WELLS FARGO & COMPANY/MN0000072971false2021Q212/31NYSE5.85% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series Q6.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series R1.66661.6666The Parent fully and unconditionally guarantees the payment of principal, interest, and any other amounts that may be due on securities that its 100% owned finance subsidiary, Wells Fargo Finance LLC, may issue.0.1080.6591.5100.8990.5162.6800.6550.412.16.57.212.18.02.03.32.80.110.95.00If issued, preference shares would be limited to one vote per shareNaNNaN0000072971us-gaap:CustomerRelationshipsMember2021-06-300000072971us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2021-06-300000072971wfc:TrailingCommissionMember2020-04-012020-06-30

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


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

For the quarterly period ended ~~September~~June 30, ~~2017~~2021

Delaware

No.

41-0449260

(State of incorporation)

(I.R.S. Employer Identification No.)

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

Registrant’s telephone number, including area code: 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	New York Stock Exchange (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 O	WFC.PRO	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 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
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series AA	WFC.PRA	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series CC	WFC.PRC	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¨

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


		Shares Outstanding
		~~Shares Outstanding~~
	~~October 25, 2017~~July 19, 2021
Common stock, $1-2/3 par value		~~4,924,261,449~~4,106,410,513

FORM 10-Q
CROSS-REFERENCE INDEX
PART I Financial Information
Item 1. Financial Statements Page
Consolidated Statement of Income
73
Consolidated Statement of Comprehensive Income
74
Consolidated Balance Sheet
75
Consolidated Statement of Changes in Equity
76
Consolidated Statement of Cash Flows
78
Notes to Financial Statements
1
— Summary of Significant Accounting Policies
79
2
— Business Combinations
81
3
— Federal Funds Sold, Securities Purchased under Resale Agreements and Other Short-Term Investments
81
4
— Investment Securities
82
5
— Loans and Allowance for Credit Losses
89
6
— Other Assets
106
7
— Securitizations and Variable Interest Entities
107
8
— Mortgage Banking Activities
115
9
— Intangible Assets
118
10
— Guarantees, Pledged Assets and Collateral
120
11
— Legal Actions
124
12
— Derivatives
128
13
— Fair Values of Assets and Liabilities
135
14
— Preferred Stock
156
15
— Employee Benefits
159
16
— Earnings Per Common Share
160
17
— Other Comprehensive Income
161
18
— Operating Segments
163
19
— Regulatory and Agency Capital Requirements
164
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)
Summary Financial Data
2
Overview
3
Earnings Performance
6
Balance Sheet Analysis
20
Off-Balance Sheet Arrangements
23
Risk Management
24
Capital Management
56
Regulatory Matters
63
Critical Accounting Policies
64
Current Accounting Developments
65
Forward-Looking Statements
69
Risk Factors
71
Glossary of Acronyms
165
Item 3. Quantitative and Qualitative Disclosures About Market Risk
44
Item 4. Controls and Procedures
72

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

Signature
168

~~PART I - FINANCIAL INFORMATION~~


FORM 10-Q
CROSS-REFERENCE INDEX
PART I	Financial Information
Item 1.	Financial Statements			Page
	Consolidated Statement of Income			64
	Consolidated Statement of Comprehensive Income			65
	Consolidated Balance Sheet			66
	Consolidated Statement of Changes in Equity			67
	Consolidated Statement of Cash Flows			69
	Notes to Financial Statements
	1	—	Summary of Significant Accounting Policies	70
	2	—	Trading Activities	73
	3	—	Available-for-Sale and Held-to-Maturity Debt Securities	74
	4	—	Loans and Related Allowance for Credit Losses	80
	5	—	Leasing Activity	96
	6	—	Equity Securities	97
	7	—	Other Assets	99
	8	—	Securitizations and Variable Interest Entities	100
	9	—	Mortgage Banking Activities	105
	10	—	Intangible Assets	107
	11	��	Guarantees and Other Commitments	108
	12	—	Pledged Assets and Collateral	110
	13	—	Legal Actions	113
	14	—	Derivatives	117
	15	—	Fair Values of Assets and Liabilities	126
	16	—	Preferred Stock	133
	17	—	Revenue from Contracts with Customers	136
	18	—	Employee Benefits and Other Expenses	138
	19	—	Restructuring Charges	139
	20	—	Earnings and Dividends Per Common Share	140
	21	—	Other Comprehensive Income	141
	22	—	Operating Segments	143
	23	—	Regulatory Capital Requirements and Other Restrictions	146
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)
	Summary Financial Data			2
	Overview			3
	Earnings Performance			6
	Balance Sheet Analysis			28
	Off-Balance Sheet Arrangements			29
	Risk Management			30
	Capital Management			51
	Regulatory Matters			57
	Critical Accounting Policies			59
	Current Accounting Developments			59
	Forward-Looking Statements			60
	Risk Factors			62
	Glossary of Acronyms			148
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			45
Item 4.	Controls and Procedures			63

PART II	Other Information
Item 1.	Legal Proceedings			149
Item 1A.	Risk Factors			149
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			149
Item 6.	Exhibits			150

Signature				151


			Wells Fargo & Company			1


Summary Financial Data (1)
	Quarter ended					Jun 30, 2021 % Change from			Six months ended
($ in millions, except per share amounts)	Jun 30, 2021			Mar 31, 2021	Jun 30, 2020	Mar 31, 2021		Jun 30, 2020	Jun 30, 2021			Jun 30, 2020	% Change
Selected Income Statement Data
Total revenue	$	20,270		18,532	18,286	9	%	11	$	38,802		36,459	6	%
Noninterest expense	13,341			13,989	14,551	(5)		(8)	27,330			27,599	(1)
Pre-tax pre-provision profit (PTPP) (2)	6,929			4,543	3,735	53		86	11,472			8,860	29
Provision for credit losses	(1,260)			(1,048)	9,534	(20)		NM	(2,308)			13,539	NM
Wells Fargo net income (loss)	6,040			4,636	(3,846)	30		NM	10,676			(2,930)	NM
Wells Fargo net income (loss) applicable to common stock	5,743			4,256	(4,160)	35		NM	9,999			(3,856)	NM
Common Share Data
Diluted earnings (loss) per common share	1.38			1.02	(1.01)	35		NM	2.40			(0.94)	NM
Dividends declared per common share	0.10			0.10	0.51	—		(80)	0.20			1.02	(80)
Common shares outstanding	4,108.0			4,141.1	4,119.6	(1)		—
Average common shares outstanding	4,124.6			4,141.3	4,105.5	—		—	4,132.9			4,105.2	1
Diluted average common shares outstanding (3)	4,156.1			4,171.0	4,105.5	—		1	4,164.6			4,105.2	1
Book value per common share (4)	$	41.74		40.27	38.31	4		9
Tangible book value per common share (4)(5)	34.95			33.49	31.52	4		11
Selected Equity Data (period-end)
Total equity	193,127			188,034	178,635	3		8
Common stockholders' equity	171,453			166,748	157,835	3		9
Tangible common equity (5)	143,577			138,702	129,842	4		11
Performance Ratios
Return on average assets (ROA) (6)	1.25		%	0.97	(0.79)				1.11		%	(0.30)
Return on average equity (ROE) (7)	13.6			10.3	(10.2)				12.0			(4.7)
Return on average tangible common equity (ROTCE) (5)	16.3			12.4	(12.3)				14.4			(5.7)
Efficiency ratio (8)	66			75	80				70			76
Net interest margin on a taxable-equivalent basis	2.02			2.05	2.25				2.04			2.42
Selected Balance Sheet Data (average)
Loans	$	854,747		873,439	971,266	(2)		(12)	$	864,041		968,156	(11)
Assets	1,939,879			1,934,425	1,947,180	—		—	1,937,167			1,948,025	(1)
Deposits	1,435,824			1,393,472	1,386,656	3		4	1,414,765			1,362,309	4
Selected Balance Sheet Data (period-end)
Debt securities	533,565			505,826	472,580	5		13
Loans	852,300			861,572	935,155	(1)		(9)
Allowance for credit losses for loans	16,391			18,043	20,436	(9)		(20)
Equity securities	64,547			57,702	50,776	12		27
Assets	1,945,996			1,957,264	1,967,048	(1)		(1)
Deposits	1,440,472			1,437,119	1,410,711	—		2

Headcount (#) (period-end)	259,196			264,513	276,013	(2)		(6)
Capital and other metrics
Risk-based capital ratios and components (9):
Standardized Approach:
Common equity tier 1 (CET1)	12.07		%	11.85	10.97
Tier 1 capital	13.71			13.54	12.60
Total capital	16.84			16.75	15.88
Risk-weighted assets (RWAs) (in billions)	1,188.7			1,179.0	1,213.1	1		(2)
Advanced Approach:
Common equity tier 1 (CET1)	12.73		%	12.60	11.13
Tier 1 capital	14.47			14.39	12.79
Total capital	16.88			16.92	15.29
Risk-weighted assets (RWAs) (in billions)	$	1,126.5		1,109.4	1,195.4	2		(6)
Tier 1 leverage ratio	8.53		%	8.36	7.95
Supplementary Leverage Ratio (SLR)	7.09			7.91	7.52
Total Loss Absorbing Capacity (TLAC) Ratio (10)	25.11			25.18	25.33
Liquidity Coverage Ratio (LCR) (11)	123			127	129

NM – Not meaningful

(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period financial statement line items have been revised to conform with the current period presentation. Prior period risk-based capital and certain other regulatory related metrics were not revised. For additional information, see the “Recent Developments” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

(2)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 ability to generate capital to cover credit losses through a credit cycle.

(3)In second quarter 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.

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

(5)Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, goodwill, certain identifiable intangible assets (other than mortgage servicing rights) and goodwill and other intangibles on nonmarketable equity 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 management, investors, and others to assess the Company’s use of equity. For additional information, including a corresponding reconciliation to generally accepted accounting principles (GAAP) financial measures, see the “Capital Management – Tangible Common Equity” section in this Report.

(6)Represents Wells Fargo net income (loss) divided by average assets.

(7)Represents Wells Fargo net income (loss) applicable to common stock divided by average common stockholders’ equity.

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

(9)The information presented reflects fully phased-in CET1, tier 1 capital, and RWAs, but reflects total capital in accordance with transition requirements. For additional information, see the “Capital Management” section and Note 23 (Regulatory Capital Requirements and Other Restrictions) to Financial Statements in this Report.

(10)Represents TLAC divided by the greater of RWAs determined under the Standardized and Advanced Approaches, which is our binding TLAC ratio.

(11)Represents high-quality liquid assets divided by projected net cash outflows, as each is defined under the LCR rule.

Summary Financial Data
   % Change
Quarter ended Sep 30, 2017 from Nine months ended
($ 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

For the Period
Wells Fargo net income $ 4,596
5,810
5,644
(21 )% (19 ) $ 15,863
16,664
(5 )%
Wells Fargo net income applicable to common stock 4,185
5,404
5,243
(23 ) (20 ) 14,645
15,501
(6 )
Diluted earnings per common share 0.84
1.07
1.03
(21 ) (18 ) 2.91
3.03
(4 )
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 0.94 % 1.21
1.17
(22 ) (20 ) 1.10 % 1.19
(8 )
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 )
Return on average tangible common equity (ROTCE) (1) 10.79
14.26
13.96
(24 ) (23 ) 12.94
14.08
(8 )
Efficiency ratio (2) 65.5
61.1
59.4
7
10
63.1
58.7
7
Total revenue $ 21,926
22,169
22,328
(1 ) (2 ) $ 66,097
66,685
(1 )
Pre-tax pre-provision profit (PTPP) (3) 7,575
8,628
9,060
(12 ) (16 ) 24,413
27,523
(11 )
Dividends declared per common share 0.390
0.380
0.380
3
3
1.150
1.135
1
Average common shares outstanding 4,948.6
4,989.9
5,043.4
(1 ) (2 ) 4,982.1
5,061.9
(2 )
Diluted average common shares outstanding 4,996.8
5,037.7
5,094.6
(1 ) (2 ) 5,035.4
5,118.2
(2 )
Average loans $ 952,343
956,879
957,484
—
(1 ) $ 957,581
945,197
1
Average assets 1,938,523
1,927,079
1,914,586
1
1
1,932,242
1,865,694
4
Average total deposits 1,306,356
1,301,195
1,261,527
—
4
1,302,273
1,239,287
5
Average consumer and small business banking deposits (4) 755,094
760,149
739,066
(1 ) 2
758,443
726,798
4
Net interest margin 2.87 % 2.90
2.82
(1 ) 2
2.88 % 2.86
1
At Period End
Investment securities $ 414,633
409,594
390,832
1
6
$ 414,633
390,832
6
Loans 951,873
957,423
961,326
(1 ) (1 ) 951,873
961,326
(1 )
Allowance for loan losses 11,078
11,073
11,583
—
(4 ) 11,078
11,583
(4 )
Goodwill 26,581
26,573
26,688
—
—
26,581
26,688
—
Assets 1,934,939
1,930,871
1,942,124
—
—
1,934,939
1,942,124
—
Deposits 1,306,706
1,305,830
1,275,894
—
2
1,306,706
1,275,894
2
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
Total equity 206,824
206,145
203,958
—
1
206,824
203,958
1
Tangible common equity (1) 152,901
152,064
149,829
1
2
152,901
149,829
2
Capital ratios (5)(6):
Total equity to assets 10.69 % 10.68
10.50
—
2
10.69 % 10.50
2
Risk-based capital:



Common Equity Tier 1 12.10
11.87
10.93
2
11
12.10
10.93
11
Tier 1 capital 13.95
13.68
12.60
2
11
13.95
12.60
11
Total capital 17.21
16.91
15.40
2
12
17.21
15.40
12
Tier 1 leverage 9.27
9.28
9.11
—
2
9.27
9.11
2
Common shares outstanding 4,927.9
4,966.8
5,023.9
(1 ) (2 ) 4,927.9
5,023.9
(2 )
Book value per common share (7) $ 36.96
36.53
35.81
1
3
$ 36.96
35.81
3
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
Team members (active, full-time equivalent) 268,000
270,600
268,800
(1 ) —
268,000
268,800
—

~~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~~2020 (2020 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.

Wells Fargo & Company is a ~~diversified, community-based~~leading financial services company ~~with $1.93~~that has approximately $1.9 trillion in ~~assets. Founded~~assets, proudly serves one in ~~1852~~three U.S. households and ~~headquartered~~more than 10% of small businesses in ~~San Francisco, we~~the U.S., and is the leading middle market banking provider in the U.S. We provide a diversified set of banking, ~~insurance, investments,~~investment and mortgage products and services, as well as consumer and commercial finance, through ~~more than 8,400 locations, 13,000 ATMs, digital (online, mobile~~our four reportable operating segments: Consumer Banking and ~~social),~~Lending, Commercial Banking, Corporate and ~~contact centers (phone, email~~Investment Banking, and ~~correspondence),~~Wealth and we have offices in 42 countries and territories to support customers who conduct business in the global economy. With approximately 268,000 active, full-time equivalent team members, we serve one in three households in the United States andInvestment Management. Wells Fargo ranked No. 2537 on Fortune’s ~~2017~~2021 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~~June 30, ~~2017.~~2021.

~~We use our~~ ~~Vision and Values~~ Wells Fargo’s top priority remains meeting its regulatory requirements to ~~guide us toward growth and success. Our vision is to satisfy our customers’ financial needs, help them succeed financially, be recognized as~~build the premier financial services company in our markets, and be one of America’s great companies. We aspire to create deep and enduring relationships with our customers by providing them with an exceptional experience and by understanding their needs and delivering the most relevant products, services, advice, and guidance.

~~We have five primary values, which are based on our vision and provide the~~right foundation for ~~everything we do. First, we value~~all that lies ahead. The Company is subject to a number of consent orders and ~~support our people as a competitive advantage~~other regulatory actions, which may require the Company, among other things, to undertake certain changes to its business, operations, products 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~~services, and risk management ~~priorities,~~practices. Addressing these regulatory actions is expected to take multiple years, and we ~~announced six long-term goals for~~may experience issues or delays along the way in satisfying their requirements. Issues or delays with one regulatory action could affect our progress on others, and failure to satisfy the requirements of a regulatory action on a timely basis could result in additional penalties, enforcement actions, and other negative consequences. While we still have significant work to do, the Company is committed to devoting the resources necessary to operate with strong business practices and controls, maintain the highest level of integrity, and have an appropriate culture in ~~March 2017, which entail becoming~~place.

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

On February 2, 2018, the ~~leader in~~Company entered into a consent order with 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 gettingBoard of Governors of the ~~work done.~~

~~Innovation – create new kinds of lasting value for our customers and businesses~~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 we received~~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. 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, to the extent the Company chooses to exclude these exposures from the asset cap, certain fees and other ~~stakeholders, include separating~~economic benefits received by the ~~roles~~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. As of ~~Chairman~~June 30, 2021, the Company had not excluded these exposures from the asset cap. 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. The Company continues to work to address the provisions of the consent orders. The Company has not yet satisfied certain aspects of the consent orders, and as a result, we believe regulators may impose additional penalties or take other enforcement actions.


			Wells Fargo & Company			3

Overview (continued)

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,~~employees, 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~~2020 Form 10-K and Note 1113 (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 probable and 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 additional 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~~2020 Form 10-K and Note 1113 (Legal Actions) to Financial Statements in this Report.

~~This~~

Recent Developments

Change in Accounting Policies

In second quarter 2021, we retroactively changed the accounting for certain tax-advantaged investments to better align the financial statement presentation with the economic impact of these investments.

Specifically, we elected to change our accounting for low-income housing tax credit investments from the equity method of accounting to the proportional amortization method. Under the proportional amortization method, the amortization of the investments and the related tax impacts are recognized in income tax expense. Previously, we recognized the amortization of the investments in other noninterest income and the related tax impacts were recognized in income tax expense.

Also, we elected to change the presentation of investment tax credits related to solar energy investments. We reclassified the investment tax credits on our consolidated balance sheet from accrued expenses and other liabilities to a reduction of the carrying value of the investment balances. We also reclassified the investment tax credits from income tax expense to interest income for solar energy leases or noninterest income for solar energy equity investments.

These changes had a nominal impact on net income and retained earnings on an annual basis; however, our quarterly results were affected in both the second and third quarters of

2020 due to the impact of these changes on the estimated annual effective income tax rate applied to each quarter. These changes also improved our efficiency ratio and generally increased our effective income tax rate from what was previously reported.

Prior period financial statement line items have been revised to conform with the current period presentation. Prior period risk-based capital and certain other regulatory related metrics were not revised. For additional information, including the financial statement line items impacted by these changes, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

COVID-19 Pandemic

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 essential services to the public. We have taken comprehensive steps to help customers, employees and communities.

We have strong levels of capital and liquidity, and we remain focused on delivering for our customers and communities to get through these unprecedented times.

PAYCHECK PROTECTION PROGRAM The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) created funding for the Small Business Administration’s (SBA) loan program providing forgiveness of up to the full principal amount of qualifying loans guaranteed under a program called the Paycheck Protection Program (PPP). Since its inception, we have funded approximately 282,000 loans under the PPP totaling approximately $14.0 billion, and more than $5.8 billion of principal forgiveness has been provided on qualifying PPP loans. We deferred approximately $420 million of SBA processing fees in 2020 that will be recognized as interest income over the terms of the loans. We voluntarily committed to donate all of the gross processing fees received from PPP loans funded in 2020. Through June 30, 2021, we donated approximately $260 million of these processing fees. We funded approximately $3.5 billion of PPP loans in the first half of 2021 and deferred approximately $270 million of related SBA processing fees that will be recognized as interest income over the terms of the loans. We have committed to donate any net profits from processing fees received from PPP loans funded in 2021. For additional information on the CARES Act and the PPP, see the “Overview – Recent Developments – COVID-19 Pandemic” section in our 2020 Form 10-K.

LIBOR Transition

The London Interbank Offered Rate (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. On March 5, 2021, the Financial Conduct Authority and the administrator of LIBOR announced that LIBOR will no longer be published on a representative basis after December 31, 2021, with the exception of the most commonly used tenors of U.S. dollar (USD) LIBOR which will no longer be published on a representative basis after June 30, 2023. Federal banking agencies have issued guidance strongly encouraging banking organizations to cease using USD LIBOR as a reference rate in new contracts as soon as practicable and in any event by December 31, 2021.

For information on the amount of our LIBOR-linked assets and liabilities, as well as initiatives created by our LIBOR Transition Office in an effort to ~~identify similar instances~~mitigate the risks associated with


4			Wells Fargo & Company

a transition away from LIBOR, see the “Overview – Recent Developments – LIBOR Transition” section in our 2020 Form

10-K. For information regarding the risks and potential impact of LIBOR or any other referenced financial metric being significantly changed, replaced or discontinued, see the “Risk Factors” section in our 2020 Form 10-K.

Capital Actions and Restrictions

In June 2021, the Company completed the 2021 Comprehensive Capital Analysis and Review (CCAR) stress test process. We expect our stress capital buffer (SCB) for the period October 1, 2021, through September 30, 2022, to be 3.10%. The FRB has indicated it will publish our final SCB by August 31, 2021.

On July 27, 2021, the Board approved an increase to the Company's third quarter 2021 common stock dividend to $0.20 per share. Additionally, our capital plan includes gross common share repurchases of approximately $18 billion for the four-quarter period beginning third quarter 2021 through second quarter 2022.

For additional information about capital planning, see the “Capital Management – Capital Planning and Stress Testing” section in this Report.

In June 2021, we redeemed the remaining $350 million of our Non-Cumulative Perpetual Class A Preferred Stock, Series N. In July 2021, we issued $1.25 billion of our Preferred Stock, Series DD.

Business and Portfolio Divestitures

On February 23, 2021, we announced an agreement to sell Wells Fargo Asset Management for a purchase price of $2.1 billion. As part of the transaction, we will own a 9.9% equity interest and continue to serve as a client and distribution partner. On March 23, 2021, we announced an agreement to sell our Corporate Trust Services business for a purchase price of $750 million. Both transactions are expected to close in the second half of 2021, subject to customary closing conditions.

In the first half of 2021, we completed substantially all of the previously announced sale of our student loan portfolio, which ~~customers may have experienced harm is ongoing,~~resulted in gains in other noninterest income of $208 million and ~~it is possible that we may identify~~$147 million in first and second quarter 2021, respectively, and goodwill write-downs in other ~~areas~~noninterest expense of ~~potential concern.~~$104 million and $79 million in first and second quarter 2021, respectively.

Financial Performance

~~Wells Fargo~~


Consolidated Financial Highlights
	Quarter ended Jun 30,						Six months ended Jun 30,
($ in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Selected income statement data
Net interest income	$	8,800	9,892	(1,092)	(11)	%	$	17,608	21,222	(3,614)	(17)	%
Noninterest income	11,470		8,394	3,076	37		21,194		15,237	5,957	39
Total revenue	20,270		18,286	1,984	11		38,802		36,459	2,343	6
Net charge-offs	379		1,114	(735)	(66)		902		2,055	(1,153)	(56)
Change in the allowance for credit losses	(1,639)		8,420	(10,059)	NM		(3,210)		11,484	(14,694)	NM
Provision for credit losses	(1,260)		9,534	(10,794)	NM		(2,308)		13,539	(15,847)	NM
Noninterest expense	13,341		14,551	(1,210)	(8)		27,330		27,599	(269)	(1)
Income tax expense	1,445		(2,001)	3,446	NM		2,346		(1,648)	3,994	NM
Wells Fargo net income	6,040		(3,846)	9,886	NM		10,676		(2,930)	13,606	NM
Wells Fargo net income applicable to common stock	5,743		(4,160)	9,903	NM		9,999		(3,856)	13,855	NM

NM – Not meaningful

In second quarter 2021, we generated $6.0 billion of net income ~~was $4.6 billion in third quarter 2017 with~~and diluted earnings per common share (EPS) of ~~$0.84,~~$1.38, compared with ~~$5.6~~a net loss of $3.8 billion and ~~$1.03, respectively,~~diluted loss per common share of $1.01 in the same period a year ago. ~~Third~~Financial performance for second quarter ~~2017 results~~2021, compared with the same period a year ago, included the ~~impact~~following:

•total revenue increased due to higher net gains from equity securities and mortgage banking income, partially offset by lower net interest income;

•provision for credit losses decreased reflecting lower net charge-offs and improvements in the economic environment;

•noninterest expense decreased due to lower operating losses and lower professional and outside services expense;

•average loans decreased due to paydowns exceeding originations in the residential mortgage and credit card portfolios, weak demand for commercial loans, and the reclassification of ~~a $1.0~~student loans, included in other consumer loans, to loans held for sale after the announced sale of the portfolio in fourth quarter 2020; and

•average deposits increased driven by growth in consumer deposits in the Consumer Banking and Lending and Wealth

and Investment Management (WIM) operating segments due to higher levels of liquidity and savings for consumer customers reflecting government stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the COVID-19 pandemic, partially offset by actions taken to manage under the asset cap which reduced deposits in the Corporate and Investment Banking operating segment and Corporate.

In the first half of 2021, we generated $10.7 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 results in third quarter 2017 included:~~

~~revenue was~~ ~~$21.9 billion, down~~ ~~$402 million~~of net income and diluted EPS of $2.40, compared with a net loss of $2.9 billion and diluted loss per common share of $0.94 in the same period a year ago. Financial performance for the first half of 2021, compared with the same period a year ago, ~~with~~included the following:

•total revenue increased due to higher net gains from equity securities and mortgage banking income, partially offset by lower net interest ~~income up 4% from a year ago;~~income;

•provision for credit losses decreased reflecting lower net charge-offs due to better portfolio credit quality driven by improvements in the economic environment;


			Wells Fargo & Company			5

Overview (continued)

•noninterest expense decreased due to lower operating losses and lower professional and outside services expense, partially offset by higher personnel expense;

•average loans ~~were $952.3 billion, down $5.1 billion, or 1%, from a year ago;~~decreased due to paydowns exceeding originations in the residential mortgage and credit card portfolios, weak demand for commercial loans, and the reclassification of student loans, included in other consumer loans, to loans held for sale after the announced sale of the portfolio in fourth quarter 2020; and

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

increased driven by growth in consumer deposits in the Consumer Banking and Lending and 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~~operating segments due 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 quarter 2017 with high~~higher levels of liquidity and ~~capital.~~savings for consumer customers reflecting government stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the COVID-19 pandemic, partially offset by actions taken to manage under the asset cap which reduced deposits in the Corporate and Investment Banking operating segment and Corporate.

Capital and Liquidity

We maintained a strong capital position in the first half of 2021, with total equity of $193.1 billion at June 30, 2021, compared with $185.7 billion at December 31, 2020. Our liquidity and regulatory capital ratios remained strong at June 30, 2021, including:

•our liquidity coverage ratio (LCR) was 123%, which continued to exceed the regulatory minimum of 100%;

•our Common Equity Tier 1 (CET1) ratio was 12.07%, which continued to exceed both the regulatory requirement of 9% and our current internal target; and

•our eligible external total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets ~~were $1.93 trillion~~was 25.11%, compared with the regulatory requirement of 21.50%.

See the “Capital Management” and the “Risk Management – Asset/Liability Management – Liquidity Risk and Funding” sections in this Report for additional information regarding our capital and liquidity, including the calculation of our regulatory capital and liquidity amounts.

Credit Quality

Credit quality reflected the improving economic environment.

•The allowance for credit losses (ACL) for loans of $16.4 billion at ~~September~~June 30, ~~2017. Cash and other short-term investments increased $5.5~~2021, decreased $3.3 billion from December 31, ~~2016, reflecting lower loan balances and growth~~2020.

•Our provision for credit losses for loans was $(2.4) billion in ~~deposits. Investment securities reached~~the first half of 2021, down from $13.4 billion in the same period a ~~record $414.6 billion, with approximately $31 billion of gross purchases during third quarter 2017, partially offset by runoff~~year ago. The decrease in the ACL for loans and the ~~sale~~provision for credit losses in the first half of approximately $13 billion of lower-yielding short-duration securities. Loans were down $15.7 billion, or 2%, from December 31, 2016, largely due to a decline in junior lien mortgage and automobile loans.

Average deposits in third quarter 2017 reached a record $1.31 trillion, up $44.8 billion, or 4%, from third quarter 2016. Our average deposit cost in third quarter 2017 was 26 basis points, up 15 basis points from2021, compared with the same period a year ago, ~~primarily driven by an increase~~reflected improvements in ~~commercial~~current and ~~WIM deposit rates.~~forecasted economic conditions.

•The allowance coverage for total loans was 1.92% at June 30, 2021, compared with 2.22% at December 31, 2020.

~~Credit Quality~~

~~Solid overall credit results continued in third quarter 2017 as losses remained low and we continued to originate high quality loans, reflecting our long-term risk focus. Net~~•Commercial portfolio net loan charge-offs were ~~$717~~$80 million, or 0.30% (annualized) of average loans, in third quarter 2017, compared with $805 million a year ago (0.33%). The decrease in net charge-offs in third quarter 2017, compared with a year ago, was driven by lower losses in the commercial and industrial loan portfolio, including in the oil and gas portfolio. Our total oil and gas loan exposure, which includes unfunded commitments and loans outstanding, was down 8% from a year ago.

~~Our commercial portfolio net charge-offs were $113 million, or 9~~7 basis points of average commercial loans, in ~~third~~second quarter ~~2017,~~2021, compared with net loan charge-offs of ~~$215~~$602 million, or 1744 basis points, in the same period a year ~~ago. Net consumer credit~~ago, predominantly driven by lower losses ~~increased to 53~~in our commercial and industrial portfolio primarily within the oil, gas and pipelines industry, and in the real estate mortgage portfolio.

•Consumer portfolio net loan charge-offs were $301 million, or 32 basis points ~~(annualized)~~ of average consumer loans, in ~~third~~second quarter ~~2017 from 51~~2021, compared with net loan charge-offs of $511 million, or 48 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~~same period a year ago, ~~reflecting~~driven by lower losses in all consumer loan portfolios as a result of payment deferral activities, government stimulus programs instituted in response to the ~~benefit~~COVID-19 pandemic, and the sale of ~~the continued improvement in the housing market and~~a portion of our ~~continued focus on originating high quality loans. Approximately 77%~~student loan portfolio.

•Nonperforming assets (NPAs) of ~~the consumer first mortgage portfolio outstanding~~$7.5 billion at ~~September~~June 30, ~~2017, was originated after 2008, when more stringent underwriting standards were implemented.~~

~~The allowance for credit losses as of September 30, 2017,~~2021, decreased ~~$585 million compared with a year ago and decreased $431 million~~$1.4 billion, or 16%, from December 31, ~~2016. The allowance for credit losses at September 30, 2017 included $450 million for coverage of~~2020, predominantly driven by decreases in our ~~preliminary estimate of potential hurricane-related losses from Hurricanes Harvey, Irma~~commercial and Maria. The allowance coverage for total loans was 1.27% at September 30, 2017, compared with 1.32% a year ago and 1.30% at December 31, 2016. The allowance covered 4.3 times annualized third quarter net charge-offs, compared with 4.0 times a year ago. Future allowance levels will be based on a variety of factors, including loan growth,industrial portfolio ~~performance and general economic conditions. Our provision for loan losses was $717 million in third quarter 2017, down from $805 million a year ago, primarily~~ reflecting ~~improvement~~improvements in the ~~oil~~economic environment, and ~~gas portfolio.~~

~~Nonperforming assets decreased $512 million, or 5%, from June 30, 2017, the sixth consecutive quarter of~~ decreases ~~with improvement across~~in our ~~consumer~~residential mortgage portfolios reflecting loan sales and ~~commercial portfolios and lower foreclosed assets. Nonperforming assets were only 0.98%~~payment deferral activities. NPAs represented 0.88% of total loans the lowest level since the merger with Wachovia in 2008. Nonaccrual loans decreased $437 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.at June 30, 2021.

~~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 the first quarter our 2017 Capital Plan was effective and we returned $4.0 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. We continued to reduce our common shares outstanding through the repurchase of 49.0 million common shares in the quarter. We also entered into a $1 billion forward repurchase contract with an unrelated third party in October 2017 that is expected to settle in first quarter 2018 for approximately 19 million shares. We expect to reduce our common shares outstanding through share repurchases throughout the remainder of 2017.

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% at September 30, 2017, well above our internal target level of 10%. The growth in our CET1 ratio reflected lower risk-weighted assets (RWA), driven by lower loan balances and commitments, as well as improved RWA efficiency. 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~~second quarter ~~2017~~2021 was ~~$4.6~~$6.0 billion ($~~0.84~~1.38 diluted ~~earnings~~EPS), compared with a net loss of $3.8 billion ($1.01 diluted loss per common share)~~, compared with $5.6 billion ($1.03 diluted per share) for third quarter 2016. Net income for the first nine months of 2017 was $15.9 billion ($2.91), compared with $16.7 billion ($3.03) for~~ in the same period a year ago. ~~Our financial performance~~Net income increased in ~~the first nine months of 2017,~~second quarter 2021, compared with the same period a year ago, ~~benefited from~~predominantly due to a ~~$1.9~~$10.8 billion decrease in provision for credit losses, a $3.1 billion increase in ~~net interest~~noninterest income, and a $1.2 billion decrease in noninterest expense, partially offset by a $3.4 billion increase in income tax expense and a $1.1 billion decrease in ~~our~~net interest income.

Net income for the first half of 2021 was $10.7 billion ($2.40 diluted EPS), compared with a net loss of $2.9 billion ($0.94 diluted loss per common share) in the same period a year ago. Net income increased in the first half of 2021, compared with the same period a year ago, predominantly due to a $15.8 billion decrease in provision for credit losses ~~offset by a $2.5 billion decrease in noninterest income~~ and a ~~$2.5~~$6.0 billion increase in noninterest 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 billion in third quarter 2017, compared with $22.3 billion in third quarter 2016. Revenue for the first nine months of 2017 was $66.1 billion, compared with $66.7 billion for the first nine months of 2016. The decrease in revenue for the third quarter and first nine months of 2017, compared with the same periods in 2016, was due to a decline in noninterest income, partially offset by ana $4.0 billion increase in income tax expense and a $3.6 billion decrease in net interest ~~income from loans and investment securities.~~

income.

~~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 net interest margin decreased in both the second quarter and first half of 2021, compared with the same periods a year ago, due to the impact of lower interest rates and lower loan balances reflecting soft demand and elevated prepayments, as well as higher mortgage-backed securities premium amortization, partially offset by a reduction in long-term debt. The first half of 2021 was also impacted by unfavorable hedge ineffectiveness accounting results.

Table 1 presents the individual components of net interest income and the net interest margin. Net interest income and 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 ended June 30, 2021 and 2020.

~~While the Company believes that it has the ability to increase~~For additional information about net interest income over time, 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 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 and collection of interest on nonaccrual loans, can vary from period to period. Net interest income and net interest margin, ~~growth has been challenged during~~see the ~~prolonged low interest rate environment as higher yielding loans and securities have run off and been replaced with lower yielding assets.~~

“Earnings Performance – Net ~~interest income on a taxable-equivalent basis was $12.8 billion and $38.2 billion~~Interest Income” section in the third quarter and first nine months of 2017, respectively, compared with $12.3 billion and $36.3 billion for the same periods a year ago. The net interest margin was 2.87% and 2.88% for the third quarter and first nine months of 2017, respectively, up from 2.82% and 2.86% for the same periods 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, 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.our 2020 Form 10-K.

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 trillion in the third quarter and first nine months of 2017, increased compared with $1.26 trillion and $1.24 trillion for the same periods a year ago, and represented 137% of average loans in third quarter 2017 (136% in the first nine months of 2017), compared with 132% in third quarter 2016 (131% in the first nine months of 2016). Average deposits were 74% and 73% of average earning assets in the third quarter and first nine months of 2017, respectively, compared with 73% in both the third quarter and first nine months of 2016.


6			Wells Fargo & Company

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


	Quarter ended June 30,
	2021						2020
(in millions)	Average balance		Interest income/ expense		Interest rates		Average balance		Interest income/ expense		Interest rates
Assets
Interest-earning deposits with banks	$	255,237	70		0.11	%	$	176,327	51		0.12	%
Federal funds sold and securities purchased under resale agreements	72,513		3		0.02		76,384		2		0.01
Debt securities:
Trading debt securities	84,612		501		2.37		96,049		663		2.76
Available-for-sale debt securities	192,418		686		1.43		232,444		1,416		2.44
Held-to-maturity debt securities	237,812		1,106		1.86		166,804		968		2.33
Total debt securities	514,842		2,293		1.78		495,297		3,047		2.46
Loans held for sale (2)	27,173		193		2.85		27,610		237		3.45
Loans:
Commercial loans:
Commercial and industrial – U.S.	248,153		1,627		2.63		310,104		1,990		2.58
Commercial and industrial – Non-U.S.	70,764		374		2.12		72,241		445		2.48
Real estate mortgage	120,526		823		2.74		123,525		930		3.03
Real estate construction	22,015		169		3.08		21,361		179		3.37
Lease financing	15,565		174		4.49		18,087		210		4.62
Total commercial loans	477,023		3,167		2.66		545,318		3,754		2.77
Consumer loans:
Residential mortgage – first lien	247,815		1,957		3.16		280,878		2,414		3.44
Residential mortgage – junior lien	20,457		211		4.13		27,700		292		4.24
Credit card	34,211		979		11.48		36,539		979		10.78
Auto	50,014		563		4.52		48,441		601		4.99
Other consumer	25,227		233		3.70		32,390		440		5.45
Total consumer loans	377,724		3,943		4.18		425,948		4,726		4.45
Total loans (2)	854,747		7,110		3.33		971,266		8,480		3.50
Equity securities	29,773		133		1.77		27,417		117		1.70
Other	9,103		1		0.04		7,715		—		(0.02)
Total interest-earning assets	1,763,388		9,803		2.23		1,782,016		11,934		2.69
Cash and due from banks	24,336		—				21,227		—
Goodwill	26,213		—				26,384		—
Other (3)	125,942		—				117,553		—
Total noninterest-earning assets	176,491		—				165,164		—
Total assets	$	1,939,879	9,803				1,947,180		11,934
Liabilities
Deposits:
Demand deposits	$	452,184	31		0.03	%	$	53,592	9		0.07	%
Savings deposits	422,650		32		0.03		799,949		311		0.16
Time deposits	37,116		29		0.32		86,971		224		1.04
Deposits in non-U.S offices	29,796		—		—		37,682		41		0.44
Total interest-bearing deposits	941,746		92		0.04		978,194		585		0.24
Short-term borrowings	48,505		(11)		(0.09)		63,535		(17)		(0.10)
Long-term debt	181,101		712		1.57		232,395		1,237		2.13
Other liabilities	27,718		101		1.47		29,947		116		1.53
Total interest-bearing liabilities	1,199,070		894		0.30		1,304,071		1,921		0.59
Noninterest-bearing demand deposits	494,078		—				408,462		—
Other noninterest-bearing liabilities	55,763		—				50,575		—
Total noninterest-bearing liabilities	549,841		—				459,037		—
Total liabilities	1,748,911		894				1,763,108		1,921
Total equity (3)	190,968		—				184,072		—
Total liabilities and equity	$	1,939,879	894				1,947,180		1,921

Interest rate spread on a taxable-equivalent basis (3)					1.93	%					2.10	%
Net interest income and net interest margin on a taxable-equivalent basis (3)			$	8,909	2.02	%			$	10,013	2.25	%

(continued on following page)

   Quarter 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 $ 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:
Securities of U.S. Treasury and federal agencies 14,529
1.31
48
25,817
1.52
99
Securities of U.S. states and political subdivisions 52,500
4.16
546
55,170
4.28
590
Mortgage-backed securities:
Federal agencies 139,781
2.58
903
105,780
2.39
631
Residential and commercial 11,013
5.43
149
18,080
5.54
250
Total mortgage-backed securities 150,794
2.79
1,052
123,860
2.85
881
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:
Securities of U.S. Treasury and federal agencies 44,708
2.18
246
44,678
2.19
246
Securities of U.S. states and political subdivisions 6,266
5.44
85
2,507
5.24
33
Federal agency and other mortgage-backed securities 88,272
2.26
498
47,971
1.97
236
Other debt securities 1,488
3.05
12
3,909
1.98
19
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
Loans:
Commercial:
Commercial and industrial – U.S. 270,091
3.81
2,590
271,226
3.48
2,369
Commercial and industrial – Non U.S. 57,738
2.90
421
51,261
2.40
309
Real estate mortgage 129,087
3.83
1,245
128,809
3.48
1,127
Real estate construction 24,981
4.18
263
23,212
3.50
205
Lease financing 19,155
4.59
220
18,896
4.70
223
Total commercial 501,052
3.76
4,739
493,404
3.42
4,233
Consumer:
Real estate 1-4 family first mortgage 278,371
4.03
2,809
278,509
3.97
2,764
Real estate 1-4 family junior lien mortgage 41,916
4.95
521
48,927
4.37
537
Credit card 35,657
12.41
1,114
34,578
11.60
1,008
Automobile 56,746
5.34
764
62,461
5.60
880
Other revolving credit and installment 38,601
6.31
615
39,605
5.92
590
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
Other 15,007
1.69
65
6,488
2.30
36
Total earning assets $ 1,776,782
3.45 % $ 15,390
1,734,508
3.17 % $ 13,798
Funding sources
Deposits:
Interest-bearing checking $ 48,278
0.57 % $ 69
44,056
0.15 % $ 17
Market rate and other savings 681,187
0.17
293
667,185
0.07
110
Savings certificates 21,806
0.31
16
25,185
0.30
19
Other time deposits 66,046
1.51
252
54,921
0.93
128
Deposits in foreign offices 124,746
0.76
240
107,072
0.30
82
Total interest-bearing deposits 942,063
0.37
870
898,419
0.16
356
Short-term borrowings 99,193
0.91
226
116,228
0.29
86
Long-term debt 243,137
2.26
1,377
252,400
1.59
1,006
Other liabilities 24,851
1.74
109
16,771
2.11
88
Total interest-bearing liabilities 1,309,244
0.79
2,582
1,283,818
0.48
1,536
Portion of noninterest-bearing funding sources 467,538
—
—
450,690
—
—
Total funding sources $ 1,776,782
0.58
2,582
1,734,508
0.35
1,536
Net interest margin and net interest income on a taxable-equivalent basis (5) 2.87 % $ 12,808
2.82 % $ 12,262
Noninterest-earning assets
Cash and due from banks $ 18,456
      18,682

Goodwill 26,600
      26,979

Other 116,685
134,417

Total noninterest-earning assets $ 161,741
180,078

Noninterest-bearing funding sources
Deposits $ 364,293
363,108

Other liabilities 57,052
63,777

Total equity 207,934
203,883

Noninterest-bearing funding sources used to fund earning assets (467,538 ) (450,690 )
Net noninterest-bearing funding sources $ 161,741
180,078

Total assets $ 1,938,523
1,914,586


~~(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.~~ Wells Fargo & Company			7

Earnings Performance (continued)

(continued from previous page)



	Six months ended June 30,
					2021						2020
(in millions)	Average balance		Interest income/ expense		Interest rates		Average balance		Interest income/ expense		Interest rates
Assets
Interest-earning deposits with banks	$	239,425	127		0.11	%	$	152,924	432		0.57	%
Federal funds sold and securities purchased under resale agreements	72,332		10		0.03		91,969		382		0.84
Debt securities:
Trading debt securities	85,990		1,035		2.41		98,556		1,433		2.91
Available-for-sale debt securities	199,642		1,527		1.53		242,501		3,226		2.66
Held-to-maturity debt securities	227,377		2,133		1.88		162,348		1,977		2.44
Total debt securities	513,009		4,695		1.83		503,405		6,636		2.64
Loans held for sale (2)	30,843		524		3.41		24,728		446		3.62
Loans:
Commercial loans:
Commercial and industrial – U.S.	250,510		3,223		2.59		299,303		4,536		3.05
Commercial and industrial – Non-U.S.	68,106		712		2.11		71,451		1,001		2.82
Real estate mortgage	120,629		1,635		2.73		122,656		2,117		3.47
Real estate construction	21,886		335		3.09		20,819		408		3.94
Lease financing	15,681		358		4.55		18,687		443		4.74
Total commercial loans	476,812		6,263		2.64		532,916		8,505		3.21
Consumer loans:
Residential mortgage – first lien	256,982		4,025		3.13		287,217		5,064		3.53
Residential mortgage – junior lien	21,384		439		4.13		28,303		662		4.70
Credit card	34,705		2,012		11.69		38,147		2,186		11.53
Auto	49,351		1,123		4.59		48,350		1,197		4.98
Other consumer	24,807		466		3.79		33,223		974		5.89
Total consumer loans	387,229		8,065		4.18		435,240		10,083		4.65
Total loans (2)	864,041		14,328		3.33		968,156		18,588		3.85
Equity securities	29,604		270		1.82		32,475		325		2.00
Other	9,299		2		0.04		7,573		14		0.37
Total interest-earning assets	1,758,553		19,956		2.28		1,781,230		26,823		3.02
Cash and due from banks	24,466		—				20,899		—
Goodwill	26,297		—				26,386		—
Other(3)	127,851		—				119,510		—
Total noninterest-earning assets	178,614		—				166,795		—
Total assets	$	1,937,167	19,956				1,948,025		26,823
Liabilities
Deposits:
Demand deposits	$	448,495	64		0.03	%	$	58,339	144		0.50	%
Savings deposits	417,153		64		0.03		781,044		1,289		0.33
Time deposits	40,552		76		0.38		99,524		690		1.39
Deposits in non-U.S. offices	30,260		—		—		45,508		204		0.90
Total interest-bearing deposits	936,460		204		0.04		984,415		2,327		0.48
Short-term borrowings	53,764		(20)		(0.08)		83,256		275		0.66
Long-term debt	189,673		1,738		1.83		230,699		2,477		2.15
Other liabilities	28,294		210		1.49		30,073		258		1.71
Total interest-bearing liabilities	1,208,191		2,132		0.35		1,328,443		5,337		0.81
Noninterest-bearing demand deposits	478,305		—				377,894		—
Other noninterest-bearing liabilities	60,645		—				55,706		—
Total noninterest-bearing liabilities	538,950		—				433,600		—
Total liabilities	1,747,141		2,132				1,762,043		5,337
Total equity (3)	190,026		—				185,982		—
Total liabilities and equity	$	1,937,167	2,132				1,948,025		5,337

Interest rate spread on a taxable-equivalent basis (3)					1.93	%					2.21	%
Net interest margin and net interest income on a taxable-equivalent basis (3)			$	17,824	2.04	%			$	21,486	2.42	%

(1)The average balance amounts represent amortized costs. The interest rates are based on interest income or expense amounts for the period and are annualized. Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.

