 3

Balance,
end of
period

(2)
Nine months ended September 30, 2016
Trading assets:
Securities of U.S. states and
political subdivisions
$ 8
—
—
(5 ) —
—
3
—

Collateralized loan obligations 343
(24 ) —
(20 ) —
(11 ) 288
(25 )
Corporate debt securities 56
(7 ) —
(3 ) —
—
46
(6 )
Mortgage-backed securities —
—
—
—
—
—
—
—

Asset-backed securities —
—
—
—
—
—
—
—

Equity securities —
—
—
(1 ) 1
—
—
—

Total trading securities 407
(31 ) —
(29 ) 1
(11 ) 337
(31 )
Other trading assets 34
(4 ) —
—
—
—
30
1

Total trading assets 441
(35 ) —
(29 ) 1
(11 ) 367
(30 ) (3)
Available-for-sale securities:
Securities of U.S. states and
political subdivisions
1,500
5
(11 ) 107
80
(481 ) 1,200
—

Mortgage-backed securities:
Residential 1
—
—
—
—
—
1
—

Commercial 73
—
1
19
—
—
93
(1 )
Total mortgage-backed securities 74
—
1
19
—
—
94
(1 )
Corporate debt securities 405
8
33
29
—
—
475
—

Collateralized loan and other
debt obligations
565
42
(18 ) 371
—
—
960
—

Asset-backed securities:
Automobile loans and leases —
—
—
—
—
—
—
—

Other asset-backed securities 1,182
1
(7 ) (130 ) —
—
1,046
(4 )
Total asset-backed securities 1,182
1
(7 ) (130 ) —
—
1,046
(4 )
Total debt securities 3,726
56
(2 ) 396
80
(481 ) 3,775
(5 ) (4)
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
—
—
—

Other marketable equity securities —
—
—
—
—
—
—
—

Total marketable equity securities —
—
—
—
—
—
—
—
(5)
Total available-for-sale
securities
3,726
56
(2 ) 396
80
(481 ) 3,775
(5 )
Mortgages held for sale 1,082
20
—
(55 ) 72
(12 ) 1,107
15
(6)
Loans 5,316
(29 ) —
(499 ) —
—
4,788
(30 ) (6)
Mortgage servicing rights (residential) (7) 12,415
(3,434 ) —
1,434
—
—
10,415
(1,789 ) (6)
Net derivative assets and liabilities:
Interest rate contracts 288
1,763
—
(1,411 ) —
(7 ) 633
374

Commodity contracts 12
5
—
(2 ) 4
1
20
13

Equity contracts (111 ) (26 ) —
(137 ) 22
(123 ) (375 ) (278 )
Foreign exchange contracts —
1
—
—
16
—
17
16

Credit contracts (3 ) 25
—
48
—
—
70
16

Other derivative contracts (58 ) (15 ) —
—
—
—
(73 ) (15 )
Total derivative contracts 128
1,753
—
(1,502 ) 42
(129 ) 292
126
(8)
Other assets 3,065
142
—
211
—
—
3,418
142
(5)
Short sale liabilities —
—
—
—
—
—
—
—
(3)
Other liabilities (30 ) 1
—
25
—
—
(4 ) —
(6)


~~(1)~~	~~See Table 13.11 for detail.~~


~~(2)~~	Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.


~~(3)~~	~~Included in net gains (losses) from trading activities and other noninterest income in the income statement.~~


~~(4)~~	~~Included in net gains (losses) from debt securities in the income statement.~~


~~(5)~~	~~Included in net gains (losses) from equity investments in the income statement.~~


~~(6)~~	~~Included in mortgage banking and other noninterest income in the income statement.~~


~~(7)~~	~~For more information on the changes in mortgage servicing rights, see Note 8 (Mortgage Banking Activities).~~


~~(8)~~	~~Included in mortgage banking, trading activities, equity investments and other noninterest income in the income statement.~~

~~(continued on following page)~~

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

~~(continued from previous page)~~

Table 13.11 presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the first nine months of 2016.

~~Table 13.11:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Nine months ended September 30, 2016~~

(in millions) Purchases
Sales
Issuances
Settlements
Net
Nine months ended September 30, 2016
Trading assets:
Securities of U.S. states and political subdivisions $ 2
(2 ) —
(5 ) (5 )
Collateralized loan obligations 265
(285 ) —
—
(20 )
Corporate debt securities 32
(35 ) —
—
(3 )
Mortgage-backed securities —
—
—
—
—
Asset-backed securities —
—
—
—
—
Equity securities —
(1 ) —
—
(1 )
Total trading securities 299
(323 ) —
(5 ) (29 )
Other trading assets —
—
—
—
—
Total trading assets 299
(323 ) —
(5 ) (29 )
Available-for-sale securities:
Securities of U.S. states and political subdivisions 28
(7 ) 475
(389 ) 107
Mortgage-backed securities:
Residential —
—
—
—
—
Commercial 22
—
—
(3 ) 19
Total mortgage-backed securities 22
—
—
(3 ) 19
Corporate debt securities 35
(4 ) —
(2 ) 29
Collateralized loan and other debt obligations 610
(49 ) —
(190 ) 371
Asset-backed securities:
Automobile loans and leases —
—
—
—
—
Other asset-backed securities —
(28 ) 214
(316 ) (130 )
Total asset-backed securities —
(28 ) 214
(316 ) (130 )
Total debt securities 695
(88 ) 689
(900 ) 396
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
Other marketable equity securities —
—
—
—
—
Total marketable equity securities —
—
—
—
—
Total available-for-sale securities 695
(88 ) 689
(900 ) 396
Mortgages held for sale 67
(424 ) 443
(141 ) (55 )
Loans 12
—
248
(759 ) (499 )
Mortgage servicing rights (residential) (1) —
(19 ) 1,452
1
1,434
Net derivative assets and liabilities:
Interest rate contracts —
—
—
(1,411 ) (1,411 )
Commodity contracts —
—
—
(2 ) (2 )
Equity contracts 29
(146 ) —
(20 ) (137 )
Foreign exchange contracts —
—
—
—
—
Credit contracts 5
(2 ) —
45
48
Other derivative contracts —
—
—
—
—
Total derivative contracts 34
(148 ) —
(1,388 ) (1,502 )
Other assets 211
—
—
—
211
Short sale liabilities —
—
—
—
—
Other liabilities —
—
—
25
25


~~(1)~~	~~For more information on the changes in mortgage servicing rights, see Note 8 (Mortgage Banking Activities).~~

Table ~~13.12~~16.7 and Table ~~13.13~~16.8 provide quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of substantially all of our Level 3 assets and liabilities measured at fair value on a recurring basis for which we use an internal model.

The significant unobservable inputs for Level 3 assets and liabilities ~~that are valued using~~inherent in the fair values obtained from ~~third party~~third-party vendors are not included in the table, as the specific inputs applied are not provided by the vendor.

In addition, the table excludes the valuation techniques and significant unobservable inputs for certain classes of Level 3 assets and liabilities measured using an internal ~~model~~models that we consider, both individually and in the aggregate, insignificant relative to our overall Level 3 assets and liabilities. We made this determination

based upon an evaluation of each class, which considered the magnitude of the positions, nature of the unobservable inputs and potential for significant changes in fair value due to changes in those inputs.

Weighted averages of inputs are calculated using outstanding unpaid principal balance for cash instruments, such

as loans and securities, and notional amounts for derivative instruments.

For information on how changes in significant unobservable inputs affect the fair values of Level 3 assets and liabilities, see Note 1719 (Fair Values of Assets and Liabilities) ~~to Financial Statements~~ in our ~~2016~~2019 Form 10-K.

Table ~~13.12:~~16.7: Valuation Techniques – Recurring Basis – ~~September 30, 2017~~

March 31, 2020


($ in millions, except cost to service amounts)	Fair Value Level 3				Valuation Technique(s)	Significant Unobservable Input	Range of Inputs							Weighted Average (1)		Fair Value Level 3				Valuation Technique(s)	Significant Unobservable Inputs	Range of Inputs Positive (Negative)							Weighted Average
September 30, 2017
Trading and available-for-sale securities:
March 31, 2020
Trading and available-for-sale debt securities:
Securities of U.S. states and political subdivisions:
Government, healthcare and other revenue bonds	$	630			Discounted cash flow	Discount rate	1.3			-	5.4		%	2.4		$	285			Discounted cash flow	Discount rate	1.6			-	5.4		%	2.3
Other municipal bonds	29				Discounted cash flow	Discount rate	4.2			-	4.3			4.3
	50				Vendor priced											66				Vendor priced
Collateralized loan and other debt obligations (2)	383				Market comparable pricing	Comparability adjustment	(16.5		)	-	24.0			3.1
Collateralized loan and other debt obligations																154				Market comparable pricing	Comparability adjustment	(27.8		)	-	137.9			6.8
																636				Vendor priced
Corporate debt securities																865				Discounted cash flow	Discount rate	4.0			-	14.9			5.5
																103				Market comparable pricing	Comparability adjustment	(32.7		)	-	14.2			(8.3	)
																196				Vendor priced
Mortgage-backed securities																177				Market comparable pricing	Comparability adjustment	(60.6		)	-	26.2			(4.6	)
	1,014				Vendor priced											185				Vendor priced
Asset-backed securities:
Diversified payment rights (3)	324				Discounted cash flow	Discount rate	2.1			-	3.7			2.8
Diversified payment rights (1)																76				Discounted cash flow	Discount rate	2.5			-	4.7			3.7
Other commercial and consumer	285			(4)	Discounted cash flow	Discount rate	3.3			-	4.7			3.9		24				Market comparable pricing	Comparability adjustment	(7.0		)	-	(5.6	)		(5.8	)
						Weighted average life	1.3			-	3.5		yrs	1.9		34				Vendor priced
	26				Vendor priced
Mortgages held for sale (residential)	1,009				Discounted cash flow	Default rate	0.0			-	5.6		%	1.2
Mortgage loans held for sale (residential)																952				Discounted cash flow	Default rate	0.0			-	18.2			1.2
						Discount rate	1.1			-	7.1			5.3							Discount rate	2.7			-	5.5			4.7
						Loss severity	0.1			-	40.8			18.8							Loss severity	0.0			-	32.0			22.8
						Prepayment rate	6.5			-	15.8			9.2							Prepayment rate	7.3			-	18.2			12.8
	23				Market comparable pricing	Comparability adjustment	(53.3		)	-	(20.0	)		(43.2	)	2,205				Market comparable pricing	Comparability adjustment	(53.3		)	-	0.0			(6.3	)
Loans	410			(5)	Discounted cash flow	Discount rate	2.8			-	7.3			4.1
Loans (2)																160				Discounted cash flow	Discount rate	3.9			-	4.4			4.2
																					Default rate	0.0				23.1			0.8
						Prepayment rate	8.5			-	100.0			92.4							Prepayment rate	7.8			-	100.0			85.0
						Loss severity	0.0			-	31.9			5.8							Loss severity	0.0			-	39.7			14.2
Mortgage servicing rights (residential)	13,338				Discounted cash flow	Cost to service per loan (6)	$	79		-	584			145		8,126				Discounted cash flow	Cost to service per loan (3)	$	59		-	622			112
						Discount rate	6.5			-	12.0		%	6.7							Discount rate	6.3			-	9.4		%	7.1
						Prepayment rate (7)	10.0			-	20.5			10.8							Prepayment rate (4)	11.3			-	26.6			15.7
Net derivative assets and (liabilities):
Interest rate contracts	89				Discounted cash flow	Default rate	0.0			-	5.0			1.7		255				Discounted cash flow	Default rate	0.0			-	5.0			1.6
																					Loss severity	50.0			-	50.0			50.0
						Loss severity	50.0			-	50.0			50.0							Prepayment rate	2.8			-	22.0			14.8
						Prepayment rate	2.8			-	12.5			10.1		65				Market comparable pricing	Comparability adjustment	(14.1		)		(8.9	)		(11.8	)
Interest rate contracts: derivative loan commitments	25				Discounted cash flow	Fall-out factor	1.0			-	99.0			17.8		365				Discounted cash flow	Fall-out factor	1.0			-	99.0			28.0
						Initial-value servicing	(38.0		)	-	98.2		bps	27.9							Initial-value servicing	(37.1		)	-	134.0		bps	35.0
Equity contracts	105				Discounted cash flow	Conversion factor	(9.8		)	-	0.0		%	(7.8	)	123				Discounted cash flow	Conversion factor	(9.0		)	-	0.0		%	(7.7	)
						Weighted average life	0.3			-	2.3		yrs	1.4							Weighted average life	0.3			-	2.8		yrs	1.4
	(696		)		Option model	Correlation factor	(77.0		)	-	98.0		%	29.5		94				Option model	Correlation factor	(77.0		)	-	99.0		%	37.4
						Volatility factor	5.0			-	100.0			19.2							Volatility factor	6.5			-	92.9			26.3
Credit contracts	(3		)		Market comparable pricing	Comparability adjustment	(25.8		)	-	15.7			(0.8	)	3				Market comparable pricing	Comparability adjustment	(78.9		)	-	135.2			(13.6	)
	56				Option model	Credit spread	0.0			-	12.2			1.2		44				Option model	Credit spread	0.1			-	49.2			2.7
						Loss severity	12.0			-	60.0			48.8							Loss severity	12.0			-	60.0			45.6
Other assets: nonmarketable equity investments	10				Discounted cash flow	Discount rate	5.0			-	10.3			9.7
						Volatility Factor	0.5			-	1.3			0.8
	4,463				Market comparable pricing	Comparability adjustment	(19.1		)	-	(3.3	)		(14.6	)
Nonmarketable equity securities																6,751				Market comparable pricing	Comparability adjustment	3.5			-	22.9			14.4

Insignificant Level 3 assets, net of liabilities	534			(8)												(30		)
Total level 3 assets, net of liabilities	$	22,104		(9)												$	21,914		(5)


(1)	~~Weighted averages are calculated using outstanding unpaid principal balance for cash instruments, such as loans and securities, and notional amounts for derivative instruments.~~


~~(2)~~	~~Includes~~ ~~$1.0 billion~~ ~~of collateralized debt obligations.~~


~~(3)~~	Securities backed by specified sources of current and future receivables generated from ~~foreign~~non-US originators.


~~(4)~~	~~A significant portion of the balance consists of investments in asset-backed securities that are revolving in nature, for which the timing of advances and repayments of principal are uncertain.~~


~~(5)~~(2)	Consists of reverse mortgage loans.


~~(6)~~(3)	The high end of the range of inputs is for servicing modified loans. For non-modified loans the range is $7959 - $~~282~~229.


~~(7)~~(4)	Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

~~(8)~~

Represents the aggregate amount of Level 3 assets and liabilities measured at fair value on a recurring basis that are individually and in the aggregate insignificant. The amount includes corporate debt securities, mortgage-backed securities, other trading assets, other liabilities and certain net derivative assets and liabilities, such as commodity contracts, foreign exchange contracts, and other derivative contracts.


~~(9)~~(5)	Consists of total Level 3 assets of $~~24.1~~23.3 billion and total Level 3 liabilities of $~~2.0~~1.3 billion, before netting of derivative balances.

Note ~~13:~~16: Fair Values of Assets and Liabilities (continued)

Table ~~13.13:~~16.8:Valuation Techniques – Recurring Basis – December 31, ~~2016~~