(2)Nonaccrual loans and any related income are included in their respective loan categories.

(3)Includes taxable-equivalent adjustments of $109 million and $121 million for the quarters ended June 30, 2021 and 2020, respectively, and $216 million and $264 million for the first half of 2021 and 2020, respectively, predominantly related to tax-exempt income on certain loans and securities.


~~(2)~~8			~~Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.~~

Wells Fargo & Company
~~(3)~~	Yields and 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)~~	~~Nonaccrual loans and related income are included in their respective loan categories.~~

~~(5)~~

~~Includes taxable-equivalent adjustments of~~ ~~$332 million~~ ~~and~~ ~~$310 million~~ ~~for the quarters ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016, respectively, and~~ ~~$980 million~~ ~~and~~ ~~$909 million~~ ~~for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016, 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 June 30,						Six months ended June 30,
(in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Deposit-related fees	$	1,342	1,142	200	18	%	$	2,597	2,589	8	—	%
Lending-related fees	362		323	39	12		723		673	50	7
Investment advisory and other asset-based fees	2,794		2,254	540	24		5,550		4,760	790	17
Commissions and brokerage services fees	580		550	30	5		1,216		1,227	(11)	(1)
Investment banking fees	570		547	23	4		1,138		938	200	21
Card fees	1,077		797	280	35		2,026		1,689	337	20
Servicing income, net	(21)		(689)	668	97		(120)		(418)	298	71
Net gains on mortgage loan originations/sales	1,357		1,006	351	35		2,782		1,114	1,668	150
Mortgage banking	1,336		317	1,019	321		2,662		696	1,966	282
Net gains from trading activities	21		807	(786)	(97)		369		871	(502)	(58)
Net gains on debt securities	—		212	(212)	(100)		151		449	(298)	(66)
Net gains (losses) from equity securities	2,696		533	2,163	406		3,088		(868)	3,956	NM
Lease income	313		335	(22)	(7)		628		688	(60)	(9)
Other	379		577	(198)	(34)		1,046		1,525	(479)	(31)
Total	$	11,470	8,394	3,076	37		$	21,194	15,237	5,957	39

Quarter ended Sep 30, %
Nine months ended Sep 30, %
(in millions) 2017
2016
Change
2017
2016
Change
Service charges on deposit accounts $ 1,276
1,370
(7 )% $ 3,865
4,015
(4 )%
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,304
2,344
(2 ) 6,957
6,874
1
Trust and investment management 840
849
(1 ) 2,506
2,499
—
Investment banking 465
420
11
1,345
1,172
15
Total trust and investment fees 3,609
3,613
—
10,808
10,545
2
Card fees 1,000
997
—
2,964
2,935
1
Other fees:
Charges and fees on loans 318
306
4
950
936
1
Cash network fees 126
138
(9 ) 386
407
(5 )
Commercial real estate brokerage commissions 120
119
1
303
322
(6 )
Letters of credit fees 77
81
(5 ) 227
242
(6 )
Wire transfer and other remittance fees 114
103
11
333
296
13
All other fees 122
179
(32 ) 445
562
(21 )
Total other fees 877
926
(5 ) 2,644

2,765
(4 )
Mortgage banking:
Servicing income, net 309
359
(14 ) 1,165
1,569
(26 )
Net gains on mortgage loan origination/sales activities 737
1,308
(44 ) 2,257
3,110
(27 )
Total mortgage banking 1,046
1,667
(37 ) 3,422

4,679
(27 )
Insurance 269
293
(8 ) 826
1,006
(18 )
Net gains from trading activities 245
415
(41 ) 921
943
(2 )
Net gains on debt securities 166
106
57
322
797
(60 )
Net gains from equity investments 238
140
70
829
573
45
Lease income 475
534
(11 ) 1,449
1,404
3
Life insurance investment income 152
152
—
441
455
(3 )
All other 97
163
(40 ) 347
1,216
(71 )
Total $ 9,450
10,376
(9 ) $ 28,838

31,333
(8 )
NM – Not meaningful

~~Noninterest income was $9.5 billion~~Second quarter 2021 vs. second quarter 2020

Deposit-related fees increased driven by:

•lower fee waivers and ~~$28.8 billion for the third quarter and first nine months of 2017, respectively,~~reversals compared with ~~$10.4 billion and $31.3 billion for the same periods~~ a ~~year ago. This income represented 43% of revenue for third~~second quarter ~~2017 and 44% for the first nine months of 2017, compared with 46%~~ ~~and~~ ~~47% for the same periods a year ago.~~

~~The decline in noninterest income in the third quarter and first nine months of 2017, compared with the same periods a year ago, was~~2020 that included elevated fee waivers due to ~~lower mortgage banking income, lower net gains from trading activities,~~our actions to support customers during the COVID-19 pandemic; and ~~lower service charges~~

•higher treasury management fees on deposit accounts. Noninterest income in the first nine months of 2017 also reflected lower net gains on debt securities, insurance income, and all other noninterest income due to unfavorable net hedge ineffectiveness accounting results, but benefited from higher trust and investment fees, net gains on equity investments, and deferred compensation plan investment results (offset in employee benefits expense).

~~Service charges on deposit~~commercial accounts were $1.3 billion and $3.9 billion in the third quarter and first nine months of 2017, respectively, compared with $1.4 billion and $4.0 billion for the same periods in 2016. The decrease in the third quarter and first nine months of 2017, compared with the same periods a year ago, was driven by ~~lower consumer~~an increase in transaction service volumes and ~~business checking account service charges, lower overdraft fees, and a higher earnings credit rate applied to commercial accounts due to increased interest rates.~~

repricing.

~~Brokerage~~Investment advisory ~~commissions~~ and other asset-based fees are received for providing full-service and discount brokerage services predominantly to retail brokerage clients. Income from these brokerage-related activities include asset-based fees for advisory accounts, which are basedincreased reflecting higher market valuations on the market value of the client’s assets, and transactional commissions based on the number and size 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 all retail brokerage services provided by our Wealth and Investment Management (WIM) operating segment. investment assets.

For additional information on ~~retail brokerage~~certain client investment assets, see the ~~discussion and Tables 4d and 4e in the “Operating~~“Earnings Performance – Operating Segment Results – Wealth and Investment Management – ~~Retail Brokerage Client~~WIM Advisory Assets” ~~section~~and “Earnings Performance – Operating Segment Results – Corporate – Wells Fargo Asset Management (WFAM) Assets Under Management” sections in this Report.

~~We earn trust~~

Card fees increased reflecting higher interchange fees, net of rewards, driven by increased purchase and ~~investment management~~transaction volumes.

Servicing income, net increased due to:

•higher income from mortgage servicing right (MSR) valuation changes and related hedges driven by negative valuation adjustments in second quarter 2020 for higher expected servicing costs and prepayment estimates due to changes in economic conditions;

partially offset by:

•lower servicing fees due to a lower balance of loans serviced for others resulting from ~~managing and administering assets, including mutual funds, institutional separate accounts, corporate trust, personal trust,~~

prepayments.

~~Earnings Performance (continued~~)

Net gains on mortgage loan originations/sales increased

driven by:

employee benefit trust and agency assets. Trust and investment management fee income is primarily from client assets under management (AUM) for which the fees are determined based on a tiered scale relative•higher gains related to the ~~market value~~re-securitization of ~~the AUM. AUM consists of assets~~loans we purchased from Government National Mortgage Association (GNMA) loan securitization pools in 2020; and

•higher residential real estate held for ~~which we have investment management discretion. Our AUM totaled $678.7 billion at September 30, 2017, compared with $667.5 billion at September 30, 2016, with substantially all of~~sale (HFS) origination volumes in our ~~AUM managed by~~retail production channel;

partially offset by:

•lower HFS origination volumes in our ~~WIM operating segment. Additional~~correspondent production channel; and

•lower margins in our retail and correspondent production channels.

For 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 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, compared with $1.6 trillion at September 30, 2016. Trust and investment management fees were $840 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 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 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 sale of our global fund services business in fourth quarter 2016.

~~Mortgage banking noninterest income, consisting of net~~ servicing income and net gains on mortgage loan ~~origination/~~originations/sales, ~~activities, totaled $1.0 billion and $3.4 billion in the third quarter and first nine months of 2017, respectively, compared with $1.7 billion and $4.7 billion for the same periods a year ago.~~

In addition to servicing fees, net mortgage loan servicing income includes amortization of commercial mortgage servicing rights (MSRs), changes in the fair value of residential MSRs during the period, as well as changes in the 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 fair value of the MSRs and a $240 million hedge gain). Net servicing income of $359 million for third 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, compared with the same period a year ago, due to lower net MSR valuation gains. The decrease in net MSR valuation gains in the first nine months of 2017, compared with the same period in 2016, was primarily attributable to MSR valuation adjustments in the first quarter 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.

~~Our portfolio of mortgage loans serviced for others was $1.70 trillion at September 30, 2017 and $1.68 trillion~~ at December 31, 2016. At September 30, 2017, the ratio of combined residential and commercial MSRs to related loans serviced for others was 0.87%, compared with 0.85% at December 31, 2016. 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 million and $2.3 billion in the third quarter and first nine months of 2017, respectively, compared with $1.3 billion and $3.1 billion for the same periods a year ago. The decrease in the third quarter and first nine months of 2017, compared with the same periods a year ago, was primarily due to lower held for sale funding volume and production margins. Total mortgage loan originations were $59 billion and $159 billion 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. The production margin on residential held-for-sale mortgage originations, which represents net gains on residential mortgage loan origination/sales activities divided by total residential held-for-sale mortgage originations, provides a measure of the profitability of our residential mortgage origination activity. Table 2a presents the information used in determining the production margin.

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

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


~~(1)~~	~~Largely includes the results of 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% for the third quarter and first nine months of 2017, respectively, compared with 1.81% and 1.72% for the same periods in 2016. The decline in production margin in the third quarter and first nine months of 2017 was attributable to lower margins in both our retail and correspondent production channels as well as a shift to more correspondent origination volume, which has a lower production margin. Mortgage applications were $73 billion and $215 billion for the third quarter and first nine months of 2017, respectively, compared with $100 billion and $272 billion for the same periods a year ago. The 1-4 family first mortgage unclosed pipeline was $29 billion at September 30, 2017, compared with $50 billion at September 30, 2016. 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 andsee Note ~~8 (Mortgage Banking Activities) and Note 13 (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 89 (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~~ decreased driven by fewer gains in asset-backed finance and credit products due to limited credit spread movement compared with a second quarter 2020 that reflected gains driven by volatility in credit spreads from the impact of the COVID-19 pandemic.

Net gains on debt securities decreased due to lower gains from fewer sales of agency mortgage-backed securities (MBS) and municipal bonds.

Net gains (losses) from equity securities increased driven by:

•higher unrealized ~~changes in fair value of~~gains on nonmarketable equity securities from our ~~trading positions~~affiliated venture capital and private equity businesses; and

•higher realized gains ~~and losses, were $245 million and $921 million in~~on the ~~third quarter and first nine months~~sales of 2017, respectively, compared with $415 million and $943 million in the same periods a year ago. The decrease in the third quarter and first nine months of 2017, compared with the same periods a year ago, was predominantly driven by lower customer accommodation trading activity. The decrease in customer accommodation trading activity in the first nine months of 2017 was equity securities;

partially offset ~~by higher~~by:

•lower gains on deferred compensation plan ~~investment~~investments (largely offset in personnel expense). Refer to Table 3a for the results ~~(offset~~for our deferred compensation plan and related hedges.

Other income decreased due to:

•lower gains on the sales of residential mortgage loans which were reclassified to held for sale in ~~employee benefits expense). Net gains from trading activities do not include interest~~2019; and ~~dividend income~~

•higher valuation losses related to the retained litigation risk, including the timing and ~~expense on trading securities. Those amounts are reported within interest income from trading assets and other interest expense from trading liabilities.~~amount of final settlement, associated with shares of Visa Class B common stock that


			Wells Fargo & Company			9

Earnings Performance (continued)

we sold. For additional information, ~~about trading activities,~~ see the “Risk Management – Asset/Liability Management – Market Risk – ~~Trading Activities”~~Equity Securities” section in our 2020 Form 10-K;

partially offset by:

•a gain on the sale of a portion of our student loan portfolio.

First half of 2021 vs. first half of 2020

Investment advisory and other asset-based fees increased reflecting higher market valuations on client investment assets.

For additional information on certain client investment assets, see the “Earnings Performance – Operating Segment Results – Wealth and Investment Management – WIM Advisory Assets” and “Earnings Performance – Operating Segment Results – Corporate – Wells Fargo Asset Management (WFAM) Assets Under Management” sections in this Report.

Investment banking fees increased driven by higher loan syndication fees, advisory fees, and equity underwriting fees.

Card fees increased reflecting higher interchange fees, net of rewards, driven by increased purchase and transaction volumes.

Servicing income, net increased reflecting:

•higher income from MSR valuation changes and related hedges driven by negative valuation adjustments to the MSR in the first half of 2020 for higher expected servicing costs and prepayment estimates due to changes in economic conditions;

partially offset by:

•lower servicing fees due to a lower balance of loans serviced for others resulting from prepayments.

Net gains on mortgage loan originations/sales increased

driven by:

•higher margins in our retail production channel;

•higher HFS origination volume in our retail production channel;

•higher gains related to the re-securitization of loans we purchased from GNMA loan securitization pools in 2020; and

•higher gains due to losses in the first half of 2020 driven by the impact of interest rate volatility on hedging activities associated with our residential mortgage loans held for sale portfolio and pipeline, as well as valuation losses on certain residential and commercial loans held for sale due to market conditions.

For additional information on servicing income and net gains on mortgage loan originations/sales, see Note 9 (Mortgage Banking Activities) to Financial Statements in this Report.

Net gains from trading activities decreased reflecting:

•lower client trading activity for interest rate products, equities, and commodities;

partially offset by:

•higher client trading activity for asset-backed finance products.

Net gains on debt securities decreased due to lower gains from fewer sales of agency MBS and municipal bonds.

Net gains (losses) from equity securities ~~totaled $404 million~~ increased driven by:

•higher unrealized gains on nonmarketable equity securities from our affiliated venture capital and ~~$1.2 billion~~private equity businesses;

•lower impairment on equity securities due to the market impact of the COVID-19 pandemic in first quarter 2020;

•higher realized gains on the ~~third quarter~~sales of equity securities; and ~~first nine months of 2017, respectively, compared with $246 million and $1.4 billion~~

•higher gains on deferred compensation plan investments (largely offset in ~~the third quarter and first nine months of 2016, after other-than-temporary impairment (OTTI) write-downs of $91 million and $293 million~~personnel expense). Refer to Table 3a for the ~~third quarter~~results for our deferred compensation plan and ~~first nine months of 2017, respectively, compared with $136 million and $464 million for the same periods in 2016. The increase in net~~related hedges.

Other income decreased due to:

•lower gains on ~~debt~~the sales of residential mortgage loans which were reclassified to held for sale in 2019; and ~~equity securities~~

•higher valuation losses related to the retained litigation risk, including the timing and amount of final settlement, associated with shares of Visa Class B common stock that we sold. For additional information, see the “Risk Management – Asset/Liability Management – Market Risk – Equity Securities” section 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 in the first nine months of 2017, compared with the same period a year ago, was driven by lower net gains on debt securities, our 2020 Form 10-K;

partially offset ~~by higher net gains from equity investments.~~by:

~~Lease income was $475 million~~•a gain on the sale of substantially all of our student loan portfolio; 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, losses on low income housing tax credit investments, foreign currency adjustments, and•higher income from investments accounted for under the equity method, any of which can cause decreases and net losses in other income. The decrease in 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 income in the first nine months of 2017 also reflected the impact of a gain from the sale of our crop insurance business in first quarter 2016, and a gain from the sale of our health benefits services business in second 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.method.

~~Earnings Performance (continued~~)


10			Wells Fargo & Company

Noninterest Expense

Table 3:Noninterest Expense

Quarter ended Sep 30, %
Nine months ended Sep 30, %
(in millions) 2017
2016
Change
2017
2016
Change
Salaries $ 4,356
4,224
3 % $ 12,960
12,359
5 %
Commission and incentive compensation 2,553
2,520
1
7,777
7,769
—
Employee benefits 1,279
1,223
5
4,273
3,993
7
Equipment 523
491
7
1,629
1,512
8
Net occupancy 716
718
—
2,134
2,145
(1 )
Core deposit and other intangibles 288
299
(4 ) 864
891
(3 )
FDIC and other deposit assessments 314
310
1
975
815
20
Outside professional services 955
802
19
2,788
2,154
29
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
Outside data processing 227
233
(3 ) 683
666
3
Travel and entertainment 154
144
7
504
509
(1 )
Postage, stationery and supplies 128
150
(15 ) 407
466
(13 )
Advertising and promotion 137
117
17
414
417
(1 )
Telecommunications 90
101
(11 ) 272
287
(5 )
Foreclosed assets 66
(17 ) NM
204
127
61
Insurance 24
23
4
72
156
(54 )
All other 514
677
(24 ) 1,716
1,703
1
Total $ 14,351
13,268
8
$ 41,684
39,162
6



	Quarter ended June 30,						Six months ended June 30,
(in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Personnel	$	8,818	8,916	(98)	(1)	%	$	18,376	17,239	1,137	7	%
Technology, telecommunications and equipment	815		672	143	21		1,659		1,470	189	13
Occupancy	735		871	(136)	(16)		1,505		1,586	(81)	(5)
Operating losses	303		1,219	(916)	(75)		516		1,683	(1,167)	(69)
Professional and outside services	1,450		1,676	(226)	(13)		2,838		3,282	(444)	(14)
Leases (1)	226		244	(18)	(7)		452		504	(52)	(10)
Advertising and promotion	132		137	(5)	(4)		222		318	(96)	(30)
Restructuring charges	(4)		—	(4)	NM		9		—	9	NM
Other	866		816	50	6		1,753		1,517	236	16
Total	$	13,341	14,551	(1,210)	(8)		$	27,330	27,599	(269)	(1)

NM -– Not meaningful

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

~~Noninterest~~

Second quarter 2021 vs. second quarter 2020

Personnel expense ~~was $14.4 billion in third quarter 2017, up 8% from $13.3 billion a year ago,~~ decreased driven ~~by higher operating losses, personnel expenses, outside professional and contract services, and foreclosed assets expense, partially offset by~~ by:

•lower other expense. In the first nine months of 2017, noninterest expense was $41.7 billion, up 6% from the same period a year ago, due to higher personnel expenses, 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 million, or 3%, in third quarter 2017 compared with the same quarter last year, and up $889 million, or 4%, in the first nine months of 2017 compared with the same period a year ago. The increase in both periods was due to annual salary increases and higher benefits expense, partially offset by one fewer payroll day. The increase in the first nine months of 2017 was also driven by higher deferred compensation costs (offset in trading revenue).

FDIC and other deposit assessments were up 1% and 20% in the third quarter and first nine months of 2017, compared with the same periods a year ago. The increase in the first nine months of 2017 was due to an increase in deposit assessments as a result of ~~a temporary surcharge which became effective~~reduced headcount; and

•lower deferred compensation expense;

partially offset by:

•higher incentive compensation expense, including the impact of higher market valuations on ~~July 1, 2016. The FDIC expects the surcharge to be in effect for approximately two years.~~stock-based compensation; and

~~Outside professional~~•higher revenue-related compensation expense.

Technology, telecommunications and ~~contract services~~equipment expense was up 17% and 26% in the third quarter and first nine months of 2017, 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~~increased due to higher expense for technology contracts and the reversal of a software licensing liability accrual in second quarter 2020.

Occupancy expense decreased driven by:

•lower rent expense; and

•lower cleaning fees, supplies, and equipment expenses compared with a second quarter 2020 that included higher expenses due to the COVID-19 pandemic.

Operating losses decreased driven by lower expense for litigation accruals and customer remediation accruals.

Professional and outside services expense decreased driven by efficiency initiatives to reduce our spending on consultants and contractors.

Other expenses increased driven by a write-down of goodwill in second quarter 2021 related to the sale of a portion of our student loan portfolio.

First half of 2021 vs. first half of 2020

Personnel expense increased driven by:

•higher incentive compensation expense, including the impact of higher market valuations on stock-based compensation;

•higher revenue-related compensation expense; and

•higher deferred compensation expense;

partially offset by:

•lower salaries as a result of reduced headcount.

Table 3a presents results for ~~various legal matters, including~~our deferred compensation plan and related hedges. In second quarter 2020, we entered into arrangements to transition our economic hedges of the deferred compensation plan liabilities from equity securities to derivative instruments. As a ~~non tax-deductible $1 billion discrete~~result of this transition, changes in fair value of derivatives used to economically hedge the deferred compensation plan are reported in personnel expense rather than in net gains (losses) from equity securities within noninterest income. For additional information on the derivatives used in the economic hedges, see Note 14 (Derivatives) to Financial Statements in this Report.

Table 3a:Deferred Compensation and Related Hedges



	Quarter ended June 30,			Six months ended June 30,
(in millions)	2021		2020	2021		2020
Net interest income	$	—	3	$	—	15
Net gains (losses) from equity securities	1		346	1		(275)
Total revenue (losses) from deferred compensation plan investments	1		349	1		(260)
Decrease (increase) in deferred compensation plan liabilities	(257)		(490)	(422)		108
Net derivative gains from economic hedges of deferred compensation	239		141	399		141
Decrease (increase) in personnel expense	(18)		(349)	(23)		249
Loss before income tax expense	$	(17)	—	$	(22)	(11)

Technology, telecommunications and equipment expense increased due to higher expense for technology contracts and

the reversal of a software licensing liability accrual in second quarter 2020.


			Wells Fargo & Company			11

Earnings Performance (continued)

Occupancy expense decreased driven by:

•lower rent expense; and

•lower cleaning fees, supplies, and equipment expenses compared with a first half of 2020 that included higher expenses due to the COVID-19 pandemic.

Operating losses decreased driven by lower expense for litigation ~~accrual~~accruals and customer remediation accruals.

Professional and outside services expense decreased driven by efficiency initiatives to reduce our spending on consultants and contractors.

Advertising and promotion expense decreased driven by a continued reduction in marketing and brand campaign volumes due to the impact of the COVID-19 pandemic.

Restructuring charges increased related to our efficiency initiatives that began in third quarter ~~2017 for previously disclosed mortgage-related regulatory investigations.~~2020. For additional information on restructuring charges, see Note 19 (Restructuring Charges) to Financial Statements in this Report.

~~Foreclosed assets expense was up $83 million and $77 million in the third quarter and first nine months~~

Other expenses increased driven by:

•a write-down 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%~~goodwill in the first ~~nine months~~half of ~~2017, compared with~~2021 related to the ~~same periods a year ago. The decrease in the first nine months~~sale of ~~2017 was predominantly~~substantially all of our student loan portfolio;

•higher charitable donations expense driven by the ~~sale~~donation of ~~our crop insurance~~PPP processing fees; and

•higher Federal Deposit Insurance Corporation (FDIC) deposit assessment expense driven by a higher assessment rate;

partially offset by:

•a reduction in business ~~in first quarter 2016.~~

~~Postage, stationary,~~travel and ~~supplies expense was down 15% and 13% in the third quarter and first nine months of 2017, compared with the same periods a year ago,~~company events due to ~~lower mail services and supplies expense.~~the impact of the COVID-19 pandemic.

All other noninterest expense was down 24% in third quarter 2017 and up 1% in the first nine months of 2017, compared with the same periods a year ago. The decrease in the third quarter was primarily driven by lower donations expense. All other noninterest expense in third quarter 2016 included a $107 million contribution to the Wells Fargo Foundation.

Our efficiency ratio was 65.5% in third quarter 2017, compared with 59.4% in third quarter 2016. The third quarter 2017 efficiency ratio included a 456 basis point impact from the $1 billion discrete litigation accrual.

Income Tax Expense

~~Our~~ Income tax expense was $1.4 billion in second quarter 2021, compared with an income tax benefit of $2.0 billion in the same period a year ago. Theeffective income tax rate was ~~32.4% and 31.5%~~19.3% for ~~third~~second quarter ~~2017 and 2016, respectively. Our~~ 2021, compared with 34.2% for the same period a year ago.

Income tax expense was $2.3 billion in the first half of 2021, compared with an income tax benefit of $1.6 billion in the same period a year ago. Theeffective income tax rate was ~~29.0% in~~18.0% for the first ~~nine months~~half of ~~2017, down from 31.9% in~~

2021, compared with 36.0% for the same period a year ago.

~~the first nine months of 2016.~~ The increase in ~~the effective~~our income tax ~~rate~~expense for ~~third~~both the second quarter ~~2017~~and first half of 2021, compared with the same periods a year ago, was ~~primarily from~~driven by higher pre-tax income, including the ~~non-deductible treatment~~impact of the $1.0 billion discrete litigation accrual, partially offset by net discrete tax benefits arising from favorable resolutions of prior period matters with state taxing authorities. The effective income tax ratechanges in accounting policy for certain tax-advantaged investments. For additional information on the ~~first nine months of 2017 also included net discrete tax benefits associated with stock compensation activity subject to ASU 2016-09~~changes in accounting ~~guidance adopted in first quarter 2017, and tax benefits associated with our agreement to sell Wells Fargo Insurance Services USA (and related businesses) in second quarter 2017. See~~policy, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this ~~Report for additional information about ASU 2016-09.~~Report.

Operating Segment Results

~~We are organized for~~Our management reporting ~~purposes~~is organized into ~~three~~four reportable operating segments: ~~Community~~Consumer Banking and Lending; Commercial Banking; ~~Wholesale~~Corporate and Investment Banking; and Wealth and Investment ~~Management (WIM). These~~

Management. All other business activities that are not included in the reportable operating segments ~~are defined~~have been included in Corporate. For additional information, see Table 4. We define our reportable operating segments by type of product ~~type~~ and customer segment, and their results are based on our management ~~accounting~~reporting process. The management reporting process measures the performance of the reportable operating segments based on the Company’s management structure, and the results are regularly reviewed by our Chief Executive Officer and Operating Committee. The management reporting process is based on U.S. GAAP and includes specific adjustments, such as funds transfer pricing for asset/liability management, shared revenues and expenses, and taxable-equivalent adjustments to consistently reflect income from taxable and tax-exempt sources, which ~~there is no comprehensive, authoritative financial accounting guidance equivalent~~allows management to ~~generally accepted accounting principles (GAAP). Commencing~~assess performance consistently across the operating segments.

In March 2021, we announced an agreement to sell our Corporate Trust Services business and, in second quarter ~~2016,~~2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. This change did not impact the previously reported consolidated financial results ~~reflect~~of the Company.

In second quarter 2021, we elected to change our accounting method for low-income housing tax credit (LIHTC) investments and elected to change the presentation of investment tax credits related to solar energy investments. These accounting policy changes had a ~~shift~~nominal impact on reportable operating segment results. Prior period financial statement line items for the Company, as well as for the reportable operating segments, have been revised to conform with the current period presentation. Our LIHTC investments are included in ~~expenses between~~ the ~~personnel~~Corporate and Investment Banking operating segment and our solar energy investments are included in the Commercial Banking operating segment. For additional information, see the “Recent Developments” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.


12			Wells Fargo & Company

Funds Transfer Pricing Corporate treasury manages a funds transfer pricing methodology that considers interest rate risk, liquidity risk, and other ~~expense categories as~~product characteristics. Operating segments pay a ~~result~~funding charge for their assets and receive a funding credit for their deposits, both of which are included in net interest income. The net impact of the ~~movement~~funding charges or credits is recognized in corporate treasury.

Revenue and Expense Sharing When lines of ~~support staff from~~business jointly serve customers, the ~~Wholesale~~line of business that is responsible for providing the product or service recognizes revenue or expense with a referral fee paid or an allocation of cost to the other line of business based on established internal revenue-sharing agreements.

When a line of business uses a service provided by another line of business or enterprise function (included in Corporate), expense is generally allocated based on the cost and use of the service provided.

Taxable-Equivalent Adjustments Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax credits for low-income housing and renewable energy investments are included in noninterest income, in each case with corresponding impacts to income tax expense (benefit). Adjustments are included in Corporate, Commercial Banking, and ~~WIM segments into a consolidated organization within the Community~~Corporate and Investment Banking ~~segment. Since then, personnel expenses associated with the transferred support staff have been allocated from Community Banking back~~and are eliminated to reconcile to the ~~Wholesale Banking~~Company’s consolidated financial results.

Allocated Capital Reportable operating segments are allocated capital under a risk-sensitive framework that is primarily based on aspects of our regulatory capital requirements, and ~~WIM~~the assumptions and methodologies used to allocate capital are periodically assessed and revised. Management believes that return on allocated capital is a useful financial measure because it enables management, investors, and others to assess a reportable operating segment’s use of capital.

Selected Metrics We present certain financial and nonfinancial metrics that management uses when evaluating reportable operating segment results. Management believes that these metrics are useful to investors and others to assess the performance, customer growth, and trends of reportable operating segments ~~through other expense.~~ or lines of business.

Table 44:Management Reporting Structure

Wells Fargo & Company

Consumer Banking and Lending

Commercial Banking

Corporate and Investment Banking

Wealth and Investment Management

Corporate

• Consumer and Small Business Banking

• Home Lending

• Credit Card

• Auto

• Personal Lending

• Middle Market Banking

• Asset-Based Lending and Leasing

• Banking

• Commercial Real Estate

• Markets

• Wells Fargo Advisors

• The Private
Bank

• Corporate Treasury

• Enterprise Functions

• Investment Portfolio

• Affiliated venture capital and private equity businesses

• Non-strategic businesses

Table 5 and the following discussion present our results by reportable operating segment. For additional ~~description of our operating segments, including additional financial~~ information, ~~and the underlying management accounting process,~~ see Note 1822 (Operating Segments) to Financial Statements in this Report.


			Wells Fargo & Company			13

Earnings Performance (continued)

Table 4:5:Operating Segment Results – Highlights



(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate (1)	Reconciling Items (2)	Consolidated Company
Quarter ended June 30, 2021
Net interest income	$	5,618	1,202	1,783	610	(304)	(109)	8,800
Noninterest income	3,068		906	1,555	2,926	3,327	(312)	11,470
Total revenue	8,686		2,108	3,338	3,536	3,023	(421)	20,270
Provision for credit losses	(367)		(382)	(501)	24	(34)	—	(1,260)
Noninterest expense	6,202		1,443	1,805	2,891	1,000	—	13,341
Income (loss) before income tax expense (benefit)	2,851		1,047	2,034	621	2,057	(421)	8,189
Income tax expense (benefit)	713		261	513	156	223	(421)	1,445
Net income before noncontrolling interests	2,138		786	1,521	465	1,834	—	6,744
Less: Net income (loss) from noncontrolling interests	—		2	(2)	—	704	—	704
Net income	$	2,138	784	1,523	465	1,130	—	6,040
Quarter ended June 30, 2020
Net interest income	$	5,717	1,554	1,963	719	60	(121)	9,892
Noninterest income	1,891		797	2,096	2,487	1,318	(195)	8,394
Total revenue	7,608		2,351	4,059	3,206	1,378	(316)	18,286
Provision for credit losses	3,102		2,295	3,756	255	126	—	9,534
Noninterest expense	6,933		1,580	2,044	2,743	1,251	—	14,551
Income (loss) before income tax expense (benefit)	(2,427)		(1,524)	(1,741)	208	1	(316)	(5,799)
Income tax expense (benefit)	(650)		(379)	(408)	52	(300)	(316)	(2,001)
Net income (loss) before noncontrolling interests	(1,777)		(1,145)	(1,333)	156	301	—	(3,798)
Less: Net income from noncontrolling interests	—		1	—	—	47	—	48
Net income (loss)	$	(1,777)	(1,146)	(1,333)	156	254	—	(3,846)
Six months ended June 30, 2021
Net interest income	$	11,233	2,456	3,562	1,267	(694)	(216)	17,608
Noninterest income	6,107		1,733	3,380	5,813	4,744	(583)	21,194
Total revenue	17,340		4,189	6,942	7,080	4,050	(799)	38,802
Provision for credit losses	(786)		(781)	(785)	(19)	63	—	(2,308)
Noninterest expense	12,469		3,073	3,638	5,919	2,231	—	27,330
Income (loss) before income tax expense (benefit)	5,657		1,897	4,089	1,180	1,756	(799)	13,780
Income tax expense (benefit)	1,415		473	1,013	296	(52)	(799)	2,346
Net income before noncontrolling interests	4,242		1,424	3,076	884	1,808	—	11,434
Less: Net income (loss) from noncontrolling interests	—		3	(2)	—	757	—	758
Net income	$	4,242	1,421	3,078	884	1,051	—	10,676
Six months ended June 30, 2020
Net interest income	$	11,719	3,287	3,984	1,557	939	(264)	21,222
Noninterest income	4,538		1,409	3,483	4,919	1,303	(415)	15,237
Total revenue	16,257		4,696	7,467	6,476	2,242	(679)	36,459
Provision for credit losses	4,671		3,336	4,881	263	388	—	13,539
Noninterest expense	13,190		3,153	3,914	5,400	1,942	—	27,599
Income (loss) before income tax expense (benefit)	(1,604)		(1,793)	(1,328)	813	(88)	(679)	(4,679)
Income tax expense (benefit)	(445)		(442)	(307)	204	21	(679)	(1,648)
Net income (loss) before noncontrolling interests	(1,159)		(1,351)	(1,021)	609	(109)	—	(3,031)
Less: Net income (loss) from noncontrolling interests	—		2	—	—	(103)	—	(101)
Net income (loss)	$	(1,159)	(1,353)	(1,021)	609	(6)	—	(2,930)

(1)All other business activities that are not included in the reportable operating segments have been included in Corporate. For additional information, see the “Corporate” section below. In March 2021, we announced an agreement to sell our Corporate Trust Services business and, in second quarter 2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation.

(2)Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax credits for low-income housing and renewable energy investments are included in noninterest income, in each case with corresponding impacts to income tax expense (benefit). Adjustments are included in Corporate, Commercial Banking, and Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial results.

(income/expense in millions, 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,
Revenue $ 12,060
12,387
7,085
7,147
4,246
4,099
(1,465 ) (1,305 ) 21,926
22,328
Provision (reversal of provision) for credit losses 650
651
69
157
(1 ) 4
(1 ) (7 ) 717
805
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
Average loans $ 473.5
489.2
463.8
454.3
72.4
68.4
(57.4 ) (54.4 ) 952.3
957.5
Average deposits 734.5
708.0
463.4
441.2
188.1
189.2
(79.6 ) (76.9 ) 1,306.4
1,261.5
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


~~(1)~~14			Includes the elimination of certain items that are included in more than one business segment, most of which represents products and services for WIM customers served through Community Banking distribution channels.Wells Fargo & Company

~~Earnings Performance (continued~~)

~~Community~~Consumer Banking and Lendingoffers ~~a complete line of~~ diversified financial products and services for consumers and small businesses ~~including~~with annual sales generally up to $5 million. These financial products and services include checking and savings accounts, credit and

debit cards, ~~and automobile, student, mortgage,~~as well as home, ~~equity~~auto, personal, and small business ~~lending,~~lending. Table 5a and Table 5b provide additional information for Consumer Banking and Lending.

Table 5a: Consumer Banking and Lending – Income Statement and Selected Metrics


	Quarter ended June 30,							Six months ended June 30,
($ in millions, unless otherwise noted)	2021			2020	$ Change	% Change		2021			2020	$ Change	% Change
Income Statement
Net interest income	$	5,618		5,717	(99)	(2)	%	$	11,233		11,719	(486)	(4)	%
Noninterest income:
Deposit-related fees	732			575	157	27		1,393			1,454	(61)	(4)
Card fees	1,017			749	268	36		1,909			1,568	341	22
Mortgage banking	1,158			256	902	352		2,417			598	1,819	304
Other	161			311	(150)	(48)		388			918	(530)	(58)
Total noninterest income	3,068			1,891	1,177	62		6,107			4,538	1,569	35
Total revenue	8,686			7,608	1,078	14		17,340			16,257	1,083	7
Net charge-offs	359			553	(194)	(35)		729			1,174	(445)	(38)
Change in the allowance for credit losses	(726)			2,549	(3,275)	NM		(1,515)			3,497	(5,012)	NM
Provision for credit losses	(367)			3,102	(3,469)	NM		(786)			4,671	(5,457)	NM
Noninterest expense	6,202			6,933	(731)	(11)		12,469			13,190	(721)	(5)
Income (loss) before income tax expense (benefit)	2,851			(2,427)	5,278	NM		5,657			(1,604)	7,261	NM
Income tax expense (benefit)	713			(650)	1,363	NM		1,415			(445)	1,860	NM
Net income (loss)	$	2,138		(1,777)	3,915	NM		$	4,242		(1,159)	5,401	NM
Revenue by Line of Business
Consumer and Small Business Banking	$	4,714		4,401	313	7		$	9,264		9,262	2	—
Consumer Lending:
Home Lending	2,072			1,477	595	40		4,299			3,353	946	28
Credit Card	1,363			1,196	167	14		2,709			2,571	138	5
Auto	415			388	27	7		818			768	50	7
Personal Lending	122			146	(24)	(16)		250			303	(53)	(17)
Total revenue	$	8,686		7,608	1,078	14		$	17,340		16,257	1,083	7

Selected Metrics
Consumer Banking and Lending:
Return on allocated capital (1)	17.3		%	(15.5)				17.2		%	(5.5)
Efficiency ratio (2)	71			91				72			81
Headcount (#) (period-end)	116,185			133,876		(13)		116,185			133,876		(13)
Retail bank branches (#)	4,878			5,300		(8)		4,878			5,300		(8)
Digital active customers (# in millions) (3)	32.6			31.1		5		32.6			31.1		5
Mobile active customers (# in millions) (3)	26.8			25.2		6		26.8			25.2		6

Consumer and Small Business Banking:
Deposit spread (4)	1.5		%	1.8				1.6		%	1.9
Debit card purchase volume ($ in billions) (5)	$	122.0		93.1	28.9	31		$	230.5		183.7	46.8	25
Debit card purchase transactions (# in millions) (5)	2,504			2,027		24		4,770			4,222		13

(continued on following page)


			Wells Fargo & Company			15

Earnings Performance (continued)

(continued from previous page)


	Quarter ended June 30,						Six months ended June 30,
($ in millions, unless otherwise noted)	2021			2020	$ Change	% Change	2021			2020	$ Change	% Change
Home Lending:
Mortgage banking:
Servicing income, net	$	(76)		(666)	590	89%	$	(199)		(409)	210	51	%
Net gains on mortgage loan originations/sales	1,234			922	312	34	2,616			1,007	1,609	160
Total mortgage banking	$	1,158		256	902	352	$	2,417		598	1,819	304

Originations ($ in billions):
Retail	$	36.9		30.5	6.4	21	$	70.5		53.6	16.9	32
Correspondent	16.3			28.7	(12.4)	(43)	34.5			53.6	(19.1)	(36)
Total originations	$	53.2		59.2	(6.0)	(10)	$	105.0		107.2	(2.2)	(2)

% of originations held for sale (HFS)	65.6		%	71.8			70.7		%	70.7
Third-party mortgage loans serviced (period-end) ($ in billions) (6)	$	769.4		989.5	(220.1)	(22)	$	769.4		989.5	(220.1)	(22)
Mortgage servicing rights (MSR) carrying value (period-end)	6,717			6,819	(102)	(1)	6,717			6,819	(102)	(1)
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) (6)	0.87		%	0.69			0.87		%	0.69
Home lending loans 30+ days or more delinquency rate (7)(8)	0.51			0.54			0.51			0.54

Credit Card:
Point of sale (POS) volume ($ in billions)	$	25.5		17.5	8.0	46	$	46.6		37.4	9.2	25
New accounts (# in thousands) (9)	323			255		27	589			570		3
Credit card loans 30+ days or more delinquency rate (8)	1.46		%	2.10			1.46		%	2.10

Auto:
Auto originations ($ in billions)	$	8.3		5.6	2.7	48	$	15.3		12.1	3.2	26
Auto loans 30+ days or more delinquency rate (8)	1.30		%	1.70			1.30		%	1.70

Personal Lending:
New funded balances	$	565		315	250	79	$	978		982	(4)	—

NM – Not meaningful

(1)Return on allocated capital is segment net income (loss) applicable to common stock divided by segment average allocated capital. Segment net income (loss) applicable to common stock is segment net income (loss) less allocated preferred stock dividends.

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

(3)Digital and mobile active customers is the number of consumer and small business customers who have logged on via a digital or mobile device, respectively, in the prior 90 days. Digital active customers includes both online and mobile customers.

(4)Deposit spread is (i) the internal funds transfer pricing credit on segment deposits minus interest paid to customers for segment deposits, divided by (ii) average segment deposits.

(5)Debit card purchase volume and transactions reflect combined activity for both consumer and business debit card purchases.

(6)Excludes residential mortgage loans subserviced for others.

(7)Excludes residential mortgage loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) and loans held for sale.

(8)Beginning in second quarter 2020, customer payment deferral activities instituted in response to the COVID-19 pandemic may have delayed the recognition of delinquencies for those customers who would have otherwise moved into past due status.

(9)Excludes certain private label new account openings.

Second quarter 2021 vs. second quarter 2020

Revenue increased driven by:

•higher mortgage banking noninterest income due to higher gains related to the re-securitization of loans we purchased from GNMA loan securitization pools in 2020, as well as ~~referrals to Wholesale Banking~~higher income from MSR valuation changes and ~~WIM business partners. The Community Banking segment~~

related hedges;

~~also includes the results of our Corporate Treasury activities~~•higher card fees reflecting higher interchange fees, net of ~~allocations in support of the other operating segments~~rewards, driven by increased purchase and ~~results of investments in our affiliated venture capital partnerships. Table 4a provides additional financial information for Community Banking.~~

transaction volumes; and

~~Table 4a:Community Banking~~

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

Total revenue 12,060
12,387
(3 ) 36,442
37,205
(2 )

Provision for credit losses 650
651
—
1,919
2,060
(7 )
Noninterest expense:
Personnel expense 5,027
4,606
9
15,193
13,886
9
Equipment 511
462
11
1,569
1,421
10
Net occupancy 532
520
2
1,573
1,551
1
Core deposit and other intangibles 112
123
(9 ) 335
380
(12 )
FDIC and other deposit assessments 171
159
8
547
453
21
Outside professional services 464
300
55
1,355
749
81
Operating losses 1,294
525
146
1,853
1,224
51
Other expense of the segment (277 ) 258
NM
(147 ) 773
NM
Total noninterest expense 7,834
6,953
13
22,278
20,437
9
Income before income tax expense and noncontrolling interests 3,576
4,783
(25 ) 12,245
14,708
(17 )
Income tax expense 1,286
1,546
(17 ) 3,817
4,910
(22 )
Net income from noncontrolling interests (4) 61
10
510
197
96
105
Net income $ 2,229
3,227
(31 ) $ 8,231
9,702
(15 )
Average loans $ 473.5
489.2
(3 ) $ 477.8
486.4
(2 )
Average deposits 734.5
708.0
4
726.4
698.3
4

~~NM - Not meaningful~~


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


~~(2)~~	~~Includes syndication and underwriting fees paid to Wells Fargo Securities which are offset in our Wholesale Banking segment.~~


~~(3)~~	~~Predominantly 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, down $998 million, or 31%, from third quarter 2016,~~•higher deposit-related fees driven by lower fee waivers and ~~$8.2 billion for the first nine months of 2017, down $1.5 billion, or 15%,~~reversals compared with a second quarter 2020 that included elevated fee waivers due to our actions to support customers during the ~~same period a year ago. Third quarter 2017 results included a $1 billion discrete litigation accrual (not tax deductible)~~COVID-19 pandemic;

partially offset by:

•lower net interest income reflecting the lower interest rate environment and lower loan balances; and

•lower other income driven by lower gains on loan sales.

Provision for ~~previously disclosed mortgage-related regulatory investigations. Revenue of $12.1 billion~~credit losses decreased $327 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%, compared with the same period last year. The decrease from third quarter 2016 was predominantlydriven by an improving economic environment.

Noninterest expense decreased driven by:

•lower operating losses due to lower ~~mortgage banking revenue~~expense for litigation accruals and ~~deposit service charges,~~customer remediation accruals;

•lower personnel expense driven by additional payments in second quarter 2020 for certain customer-facing and support employees and for back-up child care services, as well as lower branch staffing expense in second quarter 2021 related to efficiency initiatives in Consumer and Small Business Banking, partially offset by higher revenue-related compensation in Home Lending; and

•lower expense allocated from enterprise functions, reflecting risk management and technology support related expenses;

partially offset by:

•higher charitable donations expense due to the donation of PPP processing fees; and

•higher FDIC deposit assessment expense driven by a higher assessment rate.


16			Wells Fargo & Company

First half of 2021 vs. first half of 2020

Revenue increased driven by:

•higher mortgage banking noninterest income due to higher retail HFS origination volumes and margins, and higher income from MSR valuation changes and related hedges; and

•higher card fees reflecting higher interchange fees, net of rewards, driven by increased purchase and transaction volumes, partially offset by lower late fees due to higher payment rates;

partially offset by:

•lower net interest income reflecting the lower interest rate environment and ~~gains on equity investments. The decrease from the first nine months of 2016 was predominantly due to~~ lower ~~mortgage banking revenue, gains on sales of debt securities, and~~loan balances;

•lower other income driven by ~~net hedge ineffectiveness accounting~~lower gains on loan sales; and

•lower deposit-related fees driven by higher fee waivers and reversals, as well as higher average consumer deposit account balances due to the economic slowdown associated with the COVID-19 pandemic.

Provision for credit losses decreased driven by an improving economic environment.

Noninterest expense decreased driven by:

•lower operating losses due to lower expense for litigation accruals and customer remediation accruals;

•lower personnel expense driven by a first half of 2020 that included additional payments for certain customer-facing and support employees and for back-up child care services, as well as lower branch staffing expense in the first half of 2021 related to ~~our long-term debt hedging results,~~efficiency initiatives in Consumer and Small Business Banking, partially offset by higher ~~net interest income~~revenue-related compensation in Home Lending; and ~~gains on~~

•lower advertising and promotion expense;

partially offset by:

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•higher charitable donations expense due to ~~lower~~the donation of PPP processing fees;

•higher FDIC deposit assessment expense driven by a higher assessment rate; and

•higher expense allocated from enterprise functions, reflecting risk management and technology support related expenses.

Table 5b: Consumer Banking and Lending – Balance Sheet


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Loans by Line of Business:
Home Lending	$	223,229	262,209	(38,980)	(15)	%	$	233,078	269,518	(36,440)	(14)	%
Auto	50,762		49,611	1,151	2		50,143		49,552	591	1
Credit Card	34,211		36,539	(2,328)	(6)		34,705		38,147	(3,442)	(9)
Small Business	18,768		14,887	3,881	26		19,449		12,301	7,148	58
Personal Lending	4,922		6,385	(1,463)	(23)		5,053		6,578	(1,525)	(23)
Total loans	$	331,892	369,631	(37,739)	(10)		$	342,428	376,096	(33,668)	(9)
Total deposits	835,752		715,144	120,608	17		812,723		683,925	128,798	19
Allocated capital	48,000		48,000	—	—		48,000		48,000	—	—

Selected Balance Sheet Data (period-end)
Loans by Line of Business:
Home Lending	$	218,626	258,582	(39,956)	(15)		$	218,626	258,582	(39,956)	(15)
Auto	51,784		49,924	1,860	4		51,784		49,924	1,860	4
Credit Card	34,936		36,018	(1,082)	(3)		34,936		36,018	(1,082)	(3)
Small Business	16,494		18,116	(1,622)	(9)		16,494		18,116	(1,622)	(9)
Personal Lending	4,920		6,113	(1,193)	(20)		4,920		6,113	(1,193)	(20)
Total loans	$	326,760	368,753	(41,993)	(11)		$	326,760	368,753	(41,993)	(11)
Total deposits	840,434		746,602	93,832	13		840,434		746,602	93,832	13

Second quarter 2021 vs. second quarter 2020

Total loans (average) decreased as paydowns exceeded originations. Home lending loan ~~origination in the consumer lending portfolio. Average~~balances were also impacted by actions taken to suspend certain non-conforming residential mortgage and home equity originations.

Total deposits ~~of $734.5 billion~~(average) increased $26.5 billion, or 4%, from third quarter 2016 and average deposits of $726.4 billion in the first nine months of 2017 increased $28.1 billion, or 4%, 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~~levels of liquidity and savings for consumer customers reflecting government stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the ~~$1 billion discrete litigation accrual in third quarter 2017)~~COVID-19 pandemic.

First half of 2021 vs. first half of 2020

Total loans (average and period-end) decreased as paydowns exceeded originations. Home lending loan balances were also impacted by actions taken to suspend certain non-conforming residential mortgage and home equity originations.

Total deposits (average and period-end) increased driven by higher ~~personnel expenses mainly due to~~levels of liquidity and savings for consumer customers reflecting government stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the COVID-19 pandemic.


			Wells Fargo & Company			17

Earnings Performance (continued)

~~impact of annual salary increases and higher professional services driven by increased project spending, partially offset by higher expenses allocated to the Wholesale~~Commercial 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 lending

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

~~Wholesale Banking~~ provides financial solutions to ~~businesses across the United States~~private, family owned and ~~globally with annual sales generally in excess of $5 million.~~certain public companies. Products and ~~businesses~~services include ~~Business~~banking and credit products across multiple industry sectors and municipalities, secured lending and lease products, and treasury management. In March 2021, we announced an agreement to sell our Corporate Trust Services

business and, in second quarter 2021, we moved the business from the Commercial Banking ~~Commercial Real Estate, Corporate Banking, Financial Institutions Group, Government~~operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. Table 5c and ~~Institutional Banking, Insurance, Middle Market Banking, Principal Investments, Treasury Management, Wells Fargo Commercial Capital, and Wells Fargo Securities.~~ Table ~~4b provides~~5d provide additional ~~financial~~ information for ~~Wholesale~~Commercial Banking.

Table ~~4b:Wholesale~~5c:Commercial Banking – Income Statement and Selected Metrics

NM – Not meaningful

~~Wholesale Banking reported~~Second quarter 2021 vs. second quarter 2020

Revenue decreased driven by:

•lower net interest income ~~of $2.0 billion in third quarter 2017, down $1 million~~reflecting lower loan balances and the lower interest rate environment;

partially offset by:

•higher other noninterest income due to gains on equity securities and higher income from third quarter 2016. In the first nine months of 2017, net income of $6.5 billion increased $508 million, or 8%, from the same period a year ago. Net income results for the first nine months of 2017 included a tax benefit resulting from our agreementrenewable energy investments; and

•higher deposit-related fees due 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~~higher treasury management fees, driven by an increase in transaction service volumes and repricing.

Provision for credit losses decreased driven by an improving economic environment.

Noninterest expense decreased driven by:

•lower spending related to efficiency initiatives, including lower personnel expense from reduced headcount;

•lower lease expense reflecting a reduction in the size of the operating lease asset portfolio;

•lower professional and outside services expense reflecting decreased project-related expense; and

•lower expenses allocated from enterprise functions, including lower technology expenses.


18			Wells Fargo & Company

First half of 2021 vs. first half of 2020

Revenue decreased driven by:

•lower net interest income ~~was more than~~reflecting the lower interest rate environment and lower loan balances; and

•lower lease income reflecting a reduction in the size of the operating lease asset portfolio;

partially offset ~~by lower~~by:

•higher other noninterest ~~income. Net interest~~ income ~~increased $291 million, or 7%,~~due to gains on equity securities, impairments on equity securities in first quarter 2020, and higher income from ~~third quarter 2016~~renewable energy investments; and ~~$1.1 billion, or 9%, from the first nine months of 2016~~

•higher deposit-related fees due to higher treasury management fees, driven by ~~strong loan growth, which~~

~~included the benefit from the GE Capital business acquisitions in 2016, and rising interest rates. Noninterest income decreased $353 million, or 11%, from third quarter 2016 due predominantly to~~a 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~~earnings credit rate due to the ~~first~~lower interest rate environment and repricing.

Provision for credit losses decreased driven by an improving economic environment.

Noninterest expense decreased driven by:

•lower spending related to efficiency initiatives, including lower personnel expense from reduced headcount;

•lower lease expense reflecting a reduction in the size of the operating lease asset portfolio; and

•lower professional and outside services expense reflecting decreased project-related expense;

partially offset by:

•higher expenses due to lower allocations of shared expenses with other lines of business.

Table 5d:Commercial Banking – Balance Sheet


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial	$	117,585	158,982	(41,397)	(26)	%	$	119,248	156,645	(37,397)	(24)	%
Commercial real estate	47,203		53,157	(5,954)	(11)		47,885		53,223	(5,338)	(10)
Lease financing and other	13,784		16,284	(2,500)	(15)		13,712		16,773	(3,061)	(18)
Total loans	$	178,572	228,423	(49,851)	(22)		$	180,845	226,641	(45,796)	(20)
Loans by Line of Business:
Middle Market Banking	$	102,054	122,319	(20,265)	(17)		$	103,210	119,276	(16,066)	(13)
Asset-Based Lending and Leasing	76,518		106,104	(29,586)	(28)		77,635		107,365	(29,730)	(28)
Total loans	$	178,572	228,423	(49,851)	(22)		$	180,845	226,641	(45,796)	(20)
Total deposits	192,586		184,132	8,454	5		190,984		175,929	15,055	9
Allocated capital	19,500		19,500	—	—		19,500		19,500	—	—

Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial	$	117,782	142,315	(24,533)	(17)		$	117,782	142,315	(24,533)	(17)
Commercial real estate	46,905		52,802	(5,897)	(11)		46,905		52,802	(5,897)	(11)
Lease financing and other	14,218		15,662	(1,444)	(9)		14,218		15,662	(1,444)	(9)
Total loans	$	178,905	210,779	(31,874)	(15)		$	178,905	210,779	(31,874)	(15)
Loans by Line of Business:
Middle Market Banking	$	102,062	115,105	(13,043)	(11)		$	102,062	115,105	(13,043)	(11)
Asset-Based Lending and Leasing	76,843		95,674	(18,831)	(20)		76,843		95,674	(18,831)	(20)
Total loans	$	178,905	210,779	(31,874)	(15)		$	178,905	210,779	(31,874)	(15)
Total deposits	197,461		183,085	14,376	8		197,461		183,085	14,376	8

Second quarter ~~2016 sale of our crop insurance business, which resulted in lower insurance and gain on sale income, and the~~2021 vs. second quarter ~~2016 gain on~~2020

Total loans (average) decreased driven by lower loan demand, including lower line utilization, and higher paydowns reflecting continued high levels of client liquidity and strength in the ~~sale~~capital markets.

Total deposits (average) increased due to higher levels of ~~our health benefits~~liquidity and lower investment spending reflecting government stimulus programs and continued economic uncertainty associated with the COVID-19 pandemic.

First half of 2021 vs. first half of 2020

Total loans (average and period-end) decreased driven by lower loan demand, including lower line utilization, and higher paydowns reflecting continued high levels of client liquidity and strength in the capital markets.

Total deposits (average and period-end) increased due to higher levels of liquidity and lower investment spending reflecting government stimulus programs and continued economic uncertainty associated with the COVID-19 pandemic.


			Wells Fargo & Company			19

Earnings Performance (continued)

Corporate and Investment Banking delivers a suite of capital markets, banking, and financial products and services ~~business,~~to corporate, commercial real estate, government and institutional clients globally. Products and services include corporate banking, investment banking, treasury management, commercial real

estate lending and servicing, equity and fixed income solutions, as well as sales, trading, and research capabilities. Table 5e and Table 5fprovide additional information for Corporate and Investment Banking.

Table 5e:Corporate and Investment Banking – Income Statement and Selected Metrics


	Quarter ended June 30,							Six months ended June 30,
($ in millions)	2021			2020	$ Change	% Change		2021			2020	$ Change	% Change
Income Statement
Net interest income	$	1,783		1,963	(180)	(9)	%	$	3,562		3,984	(422)	(11)	%
Noninterest income:
Deposit-related fees	277			261	16	6		543			518	25	5
Lending-related fees	190			163	27	17		373			335	38	11
Investment banking fees	580			588	(8)	(1)		1,191			1,065	126	12
Net gains from trading activities	30			809	(779)	(96)		361			844	(483)	(57)
Other	478			275	203	74		912			721	191	26
Total noninterest income	1,555			2,096	(541)	(26)		3,380			3,483	(103)	(3)
Total revenue	3,338			4,059	(721)	(18)		6,942			7,467	(525)	(7)
Net charge-offs	(19)			401	(420)	NM		18			448	(430)	(96)
Change in the allowance for credit losses	(482)			3,355	(3,837)	NM		(803)			4,433	(5,236)	NM
Provision for credit losses	(501)			3,756	(4,257)	NM		(785)			4,881	(5,666)	NM
Noninterest expense	1,805			2,044	(239)	(12)		3,638			3,914	(276)	(7)
Income (loss) before income tax expense (benefit)	2,034			(1,741)	3,775	NM		4,089			(1,328)	5,417	NM
Income tax expense (benefit)	513			(408)	921	NM		1,013			(307)	1,320	NM
Less: Net loss from noncontrolling interests	(2)			—	(2)	NM		(2)			—	(2)	NM
Net income (loss)	$	1,523		(1,333)	2,856	NM		$	3,078		(1,021)	4,099	NM

Revenue by Line of Business
Banking:
Lending	$	474		464	10	2		$	927		921	6	1
Treasury Management and Payments	353			403	(50)	(12)		723			901	(178)	(20)
Investment Banking	407			444	(37)	(8)		823			805	18	2
Total Banking	1,234			1,311	(77)	(6)		2,473			2,627	(154)	(6)
Commercial Real Estate	1,014			837	177	21		1,926			1,740	186	11
Markets:
Fixed Income, Currencies, and Commodities (FICC)	888			1,506	(618)	(41)		2,032			2,420	(388)	(16)
Equities	206			302	(96)	(32)		458			698	(240)	(34)
Credit Adjustment (CVA/DVA) and Other	(16)			139	(155)	NM		20			31	(11)	(35)
Total Markets	1,078			1,947	(869)	(45)		2,510			3,149	(639)	(20)
Other	12			(36)	48	NM		33			(49)	82	NM
Total revenue	$	3,338		4,059	(721)	(18)		$	6,942		7,467	(525)	(7)

Selected Metrics
Return on allocated capital	17.0		%	(16.8)				17.3		%	(7.1)
Efficiency ratio	54			50				52			52
Headcount (#) (period-end)	8,673			8,213		6		8,673			8,213		6

NM – Not meaningful

Second quarter 2021 vs. second quarter 2020

Revenue decreased driven by:

•lower net gains from trading activities reflecting fewer gains in asset-backed finance and credit products due to limited credit spread movement compared with a second quarter 2020 that reflected gains driven by volatility in credit spreads from the impact of the COVID-19 pandemic; and

•lower net interest income reflecting the lower interest rate environment, lower deposit balances, and lower trading-related assets;

partially offset by:

•higher other noninterest income driven by higher mortgage banking income due to higher servicing income, reflecting a reversal of an impairment of commercial MSRs in second quarter 2021, compared with the related impairment recorded in second quarter 2020, as well as higher gains on ~~debt securities~~the sales of mortgage loans;

•higher income from low income housing and equity investments; and


20			Wells Fargo & Company

•higher deposit and lending-related fees reflecting growth in treasury management service charges and increased commitment fees related to revolver utilization.

Provision for credit losses decreased driven by an improving economic environment.

Noninterest expense decreased driven by:

•lower operating losses due to lower expense for litigation accruals and customer ~~accommodation trading. The decrease in noninterest income~~remediation accruals; and

•lower expenses allocated from ~~the~~enterprise functions reflecting lower spending due to efficiency initiatives;

partially offset by:

•higher personnel expense driven by higher incentive compensation.

First half of 2021 vs. first ~~nine months~~half of ~~2016 was~~2020

Revenue decreased driven by:

•lower net gains from trading activities driven by lower client trading activity for interest rate products, equities, and commodities, partially offset by higher client trading activity for asset-backed finance products; and

•lower net interest income reflecting the lower interest rate environment, lower deposit balances, and lower trading-related assets;

partially offset by:

•higher investment banking fees due to higher loan syndication fees, advisory fees, and equity underwriting fees;

•higher other noninterest income driven by higher mortgage banking income due to higher servicing income, reflecting a reversal of an impairment of commercial MSRs in the first half of 2021, compared with the related impairment recorded in the first half of 2020, as well as higher ~~lease~~gains on the sales of mortgage loans; and

•higher income

from low income housing and equity investments.

~~Earnings Performance (continued~~)

related to the GE Capital business acquisitions. Average loans of $463.8 billion in third quarter 2017 increased $9.5 billion, or 2%, from third quarter 2016, and average loans 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 wasProvision for credit losses decreased driven by growth in asset backed finance, capital finance, government and institutional banking, middle market banking, and structured real estate, as well as the GE Capital business acquisitions in 2016. Average deposits of $463.4 billion increased $22.2 billion, or 5%, from third quarter 2016 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. an improving economic environment.

Noninterest expense ~~increased $128 million, or 3%, from third quarter 2016 and $427 million, or 4%, from the first nine months of 2016,~~ decreased driven by:

•lower operating losses due to ~~higher~~lower expense for litigation accruals and customer remediation accruals;

•lower expenses allocated from ~~Community~~enterprise functions reflecting lower spending due to efficiency initiatives;

•lower professional and outside services expense reflecting decreased project-related expense; and

•a reduction in business travel and company events due to the impact of the COVID-19 pandemic;

partially offset by:

•higher personnel expense driven by higher incentive compensation.


			Wells Fargo & Company			21

Earnings Performance (continued)

Table 5f:Corporate and Investment Banking ~~related~~– Balance Sheet


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial	$	167,076	190,861	(23,785)	(12)	%	$	164,696	184,558	(19,862)	(11)	%
Commercial real estate	85,346		82,726	2,620	3		84,606		81,357	3,249	4
Total loans	$	252,422	273,587	(21,165)	(8)		$	249,302	265,915	(16,613)	(6)
Loans by Line of Business:
Banking	$	90,839	105,983	(15,144)	(14)		$	88,699	101,414	(12,715)	(13)
Commercial Real Estate	108,893		110,594	(1,701)	(2)		108,255		107,894	361	—
Markets	52,690		57,010	(4,320)	(8)		52,348		56,607	(4,259)	(8)
Total loans	$	252,422	273,587	(21,165)	(8)		$	249,302	265,915	(16,613)	(6)
Trading-related assets:
Trading account securities	$	104,743	106,836	(2,093)	(2)		$	105,546	115,082	(9,536)	(8)
Reverse repurchase agreements/securities borrowed	62,066		70,335	(8,269)	(12)		63,010		79,734	(16,724)	(21)
Derivative assets	24,731		22,380	2,351	11		25,910		20,332	5,578	27
Total trading-related assets	$	191,540	199,551	(8,011)	(4)		$	194,466	215,148	(20,682)	(10)
Total assets	513,414		535,298	(21,884)	(4)		512,476		543,455	(30,979)	(6)
Total deposits	190,810		239,637	(48,827)	(20)		192,645		252,902	(60,257)	(24)
Allocated capital	34,000		34,000	—	—		34,000		34,000	—	—

Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial	$	166,969	171,859	(4,890)	(3)		$	166,969	171,859	(4,890)	(3)
Commercial real estate	86,290		83,715	2,575	3		86,290		83,715	2,575	3
Total loans	$	253,259	255,574	(2,315)	(1)		$	253,259	255,574	(2,315)	(1)
Loans by Line of Business:
Banking	$	92,758	91,093	1,665	2		$	92,758	91,093	1,665	2
Commercial Real Estate	108,885		109,402	(517)	—		108,885		109,402	(517)	—
Markets	51,616		55,079	(3,463)	(6)		51,616		55,079	(3,463)	(6)
Total loans	$	253,259	255,574	(2,315)	(1)		$	253,259	255,574	(2,315)	(1)
Trading-related assets:
Trading account securities	$	108,291	97,708	10,583	11		$	108,291	97,708	10,583	11
Reverse repurchase agreements/securities borrowed	57,351		70,949	(13,598)	(19)		57,351		70,949	(13,598)	(19)
Derivative assets	25,288		22,757	2,531	11		25,288		22,757	2,531	11
Total trading-related assets	$	190,930	191,414	(484)	—		$	190,930	191,414	(484)	—
Total assets	516,518		510,205	6,313	1		516,518		510,205	6,313	1
Total deposits	188,219		236,620	(48,401)	(20)		188,219		236,620	(48,401)	(20)

Second quarter 2021 vs. second quarter 2020

Total assets (average) decreased predominantly due to ~~increased project and technology spending on regulatory and compliance related initiatives,~~a decline in loan balances driven by lower demand due to the COVID-19 pandemic and higher ~~expense related~~paydowns reflecting continued high levels of client liquidity and strength in the capital markets.

Total deposits (average) decreased reflecting continued actions to ~~growth initiatives. The provision for credit losses~~manage under the asset cap.

First half of 2021 vs. first half of 2020

Total assets (average) decreased ~~$88 million from third~~

~~quarter 2016~~predominantly due to a decline in trading-related assets reflecting continued actions to manage under the asset cap and ~~$944 million from the first nine months of 2016~~a decline in loan balances driven by ~~improvement~~lower demand due to the COVID-19 pandemic and higher paydowns reflecting continued high levels of client liquidity and strength in the ~~oil~~capital markets.

Total deposits (average and ~~gas portfolio.~~period-end) decreased reflecting continued actions to manage under the asset cap.


22			Wells Fargo & Company

Wealth and Investment Managementprovides ~~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 and The Private ~~Bank, Abbot Downing, Wells Fargo Institutional Retirement~~Bank. We serve clients’

brokerage needs, 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~~Table 5g and ~~trust services to institutional clients and~~Table 5h provide ~~investment management capabilities delivered to global institutional clients through separate accounts and the Wells Fargo Funds. Table 4c provides~~ additional ~~financial~~ information for ~~WIM.~~Wealth and Investment Management.

Table ~~4c:~~5g:Wealth and Investment Management

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

Total revenue 4,246
4,099
4
12,621
11,872
6

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


	Quarter ended June 30,							Six months ended June 30,
($ in millions, unless otherwise noted)	2021			2020	$ Change	% Change		2021			2020	$ Change	% Change
Income Statement
Net interest income	$	610		719	(109)	(15)	%	$	1,267		1,557	(290)	(19)	%
Noninterest income:
Investment advisory and other asset-based fees	2,382			1,835	547	30		4,688			3,908	780	20
Commissions and brokerage services fees	513			470	43	9		1,068			1,063	5	—
Other	31			182	(151)	(83)		57			(52)	109	NM
Total noninterest income	2,926			2,487	439	18		5,813			4,919	894	18
Total revenue	3,536			3,206	330	10		7,080			6,476	604	9
Net charge-offs	(6)			1	(7)	NM		(6)			2	(8)	NM
Change in the allowance for credit losses	30			254	(224)	(88)		(13)			261	(274)	NM
Provision for credit losses	24			255	(231)	(91)		(19)			263	(282)	NM
Noninterest expense	2,891			2,743	148	5		5,919			5,400	519	10
Income before income tax expense	621			208	413	199		1,180			813	367	45
Income tax expense	156			52	104	200		296			204	92	45

Net income	$	465		156	309	198		$	884		609	275	45

Selected Metrics
Return on allocated capital	20.7		%	6.6				19.8		%	13.4
Efficiency ratio	82			86				84			83
Headcount (#) (period-end)	26,989			29,088		(7)		26,989			29,088		(7)
Advisory assets ($ in billions)	$	931		743	188	25		$	931		743	188	25
Other brokerage assets and deposits ($ in billions)	1,212			1,042	170	16		1,212			1,042	170	16
Total client assets ($ in billions)	$	2,143		1,785	358	20		$	2,143		1,785	358	20
Annualized revenue per advisor ($ in thousands) (1)	1,084			898	186	21		1,071			904	167	18
Total financial and wealth advisors (#) (period-end)	12,819			14,206		(10)		12,819			14,206		(10)

Selected Balance Sheet Data (average)
Total loans	$	81,784		78,091	3,693	5		$	81,314		77,987	3,327	4
Total deposits	174,980			165,103	9,877	6		174,333			155,246	19,087	12
Allocated capital	8,750			8,750	—	—		8,750			8,750	—	—

Selected Balance Sheet Data (period-end)
Total loans	$	82,783		78,101	4,682	6		$	82,783		78,101	4,682	6
Total deposits	174,267			168,249	6,018	4		174,267			168,249	6,018	4

NM – Not meaningful

~~WIM reported net income of $710 million in third quarter 2017, up $33 million from third quarter 2016. Net income~~(1)Represents annualized segment total revenue divided by average total financial and wealth advisors for the ~~first nine months of 2017 was $2.0 billion, up $242 million, or 14%, compared with the same period a year ago. Revenue was up $147 million, or 4%, from third~~period.

Second quarter ~~2016,~~2021 vs. second quarter 2020

Revenue increased driven by:

•higher investment advisory and other asset-based fees due to ~~an increase~~higher market valuations on WIM advisory assets;

partially offset by:

•lower deferred compensation plan investment results included in other noninterest income (largely offset by personnel expense); and

•lower net interest income ~~and up $749 million, or 6%, from~~reflecting the ~~first nine months of 2016, resulting from increases in both net~~lower interest

rate environment, partially offset by higher deposit balances.

income and noninterest income. Net interest income increased 19% from third 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 incomeProvision for credit losses decreased ~~1% from third quarter 2016 substantially~~ driven by ~~lower brokerage transaction revenue, and~~an improving economic environment.

Noninterest expense increased ~~3% from the first nine months of 2016 substantially~~due to:

•higher personnel expense driven by higher ~~asset-based fees and~~

~~deferred~~revenue-related compensation, ~~plan investments (offset in employee benefits expense),~~ partially offset by lower ~~brokerage transaction revenue. Asset-based~~deferred compensation expense; and

•the reversal of a software licensing liability accrual in second quarter 2020.

Total deposits (average) increased primarily due to growth in customer balances in both The Private Bank and Wells Fargo Advisors.


			Wells Fargo & Company			23

Earnings Performance (continued)

First half of 2021 vs. first half of 2020

Revenue increased driven by:

•higher investment advisory and other asset-based fees ~~were up predominantly~~ due to higher ~~brokerage advisory account client assets driven by higher~~ market valuations and positive net flows. Average loans of $72.4 billion in third quarter 2017 increased 6% from third quarter 2016. Average loans in the first nine months of 2017 increased 8% from the same period a year ago. Average loan growth was driven by growth in non-conforming mortgage loans. Average deposits in third quarter 2017 of $188.1 billion decreased 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~~WIM advisory assets; 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~~investment results included in ~~trading revenue). Total provision~~other noninterest income (largely offset by personnel expense);

partially offset by:

•lower net interest income reflecting the lower interest rate environment, partially offset by higher deposit balances.

Provision for credit losses decreased ~~$5 million from third quarter 2016~~ driven by ~~lower net charge-offs,~~an improving economic environment.

Noninterest expense increased due to:

•higher personnel expense driven by higher revenue-related compensation and ~~increased $10 million from~~higher deferred compensation expense; and

•the reversal of a software licensing liability accrual in the first ~~nine months~~half of ~~2016~~2020;

partially offset by:

•lower professional and outside services expense driven by ~~higher~~efficiency initiatives to reduce our spending on consultants and contractors.

~~net charge-offs.~~Total deposits (average and period-end) increased primarily due to growth in customer balances in both The Private Bank and Wells Fargo Advisors.

~~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~~WIM Advisory Assets ~~Brokerage advisory, commissions and other fees are received for providing full-service and discount brokerage services predominantly~~In addition to ~~retail brokerage clients. Offering~~transactional accounts, WIM offers 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.customers. 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 and 2016.

~~Table 4d:Retail Brokerage Client Assets~~

September 30,
(in billions) 2017
2016
Retail brokerage client assets $ 1,612.1
1,483.3
Advisory account client assets 521.8
458.3
Advisory account client assets as a percentage of total client assets 32 % 31

~~Retail Brokerage advisory~~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~~

WIM also manages personal trust and other assets for high net worth clients, with fee income earned based on a percentage of the market value of these assets. Table 5h presents advisory assets activity by WIM line of business for 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~~second quarter and first ~~nine months~~half of ~~2017~~2021 and ~~2016,~~2020. Management believes that advisory assets is a useful metric because it allows management, investors, and others to assess how changes in asset amounts may impact the generation of certain asset-based fees.

For second quarter 2021 and 2020, the average fee rate by account type ranged from 8050 to 120 basis points.

Table ~~4e presents retail brokerage~~5h:WIM Advisory Assets


	Quarter ended						Six months 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
June 30, 2021
Client-directed (4)	$	192.7	11.1	(12.2)	9.7	201.3	$	186.3	21.7	(22.0)	15.3	201.3
Financial advisor-directed (5)	223.4		12.3	(10.9)	13.2	238.0	211.0		24.6	(19.9)	22.3	238.0
Separate accounts (6)	183.1		8.0	(7.7)	9.5	192.9	174.6		16.5	(14.7)	16.5	192.9
Mutual fund advisory (7)	94.7		4.3	(3.6)	4.7	100.1	91.4		8.3	(7.1)	7.5	100.1
Total Wells Fargo Advisors	$	693.9	35.7	(34.4)	37.1	732.3	$	663.3	71.1	(63.7)	61.6	732.3
The Private Bank (8)	191.5		9.3	(11.1)	8.7	198.4	189.4		18.2	(23.6)	14.4	198.4
Total WIM advisory assets	$	885.4	45.0	(45.5)	45.8	930.7	$	852.7	89.3	(87.3)	76.0	930.7
June 30, 2020
Client directed (4)	$	142.7	7.3	(7.8)	20.0	162.2	$	169.4	17.4	(17.4)	(7.2)	162.2
Financial advisor directed (5)	152.4		8.4	(6.6)	22.6	176.8	176.3		19.1	(15.2)	(3.4)	176.8
Separate accounts (6)	134.2		5.0	(5.8)	18.1	151.5	160.1		11.8	(14.3)	(6.1)	151.5
Mutual fund advisory (7)	69.5		2.2	(2.7)	9.9	78.9	83.7		5.4	(7.2)	(3.0)	78.9
Total Wells Fargo Advisors	$	498.8	22.9	(22.9)	70.6	569.4	$	589.5	53.7	(54.1)	(19.7)	569.4
The Private Bank (8)	161.8		7.2	(11.8)	16.0	173.2	188.0		15.7	(22.8)	(7.7)	173.2
Total WIM advisory assets	$	660.6	30.1	(34.7)	86.6	742.6	$	777.5	69.4	(76.9)	(27.4)	742.6

(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, ~~activity~~not the number and size of transactions executed by ~~account type for~~ the ~~third quarter~~client.

(5)Professionally managed portfolios with fees earned based on respective strategies and ~~first nine months~~as a percentage of ~~2017~~certain client assets.

(6)Professional advisory portfolios managed by Wells Fargo Asset Management 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 ~~2016.~~institutional share class mutual funds. Fees are earned based on a percentage of certain client assets.

(8)Discretionary and non-discretionary portfolios held in personal trusts, investment agency, or custody accounts with fees earned based on a percentage of client assets.

~~Table 4e:Retail Brokerage Advisory Account Client Assets~~

Quarter ended Nine months 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
September 30, 2017
Client directed (4) $ 163.8
8.2
(8.9 ) 3.7
166.8
159.1
28.5
(30.1 ) 9.3
166.8
Financial advisor directed (5) 131.7
6.7
(5.2 ) 6.0
139.2
115.7
23.0
(17.4 ) 17.9
139.2
Separate accounts (6) 137.7
5.6
(5.0 ) 4.7
143.0
125.7
20.1
(17.2 ) 14.4
143.0
Mutual fund advisory (7) 69.3
3.2
(2.3 ) 2.6
72.8
63.3
9.9
(8.0 ) 7.6
72.8
Total advisory client assets $ 502.5
23.7
(21.4 ) 17.0
521.8
463.8
81.5
(72.7 ) 49.2
521.8
September 30, 2016
Client directed (4) $ 158.5
9.2
(9.5 ) 3.1
161.3
154.7
27.4
(27.7 ) 6.9
161.3
Financial advisor directed (5) 104.2
6.3
(4.7 ) 4.7
110.5
91.9
21.4
(13.5 ) 10.7
110.5
Separate accounts (6) 118.9
6.0
(5.6 ) 3.5
122.8
110.4
19.0
(15.6 ) 9.0
122.8
Mutual fund advisory (7) 62.1
2.2
(2.6 ) 2.0
63.7
62.9
6.1
(8.5 ) 3.2
63.7
Total advisory client assets $ 443.7
23.7
(22.4 ) 13.3
458.3
419.9
73.9
(65.3 ) 29.8
458.3


~~(1)~~24			~~Inflows include new advisory account assets, contributions, dividends and interest.~~Wells Fargo & Company

Corporate includes corporate treasury and enterprise functions, net of allocations (including funds transfer pricing, capital, liquidity and certain expenses), in support of the reportable operating segments, as well as our investment portfolio and affiliated venture capital and private equity businesses. In addition, Corporate includes all restructuring charges related to our efficiency initiatives. See Note 19 (Restructuring Charges) to Financial Statements in this Report for additional information on restructuring charges. Corporate also includes certain lines of

business that management has determined are no longer consistent with the long-term strategic goals of the Company, as well as results for previously divested businesses. In March 2021, we announced an agreement to sell our Corporate Trust Services business and, in second quarter 2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. Table 5i, Table 5j, and Table 5k provide additional information for Corporate.

Table 5i:Corporate – Income Statement and Selected Metrics


	Quarter ended June 30,						Six months ended June 30,
($ in millions, unless otherwise noted)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Income Statement
Net interest income	$	(304)	60	(364)	NM		$	(694)	939	(1,633)	NM
Noninterest income	3,327		1,318	2,009	152	%	4,744		1,303	3,441	264	%
Total revenue	3,023		1,378	1,645	119		4,050		2,242	1,808	81
Net charge-offs	(8)		39	(47)	NM		69		141	(72)	(51)
Change in the allowance for credit losses	(26)		87	(113)	NM		(6)		247	(253)	NM
Provision for credit losses	(34)		126	(160)	NM		63		388	(325)	(84)
Noninterest expense	1,000		1,251	(251)	(20)		2,231		1,942	289	15
Income (loss) before income tax expense (benefit)	2,057		1	2,056	NM		1,756		(88)	1,844	NM
Income tax expense (benefit)	223		(300)	523	NM		(52)		21	(73)	NM
Less: Net income (loss) from noncontrolling interests (1)	704		47	657	NM		757		(103)	860	NM
Net income (loss)	$	1,130	254	876	345		$	1,051	(6)	1,057	NM

Selected Metrics
Headcount (#) (period-end) (2)	87,702		82,852		6		87,702		82,852		6
Wells Fargo Asset Management assets under management ($ in billions)	$	603	578	25	4		$	603	578	25	4

NM – Not meaningful

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

(2)Beginning in first quarter 2021, employees who were notified of displacement remained as headcount in their respective operating segment rather than included in Corporate.

Second quarter 2021 vs. second quarter 2020

Revenue increased driven by:

•higher gains on equity securities in our affiliated venture capital and private equity businesses; and

•a gain on the sale of a portion of our student loan portfolio and a modest gain on the sale of our Canadian equipment finance business;

partially offset by:

•lower net interest income reflecting the lower interest rate environment and lower loan balances;

•lower gains on debt securities due to fewer sales; and

•lower gains on deferred compensation plan investments (largely offset by personnel expense).

Provision for credit losses decreased driven by an improving economic environment and lower provision associated with the sale of a portion of our student loan portfolio.

Noninterest expense decreased due to:

•lower operating losses due to lower expense for litigation accruals and customer remediation accruals; and

•lower deferred compensation plan expense;

partially offset by:

•a write-down of goodwill in second quarter 2021 related to the sale of a portion of our student loan portfolio.

First half of 2021 vs. first half of 2020

Revenue increased driven by:

•higher gains on equity securities in our affiliated venture capital and private equity businesses, as well as impairments on equity securities in first quarter 2020 due to the market impact of the COVID-19 pandemic ;

•higher gains on deferred compensation plan investments (largely offset by personnel expense); and

•a gain on the sale of substantially all of our student loan portfolio;

partially offset by:

•lower net interest income reflecting the lower interest rate environment, unfavorable hedge ineffectiveness accounting results, and lower loan balances; and

•lower gains on debt securities due to fewer sales.

Provision for credit losses decreased driven by an improving economic environment and lower provision associated with the sale of substantially all of our student loan portfolio.

Noninterest expense increased due to:

•higher incentive compensation expense, including the impact of higher market valuations on stock-based compensation;

•higher deferred compensation expense; and

•a write-down of goodwill in 2021 related to the sale of substantially all of our student loan portfolio.


~~(2)~~			~~Outflows include closed advisory account assets, withdrawals, and client management fees.~~Wells Fargo & Company			25

Earnings Performance (continued)

Corporate includes our rail car leasing business, which had long-lived operating lease assets (as a lessor) of $5.6 billion, which was net of $1.9 billion of accumulated depreciation, as of June 30, 2021. The average age of our rail cars is 21 years and the rail cars are typically leased under short-term leases of 3 to 5 years. Our three largest concentrations, which represented 55% of our rail car fleet as of June 30, 2021, were rail cars used for the transportation of agricultural grain, coal, and cement/sand products. Impairments may result in the future based on changing economic and market conditions affecting the long-term demand and utility of specific types of rail cars. Our assumptions for impairment are sensitive to estimated

utilization and rental rates, as well as the estimated economic life of the leased asset. For additional information on the accounting for impairment of operating lease assets, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

In addition, Corporate includes assets under management (AUM) and assets under administration (AUA) for Institutional Retirement and Trust (IRT) client assets of $20 billion and $580 billion, respectively, at June 30, 2021, which we continue to administer at the direction of the buyer pursuant to a transition services agreement. The transition services agreement terminates in December 2021, with available options to extend.

Table 5j: Corporate – Balance Sheet


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Cash, cash equivalents, and restricted cash	$	255,043	173,754	81,289	47	%	$	239,010	148,108	90,902	61	%
Available-for-sale debt securities	185,396		223,222	(37,826)	(17)		192,867		234,028	(41,161)	(18)
Held-to-maturity debt securities	237,788		166,127	71,661	43		227,623		161,958	65,665	41
Equity securities	11,499		13,604	(2,105)	(15)		11,203		13,787	(2,584)	(19)
Total loans	10,077		21,534	(11,457)	(53)		10,152		21,517	(11,365)	(53)
Total assets	754,629		655,617	99,012	15		741,203		642,513	98,690	15
Total deposits	41,696		82,640	(40,944)	(50)		44,080		94,307	(50,227)	(53)

Selected Balance Sheet Data (period-end)
Cash, cash equivalents, and restricted cash	$	248,784	236,219	12,565	5		$	248,784	236,219	12,565	5
Available-for-sale debt securities	177,923		217,339	(39,416)	(18)		177,923		217,339	(39,416)	(18)
Held-to-maturity debt securities	260,054		168,162	91,892	55		260,054		168,162	91,892	55
Equity securities	13,142		12,546	596	5		13,142		12,546	596	5
Total loans	10,593		21,948	(11,355)	(52)		10,593		21,948	(11,355)	(52)
Total assets	761,915		713,309	48,606	7		761,915		713,309	48,606	7
Total deposits	40,091		76,155	(36,064)	(47)		40,091		76,155	(36,064)	(47)

Second quarter 2021 vs. second quarter 2020

Total assets (average) increased due to:

•an increase in cash, cash equivalents, and restricted cash managed by corporate treasury as a result of an increase in deposits from the reportable operating segments; and

•an increase in held-to-maturity debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;

partially offset by:

•a decline in available-for-sale debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;

•a decline in average equity securities due to the transition from equity securities to derivative instruments for economic hedges of the deferred compensation plan liabilities in second quarter 2020 and a reduction in Federal Home Loan Bank stock, partially offset by higher balances in our venture capital business; and

•a decline in loans due to the sale of a portion of our student loan portfolio.

Total deposits (average) decreased reflecting actions taken to manage under the asset cap.

First half of 2021 vs. first half of 2020

Total assets (average and period-end) increased due to:

•an increase in cash, cash equivalents, and restricted cash managed by corporate treasury as a result of an increase in deposits from the reportable operating segments; and

•an increase in held-to-maturity debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;

partially offset by:

•a decline in available-for-sale debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;

•a decline in loans due to the sale of substantially all of our student loan portfolio in the first half of 2021.

Total deposits (average and period-end) decreased reflecting actions taken to manage under the asset cap.


~~(3)~~26			~~Market impact reflects gains and losses on portfolio investments.~~

Wells Fargo & Company
~~(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~~Wells Fargo Asset Management (WFAM) Assets Under Management We earn ~~trust~~investment advisory and ~~investment management~~other asset-based fees from managing and administering assets ~~including mutual funds, institutional separate accounts, personal trust, employee benefit trust and agency assets~~ through ~~our asset management, wealth and retirement businesses. Our asset management business is conducted by Wells Fargo Asset Management (WFAM),~~WFAM, which offers Wells Fargo proprietary mutual funds and manages institutional separate accounts. ~~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 earnedGenerally, we earn fees from AUM where we have discretionary management authority over the investments and generate fees as a percentage of the market value of the AUM. WFAM assets under management

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. Table 4f5k presents WFAM AUM activity for the ~~third~~second quarter and first ~~nine months~~half of ~~2017~~2021 and ~~2016.~~2020. Management believes that AUM is a useful metric because it allows management, investors, and others to assess how changes in asset amounts may impact the generation of certain asset-based fees.

Table ~~4f:WIM Trust and Investment –~~5k:WFAM Assets Under Management


	Quarter ended						Six months 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
June 30, 2021

Money market funds (4)	$	191.2	8.5	—	—	199.7	$	197.4	2.3	—	—	199.7
Other assets managed	399.2		22.1	(28.5)	11.0	403.8	405.6		45.9	(58.8)	11.1	403.8

Total WFAM assets under management	$	590.4	30.6	(28.5)	11.0	603.5	$	603.0	48.2	(58.8)	11.1	603.5
June 30, 2020

Money market funds (4)	$	166.2	35.7	—	—	201.9	$	130.6	71.3	—	—	201.9
Other assets managed	351.6		26.9	(26.5)	24.4	376.4	378.2		53.1	(55.1)	0.2	376.4

Total WFAM assets under management	$	517.8	62.6	(26.5)	24.4	578.3	$	508.8	124.4	(55.1)	0.2	578.3

(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)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.

Quarter ended
Nine months 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
September 30, 2017
Assets managed by WFAM (4):

Money market funds (5) $ 94.7
7.7
—
—
102.4
102.6
—
(0.2 ) —
102.4
Other assets managed 392.5
25.4
(31.2 ) 7.3
394.0
379.6
89.0
(98.8 ) 24.2
394.0
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
Total assets under management $ 662.8
43.2
(39.9 ) 11.3
677.4
650.7
118.5
(128.1 ) 36.3
677.4
September 30, 2016
Assets managed by WFAM (4):

Money market funds (5) $ 108.9
7.4
—
—
116.3
123.6
—
(7.3 ) —
116.3
Other assets managed 374.9
31.0
(30.3 ) 6.2
381.8
366.1
86.9
(85.2 ) 14.0
381.8
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
Total assets under management $ 648.4
46.8
(37.7 ) 9.3
666.8
651.8
112.6
(117.9 ) 20.3
666.8


~~(1)~~			~~Inflows include new managed account assets, contributions, dividends and interest.~~Wells Fargo & Company			27


~~(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 billion~~ ~~and~~ ~~$7.7 billion~~ ~~as of~~ ~~September 30, 2017~~ ~~and~~ ~~2016, respectively, of client assets invested in proprietary funds managed by WFAM.~~

Balance Sheet Analysis

At ~~September~~June 30, ~~2017,~~2021, our assets totaled ~~$1.93~~$1.95 trillion, ~~up $4.8~~down $6.9 billion from December 31, 2016. Asset growth was predominantly driven by growth in trading assets and investment securities, which increased $14.0 billion and $6.7 billion, respectively, from December 31, 2016, partially offset by a $15.7 billion decrease in loans. Total 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.2020.

The following discussion provides additional information about the major components of our consolidated balance sheet. ~~Information regarding our capital and~~

See the “Capital Management” section in this Report for information on changes in our asset mix is included in the “Earnings Performance – Net Interest Income” and “Capital Management” sections and Note 19 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.equity.

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

Table 5:~~Investment~~6:Available-for-Sale and Held-to-Maturity Debt Securities ~~– Summary~~


	June 30, 2021					December 31, 2020
($ in millions)	Amortized cost, net (1)		Net unrealized gains	Fair value	Weighted average expected maturity (yrs)	Amortized cost, net (1)	Net unrealized gains	Fair value	Weighted average expected maturity (yrs)

Available-for-sale (2)	186,309		3,588	189,897	4.9	215,533	4,859	220,392	4.5
Held-to-maturity (3)	260,941		3,146	264,087	6.1	205,720	6,587	212,307	4.5
Total	$	447,250	6,734	453,984	n/a	421,253	11,446	432,699	n/a

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
(1)Represents amortized cost of the securities, net of the allowance for credit losses of $33 million and $28 million related to available-for-sale debt securities and $77 million and $41 million related to held-to-maturity debt securities at June 30, 2021, and December 31, 2020.


~~(1)~~	~~Available-for-sale securities are carried on the balance sheet at fair value. Held-to-maturity securities are carried on the balance sheet at amortized cost.~~

(2)Available-for-sale debt securities are carried on the consolidated balance sheet at fair value.

(3)Held-to-maturity debt securities are carried on the consolidated balance sheet at amortized cost, net of the allowance for credit losses.

Table 56 presents a summary of our ~~investment securities~~ portfolio ~~which increased $6.7 billion~~of investments in ~~balance sheet carrying value from December 31, 2016, predominantly due to purchases of federal agency mortgage-backed securities, partially offset by sales~~available-for-sale (AFS) and ~~paydowns~~held-to-maturity (HTM) debt securities. See the “Balance Sheet Analysis – Available-for-Sale and Held-to-Maturity Debt Securities” section in our 2020 Form 10-K for information on ~~other security classes including securities of U.S. treasury and federal agencies and mortgage-backed securities.~~

The total net unrealized gains on available-for-sale securities were $1.8 billion at September 30, 2017, up from net unrealized losses of $1.8 billion at December 31, 2016, primarily due to lower long-term interest rates, tighter credit spreads and the transfer of available-for-sale securities to held-to-maturity. For a discussion of our investment management objectives and practices ~~see the “Balance Sheet Analysis” section in our 2016 Form 10-K. Also, see~~and 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 securities for other-than-temporary impairment (OTTI) quarterly or more often if a potential loss-triggering event occurs. Of the $293 million in OTTI write-downs recognized in earnings in the first nine monthsThe fair value of ~~2017, $107 million related to~~AFS debt securities ~~$5 million related~~decreased from December 31, 2020, as purchases were more than offset by runoff, sales and transfers to ~~marketable equity~~HTM debt securities ~~which are included in available-for-sale~~due to actions taken to reposition the overall portfolio for capital management purposes.

The net amortized cost of HTM debt securities increased from December 31, 2020, as purchases 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 investmenttransfers from AFS debt securities and $53 million related to nonmarketable equity investments. For a discussion of our OTTI accounting policies 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 Securities) to Financial Statements in this Report.were partially offset by runoff.

At ~~September~~June 30, ~~2017, investment~~2021, 94% of the combined AFS and HTM debt securities ~~included $59.1 billion of municipal bonds, of which 95.9% were~~portfolio was rated ~~“A-”~~AA- or ~~better~~above. Ratings are based ~~largely~~ on external ratings where available and, ~~in some cases,~~where not available, based on internal ~~ratings. Additionally, some of the securities in our total municipal~~credit grades.