2019


($ in millions, except cost to service amounts)	Fair Value Level 3				Valuation Technique(s)	Significant Unobservable Input		Range of Inputs							Weighted Average (1)		Fair Value Level 3				Valuation Technique(s)	Significant Unobservable Inputs	Range of Inputs Positive (Negative)							Weighted Average
December 31, 2016
Trading and available-for-sale securities:
December 31, 2019
Trading and available-for-sale debt securities:
Securities of U.S. states and political subdivisions:
Government, healthcare and other revenue bonds	$	906			Discounted cash flow	Discount rate		1.1			-	5.6		%	2.0		$	379			Discounted cash flow	Discount rate	1.3			-	5.4		%	2.4
Other municipal bonds	29				Discounted cash flow	Discount rate		3.7			-	4.9			4.5
																	34				Vendor priced
Collateralized loan and other debt obligations																	183				Market comparable pricing	Comparability adjustment	(15.0		)	-	19.2			1.3
																	640				Vendor priced
Corporate debt securities																	220				Discounted cash flow	Discount rate	3.2				14.9			9.2
						Weighted average life		3.6			-	3.6		yrs	3.6		60				Market comparable pricing	Comparability adjustment	(19.7		)		14.0			(4.4	)
	208				Vendor priced												125				Vendor priced
Collateralized loan and other debt obligations (2)	309				Market comparable pricing	Comparability adjustment		(15.5		)	-	20.3		%	2.9
	879				Vendor priced
Asset-backed securities:
Diversified payment rights (3)	443				Discounted cash flow	Discount rate		1.9			-	4.8			3.3
Diversified payment rights (1)																	92				Discounted cash flow	Discount rate	2.3			-	3.1			2.8
Other commercial and consumer	492			(4)	Discounted cash flow	Discount rate		3.0			-	4.6			3.9		11				Vendor priced
						Weighted average life		0.8			-	4.2		yrs	2.9
	27				Vendor priced
Mortgages held for sale (residential)	955				Discounted cash flow	Default rate		0.5			-	7.9		%	1.9
Mortgage loans held for sale (residential)																	1,183				Discounted cash flow	Default rate	0.0			-	15.5			0.7
						Discount rate		1.1			-	6.9			5.1							Discount rate	3.0			-	5.6			4.5
						Loss severity		0.1			-	42.5			26.9							Loss severity	0.0			-	43.5			21.7
						Prepayment rate		6.3			-	17.1			10.0							Prepayment rate	5.7			-	15.4			7.8
	30				Market comparable pricing	Comparability adjustment		(53.3		)	-	0.0			(37.8	)	15				Market comparable pricing	Comparability adjustment	(56.3		)	-	(6.3	)		(40.3	)
Loans	758			(5)	Discounted cash flow	Discount rate		0.0			-	3.9			0.6
Loans (2)																	171				Discounted cash flow	Discount rate	3.9			-	4.3			4.1
						Prepayment rate		0.4			-	100.0			83.7							Prepayment rate	6.0			-	100.0			85.6
						Utilization rate		0.0			-	0.8			0.1							Loss severity	0.0			-	36.5			14.1
Mortgage servicing rights (residential)	12,959				Discounted cash flow	Cost to service per loan (6)		$	79		-	598			155		11,517				Discounted cash flow	Cost to service per loan (3)	$	61		-	495			102
						Discount rate		6.5			-	18.4		%	6.8							Discount rate	6.0			-	13.6		%	7.2
						Prepayment rate (7)		9.4			-	20.6			10.3							Prepayment rate (4)	9.6			-	24.4			11.9
Net derivative assets and (liabilities):
Interest rate contracts	127				Discounted cash flow	Default rate		0.1			-	6.8			2.1		146				Discounted cash flow	Default rate	0.0			-	5.0			1.7
						Loss severity		50.0			-	50.0			50.0							Loss severity	50.0			-	50.0			50.0
						Prepayment rate		2.8			-	12.5			9.6							Prepayment rate	2.8			-	25.0			15.0
Interest rate contracts: derivative loan commitments	(6		)		Discounted cash flow	Fall-out factor		1.0			-	99.0			15.0		68				Discounted cash flow	Fall-out factor	1.0			-	99.0			16.7
						Initial-value servicing		(23.0		)	-	131.2		bps	56.8							Initial-value servicing	(32.2		)	-	149.0		bps	36.4
Equity contracts	79				Discounted cash flow	Conversion factor		(10.6		)	-	0.0		%	(7.9	)	147				Discounted cash flow	Conversion factor	(8.8		)	-	0.0		%	(7.7	)
						Weighted average life	��	1.0			-	3.0		yrs	2.0							Weighted average life	0.5			-	3.0		yrs	1.5
	(346		)		Option model	Correlation factor		(65.0		)	-	98.5		%	39.9		(416		)		Option model	Correlation factor	(77.0		)	-	99.0		%	23.8
						Volatility factor		6.5			-	100.0			20.7							Volatility factor	6.8			-	100.0			18.7
Credit contracts	(28		)		Market comparable pricing	Comparability adjustment		(27.7		)	-	21.3			0.02		2				Market comparable pricing	Comparability adjustment	(56.1		)	-	10.8			(16.0	)
	105				Option model	Credit spread		0.0			-	11.6			1.2		27				Option model	Credit spread	0.0			-	17.8			0.8
						Loss severity		12.0			-	60.0			50.4							Loss severity	12.0			-	60.0			45.6
Other assets: nonmarketable equity investments	21				Discounted cash flow	Discount rate		5.0			-	10.3			8.7
						Volatility Factor		0.3			-	2.4			1.1
	3,238				Market comparable pricing	Comparability adjustment		(22.1		)	-	(5.5	)		(16.4	)
Nonmarketable equity securities																	7,847				Market comparable pricing	Comparability adjustment	(20.2		)	-	(4.2	)		(14.6	)

Insignificant Level 3 assets, net of liabilities	570			(8)													27
Total level 3 assets, net of liabilities	$	21,755		(9)													$	22,478		(5)


(1)	~~Weighted averages are calculated using outstanding unpaid principal balance for cash instruments, such as loans and securities, and notional amounts for derivative instruments.~~


~~(2)~~	~~Includes~~ ~~$847 million~~ ~~of collateralized debt obligations.~~


~~(3)~~	Securities backed by specified sources of current and future receivables generated from ~~foreign~~non-U.S. originators.


~~(4)~~	~~A significant portion of the balance consists of investments in asset-backed securities that are revolving in nature, for which the timing of advances and repayments of principal are uncertain.~~


~~(5)~~(2)	Consists of reverse mortgage loans.


~~(6)~~(3)	The high end of the range of inputs is for servicing modified loans. For non-modified loans the range is $7961 - $~~293~~231.


~~(7)~~(4)	Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

~~(8)~~


~~(9)~~(5)	Consists of total Level 3 assets of $~~23.5~~24.3 billion and total Level 3 liabilities of $~~1.7~~1.8 billion, before netting of derivative balances.

~~The~~For information on the valuation techniques and significant unobservable inputs used for our Level 3 assets and liabilities, ~~as presented in the previous tables, are described as follows:~~

~~Discounted cash flow~~ – Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument and then discounting those cash flows at a rate of return that results in the fair value amount.

~~Market comparable pricing~~ – Market comparable pricing valuation techniques are used to determine the fair value of certain instruments by incorporating known inputs, such as recent transaction prices, pending transactions, or prices of other similar investments that require significant adjustment to reflect differences in instrument characteristics.

~~Option model~~ – Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return.

~~Vendor-priced~~ – Prices obtained from third party pricing vendors or brokers that are used to record the fair value of the asset or liability for which the related valuation technique and significant unobservable inputs are not provided.

Significant unobservable inputs presented in the previous tables are those we consider significant to the fair value of the Level 3 asset or liability. We consider unobservable inputs to be significant if by their exclusion the fair value of the Level 3 asset or liability would be impacted by a predetermined percentage change. We also consider qualitative factors, such as nature of the instrument, type of valuation technique used, and the significance of the unobservable inputs relative to other inputs used within the valuation. Following is a description of the significant unobservable inputs provided in the table.

~~Comparability adjustment~~ – is an adjustment made to observed market data, such as a transaction price in order to reflect dissimilarities in underlying collateral, issuer, rating, or other factors used within a market valuation approach, expressed as a percentage of an observed price.

~~Conversion Factor~~ ~~– is the risk-adjusted rate in which a particular instrument may be exchanged for another instrument upon settlement, expressed as a percentage change from a specified rate.~~

~~Correlation factor~~ ~~– is the likelihood of one instrument changing in price relative to another based on an established relationship expressed as a percentage of relative change in price over a period over time.~~

~~Cost to service~~ – is the expected cost per loan of servicing a portfolio of loans, which includes estimates for unreimbursed expenses (including delinquency and foreclosure costs) that may occur as a result of servicing such loan portfolios.

~~Credit spread~~ – is the portion of the interest rate in excess of a benchmark interest rate, such as Overnight Index Swap (OIS), LIBOR or U.S. Treasury rates, that when applied to an investment captures changes in the obligor’s creditworthiness.

~~Default rate~~ ~~– is an estimate of the likelihood of not collecting contractual amounts owed expressed as a constant default rate (CDR).~~

~~Discount rate~~ – is a rate of return used to calculate the present value of the future expected cash flow to arrive at the fair value of an instrument. The discount rate consists of a benchmark rate component and a risk premium component. The benchmark rate component, for example, OIS, LIBOR or U.S. Treasury rates, is generally observable within the market and is necessary to appropriately reflect the time value of money. The risk premium component reflects the amount of compensation market participants require due to the uncertainty inherent in the instruments’ cash flows resulting from risks such as credit and liquidity.

~~Fall-out factor~~ ~~– is the expected percentage of loans associated with our interest rate lock commitment portfolio that are likely of not funding.~~

~~Initial-value servicing~~ ~~– is the estimated value of the underlying loan, including the value attributable to the embedded servicing right, expressed in basis points of outstanding unpaid principal balance.~~

~~Loss severity~~ ~~– is the estimated percentage of contractual cash flows lost in the event of a default.~~

~~Prepayment rate~~ ~~– is the estimated rate at which forecasted prepayments of principal of the related loan or debt instrument are expected to occur, expressed as a constant prepayment rate (CPR).~~

~~Utilization rate~~ ~~– is the estimated rate in which incremental portions of existing reverse mortgage credit lines are expected to be drawn by borrowers, expressed as an annualized rate.~~

~~Volatility factor~~ ~~– is the extent of change in price an item is estimated to fluctuate over a specified period of time expressed as a percentage of relative change in price over a period over time.~~

~~Weighted average life~~ – is the weighted average number of years an investment is expected to remain outstanding based on its expected cash flows reflecting the estimated date the issuer will call or extend the maturity of the instrument or otherwise reflecting an estimate of the timing of an instrument’s cash flows whose timing is not contractually fixed.

see Note ~~13: Fair Values~~19 (Fair Value of Assets and ~~Liabilities (continued~~)Liabilities) in our 2019 Form 10-K.

Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis

We may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of

LOCOM accounting, or write-downs of individual ~~assets.~~ assets or use of the measurement alternative for nonmarketable equity securities.

Table ~~13.14~~16.9 provides the fair value hierarchy and ~~carrying amount~~fair value at the date of the nonrecurring fair value adjustment for all assets

that were still held as of ~~September 30, 2017,~~March 31, 2020, and December 31, ~~2016,~~2019, and for which a nonrecurring fair value adjustment was recorded during the ~~periods presented.~~three months ended March 31, 2020, and year ended December 31, 2019.

~~Table 13.14:Fair Value on a Nonrecurring Basis~~

September 30, 2017 December 31, 2016
(in millions) Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Mortgages held for sale (LOCOM) (1) $ —
1,652
1,340
2,992
—
2,312
1,350
3,662
Loans held for sale —
18
—
18
—
8
—
8
Loans:
Commercial —
386
—
386
—
464
—
464
Consumer —
460
10
470
—
822
7
829
Total loans (2) —
846
10
856
—
1,286
7
1,293
Other assets - excluding nonmarketable equity investments at NAV (3) —
198
146
344
—
233
412
645
Total included in the fair value hierarchy $ —
2,714
1,496
4,210
—
3,839
1,769
5,608
Other assets - nonmarketable equity investments at NAV (4)

5

13
Total assets at fair value on a nonrecurring basis

$ 4,215

5,621


~~(1)~~	~~Consists of commercial mortgages and residential real estate 1-4 family first mortgage loans.~~


~~(2)~~	~~Represents the carrying value of loans for which nonrecurring adjustments are based on the appraised value of the collateral.~~


~~(3)~~	~~Includes the fair value of foreclosed real estate, other collateral owned, operating lease assets and nonmarketable equity investments.~~


~~(4)~~	Consists of certain nonmarketable equity investments that are measured at fair value on a nonrecurring basis using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.

Table ~~13.15~~16.10 presents the increase (decrease) in value of certain assets held at the end of the respective reporting periods presented for which a nonrecurring fair value adjustment was recognized during the periods presented.

Table ~~13.15:~~16.9:Fair Value on a Nonrecurring Basis



	March 31, 2020					December 31, 2019
(in millions)	Level 1		Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Mortgage loans held for sale (1)	$	—	1,450	2,868	4,318	—	2,034	3,803	5,837
Loans held for sale	—		161	—	161	—	5	—	5
Loans:
Commercial	—		207	—	207	—	280	—	280
Consumer	—		103	—	103	—	213	1	214
Total loans	—		310	—	310	—	493	1	494
Nonmarketable equity securities	—		639	844	1,483	—	1,308	173	1,481
Other assets	—		209	390	599	—	359	27	386
Total assets at fair value on a nonrecurring basis	$	—	2,769	4,102	6,871	—	4,199	4,004	8,203


(1)	Consists of commercial mortgages and residential real estate 1-4 family first mortgage loans.

Nonmarketable equity securities includes impairment on private equity and venture capital investments and gains or losses under the measurement alternative. Other assets includes impairments of operating lease ROU assets, valuation losses on foreclosed real estate and other collateral owned, and impairment on private equity and venture capital investments in consolidated portfolio companies.

Table 16.10:Change in Value of Assets with Nonrecurring Fair Value Adjustment


	Nine months ended September 30,					Quarter ended March 31,
(in millions)	2017			2016		2020			2019
Mortgages held for sale (LOCOM)	$	23		26
Mortgage loans held for sale						$	(38	)	20
Loans held for sale	(1		)	(21	)	(1		)	—
Loans:
Commercial	(286		)	(736	)	(95		)	(74	)
Consumer	(371		)	(578	)	(71		)	(79	)
Total loans ~~(1)~~	(657		)	(1,314	)	(166		)	(153	)
Other assets (2)	(179		)	(339	)
Nonmarketable equity securities						(424		)	149
Other assets						(334		)	(18	)
Total	$	(814	)	(1,648	)	$	(963	)	(2	)


~~(1)~~	~~Represents write-downs of loans based on the appraised value of the collateral.~~


~~(2)~~	Includes the losses on foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets. Also includes impairment losses on nonmarketable equity investments.

Note 16: Fair Values of Assets and Liabilities (continued)

Table ~~13.16~~16.11 provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of ~~substantially~~largely all of our Level 3 assets that are measured at fair value on a nonrecurring basis using an internal model. The table is limited to financial instruments that had nonrecurring fair value adjustments during the periods presented.

We have excluded from the table valuation techniques and significant unobservable inputs for certain classes of Level 3

assets ~~measured using an internal model that~~ we consider both individually and in the aggregate, insignificant relative to our overall Level 3 nonrecurring measurements. We made this determination based upon an evaluation of each class that considered the magnitude of the positions, nature of the unobservable inputs and potential for significant changes in fair value due to changes in those inputs.

Table ~~13.16:~~16.11:Valuation Techniques – Nonrecurring Basis

($ in millions)
Fair Value
Level 3

Valuation Technique(s) (1)

Significant
Unobservable Inputs (1)
Range of inputs
Weighted
Average (2)

September 30, 2017
Residential mortgages held for sale (LOCOM) $ 1,340
(3) Discounted cash flow Default rate (4) 0.1 — 10.3 % 2.6 %
Discount rate 1.5 — 8.5
3.8
Loss severity 0.8 — 57.6
2.6
Prepayment rate (5) 5.3 — 100.0
49.8
Other assets: nonmarketable equity investments 34
Discounted cash flow Discount rate 5.0 — 10.5
9.4
Insignificant level 3 assets 122

Total $ 1,496

December 31, 2016
Residential mortgages held for sale (LOCOM) $ 1,350
(3) Discounted cash flow Default rate (4) 0.2 — 4.3 % 1.9 %
Discount rate 1.5 — 8.5
3.8
Loss severity 0.7 — 50.1
2.4
Prepayment rate (5) 3.0 — 100.0
50.7
Other assets: nonmarketable equity investments 220
Discounted cash flow Discount rate 4.7 — 9.3
7.3
Insignificant level 3 assets 199

Total $ 1,769



($ in millions)	Fair Value Level 3			Valuation Technique(s) (1)	Significant Unobservable Inputs (1)		Range of Inputs Positive (Negative)					Weighted Average (2)
March 31, 2020
Residential mortgage loans held for sale	$	2,868	(3)	Discounted cash flow	Default rate	(4)	0.4		—	51.3	%	7.2	%
					Discount rate		1.5		—	8.7		4.1
					Loss severity		0.5		—	72.1		16.2
					Prepayment rate	(5)	5.0		—	100.0		23.8
Nonmarketable equity securities (6)	658			Market comparable pricing	Multiples		0.1x		—	11.6x		4.9x
	348			Market comparable pricing	Comparability adjustment		(100.0	)	—	(6.0	)%	(45.5	)%
	226			Other	Company risk factor		(100.0	)	—	(20.0	)	(40.9	)
Insignificant level 3 assets	2
Total	$	4,102
December 31, 2019
Residential mortgage loans held for sale	$	3,803	(3)	Discounted cash flow	Default rate	(4)	0.3		—	48.3	%	4.6	%
					Discount rate		1.5		—	9.4		4.3
					Loss severity		0.4		—	100.0		23.4
					Prepayment rate	(5)	4.8		—	100.0		23.2
Insignificant level 3 assets	201
Total	$	4,004


(1)	Refer to ~~the narrative following Table 13.13~~Note 19 (Fair Value of Assets and Liabilities) in our 2019 Form 10-K for a definition of the valuation technique(s) and significant unobservable ~~inputs.~~inputs used in the valuation of residential mortgage loans held for sale.


(2)	For residential ~~MHFS,~~MLHFS, weighted averages are calculated using the outstanding unpaid principal balance of the loans.

(3)

Consists of approximately $1.3 billion of government insured/guaranteed loans purchased from GNMA-guaranteed mortgage securitizations at both ~~September 30, 2017~~,March 31, 2020 and December 31, ~~2016~~2019, respectively, and $~~30 million~~1.6 billion and $~~33 million~~2.5 billion, respectively, of other mortgage loans that are not government insured/~~guaranteed at~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, respectively.~~guaranteed.


(4)	Applies only to non-government insured/guaranteed loans.


(5)	Includes the impact on prepayment rate of expected defaults for government insured/guaranteed loans, which impact the frequency and timing of early resolution of loans.


(6)	Includes $390 million of private equity and venture capital investments in consolidated portfolio companies classified in other assets on the balance sheet.

We typically use a market approach to estimate the fair value of our nonmarketable private equity and venture capital investments in portfolio companies. The market approach bases the fair value measurement on market data (for example, use of market comparable pricing techniques) that are used to derive the enterprise value of the portfolio company. Market comparable pricing techniques include utilization of financial metrics of comparable public companies (multiples), such as ratios of enterprise value or market value of equity to revenue, EBITDA, net income or book value. Comparable company valuation multiples are evaluated and adjusted as necessary to reflect the comparative operational, financial or marketability differences between the public company and subject portfolio company in estimating its fair value. Market comparable pricing techniques also use recent or anticipated transactions (for example, a financing round, merger, acquisition or bankruptcy)

~~Alternative Investments~~

~~We hold~~involving the subject portfolio company, or participants in its industry or related industries. Based upon these recent or anticipated transactions, current market conditions and other factors specific to the issuer, we make adjustments to estimate the enterprise value of the portfolio company. As a result of the recent market environment, we also utilized other valuation techniques. These techniques included the use of company risk factors in the estimation of the fair value of certain nonmarketable equity ~~investments for which we use NAV per share (or its equivalent)~~securities. The company risk factors are based upon entity-specific considerations including the debt and liquidity profile, projected cash flow or funding issues as ~~a practical expedient for fair value measurements, including estimated fair values for investments accounted for under~~well as other factors that may affect the cost method. The investments consist of private equity funds that invest in equity and debt securities issued by private and publicly-held companies. The fair values of these investments and related unfunded commitments totaled $27 million and $25 million, respectively, at September 30, 2017, and $48 million and $37 million, respectively, at December 31, 2016. The investments do not allow redemptions. We receive distributions as the underlying assets of the funds liquidate, which we expect to occur through 2025.company’s outlook.