~~bond portfolio are guaranteed against loss by bond insurers. These guaranteed bonds are predominantly investment grade~~The total net unrealized gains on AFS 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.

~~The weighted-average expected maturity of~~HTM debt securities available-for-sale was 6.8 years at September 30, 2017. The expected remaining maturity is shorter than the remaining contractual maturity for the 59% of this portfolio that is 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 indecreased from December 31, 2020, driven by higher interest rates, ~~on the fair value~~partially offset by tighter credit spreads. See

Note 3 (Available-for-Sale 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~~

(in billions) Fair value
Net unrealized gain (loss)

Expected remaining maturity
(in years)

At September 30, 2017
Actual $ 161.2
0.8
6.5
Assuming a 200 basis point:
Increase in interest rates 143.9
(16.5 ) 8.5
Decrease in interest rates 167.4
7.0
2.6

~~The weighted-average expected maturity of debt securities held-to-maturity was 6.5 years at September 30, 2017. See Note 4 (Investment~~Held-to-Maturity Debt Securities) to Financial Statements in this Report for additional information on AFS and HTM debt securities, including 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~~Commercial loans were relatively flat compared with December 31, 2020. Consumer loans decreased ~~$15.7 billion~~ from December 31, ~~2016, reflecting~~2020, driven by a decrease in the residential mortgage – first lien portfolio due to paydowns ~~a continued decline in~~

~~junior~~and the transfer of $10.8 billion of first lien mortgage loans ~~and an expected decline~~to loans held for sale (LHFS), substantially all of which related to the sales of loans purchased from GNMA loan securitization pools in ~~automobile loans as the effect~~prior periods, partially offset by originations of ~~tighter underwriting standards implemented last year resulted in lower origination volume.~~$30.8 billion.

Table 7:Loan Portfolios


(in millions)	September 30, 2017			December 31, 2016	(in millions)	June 30, 2021		December 31, 2020
Commercial	$	500,150		506,536	Commercial	$	476,422	478,417
Consumer	451,723			461,068	Consumer	375,878		409,220
Total loans	$	951,873		967,604	Total loans	$	852,300	887,637
Change from prior year-end	$	(15,731	)	51,045	Change from prior year-end	$	(35,337)	(74,628)

~~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 54 (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 2020 Form 10-K for additional 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


28			Wells Fargo & Company

Deposits

Deposits ~~were $1.3 trillion at September 30, 2017, up $627 million~~increased from December 31, ~~2016,~~2020, reflecting:

•higher levels of liquidity and savings for consumer customers reflecting ~~growth in retail deposits~~government stimulus programs and ~~Treasury institutional certificates of deposit,~~ payment deferral programs, as well as continued economic uncertainty associated with the COVID-19 pandemic;

partially offset ~~by lower wealth~~by:

•actions taken to manage under the asset cap resulting in declines in time deposits, such as brokered certificates of

deposit (CDs), and ~~commercial deposits.~~ interest-bearing 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)	Jun 30, 2021		% of total deposits		Dec 31, 2020		% of total deposits		% Change
Noninterest-bearing demand deposits	$	504,108	35	%	$	467,068	33	%	8
Interest-bearing demand deposits	453,277		32		447,446		32		1
Savings deposits	419,812		29		404,935		29		4
Time deposits	35,269		2		49,775		4		(29)
Interest-bearing deposits in non-U.S. offices	28,006		2		35,157		2		(20)
Total deposits	$	1,440,472	100	%	$	1,404,381	100	%	3

($ in millions) Sep 30,
2017

% of
total
deposits

Dec 31,
2016
% of
total
deposits

% Change

Noninterest-bearing $ 366,528
28 % $ 375,967
29 % (3 )
Interest-bearing checking 47,366
4
49,403
4
(4 )
Market rate and other savings 687,323
52
687,846
52
—
Savings certificates 21,396
2
23,968
2
(11 )
Other time deposits 66,884
5
52,649
4
27
Deposits in foreign offices (1) 117,209
9
116,246
9
1
Total deposits $ 1,306,706
100 % $ 1,306,079
100 % —


~~(1)~~	~~Includes Eurodollar sweep balances of $72.8 billion and $74.8 billion at September 30, 2017, and December 31, 2016, 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 our 2016 Form 10-K 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 10 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:Fair Value Level 3 Summary~~

September 30, 2017 December 31, 2016
($ in billions)
Total
balance

Level 3 (1)

Total
balance

Level 3 (1)
Assets carried
at fair value
$ 407.9
24.1
436.3
23.5
As a percentage
of total assets
21 % 1
23
1
Liabilities carried
at fair value
$ 28.6
2.0
30.9
1.7
As a percentage of
total liabilities
2 % *
2
*

* Less than 1%.


~~(1)~~	~~Before derivative netting adjustments.~~

See Note 13 (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 billion at September 30, 2017, compared with $200.5 billion at December 31, 2016. The increase was predominantly driven by a $8.7 billion increase in retained earnings from earnings net of dividends paid, partially offset by a net reduction in common stock due to repurchases.



Off-Balance Sheet Arrangements

In the ordinary course of business, we engage in financial transactions that are not recorded on the consolidated balance sheet, or may be recorded on the consolidated 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.

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~~additional information, ~~on lending commitments,~~ see Note 54 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report. We also enter into commitments to purchase securities under resale agreements. For more information on commitments to purchase securities under resale agreements, see Note 3 (Federal Funds Sold, Securities Purchased under Resale Agreements and Other Short-Term Investments) 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~~additional information, ~~on securitizations, including sales proceeds and cash flows from securitizations,~~ see Note 78 (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 and direct pay letters of credit, ~~securities lending and other indemnifications,~~ written ~~put~~ options, recourse obligations, exchange and clearing house guarantees, indemnifications, and other types of similar arrangements. For ~~more~~additional information, ~~on guarantees and certain contingent arrangements,~~ see Note 1011 (Guarantees ~~Pledged Assets~~ and ~~Collateral)~~Other Commitments) to Financial Statements in this Report.

Commitments to Purchase Debt and Equity Securities

We 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 additional information, see Note 11 (Guarantees 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 consolidated 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 consolidated balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. For ~~more~~additional information, ~~on derivatives,~~ see Note 1214 (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.



			Wells Fargo & Company			29


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~~additional information about how we manage ~~these risks,~~risk, see the “Risk Management” section in our ~~2016~~2020 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~~2020 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 ~~following discussion focuses on our~~Board’s Risk Committee has primary oversight responsibility for credit risk. A Credit Subcommittee of the Risk Committee assists the Risk Committee in providing oversight of credit risk. At the management level, Credit Risk, which is part of IRM, has oversight responsibility for credit risk. Credit Risk reports to the CRO and supports periodic reports related to credit risk provided to the Board’s Risk Committee or its Credit Subcommittee.

Loan Portfolio

Our loan portfolios ~~which~~ represent the largest component of assets on our consolidated balance sheet for which we have credit risk. Table 119 presents our total loans outstanding by portfolio segment and class of financing receivable.

Table ~~11:~~9:Total Loans Outstanding by Portfolio Segment and Class of Financing Receivable


(in millions)	Sep 30, 2017		Dec 31, 2016	(in millions)	Jun 30, 2021		Dec 31, 2020
Commercial:				Commercial:
Commercial and industrial	$	327,944	330,840	Commercial and industrial	$	317,618	318,805
Real estate mortgage	128,475		132,491	Real estate mortgage	120,678		121,720
Real estate construction	24,520		23,916	Real estate construction	22,406		21,805
Lease financing	19,211		19,289	Lease financing	15,720		16,087
Total commercial	500,150		506,536	Total commercial	476,422		478,417
Consumer:				Consumer:
Real estate 1-4 family first mortgage	280,173		275,579
Real estate 1-4 family junior lien mortgage	41,152		46,237
Residential mortgage – first lien				Residential mortgage – first lien	244,371		276,674
Residential mortgage – junior lien				Residential mortgage – junior lien	19,637		23,286
Credit card	36,249		36,700	Credit card	34,936		36,664
Automobile	55,455		62,286
Other revolving credit and installment	38,694		40,266
Auto				Auto	51,073		48,187
Other consumer				Other consumer	25,861		24,409
Total consumer	451,723		461,068	Total consumer	375,878		409,220
Total loans	$	951,873	967,604	Total loans	$	852,300	887,637

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~~quality;

•Counterparty credit ~~risk~~risk;

•Economic and market ~~conditions~~conditions;

•Legislative or regulatory ~~mandates~~mandates;

•Changes in interest ~~rates~~rates;

•Merger and acquisition ~~activities~~activities; and

•Reputation ~~risk~~risk.

Our credit risk management oversight process is governed centrally, but provides for ~~decentralized~~direct 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 in second quarter 2021 reflected continued ~~in third quarter 2017, as our net charge-off rate remained low at 0.30% (annualized) of average total loans. We continued to benefit from improvements~~improvement in the ~~performance of our residential real estate portfolio as well as reduced losses in our oil and gas portfolio.~~economic environment. In particular:

•Nonaccrual loans were ~~$8.6~~$7.4 billion at ~~September~~June 30, ~~2017~~,2021, down from ~~$10.4~~$8.7 billion at December 31, ~~2016~~.2020. Commercial nonaccrual loans ~~declined~~decreased to ~~$3.1~~$3.5 billion at ~~September~~June 30, ~~2017~~,2021, compared with ~~$4.1~~$4.8 billion at December 31, ~~2016~~,2020, and consumer nonaccrual loans declined to ~~$5.5~~$3.8 billion at ~~September~~June 30, ~~2017~~,2021, compared with ~~$6.3~~$3.9 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.~~2020. Nonaccrual loans represented ~~0.91%~~0.86% of total loans at ~~September~~June 30, ~~2017~~,2021, compared with ~~1.07%~~0.98% at December 31, ~~2016~~.

2020.

•Net loan 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 loan portfolios were ~~0.09%~~0.07% and ~~0.53%~~0.32% in the ~~third~~second quarter and ~~0.09%~~0.10% and ~~0.54%~~0.35% in the first ~~nine months~~half of ~~2017~~,2021, respectively, compared with ~~0.17%~~0.44% and ~~0.51%~~0.48% in the ~~third~~second quarter and ~~0.22%~~0.35% and ~~0.52%~~0.51% in the first ~~nine months~~half of ~~2016~~.

2020.

•Loans that are not government insured/guaranteed and 90 days or more past due and still accruing were~~$38~~ $277 million and ~~$923~~$460 million in our commercial and consumer portfolios, respectively, at ~~September~~June 30, ~~2017~~,2021, compared with ~~$64~~$78 million and ~~$908~~$612 million at December 31, ~~2016~~.

2020.

•Our provision for credit losses for loans was $~~717 million~~(1.2) billion and $~~1.9~~(2.4) billion in the ~~third~~second quarter and first ~~nine months~~half of ~~2017~~,2021, respectively, compared with $~~805 million~~9.6 billion and $~~3.0~~13.4 billion for the same periods a year ago.

•The ~~allowance~~ACL for ~~credit losses totaled~~ ~~$12.1~~loans decreased to $16.4 billion,, or ~~1.27%~~1.92% of total loans, at ~~September~~June 30, ~~2017, down from~~ ~~$12.5~~2021, compared with $19.7 billion,, or ~~1.30%~~2.22%, at December 31, ~~2016~~.

2020.

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 date 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 of 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.

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

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

~~PURCHASED CREDIT-IMPAIRED (PCI) LOANSLoans acquired~~


30			Wells Fargo & Company

COVID-Related Lending AccommodationsDuring 2020, we provided accommodations to customers in response to the COVID-19 pandemic, including payment deferrals, and other expanded assistance for mortgage, credit card, auto, small business, personal and commercial lending customers. With the exception of residential mortgage-related accommodation programs, the COVID-related lending accommodations instituted during 2020 were no longer offered as of December 31, 2020. Residential mortgage accommodation programs, which continued during the first half of 2021, offered payment deferrals for up to a total of 18 months. Table 10 summarizes the unpaid principal balance (UPB) of consumer loans that received accommodations under loan modification programs established to assist customers with ~~evidence~~the economic impact of ~~credit deterioration since their origination~~the COVID-19 pandemic (COVID-related modifications) and ~~where it is probable~~ that ~~we will not collect all contractually required principal and interest payments are PCI loans. Substantially all~~remained in a deferral period as of ~~our PCI loans were acquired~~June 30, 2021.

Based on guidance in the ~~Wachovia acquisition on December 31, 2008. PCI loans are recorded at fair value at the date of acquisition,~~CARES Act and the ~~historical allowance~~Interagency Statement on Loan Modifications and Reporting for ~~credit losses~~Financial Institutions Working with Customers Affected by the Coronavirus (Revised) issued by federal banking regulators in April 2020 (the Interagency Statement), both of which we elected to apply, loan modifications 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,~~COVID-19 and ~~$58.8 billion at December 31, 2008. The decrease~~that meet certain other criteria are exempt from ~~December 31, 2016, was due in part~~troubled debt restructuring (TDR) classification. Additionally, our election to ~~higher prepayment trends observed in our Pick-a-Pay PCI portfolio, as home price appreciation~~apply the TDR relief provided by the CARES Act and the ~~resulting reduction in~~Interagency Statement impacts our regulatory capital ratios as these loan modifications

related to ~~collateral value ratios enabled more borrowers~~COVID-19 are not adjusted 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 Septembera higher risk-weighting normally required with TDR classification. At June 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 PCI2021, substantially all residential mortgage 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,~~were in ~~our initial projected losses of $41.0 billion on all PCI loans acquired in~~a deferral period, excluding those that were government insured/guaranteed, met the ~~Wachovia acquisition. At September 30, 2017, $454 million in nonaccretable difference remained to absorb losses on PCI loans.~~

criteria for TDR relief and were therefore not classified as TDRs. For additional information ~~on PCI loans,~~regarding the TDR relief provided by the CARES Act and the clarifying TDR accounting guidance from the Interagency Statement, 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~~2020 Form ~~10-K,~~10-K.

Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of net charge-offs, delinquencies, and nonaccrual status for those customers who would have otherwise moved into past due or nonaccrual status. Customer loans that are not further modified upon exit from the deferral period may be placed on nonaccrual status or charged-off in accordance with our policies if customers are unable to resume making payments in accordance with the contractual terms of their agreement. As of June 30, 2021, substantially all of our consumer loans were current after exiting the deferral period. For additional information about our COVID-related modifications, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section and Note ~~5 (Loans and Allowance for Credit Losses)~~1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

Table 10:Consumer Loan Modifications Related to COVID-19


($ in millions)	Unpaid principal balance of modified loans still in deferral period at Jun 30, 2021		% of loan class (1)		% current at Jun 30, 2021 after exit from deferral period (2)
Consumer:
Residential mortgage – first lien (3)	$	6,810	3	%	96
Residential mortgage – junior lien (3)	997		5		90
All other consumer (4)	29		*		92
Subtotal	7,836		2
Residential mortgage – first lien (government insured/guaranteed) (5)	11,400		5
Total consumer	$	19,236

*Less than 1%.

(1)Based on total loans outstanding at June 30, 2021.

(2)Represents the UPB of loans that exited the deferral period and had a balance that was less than 30 days past due as of June 30, 2021.

(3)For residential mortgage loans still in active COVID-related accommodation programs as of June 30, 2021, 96% of first lien and 86% of junior lien mortgage loans had a loan-to-value ratio that was 80% or lower.

(4)Includes credit card, auto, and other consumer loans (including personal lines/loans).

(5)Represents residential mortgage – first lien loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) that were primarily repurchased from GNMA loan securitization pools. For additional information on GNMA loan securitization pools, see the “Risk Management – Credit Risk Management – Risks Relating to Servicing Activities” section in this Report. FHA/VA loans are entitled to payment deferrals of scheduled principal and interest up to a total of 18 months.

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 54 (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 definitions of pass and criticized categories with criticized ~~divided between~~segmented among special mention, substandard, doubtful and loss categories.

The commercial and industrial loans and lease financing portfolio totaled $347.2 billion, or 36% of total loans, at September 30, 2017. The annualized net charge-off rate for this portfolio was 0.15% in both the third quarter and first nine months of 2017, compared with 0.30% and 0.36% for the same periods a year ago. At September 30, 2017, 0.71% of this portfolio was nonaccruing, compared with 0.95% at December 31, 2016, reflecting a decrease of $853 million in nonaccrual loans, predominantly due to improvement in the oil and gas portfolio. Also, $20.0We had $15.6 billion of the commercial and industrial loan and lease financing portfolio ~~was~~ internally classified as criticized in accordance with regulatory guidance at ~~September~~June 30, ~~2017,~~2021, compared with ~~$24.0~~$19.3 billion at December 31, ~~2016.~~2020. The ~~decrease~~change was driven by decreases in ~~criticized loans, which also includes~~ the ~~decrease in nonaccrual loans, was primarily due to~~oil, gas and pipelines, retail, materials and commodities, entertainment and recreation, and technology, telecom and media industries reflecting improvement in the ~~oil and gas portfolio.~~economic environment.

~~Most~~The 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.


			Wells Fargo & Company			31

Risk Management – Credit Risk Management (continued)

Generally, the primary source of repayment for this portfolio is the operating cash flows of customers, with the collateral securing this portfolio ~~represents~~representing a secondary source of repayment.

The portfolio decreased slightly at June 30, 2021, compared with December 31, 2020, as a result of paydowns, partially offset

by limited loan draws. Table 1211 provides ~~a breakout of~~our commercial and industrial loans and lease financing by industry. The industry categories are based on the North American Industry Classification System.

Table 11:Commercial and ~~includes $59.7~~Industrial Loans and Lease Financing by Industry


	June 30, 2021							December 31, 2020
($ in millions)	Nonaccrual loans		Total portfolio	% of total loans		Total commitments (1)		Nonaccrual loans		Total portfolio	% of total loans		Total commitments (1)
Financials except banks	$	154	124,759	15	%	$	215,207	$	160	117,726	13	%	$	206,999
Technology, telecom and media	65		20,669	2		59,245		144		23,061	3		56,500
Real estate and construction	136		22,488	3		54,354		133		23,113	3		51,526
Equipment, machinery and parts manufacturing	41		16,833	2		40,174		81		18,158	2		41,332
Retail	44		16,726	2		39,732		94		17,393	2		41,669
Materials and commodities	19		13,033	2		35,232		39		12,071	1		33,879
Food and beverage manufacturing	9		11,955	1		29,460		17		12,401	1		28,908
Health care and pharmaceuticals	26		13,484	2		29,259		145		15,322	2		32,154
Oil, gas and pipelines	486		9,186	1		28,785		953		10,471	1		30,055
Auto related	63		9,873	1		25,036		79		11,817	1		25,034
Commercial services	76		10,018	1		23,965		107		10,284	1		24,442
Utilities	67		7,136	*		21,615		2		5,031	*		18,564
Insurance and fiduciaries	1		4,371	*		19,233		2		3,297	*		14,334
Diversified or miscellaneous	27		6,309	*		17,108		7		5,437	*		14,717
Transportation services	492		8,566	1		16,866		573		9,236	1		15,531
Entertainment and recreation	68		7,612	*		15,540		263		9,884	1		17,551
Banks	—		14,839	2		15,290		—		12,789	1		13,842
Agribusiness	57		5,402	*		11,221		81		6,314	*		11,642
Government and education	4		5,033	*		10,793		9		5,464	*		11,065
Other (2)	71		5,046	*		19,693		68		5,623	*		23,315
Total	$	1,906	333,338	39	%	$	727,808	$	2,957	334,892	33	%	$	713,059

*Less than 1%.

(1)Total commitments consist of loans outstanding plus unfunded credit commitments, excluding issued letters of credit.

(2)No other single industry had total loans in excess of $3.4 billion and $3.8 billion at June 30, 2021, and December 31, 2020, respectively.

Loans to financials except banks, our largest industry concentration, is predominantly comprised of loans to investment firms, financial vehicles, and nonbank creditors. We had $88.1 billion and $80.0 billion of ~~foreign~~ loans originated by our Asset Backed Finance (ABF) and Financial Institution Group (FIG) lines of business at ~~September~~June 30, ~~2017. Foreign~~2021, and December 31, 2020, respectively. These loans ~~totaled $19.4 billion within the investor category, $16.2 billion within the financial institutions category and $1.4 billion within the oil and gas category.~~

~~The investors category includes~~include: (i) loans to ~~special purpose vehicles (SPVs) formed~~customers related to their subscription or capital calls, (ii) loans to nonbank lenders collateralized by ~~sponsoring entities~~commercial loans, and (iii) loans to ~~invest in~~originators or servicers of financial assets ~~backed predominantly~~collateralized by ~~commercial and~~ residential real estate or ~~corporate cash flow,~~other consumer loans such as credit cards, auto loans and leases, student loans and other financial assets eligible for the securitization market. These ABF and FIG 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 and FIG 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. In addition, loans to financials except banks included collateralized loan obligations (CLOs) in loan form, all of which were rated AA or above, of $8.1 billion and $7.9 billion at June 30, 2021, and December 31, 2020, respectively.

~~We provide financial institutions with a variety of relationship focused products~~Oil, gas and ~~services, including~~pipelines loans ~~supporting short-term trade finance~~included $6.6 billion and ~~working capital needs. The $16.2~~$7.5 billion of ~~foreign~~senior secured loans outstanding at June 30, 2021, and December 31, 2020, respectively. Oil, gas and pipelines

nonaccrual loans decreased at June 30, 2021, compared with December 31, 2020, driven by loan payoffs.

We continue to perform escalated credit monitoring for certain industries that we consider to be directly and most adversely affected by the COVID-19 pandemic.

Our commercial and industrial loans and lease financing portfolio also includes non-U.S. loans of $72.1 billion and $63.8 billion at June 30, 2021, and December 31, 2020, respectively. Significant industry concentrations of non-U.S. loans at June 30, 2021, and December 31, 2020, respectively, included:

•$43.5 billion and $36.2 billion in the ~~financial institutions category were predominantly originated by our Financial Institutions business.~~financials except banks category;

~~The oil~~•$14.7 billion and ~~gas loan portfolio totaled~~ $12.8 billion ~~or 1% of total outstanding loans at September 30, 2017, compared with $14.8~~in the banks category; and

•$1.4 billion ~~or 2% of total outstanding loans, at December 31, 2016. Unfunded loan commitments~~and $1.6 billion in the oil, gas and 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 gas nonaccrual loans decreased to $1.6 billion at September 30, 2017, compared with $2.4 billion at December 31, 2016, due to improved portfolio performance.pipelines category.

~~Table 12: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 %


~~(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 breakout of commercial foreign loans.


~~(2)~~	~~Includes~~ ~~$116 million~~ ~~of PCI loans, which are considered to be accruing due to the existence of the accretable yield and not based on consideration given to contractual interest payments.~~


~~(3)~~	~~No other single industry had total loans in excess of~~ ~~$6.8 billion~~.

~~Risk Management - Credit Risk Management (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. We had $15.6 billion of CRE mortgage loans classified as criticized at June 30, 2021, compared with $12.0 billion at December 31, 2020, and $2.6 billion of CRE construction loans classified as criticized at June 30, 2021,


32			Wells Fargo & Company

compared with $1.6 billion at December 31, 2020. The increase in criticized CRE mortgage and construction loans was driven by the hotel/motel, apartment, institutional, and office property types and reflected the economic impact of the COVID-19 pandemic. Due to uncertainty in the recovery from the economic impacts of the COVID-19 pandemic, the credit quality of certain property types within our CRE loan portfolio, such as retail, hotel/motel, office buildings, and shopping centers, could continue to be adversely affected.

The total CRE loan portfolio decreased $441 million from December 31, 2020, driven by a decrease in CRE mortgage loans predominantly related to the office, retail (excluding shopping

center), and shopping center property types, partially offset by an increase in loans related to apartments. The CRE loan portfolio ~~which~~ included ~~$8.7~~$8.4 billion of ~~foreign~~non-U.S. CRE loans ~~totaled $153.0 billion, or 16% of total loans,~~ at ~~September~~June 30, ~~2017, and consisted of $128.5 billion of mortgage loans and $24.5 billion of construction loans.~~

~~Table 13 summarizes CRE loans by state and property type with the related nonaccrual totals.~~2021. 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%~~48% of the total CRE portfolio. ByThe largest property type ~~the largest~~ concentrations are office buildings at ~~28%~~25% and apartments at ~~16%~~20% of the portfolio. CRE nonaccrual loans totaled 0.4% of the CRE outstanding balance at September 30, 2017, compared with 0.5% at December 31, 2016. At September 30, 2017, we had $4.8 billion of criticized CRE mortgage loans, compared with $5.4 billion at December 31, 2016, and $327 million of criticized CRE construction loans, compared with $461 million at December 31, 2016.

~~At September 30, 2017, the recorded investment in PCI~~Table 12 summarizes CRE loans ~~totaled $118 million, down from $12.3 billion when acquired~~by state and property type with the related nonaccrual totals at ~~December 31, 2008, reflecting principal payments, loan resolutions and write-downs.~~June 30, 2021.

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


	June 30, 2021
	Real estate mortgage			Real estate construction		Total		% of total loans
($ in millions)	Nonaccrual loans		Total portfolio	Nonaccrual loans	Total portfolio	Nonaccrual loans	Total portfolio
By state:
California	$	218	30,684	3	4,380	221	35,064	4	%
New York	58		12,618	2	1,997	60	14,615	2
Florida	111		8,617	1	1,571	112	10,188	1
Texas	308		8,253	—	1,139	308	9,392	1
Washington	139		3,839	6	1,072	145	4,911	*
Georgia	51		3,820	—	585	51	4,405	*
North Carolina	11		3,526	—	871	11	4,397	*
Arizona	50		3,978	1	289	51	4,267	*
New Jersey	72		2,637	—	1,042	72	3,679	*
Colorado	12		3,146	—	440	12	3,586	*
Other (1)	568		39,560	32	9,020	600	48,580	6
Total	$	1,598	120,678	45	22,406	1,643	143,084	17	%
By property:
Office buildings	$	146	33,098	2	3,173	148	36,271	4	%
Apartments	27		20,645	—	8,208	27	28,853	3
Industrial/warehouse	88		15,331	2	1,746	90	17,077	2
Retail (excluding shopping center)	230		13,091	3	142	233	13,233	2
Hotel/motel	361		10,552	—	1,719	361	12,271	1
Shopping center	509		10,002	—	911	509	10,913	1
Institutional	54		4,289	20	2,619	74	6,908	*
Mixed use properties	98		5,306	—	938	98	6,244	*
Collateral pool	—		2,947	—	191	—	3,138	*
1-4 family structure	—		8	—	1,348	—	1,356	*
Other	85		5,409	18	1,411	103	6,820	*
Total	$	1,598	120,678	45	22,406	1,643	143,084	17	%

* Less than 1%.

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

September 30, 2017
Real estate mortgage Real estate construction Total
(in millions)
Nonaccrual
loans

Total
portfolio

(1)
Nonaccrual
loans

Total
portfolio

(1)
Nonaccrual
loans

Total
portfolio

(1)
% of
total
loans

By state:
California $ 127
36,398
2
4,245
129
40,643
4 %
New York 12
10,366
—
2,869
12
13,235
1
Texas 102
9,245
—
2,160
102
11,405
1
Florida 33
8,016
—
1,830
33
9,846
1
North Carolina 31
4,100
6
785
37
4,885
1
Arizona 27
3,944
—
643
27
4,587
*
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
*
Other 213
43,176
29
9,034
242
52,210
(2) 5
Total $ 593
128,475
38
24,520
631
152,995
16 %
By property:
Office buildings $ 130
39,959
2
3,187
132
43,146
5 %
Apartments 24
15,417
—
8,857
24
24,274
3
Industrial/warehouse 142
15,801
2
1,847
144
17,648
2
Retail (excluding shopping center) 66
16,873
—
617
66
17,490
2
Shopping center 16
11,835
—
1,158
16
12,993
1
Hotel/motel 8
9,685
4
1,716
12
11,401
1
Real estate - other 90
6,849
—
170
90
7,019
1
Institutional 36
3,247
—
1,564
36
4,811
1
Agriculture 30
2,613
—
19
30
2,632
*
1-4 family structure —
10
7
2,460
7
2,470
*
Other 51
6,186
23
2,925
74
9,111
1
Total $ 593
128,475
38
24,520
631
152,995
16 %


*			~~Less than 1%.~~Wells Fargo & Company			33


~~(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~~.

Risk Management – Credit Risk Management (continued)

~~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~~June 30, ~~2017, foreign~~2021, non-U.S. loans totaled ~~$68.8~~$80.8 billion, representing approximately 7%9% of our total consolidated loans outstanding, compared with ~~$65.7~~$72.9 billion, or approximately 7%8% of our total consolidated loans outstanding, at December 31, ~~2016. Foreign~~2020. Non-U.S. loans were approximately 4% of our total consolidated ~~total~~ assets at ~~September~~both June 30, ~~2017~~2021, and ~~3% at~~ December 31, ~~2016.~~2020.

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 ~~based on our assessment of risk~~outside the U.S. at ~~September~~June 30, ~~2017,~~2021, was the United Kingdom, which totaled ~~$29.6~~$34.4 billion, or approximately 2% of our total assets, and included ~~$7.1~~$7.7 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 the European Union (Brexit) on March 29, 2017, starting the two-year negotiation process leading 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.

We conduct periodic stress tests of our significant country risk exposures, analyzing the direct and indirect impacts 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 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 our normal risk management processes which include active monitoring and, if necessary, the application of aggressive loss mitigation strategies.

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 and deposits exposure includes outstanding loans, unfunded credit commitments, and deposits with non-U.S. banks. These balances are presented prior to the deduction of 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 agreements.

Table 13:Select Country Exposures


	June 30, 2021
	Lending and deposits			Securities		Derivatives and other		Total exposure
($ in millions)	Sovereign		Non-sovereign	Sovereign	Non-sovereign	Sovereign	Non-sovereign	Sovereign	Non- sovereign (1)	Total
Top 20 country exposures:
United Kingdom	$	7,716	23,986	—	970	—	1,689	7,716	26,645	34,361
Canada	2		16,693	1	(19)	2	456	5	17,130	17,135
Japan	19		700	11,173	161	—	46	11,192	907	12,099
Cayman Islands	—		6,757	—	—	—	153	—	6,910	6,910
Ireland	254		5,050	—	155	—	117	254	5,322	5,576
Luxembourg	—		4,258	—	126	—	129	—	4,513	4,513
Guernsey	—		4,157	—	3	—	39	—	4,199	4,199
Bermuda	—		3,842	—	65	—	130	—	4,037	4,037
China	—		3,353	(2)	447	17	39	15	3,839	3,854
Germany	—		3,073	—	62	3	93	3	3,228	3,231
France	131		2,233	—	212	184	12	315	2,457	2,772
Netherlands	—		1,978	3	211	—	116	3	2,305	2,308
South Korea	—		1,991	—	198	2	13	2	2,202	2,204
Brazil	—		1,438	—	2	3	—	3	1,440	1,443
Switzerland	—		1,193	—	(13)	—	212	—	1,392	1,392
United Arab Emirates	—		1,014	—	87	—	—	—	1,101	1,101
Australia	—		992	—	8	—	11	—	1,011	1,011
Singapore	—		820	—	51	—	98	—	969	969
Chile	—		918	—	—	—	—	—	918	918
India	—		877	—	20	—	—	—	897	897
Total top 20 country exposures	$	8,122	85,323	11,175	2,746	211	3,353	19,508	91,422	110,930

(1)Total non-sovereign exposure comprised $47.6 billion exposure to ~~Puerto Rico (considered part of U.S. exposure) is largely through automobile lending~~financial institutions and ~~was not material~~$43.8 billion 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.

non-financial corporations at June 30, 2021.

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

~~REAL ESTATE 1-4 FAMILY FIRST AND JUNIOR LIEN~~RESIDENTIAL MORTGAGE LOANSOur ~~real estate~~residential mortgage loan portfolio is comprised of 1-4 family first and junior lien mortgage loans. Residential mortgage – first lien loans ~~as presented in Table 15, include loans we have made to customers~~comprised 93% of the total residential mortgage loan portfolio at both June 30, 2021, and ~~retained as part of our asset/liability management strategy, the Pick-a-Pay portfolio acquired from~~December 31, 2020.

~~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).~~

The ~~real estate 1-4 family~~residential mortgage loan portfolio includes some loans with adjustable-rate features and some with an interest-only feature as part of the loan terms. Interest-only loans were approximately ~~5% and 7%~~3% of total loans at ~~September~~both June 30, ~~2017,~~2021, and December 31, ~~2016, respectively.~~2020. We believe ~~we have manageable~~our origination process appropriately addresses our adjustable-rate mortgage (ARM) reset risk across our ~~owned~~residential mortgage loan ~~portfolios.~~portfolios and our ACL for loans considers this risk. 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 are included 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, as a result of our modification and loss mitigation efforts. For more information, see the “Pick-a-Pay Portfolio” section in this Report.

We continue to modify ~~real estate 1-4 family~~residential mortgage loans to assist homeowners and other borrowers experiencing financial difficulties. For ~~more~~additional information on our modification programs, see the “Risk Management – Credit Risk Management – ~~Real Estate 1-4 Family First and Junior Lien~~Residential Mortgage Loans” section in our ~~2016~~2020 Form 10-K. For additional information on customer accommodations, including loan modifications, in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section in this Report.


34			Wells Fargo & Company

We monitor changes in real estate values and underlying economic or market conditions for all geographic areas of our residential mortgage 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, AVMs, and our policy for their use can be found in Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report and the “Risk Management – Credit Risk Management – Residential Mortgage Loans” section in our 2020 Form 10-K.

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~~residential mortgage loan portfolio. ~~These~~Excluding government insured/guaranteed loans, these credit risk indicators ~~which exclude government insured/guaranteed loans, continued to improve in third quarter 2017~~ on the ~~non-PCI~~residential mortgage ~~portfolio.~~ portfolio were:

•Loans 30 days or more delinquent at ~~September~~June 30, ~~2017,~~2021, totaled ~~$5.3~~$3.7 billion, or 2%1% of total ~~non-PCI~~ mortgages, compared with ~~$5.9~~$4.7 billion, or 2%, at December 31, ~~2016.~~ 2020. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies;

•Loans with FICO scores lower than 640 totaled ~~$12.2~~$4.3 billion, or 4%2% of total ~~non-PCI~~ mortgages at ~~September~~June 30, ~~2017,~~2021, compared with ~~$16.6~~$5.6 billion, or 5%2%, at December 31, ~~2016.~~ 2020; and

•Mortgages with a LTV/CLTV greater than 100% totaled ~~$6.7 billion~~$912 million at ~~September~~June 30, ~~2017,~~2021, or 2%less than 1% of total ~~non-PCI~~ mortgages, compared with ~~$8.9~~$1.6 billion, or 3%1%, at December 31, ~~2016.~~ 2020.

Information regarding ~~credit quality indicators, including PCI~~ credit quality indicators can be found in Note 54 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

~~Real estate 1-4 family first and junior lien~~ Residential mortgage loans by state are presented in Table ~~16.~~ 14.

Table 14:Residential Mortgage Loans by State


	June 30, 2021
($ in millions)	Residential mortgage – first lien		Residential mortgage – junior lien	Total residential mortgage	% of total loans
Residential mortgage loans:
California (1)	$	96,679	5,155	101,834	12	%
New York	29,635		1,117	30,752	4
New Jersey	10,491		1,988	12,479	1
Florida	9,839		1,804	11,643	1
Washington	8,088		414	8,502	1
Texas	6,956		388	7,344	1
Virginia	5,656		1,148	6,804	1
North Carolina	4,380		932	5,312	1
Colorado	4,668		400	5,068	1
Other (2)	47,748		6,291	54,039	6
Government insured/guaranteed loans (3)	20,231		—	20,231	2
Total	$	244,371	19,637	264,008	31	%

(1)Our ~~real estate 1-4 family~~residential mortgage loans ~~(including PCI loans)~~ to borrowers in California ~~represented approximately 13% of total loans at September 30, 2017,~~are 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~~

(2)Consists of 41 states; no state in ~~real estate values and underlying economic~~Other had loans in excess of $5.1 billion.

(3)Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or ~~market conditions for all geographic areas~~guaranteed by the Department of ~~our real estate 1-4 family mortgage portfolio as part of~~Veterans Affairs (VA).


			Wells Fargo & Company			35

our credit risk management process. Our underwriting and periodic review of loans secured by residential real estate collateral includes appraisals or estimates from automated valuation models (AVMs) to support property values. Additional information about AVMs and our policy for their use can be found in Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report and the “Risk

Risk Management – Credit Risk Management ~~– Real Estate 1-4 Family First and Junior Lien Mortgage Loans” section in our 2016 Form 10-K.~~(continued)

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

September 30, 2017
(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 loans (excluding PCI):
California $ 99,380
11,006
110,386
12 %
New York 26,008
1,989
27,997
3
Florida 13,278
3,824
17,102
2
New Jersey 13,116
3,704
16,820
2
Virginia 7,899
2,442
10,341
1
Washington 8,589
900
9,489
1
Texas 8,732
746
9,478
1
North Carolina 6,053
1,930
7,983
1
Pennsylvania 5,681
2,275
7,956
1
Other (1) 64,530
12,307
76,837
8
Government insured/
guaranteed loans (2)
13,606
—
13,606
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 %


~~(1)~~	~~Consists of~~ 41 ~~states; no state 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~~)

Residential Mortgage – First Lien ~~Mortgage~~ PortfolioOur total ~~real estate 1-4 family~~residential mortgage – first lien ~~mortgage~~ portfolio ~~increased $3.6~~decreased $32.3 billion ~~in third quarter 2017 and $4.6 billion in the first nine months of 2017, as non-conforming~~from December 31, 2020, driven by loan growth was partially offset by a decline in Pick-a-Pay 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)paydowns as a ~~percentage~~result of ~~average real estate 1-4 family~~the low interest rate environment and the transfer of $10.8 billion of first lien mortgage loans ~~improved~~to loans held for sale (LHFS) substantially all of which related to the sales of loans purchased

~~to a net recovery~~from GNMA loan securitization pools in prior periods, partially offset by originations 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 a year ago. Nonaccrual loans were $4.2 billion at September 30, 2017, compared with $5.0 billion at December 31, 2016. Improvement in the credit performance was driven by an improving housing environment. Real estate 1-4 family first lien mortgage loans originated after 2008, which generally utilized tighter underwriting standards, have resulted 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.$30.8 billion.

Table 1715 shows certain delinquency and loss information for the residential mortgage – first lien ~~mortgage~~ portfolio and lists the top five states by outstanding balance.

Table ~~17:~~15:Residential Mortgage – First Lien ~~Mortgage~~ Portfolio Performance


	Outstanding balance			% of loans 30 days or more past due			Loss (recovery) rate (annualized) quarter ended
($ in millions)	Jun 30, 2021		Dec 31, 2020	Jun 30, 2021		Dec 31, 2020	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020




California	$	96,679	104,260	0.84	%	1.00	(0.02)	(0.02)	(0.03)	(0.01)	(0.01)
New York	29,635		31,028	1.12		1.40	0.01	(0.01)	0.01	0.02	0.02
New Jersey	10,491		12,073	1.71		1.92	(0.03)	—	(0.03)	(0.01)	0.03
Florida	9,839		10,623	2.04		2.56	(0.14)	(0.11)	0.01	0.03	(0.01)
Washington	8,088		9,094	0.51		0.66	(0.02)	0.02	(0.01)	0.01	(0.01)
Other	69,408		79,356	1.42		1.60	(0.06)	(0.09)	0.02	(0.01)	0.01
Total	224,140		246,434	1.14		1.34	(0.03)	(0.04)	—	—	—
Government insured/guaranteed loans	20,231		30,240
Total first lien mortgage portfolio	$	244,371	276,674

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 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.

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~~)

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~~ PortfolioThe residential mortgage – 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~~primarily amortizing payment loans with fixed interest rates and repayment periods between five to 30 years.

We continuously monitor the credit performance of our residential mortgage –

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~~losses, such as residential mortgage – junior lien ~~mortgages is high and generally not affected by whether we or a third party own or service~~performance when the ~~related~~residential mortgage – first lien loan is delinquent.

The decrease in the residential mortgage but the frequency of delinquency is typically lower 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,~~portfolio at June 30, 2021, 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 borrower is delinquent on the corresponding first lien mortgage loans.

December 31, 2020, reflected loan paydowns. Table 2016 shows certain delinquency and loss information for the residential mortgage – junior lien ~~mortgage~~ portfolio and lists the top five states by outstanding balance. ~~The decrease in outstanding balances since December 31, 2016, predominantly reflects loan paydowns.~~

Table 16:Residential Mortgage – Junior Lien Portfolio Performance


	Outstanding balance			% of loans 30 days or more past due			Loss (recovery) rate (annualized) quarter ended
($ in millions)	Jun 30, 2021		Dec 31, 2020	Jun 30, 2021		Dec 31, 2020		Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020


California	$	5,155	6,237	2.49	%	2.20		(0.67)	(0.69)	(0.46)	(0.34)	(0.26)
New Jersey	1,988		2,258	2.78		2.84		(0.33)	0.32	(0.06)	(0.02)	(0.12)
Florida	1,804		2,119	2.67		3.06		(0.78)	(0.11)	(0.35)	(0.22)	(0.01)
Pennsylvania	1,196		1,377	2.22		2.30		(0.13)	(0.22)	(0.62)	(0.19)	0.05
Virginia	1,148		1,355	2.53		2.41		(0.62)	(0.29)	(0.15)	(0.34)	(0.05)
Other	8,346		9,940	2.37		2.31		(0.64)	(0.36)	(0.43)	(0.17)	(0.21)
Total junior lien mortgage portfolio	$	19,637	23,286	2.47	%	2.41		(0.60)	(0.35)	(0.39)	(0.22)	(0.17)

As of ~~September~~June 30, ~~2017, 10%~~2021, with respect to loans in the residential mortgage – junior lien portfolio that had a CLTV ratio in excess of 100%:

•such loans totaled 2% of the outstanding balance of the residential mortgage – 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%~~portfolio;

•3% were 30 days or more past due. ~~CLTV means~~Customer payment deferral activities instituted in response to the ~~ratio~~COVID-19 pandemic could continue to delay the recognition of delinquencies; and

•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 residential mortgage – junior lien ~~mortgage portfolio at September 30, 2017.~~portfolio.

CLTV represents the ratio of the total loan balance of first and junior lien mortgages (including unused line amounts for credit line products) to property collateral value. For additional information on consumer loans by LTV/CLTV, see Table ~~5.12~~4.11 in Note 54 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.


36			Wells Fargo & Company

Residential Mortgage – Junior Lien Line and Loan and Residential 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 $ 11,006
12,539
1.89 % 1.86 (0.46 ) (0.42 ) (0.37 ) (0.18 ) (0.13 )
Florida 3,824
4,252
2.78
2.17 0.06
(0.10 ) 0.30
0.47
0.56
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
Pennsylvania 2,275
2,494
2.07
2.07 0.47
0.29
0.67
1.01
0.75
Other 17,872
20,189
2.11
2.09 0.06
0.05
0.28
0.39
0.51
Total 41,123

46,201
2.16
2.09 —
(0.03 ) 0.21
0.38
0.40
PCI 29
36

Total junior lien mortgages $ 41,152
46,237

– First Lien Line 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~~interest-only or (2) 1.5% of outstanding principal balance plus accrued interest. As of June 30, 2021, 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 junior lien portfolio. In September 2017, approximately 48% of these borrowers paid only the minimum amount due and approximately 46% 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 payment feature, approximately 33% paid only the minimum amount due and approximately 62% 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~~ACL for ~~credit loss~~loans 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 2117 reflects the outstanding balance of our portfolio of residential mortgage – junior ~~lien mortgages,~~liens, including lines and loans, and ~~senior~~residential mortgage – first lien lines segregated into scheduled 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~~The unfunded credit commitments for residential mortgage – 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 $49.8 billion at ~~the date of acquisition.~~June 30, 2021.

Table ~~21:~~17:Residential Mortgage – Junior Lien ~~Mortgage~~ Line and Loan and ~~Senior~~Residential Mortgage – First Lien ~~Mortgage~~ Line Portfolios Payment Schedule


					Scheduled end of draw/term					Amortizing (2)
	Outstanding balance			Remainder of 2021					2026 and
($ in millions)	June 30, 2021				2022	2023	2024	2025	thereafter (1)


Residential mortgage – junior lien lines and loans	$	19,637		384	2,271	1,563	1,239	2,059	6,050	6,071
Residential mortgage – first lien lines	7,957			212	1,212	929	721	1,006	2,495	1,382
Total	$	27,594		596	3,483	2,492	1,960	3,065	8,545	7,453
% of portfolios	100		%	2	13	9	7	11	31	27

(1)Substantially all lines and loans are scheduled to convert to amortizing loans by the end of 2030, with annual scheduled amounts through 2030 ranging from $914 million to $3.3 billion and averaging $1.7 billion per year.

(2)Includes $69 million of end-of-term balloon payments which were past due.

At June 30, 2021, $339 million, or 2%, of lines in their draw period were 30 days or more past due, compared with $347 million, or 5%, of amortizing lines of credit. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies. On a monthly basis, we monitor the payment characteristics of borrowers in our residential mortgage – first and junior lien lines of credit portfolios. In June 2021, excluding borrowers with COVID-related loan modification payment deferrals:

•Approximately 43% of these borrowers paid only the minimum amount due and approximately 52% 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 payment feature, approximately 28% paid only the minimum amount due and approximately 67% paid more than the minimum amount due.

Table 18: Credit Card, Auto, and Other Consumer Loans


	June 30, 2021				December 31, 2020
($ in millions)	Outstanding balance		% of total loans		Outstanding balance		% of total loans
Credit card	$	34,936	4.10	%	$	36,664	4.13	%
Auto	51,073		5.99		48,187		5.43
Other consumer (1)	25,861		3.03		24,409		2.75
Total	$	111,870	13.13	%	$	109,260	12.31	%

(1)Other consumer loans primarily include securities-based loans.

Scheduled end of draw / term
(in millions) Outstanding balance September 30, 2017
Remainder of 2017
2018
2019
2020
2021

2022 and
thereafter (1)

Amortizing
Junior lien lines and loans $ 41,123
538
1,771
770
703
1,410
22,562
13,369
First lien lines 13,809
89
578
284
263
616
9,899
2,080
Total (2)(3) $ 54,932
627
2,349
1,054
966
2,026
32,461
15,449
% of portfolios 100 % 1
4
2
2
4
59
28


~~(1)~~	~~Substantially all lines and loans are scheduled to convert to amortizing loans by the end of 2026, with annual scheduled amounts through that date ranging from~~ ~~$4.2 billion~~ to ~~$7.2 billion~~ ~~and averaging~~ ~~$6.1 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~~CARDOur credit card portfolio totaled ~~$36.2~~$34.9 billion at ~~September~~June 30, ~~2017, which represented 4% of our total outstanding loans. The net charge-off rate (annualized) for our credit card portfolio was 3.08% for third quarter 2017,~~2021, compared with ~~2.82% for third quarter 2016 and 3.43% and 3.07% for the first nine months of 2017 and 2016, respectively, principally from seasoning of newer vintages.~~

~~AUTOMOBILEOur automobile portfolio, predominantly composed of indirect loans, totaled $55.5~~$36.7 billion at ~~September~~December 31, 2020. The decrease in the outstanding balance at June 30, ~~2017. The net charge-off rate (annualized) for our automobile portfolio was 1.41% for third quarter 2017,~~2021, compared with ~~0.87% for third quarter 2016 and 1.12% and 0.77% for the first nine months of 2017 and 2016, respectively. The increase in net charge-offs in 2017, compared with 2016,~~December 31, 2020, was due to increased loss severities resulting from a temporary moratorium 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.

seasonal paydowns.

AUTOOur auto portfolio totaled $51.1 billion at June 30, 2021, compared with $48.2 billion at December 31, 2020. The outstanding balance at June 30, 2021, compared with December 31, 2020, increased as originations exceeded paydowns.

OTHER ~~REVOLVING CREDIT AND INSTALLMENT~~CONSUMEROther consumer loans, which include revolving credit and installment loans, totaled ~~$38.7~~$25.9 billion at ~~September~~June 30, ~~2017, and primarily included student and securities-based loans. Our private student loan portfolio totaled $12.2~~2021, compared with $24.4 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~~December 31, 2017. The net charge-off rate (annualized) for other revolving credit and installment loans was 1.44% for third quarter 2017, compared with 1.40% for third quarter 2016 and 1.54% and 1.38% for the first nine months of 2017 and 2016, respectively.

2020.


			Wells Fargo & Company			37

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

(continued)

NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS)For information about when we generally place loans on nonaccrual status, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of nonaccrual loans for those customers who would have otherwise moved into nonaccrual status. For additional

information on customer accommodations, including loan modifications, in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section in this Report.

Table 2219 summarizes nonperforming assets (NPAs) for each of the last four quarters. ~~Total NPAs decreased $512 million from second quarter 2017 to $9.3 billion with improvement across our consumer~~

Table 19:Nonperforming Assets (Nonaccrual Loans and ~~commercial portfolios. Nonaccrual~~Foreclosed Assets)


	June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
($ in millions)	Balance		% of total loans		Balance		% of total loans		Balance		% of total loans		Balance		% of total loans
Nonaccrual loans:
Commercial:
Commercial and industrial	$	1,691	0.53	%	$	2,223	0.70	%	$	2,698	0.85	%	$	2,834	0.88	%
Real estate mortgage	1,598		1.32		1,703		1.41		1,774		1.46		1,343		1.10
Real estate construction	45		0.20		55		0.26		48		0.22		34		0.15
Lease financing	215		1.37		249		1.58		259		1.61		187		1.10
Total commercial	3,549		0.74		4,230		0.89		4,779		1.00		4,398		0.91
Consumer:
Residential mortgage – first lien (1)	2,852		1.17		2,859		1.12		2,957		1.07		2,641		0.90
Residential mortgage – junior lien (1)	713		3.63		747		3.51		754		3.24		767		3.05
Auto	221		0.43		181		0.37		202		0.42		176		0.36
Other consumer	36		0.14		38		0.15		36		0.15		40		0.12
Total consumer	3,822		1.02		3,825		1.00		3,949		0.97		3,624		0.83
Total nonaccrual loans	7,371		0.86		8,055		0.93		8,728		0.98		8,022		0.87
Foreclosed assets:
Government insured/guaranteed (2)	15				16				18				22
Non-government insured/guaranteed	114				124				141				134
Total foreclosed assets	129				140				159				156
Total nonperforming assets	$	7,500	0.88	%	$	8,195	0.95	%	$	8,887	1.00	%	$	8,178	0.89	%
Change in NPAs from prior quarter	$	(695)			$	(692)			$	709			$	378

(1)Residential mortgage loans decreased $437 million from second quarter 2017 to $8.6 billion reflecting declines in commercial and industrial nonaccruals, as well as continued lower consumer real estate nonaccruals. Foreclosed assets of $706 million were down $75 million from second quarter 2017.

~~We generally place loans on nonaccrual status when:~~

predominantly insured by the ~~full and timely collection of interest~~FHA or ~~principal becomes uncertain (generally based on an assessment of~~guaranteed by 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 in the process of collection;~~

~~part of the principal balance has been charged off;~~

~~for junior lien mortgages, we have evidence that the related first lien mortgage may 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~~VA are not placed on nonaccrual status ~~but~~because they are ~~generally fully charged off when~~insured or guaranteed.

(2)Consistent with regulatory reporting requirements, foreclosed real estate resulting from government insured/guaranteed loans are classified as nonperforming. Both principal and interest related to these foreclosed real estate assets are collectible because the ~~loan reaches 180 days past due.~~loans were predominantly insured by the FHA or guaranteed by the VA. Receivables related to the foreclosure of certain government guaranteed real estate mortgage loans are excluded from this table and included in Accounts Receivable in Other Assets. For additional information on foreclosed assets, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

Commercial nonaccrual loans decreased $1.2 billion from December 31, 2020, predominantly due to a decline in commercial and industrial nonaccrual loans, driven by a decrease in oil, gas, and pipeline nonaccrual loans, reflecting improvement in the economic environment. For additional information on commercial and industrial nonaccrual loans, see the “Risk Management – Credit Risk Management – Commercial and Industrial Loans and Lease Financing” section in this Report.

Consumer nonaccrual loans decreased $127 million from December 31, 2020, driven by a decline in residential mortgage nonaccrual loans.

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

September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
($ in millions) 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 %
Real estate mortgage 593
0.46
630
0.48
672
0.51
685
0.52
Real estate construction 38
0.15
34
0.13
40
0.16
43
0.18
Lease financing 81
0.42
89
0.46
96
0.50
115
0.60
Total commercial 3,109
0.62
3,385
0.67
3,706
0.73
4,059
0.80
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
Real estate 1-4 family junior lien mortgage 1,101
2.68
1,095
2.56
1,153
2.60
1,206
2.61
Automobile 137
0.25
104
0.18
101
0.17
106
0.17
Other revolving credit and installment 59
0.15
59
0.15
56
0.14
51
0.13
Total consumer (2) 5,510
1.22
5,671
1.26
6,053
1.34
6,325
1.37
Total nonaccrual loans (3)(4)(5) 8,619
0.91
9,056
0.95
9,759
1.02
10,384
1.07
Foreclosed assets:
Government insured/guaranteed (6) 137
149
179
197

Non-government insured/guaranteed 569
632
726
781

Total foreclosed assets 706
781
905
978

Total nonperforming assets $ 9,325
0.98 % $ 9,837
1.03 % $ 10,664
1.11 % $ 11,362
1.17 %
Change in NPAs from prior quarter $ (512 ) (827 ) (698 ) (644 )


~~(1)~~38			~~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.~~

Wells Fargo & Company
~~(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)~~

Consistent with regulatory reporting requirements, foreclosed real estate resulting from government insured/guaranteed loans are classified as nonperforming. However, 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 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, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2016~~ ~~Form 10-K.~~

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

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

Quarter ended
(in millions) Sep 30,
2017
Jun 30,
2017
Mar 31,
2017
Dec 31,
2016
Sep 30,
2016
Commercial nonaccrual loans
Balance, beginning of period $ 3,385
3,706
4,059
4,262
4,507
Inflows 627
704
945
951
1,180
Outflows:
Returned to accruing (97 ) (61 ) (133 ) (59 ) (80 )
Foreclosures (3 ) (15 ) (1 ) (15 ) (1 )
Charge-offs (173 ) (116 ) (202 ) (292 ) (290 )
Payments, sales and other (630 ) (833 ) (962 ) (788 ) (1,054 )
Total outflows (903 ) (1,025 ) (1,298 ) (1,154 ) (1,425 )
Balance, end of period 3,109

3,385

3,706

4,059

4,262
Consumer nonaccrual loans
Balance, beginning of period 5,671
6,053
6,325
6,724
7,456
Inflows (1) 887
676
814
863
868
Outflows:
Returned to accruing (397 ) (425 ) (428 ) (410 ) (597 )
Foreclosures (56 ) (72 ) (81 ) (59 ) (85 )
Charge-offs (109 ) (117 ) (151 ) (158 ) (192 )
Payments, sales and other (486 ) (444 ) (426 ) (635 ) (726 )
Total outflows (1,048 ) (1,058 ) (1,086 ) (1,262 ) (1,600 )
Balance, end of period 5,510

5,671

6,053

6,325

6,724
Total nonaccrual loans $ 8,619
9,056
9,759
10,384
10,986


~~(1)~~	~~Quarter ended September 30, 2017, includes an incremental $171 million of nonaccrual loans, reflecting updated industry regulatory guidance related to loans in bankruptcy.~~

Typically, changes to nonaccrual loans period-over-period represent inflows for loans that are placed on nonaccrual status in accordance with our ~~policy,~~policies, 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~~

Table 20:Analysis of ~~loss content, we~~Changes in Nonaccrual Loans


	Quarter ended


(in millions)	Jun 30, 2021		Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020
Commercial nonaccrual loans
Balance, beginning of period	$	4,230	4,779	4,398	4,285	2,875
Inflows	560		773	1,696	1,316	2,741
Outflows:
Returned to accruing	(287)		(177)	(99)	(166)	(64)
Foreclosures	(3)		(6)	(37)	—	—
Charge-offs	(145)		(202)	(367)	(382)	(560)
Payments, sales and other	(806)		(937)	(812)	(655)	(707)
Total outflows	(1,241)		(1,322)	(1,315)	(1,203)	(1,331)
Balance, end of period	3,549		4,230	4,779	4,398	4,285
Consumer nonaccrual loans
Balance, beginning of period	3,825		3,949	3,624	3,320	3,281
Inflows	563		454	792	696	379
Outflows:
Returned to accruing	(200)		(152)	(208)	(160)	(135)
Foreclosures	(16)		(19)	(5)	(4)	(6)
Charge-offs	(17)		(26)	(36)	(36)	(39)
Payments, sales and other	(333)		(381)	(218)	(192)	(160)
Total outflows	(566)		(578)	(467)	(392)	(340)
Balance, end of period	3,822		3,825	3,949	3,624	3,320
Total nonaccrual loans	$	7,371	8,055	8,728	8,022	7,605

We believe exposure to loss on nonaccrual loans is ~~significantly~~ mitigated by the following factors at ~~September~~June 30, ~~2017:~~2021:

~~98%~~•96% of total commercial nonaccrual loans and 99% of total consumer nonaccrual loans are secured. Of the consumer nonaccrual loans, ~~96%~~93% are secured by real estate and ~~81%~~93% 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%~~•71% 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.

~~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.~~

~~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~~$1.0 billion of consumer loans in bankruptcy or discharged in bankruptcy, and classified as nonaccrual, ~~$1.5 billion~~$691 million were current.

•the remaining risk of loss of all nonaccrual loans has been considered in developing our allowance for loan losses.

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.~~modification. 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.


			Wells Fargo & Company			39

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


	Quarter ended


(in millions)	Jun 30, 2021		Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020
Summary by loan segment
Government insured/guaranteed	$	15	16	18	22	31
Commercial	63		64	70	39	45
Consumer	51		60	71	95	119
Total foreclosed assets	$	129	140	159	156	195
Analysis of changes in foreclosed assets
Balance, beginning of period	$	140	159	156	195	252
Net change in government insured/guaranteed (1)	(1)		(2)	(4)	(9)	(12)
Additions to foreclosed assets (2)	96		88	114	60	51
Reductions:
Sales	(104)		(107)	(104)	(88)	(98)
Write-downs and gains (losses) on sales	(2)		2	(3)	(2)	2
Total reductions	(106)		(105)	(107)	(90)	(96)
Balance, end of period	$	129	140	159	156	195

(1)Foreclosed government insured/guaranteed loans are temporarily transferred to and held by us as servicer, until reimbursement is received from FHA or VA.

(2)Includes loans moved into foreclosed assets from nonaccrual status and repossessed autos.

(in millions) Sep 30,
2017
Jun 30,
2017
Mar 31,
2017
Dec 31,
2016
Sep 30,
2016
Summary by loan segment
Government insured/guaranteed $ 137
149
179
197
282
PCI loans:
Commercial 67
79
84
91
98
Consumer 72
67
80
75
88
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
Analysis of changes in foreclosed assets (1)

Balance, beginning of period $ 781
905
978
1,020
1,117
Net change in government insured/guaranteed (2) (12 ) (30 ) (18 ) (85 ) (39 )
Additions to foreclosed assets (3) 198
233
288
405
261
Reductions:
Sales (257 ) (330 ) (307 ) (296 ) (421 )
Write-downs and gains (losses) on sales (4 ) 3
(36 ) (66 ) 102
Total reductions (261 ) (327 ) (343 ) (362 ) (319 )
Balance, end of period $ 706
781
905
978
1,020

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

Foreclosed assets at ~~September~~June 30, ~~2017,~~2021, included ~~$398~~$49 million of foreclosed residential real estate, of which ~~34%~~30% 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~~$129 million in foreclosed assets at ~~September~~June 30, ~~2017, 56%~~2021, 61% have been in the foreclosed assets portfolio for one year or less.

As part of our actions to support customers during the COVID-19 pandemic, we have temporarily suspended certain mortgage foreclosure activities, which has affected the amount of our foreclosed assets. For additional information on loans in process of foreclosure, see Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

TROUBLED DEBT RESTRUCTURINGS (TDRs)

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

(in millions) Sep 30,
2017

Jun 30,
2017

Mar 31,
2017

Dec 31,
2016

Sep 30,
2016
Commercial:
Commercial and industrial $ 2,424
2,629
2,484
2,584
2,445
Real estate mortgage 953
1,024
1,090
1,119
1,256
Real estate construction 48
62
73
91
95
Lease financing 39
21
8
6
8
Total commercial TDRs 3,464
3,736
3,655
3,800
3,804
Consumer:
Real estate 1-4 family first mortgage 12,617
13,141
13,680
14,134
14,761
Real estate 1-4 family junior lien mortgage 1,919
1,975
2,027
2,074
2,144
Credit Card 340
316
308
300
294
Automobile 88
85
80
85
89
Other revolving credit and installment 124
118
107
101
93
Trial modifications 183
215
261
299
348
Total consumer TDRs (1) 15,271
15,850
16,463
16,993
17,729
Total TDRs $ 18,735
19,586
20,118
20,793
21,533
TDRs on nonaccrual status $ 5,218
5,637
5,819
6,193
6,429
TDRs on accrual status (1) 13,517
13,949
14,299
14,600
15,104
Total TDRs $ 18,735
19,586
20,118
20,793
21,533


~~(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 25~~22 provides information regarding the recorded investment of loans modified in TDRs. ~~The allowance for loan losses for~~ TDRs ~~was $1.6 billion and $2.2 billion at September 30, 2017, and~~decreased from December 31, ~~2016, respectively. See Note 5 (Loans~~2020, due to paydowns and ~~Allowance for Credit Losses)~~a $436 million transfer from residential mortgage – first lien loans to ~~Financial Statements~~LHFS related to the sales of loans purchased from GNMA loan securitization pools in ~~this Report for additional information regarding TDRs.~~ 2020. The amount of our TDRs at June 30, 2021, would have otherwise been higher without the TDR relief provided by the CARES Act and Interagency Statement.

Table 22:TDR Balances


(in millions)	Jun 30, 2021		Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020
Commercial:
Commercial and industrial	$	1,225	1,331	1,933	2,082	1,882
Real estate mortgage	645		652	774	805	717
Real estate construction	15		21	15	21	20
Lease financing	9		9	9	9	10
Total commercial TDRs	1,894		2,013	2,731	2,917	2,629
Consumer:
Residential mortgage – first lien	8,841		9,446	9,764	9,420	7,176
Residential mortgage – junior lien	1,097		1,174	1,237	1,298	1,309
Credit card	368		411	458	494	510
Auto	196		156	176	156	108
Other consumer	63		67	67	190	173
Trial modifications	77		81	90	91	91
Total consumer TDRs	10,642		11,335	11,792	11,649	9,367
Total TDRs	$	12,536	13,348	14,523	14,566	11,996
TDRs on nonaccrual status	$	3,711	3,800	4,456	4,163	3,475
TDRs on accrual status:
Government insured/guaranteed	3,431		3,708	3,721	3,467	1,277
Non-government insured/guaranteed	5,394		5,840	6,346	6,936	7,244
Total TDRs	$	12,536	13,348	14,523	14,566	11,996


40			Wells Fargo & Company

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. The allowance for loan losses for TDRs was $360 million and $565 million at June 30, 2021, and December 31, 2020, respectively. 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 additional information on the CARES Act

and the Interagency Statement, see the “Risk Management – Credit Risk Management – Credit Quality Overview – COVID-Related Lending Accommodations” 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~~2020 Form 10-K.

Table 2623 provides an analysis of the changes in TDRs. Loans modified more than once as a TDR are reported as ~~TDR~~ inflows only in the period they are first modified. ~~Other than resolutions such as~~In addition to 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.

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

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


						Quarter ended


(in millions)	Jun 30, 2021		Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020
Commercial TDRs
Balance, beginning of period	$	2,013	2,731	2,917	2,629	2,042
Inflows (1)	336		155	486	866	971
Outflows
Charge-offs	(45)		(49)	(72)	(77)	(60)
Foreclosure	—		(5)	—	—	—
Payments, sales and other (2)	(410)		(819)	(600)	(501)	(324)
Balance, end of period	1,894		2,013	2,731	2,917	2,629
Consumer TDRs
Balance, beginning of period	11,335		11,792	11,649	9,367	9,523
Inflows (1)	495		633	1,226	2,805	425
Outflows
Charge-offs	(36)		(43)	(57)	(58)	(46)
Foreclosure	(15)		(14)	(5)	(7)	(8)
Payments, sales and other (2)	(1,133)		(1,024)	(1,020)	(458)	(510)
Net change in trial modifications (3)	(4)		(9)	(1)	—	(17)
Balance, end of period	10,642		11,335	11,792	11,649	9,367
Total TDRs	$	12,536	13,348	14,523	14,566	11,996

(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 normal amortization/accretion of loan basis adjustments and loans transferred to held for sale. Occasionally, loans that have been refinanced or restructured at market terms qualify as new loans, 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.

Quarter ended
(in millions) Sep 30,
2017
Jun 30,
2017
Mar 31,
2017
Dec 31,
2016
Sep 30,
2016
Commercial:
Balance, beginning of quarter $ 3,736
3,655
3,800
3,804
3,386
Inflows (1) 333
730
642
615
914
Outflows
Charge-offs (74 ) (59 ) (108 ) (120 ) (76 )
Foreclosures (2 ) (12 ) —
(13 ) (2 )
Payments, sales and other (2) (529 ) (578 ) (679 ) (486 ) (418 )
Balance, end of quarter 3,464
3,736
3,655
3,800
3,804
Consumer:
Balance, beginning of quarter 15,850
16,463
16,993
17,729
18,565
Inflows (1) 461
444
517
513
542
Outflows
Charge-offs (51 ) (51 ) (51 ) (48 ) (65 )
Foreclosures (146 ) (159 ) (179 ) (166 ) (230 )
Payments, sales and other (2) (811 ) (801 ) (779 ) (987 ) (1,067 )
Net change in trial modifications (3) (32 ) (46 ) (38 ) (48 ) (16 )
Balance, end of quarter 15,271
15,850
16,463
16,993
17,729
Total TDRs $ 18,735
19,586
20,118
20,793
21,533


~~(1)~~			~~Inflows include loans that modify, even if they resolve within the period as well as advances on loans that modified in a prior period.~~Wells Fargo & Company			41

~~(2)~~

~~Other outflows include normal amortization/accretion of loan basis adjustments and loans transferred to held-for-sale. It also includes~~ ~~$6 million~~ ~~and~~ ~~$4 million~~ ~~of loans refinanced or restructured at market terms and qualifying 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~~.

Risk Management – Credit Risk Management (continued)


~~(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~~residential mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. PCI loans are not included in 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.

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

~~stabilization. Also, fluctuations from quarter to quarter are 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 billion at September 30, 2017, down from $10.9 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.

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 54 (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)	Jun 30, 2021		Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020
Total:	$	4,703	6,273	7,041	11,698	9,739
Less: FHA insured/VA guaranteed (1)	3,966		5,406	6,351	11,041	8,922

Total, not government insured/guaranteed	$	737	867	690	657	817
By segment and class, not government insured/guaranteed: Commercial:
Commercial and industrial	$	165	55	39	61	101
Real estate mortgage	105		128	38	47	44
Real estate construction	7		86	1	—	—
Total commercial	277		269	78	108	145
Consumer:
Residential mortgage – first lien	73		85	135	97	93
Residential mortgage – junior lien	12		15	19	28	19
Credit card	271		394	365	297	418
Auto	43		46	65	50	54
Other consumer	61		58	28	77	88
Total consumer	460		598	612	549	672
Total, not government insured/guaranteed	$	737	867	690	657	817

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

Loans 90 days or more past due and still accruing, excluding government insured/guaranteed loans, at June 30, 2021, were up from December 31, 2020, due to an increase in delinquent commercial real estate mortgage loans and commercial and industrial loans, partially offset by a decline in delinquent consumer loans in line with the decrease in our total consumer loan portfolio. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for customers who would have otherwise moved into past due status.

Loans 90 days or more past due and still accruing whose repayments are largely insured by the FHA or guaranteed by the VA for mortgages at June 30, 2021, were down from December 31, 2020, largely due to transfers to LHFS related to the sales of loans purchased from GNMA loan securitization pools in prior periods.

(in millions) Sep 30, 2017
Jun 30, 2017
Mar 31, 2017
Dec 31, 2016
Sep 30, 2016
Total (excluding PCI (1)): $ 10,227
9,716
10,525
11,858
12,068
Less: FHA insured/VA guaranteed (2)(3) 9,266
8,873
9,585
10,883
11,198
Less: Student loans guaranteed under the FFELP (4) —
—
—
3
17
Total, not government insured/guaranteed $ 961
843
940
972
853
By segment and class, not government insured/guaranteed:
Commercial:

Commercial and industrial $ 27
42
88
28
47
Real estate mortgage 11
2
11
36
4
Real estate construction —
10
3
—
—
Total commercial 38

54

102

64

51
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
Credit card 475
411
453
452
392
Automobile 111
91
79
112
81
Other revolving credit and installment 98
98
115
113
104
Total consumer 923
789

838

908

802
Total, not government insured/guaranteed $ 961
843

940

972

853


~~(1)~~42			~~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.~~

Wells Fargo & Company
~~(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~~)

NET CHARGE-OFFS Table 2825 presents net loan charge-offs for ~~third~~second quarter ~~2017~~2021 and the previous four quarters.

Table 25:Net Loan Charge-offs


		Quarter ended
		Jun 30, 2021			Mar 31, 2021				Dec 31, 2020				Sep 30, 2020				Jun 30, 2020
($ 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)





Commercial:
	Commercial and industrial		$	81	0.10	%	$	88	0.11	%	$	111	0.14	%	$	274	0.33	%	$	521	0.55	%
	Real estate mortgage		(5)		(0.02)		46		0.16		162		0.53		56		0.18		67		0.22
	Real estate construction		(1)		—		—		—		—		—		(2)		(0.03)		(1)		(0.02)
	Lease financing		5		0.12		15		0.40		35		0.83		28		0.66		15		0.33
Total commercial			80		0.07		149		0.13		308		0.26		356		0.29		602		0.44
Consumer:
	Residential mortgage – first lien		(19)		(0.03)		(24)		(0.04)		(3)		—		(1)		—		2		—
	Residential mortgage – junior lien		(31)		(0.60)		(19)		(0.35)		(24)		(0.39)		(14)		(0.22)		(12)		(0.17)
	Credit card		256		3.01		236		2.71		190		2.09		245		2.71		327		3.60
	Auto		45		0.35		52		0.44		51		0.43		31		0.25		106		0.88
	Other consumer		50		0.80		119		1.97		62		0.88		66		0.80		88		1.09
Total consumer			301		0.32		364		0.37		276		0.26		327		0.30		511		0.48
	Total		$	381	0.18	%	$	513	0.24	%	$	584	0.26	%	$	683	0.29	%	$	1,113	0.46	%

(1)Quarterly net charge-offs ~~in third quarter 2017 were $717 million (0.30%~~as a percentage of average ~~total~~respective loans ~~outstanding) compared with $805 million (0.33%) in third quarter 2016.~~are annualized.

The decrease in commercial ~~and industrial~~ net loan charge-offs ~~from third~~in second quarter ~~2016 reflected continued improvement~~2021, compared with the prior quarter, was driven by lower charge-offs across the entire portfolio as well as higher recoveries in the CRE portfolio.

The decrease in consumer net loan charge-offs in second quarter 2021, compared with the prior quarter, was driven by lower losses in other consumer loans due to the sale of a portion of our student loan portfolio in first quarter 2021.

The COVID-19 pandemic may continue to impact the credit quality of our loan portfolio. Although the potential impacts were considered in our oil and gas portfolio. Our commercial real estate portfolios were in a net recovery position. Total consumer net charge-offs increased slightly from the prior year due to an increase in credit card and automobile net charge-offs, partially offset by a decrease in residential real estate net charge-offs.

~~ALLOWANCE FOR CREDIT LOSSESThe~~ allowance for credit losses ~~which consists~~for loans, payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of net loan charge-offs. For additional information on customer accommodations in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section in this Report.

ALLOWANCE FOR CREDIT LOSSESWe maintain an allowance for ~~loan~~credit losses ~~and the allowance~~(ACL) for ~~unfunded credit commitments,~~loans, which is management’s estimate of the expected life-time 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~~value or held for sale. Additionally, we maintain an ACL for debt securities classified as either AFS or HTM, other financial assets measured at amortized cost, net investments in ~~the allowance for~~leases, and other off-balance sheet credit ~~losses by portfolio segment (including charge-offs and recoveries by loan class) is in Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.~~exposures.

We apply a disciplined process and methodology to establish our ~~allowance for credit losses~~ACL each quarter. ~~This~~The process for establishing the ACL 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,~~ACL, see the “Critical Accounting Policies – Allowance for Credit Losses” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2016~~2020 Form ~~10-K~~10-K. For additional information on our ACL for loans, see Note 4 (Loans and ~~Note 5 (Loans and~~Related Allowance for Credit Losses) to Financial Statements in this Report, and for additional information on our ACL for debt securities, see the “Balance Sheet Analysis – Available-For-Sale and Held-To-Maturity Debt Securities” section and Note 3 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report.


			Wells Fargo & Company			43

Risk Management – Credit Risk Management (continued)

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

Table ~~29:~~26:Allocation of the ~~Allowance~~ACL for Loans (1)


	Jun 30, 2021					Dec 31, 2020				Dec 31, 2019				Dec 31, 2018				Dec 31, 2017
($ 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	$	5,640	37		%	$	7,230	36	%	$	3,600	37	%	$	3,628	37	%	$	3,752	35	%
Real estate mortgage	2,884		14			3,167		14		1,236		13		1,282		13		1,374		13
Real estate construction	530		3			410		2		1,079		2		1,200		2		1,238		3
Lease financing	516		2			709		2		330		2		307		2		268		2
Total commercial	9,570		56			11,516		54		6,245		54		6,417		54		6,632		53
Consumer:
Residential mortgage – first lien	1,283		29			1,600		31		692		30		750		30		1,085		30
Residential mortgage – junior lien	320		2			653		3		247		3		431		3		608		4
Credit card	3,663		4			4,082		4		2,252		4		2,064		4		1,944		4
Auto	1,026		6			1,230		5		459		5		475		5		1,039		5
Other consumer	529		3			632		3		561		4		570		4		652		4
Total consumer	6,821		44			8,197		46		4,211		46		4,290		46		5,328		47
Total	$	16,391	100		%	$	19,713	100	%	$	10,456	100	%	$	10,707	100	%	$	11,960	100	%


Components:
Allowance for loan losses			$	15,148				18,516				9,551				9,775				11,004
Allowance for unfunded credit commitments			1,243					1,197				905				932				956
Allowance for credit losses			$	16,391				19,713				10,456				10,707				11,960
Ratio of allowance for loan losses to total net loan charge-offs (2)			9.93x					5.63				3.46				3.56				3.76
Allowance for loan losses as a percentage of total loans			1.78		%			2.09				0.99				1.03				1.15
Allowance for credit losses for loans as a percentage of total loans			1.92					2.22				1.09				1.12				1.25
Allowance for credit losses for loans as a percentage of total nonaccrual loans			222					226				196				165				156

(1)Disclosure is not comparative due to our adoption of Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses ~~(ACL)~~

~~In addition to the allowance for credit losses, there was $454 million at September 30, 2017, and $954 million at December 31, 2016~~(Topic 326): Measurement of nonaccretable difference to absorb losses for PCI loans, which totaled $13.6 billion at September 30, 2017. The allowance for credit losses 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 adjustment and therefore do not initially require additions to the allowance as is typically associated with loan growth.Credit Losses on Financial Instruments (CECL) on January 1, 2020. For additional information, ~~on PCI loans,~~ see ~~the “Risk Management – Credit Risk Management – Purchased Credit-Impaired Loans” section and~~ Note ~~5 (Loans and Allowance for Credit Losses)~~1 (Summary of Significant Accounting Policies) to Financial Statements in ~~this Report.~~our 2020 Form 10-K.

(2)Total net loan charge-offs are annualized for the quarter ended June 30, 2021.

The ~~ratio of~~ratios for the allowance for ~~credit~~loan losses ~~to total nonaccrual~~and the ACL for loans presented in Table 26 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~~

The ACL for 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,~~ $3.3 billion, or 3%17%, from December 31, ~~2016, due to a decrease in our commercial allowance~~2020, reflecting better portfolio credit quality ~~improvement, including~~and improvements in ~~the oil~~current and gas portfolio, as well as improvement in our residential real estate portfolios, partially offset by increased allowance in the credit card, automobile and other revolving credit and installment portfolios.forecasted economic conditions. Total provision for credit losses for loans was ~~$717 million~~$(1.2) billion in ~~third~~second quarter ~~2017,~~2021, compared with ~~$805 million~~$9.6 billion in ~~third quarter 2016, reflecting~~ the same period a year ago, reflecting lower net charge-offs and improvements in current and forecasted economic conditions. The detail of the changes ~~mentioned above~~in the ACL for loans by portfolio segment (including charge-offs and recoveries by loan class) is included in Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

We consider multiple economic scenarios to develop our estimate of the ACL for loans. The scenarios generally include a base scenario, along with an optimistic (upside) and one or more pessimistic (downside) scenarios. Our estimate of the ACL for loans at June 30, 2021, was based on a weighting of the base and a downside economic scenario of 50% and 50%, respectively, with no weighting applied to an upside scenario. The base scenario assumed economic improvements in the near term with a return to normalized levels near the end of 2022. The downside scenario assumed sustained adverse economic impacts resulting from the

COVID-19 pandemic, compared with the base scenario. The downside scenario assumed U.S. real GDP growth rates decline in the first half of 2022 before returning to normalized levels after 2023 and the U.S. unemployment rate increases through 2022 and peaks in the first half of 2023. We considered within each scenario our expectations for the ~~allowance~~impact of customer accommodation activity, as well as the estimated impact on certain industries that we consider to be directly and most adversely affected by the COVID-19 pandemic.

In addition to quantitative estimates, we consider qualitative factors that represent risks inherent in our processes and assumptions such as economic environmental factors, modeling assumptions and performance, and other subjective factors, including industry trends and emerging risk assessments. We also considered the significant uncertainty related to the duration and severity of the economic impacts from the COVID-19 pandemic and the incremental risks to our loan portfolio.

The forecasted key economic variables used in our estimate of the ACL for loans at June 30 and March 31, 2021, are presented in Table 27.


44			Wells Fargo & Company

Table 27:ForecastedKeyEconomic Variables


	4Q 2021		2Q 2022	4Q 2022
Blend of economic scenarios (1):
U.S. unemployment rate (2):


March 31, 2021	6.5	%	7.0	7.1
June 30, 2021	5.6		6.2	6.9

U.S. real GDP (3):


March 31, 2021	(1.1)		(0.6)	1.8
June 30, 2021	1.0		(0.4)	0.6

Home price index (4):


March 31, 2021	1.0		(5.2)	(5.7)
June 30, 2021	2.8		(6.5)	(5.2)

Commercial real estate asset prices (4):


March 31, 2021	(10.0)		(11.5)	(9.0)
June 30, 2021	(7.8)		(11.9)	(10.4)

(1)Represents a weighting of the forecasted economic variable inputs based on a weighting of 50% for the base and 50% for a downside scenario at both June 30 and March 31, 2021.

(2)Quarterly average.

(3)Percent change from the preceding period, seasonally adjusted annualized rate.

(4)Percent change year over year of national average; outlook differs by geography and property type.

Future amounts of the ACL for loans will be based on a variety of factors, including loan balance changes, portfolio credit ~~losses.~~quality and mix changes, and changes in general economic conditions and expectations (including for unemployment and GDP), among other factors. We observed economic improvements in the first half of 2021; however, there remained significant uncertainty related to the length and severity of the economic impact of 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 ACL, including the impact of economic stimulus programs and customer accommodation activity. The COVID-19 pandemic could continue to impact the recognition of credit losses in our loan portfolios and may result in increases in our ACL, particularly if the impact on the economy worsens.

We believe the ~~allowance~~ACL for ~~credit losses~~loans of ~~$12.1~~$16.4 billion at ~~September~~June 30, ~~2017,~~2021, 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 credit losses ~~inherent in~~from the total loan portfolio. The ~~allowance~~ACL for ~~credit losses~~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~~ACL for ~~credit losses~~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~~ACL 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~~2020 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~~2020 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~~

As a servicer, we are required to advance certain delinquent payments of principal and interest on mortgage loans we service. The amount and timing of reimbursement of advances of delinquent payments vary by investor and the applicable servicing agreements. Due to payment deferrals provided as a result of the COVID-19 pandemic, the amount of our servicing ~~activities,~~advances of principal and interest remained elevated. The amount of these advances may increase if additional payment deferrals are provided. Payment deferrals also delay the collection of contractually specified servicing fees, resulting in lower net servicing income.

Upon transfer as servicer, we ~~have entered~~retain the option to repurchase loans from GNMA loan securitization pools, which becomes exercisable when three scheduled loan payments remain unpaid by the borrower. We generally repurchase these loans for cash and as a result, our total consolidated assets do not change. As a result of the COVID-19 pandemic, our repurchases of these loans were elevated in 2020 but returned to more normalized levels in the first half of 2021.

Repurchased loans that regain current status or are otherwise modified in accordance with applicable servicing guidelines may be included in future GNMA loan securitization pools. However, in accordance with guidance issued by GNMA, certain loans repurchased after June 30, 2020, are ineligible for inclusion in future GNMA loan securitization pools until the borrower has timely made six consecutive payments. This requirement may delay our ability to resell loans into various settlements with federal and state regulators to resolve certain alleged servicing issues and practices. In general, these settlements required us to provide customers with loan modification relief, refinancing relief, and foreclosure prevention and assistance, as well as imposed certain monetary penalties on us.the securitization market.

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~~2020 Form 10-K. For additional information on mortgage banking activities, see Note 9 (Mortgage Banking Activities) to Financial Statements in this Report.

Asset/Liability Management

Asset/liability management involves evaluating, monitoring and managing interest rate risk, market risk, liquidity and funding. ~~Primary~~For information on our oversight of ~~interest rate risk and market risk resides with~~asset/liability risks, see the ~~Finance Committee of~~“Risk Management – Asset/Liability Management” section in 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, risk, and business executives, to oversee these risks and report on them periodically to the Board’s Finance Committee and Risk Committee as appropriate. As discussed in more detail for trading activities below, we employ separate management level oversight specific to market risk.2020 Form 10-K.

INTEREST RATE RISK Interest rate risk ~~which potentially~~is created in our role as a financial intermediary for customers based on investments such as loans and other extensions of credit and debt securities. Interest rate risk can have a significant ~~earnings~~ impact ~~is an integral part of being a financial intermediary.~~to our earnings. We are subject to interest rate risk because:

•assets and liabilities may mature or reprice at different ~~times (for example, if~~times. 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, we may reduce rates paid on checking and savings deposit accounts by an amount that is less than the general decline in market interest rates);amounts;

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

•the remaining maturity offor various assets or liabilities may shorten or lengthen as interest rates ~~change (for~~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 at a slower rate than anticipated, which could ~~reduce~~impact portfolio ~~income);~~income; or


			Wells Fargo & Company			45

Risk Management – Asset/Liability Management (continued)

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

instruments.

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~~Our most recent simulations, as presented in Table 28, estimate net interest income ~~will~~sensitivity over the next 12 months using instantaneous movements across the yield curve with both lower and higher interest rates relative to our base scenario. Steeper and flatter scenarios measure non-parallel changes in the yield curve, with long-term interest rates defined as all tenors three years and longer (e.g., 10-year U.S. Treasury securities) and short-term interest rates defined as all tenors less than three years. Where applicable, U.S. dollar interest rates are floored at 0.00%. The following describes the simulation assumptions for the scenarios presented in Table 28:

•Simulations are dynamic and reflect anticipated changes to our 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 debt and equity securities portfolios constant across scenarios.

Table 28:Net Interest Income Sensitivity


($ in billions)	Jun 30, 2021		Dec 31, 2020
Parallel Shift:
+100 bps shift in interest rates	$	7.0	6.7
-100 bps shift in interest rates	(2.9)		(2.7)

Steeper yield curve:
+50 bps shift in long-term interest rates	1.2		1.3

Flatter yield curve:
+50 bps shift in short-term interest rates	2.5		2.2
-50 bps shift in long-term interest rates	(1.2)		(1.4)

The interest rate sensitivity included in Table 28 indicates that we would expect to 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 most recent simulations estimate~~liabilities resulting in lower 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 changes) are summarized in Table 30, indicating net interest income sensitivity relative to the 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:

~~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 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 securities portfolio constant across scenarios.~~

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

Lower Rates Higher Rates
($ in billions) 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
Key Rates at Horizon End
Fed Funds Target 2.09 1.09 3.09 4.09
10-year CMT (1) 2.97 1.97 3.97 4.97
Second Year of Forecasting Horizon
Net Interest Income Sensitivity to Base Scenario (1.1) - (0.6) 1.5 - 2.0 2.1 - 2.6
Key Rates at Horizon End
Fed Funds Target 2.50 1.50 3.50 4.50
10-year CMT (1) 3.59 2.59 4.59 5.59


~~(1)~~	~~U.S. Constant Maturity Treasury Rate~~

The sensitivity results above do not capture ~~interest rate sensitive~~ noninterest income ~~and~~or 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, in response to higher interest rates, mortgage activity, primarily refinancing activity, generally declines. And in response to lower interest rates, mortgage activity generally increases. 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 our 2020 Form 10-K for additional information. For additional information on our trading assets and liabilities, see Note 2 (Trading Activities) to Financial Statements in this ~~Report for more information.~~Report.

We use the ~~investment~~debt securities portfolio and exchange-traded and over-the-counter (OTC) interest rate derivatives to ~~hedge~~manage our interest rate exposures. See ~~the “Balance Sheet Analysis – Investment Securities” section in this Report for more information on the use~~Note 1 (Summary of ~~the available-for-sale~~Significant Accounting Policies), Note 3 (Available-for-Sale and ~~held-to-~~

~~Asset/Liability Management (continued~~)

~~maturity securities portfolios. The notional or contractual amount, credit risk amount~~Held-to-Maturity Debt Securities) and ~~fair value of the derivatives used to hedge our interest rate risk exposures as of September 30, 2017,and December 31, 2016, are presented in~~ Note 1214 (Derivatives) to Financial Statements in ~~this Report. We use derivatives~~our 2020 Form 10-K for ~~asset/liability management in two main ways:~~additional information.

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~~additional information on mortgage banking interest rate and market risk, see Note 9 (Mortgage Banking Activities) to Financial Statements in this Report and the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section in our ~~2016~~2020 Form 10-K.

Hedging the various sources of interest rate risk in mortgage banking is a complex process that requires sophisticated modeling and constant monitoring. There are several potential risks to earnings from mortgage banking related to origination volumes and mix, valuation of MSRs and associated hedging results, the relationship and degree of volatility between short-term and long-term interest rates, and changes in servicing and foreclosures costs. While ~~our hedging activities are designed~~we attempt to balance our mortgage banking interest rate and market 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 hedges for the MSRs may not continue at recent levels if the spread between short-term and long-term rates decreases or there are other changes in the market for mortgage forwards that affect the implied carry.

The total carrying value of our residential and commercial MSRs was $14.7 billion at September 30, 2017, and $14.4 billion at December 31, 2016. The weighted-average note rate on our portfolio of loans serviced for others was 4.23% at September 30, 2017, and 4.26% at December 31, 2016. The carrying value of our total MSRs represented 0.87% of mortgage loans serviced for others at September 30, 2017, and 0.85% at December 31, 2016.

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 risk, and market ~~liquidity.~~liquidity risk. It also includes price risk in the trading book, mortgage servicing rights and the hedge effectiveness risk associated with the mortgage book, and impairment on private equity investments. For information on our oversight of market risk, see the “Risk Management – Asset/Liability Management – Market ~~risk is intrinsic~~Risk” section in our 2020 Form 10-K.

MARKET RISK – TRADING ACTIVITIES We engage in trading activities to accommodate the ~~Company’s sales and trading, market making, investing,~~investment and risk management activities of our customers and to execute economic hedging to manage certain balance sheet risks. These trading activities predominantly occur within our CIB businesses and to a lesser extent other businesses 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 consolidated statement of income. Changes in fair value of the financial instruments used in our trading activities are reflected in net gains from trading activities. For additional information on the financial instruments used in our trading activities and the income from these trading activities, see Note 2 (Trading Activities) to Financial Statements in this Report.

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


46			Wells Fargo & Company

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~~additional information on ~~VaR,~~our monitoring activities, sensitivity analysis and stress testing, see the “Risk Management – Asset/Liability Management – Market Risk – Trading Activities” section in our ~~2016~~2020 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 consolidated balance sheet.

~~Asset/Liability Management (continued~~)

Table 3329 shows the Company’s Trading General VaR by risk category. ~~As presented~~The decrease in ~~the table,~~ average Company Trading General VaR ~~was $15 million~~ for the quarter ended ~~September~~June 30, ~~2017,~~2021, compared with ~~$29 million for~~ the ~~quarter~~

~~ended June 30, 2017. The decrease~~same period a year ago, was ~~mainly~~ driven by ~~changes in historical VaR dates~~a greater presence of market volatility dropping out of the ~~1-year time horizon.~~12-month historical lookback window used to calculate average Company Trading General VaR for the quarter ended June 30, 2021. Market volatility present in average Company Trading General VaR for the quarter ended June 30, 2020, was driven by the introduction of the COVID-19 pandemic, in particular, changes in interest rate curves and a significant widening of credit spreads.

Table ~~33:~~29:Trading 1-Day 99% General VaR by Risk Category


			Quarter ended
	June 30, 2021					March 31, 2021				June 30, 2020
(in millions)	Period end		Average	Low	High	Period end	Average	Low	High	Period end	Average	Low	High
Company Trading General VaR Risk Categories
Credit	$	14	21	12	30	22	94	21	112	86	82	61	99
Interest rate	7		7	4	22	36	73	26	120	155	106	42	161
Equity	29		37	25	56	35	36	28	72	14	10	6	17
Commodity	28		7	2	28	11	5	2	12	4	4	2	7
Foreign exchange	0		1	0	1	1	1	1	1	1	2	1	3
Diversification benefit (1)	(38)		(30)			(64)	(111)			(51)	(49)
Company Trading General VaR	40		43			41	98			209	155

Quarter ended
September 30, 2017 June 30, 2017
(in millions)
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
Interest rate 7
13
7
20
10
20
10
27
Equity 13
11
9
14
10
11
9
14
Commodity 2
1
1
2
1
1
1
2
Foreign exchange 0
1
0
1
1
1
0
1
Diversification benefit (1) (22 ) (37 ) (29 ) (33 )
Company Trading General VaR $ 18
15
16
29

~~(1)~~

(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 VaR components indescribed above, which is due to portfolio diversification. The diversification effect arises because the ~~table below.~~

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

high metrics since they may occur on different days.

~~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~~SECURITIES We 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. For nonmarketable investments, 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 investments include private equity investments accounted for under the cost method, equity method and fair value option.

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”~~“Risk Management – Asset/Liability Management – Market Risk – Equity Securities” section in our 2020 Form 10-K.

We also have marketable equity securities that include investments relating to our venture capital activities. The fair value changes in these marketable equity securities are recognized in net income. For additional information, see Note ~~11 (Legal Actions)~~6 (Equity Securities) 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 relating to our venture capital activities. We manage these investments 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 these securities are recognized in net income when realized and periodically include OTTI charges.