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

Fair Value Option

The fair value option is an irrevocable election, generally only permitted upon initial recognition of financial assets or liabilities, to measure eligible financial instruments at fair value with changes in fair value reflected in earnings. We may elect the fair value option to align the measurement model with how the financial assets or liabilities are managed or to reduce complexity

or accounting asymmetry. For more information, including the basis for our fair value option elections, see Note 1719 (Fair Values of Assets and Liabilities) ~~to Financial Statements~~ in our ~~2016~~2019 Form 10-K.

Table ~~13.17~~16.12 reflects differences between the fair value carrying amount of the assets for which we have elected the fair value option and the contractual aggregate unpaid principal amount at maturity.

Table ~~13.17:~~16.12:Fair Value Option



	March 31, 2020					December 31, 2019
(in millions)	Fair value carrying amount		Aggregate unpaid principal	Fair value carrying amount less aggregate unpaid principal		Fair value carrying amount	Aggregate unpaid principal	Fair value carrying amount less aggregate unpaid principal
Mortgage loans held for sale:
Total loans	$	16,665	16,096	569		16,606	16,279	327
Nonaccrual loans	131		155	(24	)	133	157	(24	)
Loans 90 days or more past due and still accruing	10		13	(3	)	8	10	(2	)
Loans held for sale:
Total loans	1,673		1,804	(131	)	972	1,020	(48	)
Nonaccrual loans	17		30	(13	)	21	29	(8	)
Loans:
Total loans	160		189	(29	)	171	201	(30	)
Nonaccrual loans	123		151	(28	)	129	159	(30	)

   September 30, 2017 December 31, 2016
(in millions)
Fair value
carrying
amount

Aggregate
unpaid
principal

Fair value
carrying
amount
less
aggregate
unpaid
principal

Fair value
carrying
amount

Aggregate
unpaid
principal

Fair value
carrying
amount
less
aggregate
unpaid
principal

Trading assets – loans:
     Total loans $ 1,182
1,231
(49 ) 1,332
1,418
(86 )
     Nonaccrual loans 65
84
(19 ) 100
115
(15 )
Mortgages held for sale:
Total loans 16,484
16,087
397
22,042
21,961
81
Nonaccrual loans 120
159
(39 ) 136
182
(46 )
Loans 90 days or more past due and still accruing 13
16
(3 ) 12
16
(4 )
Loans held for sale:
Total loans —
6
(6 ) —
6
(6 )
Nonaccrual loans —
6
(6 ) —
6
(6 )
Loans:
Total loans 410
437
(27 ) 758
775
(17 )
Nonaccrual loans 267
293
(26 ) 297
318
(21 )
Other assets (1) 4,523
N/A
N/A
3,275
N/A
N/A


~~(1)~~	~~Consists of nonmarketable equity investments carried at fair value. See Note 6 (Other Assets) for more information.~~

~~The assets accounted for under the fair value option are initially measured at fair value. Gains and losses from initial measurement and subsequent changes in fair value are recognized in earnings.~~ The changes in fair value related to initial

measurement and subsequent changes in fair value included in earnings for these assets measured at fair value are shown in Table ~~13.18~~16.13 by income

statement line item. Amounts recorded as interest income are excluded from Table 16.13.

Table ~~13.18:~~16.13:Fair Value Option – Changes in Fair Value Included in Earnings



	2020					2019
(in millions)	Mortgage banking noninterest income		Net gains (losses) from trading activities		Other noninterest income	Mortgage banking noninterest income	Net gains (losses) from trading activities	Other noninterest income
Quarter ended March 31,
Mortgage loans held for sale	$	348	—		—	214	—	—
Loans held for sale	—		(13	)	—	—	14	1
Loans	—		—		—	—	—	—

   2017 2016
(in millions) Mortgage banking noninterest income

Net gains
(losses)
from
trading
activities

Other
noninterest
income

Mortgage
banking
noninterest
income

Net gains
(losses)
from
trading
activities

Other
noninterest
income

Quarter ended September 30,




Trading assets - loans $ —
6
—
—
21
1
Mortgages held for sale 400
—
—
563
—
—
Loans —
—
—
—
—
(25 )
Other assets —
—
522
—
—
383
Other interests held (1) —
(1 ) —
—
(3 ) —
Nine months ended September 30,
Trading assets – loans $ —
42
1
—
47
2
Mortgages held for sale 967
—
—
1,739
—
—
Loans —
—
—
—
—
(29 )
Other assets —
—
1,233
—
—
149
Other interests held (1) —
(5 ) —
—
(4 ) —


~~(1)~~	~~Includes retained interests in securitizations.~~

For performing loans, instrument-specific credit risk gains or losses were derived principally by determining the change in fair value of the loans due to changes in the observable or implied credit spread. Credit spread is the market yield on the loans less the relevant risk-free benchmark interest rate. For

nonperforming loans, we attribute all changes in fair value to instrument-specific credit risk. Table ~~13.19~~16.14 shows the estimated gains and losses from earnings attributable to instrument-specific credit risk related to assets accounted for under the fair value option.

Table ~~13.19:~~16.14:Fair Value Option – Gains/Losses Attributable to Instrument-Specific Credit Risk



	Quarter ended March 31,
(in millions)	2020		2019
Gains (losses) attributable to instrument-specific credit risk:
Mortgage loans held for sale	(182	)	(4	)
Loans held for sale	(12	)	14
Total	(194	)	10

   Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
Gains (losses) attributable to instrument-specific credit risk:


Trading assets – loans $ 6
21
42
47
Mortgages held for sale (4 ) 1
(9 ) (4 )
Total $ 2
22
33
43

Disclosures about Fair Value of Financial Instruments

Table ~~13.20 is~~16.15 presents a summary of fair value estimates for financial instruments ~~excluding financial instruments recorded~~that are not carried at fair value on a recurring ~~basis,~~basis. Some financial instruments are excluded from scope of this table, such as ~~they are included within Table 13.2 in this Note. The carrying amounts in the following~~certain insurance contracts and leases. This table ~~are recorded on the balance sheet under the indicated captions, except for nonmarketable equity investments, which are included in other assets.~~

~~We have not included~~also excludes assets and liabilities that are not financial instruments ~~in our disclosure,~~ such as the value of the long-term relationships with our deposit, credit card and trust customers, ~~amortized~~ MSRs, premises and equipment, goodwill and ~~other intangibles,~~ deferred ~~taxes and other liabilities. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.~~taxes.

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

~~Table 13.20:Fair Value Estimates for Financial Instruments~~

Estimated fair value
(in millions) Carrying amount
Level 1
Level 2
Level 3
Total
September 30, 2017
Financial assets
Cash and due from banks (1) $ 19,206
19,206
—
—
19,206
Federal funds sold, securities purchased under resale agreements and other short-term investments (1) 273,105
206,073
66,963
69
273,105
Held-to-maturity securities 142,423
45,282
96,627
909
142,818
Mortgages held for sale (2) 3,525
—
2,189
1,340
3,529
Loans held for sale 157
—
157
—
157
Loans, net (3) 921,420
—
54,106
881,812
935,918
Nonmarketable equity investments (cost method)
Excluding investments at NAV 7,642
—
23
8,084
8,107
Total financial assets included in the fair value hierarchy 1,367,478
270,561
220,065
892,214
1,382,840
Investments at NAV (4) 25
27
Total financial assets $ 1,367,503

1,382,867
Financial liabilities
Deposits $ 1,306,706
—
1,285,239
21,455
1,306,694
Short-term borrowings (1) 93,811
—
93,811
—
93,811
Long-term debt (5) 238,854
—
240,846
2,306
243,152
Total financial liabilities $ 1,639,371

—

1,619,896

23,761
1,643,657
December 31, 2016
Financial assets
Cash and due from banks (1) $ 20,729
20,729
—
—
20,729
Federal funds sold, securities purchased under resale agreements and other short-term investments (1) (6) 266,038
207,003
58,953
82
266,038
Held-to-maturity securities 99,583
45,079
51,706
2,370
99,155
Mortgages held for sale (2) 4,267
—
2,927
1,350
4,277
Loans held for sale 80
—
81
—
81
Loans, net (3) 936,358
—
60,245
887,589
947,834
Nonmarketable equity investments (cost method)
Excluding investments at NAV 8,362
—
18
8,924
8,942
Total financial assets included in the fair value hierarchy 1,335,417
272,811
173,930
900,315
1,347,056
Investments at NAV (4) 35

48
Total financial assets $ 1,335,452

1,347,104
Financial liabilities
Deposits $ 1,306,079
—
1,282,158
23,995
1,306,153
Short-term borrowings (1) 96,781
—
96,781
—
96,781
Long-term debt (5) 255,070
—
245,704
10,075
255,779
Total financial liabilities $ 1,657,930

—

1,624,643

34,070
1,658,713


~~(1)~~	~~Amounts consist of financial instruments for which carrying value approximates fair value.~~


~~(2)~~	~~Excludes MHFS for which we elected the fair value option.~~


~~(3)~~	~~Excludes loans for which the fair value option was elected and also excludes lease financing with a carrying amount of~~ ~~$19.2 billion~~ ~~and~~ ~~$19.3 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively.~~


~~(4)~~	Consists of certain nonmarketable equity investments for which estimated fair values are determined using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.


~~(5)~~	~~Excludes capital lease obligations under capital leases of~~ ~~$39 million~~ ~~and~~ ~~$7 million~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively.~~


~~(6)~~	~~The fair value classification level of certain interest-earning deposits have been reclassified to conform with the current period end classification.~~

Loan commitments, standby letters of credit and commercial and similar letters of credit are not included in ~~the table above.~~Table 16.15. A reasonable estimate of the fair value of these instruments is the carrying value of deferred fees plus the allowance for unfunded credit commitments, which totaled ~~$1.1 billion~~$853 million and ~~$1.2~~$1.0 billion at ~~September 30, 2017,~~March 31, 2020 and December 31, ~~2016,~~2019, respectively.

The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.

Table 16.15:Fair Value Estimates for Financial Instruments



			Estimated fair value
(in millions)	Carrying amount		Level 1	Level 2	Level 3	Total
March 31, 2020
Financial assets
Cash and due from banks (1)	$	22,738	22,738	—	—	22,738
Interest-earning deposits with banks (1)	128,071		127,831	240	—	128,071
Federal funds sold and securities purchased under resale agreements (1)	86,465		—	86,465	—	86,465
Held-to-maturity debt securities, net	169,909		50,691	126,030	841	177,562
Mortgage loans held for sale	5,130		—	2,285	3,392	5,677
Loans held for sale	210		—	210	—	210
Loans, net (2)	979,449		—	53,806	922,616	976,422
Nonmarketable equity securities (cost method)	4,512		—	—	4,548	4,548
Total financial assets	$	1,396,484	201,260	269,036	931,397	1,401,693
Financial liabilities
Deposits (3)	$	110,841	—	82,565	28,732	111,297
Short-term borrowings	92,289		—	92,289	—	92,289
Long-term debt (4)	237,311		—	226,294	1,921	228,215
Total financial liabilities	$	440,441	—	401,148	30,653	431,801
December 31, 2019
Financial assets
Cash and due from banks (1)	$	21,757	21,757	—	—	21,757
Interest-earning deposits with banks (1)	119,493		119,257	236	—	119,493
Federal funds sold and securities purchased under resale agreements (1)	102,140		—	102,140	—	102,140
Held-to-maturity debt securities	153,933		46,138	109,933	789	156,860
Mortgage loans held for sale	6,736		—	2,939	4,721	7,660
Loans held for sale	5		—	5	—	5
Loans, net (2)	933,042		—	54,125	891,714	945,839
Nonmarketable equity securities (cost method)	4,790		—	—	4,823	4,823
Total financial assets	$	1,341,896	187,152	269,378	902,047	1,358,577
Financial liabilities
Deposits (3)	$	118,849	—	87,279	31,858	119,137
Short-term borrowings	104,512		—	104,513	—	104,513
Long-term debt (4)	228,159		—	231,332	1,720	233,052
Total financial liabilities	$	451,520	—	423,124	33,578	456,702


(1)	Amounts consist of financial instruments for which carrying value approximates fair value.


(2)	Excludes lease financing with a carrying amount of $19.0 billion and $19.5 billion at March 31, 2020 and December 31, 2019, respectively.


(3)	Excludes deposit liabilities with no defined or contractual maturity of $1.3 trillion and $1.2 trillion at March 31, 2020 and December 31, 2019, respectively.


(4)	Excludes capital lease obligations under capital leases of $31 million and $32 million at March 31, 2020 and December 31, 2019, respectively.

Note ~~14:~~17: Preferred Stock

We are authorized to issue 20 million shares of preferred stock and 4 million shares of preference stock, both without par value. Preferred shares outstanding rank senior to common shares both as to dividends and liquidation preference but have no general voting rights. We have not issued any preference shares under

this authorization. If issued, preference shares would be limited to ~~one~~

1 vote per share. Our total authorized, issued and outstanding preferred stock is presented in the following two tables along with the Employee Stock Ownership Plan (ESOP) Cumulative Convertible Preferred Stock. All classes of preferred stock, except the Dividend Equalization Preferred Shares and the ESOP Cumulative Convertible Preferred Stock, qualify as Tier 1 capital.

Table ~~14.1:~~17.1:Preferred Stock Shares


	September 30, 2017			December 31, 2016			March 31, 2020			December 31, 2019
	Liquidation preference per share		Shares authorized and designated	Liquidation preference per share		Shares authorized and designated	Liquidation preference per share		Shares authorized and designated	Liquidation preference per share		Shares authorized and designated
DEP Shares
Dividend Equalization Preferred Shares (DEP)	$	10	97,000	$	10	97,000	$	10	97,000	$	10	97,000
Series H
Series I
Floating Class A Preferred Stock (1)	—		—	20,000		50,000	100,000		25,010	100,000		25,010
Series I
Floating Class A Preferred Stock	100,000		25,010	100,000		25,010
Series J
8.00% Non-Cumulative Perpetual Class A Preferred Stock	1,000		2,300,000	1,000		2,300,000
Series K
7.98% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	1,000		3,500,000	1,000		3,500,000
Floating Non-Cumulative Perpetual Class A Preferred Stock (2)							—		—	1,000		3,500,000
Series L
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock	1,000		4,025,000	1,000		4,025,000
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock (3)							1,000		4,025,000	1,000		4,025,000
Series N
5.20% Non-Cumulative Perpetual Class A Preferred Stock	25,000		30,000	25,000		30,000	25,000		30,000	25,000		30,000
Series O
5.125% Non-Cumulative Perpetual Class A Preferred Stock	25,000		27,600	25,000		27,600	25,000		27,600	25,000		27,600
Series P
5.25% Non-Cumulative Perpetual Class A Preferred Stock	25,000		26,400	25,000		26,400	25,000		26,400	25,000		26,400
Series Q
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	25,000		69,000	25,000		69,000	25,000		69,000	25,000		69,000
Series R
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	25,000		34,500	25,000		34,500	25,000		34,500	25,000		34,500
Series S
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	25,000		80,000	25,000		80,000	25,000		80,000	25,000		80,000
Series T
6.00% Non-Cumulative Perpetual Class A Preferred Stock	25,000		32,200	25,000		32,200
6.00% Non-Cumulative Perpetual Class A Preferred Stock (4)							25,000		32,200	25,000		32,200
Series U
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	25,000		80,000	25,000		80,000	25,000		80,000	25,000		80,000
Series V
6.00% Non-Cumulative Perpetual Class A Preferred Stock	25,000		40,000	25,000		40,000	25,000		40,000	25,000		40,000
Series W
5.70% Non-Cumulative Perpetual Class A Preferred Stock	25,000		40,000	25,000		40,000	25,000		40,000	25,000		40,000
Series X
5.50% Non-Cumulative Perpetual Class A Preferred Stock	25,000		46,000	25,000		46,000	25,000		46,000	25,000		46,000
Series Y
5.625% Non-Cumulative Perpetual Class A Preferred Stock	25,000		27,600	—		—	25,000		27,600	25,000		27,600
Series Z
4.750% Non-Cumulative Perpetual Class A Preferred Stock							25,000		80,500	—		—
ESOP
Cumulative Convertible Preferred Stock (2)	—		1,774,652	—		1,439,181
Cumulative Convertible Preferred Stock (5)							—		1,071,418	—		1,071,418
Total			12,254,962			11,941,891			5,832,228			9,251,728

(1)

~~On January 26, 2017, we filed with~~Preferred Stock, Series I, relates to trust preferred securities. See Note 10 (Securitizations and Variable Interest Entities) for additional information. This issuance has a floating interest rate that is the ~~Delaware Secretary~~greater of ~~State a Certificate Eliminating the Certificate of Designations with respect to the Series H preferred stock.~~three-month London Interbank Offered Rate (LIBOR) plus 0.93% and 5.56975%.


(2)	Floating rate for Preferred Stock, Series K, is three-month LIBOR plus 3.77%. In first quarter 2020, the remaining $1.8 billion of Preferred Stock, Series K, was redeemed.