Changes in equity market prices may also indirectly affect our net income by (1) the value of ~~third party~~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~~

LIQUIDITY RISK AND FUNDING In the ordinary course of business, we enter into contractual obligations that may require future cash payments, including funding for customer loan requests, customer deposit maturities and ~~nonmarketable equity investments as of September 30, 2017,~~withdrawals, debt service, leases for premises and ~~December 31, 2016.~~

~~Table 40:Nonmarketable~~equipment, 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 FUNDING~~other cash commitments. The objective of effective liquidity management is to ensure that we can meet ~~customer loan requests, customer deposit maturities/withdrawals~~our contractual obligations and other cash commitments efficiently under both normal operating conditions and under periods of Wells Fargo-specific and/or market stress. To help 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. These guidelines are established and monitored forwe monitor 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. The Parent acts as a source of funding for the Company through the issuance of long-term debt and equity, and WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), provides funding support for the ongoing operational requirements of the Parent and certain of its direct and indirect subsidiaries. For additional information on liquidity risk and funding management, see the “Risk Management – Liquidity Risk and Funding” section in our 2020 Form 10-K. For additional information on the IHC, see the “Regulatory Matters – ‘Living Will’ Requirements and Related Matters” section in this Report.

Liquidity Standards ~~On September 3, 2014,~~ We are subject to a rule, issued by the FRB, OCC and FDIC, ~~issued~~that establishes a ~~final rule that implements a~~ quantitative minimum liquidity requirement consistent with the liquidity coverage ratio (LCR) established by the Basel Committee on Banking Supervision (BCBS). The rule requires a covered banking ~~institutions,~~organization, such as Wells Fargo, to hold high-quality liquid assets (HQLA), ~~such as~~predominantly consisting of central bank ~~reserves~~deposits, government debt securities, and ~~government and corporate debt~~mortgage-backed securities of federal agencies 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~~LCR applies to the Company on a consolidated basis and to our insured depository institutions (IDIs) with total assets ~~greater than~~of $10 ~~billion.~~billion or more. In addition, rules issued by the FRB ~~finalized rules imposing~~impose enhanced liquidity risk management standards on large bank holding companies ~~(BHC)~~(BHCs), 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~~also issued a rule ~~that would implement~~implementing a stable funding requirement, known as the net stable funding


			Wells Fargo & Company			47

Risk Management – Asset/Liability Management (continued)

ratio (NSFR), which ~~would require large~~requires a covered banking ~~organizations,~~organization, such as Wells Fargo, to maintain a ~~sufficient~~minimum amount of stable funding, including common equity, long-term debt and most types of deposits, in relation to ~~their~~its assets, derivative exposures and commitments over a one-year horizon period. ~~As proposed, the rule would become~~The NSFR became effective on ~~January~~July 1, ~~2018.~~2021, and applies to the Company on a consolidated basis and to our IDIs with total assets of $10 billion or more. As of July 1, 2021, we were compliant with the NSFR requirement.

Liquidity Coverage Ratio As of ~~September~~June 30, ~~2017,~~2021, the consolidated Company, ~~and~~ Wells Fargo Bank, N.A. ~~were above~~, and Wells Fargo National Bank West exceeded 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 4130 presents the Company’s quarterly average values for the daily-calculated LCR and its components calculated pursuant to the LCR rule requirements.

Table ~~41:~~ 30:Liquidity Coverage Ratio


	Average for Quarter ended
(in millions, except ratio)	Jun 30, 2021			Mar 31, 2021	Jun 30, 2020
HQLA (1):
Eligible cash	$	248,404		216,403	166,947
Eligible securities (2)	137,718			186,270	242,520
Total HQLA	386,122			402,673	409,467
Projected net cash outflows	314,678			316,116	316,268
LCR	123		%	127	129

(in millions) Average for Quarter ended September 30, 2017
HQLA (1)(2) $ 398,381
Projected net cash outflows 311,592
LCR 128 %
HQLA in excess of projected net cash outflows $ 86,789

(1)Excludes excess HQLA at certain subsidiaries that is not transferable to other Wells Fargo ~~Bank, N.A.~~entities.

(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.~~liquidity. 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 primary sources of liquidity are presented in Table 31, which also includes encumbered securities that are not included as available HQLA in the calculation of the LCR.

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~~MBS 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 held-to-maturity portion of~~ our ~~investment securities~~HTM 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:~~31:Primary Sources of Liquidity


	June 30, 2021				December 31, 2020
(in millions)	Total		Encumbered	Unencumbered	Total	Encumbered	Unencumbered
Interest-earning deposits with banks	$	248,869	—	248,869	236,376	—	236,376
Debt securities of U.S. Treasury and federal agencies	63,934		3,304	60,630	70,756	5,370	65,386
Mortgage-backed securities of federal agencies	280,984		52,700	228,284	258,668	49,156	209,512
Total	$	593,787	56,004	537,783	565,800	54,526	511,274

September 30, 2017 December 31, 2016
(in millions) 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
Mortgage-backed securities of federal agencies (1) 239,798
46,137
193,661
205,655
52,672
152,983
Total $ 497,078
47,238
449,840
$ 477,224
53,832
423,392


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

In addition to our primary sources of liquidity shown in

Table ~~42,~~31, liquidity is also available through the sale or financing of other debt securities including trading and/or ~~available-for-sale~~AFS 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 June 30, 2021, we also maintained approximately $222.7 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%~~169% and 158% of total loans at ~~September~~June 30, ~~2017~~2021, and ~~135% at~~ December 31, ~~2016.~~

2020, respectively. Additional funding is provided by long-term debt and short-term borrowings. Table 32 shows selected information for short-term borrowings, which generally mature in less than 30 days. We pledge certain financial instruments that we own to collateralize repurchase agreements and other securities financings. For additional information, see the “Pledged Assets” section of Note 12 (Pledged Assets and Collateral) to Financial Statements in this Report.


48			Wells Fargo & Company

Table 32:Short-Term Borrowings


	Quarter ended
(in millions)	Jun 30, 2021		Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020
Balance, period end
Federal funds purchased and securities sold under agreements to repurchase	$	33,708	46,871	46,362	44,055	49,659

Other short-term borrowings	11,927		12,049	12,637	11,169	10,826
Total	$	45,635	58,920	58,999	55,224	60,485
Average daily balance for period
Federal funds purchased and securities sold under agreements to repurchase	$	36,526	47,358	46,069	46,504	52,868

Other short-term borrowings	11,979		11,724	11,235	10,788	10,667
Total	$	48,505	59,082	57,304	57,292	63,535
Maximum month-end balance for period
Federal funds purchased and securities sold under agreements to repurchase (1)	$	33,708	47,050	46,879	49,148	50,397

Other short-term borrowings (2)	12,563		12,049	12,637	11,169	11,220

(1)Maximum month-end balance in each of the last five quarters was in June and February 2021, and November, July and April 2020.

(2)Maximum month-end balance in each of the last five quarters was in April and March 2021, and December, September and April 2020.

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. 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 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 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.~~ We issued $1.0 billion and $1.1 billion of ~~unregistered senior notes, none~~long-term debt in the second quarter and first half of ~~which were issued under~~2021, respectively. Table 33 provides the ~~bank note program. In addition, during~~aggregate carrying value of long-term debt maturities (based on contractual payment dates) for the ~~first nine months~~remainder of ~~2017, Wells Fargo Bank, N.A. executed advances of $20.4 billion with~~2021 and the ~~Federal Home Loan Bank of Des Moines, and~~following years thereafter, as of ~~September~~June 30, ~~2017, Wells Fargo Bank, N.A. had outstanding advances~~2021.

Table 33:Maturity of ~~$60.0 billion across the Federal Home Loan Bank System.~~Long-Term Debt


	June 30, 2021
(in millions)	Remaining 2021		2022	2023	2024	2025	Thereafter	Total
Wells Fargo & Company (Parent Only)
Senior notes	$	6,501	13,563	8,260	12,233	15,151	71,163	126,871
Subordinated notes	—		—	3,706	753	1,124	22,752	28,335
Junior subordinated notes	—		—	—	—	—	1,388	1,388
Total long-term debt – Parent	6,501		13,563	11,966	12,986	16,275	95,303	156,594
Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior notes	3,208		2,833	2,861	3	188	231	9,324
Subordinated notes	—		—	1,098	—	168	4,236	5,502
Junior subordinated notes	—		—	—	—	—	382	382
Securitizations and other bank debt	1,579		1,383	876	424	146	1,476	5,884
Total long-term debt – Bank	4,787		4,216	4,835	427	502	6,325	21,092
Other consolidated subsidiaries
Senior notes	358		190	517	107	428	338	1,938

Securitizations and other bank debt	—		—	—	—	—	32	32
Total long-term debt – Other consolidated subsidiaries	358		190	517	107	428	370	1,970
Total long-term debt	$	11,646	17,969	17,318	13,520	17,205	101,998	179,656


			Wells Fargo & Company			49

Risk Management – Asset/Liability Management (continued)

Credit RatingsInvestors 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.

On ~~September 18, 2017, S&P Global Ratings~~April 22, 2021, Moody's Investors Service (Moody's) affirmed ~~all of the Company’s~~our ratings and ~~maintained its~~retained the negative ratings outlook. On ~~September 20, 2017,~~July 12, 2021, Moody's upgraded the senior debt rating of the Company to A1 from A2 as a result of revisions to its bank

ratings methodology. On May 24, 2021, DBRS ~~Inc. (DBRS) downgraded~~Morningstar confirmed our ratings and retained the ~~Company’s long-term~~negative ratings ~~by one notch and affirmed the Company’s short-term ratings. DBRS revised the trend on the Company's long-term ratings from negative to stable.~~trend. On ~~October 3, 2017,~~June 14, 2021, Fitch Ratings ~~Inc. downgraded certain of~~affirmed our ratings and retained the ~~Company’s~~negative ratings ~~by one notch and revised the ratings outlook from negative to stable. Both the Parent and Wells Fargo Bank, N.A. remain among the top-rated financial firms in the U.S.~~outlook.

See the “Risk Factors” section in our ~~2016~~2020 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 1214 (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~~June 30, ~~2017,~~2021, are presented in Table ~~45.~~

34.

Table ~~45:~~34:Credit Ratings as of ~~September~~June 30, ~~2017~~

2021

Wells Fargo & Company

Wells Fargo Bank, N.A.

Senior debt

Short-term

borrowings

Long-term

deposits

Short-term

borrowings

~~Moody's~~Moody’s

P-1

Aa1

P-1

S&P Global Ratings

ABBB+

~~A-1~~A-2

~~AA-~~A+

~~A-1+~~A-1

Fitch Ratings ~~Inc.~~

A+

F1+

DBRS Morningstar

~~AA(low)~~AA (low)

~~R-1(middle)~~R-1 (middle)

~~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~~FHLB members are 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~~the amount of any future ~~payments to~~investment in the capital stock of the FHLBs ~~are~~is not determinable.



~~Capital Management~~50			Wells Fargo & Company


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 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~~long- and short-term debt. Retained earnings at June 30, 2021, increased ~~$8.7~~$9.1 billion from December 31, ~~2016,~~2020, predominantly ~~from~~as a result of $10.7 billion of Wells Fargo net income, ~~of $15.9~~partially offset by $1.5 billion ~~less~~of common and preferred stock ~~dividends~~dividends. During the first half of ~~$7.0 billion. During third quarter 2017,~~2021, we issued ~~10.1~~$819 million ~~shares~~ of common ~~stock.~~stock, substantially all of which was issued in connection with employee compensation and benefits. During ~~third quarter 2017,~~the first half of 2021, we repurchased ~~49.0~~53 million shares of common stock ~~in open market transactions, private transactions and from employee benefit plans,~~ at a cost of ~~$2.6~~$2.2 billion. ~~We also entered into a $1 billion forward repurchase contract with an unrelated third party in October 2017 that is expected to settle in first quarter 2018 for approximately 19 million shares.~~ For additional information about capital planning, see the “Capital Planning and Stress Testing” section below.

In the first half of 2021, we issued $4.6 billion of preferred stock and redeemed $4.9 billion of preferred stock, including the redemption of the remaining $350 million of our ~~forward repurchase agreements,~~Preferred Stock, Series N, in June 2021. In July 2021, we issued $1.25 billion of our Preferred Stock, Series DD. For additional information, see Note ~~1 (Summary of Significant Accounting Policies)~~16 (Preferred Stock) to Financial Statements in this Report.

Regulatory Capital ~~Guidelines~~Requirements

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~~rules establish a risk-adjusted ~~ratio~~ratios relating regulatory 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~~The rules ~~are~~contain two frameworks for calculating capital requirements, a Standardized Approach and an Advanced Approach applicable to certain institutions, including Wells Fargo. Our capital adequacy is assessed based on ~~international guidelines for determining regulatory~~the lower of our risk-based capital ~~issued by~~ratios calculated under the ~~Basel Committee~~two approaches. The Company is required to satisfy the risk-based capital ratio requirements to avoid restrictions on ~~Banking Supervision (BCBS). The federal banking regulators’~~ capital ~~rules, among other things, require~~distributions and discretionary bonus payments. Table 35 and Table 36 present the risk-based capital requirements applicable to the Company on a fully phased-in ~~basis:~~basis under the Standardized Approach and Advanced Approach, respectively, as of June 30, 2021.

a minimum Common Equity Tier 1 (CET1) ratio of 9.0%, comprised of a 4.5% minimum requirement plus a capital conservation buffer of 2.5% 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;

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

Table 35: Risk-Based Capital Requirements – Standardized Approach

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

~~a potential countercyclical buffer of up to 2.5% to be added~~Table 36: Risk-Based Capital Requirements – Advanced Approach

In addition to the ~~minimum~~risk-based capital ~~ratios, which is currently not~~requirements described in ~~effect but could be imposed by regulators at their discretion~~Table 35 and Table 36, if ~~it is determined~~the FRB determines that a period of excessive credit growth is contributing to an increase in systemic ~~risk;~~

risk, 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~~countercyclical buffer of ~~2.0%) for large and internationally active bank holding companies (BHCs).~~up to 2.50% could be added to the risk-based capital ratio requirements under federal banking regulations.

~~We were required to comply with the final Basel III~~The capital rules beginning January 2014, with certain provisions subject to phase-in periods. The Basel III capital rules are scheduled to be fully 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 Approachconservation buffer is applicable to certain institutions, including Wells ~~Fargo. Accordingly,~~Fargo, under the Advanced Approach and is intended to absorb losses during times of economic or financial stress.

The stress capital buffer is calculated based on the decrease in a BHC’s risk-based capital ratios under the severely adverse scenario in the ~~assessment~~FRB’s annual supervisory stress test and related Comprehensive Capital Analysis and Review (CCAR), plus four quarters of planned common stock dividends. Because the stress capital buffer is calculated annually based on data that can differ over time, our stress capital ~~adequacy, we must report the lower of~~buffer, and thus our ~~CET1, tier 1 and total~~risk-based capital ~~ratios calculated~~ratio requirements under the Standardized Approach, ~~and under~~are subject to change in future periods. The Company’s stress capital buffer for the ~~Advanced Approach.~~period October 1, 2020, through September 30, 2021, is 2.50%. The Company expects its stress capital buffer for the period October 1, 2021, through September 30, 2022, to be 3.10%. The FRB has indicated that it will publish the final stress capital buffer for the period October 1, 2021, through September 30, 2022, for each BHC by August 31, 2021.

~~Because the Company has been designated as~~


			Wells Fargo & Company			51

Capital Management (continued)

As a ~~G-SIB,~~global systemically important bank (G-SIB), we ~~will~~are also be subject to the FRB’s rule implementing ~~the~~an additional capital surcharge of between ~~1.0-4.5%~~1.00-4.50% on the risk-based capital ratio 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 (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~~under method one. 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. We expect our G-SIB capital surcharge to decrease by 50 basis points to 1.50% beginning in first quarter 2022, subject to finalization in fourth quarter 2021.

The Basel III capital 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 by the end of 2021.

Under the ~~Standardized Approach (fully phased-in), our CET1 ratio~~risk-based capital rules, on-balance sheet assets and credit equivalent amounts of ~~11.82% exceeded~~derivatives and off-balance sheet items are assigned to one of several broad risk categories

according to the ~~minimum~~obligor, or, if relevant, the guarantor or the nature of ~~9.0%~~any collateral. The aggregate dollar amount in each risk category is then multiplied by ~~282 basis points at September 30, 2017.~~the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWAs.

The tables that follow provide information about our ~~risk- based~~risk-based capital and related ratios as calculated under Basel III capital ~~guidelines. For banking industry~~rules. Although we report certain capital amounts and ratios in accordance with transition requirements for bank regulatory reporting purposes, we ~~report~~manage 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~~transition requirements, see

Note 23 (Regulatory Capital Requirements ~~see Note 19 (Regulatory~~ and ~~Agency Capital Requirements)~~Other Restrictions) to Financial Statements in this Report.

~~Capital Management (continued~~)

Table 4637 summarizes our CET1, tier 1 capital, total capital, ~~risk-weighted assets~~RWAs and capital ratios on a fully phased-in basis at ~~September~~June 30, ~~2017~~2021, and December 31, ~~2016. As~~2020. Fully phased-in total capital amounts and 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 38 for information regarding the calculation and components of ~~September 30, 2017,~~ our CET1, ~~and~~ tier 1 capital, ~~ratios were lower using~~total capital and RWAs, ~~calculated under the Standardized Approach.~~

as well as a corresponding reconciliation to GAAP financial measures for our fully phased-in total capital amounts.

Table ~~46:~~37:Capital Components and Ratios (Fully Phased-In) ~~(1)~~


				June 30, 2021				December 31, 2020
(in millions, except ratios)		Required Capital Ratios (1)		Advanced Approach		Standardized Approach		Advanced Approach		Standardized Approach
Common Equity Tier 1	(A)			$	143,442	143,442		138,297		138,297
Tier 1 Capital	(B)			162,999		162,999		158,196		158,196
Total Capital	(C)			190,147		200,130		186,803		196,529
Risk-Weighted Assets	(D)			1,126,535		1,188,727		1,158,355		1,193,744
Common Equity Tier 1 Capital Ratio	(A)/(D)	9.00	%	12.73		12.07	*	11.94		11.59	*
Tier 1 Capital Ratio	(B)/(D)	10.50		14.47		13.71	*	13.66		13.25	*
Total Capital Ratio	(C)/(D)	12.50		16.88		16.84	*	16.14	*	16.47

September 30, 2017 December 31, 2016
(in millions) Advanced Approach
Standardized Approach
Advanced Approach
Standardized Approach

Common Equity Tier 1 (A) $ 152,808
152,808
146,424
146,424

Tier 1 Capital (B) 176,263
176,263
169,063
169,063

Total Capital (C) 207,593
217,279
200,344
210,796

Risk-Weighted Assets (D) 1,243,355
1,292,841
1,298,688
1,358,933

Common Equity Tier 1 Capital Ratio (A)/(D) 12.29 % 11.82
* 11.27
10.77
*
Tier 1 Capital Ratio (B)/(D) 14.18
13.63
* 13.02
12.44
*
Total Capital Ratio (C)/(D) 16.70
* 16.81
15.43
* 15.51

*Denotes the ~~lowest capital~~binding ratio ~~as determined~~based on the lower calculation under the Advanced and Standardized Approaches.

(1)Represents the minimum ratios required to avoid restrictions on capital distributions and discretionary bonus payments. The required ratios were the same under both the Standardized and Advanced Approaches at June 30, 2021.


~~(1)~~52			Fully phased-in regulatory capital amounts, ratios and RWAs 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 47~~ for information regarding the calculation and components of CET1, tier 1 capital, total capital and RWAs, as well as the corresponding reconciliation of our regulatory capital amounts to GAAP financial measures. Wells Fargo & Company

Table 4738 provides information regarding the calculation and composition of our risk-based capital under the Advanced and Standardized Approaches at ~~September~~June 30, ~~2017~~2021, and December 31, ~~2016.~~2020.

Table ~~47:~~38:Risk-Based Capital Calculation and Components



		June 30, 2021			December 31, 2020
(in millions)		Advanced Approach		Standardized Approach	Advanced Approach	Standardized Approach
Total equity (1)		$	193,127	193,127	185,712	185,712
Effect of accounting policy changes (1)		—		—	208	208
Total equity (as reported)		193,127		193,127	185,920	185,920
Adjustments:
Preferred stock		(20,820)		(20,820)	(21,136)	(21,136)
Additional paid-in capital on preferred stock		136		136	152	152
Unearned ESOP shares		875		875	875	875
Noncontrolling interests		(1,865)		(1,865)	(1,033)	(1,033)
Total common stockholders’ equity		$	171,453	171,453	164,778	164,778
Adjustments:
Goodwill		(26,194)		(26,194)	(26,392)	(26,392)
Certain identifiable intangible assets (other than MSRs)		(301)		(301)	(342)	(342)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)		(2,256)		(2,256)	(1,965)	(1,965)
Applicable deferred taxes related to goodwill and other intangible assets (2)		875		875	856	856
CECL transition provision (3)		879		879	1,720	1,720
Other		(1,014)		(1,014)	(358)	(358)
Common Equity Tier 1		$	143,442	143,442	138,297	138,297
Preferred stock		20,820		20,820	21,136	21,136
Additional paid-in capital on preferred stock		(136)		(136)	(152)	(152)
Unearned ESOP shares		(875)		(875)	(875)	(875)
Other		(252)		(252)	(210)	(210)
Total Tier 1 capital	(A)	$	162,999	162,999	158,196	158,196
Long-term debt and other instruments qualifying as Tier 2		23,206		23,206	24,387	24,387
Qualifying allowance for credit losses (4)		4,304		14,287	4,408	14,134
Other		(362)		(362)	(188)	(188)
Total Tier 2 capital (fully phased-in)	(B)	$	27,148	37,131	28,607	38,333
Effect of Basel III transition requirements		26		26	131	131
Total Tier 2 capital (Basel III transition requirements)		$	27,174	37,157	28,738	38,464

Total qualifying capital (fully phased-in)	(A)+(B)	$	190,147	200,130	186,803	196,529
Total Effect of Basel III transition requirements		26		26	131	131
Total qualifying capital (Basel III transition requirements)		$	190,173	200,156	186,934	196,660

Risk-Weighted Assets (RWAs)(5):
Credit risk (6)		$	729,917	1,140,459	752,999	1,125,813
Market risk		48,268		48,268	67,931	67,931
Operational risk		348,350		—	337,425	—
Total RWAs		$	1,126,535	1,188,727	1,158,355	1,193,744

(2)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)At June 30, 2021, the impact of the CECL transition provision issued by federal banking regulators on our regulatory capital was an increase in capital of $879 million, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $7.5 billion increase in our ACL under CECL from January 1, 2020, through June 30, 2021.

(4)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 0.60% 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, in each case with any excess allowance for credit losses being deducted from the respective total RWAs.

(5)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 loss resulting from inadequate or failed internal processes, people and systems, or from external events.

(6)Includes an increase of $547 million under the Standardized Approach and a decrease of $1.4 billion under the Advanced Approach related to the impact of the CECL transition provision on our excess allowance for credit losses as of June 30, 2021. See footnote (4) to this table.

September 30, 2017 December 31, 2016
(in millions) Advanced Approach
Standardized Approach
Advanced Approach
Standardized Approach
Total equity $ 206,824
206,824
200,497
200,497
Adjustments:
Preferred stock (25,576 ) (25,576 ) (24,551 ) (24,551 )
Additional paid-in capital on ESOP preferred stock (130 ) (130 ) (126 ) (126 )
Unearned ESOP shares 1,904
1,904
1,565
1,565
Noncontrolling interests (895 ) (895 ) (916 ) (916 )
Total common stockholders' equity
182,127
182,127
176,469
176,469
Adjustments:
Goodwill (26,581 ) (26,581 ) (26,693 ) (26,693 )
Certain identifiable intangible assets (other than MSRs) (1,913 ) (1,913 ) (2,723 ) (2,723 )
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

Common Equity Tier 1 (Fully Phased-In) $ 152,808
152,808
146,424
146,424
Preferred stock 25,576
25,576
24,551
24,551
Additional paid-in capital on ESOP preferred stock 130
130
126
126
Unearned ESOP shares (1,904 ) (1,904 ) (1,565 ) (1,565 )
Other (347 ) (347 ) (473 ) (473 )
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 (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
Qualifying allowance for credit losses (3) 2,423
12,109
2,088
12,540
Other (276 ) (276 ) (272 ) (272 )
Total Tier 2 capital (Fully Phased-In) (B) 31,330
41,016
31,281
41,733
Effect of Transition Requirements 1,196
1,196
1,780
1,780
Total Tier 2 capital (Transition Requirements) $ 32,526
42,212
33,061
43,513

Total qualifying capital (Fully Phased-In) (A)+(B) $ 207,593
217,279
200,344
210,796
Total Effect of Transition Requirements 1,929
1,929
4,081
4,081
Total qualifying capital (Transition Requirements) $ 209,522
219,208
204,425
214,877

Risk-Weighted Assets (RWAs) (4)(5):
Credit risk $ 910,562
1,255,711
960,763
1,314,833
Market risk 37,130
37,130
44,100
44,100
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


~~(1)~~			~~Represents goodwill and other intangibles on nonmarketable equity investments and on held-for-sale assets, which are included in other assets.~~Wells Fargo & Company			53


~~(2)~~	Applicable deferred taxes relate to goodwill and other intangible assets. They were 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)~~

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% 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)~~	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)~~

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.

Capital Management (~~continued~~)(continued)

Table 4839 presents the changes in ~~Common Equity Tier 1 under the Advanced Approach~~CET1 for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2021.

Table ~~48:~~39:Analysis of Changes in Common Equity Tier 1

(in millions)
Common Equity Tier 1 (Fully Phased-In) at December 31, 2016 $ 146,424
Net income 14,645
Common stock dividends (5,738 )
Common stock issued, repurchased, and stock compensation-related items (4,750 )
Goodwill 112
Certain identifiable intangible assets (other than MSRs) 811
Other assets (1) (195 )
Applicable deferred taxes (2) (221 )
Investment in certain subsidiaries and other 1,720
Change in Common Equity Tier 1 6,384
Common Equity Tier 1 (Fully Phased-In) at September 30, 2017 $ 152,808


~~(1)~~(in millions)	~~Represents goodwill~~
Common Equity Tier 1 at December 31, 2020		$	138,297
Net income applicable to common stock		9,999
Common stock dividends		(826)
Common stock issued, repurchased, and stock compensation-related items		(1,539)
Changes in cumulative other comprehensive income		(758)

Goodwill		198
Certain identifiable intangible assets (other than MSRs)		41
Goodwill and other intangibles on nonmarketable equity ~~investments and on held-for-sale assets, which are included~~securities (included in other ~~assets.~~assets)

	(291)
~~(2)~~	Applicable deferred taxes ~~relate~~related to goodwill and other intangible ~~assets. They were 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 (1)		19
CECL transition provision (2)		(841)
Other		(857)
Change in Common Equity Tier 1		5,145
Common Equity Tier 1 at ~~period end.~~June 30, 2021		$	143,442

(1)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.

(2)At June 30, 2021, the impact of the CECL transition provision issued by federal banking regulators on our regulatory capital was an increase in capital of $879 million, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $7.5 billion increase in our ACL under CECL from January 1, 2020, through June 30, 2021.

Table 4940 presents net changes in the components of RWAs under the Advanced and Standardized Approaches for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2021.

Table ~~49:~~40:Analysis of Changes in RWAs


(in millions)	Advanced Approach		Standardized Approach
RWAs at December 31, 2020	$	1,158,355	1,193,744
Net change in credit risk RWAs (1)	(23,082)		14,646
Net change in market risk RWAs	(19,663)		(19,663)
Net change in operational risk RWAs	10,925		—
Total change in RWAs	(31,820)		(5,017)
RWAs at June 30, 2021	$	1,126,535	1,188,727

(1)Includes an increase of $547 million under the Standardized Approach and a decrease of $1.4 billion under the Advanced Approach related to the impact of the CECL transition provision on our excess allowance for credit losses. See Table 38 for additional information.

(in millions) Advanced Approach
Standardized Approach
RWAs (Fully Phased-In) at December 31, 2016 $ 1,298,688
1,358,933
Net change in credit risk RWAs (50,201 ) (59,122 )
Net change in market risk RWAs (6,970 ) (6,970 )
Net change in operational risk RWAs 1,838
N/A
Total change in RWAs (55,333 ) (66,092 )
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


54			Wells Fargo & Company

TANGIBLE COMMON EQUITYWe 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~~The ratios are ~~as follows:~~

~~Tangible~~(i) tangible book value per common share, which represents tangible common equity divided by common shares ~~outstanding.~~

~~Return~~outstanding; and (ii) 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 management, investors, and others to assess the ~~Company's~~Company’s use of equity.

Table 5041 provides a reconciliation of these non-GAAP financial measures to GAAP financial measures.

Table ~~50:~~41:Tangible Common Equity


		Balance at period end				Average balance
		Quarter ended				Quarter ended					Six months ended
(in millions, except ratios)		Jun 30, 2021		Mar 31, 2021	Jun 30, 2020	Jun 30, 2021			Mar 31, 2021	Jun 30, 2020	Jun 30, 2021			Jun 30, 2020
Total equity		$	193,127	188,034	178,635	190,968			189,074	184,072	190,026			185,982
Adjustments:
Preferred stock		(20,820)		(21,170)	(21,098)	(21,108)			(21,840)	(21,344)	(21,472)			(21,569)
Additional paid-in capital on preferred stock		136		139	159	138			145	140	142			138
Unearned ESOP shares		875		875	875	875			875	1,140	875			1,141
Noncontrolling interests		(1,865)		(1,130)	(736)	(1,313)			(1,115)	(643)	(1,215)			(714)
Total common stockholders’ equity	(A)	171,453		166,748	157,835	169,560			167,139	163,365	168,356			164,978
Adjustments:
Goodwill		(26,194)		(26,290)	(26,385)	(26,213)			(26,383)	(26,384)	(26,297)			(26,386)
Certain identifiable intangible assets (other than MSRs)		(301)		(322)	(389)	(310)			(330)	(402)	(320)			(414)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)		(2,256)		(2,300)	(2,050)	(2,208)			(2,217)	(1,922)	(2,212)			(2,037)
Applicable deferred taxes related to goodwill and other intangible assets (1)		875		866	831	873			863	828	868			823
Tangible common equity	(B)	$	143,577	138,702	129,842	141,702			139,072	135,485	140,395			136,964
Common shares outstanding	(C)	4,108.0		4,141.1	4,119.6	N/A			N/A	N/A	N/A			N/A
Net income applicable to common stock	(D)	N/A		N/A	N/A	$	5,743		4,256	(4,160)	$	9,999		(3,856)
Book value per common share	(A)/(C)	$	41.74	40.27	38.31	N/A			N/A	N/A	N/A			N/A
Tangible book value per common share	(B)/(C)	34.95		33.49	31.52	N/A			N/A	N/A	N/A			N/A
Return on average common stockholders’ equity (ROE) (annualized)	(D)/(A)	N/A		N/A	N/A	13.59		%	10.33	(10.24)	11.98		%	(4.70)	%
Return on average tangible common equity (ROTCE) (annualized)	(D)/(B)	N/A		N/A	N/A	16.26			12.41	(12.35)	14.36		%	(5.66)	%

Balance at period end Average balance
Quarter ended Quarter ended Nine months 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
Total equity $ 206,824
206,145
203,958
207,934
205,968
203,883
205,246
200,502
Adjustments:
Preferred stock (25,576 ) (25,785 ) (24,594 ) (25,780 ) (25,849 ) (24,813 ) (25,600 ) (24,291 )
Additional paid-in capital on ESOP preferred stock (130 ) (136 ) (130 ) (136 ) (144 ) (148 ) (142 ) (172 )
Unearned ESOP shares 1,904
2,119
1,612
2,114
2,366
1,850
2,226
2,150
Noncontrolling interests (895 ) (915 ) (930 ) (926 ) (910 ) (927 ) (931 ) (938 )
Total common stockholders' equity (A) 182,127
181,428
179,916
183,206
181,431
179,845
180,799
177,251
Adjustments:
Goodwill (26,581 ) (26,573 ) (26,688 ) (26,600 ) (26,664 ) (26,979 ) (26,645 ) (26,696 )
Certain identifiable intangible assets (other than MSRs) (1,913 ) (2,147 ) (3,001 ) (2,056 ) (2,303 ) (3,145 ) (2,314 ) (3,383 )
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
Tangible common equity (B) $ 152,901
152,064
149,829
153,898
151,952
149,445
151,327
147,048
Common shares outstanding (C) 4,927.9
4,966.8
5,023.9
N/A
N/A
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
Book value per common share (A)/(C) $ 36.96
36.53
35.81
N/A
N/A
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
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
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


~~(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 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~~REQUIREMENTS 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 of at least 5.0% (comprised of the 3.0% minimum requirement plus a~~ supplementary leverage ~~buffer of 2.0%)~~ratio (SLR) to avoid restrictions on capital distributions and discretionary bonus ~~payments. The rule will also require that all of our insured depository institutions~~payments and maintain a minimum tier 1 leverage ratio. Table 42 presents the leverage requirements applicable to the Company as of June 30, 2021.

Table 42:Leverage Requirements Applicable to the Company

In addition, our IDIs are required to maintain an 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~~rules and maintain a minimum tier 1 leverage ratio of 4.00%.

The FRB and OCC have proposed amendments to the SLR ~~requirements to implement revisions~~rules. For information regarding the proposed amendments to the ~~Basel III leverage framework finalized by~~SLR rules, see the ~~BCBS~~“Capital Management – Leverage Requirements” section in ~~January 2014. These additional changes, among other things, modify~~our 2020 Form 10-K.

At June 30, 2021, the ~~methodology for including off- balance sheet items, including credit derivatives, repo-style transactions~~Company’s SLR was 7.09%, and lines of credit, in the denominator of the SLR, and will become effective on January 1, 2018. At September 30, 2017, our SLR for the Company was 7.9% assuming full phase-in of the Advanced Approach capital framework. Based on our review, our current leverage levels would exceed the applicable requirements for each of our ~~insured depository institutions as well. The fully phased-in~~IDIs exceeded their applicable 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. See~~requirements. Table ~~51 for~~43 presents information regarding the calculation and components of the ~~SLR.~~Company’s SLR and tier 1 leverage ratio.

~~Table 51:Fully Phased-In SLR~~

(in millions, except ratio) September 30, 2017
Tier 1 capital $ 176,263
Total average assets 1,938,522
Less: deductions from Tier 1 capital 29,705
Total adjusted average assets 1,908,817
Adjustments:
Derivative exposures 73,681
Repo-style transactions 3,055
Other off-balance sheet exposures 243,339
Total adjustments 320,075
Total leverage exposure $ 2,228,892
Supplementary leverage ratio 7.9 %

~~OTHER REGULATORY CAPITAL MATTERS~~ ~~In December 2016,~~


			Wells Fargo & Company			55

Capital Management (continued)

Table 43:Leverage Ratios for the ~~FRB finalized rules~~Company


(in millions, except ratios)		Quarter ended June 30, 2021
Tier 1 capital	(A)	$	162,999
Total average assets		1,940,757
Less: Goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities)		29,103
Less: Other SLR exclusions		—
Total adjusted average assets		1,911,654
Plus adjustments for off-balance sheet exposures:
Derivatives (1)		68,738
Repo-style transactions (2)		3,626
Other (3)		316,398
Total off-balance sheet exposures		388,762
Total leverage exposure	(B)	$	2,300,416
Supplementary leverage ratio	(A)/(B)	7.09		%

Tier 1 leverage ratio (4)		8.53		%

(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 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.

(4)The tier 1 leverage ratio consists of tier 1 capital divided by total average assets, excluding goodwill and certain other items as determined under the rule.

TOTAL LOSS ABSORBING CAPACITYAs 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 amount of 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) to avoid restrictions on capital distributions and discretionary bonus payments, as well as a minimum amount of eligible unsecured long-term debt.The components used to calculate our minimum TLAC and eligible unsecured long-term debt requirements as of June 30, 2021, are presented in Table 44.

Table 44:Components Used to Calculate TLAC and Eligible Unsecured Long-Term Debt Requirements

TLAC requirement

Greater of:

18.00% of RWAs

7.50% of total leverage exposure
(the denominator of the SLR calculation)

TLAC buffer (equal to 2.50% of RWAs + method one G-SIB capital surcharge + any countercyclical buffer)

External TLAC leverage buffer
(equal to 2.00% of total leverage exposure)

Minimum amount of eligible unsecured long-term debt

Greater of:

6.00% of RWAs

4.50% of total leverage exposure

Method two G-SIB capital surcharge

The FRB and OCC have proposed amendments to the ~~greater~~TLAC and eligible unsecured long-term debt requirements. For information regarding these proposed amendments, see the “Capital Management – Total Loss Absorbing Capacity” section in our 2020 Form 10-K.

Table 45 provides our TLAC and eligible unsecured long-term debt and related ratios as of ~~(i) 18% of RWAs~~June 30, 2021, and ~~(ii) 7.5% of total leverage exposure (the denominator of~~December 31, 2020.

Table 45: TLAC and Eligible Unsecured Long-Term Debt


($ in millions)	TLAC (1)			Regulatory Minimum (2)	Eligible Unsecured Long-term Debt	Regulatory Minimum
	June 30, 2021
Total eligible amount	$	298,496			129,411

Percentage of RWAs (3)	25.11		%	21.50	10.89	8.00
Percentage of total leverage exposure	12.98			9.50	5.63	4.50

	December 31, 2020
Total eligible amount	$	307,226			140,703

Percentage of RWAs (3)	25.74		%	22.00	11.79	8.00
Percentage of total leverage exposure (4)	15.64			9.50	7.16	4.50

(1)TLAC ratios are calculated using the ~~SLR calculation). Additionally, U.S. G-SIBs will be~~CECL transition provision issued by federal banking regulators.

(2)Represents the minimum required to maintain (i) a TLAC buffer equal to 2.5% of RWAs plus the firm’s applicable G-SIB capital surcharge calculated under method one plus any applicable countercyclical buffer that will be added to the 18% minimum and (ii) an external

~~TLAC leverage buffer equal to 2.0% of total leverage exposure that will be added to the 7.5% minimum, in order~~ to avoid restrictions on capital distributions and discretionary bonus payments. ~~The rules will also require U.S. G-SIBs to have a~~

(3)Our minimum ~~amount of~~TLAC and eligible unsecured long-term debt ~~equal to~~requirements are calculated based on the greater of ~~(i) 6.0%~~RWAs determined under the Standardized and Advanced Approaches.

(4)Total leverage exposure at December 31, 2020, reflected an interim final rule issued by the FRB that temporarily allowed a bank holding company to exclude on-balance sheet amounts of ~~RWAs plus~~U.S. Treasury securities and deposits at Federal Reserve Banks from the ~~firm’s applicable G-SIB capital surcharge calculated under method two and (ii) 4.5%~~calculation of ~~the~~its total leverage exposure. In addition, the rules will impose certain restrictions on the operations 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.

In addition, 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 ruleOTHER REGULATORY CAPITAL AND LIQUIDITY MATTERS For information regarding the U.S. implementation of the Basel III LCR and ~~a proposed rule regarding~~NSFR, see the ~~NSFR.~~“Risk Management – Asset/ Liability Management – Liquidity Risk and Funding – Liquidity Standards” section in this Report.

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~~that is 100 basis points above our regulatory requirement plus an incremental buffer of ~~10%, which includes a 2% G-SIB surcharge.~~25 to 50 basis points. 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, changes to the regulatory requirements for our capital ratios, planned capital actions, changes in our risk profile and other factors.

~~Under the FRB’s~~The FRB capital plan rule ~~large~~establishes capital planning and other requirements that govern capital distributions, including dividends and share repurchases, by certain 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.~~Wells Fargo. 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 their capital plans.

~~Our 2017~~On March 25, 2021, the FRB announced that it was extending measures it previously announced limiting large BHCs, including Wells Fargo, from making any capital ~~plan, which was submitted on April 4, 2017, as part~~distribution (excluding any capital distribution arising from the issuance of ~~CCAR, included~~ a ~~comprehensive~~ capital ~~outlook supported~~instrument eligible for inclusion in the numerator of a regulatory capital ratio), unless otherwise approved by the FRB. The FRB generally authorized BHCs to (i) provided that the BHC does not increase the amount of its common stock dividends to


56			Wells Fargo & Company

be larger than the level paid in second quarter 2020, pay common stock dividends and make share repurchases that, in the aggregate, do not exceed an ~~assessment of expected sources and uses of capital over a given planning horizon under a range of expected and stress scenarios. As part~~amount equal to the average of the ~~2017~~BHC’s net income for the four preceding calendar quarters; (ii) make share repurchases that equal the amount of share issuances related to expensed employee compensation; and (iii) redeem and make scheduled payments on additional tier 1 and tier 2 capital instruments. These limitations on capital distributions ended on June 30, 2021.

Concurrently with CCAR, ~~the FRB~~federal banking regulators 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 the supervisory stress results both as required under the Dodd-Frank Act using a common set of capital actions for allrequire large BHCs and ~~by taking into account the Company’s proposed capital actions. The FRB published its~~

~~supervisory stress test results as required under the Dodd-Frank Act on June 22, 2017. On June 28, 2017, the FRB notified us that it did not object~~banks to ~~our capital plan included in the 2017 CCAR.~~

~~Federal banking regulators require~~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~~

In June 2021, the ~~timing and type of~~Company completed the 2021 CCAR 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 distributionsprocess. On July 27, 2021, the Board approved an increase to the ~~extent its actual~~Company's third quarter 2021 common stock dividend to $0.20 per share. Additionally, our capital ~~issuances were less than amounts indicated in its capital plan. As required under~~plan includes gross common share repurchases of approximately $18 billion for the ~~FRB’s stress testing rule, we must submit a mid-cycle stress test based on~~four-quarter period beginning third quarter 2021 through 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.~~2022.

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 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 under the FRB’s ~~response~~capital plan rule. Due to the various factors that may impact the amount of our share repurchases and the fact that we tend to be in the market regularly to satisfy repurchase considerations under our capital plan, ~~and to changes in~~ our ~~risk profile.~~share repurchases occur at various price levels. We may suspend share repurchase activity at any time.

~~In January 2016, the Board authorized the repurchase of 350 million shares of our common stock.~~ At ~~September~~June 30, ~~2017,~~2021, we had remaining Board authority to repurchase approximately ~~122~~615 million shares, subject to regulatory and legal conditions. For ~~more~~additional information about share repurchases during ~~third~~second quarter ~~2017,~~2021, 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~~The U.S. financial services industry ~~has been~~is subject to a significant ~~increase in~~ regulation and regulatory oversight initiatives. This ~~increased~~ regulation and oversight ~~has substantially changed~~may continue to impact how ~~most~~ U.S. financial services companies conduct business and ~~has~~may continue to result in 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~~2020 Form ~~10-K~~10-K.

“Living Will” Requirements 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 issued a number of 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 amendments to the rule implementing the Home Mortgage Disclosure Act, resulting 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, 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 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 under 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 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~~Related Matters

Rules adopted by the FRB and the FDIC under the Dodd-Frank Act require large financial institutions, including Wells Fargo, to prepare and periodically ~~revise~~submit resolution plans, ~~so-called “living-wills”,~~also known as “living wills,” that would facilitate their rapid and orderly resolution in the event of material financial distress or failure. Under the rules, rapid and orderly resolution ~~plans are required to provide strategies for resolution~~means a reorganization or liquidation of the covered company under the U.S. Bankruptcy Code ~~and other applicable insolvency regimes~~ that can be accomplished in a reasonable period of time and in a

manner that substantially mitigates the risk that failure would have serious adverse effects on the financial stability of the United States. ~~We submitted our 2017~~In addition to the Company’s resolution plan, our national bank subsidiary, Wells Fargo Bank, N.A. (the “Bank”), is also required to ~~the FRB~~prepare and ~~FDIC on June 30, 2017, but have not yet received regulatory feedback on the~~periodically submit a resolution plan. If the FRB ~~and~~and/or 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~~and/or 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~~ On June 29, 2021, we submitted our most recent resolution plan 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, 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.FDIC.

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~~The strategy described in our most recent resolution plan is a ~~“multiple~~single 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”~~entry strategy, in which the Parent would likely be the only material legal entity to enter resolution proceedings. However, we are not obligated to maintain a single point of entry strategy, and the strategy described in our resolution plan is 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. 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. Federal banking regulators have also required measures to facilitate 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 provide capital and liquidity resources to certain subsidiaries ~~in order~~ to facilitate an orderly resolution. In response to the regulators’ guidance 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, as amended


			Wells Fargo & Company			57

Regulatory Matters (continued)

and restated on June 26, 2019 (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~~and certain other subsidiaries of the ~~Parent.~~Parent designated from time to time as material entities for resolution planning purposes (the “Covered Entities”) or identified from time to time as related support entities in our resolution plan (the “Related Support Entities”). 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 IHC

and will continue to transfer those types of assets to the IHC from time to time. In the event of our material financial distress or failure, the IHC will be obligated to use the transferred assets to provide capital and/or liquidity to the Bank, WFS, WFCS, and the Covered Entities 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, or if the Parent’s board of directors authorizes it to file a case under the U.S. Bankruptcy Code, the subordinated notes would be forgiven, ~~and~~ the committed line of credit would terminate, and the IHC’s ability to pay dividends to the Parent would be restricted, any of 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 of the Parent, the IHC, the Bank, and the Related Support Entities are secured pursuant to a related security agreement.

In addition to our resolution plans, 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, securities, loan portfolios or businesses. 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 determines that our recovery plan is deficient, they may impose fines, restrictions on our business or ultimately require us to divest assets.



58			Wells Fargo & Company


Critical Accounting Policies

Our significant accounting policies (see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2016~~2020 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 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.~~losses; and

•goodwill impairment.

~~Starting second quarter 2017, the liability for contingent litigation losses~~

Management has ~~been designated as one of our~~discussed these critical accounting ~~policies. The remaining five of~~policies and the related estimates and judgments with the Board’s Audit Committee. For additional information on these policies, ~~are described further in~~see the ~~“Financial Review – Critical~~“Critical Accounting Policies” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2016~~2020 Form 10-K.

~~Liability for Contingent Litigation Losses~~

The Company is involved in a number of judicial, regulatory, arbitration and other proceedings concerning matters arising from the conduct of its business activities, and many 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) to Financial Statements in this Report for further information.~~

~~Management and the Board's Audit and Examination Committee have reviewed and approved these critical accounting policies.~~

~~Current Accounting Developments (continued~~)



Current Accounting Developments

~~Table 52 provides~~The following significant accounting ~~pronouncements applicable to us that have~~update has been issued by the ~~FASB~~Financial Accounting Standards Board (FASB) and is applicable to us, but ~~are~~is not yet ~~effective.~~

effective:

~~Table 52:Current~~ •Accounting ~~Developments~~Standards Update (ASU or Update) 2018-12 – ~~Issued Standards~~



~~Standard~~	~~Description~~	~~Effective date and financial statement impact~~
~~Accounting Standards Update (ASU or Update) 2017-12 - Derivatives and Hedging (Topic 815):~~ Financial Services – Insurance (Topic 944): Targeted Improvements ~~to Accounting for Hedging Activities~~	The Update makes targeted 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 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 increased 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) 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~~	The Update changes the accounting for certain purchased callable debt securities held at a premium to shorten 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.	The guidance is effective in first quarter 2020 with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. While early adoption is permitted beginning in first quarter 2019, we do not expect to elect that option. We are evaluating the impact of the Update on our consolidated financial statements. We expect 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 addition of an allowance for debt securities. The 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 measured at fair value under the fair value option and equity investments. The guidance also updates fair value presentation and disclosure requirements for financial instruments measured at amortized cost.	We will adopt the guidance in first quarter 2018 with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption, except for changes related to nonmarketable equity investments, which are applied prospectively. Our investments in marketable equity securities classified 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 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.



~~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,~~Accounting for Long-Duration Contracts and subsequent related updates

ASU 2018-12 See the “Current Accounting Developments” section in our 2020 Form 10-K for information on the effective date and our assessment of the expected financial statement impact upon adoption.

Other Accounting Developments

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 (Topic 260); Distinguishing Liabilities from Equity (Topic 480);~~2020-06 – Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

•ASU 2021-05 – Leases (Topic ~~815)~~842): ~~(Part I) Accounting for~~Lessors – Certain ~~Financial Instruments~~Leases with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope ExceptionVariable Lease Payments

~~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~~)



			Wells Fargo & Company			59


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,~~Securities and Exchange Commission, 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 allowance levels; (iv) the appropriateness of the~~our allowance for credit ~~losses; (v)~~losses, and the economic scenarios considered to develop the allowance; (iv) our expectations regarding net interest income and net interest margin; ~~(vi)~~(v) loan growth or the reduction or mitigation of risk in our loan portfolios; ~~(vii)~~(vi) future capital or liquidity levels, ratios or ~~targets and our estimated Common Equity Tier 1 ratio under Basel III capital standards; (viii)~~targets; (vii) the performance of our mortgage business and any related exposures; ~~(ix)~~(viii) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; ~~(x)~~(ix) future common stock dividends, common share repurchases and other uses of capital; ~~(xi)~~(x) our targeted range for return on assets, return on equity, and return on tangible common equity; (xi) expectations regarding our effective income tax rate; (xii) the outcome of contingencies, such as legal proceedings; (xiii) environmental, social and ~~(xiii)~~governance related goals or commitments; and (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~~rules and ~~other legislation and regulation~~regulations relating to bank products and financial 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,~~employees, 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;

•our ability to develop and 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, ~~2016~~.

2020.

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


60			Wells Fargo & Company

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~~additional 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,~~2020, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.1

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.


1 We do not control this website. Wells Fargo has provided this link for your convenience, but does not endorse and is not responsible for the content, links, privacy policy, or security policy of this website.

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.



			Wells Fargo & Company			61


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~~2020 Form 10-K.

~~Controls and Procedures~~


62			Wells Fargo & Company


Controls and Procedures


Disclosure Controls and Procedures

The Company’s management evaluated the effectiveness, as of ~~September~~June 30, ~~2017,~~2021, 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~~June 30, ~~2017.~~2021.



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~~second quarter ~~2017~~2021 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 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) losses were~~ ~~$5 million~~ ~~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 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~~ ~~for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016, respectively. Of total OTTI, losses of~~ ~~$107 million~~ ~~and~~ ~~$142 million~~ ~~were recognized in earnings, and reversal of losses of~~ ~~$(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.~~ Wells Fargo & Company			63


~~(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.~~

~~The accompanying notes are an integral part of these statements.~~

Financial Statements

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


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Income (Unaudited)
	Quarter ended June 30,			Six months ended June 30,
(in millions, except per share amounts)	2021		2020	2021		2020
Interest income
Debt securities	$	2,199	2,946	$	4,511	6,418
Loans held for sale	193		237	524		446
Loans (1)	7,095		8,460	14,296		18,543
Equity securities	132		116	269		322
Other interest income	74		54	139		829
Total interest income	9,693		11,813	19,739		26,558
Interest expense
Deposits	92		585	204		2,327
Short-term borrowings	(12)		(17)	(21)		274
Long-term debt	712		1,237	1,738		2,477
Other interest expense	101		116	210		258
Total interest expense	893		1,921	2,131		5,336
Net interest income	8,800		9,892	17,608		21,222
Noninterest income
Deposit and lending-related fees	1,704		1,465	3,320		3,262
Investment advisory and other asset-based fees (2)	2,794		2,254	5,550		4,760
Commissions and brokerage services fees (2)	580		550	1,216		1,227
Investment banking fees	570		547	1,138		938
Card fees	1,077		797	2,026		1,689
Mortgage banking	1,336		317	2,662		696
Net gains on trading and securities	2,717		1,552	3,608		452
Other (1)	692		912	1,674		2,213
Total noninterest income	11,470		8,394	21,194		15,237
Total revenue	20,270		18,286	38,802		36,459
Provision for credit losses	(1,260)		9,534	(2,308)		13,539
Noninterest expense
Personnel	8,818		8,916	18,376		17,239
Technology, telecommunications and equipment	815		672	1,659		1,470
Occupancy	735		871	1,505		1,586
Operating losses	303		1,219	516		1,683
Professional and outside services	1,450		1,676	2,838		3,282
Advertising and promotion	132		137	222		318
Restructuring charges	(4)		0	9		0
Other	1,092		1,060	2,205		2,021
Total noninterest expense	13,341		14,551	27,330		27,599
Income (loss) before income tax expense	8,189		(5,799)	13,780		(4,679)
Income tax expense (benefit) (1)	1,445		(2,001)	2,346		(1,648)
Net income (loss) before noncontrolling interests	6,744		(3,798)	11,434		(3,031)
Less: Net income (loss) from noncontrolling interests	704		48	758		(101)
Wells Fargo net income (loss) (1)	$	6,040	(3,846)	$	10,676	(2,930)
Less: Preferred stock dividends and other	297		314	677		926
Wells Fargo net income (loss) applicable to common stock (1)	$	5,743	(4,160)	$	9,999	(3,856)
Per share information (1)
Earnings (loss) per common share	$	1.39	(1.01)	$	2.42	(0.94)
Diluted earnings (loss) per common share	1.38		(1.01)	2.40		(0.94)
Average common shares outstanding	4,124.6		4,105.5	4,132.9		4,105.2
Diluted average common shares outstanding	4,156.1		4,105.5	4,164.6		4,105.2

~~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
Assets (Unaudited)

Cash and due from banks $ 19,206
20,729
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
Allowance for loan losses (11,078 ) (11,419 )
Net loans 940,795
956,185
Mortgage servicing rights:
Measured at fair value 13,338
12,959
Amortized 1,406
1,406
Premises and equipment, net 8,449
8,333
Goodwill 26,581
26,693
Derivative assets 12,580
14,498
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
Liabilities
Noninterest-bearing deposits $ 366,528
375,967
Interest-bearing deposits 940,178
930,112
Total deposits 1,306,706
1,306,079
Short-term borrowings 93,811
96,781
Derivative liabilities 9,497
14,492
Accrued expenses and other liabilities 79,208
57,189
Long-term debt 238,893
255,077
Total liabilities (3) 1,728,115
1,729,618
Equity
Wells Fargo stockholders' equity:
Preferred stock 25,576
24,551
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares 9,136
9,136
Additional paid-in capital 60,759
60,234
Retained earnings 141,761
133,075
Cumulative other comprehensive income (loss) (1,627 ) (3,137 )
Treasury stock – 553,940,326 shares and 465,702,148 shares (27,772 ) (22,713 )
Unearned ESOP shares (1,904 ) (1,565 )
Total Wells Fargo stockholders' equity 205,929
199,581
Noncontrolling interests 895
916
Total equity 206,824
200,497
Total liabilities and equity $ 1,934,939
1,930,115


~~(1)~~	~~Parenthetical amounts represent assets and liabilities for which we have elected the fair value option.~~

~~(2)~~

~~Our consolidated assets at~~ ~~September 30, 2017, and~~ ~~December 31, 2016, 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 million~~ ~~and~~ ~~$168 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,~~ ~~$0 million~~ ~~at both period ends; Net loans,~~ ~~$11.9 billion~~ ~~and~~ ~~$12.6 billion; Derivative assets,~~ ~~$0 million~~ ~~and~~ ~~$1 million; Other assets,~~ ~~$352 million~~ ~~and~~ ~~$452 million; and Total assets,~~ ~~$12.9 billion~~ ~~and~~ ~~$13.4 billion, respectively.~~

~~(3)~~

~~Our consolidated liabilities at~~ ~~September 30, 2017, and~~ ~~December 31, 2016, include the following VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo: Derivative liabilities,~~ ~~$26 million~~ ~~and~~ ~~$33 million; Accrued expenses and other liabilities,~~ ~~$141 million~~ ~~and~~ ~~$107 million; Long-term debt,~~ ~~$2.1 billion~~ ~~and~~ ~~$3.7 billion; and Total liabilities,~~ ~~$2.3 billion~~ ~~and~~ ~~$3.8 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.~~

(2)In first quarter 2021, trust and investment management fees and asset-based brokerage fees were combined into a single line item for investment advisory and other asset-based fees, and brokerage commissions and other brokerage services fees were combined into a single line item for commissions and brokerage services fees. Prior period balances have been revised to conform with the current period presentation.

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 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)~~64			~~Prior periods have been revised to conform to the current period presentation.~~Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Comprehensive Income (Unaudited)
	Quarter ended June 30,			Six months ended June 30,

(in millions)	2021		2020	2021	2020
Net income (loss) before noncontrolling interests (1)	$	6,744	(3,798)	11,434	(3,031)
Other comprehensive income (loss), after tax:
Net change in debt securities	304		1,143	(1,221)	915
Net change in derivatives and hedging activities	27		3	63	140
Defined benefit plans adjustments	334		(431)	369	(401)

Net change in foreign currency translation adjustments	22		51	33	(142)
Other comprehensive income (loss), after tax	687		766	(756)	512
Total comprehensive income (loss) before noncontrolling interests (1)	7,431		(3,032)	10,678	(2,519)
Less: Other comprehensive income (loss) from noncontrolling interests	1		0	2	(1)
Less: Net income (loss) from noncontrolling interests	704		48	758	(101)
Wells Fargo comprehensive income (loss) (1)	$	6,726	(3,080)	9,918	(2,417)

The accompanying notes are an integral part of these statements.


			Wells Fargo & Company			65


Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet
(in millions, except shares)	Jun 30, 2021		Dec 31, 2020
Assets	(Unaudited)
Cash and due from banks	$	25,304	28,236
Interest-earning deposits with banks	248,869		236,376
Total cash, cash equivalents, and restricted cash	274,173		264,612
Federal funds sold and securities purchased under resale agreements	70,149		65,672
Debt securities:
Trading, at fair value	82,727		75,095
Available-for-sale, at fair value (includes amortized cost of $186,309 and $215,533, net of allowance for credit losses)	189,897		220,392
Held-to-maturity, at amortized cost, net of allowance for credit losses (fair value $264,087 and $212,307)	260,941		205,720
Loans held for sale (includes $18,894 and $18,806 carried at fair value)	25,594		36,384
Loans	852,300		887,637
Allowance for loan losses	(15,148)		(18,516)
Net loans	837,152		869,121
Mortgage servicing rights (includes $6,717 and $6,125 carried at fair value)	8,009		7,437
Premises and equipment, net	8,745		8,895
Goodwill	26,194		26,392
Derivative assets	25,415		25,846
Equity securities (includes $35,331 and $34,009 carried at fair value) (1)	64,547		60,008
Other assets	72,453		87,337
Total assets (2)	$	1,945,996	1,952,911
Liabilities
Noninterest-bearing deposits	$	504,108	467,068
Interest-bearing deposits	936,364		937,313
Total deposits	1,440,472		1,404,381
Short-term borrowings	45,635		58,999
Derivative liabilities	14,551		16,509
Accrued expenses and other liabilities (includes $22,043 and $22,441 carried at fair value) (1)	72,555		74,360
Long-term debt	179,656		212,950
Total liabilities (3)	1,752,869		1,767,199
Equity
Wells Fargo stockholders’ equity:
Preferred stock	20,820		21,136
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares	9,136		9,136
Additional paid-in capital	60,018		60,197
Retained earnings (1)	171,765		162,683
Cumulative other comprehensive income (loss)	(564)		194
Treasury stock – 1,373,813,200 shares and 1,337,799,931 shares	(69,038)		(67,791)
Unearned ESOP shares	(875)		(875)
Total Wells Fargo stockholders’ equity	191,262		184,680
Noncontrolling interests	1,865		1,032
Total equity	193,127		185,712
Total liabilities and equity	$	1,945,996	1,952,911

(2)Our consolidated assets at June 30, 2021, and December 31, 2020, included the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Debt securities, $518 million and $967 million; Loans, $4.1 billion and $10.9 billion; All other assets, $334 million and $310 million; and Total assets, $4.9 billion and $12.1 billion, respectively.

(3)Our consolidated liabilities at June 30, 2021, and December 31, 2020, include the following VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo: Long-term debt, $178 million and $203 million; All other liabilities, $587 million and $900 million; and Total liabilities, $765 million and $1.1 billion, respectively.

The accompanying notes are an integral part of these statements.


66			Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity – Quarter ended June 30 (Unaudited)
	Wells Fargo stockholders’ equity
	Preferred stock			Common stock
($ and shares in millions)	Shares	Amount		Shares	Amount		Additional paid-in capital	Retained earnings	Cumulative other comprehensive income (loss)	Treasury stock	Unearned ESOP shares	Noncontrolling interests	Total equity
Balance March 31, 2021 (1)	5.6	$	21,170	4,141.1	$	9,136	59,854	166,458	(1,250)	(67,589)	(875)	1,130	188,034



Net income								6,040				704	6,744
Other comprehensive income (loss), net of tax									686			1	687
Noncontrolling interests												30	30
Common stock issued				2.2			0	(20)		115			95
Common stock repurchased				(35.3)						(1,565)			(1,565)
Preferred stock redeemed (2)	0	(350)					4	(4)					(350)

Preferred stock released by ESOP							0				0		0
Preferred stock converted to common shares	0	0		0			0			0			0


Common stock dividends							4	(416)					(412)
Preferred stock dividends								(293)					(293)
Stock incentive compensation expense							226						226
Net change in deferred compensation and related plans							(70)			1			(69)
Net change	0	(350)		(33.1)	0		164	5,307	686	(1,449)	0	735	5,093
Balance June 30, 2021	5.6	$	20,820	4,108.0	$	9,136	60,018	171,765	(564)	(69,038)	(875)	1,865	193,127
Balance March 31, 2020 (1)	5.7	$	21,347	4,096.4	$	9,136	59,849	165,288	(1,564)	(70,215)	(1,143)	612	183,310



Net income (loss) (1)								(3,846)				48	(3,798)
Other comprehensive income (loss), net of tax									766			0	766
Noncontrolling interests												75	75
Common stock issued				13.5			224	(549)		692			367
Common stock repurchased				0						(2)			(2)
Preferred stock redeemed	0	0					0	0					0

Preferred stock released by ESOP							(19)				268		249
Preferred stock converted to common shares	(0.2)	(249)		9.7			(243)			492			0


Common stock dividends							20	(2,113)					(2,093)
Preferred stock dividends								(314)					(314)
Stock incentive compensation expense							120						120
Net change in deferred compensation and related plans							(28)			(17)			(45)
Net change (1)	(0.2)	(249)		23.2	0		74	(6,822)	766	1,165	268	123	(4,675)
Balance June 30, 2020 (1)	5.5	$	21,098	4,119.6	$	9,136	59,923	158,466	(798)	(69,050)	(875)	735	178,635

(2)Represents the impact of the redemption of the remaining Preferred Stock, Series N, in second quarter 2021. For additional information, see Note 16 (Preferred Stock).

The accompanying notes are an integral part of these statements.


			Wells Fargo & Company			67


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity – Six months ended June 30 (Unaudited)
	Wells Fargo stockholders’ equity
	Preferred stock			Common stock
($ and shares in millions)	Shares	Amount		Shares	Amount		Additional paid-in capital	Retained earnings	Cumulative other comprehensive income (loss)	Treasury stock	Unearned ESOP shares	Noncontrolling interests	Total equity


Balance December 31, 2020 (1)	5.5	$	21,136	4,144.0	$	9,136	60,197	162,683	194	(67,791)	(875)	1,032	185,712

Net income								10,676				758	11,434
Other comprehensive income (loss), net of tax									(758)			2	(756)
Noncontrolling interests												73	73
Common stock issued				16.5			0	(81)		900			819
Common stock repurchased				(52.5)						(2,161)			(2,161)
Preferred stock redeemed (2)	(0.1)	(4,876)					48	(48)					(4,876)

Preferred stock released by ESOP							0				0		0
Preferred stock converted to common shares	0	0		0			0			0			0

Preferred stock issued	0.2	4,560					(31)						4,529
Common stock dividends							10	(836)					(826)
Preferred stock dividends								(629)					(629)
Stock incentive compensation expense							724						724
Net change in deferred compensation and related plans							(930)			14			(916)
Net change	0.1	(316)		(36.0)	0		(179)	9,082	(758)	(1,247)	0	833	7,415
Balance June 30, 2021	5.6	$	20,820	4,108.0	$	9,136	60,018	171,765	(564)	(69,038)	(875)	1,865	193,127
Balance December 31, 2019	7.5	$	21,549	4,134.4	$	9,136	61,049	166,697	(1,311)	(68,831)	(1,143)	838	187,984
Cumulative effect from change in accounting policies (1)								708					708
Balance January 1, 2020 (1)	7.5	21,549		4,134.4	9,136		61,049	167,405	(1,311)	(68,831)	(1,143)	838	188,692

Net income (loss) (1)								(2,930)				(101)	(3,031)
Other comprehensive income (loss), net of tax									513			(1)	512
Noncontrolling interests												(1)	(1)
Common stock issued				50.9			207	(857)		2,694			2,044
Common stock repurchased				(75.4)						(3,409)			(3,409)
Preferred stock redeemed (3)	(1.9)	(2,215)					17	(272)					(2,470)

Preferred stock released by ESOP							(19)				268		249
Preferred stock converted to common shares	(0.2)	(249)		9.7			(243)			492			0

Preferred stock issued	0.1	2,013					(45)						1,968
Common stock dividends							38	(4,226)					(4,188)
Preferred stock dividends								(654)					(654)
Stock incentive compensation expense							301						301
Net change in deferred compensation and related plans							(1,382)			4			(1,378)
Net change (1)	(2.0)	(451)		(14.8)	0		(1,126)	(8,939)	513	(219)	268	(103)	(10,057)
Balance June 30, 2020 (1)	5.5	$	21,098	4,119.6	$	9,136	59,923	158,466	(798)	(69,050)	(875)	735	178,635

(1)We adopted Accounting Standards Update (ASU) 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL) effective January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies) in our Annual Report on Form 10-K for the year ended December 31, 2020. In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(2)Represents the impact of the redemption of Preferred Stock, Series I, Series P and Series W, in first quarter 2021, and Preferred Stock, Series N, in second quarter 2021. For additional information, see Note 16 (Preferred Stock).

(3)Represents the impact of the redemption of the remaining Preferred Stock, Series K, and partial redemption of Preferred Stock, Series T, in first quarter 2020.

The accompanying notes are an integral part of these statements.


68			Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
	Six months ended June 30,
(in millions)	2021		2020
Cash flows from operating activities:
Net income (loss) before noncontrolling interests (1)	$	11,434	(3,031)
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	(2,308)		13,539
Changes in fair value of MSRs and LHFS carried at fair value	(895)		4,481
Depreciation, amortization and accretion (1)	4,173		3,858
Stock-based compensation	1,475		953
Deferred income tax benefit (1)	(1,495)		(118)
Other net (gains) losses (2)	(7,661)		7,150
Originations and purchases of loans held for sale (2)	(87,673)		(83,540)
Proceeds from sales of and paydowns on loans originally classified as held for sale (2)	55,502		69,195
Net change in:
Debt and equity securities, held for trading	7,531		36,459

Derivative assets and liabilities	(1,299)		(6,825)
Other assets	11,256		(5,910)
Other accrued expenses and liabilities (1)	(1,572)		(2,819)
Net cash provided (used) by operating activities	(11,532)		33,392
Cash flows from investing activities:
Net change in:
Federal funds sold and securities purchased under resale agreements	(4,477)		22,851
Available-for-sale debt securities:
Proceeds from sales	13,675		29,524
Prepayments and maturities	45,238		35,340
Purchases	(71,997)		(28,310)
Held-to-maturity debt securities:
Paydowns and maturities	45,833		11,566
Purchases	(43,192)		(25,376)
Equity securities, not held for trading:
Proceeds from sales and capital returns	2,131		5,584
Purchases	(3,033)		(5,587)
Loans:
Loans originated by banking subsidiaries, net of principal collected	21,926		8,871
Proceeds from sales of loans originally classified as held for investment	22,174		5,325
Purchases of loans	(186)		(775)
Principal collected on nonbank entities’ loans	7,007		5,505
Loans originated by nonbank entities	(5,723)		(5,856)

Proceeds from sales of foreclosed assets and short sales	372		753
Other, net	1,056		(31)
Net cash provided by investing activities	30,804		59,384
Cash flows from financing activities:
Net change in:
Deposits	36,575		88,085
Short-term borrowings	(13,364)		(44,027)
Long-term debt:
Proceeds from issuance	1,125		37,664
Repayment	(29,810)		(44,574)
Preferred stock:
Proceeds from issuance	4,529		1,968
Redeemed	(4,875)		(2,470)
Cash dividends paid	(629)		(654)
Common stock:
Proceeds from issuance	114		454
Stock tendered for payment of withholding taxes	(250)		(320)
Repurchased	(2,161)		(3,409)
Cash dividends paid	(795)		(4,055)
Net change in noncontrolling interests	(13)		(31)
Other, net	(157)		(154)
Net cash provided (used) by financing activities	(9,711)		28,477
Net change in cash, cash equivalents, and restricted cash	9,561		121,253
Cash, cash equivalents, and restricted cash at beginning of period	264,612		141,250
Cash, cash equivalents, and restricted cash at end of period	$	274,173	262,503
Supplemental cash flow disclosures:
Cash paid for interest	$	2,345	5,545
Cash paid for income taxes, net (2)	3,052		2,070

(2)Prior period balances have been revised to conform with the current period presentation.

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~~)


			Wells Fargo & Company			69

~~See~~

Notes to Financial Statements

-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~~investment and ~~investments,~~ mortgage ~~banking, investment banking, retail banking, brokerage,~~products and services, as well as consumer and commercial finance, through ~~branches,~~banking locations and offices, the internet and other distribution channels to ~~consumers,~~individuals, businesses and institutions in all 50 states, the District of Columbia, and in ~~foreign countries.~~countries outside the U.S. 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~~2020 (2020 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 54 (Loans and Related Allowance for Credit Losses));

•valuations of residential mortgage servicing rights (MSRs) (Note 78 (Securitizations and Variable Interest Entities) and Note 89 (Mortgage Banking Activities)) ~~and~~;

•valuations of financial instruments (Note 1315 (Fair Values of Assets and Liabilities));

~~income taxes; and~~

•liabilities for contingent litigation losses (Note 1113 (Legal Actions));

•income taxes; and

•goodwill impairment (Note 10 (Intangible Assets)).

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~~2020 Form 10-K.

Change in Accounting Policies

In second quarter 2021, we elected to change our accounting method for low-income housing tax credit (LIHTC) investments from the equity method of accounting to the proportional amortization method. Under the proportional amortization method, the investments are carried at amortized cost and amortized in proportion to the tax credits received. The amortization of the investments and the related tax impacts are recognized in income tax expense. Previously, we recognized the amortization of the investments in other noninterest income and the related tax impacts were recognized in income tax expense. We determined that the proportional amortization method is preferable because it better aligns the financial statement presentation with the economic impact of these investments, which generate tax credits over the lives of the investments. Adoption of the proportional amortization method was applied retrospectively, to the earliest period presented, which resulted in a cumulative-effect adjustment to reduce retained earnings by $283 million as of January 1, 2020.

In second quarter 2021, we also elected to change the presentation of investment tax credits related to solar energy investments, which are accounted for under the deferral method. We reclassified the investment tax credits on our consolidated balance sheet from accrued expenses and other liabilities to a reduction of the carrying value of the investment balances. We also reclassified the investment tax credits, which are recognized over time, from income tax expense to interest income for solar energy leases or noninterest income for solar energy equity investments. We determined that this presentation is preferable because it better reflects the financial statement presentation of the investment tax credits as an integral component of the investments. The change in accounting policy was adopted retrospectively to January 1, 2020.

Table 1.1 presents the impact of the accounting policy changes for LIHTC investments and solar energy investments to our consolidated statement of income and consolidated balance sheet. There was no material impact to the consolidated statement of cash flows.


70			Wells Fargo & Company

Table 1.1:Impact of the Accounting Policy Changes for LIHTC Investments and Solar Energy Investments


	Quarter ended June 30, 2020					Six months ended June 30, 2020
			Effect of accounting policy changes ($)					Effect of accounting policy changes ($)
($ in millions, except per share amounts)	As reported		LIHTC	Solar	As revised	As reported		LIHTC	Solar	As revised
Selected Income Statement Data
Interest income – loans	$	8,448	0	12	8,460	18,513		0	30	18,543
Noninterest income	7,956		370	68	8,394	14,361		739	137	15,237
Income tax expense (benefit) (1)	(3,917)		1,434	482	(2,001)	(3,758)		1,584	526	(1,648)
Net income (loss)	(2,379)		(1,064)	(403)	(3,846)	(1,726)		(845)	(359)	(2,930)
Earnings (loss) per common share	(0.66)		(0.26)	(0.09)	(1.01)	(0.65)		(0.21)	(0.08)	(0.94)
Diluted earnings (loss) per common share	(0.66)		(0.26)	(0.09)	(1.01)	(0.65)		(0.21)	(0.08)	(0.94)

						At December 31, 2020
								Effect of accounting policy changes ($)
						As reported		LIHTC	Solar	As revised
Selected Balance Sheet Data
Equity securities						$	62,260	(275)	(1,977)	60,008
Accrued expenses and other liabilities						76,404		(62)	(1,982)	74,360
Retained earnings						162,890		(207)	0	162,683

(1)The quarterly income tax expense (benefit) varies based on the income (loss) before income tax expense (benefit) and the estimated annual effective income tax rate applied to each quarter.

Accounting Standards Adopted in ~~2017~~2021

In ~~first quarter 2017,~~2021, we adopted the following new accounting guidance:

•Accounting Standards Update (ASU or Update) ~~2016-09~~2021-01 – ~~Compensation~~Reference Rate Reform (Topic 848): Scope

•ASU 2020-08 – ~~Stock Compensation (Topic 718):~~

Codification Improvements to ~~Employee Share-Based Payment Accounting;~~Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs

•ASU ~~2016-07 -~~2020-01 – Investments -– Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323)~~: Simplifying the Transition to the Equity Method of Accounting;~~

~~ASU 2016-06 -~~ , and Derivatives and Hedging (Topic 815): ~~Contingent Put~~Clarifying the Interactions between Topic 321, Topic 323, and ~~Call Options in Debt Instruments; and~~

Topic 815 (a consensus of the Financial Accounting Standards Board (FASB) Emerging Issues Task Force)

•ASU ~~2016-05 -~~ ~~Derivatives and Hedging~~2019-12 – Income Taxes (Topic ~~815)~~740): ~~Effect~~Simplifying the Accounting for Income Taxes

ASU 2021-01 clarifies the scope of ~~Derivative Contract Novations on Existing Hedge Accounting Relationships.~~

~~ASU 2016-09Simplifies the accounting for share-based payment awards issued~~Topic 848 to ~~employees. We have income tax effects based on~~include derivatives affected by changes in ~~our stock~~interest rates for margining, discounting, or contract price ~~from the grant date to the vesting date~~alignment as part of the ~~employee stock compensation.~~market-wide transition to new reference rates (commonly referred to as the “discounting transition”), even if they do not reference the London Interbank Offered Rate or another rate that is expected to be discontinued as a result of reference rate reform. The Update ~~requires these income tax effects to be recognized~~also clarifies other aspects of the relief provided in ~~the statement of income within income tax expense instead of within additional paid-in capital. In addition, the~~Accounting Standards Codification (ASC) 848. We adopted this Update requires changes to the Statement of Cash Flows including the classification between the operating and financing section for tax activity related to employee stock compensation, which we adopted retrospectively. We recorded excess tax benefits and tax deficiencies within income tax expense in the statement of income in first quarter ~~2017,~~2021 on a prospective ~~basis.~~

~~ASU 2016-07~~ eliminates the requirement for companies to retroactively apply the equity method of accounting for investments when increases in ownership interests or degree of influence result in the adoption of the equity method. Underbasis, and the guidance will be followed until 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~~terminates on ~~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.December 31, 2022. The Update did not have a material impact on our consolidated financial statements.

ASU ~~2016-05~~ 2020-08clarifies ~~that~~the accounting for purchased callable debt securities carried at a ~~change in~~premium and was issued to correct an unintended application of ASU 2017-08 – Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities,which requires amortization of such premiums to the ~~counterparty to a derivative instrument that has been designated as an accounting hedge does~~earliest call date, but was not ~~require~~clear for the ~~hedging relationship~~method to be ~~dedesignated as long as all other hedge accounting criteria continue~~used for instruments with multiple call dates. The Update now specifies that such premiums are amortized to ~~be met.~~the next call date and requires reassessment throughout the life of the instruments with multiple call dates. We adopted ~~the guidance~~this Update in first quarter ~~2017.~~

2021. The Update did not have a material impact on our consolidated financial statements.

~~Accounting Standards with Retrospective Application~~

ASU 2020-01 clarifies the accounting for equity securities upon transition between the measurement alternative and equity method. The ~~following accounting pronouncements have been issued~~Update also clarifies for forward contracts and options to purchase equity securities an entity need not consider whether upon settlement of the forward contract or option if the equity securities would be accounted for by the ~~FASB but are not yet effective:~~

~~ASU 2016-15 –~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~

~~Note 1: Summary of Significant Accounting Policies (continued~~)

~~ASU 2016-18~~ ~~– Statement of Cash Flows (Topic 230):~~ ~~Restricted Cash~~

~~ASU 2016-15~~ ~~addresses eight specific cash flow issues with~~equity method or the ~~objective of reducing the existing diversity in practice for reporting in the Statement of Cash Flows. The~~fair value option. We adopted this Update ~~is effective for us~~ in first quarter ~~2018 with retrospective application. Subject to completion of our assessment, we are~~2021. The Update did not ~~expecting this Update to~~ have a material impact on our consolidated financial statements.

ASU ~~2016-18~~ ~~requires~~2019-12 provides narrow scope simplifications and improvements to the general principles in ASC Topic 740 – Income Taxes related to intraperiod tax allocation, basis differences when there are changes in ownership of foreign investments and interim periods income tax accounting for year to date losses that amounts described as restricted cash and cash equivalents be included with cash and cash equivalents in the statement of cash flows. In addition, we will be required to disclose information in our footnotes about the nature of the restriction on cash and cash equivalents. Theexceed anticipated annual losses. We adopted this Update ~~is effective for us~~ in first quarter ~~2018 with retrospective application. Subject to completion of our assessment, we are~~2021. The Update did not ~~expecting this Update to~~ have a material impact on our consolidated 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 manner consistent with our


			Wells Fargo & Company			71

Note 1: Summary of Significant Accounting Policies (continued)

~~capital plans submitted annually under the Comprehensive Capital Analysis and Review (CCAR) and to provide an economic benefit to the Company.~~

Our payments to the counterparties for these contracts are recorded in permanent equity in the quarter paid and are not subject to re-measurement. The classification of the up-front payments as permanent equity assures that we have appropriate repurchase timing consistent with our capital plans, which contemplate a fixed dollar amount available per quarter for share repurchases pursuant to Federal Reserve Board (FRB) supervisory guidance. In return, the counterparty agrees to deliver a variable number 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 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.

~~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 1.2.

Table ~~1.1:~~1.2:Supplemental Cash Flow Information


	Six months ended June 30,
(in millions)	2021	2020

Held-to-maturity debt securities purchased from securitization of LHFS (1)	16,462	664
Transfers from loans to LHFS (2)	11,551	12,753
Transfers from available-for-sale debt securities to held-to-maturity debt securities	41,298	0

(1)For the six months ended June 30, 2021,predominantly represents agency mortgage-backed securities purchased upon settlement of the sale and securitization of our conforming residential mortgage loans. See Note 8 (Securitizations and Variable Interest Entities) for additional information.

(2)Prior periods have been revised to conform to the current period presentation.

Subsequent Events

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

~~Subsequent Events~~

We have evaluated the effects of events that have occurred subsequent to ~~September~~June 30, ~~2017,~~2021, and, except as disclosed in Note 16 (Preferred Stock), there have been no material events that would require recognition in our ~~third~~second quarter ~~2017~~2021 consolidated financial statements or disclosure in the Notes to the consolidated financial statements.



~~Note 2:~~ ~~Business Combinations~~ 72			Wells Fargo & Company

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: Trading Activities

~~Table 3.1 provides 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.~~

~~Table 3.1:Fed Funds Sold and Other Short-Term Investments~~

(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

As part of maintaining our memberships in certain clearing organizations, we are required to stand ready to provide liquidity meant to sustain market clearing activity in the event unforeseen events occur or are deemed likely to occur. This includes commitments 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 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.

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).

~~Note 4: Investment Securities~~

Table ~~4.1~~2.1 presents a summary of our trading assets and liabilities measured at fair value through earnings.

Table 2.1:Trading Assets and Liabilities


(in millions)	Jun 30, 2021		Dec 31, 2020
Trading assets:
Debt securities	$	82,727	75,095
Equity securities	23,701		23,032
Loans held for sale	2,269		1,015
Gross trading derivative assets	54,965		58,767
Netting (1)	(31,052)		(34,301)
Total trading derivative assets	23,913		24,466
Total trading assets	132,610		123,608
Trading liabilities:
Short sale	22,043		22,441
Gross trading derivative liabilities	45,441		53,285
Netting (1)	(33,614)		(39,444)
Total trading derivative liabilities	11,827		13,841
Total trading liabilities	$	33,870	36,282

(1)Represents balance sheet netting for trading derivative asset and liability balances, and trading portfolio level counterparty valuation adjustments.

Table 2.2 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 dividend income on trading securities and dividend expense on trading securities we have sold, but not yet purchased.

Table 2.2: Net Interest Income and Net Gains (Losses) on Trading Activities


	Quarter ended June 30,				Six months ended June 30,
(in millions)	2021		2020		2021		2020
Interest income:
Debt securities	$	496	$	659	$	1,025	1,425
Equity securities	93		68		196		205
Loans held for sale	3		6		15		18
Total interest income	592		733		1,236		1,648
Less: Interest expense	105		116		215		257
Net interest income	487		617		1,021		1,391
Net gains (losses) from trading activities (1):
Debt securities	769		329		(1,337)		2,684
Equity securities	856		2,329		2,009		(2,072)
Loans held for sale	15		24		39		12
Derivatives (2)	(1,619)		(1,875)		(342)		247
Total net gains from trading activities	21		807		369		871
Total trading-related net interest and noninterest income	$	508	$	1,424	$	1,390	2,262

(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.


			Wells Fargo & Company			73


Note 3: Available-for-Sale and Held-to-Maturity Debt Securities

Table 3.1 provides the amortized cost, net of the allowance for credit losses (ACL) for debt securities, and fair value by major categories of available-for-sale (AFS) debt securities, which are carried at fair value, and held-to-maturity (HTM) debt securities, which are carried at

amortized ~~cost.~~cost, net of the ACL. The net unrealized gains (losses) for ~~available-for-sale~~AFS debt securities are reported ~~on an after-tax basis~~ as a component of cumulative ~~OCI.~~other comprehensive income (OCI), net of the ACL and applicable income taxes. Information on debt securities held for trading is included in Note 2 (Trading Activities).

Outstanding balances exclude accrued interest receivable on AFS and HTM debt securities, which are included in other assets. See Note 7 (Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. The interest income reversed in the second quarter and first half of both 2021 and 2020 was insignificant.

Table ~~4.1:Amortized Cost~~3.1:Available-for-Sale and ~~Fair Value~~Held-to-Maturity Debt Securities Outstanding


(in millions)	Amortized cost, net (1)		Gross unrealized gains	Gross unrealized losses	Fair value
June 30, 2021
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	35,741	195	(31)	35,905
Non-U.S. government securities	11,201		0	0	11,201
Securities of U.S. states and political subdivisions (2)	19,121		410	(32)	19,499
Federal agency mortgage-backed securities	94,186		2,679	(331)	96,534
Non-agency mortgage-backed securities (3)	4,349		51	(22)	4,378
Collateralized loan obligations	12,406		8	(7)	12,407
Other debt securities	9,305		699	(31)	9,973
Total available-for-sale debt securities	186,309		4,042	(454)	189,897
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	27,576		862	(409)	28,029
Securities of U.S. states and political subdivisions	28,243		931	(36)	29,138
Federal agency mortgage-backed securities	182,891		2,908	(1,349)	184,450
Non-agency mortgage-backed securities	948		46	(11)	983
Collateralized loan obligations	21,283		205	(1)	21,487

Total held-to-maturity debt securities	260,941		4,952	(1,806)	264,087
Total (4)	$	447,250	8,994	(2,260)	453,984
December 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	21,954	205	0	22,159
Non-U.S. government securities	16,816		0	(3)	16,813
Securities of U.S. states and political subdivisions (2)	19,263		224	(81)	19,406
Federal agency mortgage-backed securities	134,838		4,260	(28)	139,070
Non-agency mortgage-backed securities (3)	3,745		30	(46)	3,729
Collateralized loan obligations	9,058		4	(44)	9,018
Other debt securities	9,859		399	(61)	10,197
Total available-for-sale debt securities	215,533		5,122	(263)	220,392
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	47,295		1,472	(170)	48,597
Securities of U.S. states and political subdivisions	25,860		938	(5)	26,793
Federal agency mortgage-backed securities	115,437		4,182	(21)	119,598
Non-agency mortgage-backed securities	890		51	(8)	933
Collateralized loan obligations	16,238		148	0	16,386

Total held-to-maturity debt securities	205,720		6,791	(204)	212,307
Total (4)	$	421,253	11,913	(467)	432,699

(1)Represents amortized cost of the securities, net of the ACL of $33 million and $28 million related to AFS debt securities and $77 million and $41 million related to HTM debt securities at June 30, 2021, and December 31, 2020, respectively.

(2)Includes investments in tax-exempt preferred debt securities issued by investment funds or trusts that predominantly invest in tax-exempt municipal securities. The amortized cost, net of the ACL and fair value of these types of securities, was $5.2 billion at June 30, 2021, and $5.0 billion at December 31, 2020.

(3)Predominantly consists of commercial mortgage-backed securities at both June 30, 2021, and December 31, 2020.

(4)We held AFS and HTM 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 $119.8 billion and $89.9 billion and a fair value of $121.5 billion and $91.3 billion at June 30, 2021, and an amortized cost of $99.8 billion and $88.7 billion and a fair value of $103.2 billion and $91.5 billion at December 31, 2020, respectively.

(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


~~(1)~~74			~~The available-for-sale portfolio includes collateralized debt obligations (CDOs) with a cost basis and fair value of~~ ~~$914 million~~ ~~and~~ ~~$1.0 billion, respectively, at~~ ~~September 30, 2017, and~~ ~~$819 million~~ ~~and~~ ~~$847 million, respectively, at~~ ~~December 31, 2016~~. Wells Fargo & Company

Table 3.2 details the breakout of purchases of and transfers to HTM debt securities by major category of security.

Table 3.2:Held-to-Maturity Debt Securities Purchases and Transfers


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2021		2020	2021		2020
Purchases of held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies	$	0	0	$	0	3,016
Securities of U.S. states and political subdivisions	1,173		15	3,083		881
Federal agency mortgage-backed securities	24,855		6,958	49,722		22,821
Non-agency mortgage-backed securities	55		12	84		74
Collateralized loan obligations	3,385		0	7,338		0
Total purchases of held-to-maturity debt securities	29,468		6,985	60,227		26,792
Transfers from available-for-sale debt securities to held-to-maturity debt securities:


Federal agency mortgage-backed securities	24,681		0	41,298		0


Total transfers from available-for-sale debt securities to held-to-maturity debt securities	$	24,681	0	$	41,298	0

(1)Inclusive of securities purchased but not yet settled and noncash purchases from securitization of loans held for sale (LHFS).

Table 3.3 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 AFS and HTM debt securities (pre-tax).

Table 3.3:Income Statement Impacts for Available-for-Sale and Held-to-Maturity Debt Securities


	Quarter ended June 30,				Six months ended June 30,
(in millions)	2021		2020		2021		2020
Interest income (1):
Available-for-sale	$	655	1,349		$	1,466	3,075
Held-to-maturity	1,048		938		2,020		1,918
Total interest income	1,703		2,287		3,486		4,993
Provision for credit losses:
Available-for-sale	(10)		(40)		12		128
Held-to-maturity	(11)		9		36		13
Total provision for credit losses	(21)		(31)		48		141
Realized gains and losses (2):
Gross realized gains	1		248		152		504
Gross realized losses	(1)		(36)		(1)		(40)


Impairment write-downs	0		0		0		(15)
Net realized gains	$	0	$	212	$	151	449

(1)Excludes interest income from trading debt securities, which is disclosed in Note 2 (Trading Activities).

(2)Realized gains and losses relate to AFS debt securities. There were 0 realized gains or losses from HTM debt securities in all periods presented.

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 ACL for debt securities. 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 (NRSROs). Debt securities rated investment grade, that is those with ratings similar to BBB-/Baa3 or above, as defined by NRSROs, 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 NRSROs, 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. Substantially all of our debt securities were rated by NRSROs at June 30, 2021, and December 31, 2020.

Table 3.4 shows the percentage of fair value of AFS debt securities and amortized cost of HTM debt securities determined to be rated investment grade, inclusive of securities rated based on internal credit grades.


~~(2)~~			The “Other” category 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 basis and fair value of ~~$158 million~~ ~~each at~~ ~~September 30, 2017, and~~ ~~$1.3 billion~~ ~~each at~~ ~~December 31, 2016. 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~~. Wells Fargo & Company			75

Note 3: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

Table 3.4:Investment Grade Debt Securities


	Available-for-Sale				Held-to-Maturity
($ in millions)	Fair value		% investment grade		Amortized cost	% investment grade
June 30, 2021
Total portfolio (1)	$	189,897	99	%	261,018	99	%
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)	$	132,439	100	%	210,467	100	%
Securities of U.S. states and political subdivisions	19,499		99		28,258	100
Collateralized loan obligations (3)	12,407		100		21,329	100
All other debt securities (4)	25,552		91		964	4
December 31, 2020
Total portfolio (1)	$	220,392	99	%	205,761	99	%
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)	$	161,229	100	%	162,732	100	%
Securities of U.S. states and political subdivisions	19,406		99		25,870	100
Collateralized loan obligations (3)	9,018		100		16,255	100
All other debt securities (4)	30,739		93		904	6

(1)94% and 92% were rated AA- and above at June 30, 2021, and December 31, 2020, respectively.

(2)Includes federal agency mortgage-backed securities.

(3)99% and 98% were rated AA- and above at June 30, 2021, and December 31, 2020, respectively.

(4)Includes non-U.S. government, non-agency mortgage-backed, and all other debt securities.

DELINQUENCY STATUS AND NONACCRUAL DEBT SECURITIESDebt 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.

Debt securities that are past due and still accruing were insignificant at both June 30, 2021, and December 31, 2020. The carrying value of debt securities in nonaccrual status was insignificant at both June 30, 2021, and December 31, 2020. Charge-offs on debt securities were insignificant in the second quarter and first half of both 2021 and 2020.

Purchased debt securities with credit deterioration (PCD) are not considered to be in nonaccrual status, as payments from issuers of these securities remain current. PCD securities were insignificant in the second quarter and first half of both 2021 and 2020.


~~(3)~~76			~~Predominantly consists of federal agency mortgage-backed securities at both~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~. Wells Fargo & Company

~~Note 4: Investment Securities (continued~~)

~~Gross~~ Unrealized Losses ~~and Fair Value~~of Available-for-Sale Debt Securities

Table ~~4.2~~3.5 shows the gross unrealized losses and fair value of AFS 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 “12 months or more” in a continuous loss position based on the point in time that the fair value declined to below the amortized cost basis, ~~and not the period~~net of ~~time since the credit-related OTTI write-down.~~allowance for credit losses.

Table ~~4.2:~~3.5: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

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


	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
June 30, 2021
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	(31)	11,924	0	0	(31)	11,924
Non-U.S. government securities	0		0	0	0	0	0
Securities of U.S. states and political subdivisions	(21)		1,413	(11)	717	(32)	2,130
Federal agency mortgage-backed securities	(285)		18,152	(46)	2,924	(331)	21,076
Non-agency mortgage-backed securities	(3)		330	(19)	771	(22)	1,101
Collateralized loan obligations	(2)		1,312	(5)	1,698	(7)	3,010
Other debt securities	(15)		1,196	(16)	807	(31)	2,003
Total available-for-sale debt securities	$	(357)	34,327	(97)	6,917	(454)	41,244
December 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	0	0	0	0	0	0
Non-U.S. government securities	(3)		16,812	0	0	(3)	16,812
Securities of U.S. states and political subdivisions	(51)		3,681	(30)	1,101	(81)	4,782
Federal agency mortgage-backed securities	(27)		11,310	(1)	316	(28)	11,626
Non-agency mortgage-backed securities	(28)		1,366	(18)	534	(46)	1,900
Collateralized loan obligations	(27)		5,082	(17)	1,798	(44)	6,880
Other debt securities	(16)		647	(45)	1,604	(61)	2,251
Total available-for-sale debt securities	$	(152)	38,898	(111)	5,353	(263)	44,251

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~~Credit impairment ~~exists, including our intent and ability to hold the securities~~is recorded as an ACL for ~~a period of time sufficient to recover the cost basis of the~~debt securities.