(3)	Preferred Stock, Series L, may be converted at any time, at the option of the holder, into 6.3814 shares of our common stock, plus cash in lieu of fractional shares, subject to anti-dilution adjustments.


(4)	In first quarter 2020, $669 million of Preferred Stock, Series T, was redeemed.


(5)	See the ESOP Cumulative Convertible Preferred Stock section in this Note for additional information about the liquidation ~~preference for the ESOP Cumulative Convertible Preferred Stock.~~preference.

Note ~~14:~~17: Preferred Stock (continued)

Table ~~14.2:~~17.2:Preferred Stock – Shares Issued and Carrying Value



	March 31, 2020					December 31, 2019
(in millions, except shares)	Shares issued and outstanding	Liquidation preference value		Carrying value	Discount	Shares issued and outstanding	Liquidation preference value		Carrying value	Discount
DEP Shares
Dividend Equalization Preferred Shares (DEP)	96,546	$	—	—	—	96,546	$	—	—	—
Series I (1)
Floating Class A Preferred Stock	25,010	2,501		2,501	—	25,010	2,501		2,501	—
Series K (2)
Floating Non-Cumulative Perpetual Class A Preferred Stock	—	—		—	—	1,802,000	1,802		1,546	256
Series L (3)
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock	3,967,995	3,968		3,200	768	3,967,995	3,968		3,200	768
Series N
5.20% Non-Cumulative Perpetual Class A Preferred Stock	30,000	750		750	—	30,000	750		750	—
Series O
5.125% Non-Cumulative Perpetual Class A Preferred Stock	26,000	650		650	—	26,000	650		650	—
Series P
5.25% Non-Cumulative Perpetual Class A Preferred Stock	25,000	625		625	—	25,000	625		625	—
Series Q
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	69,000	1,725		1,725	—	69,000	1,725		1,725	—
Series R
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	33,600	840		840	—	33,600	840		840	—
Series S
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	80,000	2,000		2,000	—	80,000	2,000		2,000	—
Series T (4)
6.00% Non-Cumulative Perpetual Class A Preferred Stock	5,280	131		131	—	32,000	800		800	—
Series U
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	80,000	2,000		2,000	—	80,000	2,000		2,000	—
Series V
6.00% Non-Cumulative Perpetual Class A Preferred Stock	40,000	1,000		1,000	—	40,000	1,000		1,000	—
Series W
5.70% Non-Cumulative Perpetual Class A Preferred Stock	40,000	1,000		1,000	—	40,000	1,000		1,000	—
Series X
5.50% Non-Cumulative Perpetual Class A Preferred Stock	46,000	1,150		1,150	—	46,000	1,150		1,150	—
Series Y
5.625% Non-Cumulative Perpetual Class A Preferred Stock	27,600	690		690	—	27,600	690		690	—
Series Z
4.750% Non-Cumulative Perpetual Class A Preferred Stock	80,500	2,013		2,013	—	—	—		—	—
ESOP
Cumulative Convertible Preferred Stock	1,071,418	1,072		1,072	—	1,071,418	1,072		1,072	—
Total	5,743,949	$	22,115	21,347	768	7,492,169	$	22,573	21,549	1,024

   September 30, 2017 December 31, 2016
(in millions, except shares)
Shares
issued and
outstanding

Liquidation preference
value

Carrying
value

Discount

Shares
issued and
outstanding

Liquidation preference
value

Carrying
value

Discount
DEP Shares







Dividend Equalization Preferred Shares (DEP) 96,546
$ —
—
—
96,546
$ —
—
—
Series I (1)

Floating Class A Preferred Stock 25,010
2,501
2,501
—
25,010
2,501
2,501
—
Series J (1)

8.00% Non-Cumulative Perpetual Class A Preferred Stock 2,150,375
2,150
1,995
155
2,150,375
2,150
1,995
155
Series K (1)

7.98% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 3,352,000
3,352
2,876
476
3,352,000
3,352
2,876
476
Series L (1)

7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock 3,968,000
3,968
3,200
768
3,968,000
3,968
3,200
768
Series N (1)

5.20% Non-Cumulative Perpetual Class A Preferred Stock 30,000
750
750
—
30,000
750
750
—
Series O (1)

5.125% Non-Cumulative Perpetual Class A Preferred Stock 26,000
650
650
—
26,000
650
650
—
Series P (1)

5.25% Non-Cumulative Perpetual Class A Preferred Stock 25,000
625
625
—
25,000
625
625
—
Series Q (1)

5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 69,000
1,725
1,725
—
69,000
1,725
1,725
—
Series R (1)

6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 33,600
840
840
—
33,600
840
840
—
Series S (1)

5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 80,000
2,000
2,000
—
80,000
2,000
2,000
—
Series T (1)

6.00% Non-Cumulative Perpetual Class A Preferred Stock 32,000
800
800
—
32,000
800
800
—
Series U (1)

5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 80,000
2,000
2,000
—
80,000
2,000
2,000
—
Series V (1)

6.00% Non-Cumulative Perpetual Class A Preferred Stock 40,000
1,000
1,000
—
40,000
1,000
1,000
—
Series W (1)

5.70% Non-Cumulative Perpetual Class A Preferred Stock 40,000
1,000
1,000
—
40,000
1,000
1,000
—
Series X (1)

5.50% Non-Cumulative Perpetual Class A Preferred Stock 46,000
1,150
1,150
—
46,000
1,150
1,150
—
Series Y (1)

5.625% Non-Cumulative Perpetual Class A Preferred Stock 27,600
690
690
—
—
—
—
—
ESOP
Cumulative Convertible Preferred Stock 1,774,652
1,774
1,774
—
1,439,181
1,439
1,439
—
Total 11,895,783
$ 26,975
25,576
1,399
11,532,712
$ 25,950
24,551
1,399


(1)	Floating rate for Preferred Stock, Series I, is the greater of three-month LIBOR plus 0.93% and 5.56975%.


(2)	Floating rate for Preferred Stock, Series K, is three-month LIBOR plus 3.77%. In first quarter 2020, the remaining $1.8 billion of Preferred Stock, Series K, was redeemed.


(3)	Preferred Stock, Series L, may be converted at any time, at the option of the holder, into 6.3814shares ~~qualify as Tier 1 capital.~~of our common stock, plus cash in lieu of fractional shares, subject to anti-dilution adjustments.


(4)	In first quarter 2020, $669 million of Preferred Stock, Series T, was redeemed.

In April 2017, we issued 27.6 million Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series Y, for an aggregate public offering price of $690 million.

~~See Note 7 (Securitizations and Variable Interest Entities) for additional information on our trust preferred securities.~~

ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCKAll shares of our ESOP Cumulative Convertible Preferred Stock (ESOP Preferred Stock) were issued to a trustee acting on behalf of the Wells Fargo & Company 401(k) Plan (the 401(k) Plan). Dividends on the ESOP Preferred Stock are cumulative from the date of initial issuance and are payable quarterly at annual rates based upon the year of issuance. Each share of ESOP Preferred Stock released from the unallocated reserve of the 401(k) Plan is converted into shares of our common stock based on the stated

value of the ESOP Preferred Stock and the then current market price of our common stock. The ESOP Preferred Stock is also convertible at the option of the holder at any time, unless previously redeemed. We have the option to redeem the ESOP Preferred Stock at any time, in whole or in part, at a redemption price per share equal to the higher of (a) $1,000 per share plus accrued and unpaid dividends or (b) the fair market value, as defined in the Certificates of Designation for the ESOP Preferred Stock.

Table ~~14.3:~~17.3:ESOP Preferred Stock


	Shares issued and outstanding		Carrying value					Adjustable dividend rate			Shares issued and outstanding		Carrying value					Adjustable dividend rate
(in millions, except shares)	Sep 30, 2017	Dec 31, 2016	Sep 30, 2017			Dec 31, 2016		Minimum		Maximum	Mar 31, 2020	Dec 31, 2019	Mar 31, 2020			Dec 31, 2019		Minimum		Maximum
ESOP Preferred Stock
$1,000 liquidation preference per share
2018											254,945	254,945	255			255		7.00	%	8.00	%
2017	491,758	—	$	492		—		7.00	%	8.00	192,210	192,210	192			192		7.00		8.00
2016	322,826	358,528	323			358		9.30		10.30	197,450	197,450	198			198		9.30		10.30
2015	187,436	200,820	187			201		8.90		9.90	116,784	116,784	117			117		8.90		9.90
2014	237,151	255,413	237			255		8.70		9.70	136,151	136,151	136			136		8.70		9.70
2013	201,948	222,558	202			223		8.50		9.50	97,948	97,948	98			98		8.50		9.50
2012	128,634	144,072	129			144		10.00		11.00	49,134	49,134	49			49		10.00		11.00
2011	129,296	149,301	129			149		9.00		10.00	26,796	26,796	27			27		9.00		10.00
2010	75,603	90,775	75			91		9.50		10.50
2008	—	17,714	—			18		10.50		11.50
Total ESOP Preferred Stock (1)	1,774,652	1,439,181	$	1,774		1,439					1,071,418	1,071,418	$	1,072		1,072
Unearned ESOP shares (2)			$	(1,904	)	(1,565	)						$	(1,143	)	(1,143	)


(1)	At ~~September 30, 2017~~March 31, 2020, and December 31, ~~2016~~,2019, additional paid-in capital included $~~130~~71 million and $~~126~~71 million, respectively, related to ESOP preferred stock.


(2)	We recorded a corresponding charge to unearned ESOP shares in connection with the issuance of the ESOP Preferred Stock. The unearned ESOP shares are reduced as shares of the ESOP Preferred Stock are committed to be released.

Note 18: Revenue from Contracts with Customers (continued)

Note 18: Revenue from Contracts with Customers

Our revenue includes net interest income on financial instruments and noninterest income. Table 18.1 presents our revenue by operating segment. The “Other” segment for each of the tables below includes the elimination of certain items that are included in more than one business segment, substantially all of which

represents products and services for WIM customers served through Community Banking distribution channels. For additional description of our operating segments, including additional financial information and the underlying management reporting process, see Note 22 (Operating Segments).

Table 18.1: Revenue by Operating Segment



	Quarter ended Mar 31,
	Community Banking					Wholesale Banking				Wealth and Investment Management				Other				Consolidated Company
(in millions)	2020			2019		2020		2019		2020		2019		2020		2019		2020		2019
Net interest income (1)	$	6,787		7,248		4,136		4,534		867		1,101		(478	)	(572	)	11,312		12,311
Noninterest income:
Service charges on deposit accounts	700			610		508		483		5		4		(4	)	(3	)	1,209		1,094
Trust and investment fees:
Brokerage advisory, commissions and other fees	518			449		90		78		2,397		2,124		(523	)	(458	)	2,482		2,193
Trust and investment management	194			210		131		114		582		676		(206	)	(214	)	701		786
Investment banking	(99		)	(20	)	490		412		1		5		(1	)	(3	)	391		394
Total trust and investment fees	613			639		711		604		2,980		2,805		(730	)	(675	)	3,574		3,373
Card fees	809			858		83		86		1		1		(1	)	(1	)	892		944
Other fees:
Lending related charges and fees (1)	50			65		278		282		2		2		(2	)	(2	)	328		347
Cash network fees	106			109		—		—		—		—		—		—		106		109
Commercial real estate brokerage commissions	—			—		1		81		—		—		—		—		1		81
Wire transfer and other remittance fees	66			64		43		48		2		2		(1	)	(1	)	110		113
All other fees (1)	63			94		24		26		—		—		—		—		87		120
Total other fees	285			332		346		437		4		4		(3	)	(3	)	632		770
Mortgage banking (1)	340			641		40		68		(3	)	(3	)	2		2		379		708
Insurance (1)	11			11		75		78		19		17		(10	)	(10	)	95		96
Net gains (losses) from trading activities (1)	29			5		41		333		(7	)	19		1		—		64		357
Net gains (losses) on debt securities (1)	194			37		43		88		—		—		—		—		237		125
Net gains (losses) from equity securities (1)	(1,028		)	601		(95	)	77		(278	)	136		—		—		(1,401	)	814
Lease income (1)	—			—		352		443		—		—		—		—		352		443
Other income of the segment (1)	756			768		(423	)	(120	)	127		(5	)	(88	)	(69	)	372		574
Total noninterest income	2,709			4,502		1,681		2,577		2,848		2,978		(833	)	(759	)	6,405		9,298
Revenue	$	9,496		11,750		5,817		7,111		3,715		4,079		(1,311	)	(1,331	)	17,717		21,609


(1)	These revenues are related to financial assets and liabilities, including loans, leases, securities and derivatives, with additional details included in other footnotes to our financial statements.

We provide services to customers which have related performance obligations that we complete to recognize revenue. Our revenues are generally recognized either immediately upon the completion of our service or over time as we perform services. Any services performed over time generally require that we render services each period and therefore we measure our progress in completing these services based upon the passage of time.

SERVICE CHARGES ON DEPOSIT ACCOUNTS are earned on depository accounts for commercial and consumer customers and include fees for account and overdraft services. Account

charges include fees for periodic account maintenance activities and event-driven services such as stop payment fees. Our obligation for event-driven services is satisfied at the time of the event when the service is delivered, while our obligation for maintenance services is satisfied over the course of each month. Our obligation for overdraft services is satisfied at the time of the overdraft.

Table 18.2 presents our service charges on deposit accounts by operating segment.

Table 18.2: Service Charges on Deposit Accounts by Operating Segment



	Quarter ended Mar 31,
	Community Banking			Wholesale Banking		Wealth and Investment Management		Other				Consolidated Company
(in millions)	2020		2019	2020	2019	2020	2019	2020		2019		2020	2019
Overdraft fees	$	484	417	1	1	—	—	—		—		485	418
Account charges	216		193	507	482	5	4	(4	)	(3	)	724	676
Service charges on deposit accounts	$	700	610	508	483	5	4	(4	)	(3	)	1,209	1,094

BROKERAGE ADVISORY, COMMISSIONS AND OTHER FEES are earned for providing full-service and discount brokerage services predominantly to retail brokerage clients. These revenues include fees earned on asset-based and transactional accounts and other brokerage advisory services.

Asset-based revenues are charged based on the market value of the client’s assets. The services and related obligations associated with certain of these revenues, which include investment advice, active management of client assets, or assistance with selecting and engaging a third-party advisory manager, are generally satisfied over a month or quarter. The remaining revenues include trailing commissions which are earned for selling shares to investors. Our obligation associated with earning trailing commissions is satisfied at the time shares are sold. However, these fees are received and recognized over time during the period the customer owns the shares and we remain

the broker of record. The amount of trailing commissions is variable based on the length of time the customer holds the shares and on changes in the value of the underlying assets.

Transactional revenues are earned for executing transactions at the client’s direction. Our obligation is generally satisfied upon the execution of the transaction and the fees are based on the size and number of transactions executed.

Other revenues earned from other brokerage advisory services include omnibus and networking fees received from mutual fund companies in return for providing record keeping and other administrative services, and annual account maintenance fees charged to customers.

Table 18.3 presents our brokerage advisory, commissions and other fees by operating segment.

Table 18.3: Brokerage Advisory, Commissions and Other Fees by Operating Segment



	Quarter ended Mar 31,
	Community Banking			Wholesale Banking		Wealth and Investment Management		Other				Consolidated Company
(in millions)	2020		2019	2020	2019	2020	2019	2020		2019		2020	2019
Asset-based revenue (1)	$	398	343	—	—	1,805	1,580	(398	)	(343	)	1,805	1,580
Transactional revenue	102		89	3	16	432	387	(107	)	(98	)	430	394
Other revenue	18		17	87	62	160	157	(18	)	(17	)	247	219
Brokerage advisory, commissions and other fees	$	518	449	90	78	2,397	2,124	(523	)	(458	)	2,482	2,193


(1)	We earned trailing commissions of $275 million and $280 million for first quarter 2020 and 2019, respectively.

Note 18: Revenue from Contracts with Customers (continued)

TRUST AND INVESTMENT MANAGEMENT FEES are earned for providing trust, investment management and other related services.

Investment management services include managing and administering assets, including mutual funds, and institutional separate accounts. Fees for these services are generally determined based on a tiered scale relative to the market value of assets under management (AUM). In addition to AUM, we have client assets under administration (AUA) that earn various administrative fees which are generally based on the extent of the services provided to administer the account. Services with AUM

and AUA-based fees are generally performed over time.

Trust services include acting as a trustee or agent for corporate trust, personal trust, and agency assets. Obligations for trust services are generally satisfied over time, while obligations for activities that are transactional in nature are satisfied at the time of the transaction.

Other related services include the custody and safekeeping of accounts. Our obligation for these services is generally satisfied over time.

Table 18.4 presents our trust and investment management fees by operating segment.

Table 18.4: Trust and Investment Management Fees by Operating Segment



	Quarter ended Mar 31,
	Community Banking			Wholesale Banking		Wealth and Investment Management			Other				Consolidated Company
(in millions)	2020		2019	2020	2019	2020		2019	2020		2019		2020	2019
Investment management fees	$	—	1	—	—	489		477	—		—		489	478
Trust fees	194		209	89	82	102		168	(206	)	(214	)	179	245
Other revenue	—		—	42	32	(9	)	31	—		—		33	63
Trust and investment management fees	$	194	210	131	114	582		676	(206	)	(214	)	701	786

INVESTMENT BANKING FEES are earned for underwriting debt and equity securities, arranging loan syndications and performing other advisory services. Our obligation for these services is generally satisfied at closing of the transaction. Substantially all of these fees are in the Wholesale Banking operating segment.

CARD FEES include credit and debit card interchange and network revenues and various card-related fees. Credit and debit card

interchange and network revenues are earned on credit and debit card transactions conducted through payment networks such as Visa, MasterCard, and American Express. Our obligation is satisfied concurrently with the delivery of services on a daily basis.

Table 18.5 presents our card fees by operating segment.

Table 18.5: Card Fees by Operating Segment



	Quarter ended Mar 31,
	Community Banking			Wholesale Banking		Wealth and Investment Management		Other				Consolidated Company
(in millions)	2020		2019	2020	2019	2020	2019	2020		2019		2020	2019
Credit card interchange and network revenues (1)	$	134	189	83	86	1	1	(1	)	(1	)	217	275
Debit card interchange and network revenues	513		507	—	—	—	—	—		—		513	507
Late fees, cash advance fees, balance transfer fees, and annual fees	162		162	—	—	—	—	—		—		162	162
Card fees	$	809	858	83	86	1	1	(1	)	(1	)	892	944


(1)	The cost of credit card rewards and rebates of $385 million and $354 million for the quarters ended March 31, 2020 and 2019, respectively, are presented net against the related revenues.

CASH NETWORK FEES are earned for processing ATM transactions. Our obligation is completed daily upon settlement of ATM transactions. All of these fees are included in the Community Banking operating segment.

COMMERCIAL REAL ESTATE BROKERAGE COMMISSIONS are earned for assisting customers in the sale of real estate property. Our obligation is satisfied upon the successful brokering of a transaction. Fees are based on a fixed percentage of the sales price. All of these fees are included in the Wholesale Banking operating segment. In October 2019, we sold our commercial real estate brokerage business (Eastdil).

WIRE TRANSFER AND OTHER REMITTANCE FEES consist of fees earned for funds transfer services and issuing cashier’s checks and money orders. Our obligation is satisfied at the time of the funds transfer services or upon issuance of the cashier’s check or money order. Substantially all of these fees are included in in the Community Banking and Wholesale Banking operating segments.

ALL OTHER FEES include various types of fees for products or services such as merchant payment services, safe deposit boxes, and loan syndication agency services. These fees are generally recognized over time as we perform the services. Most of these fees are included in the Community Banking operating segment.

Note ~~15:~~19: Employee Benefits and Other Expenses

We sponsor a frozen noncontributory qualified defined benefit retirement plan, ~~called~~ the Wells Fargo & Company Cash Balance Plan (Cash Balance Plan), which covers eligible employees of Wells Fargo. The Cash Balance Plan was frozen on July 1, 2009, and no0 new benefits ~~accrue~~have accrued after that date. For additional information on our pension and postretirement plans, including plan assumptions, investment strategy and asset allocation, projected benefit payments, and valuation methodologies used

for assets measured at fair value, see Note 23 (Employee Benefits and Other Expenses) in our 2019 Form 10-K.

Table ~~15.1~~19.1 presents the components of net periodic benefit cost. Service cost is reported in employee benefits expense and all other components of net periodic benefit cost are reported in other noninterest expense on the consolidated statement of income.

Table 19.1:Net Periodic Benefit Cost



	2020						2019
	Pension benefits						Pension benefits
(in millions)	Qualified			Non-qualified	Other benefits		Qualified		Non-qualified	Other benefits
Quarter ended March 31,
Service cost	$	3		—	—		3		—	—
Interest cost	86			4	4		105		6	5
Expected return on plan assets	(148		)	—	(6	)	(142	)	—	(7	)
Amortization of net actuarial loss (gain)	36			4	(5	)	37		2	(4	)
Amortization of prior service credit	—			—	(2	)	—		—	(2	)
Settlement loss	—			3	—		—		2	—
Net periodic benefit cost	$	(23	)	11	(9	)	3		10	(8	)

Other Expenses

Table 19.2 separately presents other expenses exceeding 1% of the sum of net interest income and total noninterest income in any of the periods presented.

Table ~~15.1:Net Periodic Benefit Cost~~19.2:Other Expenses

   2017 2016
   Pension benefits
Pension benefits
(in millions) Qualified
Non-qualified

Other
benefits

Qualified
Non-qualified

Other
benefits

Quarter ended September 30,
Service cost $ 1
—
—
—
—
—
Interest cost 103
5
7
105
6
11
Expected return on plan assets (163 ) —
(7 ) (152 ) —
(8 )
Amortization of net actuarial loss (gain) 37
3
(3 ) 37
3
(1 )
Amortization of prior service credit —
—
(2 ) —
—
—
Settlement loss 6
—
—
—
—
—
Net periodic benefit cost (income) $ (16 ) 8
(5 ) (10 ) 9
2
Nine months ended September 30,
Service cost $ 4
—
—
2
—
—
Interest cost 309
17
21
323
19
31
Expected return on plan assets (489 ) —
(22 ) (435 ) —
(23 )
Amortization of net actuarial loss (gain) 113
9
(8 ) 103
9
(3 )
Amortization of prior service credit —
—
(7 ) —
—
—
Settlement loss 7
6
—
4
2
—
Net periodic benefit cost (income) $ (56 ) 32
(16 ) (3 ) 30
5



	Quarter ended March 31,
(in millions)	2020		2019
Outside professional services	$	727	678
Contract services	630		563
Operating losses	464		238
Leases (1)	260		286
Advertising and promotion	181		237
Other	955		1,141
Total other noninterest expense	$	3,217	3,143


(1)	Represents expenses for assets we lease to customers.

Note ~~16:~~20: Earnings and Dividends Per Common Share

Table ~~16.1~~20.1 shows earnings per common share and diluted earnings per common share and reconciles the numerator and denominator of both earnings per common share calculations.

See Note 1 (Summary of Significant Accounting Policies) for discussion on share repurchases.

Table ~~16.1:~~20.1:Earnings Per Common Share Calculations



	Quarter ended March 31,
(in millions, except per share amounts)	2020		2019
Wells Fargo net income	$	653	5,860
Less: Preferred stock dividends and other (1)	611		353
Wells Fargo net income applicable to common stock (numerator)	$	42	5,507
Earnings per common share
Average common shares outstanding (denominator)	4,104.8		4,551.5
Per share	$	0.01	1.21
Diluted earnings per common share
Average common shares outstanding	4,104.8		4,551.5
Add: Stock options (2)	—		2.5
Restricted share rights (2)	30.5		30.0
Diluted average common shares outstanding (denominator)	4,135.3		4,584.0
Per share	$	0.01	1.20

Quarter ended September 30, Nine months ended September 30,
(in millions, except per share amounts) 2017
2016
2017
2016
Wells Fargo net income $ 4,596
5,644
$ 15,863
16,664
Less: Preferred stock dividends and other 411
401
1,218
1,163
Wells Fargo net income applicable to common stock (numerator) $ 4,185
5,243
$ 14,645
15,501
Earnings per common share
Average common shares outstanding (denominator) 4,948.6
5,043.4
4,982.1
5,061.9
Per share $ 0.85
1.04
$ 2.94
3.06
Diluted earnings per common share
Average common shares outstanding 4,948.6
5,043.4
4,982.1
5,061.9
Add: Stock options 15.8
18.1
18.1
19.6
Restricted share rights 22.4
23.1
24.1
26.1
Warrants 10.0
10.0
11.1
10.6
Diluted average common shares outstanding (denominator) 4,996.8
5,094.6
5,035.4
5,118.2
Per share $ 0.84
1.03
$ 2.91
3.03


(1)	The quarter ended March 31, 2020, includes $272 million from the elimination of discounts or issuance costs associated with redemptions of preferred stock.


(2)	Calculated using the treasury stock method.

Table ~~16.2~~20.2 presents the outstanding ~~options to purchase shares of common stock~~Convertible Preferred Stock, Series L, that were anti-dilutive ~~(the exercise~~

~~price was higher than the weighted-average market price),~~ and therefore not included in the calculation of diluted earnings per common share.

Table ~~16.2:~~20.2:Outstanding Anti-Dilutive ~~Options~~Securities


	Weighted-average shares				Weighted-average shares
	Quarter ended September 30,		Nine months ended September 30,		Quarter ended March 31,
(in millions)	2017	2016	2017	2016	2020	2019
Options	1.8	2.6	2.0	3.4
Convertible Preferred Stock, Series L (1)					25.3	25.3


(1)	Calculated using the if-converted method.

Table 20.3 presents dividends declared per common share.

Table 20.3:Dividends Declared Per Common Share

~~Note 17: Other Comprehensive Income (continued~~)

Note ~~17:~~21: Other Comprehensive Income

Table ~~17.1~~21.1 provides the components of ~~other comprehensive income (OCI),~~OCI, reclassifications to net income by income statement line item, and the related tax effects.

Table ~~17.1:~~21.1:Summary of Other Comprehensive Income


	Quarter ended September 30,														Nine months ended September 30,												Quarter ended March 31,
	2017								2016						2017						2016						2020								2019
(in millions)	Before tax			Tax effect		Net of tax			Before tax		Tax effect		Net of tax		Before tax		Tax effect		Net of tax		Before tax		Tax effect		Net of tax		Before tax			Tax effect		Net of tax			Before tax		Tax effect		Net of tax
Investment securities:
Net unrealized gains arising during the period	$	891		(353	)	538			112		(32	)	80		2,825		(1,075	)	1,750		2,478		(938	)	1,540
Debt securities:
Net unrealized gains (losses) arising during the period																											$	(110	)	22		(88		)	2,831		(695	)	2,136
Reclassification of net (gains) losses to net income:
Interest income on investment securities (1)	70			(26	)	44			2		(1	)	1		122		(46	)	76		5		(2	)	3
Interest income on debt securities (1)																											66			(16	)	50			45		(11	)	34
Net gains on debt securities	(166		)	62		(104		)	(106	)	40		(66	)	(322	)	119		(203	)	(797	)	299		(498	)	(237		)	48		(189		)	(125	)	31		(94	)
Net gains from equity investments	(106		)	41		(65		)	(85	)	32		(53	)	(323	)	120		(203	)	(204	)	77		(127	)
Other noninterest income	2			—		2			(4	)	2		(2	)	1		—		1		(5	)	2		(3	)	(1		)	—		(1		)	(1	)	—		(1	)
Subtotal reclassifications to net income	(200		)	77		(123		)	(193	)	73		(120	)	(522	)	193		(329	)	(1,001	)	376		(625	)	(172		)	32		(140		)	(81	)	20		(61	)
Net change	691			(276	)	415			(81	)	41		(40	)	2,303		(882	)	1,421		1,477		(562	)	915		(282		)	54		(228		)	2,750		(675	)	2,075
Derivatives and hedging activities:
Net unrealized gains (losses) arising during the period	36			(13	)	23			(445	)	168		(277	)	279		(105	)	174		2,611		(984	)	1,627
Reclassification of net (gains) losses to net income:
Derivative and hedging activities:
Fair Value Hedges:
Change in fair value of excluded components on fair value hedges (2)																											144			(35	)	109			(26	)	7		(19	)
Cash Flow Hedges:
Net unrealized losses arising during the period on cash flow hedges																											(20		)	5		(15		)	(9	)	2		(7	)
Reclassification of net losses to net income on cash flow hedges:
Interest income on loans	(107		)	41		(66		)	(266	)	100		(166	)	(468	)	177		(291	)	(794	)	299		(495	)	56			(14	)	42			78		(19	)	59
Interest expense on long-term debt	2			(1	)	1			4		(1	)	3		8		(3	)	5		11		(4	)	7		2			(1	)	1			1		—		1
Subtotal reclassifications to net income	(105		)	40		(65		)	(262	)	99		(163	)	(460	)	174		(286	)	(783	)	295		(488	)	58			(15	)	43			79		(19	)	60
Net change	(69		)	27		(42		)	(707	)	267		(440	)	(181	)	69		(112	)	1,828		(689	)	1,139		182			(45	)	137			44		(10	)	34
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period	11			(5	)	6			(447	)	168		(279	)	4		(2	)	2		(474	)	178		(296	)	3			(1	)	2			(4	)	1		(3	)
Reclassification of amounts to net periodic benefit costs (2):
Reclassification of amounts to non interest expense (3):
Amortization of net actuarial loss	37			(13	)	24			39		(14	)	25		114		(43	)	71		109		(41	)	68		35			(8	)	27			35		(8	)	27
Settlements and other	4			(1	)	3			—		—		—		6		—		6		6		(2	)	4		1			—		1			—		—		—
Subtotal reclassifications to net periodic benefit costs	41			(14	)	27			39		(14	)	25		120		(43	)	77		115		(43	)	72
Subtotal reclassifications to non interest expense																											36			(8	)	28			35		(8	)	27
Net change	52			(19	)	33			(408	)	154		(254	)	124		(45	)	79		(359	)	135		(224	)	39			(9	)	30			31		(7	)	24
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period	40			3		43			(10	)	(1	)	(11	)	87		6		93		27		6		33		(194		)	1		(193		)	42		(2	)	40
Net change	40			3		43			(10	)	(1	)	(11	)	87		6		93		27		6		33		(194		)	1		(193		)	42		(2	)	40
Other comprehensive income (loss)	$	714		(265	)	449			(1,206	)	461		(745	)	2,333		(852	)	1,481		2,973		(1,110	)	1,863		$	(255	)	1		(254		)	2,867		(694	)	2,173
Less: Other comprehensive income (loss) from noncontrolling interests, net of tax						(34		)					19						(29	)					(24	)
Less: Other comprehensive loss from noncontrolling interests, net of tax																																(1		)					—
Wells Fargo other comprehensive income (loss), net of tax						$	483						(764	)					1,510						1,887							$	(253	)					2,173


(1)	Represents net unrealized gains and losses amortized over the remaining lives of securities that were transferred from the available-for-sale portfolio to the held-to-maturity portfolio.


(2)	Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of effectiveness recorded in other comprehensive income.


(3)	These items are included in the computation of net periodic benefit cost ~~which is recorded in employee benefits expense~~ (see Note 1519 (Employee Benefits) for ~~additional details)~~more information).

Note 21: Other Comprehensive Income (continued)

Table ~~17.2:~~21.2:Cumulative OCI Balances



(in millions)	Debt securities			Fair value hedges (1)		Cash flow hedges (2)		Defined benefit plans adjustments		Foreign currency translation adjustments		Cumulative other comprehensive income
Quarter ended March 31, 2020
Balance, beginning of period	$	1,552		(180	)	(298	)	(2,223	)	(162	)	(1,311	)
Net unrealized gains (losses) arising during the period	(88		)	109		(15	)	2		(193	)	(185	)
Amounts reclassified from accumulated other comprehensive income	(140		)	—		43		28		—		(69	)
Net change	(228		)	109		28		30		(193	)	(254	)
Less: Other comprehensive loss from noncontrolling interests	—			—		—		—		(1	)	(1	)
Balance, end of period	$	1,324		(71	)	(270	)	(2,193	)	(354	)	(1,564	)
Quarter ended March 31, 2019
Balance, beginning of period	$	(3,122	)	(178	)	(507	)	(2,296	)	(233	)	(6,336	)
Transition adjustment (3)	481			—		—		—		—		481
Balance, January 1, 2019	(2,641		)	(178	)	(507	)	(2,296	)	(233	)	(5,855	)
Net unrealized gains (losses) arising during the period	2,136			(19	)	(7	)	(3	)	40		2,147
Amounts reclassified from accumulated other comprehensive income	(61		)	—		60		27		—		26
Net change	2,075			(19	)	53		24		40		2,173
Less: Other comprehensive income from noncontrolling interests	—			—		—		—		—		—
Balance, end of period	$	(566	)	(197	)	(454	)	(2,272	)	(193	)	(3,682	)


(1)	Substantially all of the beginning and end of period amounts for fair value hedges are foreign exchange contracts.


(2)	Substantially all of the beginning and end of period amounts for cash flow hedges are interest rate contracts.


(3)	The transition adjustment relates to the adoption of ASU 2017-08 – Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. For more information see Note 1 (Summary of Significant Accounting Policies).

(in millions)
Investment
securities

Derivatives
and
hedging
activities

Defined
benefit
plans
adjustments

Foreign
currency
translation
adjustments

Cumulative
other
compre-
hensive
income

Quarter ended September 30, 2017
Balance, beginning of period $ (96 ) 19
(1,897 ) (136 ) (2,110 )
Net unrealized gains arising during the period 538
23
6
43
610
Amounts reclassified from accumulated other comprehensive income (123 ) (65 ) 27
—
(161 )
Net change 415
(42 ) 33
43
449
Less: Other comprehensive loss from noncontrolling interests (34 ) —
—
—
(34 )
Balance, end of period $ 353
(23 ) (1,864 ) (93 ) (1,627 )
Quarter ended September 30, 2016
Balance, beginning of period $ 2,812
2,199
(1,921 ) (142 ) 2,948
Net unrealized gains (losses) arising during the period 80
(277 ) (279 ) (11 ) (487 )
Amounts reclassified from accumulated other comprehensive income (120 ) (163 ) 25
—
(258 )
Net change (40 ) (440 ) (254 ) (11 ) (745 )
Less: Other comprehensive income from noncontrolling interests 19
—
—
—
19
Balance, end of period $ 2,753
1,759
(2,175 ) (153 ) 2,184
Nine months ended September 30, 2017




Balance, beginning of period $ (1,099 ) 89
(1,943 ) (184 ) (3,137 )
Net unrealized gains arising during the period 1,750
174
2
93
2,019
Amounts reclassified from accumulated other comprehensive income (329 ) (286 ) 77
—
(538 )
Net change 1,421
(112 ) 79
93
1,481
Less: Other comprehensive income (loss) from noncontrolling interests (31 ) —
—
2
(29 )
Balance, end of period $ 353
(23 ) (1,864 ) (93 ) (1,627 )
Nine months ended September 30, 2016




Balance, beginning of period $ 1,813
620
(1,951 ) (185 ) 297
Net unrealized gains (losses) arising during the period 1,540
1,627
(296 ) 33
2,904
Amounts reclassified from accumulated other comprehensive income (625 ) (488 ) 72
—
(1,041 )
Net change 915
1,139
(224 ) 33
1,863
Less: Other comprehensive income (loss) from noncontrolling interests (25 ) —
—
1
(24 )
Balance, end of period $ 2,753
1,759
(2,175 ) (153 ) 2,184

Note ~~18:~~22: Operating Segments

~~We have three~~As of March 31, 2020, we had 3 reportable operating segments: Community Banking; Wholesale Banking; and Wealth and Investment Management (WIM). We define our operating segments by product type and customer segment and their results are based on our management ~~accounting process, for which there is no comprehensive, authoritative guidance equivalent to GAAP for financial accounting.~~reporting process. The management ~~accounting~~reporting process is based on U.S. GAAP with specific adjustments, such as for funds transfer pricing for asset/liability management, for shared revenues and expenses, and tax-equivalent adjustments to consistently reflect income from taxable and tax-exempt sources. The management reporting process measures the performance of the operating segments based on

our management structure and is not necessarily comparable with similar information for other financial services companies. IfOn February 11, 2020, we announced a new organizational structure with 5 principal lines of business:

Consumer and Small Business Banking; Consumer Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment Management. The Company is currently in the process of transitioning to this new organizational structure, including identifying leadership for some of these principal business lines and aligning management ~~structure and/or~~reporting and allocation methodologies. These changes will not impact the ~~allocation process~~consolidated financial results of the Company, but are expected to result in changes ~~allocations, transfers~~to our operating segments. We will update our operating segment disclosures, including comparative financial results, when the Company completes its transition and ~~assignments may change.~~ is managed in accordance with the new organizational structure.

For a description of our operating segments ~~including the underlying management accounting process,~~ see Note 2427 (Operating Segments) ~~to Financial Statements~~ in our ~~2016~~2019 Form 10-K. Table ~~18.1~~22.1 presents our results by operating segment.

Table ~~18.1:~~22.1:Operating Segments


	Community Banking			Wholesale Banking				Wealth and Investment Management				Other (1)				Consolidated Company		Community Banking				Wholesale Banking			Wealth and Investment Management			Other (1)				Consolidated Company
(income/expense in millions, average balances in billions)	2017		2016	2017		2016		2017		2016		2017		2016		2017	2016	2020			2019	2020		2019	2020		2019	2020		2019		2020		2019
Quarter ended Sep 30,
Quarter ended Mar 31,
Net interest income (2)	$	7,645	7,430	4,353		4,062		1,159		977		(681	)	(517	)	12,476	11,952	$	6,787		7,248	4,136		4,534	867		1,101	(478	)	(572	)	11,312		12,311
Provision (reversal of provision) for credit losses	650		651	69		157		(1	)	4		(1	)	(7	)	717	805	1,718			710	2,288		134	8		4	(9	)	(3	)	4,005		845
Noninterest income	4,415		4,957	2,732		3,085		3,087		3,122		(784	)	(788	)	9,450	10,376	2,709			4,502	1,681		2,577	2,848		2,978	(833	)	(759	)	6,405		9,298
Noninterest expense	7,834		6,953	4,248		4,120		3,106		2,999		(837	)	(804	)	14,351	13,268	7,116			7,689	3,763		3,838	3,103		3,303	(934	)	(914	)	13,048		13,916
Income (loss) before income tax expense (benefit)	3,576		4,783	2,768		2,870		1,141		1,096		(627	)	(494	)	6,858	8,255	662			3,351	(234	)	3,139	604		772	(368	)	(414	)	664		6,848
Income tax expense (benefit)(3)	1,286		1,546	729		827		427		415		(238	)	(187	)	2,204	2,601	644			424	(546	)	369	153		192	(92	)	(104	)	159		881
Net income (loss) before noncontrolling interests	2,290		3,237	2,039		2,043		714		681		(389	)	(307	)	4,654	5,654	18			2,927	312		2,770	451		580	(276	)	(310	)	505		5,967
Less: Net income (loss) from noncontrolling interests	61		10	(7	)	(4	)	4		4		—		—		58	10	(137		)	104	1		—	(12	)	3	—		—		(148	)	107
Net income (loss) ~~(3)~~	$	2,229	3,227	2,046		2,047		710		677		(389	)	(307	)	4,596	5,644	$	155		2,823	311		2,770	463		577	(276	)	(310	)	653		5,860

Average loans	$	473.5	489.2	463.8		454.3		72.4		68.4		(57.4	)	(54.4	)	952.3	957.5	$	462.6		458.2	484.5		476.4	78.5		74.4	(60.6	)	(59.0	)	965.0		950.0
Average assets	988.9		993.6	824.3		794.2		213.4		212.1		(88.1	)	(85.3	)	1,938.5	1,914.6	1,039.2			1,015.4	885.0		844.5	88.1		83.2	(61.6	)	(60.0	)	1,950.7		1,883.1
Average deposits	734.5		708.0	463.4		441.2		188.1		189.2		(79.6	)	(76.9	)	1,306.4	1,261.5	798.6			765.6	456.6		409.8	151.4		153.2	(68.6	)	(66.5	)	1,338.0		1,262.1
Nine months ended Sep 30,
Net interest income (2)	$	22,820	22,277	12,779		11,729		3,360		2,852		(1,700	)	(1,506	)	37,259	35,352
Provision (reversal of provision) for credit losses	1,919		2,060	(39	)	905		2		(8	)	(5	)	8		1,877	2,965
Noninterest income	13,622		14,928	8,295		9,660		9,261		9,020		(2,340	)	(2,275	)	28,838	31,333
Noninterest expense	22,278		20,437	12,551		12,124		9,387		9,017		(2,532	)	(2,416	)	41,684	39,162
Income (loss) before income tax expense (benefit)	12,245		14,708	8,562		8,360		3,232		2,863		(1,503	)	(1,373	)	22,536	24,558
Income tax expense (benefit)	3,817		4,910	2,034		2,341		1,206		1,087		(571	)	(521	)	6,486	7,817
Net income (loss) before noncontrolling interests	8,428		9,798	6,528		6,019		2,026		1,776		(932	)	(852	)	16,050	16,741
Less: Net income (loss) from noncontrolling interests	197		96	(21	)	(22	)	11		3		—		—		187	77
Net income (loss) (3)	$	8,231	9,702	6,549		6,041		2,015		1,773		(932	)	(852	)	15,863	16,664
Average loans	$	477.8	486.4	465.0		445.2		71.6		66.4		(56.8	)	(52.8	)	957.6	945.2
Average assets	987.7		969.6	816.5		771.9		216.1		208.5		(88.1	)	(84.3	)	1,932.2	1,865.7
Average deposits	726.4		698.3	464.1		431.7		190.6		185.4		(78.8	)	(76.1	)	1,302.3	1,239.3


(1)	Includes the elimination of certain items that are included in more than one business segment, ~~most~~substantially all of which represents products and services for ~~Wealth and Investment Management~~WIM customers served through Community Banking distribution channels.

(2)

Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets ~~and, if the segment has excess liabilities,~~as well as interest credits for ~~providing~~any funding of a segment available to be provided to other segments. The cost of liabilities includes actual interest expense on segment liabilities ~~and, if the segment does not have enough liabilities to fund its assets, a~~as well as funding ~~charge based on the cost of excess liabilities~~charges for any funding provided from ~~another segment.~~other segments.

(3)

~~Represents~~

Income tax expense (benefit) for our Wholesale Banking operating segment ~~net~~included income ~~(loss)~~tax credits related to low-income housing and renewable energy investments of $491 million and $427 million for ~~Community Banking; Wholesale Banking;~~first quarter 2020 and ~~Wealth and Investment Management segments and Wells Fargo net income for the consolidated company.~~2019, respectively.

Note ~~19:~~23: Regulatory and Agency Capital Requirements

The Company and each of its subsidiary banks are subject to regulatory capital adequacy requirements promulgated by federal bank regulatory agencies. The Federal Reserve establishes capital requirements for the consolidated financial holding company, and the OCC has similar requirements for the Company’s national banks, including Wells Fargo Bank, N.A. (the Bank).

Table ~~19.1~~23.1 presents regulatory capital information for Wells Fargo & Company and the Bank ~~using~~in accordance with Basel III ~~which increased minimum required~~ capital ~~ratios, and introduced a minimum Common Equity Tier 1 (CET1) ratio.~~requirements. We must report the lower of our ~~CET1,~~Common Equity Tier 1 (CET1), tier 1 and total capital ratios calculated under the Standardized Approach and under the Advanced Approach in the assessment of our capital adequacy. The ~~information presented reflects risk-weighted assets (RWAs) under the Standardized and Advanced Approaches with Transition Requirements. The~~ Standardized Approach applies assigned risk weights to broad risk categories, while the calculation of ~~RWAs~~risk-weighted assets (RWAs) under the

Advanced Approach differs by requiring applicable banks to utilize a risk-sensitive methodology, which relies upon the use of internal credit models, and includes an operational risk component. The

Basel III ~~revised definition of~~ capital requirements for calculating CET1 and ~~changes~~tier 1 capital, along with RWAs, are ~~being~~fully phased-in. However, the requirements for determining tier 2 and total capital are still in accordance with Transition Requirements and are scheduled to be fully phased-in ~~effective January 1, 2014, through~~by the end of 2021. Accordingly, the information presented below reflects fully phased-in CET1 capital, tier 1 capital, and RWAs, but reflects total capital still in accordance with Transition Requirements.

At March 31, 2020, the Bank and our other insured depository institutions were considered well-capitalized under the requirements of the Federal Deposit Insurance Act.

The Bank is an approved seller/servicer of mortgage loans and is required to maintain minimum levels of shareholders’ equity, as specified by various agencies, including the United States Department of Housing and Urban Development, GNMA, FHLMC and FNMA. At ~~September 30, 2017,~~March 31, 2020, the Bank met these requirements. Other subsidiaries, including the Company’s insurance and broker-dealer subsidiaries, are also subject to various minimum capital levels, as defined by applicable industry regulations. The minimum capital levels for these subsidiaries, and related restrictions, are not significant to our consolidated operations.

Table ~~19.1:~~23.1:Regulatory Capital Information


	Wells Fargo & Company										Wells Fargo Bank, N.A.						Wells Fargo & Company									Wells Fargo Bank, N.A.
	September 30, 2017						December 31, 2016				September 30, 2017			December 31, 2016			March 31, 2020						December 31, 2019			March 31, 2020			December 31, 2019
(in millions, except ratios)	Advanced Approach				Standardized Approach		Advanced Approach		Standardized Approach		Advanced Approach	Standardized Approach		Advanced Approach	Standardized Approach		Advanced Approach			Standardized Approach			Advanced Approach	Standardized Approach		Advanced Approach	Standardized Approach		Advanced Approach	Standardized Approach
Regulatory capital:	Regulatory capital:																Regulatory capital:
Common equity tier 1	$	153,548			153,548		148,785		148,785		140,021	140,021		132,225	132,225		$	134,751		134,751			138,760	138,760		147,537	147,537		145,149	145,149
Tier 1	176,996				176,996		171,364		171,364		140,021	140,021		132,225	132,225		154,277			154,277			158,949	158,949		147,537	147,537		145,149	145,149
Total	209,522				219,208		204,425		214,877		153,558	162,723		145,665	155,281		184,068			192,121			188,333	196,223		162,300	169,846		158,615	166,056
Assets:
Risk-weighted	$	1,217,700			1,268,638		1,274,589		1,336,198		1,103,800	1,173,294		1,143,681	1,222,876
Adjusted average (1)	1,908,883				1,908,883		1,914,802		1,914,802		1,713,046	1,713,046		1,714,524	1,714,524
Risk-weighted assets (1)																	$	1,181,271		1,262,808			1,165,079	1,245,853		1,061,736	1,171,371		1,047,054	1,152,791
Adjusted average assets (2)																	1,922,129			1,922,129			1,913,297	1,913,297		1,711,367	1,711,367		1,695,807	1,695,807
Regulatory capital ratios:
Common equity tier 1 capital(1)	12.61		%		12.10	*	11.67		11.13	*	12.69	11.93	*	11.56	10.81	*	11.41		%	10.67		*	11.91	11.14	*	13.90	12.60	*	13.86	12.59	*
Tier 1 capital(1)	14.54				13.95	*	13.44		12.82	*	12.69	11.93	*	11.56	10.81	*	13.06			12.22		*	13.64	12.76	*	13.90	12.60	*	13.86	12.59	*
Total capital(1)	17.21			*	17.28		16.04	*	16.08		13.91	13.87	*	12.74	12.70	*	15.58			15.21		*	16.16	15.75	*	15.29	14.50	*	15.15	14.40	*
Tier 1 leverage ~~(1)~~(2)	9.27				9.27		8.95		8.95		8.17	8.17		7.71	7.71		8.03			8.03			8.31	8.31		8.62	8.62		8.56	8.56
																	Wells Fargo & Company									Wells Fargo Bank, N.A.
																	March 31, 2020						December 31, 2019			March 31, 2020			December 31, 2019
Supplementary leverage (3):
Total leverage exposure																	$	2,256,314					2,247,729			2,017,471			2,006,180
Supplementary leverage ratio																	6.84				%		7.07			7.31			7.24

*Denotes the lowest capital ratio as determined under the Advanced and Standardized Approaches.


(1)	RWAs and capital ratios for December 31, 2019, have been revised as a result of a decrease in RWAs under the Advanced Approach due to the correction of duplicated operational loss amounts.


(2)	The leverage ratio consists of Tier 1 capital divided by ~~quarterly~~total average ~~total~~ assets, excluding goodwill and certain other items.


(3)	The supplementary leverage ratio (SLR) consists of Tier 1 capital divided by total leverage exposure. Total leverage exposure consists of total average assets, less goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities), plus certain off-balance sheet exposures.

Table ~~19.2~~23.2 presents the minimum required regulatory capital ratios under Transition Requirements to which the Company and

the Bank were subject as of ~~September 30, 2017~~March 31, 2020, and

December 31, ~~2016.~~

2019.

Table ~~19.2:~~23.2:Minimum Required Regulatory Capital Ratios – Transition Requirements (1)


	Wells Fargo & Company			Wells Fargo Bank, N.A.		Wells Fargo & Company			Wells Fargo Bank, N.A.
	September 30, 2017		December 31, 2016	September 30, 2017	December 31, 2016	March 31, 2020		December 31, 2019	March 31, 2020	December 31, 2019
Regulatory capital ratios:
Common equity tier 1 capital	6.750	%	5.625	5.750	5.125	9.000	%	9.000	7.000	7.000
Tier 1 capital	8.250		7.125	7.250	6.625	10.500		10.500	8.500	8.500
Total capital	10.250		9.125	9.250	8.625	12.500		12.500	10.500	10.500
Tier 1 leverage	4.000		4.000	4.000	4.000	4.000		4.000	4.000	4.000
Supplementary leverage (2)						5.000		5.000	6.000	6.000

(1)

At ~~September 30, 2017~~March 31, 2020, under transition requirements, the CET1, tier 1 and total capital minimum ratio requirements for Wells Fargo & Company include a capital conservation buffer of ~~1.250%~~2.500% and a global systemically important bank (G-SIB) surcharge of ~~1.000%~~2.000%. Only the ~~1.250%~~2.500% capital conservation buffer applies to the Bank at ~~September 30, 2017~~March 31, 2020. Effective October 1, 2020, the 2.500% capital conservation buffer will be replaced under the Standardized Approach by a stress capital buffer that will be calculated annually as part of the Comprehensive Capital Analysis and Review (CCAR).


(2)	Wells Fargo & Company is required to maintain a SLR of at least 5.000% (comprised of a 3.000% minimum requirement plus a supplementary leverage buffer of 2.000%) to avoid restrictions on capital distributions and discretionary bonus payments. The Bank is required to maintain a SLR of at least 6.000% to be considered well-capitalized under applicable regulatory capital adequacy guidelines.



Glossary of Acronyms

~~ABS~~	~~Asset-backed security~~	~~G-SIB~~	~~Globally systemic important bank~~
ACL	Allowance for credit losses	~~HAMP~~	~~Home Affordability Modification Program~~
~~ALCO~~	~~Asset/Liability Management Committee~~	~~HUD~~	~~U.S. Department of Housing and Urban Development~~
~~ARM~~	~~Adjustable-rate mortgage~~	LCR	Liquidity coverage ratio
~~ASC~~ AFS	~~Accounting Standards Codification~~Available-for-sale	LHFS	Loans held for sale
~~ASU~~ALCO	~~Accounting Standards Update~~Asset/Liability Management Committee	LIBOR	London Interbank Offered Rate
~~AUA~~ARM	~~Assets under administration~~Adjustable-rate mortgage	LIHTC	Low income housing tax credit
~~AUM~~ASC	~~Assets under management~~Accounting Standards Codification	LOCOM	Lower of cost or ~~market~~fair value
ASU	Accounting Standards Update	LTV	Loan-to-value
AUA	Assets under administration	MBS	Mortgage-backed security
AUM	Assets under management	MLHFS	Mortgage loans held for sale
AVM	Automated valuation model	~~LTV~~MSR	~~Loan-to-value~~Mortgage servicing right
BCBS	Basel Committee on Bank Supervision	~~MBS~~NAV	~~Mortgage-backed security~~Net asset value
BHC	Bank holding company	~~MHA~~NPA	~~Making Home Affordable programs~~Nonperforming asset
CCAR	Comprehensive Capital Analysis and Review	~~MHFS~~NSFR	~~Mortgages held for sale~~Net stable funding ratio
CD	Certificate of deposit	~~MSR~~	~~Mortgage servicing right~~
~~CDO~~	~~Collateralized debt obligation~~	~~MTN~~	~~Medium-term note~~
~~CDS~~	~~Credit default swaps~~	~~NAV~~	~~Net asset value~~
~~CECL~~	~~Current expected credit loss~~	~~NPA~~	~~Nonperforming asset~~
~~CET1~~	~~Common Equity Tier 1~~	OCC	Office of the Comptroller of the Currency
~~CFPB~~CDS	~~Consumer Financial Protection Bureau~~Credit default swaps	OCI	Other comprehensive income
~~CLO~~CECL	~~Collateralized loan obligation~~Current expected credit loss	OTC	Over-the-counter
~~CLTV~~CET1	~~Combined loan-to-value~~Common Equity Tier 1	OTTI	Other-than-temporary impairment
~~CMBS~~CFPB	~~Commercial mortgage-backed securities~~Consumer Financial Protection Bureau	~~PCI Loans~~PCD	~~Purchased credit-impaired loans~~Purchase credit-deteriorated
~~CPI~~CLO	~~Collateral protection insurance~~Collateralized loan obligation	PCI	Purchase credit-impaired
CLTV	Combined loan-to-value	PTPP	Pre-tax pre-provision profit
~~CPP~~CPI	~~Capital Purchase Program~~Collateral protection insurance	RBC	Risk-based capital
CRE	Commercial real estate	RMBS	Residential mortgage-backed securities
DPD	Days past due	ROA	Wells Fargo net income to average total assets
ESOP	Employee Stock Ownership Plan	ROE	Wells Fargo net income applicable to common stock
~~FAS~~FASB	~~Statement of~~ Financial Accounting Standards Board		to average Wells Fargo common ~~stockholders'~~stockholders’ equity
~~FASB~~FDIC	~~Financial Accounting Standards Board~~Federal Deposit Insurance Corporation	ROTCE	Return on average tangible common equity
~~FDIC~~	~~Federal Deposit Insurance Corporation~~	~~RWAs~~	~~Risk-weighted assets~~
~~FFELP~~	~~Federal Family Education Loan Program~~	~~SEC~~	~~Securities and Exchange Commission~~
FHA	Federal Housing Administration	~~S&P~~RWAs	~~Standard & Poor’s Ratings Services~~Risk-weighted assets
FHLB	Federal Home Loan Bank	~~SLR~~SEC	~~Supplementary leverage ratio~~Securities and Exchange Commission
FHLMC	Federal Home Loan Mortgage Corporation	~~SPE~~S&P	~~Special purpose entity~~Standard & Poor’s Global Ratings
FICO	Fair Isaac Corporation (credit rating)	~~TARP~~SLR	~~Troubled Asset Relief Program~~Supplementary leverage ratio
FNMA	Federal National Mortgage Association	~~TDR~~SOFR	~~Troubled debt restructuring~~Secured Overnight Financing Rate
FRB	Board of Governors of the Federal Reserve System	~~TLAC~~SPE	~~Total Loss Absorbing Capacity~~Special purpose entity
GAAP	Generally accepted accounting principles	VATDR	~~Department of Veterans Affairs~~Troubled debt restructuring
GNMA	Government National Mortgage Association	~~VaR~~TLAC	~~Value-at-Risk~~Total Loss Absorbing Capacity
GSE	Government-sponsored entity	VA	Department of Veterans Affairs
G-SIB	Global systemically important bank	VaR	Value-at-Risk
HQLA	High-quality liquid assets	VIE	Variable interest entity
HTM	Held-to-maturity	WIM	Wealth and Investment Management

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Information in response to this item can be found in Note 1114 (Legal Actions) to Financial Statements in this Report which information is incorporated by reference into this item.

Item 1A. Risk Factors

Information in response to this item can be found under the “Financial Review – Risk Factors” section in this Report which information is incorporated by reference into this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows Company repurchases of its common stock for each calendar month in the quarter ended ~~September 30, 2017.~~March 31, 2020.

Calendar month
Total number
of shares
repurchased (1)

Weighted-average
price paid per share

Maximum number of
shares that may yet
be repurchased under
the authorization
July 6,616,050
$ 54.73
164,594,913
August (2) 30,887,246
53.26
133,707,667
September (2) 11,519,239
51.50
122,188,428
Total 49,022,535



Calendar month	Total number of shares repurchased (1)	Weighted-average price paid per share		Maximum number of shares that may yet be repurchased under the authorization
January	26,675,407	$	50.40	216,240,829
February	26,845,918	47.33		189,394,911
March	21,846,195	36.26		167,548,716
Total	75,367,520


(1)	All shares were repurchased under an authorization covering up to 350 million shares of common stock approved by the Board of Directors and publicly announced by the Company on ~~January 26, 2016.~~July 23, 2019. Unless modified or revoked by the Board, this authorization does not expire.


~~(2)~~	~~August includes a private repurchase transaction of~~ ~~18,746,180~~ ~~shares at a weighted-average price per share of~~ ~~$53.34. September includes a private repurchase transaction of~~ ~~9,717,399~~ ~~shares at a weighted-average price per share of~~ ~~$51.45~~.

~~The following table shows Company repurchases of the warrants for each calendar month in the quarter ended September 30, 2017.~~



~~Calendar month~~	~~Total number~~ ~~of warrants~~ ~~repurchased (1)~~	~~Average price~~ ~~paid per warrant~~		~~Maximum dollar value~~ ~~of warrants that~~ ~~may yet be repurchased~~
~~July~~	—	$	—	~~451,944,402~~
~~August~~	—	—		~~451,944,402~~
~~September~~	—	—		~~451,944,402~~
~~Total~~	—


~~(1)~~	~~Warrants are repurchased under the authorization covering up to~~ ~~$1 billion~~ ~~in warrants approved by the Board of Directors (ratified and approved on June 22, 2010). Unless modified or revoked by the Board, this authorization does not expire.~~


Item 6.	Exhibits

A list of exhibits to this Form 10-Q is set forth below.

The Company’s SEC file number is 001-2979. On and before November 2, 1998, the Company filed documents with the SEC under the name Norwest Corporation. The former Wells Fargo & Company filed documents under SEC file number 001-6214.

Exhibit
Number
Description Location
3(a)

Restated Certificate of Incorporation, as amended and in effect on the date hereof.
Incorporated by reference to Exhibit 3(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.
3(b)

By-Laws.
Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed December 1, 2016.
4(a) See Exhibits 3(a) and 3(b).
4(b) The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.
12(a)

Computation of Ratios of Earnings to Fixed Charges:
Filed herewith.
      Quarter ended September 30, Nine months ended September 30,
      2017
2016
2017
2016

   Including interest on deposits 3.53
6.03
4.17
6.36

   Excluding interest on deposits 4.75
7.42
5.51
7.86


12(b)

Computation of Ratios of Earnings to Fixed Charges and Preferred Dividends:
Filed herewith.
      Quarter ended September 30, Nine months ended September 30,
      2017
2016
2017
2016

   Including interest on deposits 2.88
4.44
3.35
4.63

   Excluding interest on deposits 3.56
5.10
4.09
5.31


31(a)

Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
31(b)

Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
32(a)

Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.
Furnished herewith.
32(b)

Certification of Periodic Financial Report by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.
Furnished herewith.
101.INS XBRL Instance Document Filed herewith.
101.SCH XBRL Taxonomy Extension Schema Document Filed herewith.
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith.
101.DEF XBRL Taxonomy Extension Definitions Linkbase Document Filed herewith.
101.LAB XBRL Taxonomy Extension Label Linkbase Document Filed herewith.
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith.

Exhibit

Number

Description

Location

3(a)

Restated Certificate of Incorporation, as amended and in effect on the date hereof.

Filed herewith.

3(b)

By-Laws.

Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 1, 2018.

4(a)

See Exhibits 3(a) and 3(b).

4(b)

The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.

31(a)

Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

31(b)

Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

32(a)

Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.

Furnished herewith.

32(b)

Certification of Periodic Financial Report by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.

Furnished herewith.

101.INS

Inline XBRL Instance Document

The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

Filed herewith.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith.

101.DEF

Inline XBRL Taxonomy Extension Definitions Linkbase Document

Filed herewith.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

Filed herewith.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith.

104

Cover Page Interactive Data File

Formatted as Inline XBRL and contained in Exhibit 101.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: ~~November 3, 2017~~ May 5, 2020 WELLS FARGO & COMPANY

~~By:~~ ~~/s/ RICHARD D. LEVY~~

~~Richard D. Levy~~



By:	/s/ Muneera S. Carr
	Muneera S. Carr
	Executive Vice President, Chief Accounting Officer and Controller
	(Principal Accounting Officer)

~~Executive Vice President and Controller~~

~~(Principal Accounting Officer)~~

~~168~~155



					December 31,
	September 30, 2017				2016				2008
(in millions)	Adjusted unpaid principal balance (1)		% of total		Adjusted unpaid principal balance (1)		% of total		Adjusted unpaid principal balance (1)		% of total
Option payment loans	$	11,460	36	%	$	13,618	37	%	$	99,937	86	%
Non-option payment adjustable-rate and fixed-rate loans	3,951		13		4,630		13		15,763		14
Full-term loan modifications	15,958		51		18,598		50		—		—
Total adjusted unpaid principal balance	$	31,369	100	%	$	36,846	100	%	$	115,700	100	%
Total carrying value	$	27,295			32,292				95,315



	September 30, 2017
	PCI loans									All other loans
(in millions)	Adjusted unpaid principal balance (2)		Current LTV ratio (3)		Carrying value (4)		Ratio of carrying value to current value (5)			Carrying value (4)		Ratio of carrying value to current value (5)
California	$	11,753	61	%	$	9,033	47	%		$	6,703	44	%
Florida	1,481		69		1,076		49		��	1,439		54
New Jersey	586		76		429		55			953		62
New York	446		69		363		52			477		59
Texas	135		48		102		36			570		37
Other	2,928		68		2,208		51			3,942		56
Total Pick-a-Pay loans	$	17,329	64		$	13,211	48			$	14,084	50



	Sep 30, 2017				Dec 31, 2016				Dec 31, 2015				Dec 31, 2014				Dec 31, 2013
(in millions)	ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans
Commercial:
Commercial and industrial	$	4,076	34	%	$	4,560	34	%	$	4,231	33	%	$	3,506	32	%	$	3,040	29	%
Real estate mortgage	1,248		14		1,320		14		1,264		13		1,576		13		2,157		14
Real estate construction	1,262		3		1,294		2		1,210		3		1,097		2		775		2
Lease financing	246		2		220		2		167		1		198		1		131		1
Total commercial	6,832		53		7,394		52		6,872		50		6,377		48		6,103		46
Consumer:
Real estate 1-4 family first mortgage	1,173		29		1,270		29		1,895		30		2,878		31		4,087		32
Real estate 1-4 family junior lien mortgage	672		4		815		5		1,223		6		1,566		7		2,534		8
Credit card	1,900		4		1,605		4		1,412		4		1,271		4		1,224		3
Automobile	853		6		817		6		529		6		516		6		475		6
Other revolving credit and installment	679		4		639		4		581		4		561		4		548		5
Total consumer	5,277		47		5,146		48		5,640		50		6,792		52		8,868		54
Total	$	12,109	100	%	$	12,540	100	%	$	12,512	100	%	$	13,169	100	%	$	14,971	100	%

	Sep 30, 2017				Dec 31, 2016				Dec 31, 2015				Dec 31, 2014				Dec 31, 2013
Components:
Allowance for loan losses	$	11,078			11,419				11,545				12,319				14,502
Allowance for unfunded credit commitments	1,031				1,121				967				850				469
Allowance for credit losses	$	12,109			12,540				12,512				13,169				14,971
Allowance for loan losses as a percentage of total loans	1.16			%	1.18				1.26				1.43				1.76
Allowance for loan losses as a percentage of total net charge-offs (1)	390				324				399				418				322
Allowance for credit losses as a percentage of total loans	1.27				1.30				1.37				1.53				1.82
Allowance for credit losses as a percentage of total nonaccrual loans	141				121				110				103				96



(in millions)	ABS		CMBS		RMBS	CLO/CDO
September 30, 2017
Securitization exposure:
Securities	$	559	220		744	738
Derivatives	3		(4	)	1	(2	)
Total	$	562	216		745	736
December 31, 2016
Securitization exposure:
Securities	$	801	397		911	791
Derivatives	3		4		1	(8	)
Total	$	804	401		912	783



(in millions)	Risk- based capital			Risk- weighted assets
Balance, December 31, 2016	$	3,528		44,100
Total VaR	(84		)	(1,052	)
Total Stressed VaR	(298		)	(3,722	)
Incremental Risk Charge	(183		)	(2,288	)
Securitized Products Charge	117			1,461
Standardized Specific Risk Charge	(108		)	(1,356	)
De minimis Charges	(2		)	(13	)
Balance, September 30, 2017	$	2,970		37,130

Balance, June 30, 2017	$	3,026		37,827
Total VaR	11			141
Total Stressed VaR	(62		)	(774	)
Incremental Risk Charge	4			47
Securitized Products Charge	55			689
Standardized Specific Risk Charge	(66		)	(831	)
De minimis Charges	2			31
Balance, September 30, 2017	$	2,970		37,130



	Quarter ended
(in millions)	Sep 30 2017		Jun 30, 2017	Mar 31, 2017	Dec 31, 2016	Sep 30, 2016
Balance, period end
Federal funds purchased and securities sold under agreements to repurchase	$	79,824	78,683	76,366	78,124	108,468
Commercial paper	—		11	10	120	123
Other short-term borrowings	13,987		16,662	18,495	18,537	16,077
Total	$	93,811	95,356	94,871	96,781	124,668
Average daily balance for period
Federal funds purchased and securities sold under agreements to repurchase	$	81,980	79,826	79,942	107,271	101,252
Commercial paper	4		10	51	121	137
Other short-term borrowings	17,209		15,927	18,556	17,306	14,839
Total	$	99,193	95,763	98,549	124,698	116,228
Maximum month-end balance for period
Federal funds purchased and securities sold under agreements to repurchase (1)	$	83,260	78,683	81,284	109,645	108,468
Commercial paper (2)	11		11	78	121	138
Other short-term borrowings (3)	18,301		18,281	19,439	18,537	16,077



	September 30, 2017
(in millions)	Remaining 2017		2018	2019	2020	2021	Thereafter	Total
Wells Fargo & Company (Parent Only)
Senior notes	$	3,084	8,002	6,791	13,300	18,036	71,083	120,296
Subordinated notes	—		608	—	—	—	26,380	26,988
Junior subordinated notes	—		—	—	—	—	1,658	1,658
Total long-term debt - Parent	$	3,084	8,610	6,791	13,300	18,036	99,121	148,942
Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior notes	$	4,512	31,622	18,888	5,511	10,238	240	71,011
Subordinated notes	1,026		—	—	—	—	5,406	6,432
Junior subordinated notes	—		—	—	—	—	340	340
Securitizations and other bank debt	1,732		1,803	728	649	117	3,639	8,668
Total long-term debt - Bank	$	7,270	33,425	19,616	6,160	10,355	9,625	86,451
Other consolidated subsidiaries
Senior notes	$	—	807	1,200	—	1,016	404	3,427
Junior subordinated notes	—		—	—	—	—	—	—
Securitizations and other bank debt	—		73	—	—	—	—	73
Total long-term debt - Other consolidated subsidiaries	$	—	880	1,200	—	1,016	404	3,500
Total long-term debt	$	10,354	42,915	27,607	19,460	29,407	109,150	238,893



(in millions)	Amortized Cost		Gross unrealized gains	Gross unrealized losses		Fair value
September 30, 2017
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	$	6,408	8	(66	)	6,350
Securities of U.S. states and political subdivisions	52,854		774	(854	)	52,774
Mortgage-backed securities:
Federal agencies	149,872		1,237	(928	)	150,181
Residential	5,942		455	(3	)	6,394
Commercial	4,586		74	(8	)	4,652
Total mortgage-backed securities	160,400		1,766	(939	)	161,227
Corporate debt securities	8,962		443	(65	)	9,340
Collateralized loan and other debt obligations (1)	35,298		317	(7	)	35,608
Other (2)	5,857		168	(7	)	6,018
Total debt securities	269,779		3,476	(1,938	)	271,317
Marketable equity securities:
Perpetual preferred securities	412		12	(5	)	419
Other marketable equity securities	194		282	(2	)	474
Total marketable equity securities	606		294	(7	)	893
Total available-for-sale securities	270,385		3,770	(1,945	)	272,210
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies	44,712		606	(36	)	45,282
Securities of U.S. states and political subdivisions	6,321		70	(45	)	6,346
Federal agency and other mortgage-backed securities (3)	90,071		305	(509	)	89,867
Collateralized loan obligations	661		3	—		664
Other (2)	658		1	—		659
Total held-to-maturity securities	142,423		985	(590	)	142,818
Total	$	412,808	4,755	(2,535	)	415,028
December 31, 2016
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	$	25,874	54	(109	)	25,819
Securities of U.S. states and political subdivisions	52,121		551	(1,571	)	51,101
Mortgage-backed securities:
Federal agencies	163,513		1,175	(3,458	)	161,230
Residential	7,375		449	(8	)	7,816
Commercial	8,475		101	(74	)	8,502
Total mortgage-backed securities	179,363		1,725	(3,540	)	177,548
Corporate debt securities	11,186		381	(110	)	11,457
Collateralized loan and other debt obligations (1)	34,764		287	(31	)	35,020
Other (2)	6,139		104	(35	)	6,208
Total debt securities	309,447		3,102	(5,396	)	307,153
Marketable equity securities:
Perpetual preferred securities	445		35	(11	)	469
Other marketable equity securities	261		481	—		742
Total marketable equity securities	706		516	(11	)	1,211
Total available-for-sale securities	310,153		3,618	(5,407	)	308,364
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies	44,690		466	(77	)	45,079
Securities of U.S. states and political subdivisions	6,336		17	(144	)	6,209
Federal agency and other mortgage-backed securities (3)	45,161		100	(804	)	44,457
Collateralized loan obligations	1,065		6	(1	)	1,070
Other (2)	2,331		10	(1	)	2,340
Total held-to-maturity securities	99,583		599	(1,027	)	99,155
Total	$	409,736	4,217	(6,434	)	407,519



	Investment grade				Non-investment grade
(in millions)	Gross unrealized losses			Fair value	Gross unrealized losses		Fair value
September 30, 2017
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	$	(66	)	4,550	—		—
Securities of U.S. states and political subdivisions	(822		)	25,098	(32	)	207
Mortgage-backed securities:
Federal agencies	(928		)	72,811	—		—
Residential	(1		)	134	(2	)	75
Commercial	(2		)	527	(6	)	214
Total mortgage-backed securities	(931		)	73,472	(8	)	289
Corporate debt securities	(14		)	674	(51	)	517
Collateralized loan and other debt obligations	(7		)	3,752	—		—
Other	(5		)	781	(2	)	239
Total debt securities	(1,845		)	108,327	(93	)	1,252
Perpetual preferred securities	(4		)	70	(1	)	18
Total available-for-sale securities	(1,849		)	108,397	(94	)	1,270
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies	(36		)	3,345	—		—
Securities of U.S. states and political subdivisions	(45		)	2,801	—		—
Federal agency and other mortgage-backed securities	(508		)	58,248	(1	)	92
Collateralized loan obligations	—			—	—		—
Other	—			—	—		—
Total held-to-maturity securities	(589		)	64,394	(1	)	92
Total	$	(2,438	)	172,791	(95	)	1,362
December 31, 2016
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	$	(109	)	10,816	—		—
Securities of U.S. states and political subdivisions	(1,517		)	33,271	(54	)	354
Mortgage-backed securities:
Federal agencies	(3,458		)	124,216	—		—
Residential	(1		)	176	(7	)	596
Commercial	(15		)	2,585	(59	)	564
Total mortgage-backed securities	(3,474		)	126,977	(66	)	1,160
Corporate debt securities	(31		)	1,238	(79	)	937
Collateralized loan and other debt obligations	(31		)	5,096	—		—
Other	(30		)	1,842	(5	)	391
Total debt securities	(5,192		)	179,240	(204	)	2,842
Perpetual preferred securities	(10		)	68	(1	)	18
Total available-for-sale securities	(5,202		)	179,308	(205	)	2,860
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies	(77		)	6,351	—		—
Securities of U.S. states and political subdivisions	(144		)	4,871	—		—
Federal agency and other mortgage-backed securities	(803		)	40,078	(1	)	17
Collateralized loan obligations	(1		)	266	—		—
Other	(1		)	633	—		—
Total held-to-maturity securities	(1,026		)	52,199	(1	)	17
Total	$	(6,228	)	231,507	(206	)	2,877



(in millions)	Quarter ended Sep 30, 2017			Nine months ended Sep 30, 2017		2009-2016
Balance, beginning of period	$	9,369		11,216		10,447
Change in accretable yield due to acquisitions	—			2		159
Accretion into interest income (1)	(340		)	(1,071	)	(15,577	)
Accretion into noninterest income due to sales (2)	—			(334	)	(467	)
Reclassification from nonaccretable difference for loans with improving credit-related cash flows	234			640		10,955
Changes in expected cash flows that do not affect nonaccretable difference (3)	(20		)	(1,210	)	5,699
Balance, end of period	$	9,243		9,243		11,216



	September 30, 2017 (1)				December 31, 2016
(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Total	Real estate 1-4 family first mortgage	Real estate 1-4 family junior lien mortgage	Total
By FICO:
< 600	$	4,175	37	4,212	4,292	46	4,338
600-639	2,153		21	2,174	3,001	26	3,027
640-679	2,496		27	2,523	3,972	35	4,007
680-719	2,359		32	2,391	3,170	37	3,207
720-759	1,840		23	1,863	1,767	24	1,791
760-799	957		13	970	962	15	977
800+	471		7	478	254	4	258
No FICO available	3,109		5	3,114	3,385	5	3,390
Total consumer PCI loans (adjusted unpaid principal balance)	$	17,560	165	17,725	20,803	192	20,995
Total consumer PCI loans (carrying value)	$	13,301	29	13,330	16,018	36	16,054



				Other interests held
	Residential mortgage servicing rights (1)			Interest-only strips	Consumer			Commercial (2)
($ in millions, except cost to service amounts)	Residential mortgage servicing rights (1)			Interest-only strips	Subordinated bonds			Subordinated bonds	Senior bonds
Fair value of interests held at September 30, 2017	$	13,338		23	—			561	526
Expected weighted-average life (in years)	6.1			3.8	0.0			5.7	5.2
Key economic assumptions:
Prepayment speed assumption (3)	10.8		%	17.4	—
Decrease in fair value from:
10% adverse change	$	575		1	—
25% adverse change	1,359			2	—
Discount rate assumption	6.7		%	12.7	—			3.0	2.9
Decrease in fair value from:
100 basis point increase	$	647		—	—			25	22
200 basis point increase	1,236			1	—			47	44
Cost to service assumption ($ per loan)	145
Decrease in fair value from:
10% adverse change	476
25% adverse change	1,189
Credit loss assumption					—		%	2.0	—
Decrease in fair value from:
10% higher losses					$	—		—	—
25% higher losses					—			—	—
Fair value of interests held at December 31, 2016	$	12,959		28	1			249	552
Expected weighted-average life (in years)	6.3			3.9	8.3			3.1	5.1
Key economic assumptions:
Prepayment speed assumption (3)	10.3		%	17.4	13.5
Decrease in fair value from:
10% adverse change	$	583		1	—
25% adverse change	1,385			2	—
Discount rate assumption	6.8		%	13.3	10.7			5.2	2.7
Decrease in fair value from:
100 basis point increase	$	649		1	—			7	23
200 basis point increase	1,239			1	—			12	45
Cost to service assumption ($ per loan)	155
Decrease in fair value from:
10% adverse change	515
25% adverse change	1,282
Credit loss assumption					3.0		%	4.7	—
Decrease in fair value from:
10% higher losses					$	—		—	—
25% higher losses					—			—	—



			Carrying value
(in millions)	Total VIE assets		Assets	Liabilities		Noncontrolling interests		Net assets
September 30, 2017
Secured borrowings:
Municipal tender option bond securitizations	$	670	572	(539	)	—		33
Commercial real estate loans	392		392	(388	)	—		4
Residential mortgage securitizations	119		116	(117	)	—		(1	)
Total secured borrowings	1,181		1,080	(1,044	)	—		36
Consolidated VIEs:
Commercial and industrial loans and leases	8,546		8,051	(1,425	)	(14	)	6,612
Nonconforming residential mortgage loan securitizations	2,812		2,486	(837	)	—		1,649
Commercial real estate loans	2,120		2,120	—		—		2,120
Structured asset finance	13		8	(6	)	—		2
Investment funds	135		135	(1	)	(72	)	62
Other	118		104	(1	)	(33	)	70
Total consolidated VIEs	13,744		12,904	(2,270	)	(119	)	10,515
Total secured borrowings and consolidated VIEs	$	14,925	13,984	(3,314	)	(119	)	10,551
December 31, 2016
Secured borrowings:
Municipal tender option bond securitizations	$	1,473	998	(907	)	—		91
Residential mortgage securitizations	139		138	(136	)	—		2
Total secured borrowings	1,612		1,136	(1,043	)	—		93
Consolidated VIEs:
Commercial and industrial loans and leases	8,821		8,623	(2,819	)	(14	)	5,790
Nonconforming residential mortgage loan securitizations	3,349		2,974	(1,003	)	—		1,971
Commercial real estate loans	1,516		1,516	—		—		1,516
Structured asset finance	23		13	(9	)	—		4
Investment funds	142		142	(2	)	(67	)	73
Other	166		146	(1	)	(57	)	88
Total consolidated VIEs	14,017		13,414	(3,834	)	(138	)	9,442
Total secured borrowings and consolidated VIEs	$	15,629	14,550	(4,877	)	(138	)	9,535



(in millions)	Amortized MSRs		Core deposit intangibles	Customer relationship and other intangibles (1)	Total
Nine months ended September 30, 2017 (actual)	$	198	639	235	1,072
Estimate for the remainder of 2017	$	64	212	76	352
Estimate for year ended December 31,
2018	240		769	301	1,310
2019	212		—	116	328
2020	192		—	96	288
2021	166		—	82	248
2022	146		—	68	214



	Interest rate contracts hedging:							Foreign exchange contracts hedging:				Total net gains (losses) on fair value hedges
(in millions)	Available- for-sale securities			Mortgages held for sale		Long-term debt		Available- for-sale securities		Long-term debt		Total net gains (losses) on fair value hedges
Quarter ended September 30, 2017
Net interest income (expense) recognized on derivatives	$	(110	)	(1	)	271		4		(60	)	104
Gains (losses) recorded in noninterest income
Recognized on derivatives	(6		)	—		(161	)	(87	)	996		742
Recognized on hedged item	(6		)	(2	)	173		86		(878	)	(627	)
Net recognized on fair value hedges (ineffective portion) (1)	$	(12	)	(2	)	12		(1	)	118		115
Quarter ended September 30, 2016
Net interest income (expense) recognized on derivatives	$	(117	)	(1	)	471		2		9		364
Gains (losses) recorded in noninterest income
Recognized on derivatives	21			6		(271	)	30		312		98
Recognized on hedged item	(10		)	(7	)	354		(32	)	(234	)	71
Net recognized on fair value hedges (ineffective portion) (1)	$	11		(1	)	83		(2	)	78		169
Nine months ended September 30, 2017
Net interest income (expense) recognized on derivatives (1)	$	(363	)	(5	)	1,070		10		(142	)	570
Gains (losses) recorded in noninterest income
Recognized on derivatives	(167		)	(11	)	(294	)	(216	)	2,579		1,891
Recognized on hedged item	121			4		314		216		(2,554	)	(1,899	)
Net recognized on fair value hedges (ineffective portion)	$	(46	)	(7	)	20		—		25		(8	)
Nine months ended September 30, 2016
Net interest income (expense) recognized on derivatives (1)	$	(468	)	(5	)	1,436		4		40		1,007
Gains (losses) recorded in noninterest income
Recognized on derivatives	(2,674		)	(36	)	4,815		98		1,475		3,678
Recognized on hedged item	2,699			32		(4,215	)	(106	)	(1,242	)	(2,832	)
Net recognized on fair value hedges (ineffective portion)	$	25		(4	)	600		(8	)	233		846



	Brokers				Third-party pricing services
(in millions)	Level 1		Level 2	Level 3	Level 1		Level 2		Level 3
September 30, 2017
Trading assets	$	—	—	—	674		211		—
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	—		—	—	3,400		2,950		—
Securities of U.S. states and political subdivisions	—		—	—	—		52,068		50
Mortgage-backed securities	—		37	—	—		160,628		76
Other debt securities (1)	—		684	1,146	—		46,098		22
Total debt securities	—		721	1,146	3,400		261,744		148
Total marketable equity securities	—		—	—	—		264		—
Total available-for-sale securities	—		721	1,146	3,400		262,008		148
Derivatives assets	—		—	—	19		—		—
Derivatives liabilities	—		—	—	(16	)	—		—
Other liabilities (2)	—		—	—	—		—		—
December 31, 2016
Trading assets	$	—	—	—	899		60		—
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	—		—	—	22,870		2,949		—
Securities of U.S. states and political subdivisions	—		—	—	—		49,837		208
Mortgage-backed securities	—		171	—	—		176,923		92
Other debt securities (1)	—		450	968	—		49,162		54
Total debt securities	—		621	968	22,870		278,871		354
Total marketable equity securities	—		—	—	—		358		—
Total available-for-sale securities	—		621	968	22,870		279,229		354
Derivatives assets	—		—	—	22		—		—
Derivatives liabilities	—		—	—	(109	)	(1	)	—
Other liabilities (2)	—		—	—	—		—		—



	Transfers Between Fair Value Levels
	Level 1					Level 2				Level 3 (1)
(in millions)	In			Out		In		Out		In		Out			Total
Quarter ended September 30, 2017
Trading assets	$	—		—		—		(20	)	20		—			—
Available-for-sale securities	—			—		838		—		—		(838	)		—
Mortgages held for sale	—			—		2		(55	)	55		(2	)		—
Other assets	—			—		—		—		—		—			—
Net derivative assets and liabilities (2)	—			—		6		15		(15	)	(6	)		—
Short sale liabilities	—			—		—		—		—		—			—
Total transfers	$	—		—		846		(60	)	60		(846	)		—
Quarter ended September 30, 2016
Trading assets	$	1		(44	)	44		(2	)	1		—			—
Available-for-sale securities	—			—		465		—		—		(465	)		—
Mortgages held for sale	—			—		3		(18	)	18		(3	)		—
Other assets	—			—		—		—		—		—			—
Net derivative assets and liabilities (2)	—			—		79		(14	)	14		(79	)		—
Short sale liabilities	—			1		(1	)	—		—		—			—
Total transfers	$	1		(43	)	590		(34	)	33		(547	)		—
Nine months ended September 30, 2017
Trading assets	$	—		—		1		(39	)	39		(1	)		—
Available-for-sale securities	—			—		1,334		(5	)	5		(1,334	)		—
Mortgages held for sale	—			—		8		(116	)	116		(8	)		—
Other assets	—			—		—		(1	)	1		—		��	—
Net derivative assets and liabilities (2)	—			—		89		37		(37	)	(89	)		—
Short sale liabilities	—			—		—		—		—		—			—
Total transfers	$	—		—		1,432		(124	)	124		(1,432	)		—
Nine months ended September 30, 2016
Trading assets	$	5		(48	)	59		(6	)	1		(11	)		—
Available-for-sale securities	—			—		481		(80	)	80		(481	)		—
Mortgages held for sale	—			—		12		(72	)	72		(12	)		—
Other assets	—			—		—		—		—		—			—
Net derivative assets and liabilities (2)	—			—		129		(42	)	42		(129	)		—
Short sale liabilities	(1		)	1		(1	)	1		—		—			—
Total transfers	$	4		(47	)	680		(199	)	195		(633	)		—



($ in millions)	Fair Value Level 3			Valuation Technique(s) (1)	Significant Unobservable Inputs (1)		Range of inputs				Weighted Average (2)
September 30, 2017
Residential mortgages held for sale (LOCOM)	$	1,340	(3)	Discounted cash flow	Default rate	(4)	0.1	—	10.3	%	2.6	%
					Discount rate		1.5	—	8.5		3.8
					Loss severity		0.8	—	57.6		2.6
					Prepayment rate	(5)	5.3	—	100.0		49.8
Other assets: nonmarketable equity investments	34			Discounted cash flow	Discount rate		5.0	—	10.5		9.4
Insignificant level 3 assets	122
Total	$	1,496
December 31, 2016
Residential mortgages held for sale (LOCOM)	$	1,350	(3)	Discounted cash flow	Default rate	(4)	0.2	—	4.3	%	1.9	%
					Discount rate		1.5	—	8.5		3.8
					Loss severity		0.7	—	50.1		2.4
					Prepayment rate	(5)	3.0	—	100.0		50.7
Other assets: nonmarketable equity investments	220			Discounted cash flow	Discount rate		4.7	—	9.3		7.3
Insignificant level 3 assets	199
Total	$	1,769



(in millions)	Investment securities			Derivatives and hedging activities		Defined benefit plans adjustments		Foreign currency translation adjustments		Cumulative other compre- hensive income
Quarter ended September 30, 2017
Balance, beginning of period	$	(96	)	19		(1,897	)	(136	)	(2,110	)
Net unrealized gains arising during the period	538			23		6		43		610
Amounts reclassified from accumulated other comprehensive income	(123		)	(65	)	27		—		(161	)
Net change	415			(42	)	33		43		449
Less: Other comprehensive loss from noncontrolling interests	(34		)	—		—		—		(34	)
Balance, end of period	$	353		(23	)	(1,864	)	(93	)	(1,627	)
Quarter ended September 30, 2016
Balance, beginning of period	$	2,812		2,199		(1,921	)	(142	)	2,948
Net unrealized gains (losses) arising during the period	80			(277	)	(279	)	(11	)	(487	)
Amounts reclassified from accumulated other comprehensive income	(120		)	(163	)	25		—		(258	)
Net change	(40		)	(440	)	(254	)	(11	)	(745	)
Less: Other comprehensive income from noncontrolling interests	19			—		—		—		19
Balance, end of period	$	2,753		1,759		(2,175	)	(153	)	2,184
Nine months ended September 30, 2017
Balance, beginning of period	$	(1,099	)	89		(1,943	)	(184	)	(3,137	)
Net unrealized gains arising during the period	1,750			174		2		93		2,019
Amounts reclassified from accumulated other comprehensive income	(329		)	(286	)	77		—		(538	)
Net change	1,421			(112	)	79		93		1,481
Less: Other comprehensive income (loss) from noncontrolling interests	(31		)	—		—		2		(29	)
Balance, end of period	$	353		(23	)	(1,864	)	(93	)	(1,627	)
Nine months ended September 30, 2016
Balance, beginning of period	$	1,813		620		(1,951	)	(185	)	297
Net unrealized gains (losses) arising during the period	1,540			1,627		(296	)	33		2,904
Amounts reclassified from accumulated other comprehensive income	(625		)	(488	)	72		—		(1,041	)
Net change	915			1,139		(224	)	33		1,863
Less: Other comprehensive income (loss) from noncontrolling interests	(25		)	—		—		1		(24	)
Balance, end of period	$	2,753		1,759		(2,175	)	(153	)	2,184

Quarter ended March 31,

Per common share