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) ~~and Note 5 (Investment Securities) to Financial Statements~~ in our ~~2016~~2020 Form 10-K. ~~There were no material changes to our methodologies for assessing impairment in the first nine months of 2017.~~

~~Table 4.3 shows 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 (used for credit risk management purposes) equivalent to the credit rating assigned by major credit agencies. The unrealized losses 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.

~~Table 4.3:Gross Unrealized Losses and Fair Value by Investment Grade~~

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


			Wells Fargo & Company			77

Note ~~4: Investment~~3: Available-for-Sale and Held-to-Maturity Debt Securities (~~continued~~)(continued)

Contractual Maturities

Table ~~4.4 shows~~3.6 and Table 3.7 show the remaining contractual maturities, amortized cost, net of the ACL, fair value and ~~contractual weighted-average~~weighted average effective yields ~~(taxable-equivalent basis)~~ of ~~available-for-sale~~AFS and HTM debt ~~securities.~~securities, respectively. The remaining contractual principal

maturities for ~~MBS~~mortgage-backed securities (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 3.6:Contractual Maturities – Available-for-Sale Debt Securities


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
June 30, 2021
Available-for-sale debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	35,741		5	17,965	15,777	1,994
Fair value	35,905			5	17,978	15,837	2,085
Weighted average yield	0.75		%	2.00	0.33	1.13	1.44
Non-U.S. government securities
Amortized cost, net	$	11,201		11,176	25	0	0
Fair value	11,201			11,176	25	0	0
Weighted average yield	(0.11		%)	(0.11)	0.42	0	0
Securities of U.S. states and political subdivisions
Amortized cost, net	$	19,121		1,546	2,225	5,244	10,106
Fair value	19,499			1,549	2,270	5,253	10,427
Weighted average yield	2.07		%	1.46	1.58	1.41	2.62
Federal agency mortgage-backed securities
Amortized cost, net	$	94,186		8	171	3,359	90,648
Fair value	96,534			8	181	3,484	92,861
Weighted average yield	2.72		%	2.35	3.30	2.30	2.74
Non-agency mortgage-backed securities
Amortized cost, net	$	4,349		0	0	151	4,198
Fair value	4,378			0	0	150	4,228
Weighted average yield	2.00		%	0	0	2.27	1.99
Collateralized loan obligations
Amortized cost, net	$	12,406		0	90	7,306	5,010
Fair value	12,407			0	90	7,304	5,013
Weighted average yield	1.42		%	0	2.21	1.44	1.39
Other debt securities
Amortized cost, net	$	9,305		160	2,791	2,865	3,489
Fair value	9,973			160	3,152	2,910	3,751
Weighted average yield	3.17		%	2.97	4.23	3.31	2.22
Total available-for-sale debt securities
Amortized cost, net	$	186,309		12,895	23,267	34,702	115,445
Fair value	$	189,897		12,898	23,696	34,938	118,365
Weighted average yield	2.03		%	0.22	0.95	1.54	2.60

(1)Weighted average yields displayed by maturity bucket are weighted based on amortized cost without effect for any related hedging derivatives and are shown pre-tax.

~~Table 4.4:Contractual Maturities~~

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
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 % $ —
— %
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
Mortgage-backed securities:
Federal agencies 150,181
3.24
1
5.03
223
2.78
5,927
2.83
144,030
3.26
Residential 6,394
3.88
—
—
27
5.66
11
2.42
6,356
3.88
Commercial 4,652
3.74
—
—
—
—
64
2.76
4,588
3.75
Total mortgage-backed securities 161,227
3.28
1
5.03
250
3.09
6,002
2.83
154,974
3.30
Corporate debt securities 9,340
4.94
976
4.08
3,009
5.57
4,373
4.61
982
5.28
Collateralized loan and other debt obligations 35,608
2.97
—
—
100
1.83
16,498
2.95
19,010
3.00
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 %


~~(1)~~78			~~Weighted-average~~Wells Fargo & Company

Table 3.7: Contractual Maturities – Held-to-Maturity Debt Securities


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
June 30, 2021
Held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	27,576		11,386	12,407	0	3,783
Fair value	28,029			11,461	13,140	0	3,428
Weighted average yield	2.10		%	1.98	2.37	0	1.57
Securities of U.S. states and political subdivisions
Amortized cost, net	$	28,243		673	2,177	2,066	23,327
Fair value	29,138			680	2,246	2,150	24,062
Weighted average yield	2.19		%	2.09	1.90	2.65	2.18
Federal agency mortgage-backed securities
Amortized cost, net	$	182,891		0	0	0	182,891
Fair value	184,450			0	0	0	184,450
Weighted average yield	2.20		%	0	0	0	2.20
Non-agency mortgage-backed securities
Amortized cost, net	$	948		0	15	0	933
Fair value	983			0	15	0	968
Weighted average yield	3.09		%	0	1.56	0	3.12
Collateralized loan obligations
Amortized cost, net	$	21,283		0	0	8,155	13,128
Fair value	21,487			0	0	8,248	13,239
Weighted average yield	1.68		%	0	0	1.73	1.65
Total held-to-maturity debt securities
Amortized cost, net	$	260,941		12,059	14,599	10,221	224,062
Fair value	264,087			12,141	15,401	10,398	226,147
Weighted average yield	2.15		%	1.98	2.30	1.91	2.16

(1)Weighted average yields displayed by maturity bucket are weighted based on ~~fair value and predominantly represent contractual coupon rates without effect for any related hedging derivatives.~~

~~Table 4.5 shows the~~ amortized cost and ~~weighted-average yields of held-to-maturity debt securities by contractual maturity.~~are shown pre-tax.

~~Table 4.5:Amortized Cost 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
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 %


~~(1)~~			~~Weighted-average yields displayed by maturity bucket are weighted based on amortized cost and predominantly represent contractual coupon rates.~~Wells Fargo & Company			79

~~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~~Note 4: Loans 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.

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: Loans and~~Related Allowance for Credit Losses

Table ~~5.1~~4.1 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 June 30, 2021, and December 31, 2020.

Outstanding balances exclude accrued interest receivable on loans, except for certain revolving loans, such as credit card loans.

See Note 7 (Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. During the first half of 2021, we reversed accrued interest receivable of $24 million for our commercial portfolio segment and $104 million for our consumer portfolio segment, compared with $21 million and $114 million, respectively, for the same period a year ago.

Table ~~5.1:~~4.1:Loans Outstanding


(in millions)				(in millions)	Jun 30, 2021		Dec 31, 2020

(in millions)	Sep 30, 2017		Dec 31, 2016

Commercial:				Commercial:
Commercial and industrial	$	327,944	330,840	Commercial and industrial	$	317,618	318,805
Real estate mortgage	128,475		132,491	Real estate mortgage	120,678		121,720
Real estate construction	24,520		23,916	Real estate construction	22,406		21,805
Lease financing	19,211		19,289	Lease financing	15,720		16,087
Total commercial	500,150		506,536	Total commercial	476,422		478,417
Consumer:				Consumer:
Real estate 1-4 family first mortgage	280,173		275,579
Real estate 1-4 family junior lien mortgage	41,152		46,237
Residential mortgage – first lien				Residential mortgage – first lien	244,371		276,674
Residential mortgage – junior lien				Residential mortgage – junior lien	19,637		23,286
Credit card	36,249		36,700	Credit card	34,936		36,664
Automobile	55,455		62,286
Other revolving credit and installment	38,694		40,266
Auto				Auto	51,073		48,187
Other consumer				Other consumer	25,861		24,409
Total consumer	451,723		461,068	Total consumer	375,878		409,220
Total loans	$	951,873	967,604	Total loans	$	852,300	887,637

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~~4.2 presents total non-U.S. commercial ~~foreign~~ loans outstanding by class of financing receivable.

Table ~~5.2:~~4.2:Non-U.S. Commercial ~~Foreign~~ Loans Outstanding


(in millions)	Jun 30, 2021		Dec 31, 2020




Non-U.S. commercial loans:
Commercial and industrial	$	71,409	63,128
Real estate mortgage	6,619		7,278
Real estate construction	1,820		1,603
Lease financing	672		629
Total non-U.S. commercial loans	$	80,520	72,638

(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


80			Wells Fargo & Company

Loan Purchases, Sales, and Transfers

Table ~~5.3 summarizes~~4.3 presents 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 residential mortgage – first lien loans ~~originated for sale~~ because their loan activity normally does not impact the ~~allowance for credit losses.~~ ACL.

Table ~~5.3:~~4.3:Loan Purchases, Sales, and Transfers



	2021				2020
(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total
Quarter ended June 30,
Purchases	$	134	1	135	332	2	334
Sales	(65)		0	(65)	(1,957)	(1)	(1,958)
Transfers (to)/from LHFS	(359)		(99)	(458)	(8)	(10,379)	(10,387)
Six months ended June 30,
Purchases	$	182	2	184	673	3	676
Sales	(338)		(188)	(526)	(2,770)	(27)	(2,797)
Transfers (to)/from LHFS	(794)		(36)	(830)	69	(10,377)	(10,308)

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. For unconditionally cancelable commitments at our discretion, we do not recognize an ACL.

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~~$82.6 billion at ~~September~~June 30, ~~2017 and December 31, 2016, respectively.~~2021.

We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At ~~September~~June 30, ~~2017,~~2021, and December 31, ~~2016,~~2020, we had ~~$1.2~~$1.4 billion and ~~$1.1~~$1.3 billion, 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 1011 (Guarantees ~~Pledged Assets~~ and ~~Collateral)~~Other Commitments) for additional information on standby letters of credit.

When we ~~make~~enter into 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,~~autos, 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.~~4.4. The table excludes the issued standby and commercial letters of credit and temporary advance arrangements described above.

Table ~~5.4:~~4.4:Unfunded Credit Commitments


(in millions)	Jun 30, 2021		Dec 31, 2020
Commercial:
Commercial and industrial	$	394,370	378,167
Real estate mortgage	8,794		7,993
Real estate construction	16,260		15,650

Total commercial	419,424		401,810
Consumer:
Residential mortgage – first lien	37,920		31,530
Residential mortgage – junior lien	30,170		32,820
Credit card	124,985		121,096
Other consumer	54,724		49,179
Total consumer	247,799		234,625
Total unfunded credit commitments	$	667,223	636,435

(in millions) Sep 30,
2017
Dec 31,
2016
Commercial:
Commercial and industrial $ 321,797
319,662
Real estate mortgage 7,686
7,833
Real estate construction 16,025
18,840
Lease financing —
16
Total commercial 345,508
346,351
Consumer:
Real estate 1-4 family first mortgage 33,985
33,498
Real estate 1-4 family
junior lien mortgage
39,437
41,431
Credit card 108,240
101,895
Other revolving credit and installment 27,796
28,349
Total consumer 209,458
205,173
Total unfunded
credit commitments
$ 554,966
551,524


			Wells Fargo & Company			81

Note 5:4: Loans and Related Allowance for Credit Losses (~~continued~~)(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.

Table ~~5.5~~4.5 presents the allowance for credit losses (ACL) for loans, which consists of the allowance for loan losses and the allowance

for unfunded credit commitments. The ACL for loans decreased $3.3 billion from December 31, 2020, due to improvements in current and forecasted economic conditions.

Table ~~5.5:~~4.5:Allowance for Credit Losses for Loans


	Quarter ended June 30,				Six months ended June 30,
($ in millions)	2021			2020	2021	2020
Balance, beginning of period	$	18,043		12,022	19,713	10,456

Cumulative effect from change in accounting policies (1)	0			0	0	(1,337)
Allowance for purchased credit-deteriorated (PCD) loans (2)	0			0	0	8

Balance, beginning of period, adjusted	18,043			12,022	19,713	9,127
Provision for credit losses	(1,239)			9,565	(2,356)	13,398
Interest income on certain impaired loans (3)	(36)			(38)	(77)	(76)
Loan charge-offs:
Commercial:
Commercial and industrial	(149)			(556)	(308)	(933)
Real estate mortgage	(11)			(72)	(63)	(75)
Real estate construction	0			0	0	0
Lease financing	(10)			(19)	(31)	(32)
Total commercial	(170)			(647)	(402)	(1,040)
Consumer:
Residential mortgage – first lien	(6)			(20)	(23)	(43)
Residential mortgage – junior lien	(12)			(18)	(31)	(48)
Credit card	(357)			(415)	(692)	(886)
Auto	(128)			(158)	(257)	(314)
Other consumer	(79)			(113)	(226)	(278)
Total consumer	(582)			(724)	(1,229)	(1,569)
Total loan charge-offs	(752)			(1,371)	(1,631)	(2,609)
Loan recoveries:
Commercial:
Commercial and industrial	68			35	139	79
Real estate mortgage	16			5	22	10
Real estate construction	1			1	1	17
Lease financing	5			4	11	8
Total commercial	90			45	173	114
Consumer:
Residential mortgage – first lien	25			18	66	44
Residential mortgage – junior lien	43			30	81	65
Credit card	101			88	200	182
Auto	83			52	160	126
Other consumer	29			25	57	56
Total consumer	281			213	564	473
Total loan recoveries	371			258	737	587
Net loan charge-offs	(381)			(1,113)	(894)	(2,022)
Other	4			0	5	9
Balance, end of period	$	16,391		20,436	16,391	20,436

Components:
Allowance for loan losses	$	15,148		18,926	15,148	18,926
Allowance for unfunded credit commitments	1,243			1,510	1,243	1,510
Allowance for credit losses	$	16,391		20,436	16,391	20,436
Net loan charge-offs (annualized) as a percentage of average total loans	0.18		%	0.46	0.21	0.42
Allowance for loan losses as a percentage of total loans	1.78			2.02	1.78	2.02
Allowance for credit losses for loans as a percentage of total loans	1.92			2.19	1.92	2.19

(1)Represents the overall decrease in our ACL for loans as a result of our adoption of CECL on January 1, 2020.

(2)Represents the allowance estimated for purchased credit-impaired (PCI) loans that automatically became PCD loans with the adoption of CECL. For additional information, see Note 1 (Summary of Significant Accounting Policies) in our 2020 Form 10-K.

(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.

Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
Balance, beginning of period $ 12,146
12,749
12,540
12,512
Provision for credit losses 717
805
1,877
2,965
Interest income on certain impaired loans (1) (43 ) (54 ) (137 ) (153 )
Loan charge-offs:
Commercial:
Commercial and industrial (194 ) (324 ) (608 ) (1,110 )
Real estate mortgage (21 ) (7 ) (34 ) (13 )
Real estate construction —
—
—
(1 )
Lease financing (11 ) (4 ) (31 ) (25 )
Total commercial (226 ) (335 ) (673 ) (1,149 )
Consumer:
Real estate 1-4 family first mortgage (67 ) (106 ) (191 ) (366 )
Real estate 1-4 family junior lien mortgage (70 ) (119 ) (225 ) (385 )
Credit card (337 ) (296 ) (1,083 ) (930 )
Automobile (274 ) (215 ) (741 ) (602 )
Other revolving credit and installment (170 ) (170 ) (544 ) (508 )
Total consumer (2) (918 ) (906 ) (2,784 ) (2,791 )
Total loan charge-offs (1,144 ) (1,241 ) (3,457 ) (3,940 )
Loan recoveries:
Commercial:
Commercial and industrial 69
65
234
210
Real estate mortgage 24
35
68
90
Real estate construction 15
18
27
30
Lease financing 5
2
13
10
Total commercial 113
120
342
340
Consumer:
Real estate 1-4 family first mortgage 83
86
216
284
Real estate 1-4 family junior lien mortgage 69
70
205
200
Credit card 60
51
177
153
Automobile 72
78
246
248
Other revolving credit and installment 30
31
94
100
Total consumer 314
316
938
985
Total loan recoveries 427
436
1,280
1,325
Net loan charge-offs (717 ) (805 ) (2,177 ) (2,615 )
Other 6
(1 ) 6
(15 )
Balance, end of period $ 12,109
12,694
12,109
12,694
Components:
Allowance for loan losses $ 11,078
11,583
11,078
11,583
Allowance for unfunded credit commitments 1,031
1,111
1,031
1,111
Allowance for credit losses $ 12,109
12,694
12,109
12,694
Net loan charge-offs (annualized) as a percentage of average total loans 0.30 % 0.33
0.30
0.37
Allowance for loan losses as a percentage of total loans 1.16
1.20
1.16
1.20
Allowance for credit losses as a percentage of total loans 1.27
1.32
1.27
1.32


~~(1)~~82			Certain impaired loans with an allowance calculated 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.

Wells Fargo & Company
~~(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.~~

Table ~~5.6~~4.6 summarizes the activity in the ~~allowance for credit losses~~ACL by our commercial and consumer portfolio segments.

Table ~~5.6:~~4.6:Allowance for Credit Losses for Loans Activity by Portfolio Segment



	2021				2020
(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total
Quarter ended June 30,
Balance, beginning of period	$	10,682	7,361	18,043	5,279	6,743	12,022



Provision for credit losses	(1,021)		(218)	(1,239)	6,999	2,566	9,565
Interest income on certain loans (3)	(15)		(21)	(36)	(12)	(26)	(38)
Loan charge-offs	(170)		(582)	(752)	(647)	(724)	(1,371)
Loan recoveries	90		281	371	45	213	258
Net loan charge-offs	(80)		(301)	(381)	(602)	(511)	(1,113)
Other	4		0	4	5	(5)	0
Balance, end of period	$	9,570	6,821	16,391	11,669	8,767	20,436
Six months ended June 30,
Balance, beginning of period	$	11,516	8,197	19,713	6,245	4,211	10,456
Cumulative effect from change in accounting policies (1)	0		0	0	(2,861)	1,524	(1,337)
Allowance for purchased credit-deteriorated (PCD) loans (2)	0		0	0	0	8	8
Balance, beginning of period, adjusted	11,516		8,197	19,713	3,384	5,743	9,127
Provision for credit losses	(1,688)		(668)	(2,356)	9,239	4,159	13,398
Interest income on certain loans (3)	(34)		(43)	(77)	(26)	(50)	(76)
Loan charge-offs	(402)		(1,229)	(1,631)	(1,040)	(1,569)	(2,609)
Loan recoveries	173		564	737	114	473	587
Net loan charge-offs	(229)		(665)	(894)	(926)	(1,096)	(2,022)
Other	5		0	5	(2)	11	9
Balance, end of period	$	9,570	6,821	16,391	11,669	8,767	20,436

(1)Represents the overall decrease in our ACL 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 additional information, see Note 1 (Summary of Significant Accounting Policies) in our 2020 Form 10-K.

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

~~Table 5.7 disaggregates our allowance for credit losses and recorded investment in loans by impairment methodology.~~

~~Table 5.7:Allowance by Impairment Methodology~~

Allowance for credit losses Recorded investment in loans
(in millions) Commercial
Consumer
Total
Commercial
Consumer
Total
September 30, 2017
Collectively evaluated (1) $ 6,032
4,094
10,126
495,395
423,102
918,497
Individually evaluated (2) 786
1,183
1,969
4,521
15,291
19,812
PCI (3) 14
—
14
234
13,330
13,564
Total $ 6,832
5,277
12,109
500,150
451,723
951,873
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 loans 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.~~ Wells Fargo & Company			83


~~(2)~~	~~Represents loans 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.~~ Note 4: Loans and Related Allowance for Credit Losses (continued)


~~(3)~~	~~Represents the allowance 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~~ACL for ~~credit losses.~~loans. 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 the “Purchased Credit-Impaired Loans” section in this Note for credit quality information on our PCI portfolio.~~

March 31, 2021.

~~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~~

Commercial loans are generally 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~~regulatory definitions of pass and ~~Criticized~~criticized categories with the criticized segmented among 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~~4.7 provides ~~a breakdown~~the outstanding balances of ~~outstanding~~our commercial ~~loans~~loan portfolio by risk category. OfCredit quality information is provided with the ~~$18.7~~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 troubled debt restructuring (TDR). At June 30, 2021, we had $442.6 billion inand $33.8 billion of pass and criticized commercial ~~and industrial~~ loans, and $5.1 billion 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.respectively.

Table ~~5.8:~~4.7:Commercial ~~Loans~~Loan Categories by Risk ~~Category~~Categories and Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
(in millions)	2021		2020	2019	2018	2017	Prior
June 30, 2021
Commercial and industrial
Pass	$	37,051	25,171	28,385	11,075	5,582	12,341	183,360	341	303,306
Criticized	729		1,317	1,325	1,594	826	1,078	7,443	0	14,312
Total commercial and industrial	37,780		26,488	29,710	12,669	6,408	13,419	190,803	341	317,618
Real estate mortgage
Pass	14,713		18,977	21,983	15,350	9,245	20,321	4,478	1	105,068
Criticized	1,664		2,450	3,444	2,679	1,286	3,665	422	0	15,610
Total real estate mortgage	16,377		21,427	25,427	18,029	10,531	23,986	4,900	1	120,678
Real estate construction
Pass	2,800		4,995	6,148	3,607	775	359	1,138	2	19,824
Criticized	354		501	746	418	442	120	1	0	2,582
Total real estate construction	3,154		5,496	6,894	4,025	1,217	479	1,139	2	22,406
Lease financing
Pass	2,244		3,545	3,180	1,752	1,107	2,555	0	0	14,383
Criticized	145		293	374	254	129	142	0	0	1,337
Total lease financing	2,389		3,838	3,554	2,006	1,236	2,697	0	0	15,720
Total commercial loans	$	59,700	57,249	65,585	36,729	19,392	40,581	196,842	344	476,422
	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
	2020		2019	2018	2017	2016	Prior
December 31, 2020
Commercial and industrial
Pass	$	56,915	34,040	15,936	7,274	4,048	4,738	177,107	997	301,055
Criticized	1,404		1,327	1,357	972	672	333	11,534	151	17,750
Total commercial and industrial	58,319		35,367	17,293	8,246	4,720	5,071	188,641	1,148	318,805
Real estate mortgage
Pass	22,444		26,114	18,679	11,113	11,582	14,663	5,152	6	109,753
Criticized	2,133		2,544	1,817	1,287	1,625	2,082	479	0	11,967
Total real estate mortgage	24,577		28,658	20,496	12,400	13,207	16,745	5,631	6	121,720
Real estate construction
Pass	5,242		6,574	4,771	1,736	477	235	1,212	3	20,250
Criticized	449		452	527	4	113	10	0	0	1,555
Total real estate construction	5,691		7,026	5,298	1,740	590	245	1,212	3	21,805
Lease financing
Pass	3,970		3,851	2,176	1,464	1,199	1,924	0	0	14,584
Criticized	308		433	372	197	108	85	0	0	1,503
Total lease financing	4,278		4,284	2,548	1,661	1,307	2,009	0	0	16,087
Total commercial loans	$	92,865	75,335	45,635	24,047	19,824	24,070	195,484	1,157	478,417

(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


84			Wells Fargo & Company

Table ~~5.9~~4.8 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. Payment deferral activities

instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for customers who otherwise would have moved into past due status.

Table ~~5.9:~~4.8:Commercial ~~Loans~~Loan Categories by Delinquency Status


(in millions)	Commercial and industrial		Real estate mortgage	Real estate construction	Lease financing	Total
June 30, 2021
By delinquency status:
Current-29 days past due (DPD) and still accruing	$	315,279	118,719	22,329	15,350	471,677
30-89 DPD and still accruing	483		256	25	155	919
90+ DPD and still accruing	165		105	7	0	277
Nonaccrual loans	1,691		1,598	45	215	3,549
Total commercial loans	$	317,618	120,678	22,406	15,720	476,422
December 31, 2020
By delinquency status:
Current-29 DPD and still accruing	$	315,493	119,561	21,532	15,595	472,181
30-89 DPD and still accruing	575		347	224	233	1,379
90+ DPD and still accruing	39		38	1	0	78
Nonaccrual loans	2,698		1,774	48	259	4,779
Total commercial loans	$	318,805	121,720	21,805	16,087	478,417

(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~~residential 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~~ACL for the consumer loan portfolio segment.

Many of our loss estimation techniques used for the ~~allowance~~ACL for ~~credit losses~~loans rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality ~~and~~in the establishment of our ~~allowance~~ACL for ~~credit losses.~~ consumer loans.

Table ~~5.10~~4.9 provides the outstanding balances of our consumer loan portfolio by delinquency status. Payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for customers who otherwise would have moved into past due status.

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:Consumer Loans by Delinquency Status~~

(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
September 30, 2017
By delinquency status:
Current-29 DPD $ 248,896
40,242
35,297
53,684
38,316
416,435
30-59 DPD 1,895
308
282
1,287
146
3,918
60-89 DPD 687
147
195
349
102
1,480
90-119 DPD 339
86
168
127
79
799
120-179 DPD 263
94
288
7
26
678
180+ DPD 1,186
246
19
1
25
1,477
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
By delinquency status:
Current-29 DPD $ 239,061
45,238
35,773
60,572
39,833
420,477
30-59 DPD 1,904
296
275
1,262
177
3,914
60-89 DPD 700
160
200
330
111
1,501
90-119 DPD 307
102
169
116
93
787
120-179 DPD 323
108
279
5
30
745
180+ DPD 1,661
297
4
1
22
1,985
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 consumer loans $ 275,579
46,237
36,700
62,286
40,266
461,068


~~(1)~~			~~Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA. Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled~~ ~~$8.8 billion~~ at ~~September 30, 2017, compared with~~ ~~$10.1 billion~~ at ~~December 31, 2016~~. Wells Fargo & Company			85

Note 4: Loans and Related Allowance for Credit Losses (continued)

Table 4.9:Consumer Loan Categories by Delinquency Status and Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2021		2020	2019	2018	2017	Prior			Total
June 30, 2021
Residential mortgage – first lien
By delinquency status:
Current-29 DPD	$	30,494	47,246	32,078	10,137	17,647	76,251	5,989	1,598	221,440
30-59 DPD	28		33	52	21	34	604	15	30	817
60-89 DPD	1		11	1	3	3	187	8	18	232
90-119 DPD	2		8	3	1	7	64	6	11	102
120-179 DPD	0		12	6	3	3	85	16	23	148
180+ DPD	0		204	12	10	21	809	100	245	1,401
Government insured/guaranteed loans (1)	3		193	364	566	635	18,470	0	0	20,231
Total residential mortgage – first lien	30,528		47,707	32,516	10,741	18,350	96,470	6,134	1,925	244,371
Residential mortgage – junior lien
By delinquency status:
Current-29 DPD	13		22	34	35	28	909	12,913	4,680	18,634
30-59 DPD	0		0	1	0	0	15	28	40	84
60-89 DPD	0		0	0	0	0	7	16	29	52
90-119 DPD	0		0	0	0	0	3	11	22	36
120-179 DPD	0		0	0	0	0	6	37	49	92
180+ DPD	0		0	0	0	0	32	215	492	739
Total residential mortgage – junior lien	13		22	35	35	28	972	13,220	5,312	19,637
Credit cards
By delinquency status:
Current-29 DPD	0		0	0	0	0	0	34,201	226	34,427
30-59 DPD	0		0	0	0	0	0	135	7	142
60-89 DPD	0		0	0	0	0	0	90	6	96
90-119 DPD	0		0	0	—	0	0	80	7	87
120-179 DPD	0		0	0	0	0	0	182	2	184
180+ DPD	0		0	0	0	0	0	0	0	0
Total credit cards	0		0	0	0	0	0	34,688	248	34,936
Auto
By delinquency status:
Current-29 DPD	14,445		15,920	11,321	4,644	2,309	1,677	0	0	50,316
30-59 DPD	33		143	148	81	52	85	0	0	542
60-89 DPD	8		42	44	24	14	25	0	0	157
90-119 DPD	3		17	17	8	5	8	0	0	58
120-179 DPD	0		0	0	0	0	0	0	0	0
180+ DPD	0		0	0	0	0	0	0	0	0
Total auto	14,489		16,122	11,530	4,757	2,380	1,795	0	0	51,073
Other consumer
By delinquency status:
Current-29 DPD	982		990	994	335	155	173	22,011	150	25,790
30-59 DPD	1		2	3	2	1	2	8	3	22
60-89 DPD	0		2	2	1	1	1	5	1	13
90-119 DPD	0		1	2	1	0	0	4	1	9
120-179 DPD	0		0	0	0	0	0	8	2	10
180+ DPD	0		0	0	0	0	2	4	11	17
Total other consumer	983		995	1,001	339	157	178	22,040	168	25,861
Total consumer loans	$	46,013	64,846	45,082	15,872	20,915	99,415	76,082	7,653	375,878

(continued on following page)


86			Wells Fargo & Company

(continued from previous page)


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2020		2019	2018	2017	2016	Prior			Total
December 31, 2020
Residential mortgage – first lien
By delinquency status:
Current-29 DPD	$	53,298	43,297	14,761	24,619	30,533	67,960	6,762	1,719	242,949
30-59 DPD	111		76	36	67	79	750	52	66	1,237
60-89 DPD	88		10	6	12	13	305	56	68	558
90-119 DPD	232		11	5	8	7	197	26	33	519
120-179 DPD	3		4	1	3	5	151	17	29	213
180+ DPD	3		1	4	11	15	758	21	145	958
Government insured/guaranteed loans (1)	215		639	904	1,076	2,367	25,039	0	0	30,240
Total residential mortgage – first lien	53,950		44,038	15,717	25,796	33,019	95,160	6,934	2,060	276,674
Residential mortgage – junior lien
By delinquency status:
Current-29 DPD	22		39	39	37	31	1,115	15,366	5,434	22,083
30-59 DPD	0		0	1	1	0	22	113	160	297
60-89 DPD	0		0	1	0	0	11	154	271	437
90-119 DPD	0		0	0	1	0	7	45	84	137
120-179 DPD	0		0	0	0	0	9	36	77	122
180+ DPD	0		0	0	0	1	25	29	155	210
Total residential mortgage – junior lien	22		39	41	39	32	1,189	15,743	6,181	23,286
Credit cards
By delinquency status:
Current-29 DPD	0		0	0	0	0	0	35,612	255	35,867
30-59 DPD	0		0	0	0	0	0	243	12	255
60-89 DPD	0		0	0	0	0	0	167	10	177
90-119 DPD	0		0	0	0	0	0	144	10	154
120-179 DPD	0		0	0	0	0	0	208	3	211
180+ DPD	0		0	0	0	0	0	0	0	0
Total credit cards	0		0	0	0	0	0	36,374	290	36,664
Auto
By delinquency status:
Current-29 DPD	19,625		14,561	6,307	3,459	2,603	697	0	0	47,252
30-59 DPD	120		183	114	80	107	46	0	0	650
60-89 DPD	32		60	36	25	35	16	0	0	204
90-119 DPD	13		26	14	9	12	6	0	0	80
120-179 DPD	0		1	0	0	0	0	0	0	1
180+ DPD	0		0	0	0	0	0	0	0	0
Total auto	19,790		14,831	6,471	3,573	2,757	765	0	0	48,187
Other consumer
By delinquency status:
Current-29 DPD	1,406		1,383	577	261	59	193	20,246	162	24,287
30-59 DPD	2		7	5	2	1	3	19	10	49
60-89 DPD	1		5	3	1	1	1	10	6	28
90-119 DPD	1		4	2	1	0	1	8	3	20
120-179 DPD	0		0	0	0	0	0	10	4	14
180+ DPD	0		0	0	0	0	2	3	6	11
Total other consumer	1,410		1,399	587	265	61	200	20,296	191	24,409
Total consumer loans	$	75,172	60,307	22,816	29,673	35,869	97,314	79,347	8,722	409,220

(1)Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled $6.1 billion and $11.1 billion at June 30, 2021, and December 31, 2020, respectively.

Of the ~~$3.0~~$2.9 billion of consumer loans not government insured/guaranteed that are 90 days or more past due at ~~September~~June 30, ~~2017, $923~~2021, $460 million was accruing, compared with ~~$3.5~~

$2.7 billion past due and ~~$908~~$612 million accruing at December 31, ~~2016.~~

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, 2016.2020.


			Wells Fargo & Company			87

Note 5:4: Loans and Related Allowance for Credit Losses (~~continued~~)(continued)

Table ~~5.11~~4.10 provides ~~a breakdown~~the outstanding balances of our consumer loan 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 score. Substantially allof the scored consumer portfolio has

an updated FICO score of 680 and above, reflecting a strong current borrower credit profile. FICO isscores are 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 $15.9 billion and $13.2 billion at June 30, 2021, and December 31, 2020, 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:~~4.10:Consumer ~~Loans~~Loan Categories by FICO and Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2021		2020	2019	2018	2017	Prior			Total
June 30, 2021
By FICO:
Residential mortgage – first lien
800+	$	14,373	29,351	21,113	6,709	12,245	47,225	2,973	453	134,442
760-799	11,864		12,539	7,250	2,017	3,200	12,684	1,229	257	51,040
720-759	3,281		4,024	2,566	857	1,343	7,473	771	243	20,558
680-719	794		1,103	788	363	603	4,188	463	215	8,517
640-679	129		294	222	107	143	2,117	213	135	3,360
600-639	30		47	75	37	51	1,234	109	93	1,676
< 600	7		11	28	16	32	1,303	139	145	1,681
No FICO available	47		145	110	69	98	1,776	237	384	2,866
Government insured/guaranteed loans (1)	3		193	364	566	635	18,470	0	0	20,231
Total residential mortgage – first lien	30,528		47,707	32,516	10,741	18,350	96,470	6,134	1,925	244,371
Residential mortgage – junior lien
800+	0		0	0	0	0	236	6,715	1,612	8,563
760-799	0		0	0	0	0	142	2,588	906	3,636
720-759	0		0	0	0	0	169	1,721	891	2,781
680-719	0		0	0	0	0	143	1,022	719	1,884
640-679	0		0	0	0	0	82	396	405	883
600-639	0		0	0	0	0	52	189	232	473
< 600	0		0	0	0	0	53	195	267	515
No FICO available	13		22	35	35	28	95	394	280	902
Total residential mortgage – junior lien	13		22	35	35	28	972	13,220	5,312	19,637
Credit card
800+	0		0	0	0	0	0	3,987	1	3,988
760-799	0		0	0	0	0	0	5,561	8	5,569
720-759	0		0	0	0	0	0	7,825	30	7,855
680-719	0		0	0	0	0	0	8,437	57	8,494
640-679	0		0	0	0	0	0	5,122	56	5,178
600-639	0		0	0	0	0	0	1,929	39	1,968
< 600	0		0	0	0	0	0	1,819	56	1,875
No FICO available	0		0	0	0	0	0	8	1	9
Total credit card	0		0	0	0	0	0	34,688	248	34,936
Auto
800+	2,576		2,329	2,157	941	509	271	0	0	8,783
760-799	2,505		2,698	2,145	850	390	216	0	0	8,804
720-759	2,430		2,721	1,999	825	387	251	0	0	8,613
680-719	2,518		2,965	1,968	772	358	259	0	0	8,840
640-679	2,267		2,548	1,400	527	257	222	0	0	7,221
600-639	1,418		1,519	822	333	178	190	0	0	4,460
< 600	775		1,313	993	498	288	362	0	0	4,229
No FICO available	0		29	46	11	13	24	0	0	123
Total auto	14,489		16,122	11,530	4,757	2,380	1,795	0	0	51,073
Other consumer
800+	253		250	204	59	18	60	1,839	19	2,702
760-799	265		225	186	59	15	31	943	22	1,746
720-759	190		184	175	67	19	26	829	28	1,518
680-719	115		125	147	61	19	21	711	26	1,225
640-679	47		52	74	34	12	11	343	19	592
600-639	9		14	24	13	5	6	122	11	204
< 600	3		13	27	16	6	7	121	14	207
No FICO available	101		132	164	30	63	16	1,197	29	1,732
FICO not required	0		0	0	0	0	0	15,935	0	15,935
Total other consumer	983		995	1,001	339	157	178	22,040	168	25,861
Total consumer loans	$	46,013	64,846	45,082	15,872	20,915	99,415	76,082	7,653	375,878

(continued on following page)

(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
September 30, 2017
By FICO:
< 600 $ 5,416
1,842
3,436
9,245
871
20,810
600-639 3,630
1,313
2,970
5,961
919
14,793
640-679 7,123
2,512
5,468
8,146
1,994
25,243
680-719 15,039
5,001
7,300
9,189
3,696
40,225
720-759 28,453
6,506
7,721
8,018
5,203
55,901
760-799 54,885
7,561
6,108
6,612
6,493
81,659
800+ 133,164
15,574
2,880
7,987
8,620
168,225
No FICO available 5,556
814
366
297
2,761
9,794
FICO not required —
—
—
—
8,137
8,137
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 consumer loans $ 280,173
41,152
36,249
55,455
38,694
451,723
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


~~(1)~~88			~~The~~ ~~September 30, 2017, amounts reflect updated FICO score version implemented in first quarter 2017.~~

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


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2020		2019	2018	2017	2016	Prior			Total
December 31, 2020
By FICO:
Residential mortgage – first lien
800+	$	29,365	28,652	9,911	17,416	22,215	40,440	3,391	493	151,883
760-799	17,154		9,866	2,908	4,380	4,955	10,843	1,361	274	51,741
720-759	5,274		3,290	1,189	1,829	2,106	7,001	879	265	21,833
680-719	1,361		1,084	490	678	831	4,403	520	221	9,588
640-679	376		287	148	192	226	2,385	241	154	4,009
600-639	55		56	44	56	92	1,429	127	106	1,965
< 600	14		29	36	44	66	1,789	162	175	2,315
No FICO available	136		135	87	125	161	1,831	253	372	3,100
Government insured/guaranteed loans (1)	215		639	904	1,076	2,367	25,039	0	0	30,240
Total residential mortgage – first lien	53,950		44,038	15,717	25,796	33,019	95,160	6,934	2,060	276,674
Residential mortgage – junior lien
800+	0		0	0	0	0	293	7,973	1,819	10,085
760-799	0		0	0	0	0	177	3,005	1,032	4,214
720-759	0		0	0	0	0	207	2,093	1,034	3,334
680-719	0		0	0	0	0	183	1,233	854	2,270
640-679	0		0	0	0	0	103	503	493	1,099
600-639	0		0	0	0	0	67	241	299	607
< 600	0		0	0	0	0	76	254	374	704
No FICO available	22		39	41	39	32	83	441	276	973
Total residential mortgage – junior lien	22		39	41	39	32	1,189	15,743	6,181	23,286
Credit card
800+	0		0	0	0	0	0	3,860	1	3,861
760-799	0		0	0	0	0	0	5,438	7	5,445
720-759	0		0	0	0	0	0	7,897	29	7,926
680-719	0		0	0	0	0	0	8,854	60	8,914
640-679	0		0	0	0	0	0	5,657	64	5,721
600-639	0		0	0	0	0	0	2,242	46	2,288
< 600	0		0	0	0	0	0	2,416	82	2,498
No FICO available	0		0	0	0	0	0	10	1	11
Total credit card	0		0	0	0	0	0	36,374	290	36,664
Auto
800+	2,875		2,606	1,211	731	452	104	0	0	7,979
760-799	3,036		2,662	1,122	579	349	81	0	0	7,829
720-759	3,162		2,514	1,095	576	395	98	0	0	7,840
680-719	3,534		2,542	1,066	545	400	105	0	0	8,192
640-679	3,381		1,948	763	395	334	94	0	0	6,915
600-639	2,208		1,165	479	274	276	87	0	0	4,489
< 600	1,581		1,357	730	463	533	186	0	0	4,850
No FICO available	13		37	5	10	18	10	0	0	93
Total auto	19,790		14,831	6,471	3,573	2,757	765	0	0	48,187
Other consumer
800+	353		287	94	35	10	71	2,249	21	3,120
760-799	342		279	93	29	10	34	1,110	16	1,913
720-759	262		258	107	35	11	30	915	26	1,644
680-719	156		213	99	36	11	24	798	31	1,368
640-679	71		112	59	21	7	10	415	23	718
600-639	18		36	22	9	4	8	151	13	261
< 600	13		41	30	12	5	7	161	18	287
No FICO available	195		173	83	88	3	16	1,248	43	1,849
FICO not required	0		0	0	0	0	0	13,249	0	13,249
Total other consumer	1,410		1,399	587	265	61	200	20,296	191	24,409
Total consumer loans	$	75,172	60,307	22,816	29,673	35,869	97,314	79,347	8,722	409,220

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

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 lien 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.


			Wells Fargo & Company			89

Note 4: Loans and Related Allowance for Credit Losses (continued)

Table ~~5.12~~4.11 shows the most updated LTV and CLTV distribution of the ~~real estate 1-4 family~~residential mortgage – first lien and residential mortgage – 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.~~ACL. 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.


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2021		2020	2019	2018	2017	Prior			Total
June 30, 2021
Residential mortgage – first lien
By LTV:
0-60%	$	9,789	18,204	14,733	5,341	11,884	66,680	4,604	1,567	132,802
60.01-80%	20,654		27,433	15,773	4,339	5,369	10,096	1,071	256	84,991
80.01-100%	40		1,720	1,498	416	382	801	304	68	5,229
100.01-120% (1)	0		35	52	19	16	101	72	17	312
> 120% (1)	0		21	17	6	7	50	30	6	137
No LTV available	42		101	79	54	57	272	53	11	669
Government insured/guaranteed loans (2)	3		193	364	566	635	18,470	0	0	20,231
Total residential mortgage – first lien	30,528		47,707	32,516	10,741	18,350	96,470	6,134	1,925	244,371
Residential mortgage – junior lien
By CLTV:
0-60%	0		0	0	0	0	496	8,124	3,558	12,178
60.01-80%	0		0	0	0	0	254	3,718	1,178	5,150
80.01-100%	0		0	0	0	0	123	1,051	424	1,598
100.01-120% (2)	0		0	0	0	0	31	225	92	348
> 120% (2)	0		0	0	0	0	8	78	28	114
No CLTV available	13		22	35	35	28	60	24	32	249
Total residential mortgage – junior lien	13		22	35	35	28	972	13,220	5,312	19,637
Total	$	30,541	47,729	32,551	10,776	18,378	97,442	19,354	7,237	264,008
	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
	2020		2019	2018	2017	2016	Prior			Total
December 31, 2020
Residential mortgage – first lien
By LTV:
0-60%	$	16,582	15,449	6,065	13,190	21,097	59,291	4,971	1,587	138,232
60.01-80%	34,639		24,736	7,724	10,745	8,970	9,333	1,323	326	97,796
80.01-100%	2,332		2,975	900	654	441	1,003	425	100	8,830
100.01-120% (1)	41		106	45	40	41	168	117	26	584
> 120% (1)	31		41	16	19	16	78	44	8	253
No LTV available	110		92	63	72	87	248	54	13	739
Government insured/guaranteed loans (2)	215		639	904	1,076	2,367	25,039	0	0	30,240
Total residential mortgage – first lien	53,950		44,038	15,717	25,796	33,019	95,160	6,934	2,060	276,674
Residential mortgage – junior lien
By CLTV:
0-60%	0		0	0	0	0	548	8,626	3,742	12,916
60.01-80%	0		0	0	0	0	335	5,081	1,554	6,970
80.01-100%	0		0	0	0	0	187	1,507	641	2,335
100.01-120% (2)	0		0	0	0	0	59	376	156	591
> 120% (2)	0		0	0	0	0	15	128	50	193
No CLTV available	22		39	41	39	32	45	25	38	281
Total residential mortgage – junior lien	22		39	41	39	32	1,189	15,743	6,181	23,286
Total	$	53,972	44,077	15,758	25,835	33,051	96,349	22,677	8,241	299,960

(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.

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

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% $ 130,463
16,168
146,631
121,430
16,464
137,894
60.01-80% 104,674
13,447
118,121
101,726
15,262
116,988
80.01-100% 14,179
7,136
21,315
15,795
8,765
24,560
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
No LTV/CLTV available 1,110
472
1,582
1,295
508
1,803
Government insured/guaranteed loans (2) 13,606
—
13,606
15,605
—
15,605
Total consumer loans (excluding PCI) 266,872
41,123
307,995
259,561
46,201
305,762
Total consumer PCI loans (carrying value) 13,301
29
13,330
16,018
36
16,054
Total consumer loans $ 280,173
41,152
321,325
275,579
46,237
321,816


~~(1)~~90			~~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.~~

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

NONACCRUAL LOANSTable ~~5.13~~4.12 provides loans on nonaccrual status. ~~PCI~~In connection with our adoption of CECL, nonaccrual loans ~~are excluded~~may have an ACL or a negative allowance for credit losses from ~~this table because they~~expected recoveries of amounts previously written off. Payment

deferral activities instituted in response to the COVID-19 pandemic could continue to ~~earn interest fromaccretable yield, independent~~delay the recognition of ~~performance in accordance with their contractual terms.~~delinquencies for customers who otherwise would have moved into nonaccrual status.

Table ~~5.13:~~4.12:Nonaccrual Loans


	Amortized cost					Recognized interest income
	Nonaccrual loans			Nonaccrual loans without related allowance for credit losses (1)		Six months ended June 30,
(in millions)	Jun 30, 2021		Dec 31, 2020	Jun 30, 2021	Dec 31, 2020	2021	2020
Commercial:
Commercial and industrial	$	1,691	2,698	464	382	45	30
Real estate mortgage	1,598		1,774	201	93	33	17
Real estate construction	45		48	13	15	1	5
Lease financing	215		259	40	16	0	0
Total commercial	3,549		4,779	718	506	79	52
Consumer:
Residential mortgage- first lien	2,852		2,957	1,949	1,908	56	81
Residential mortgage- junior lien	713		754	463	461	25	28
Auto	221		202	0	0	17	7
Other consumer	36		36	0	0	1	1
Total consumer	3,822		3,949	2,412	2,369	99	117
Total nonaccrual loans	$	7,371	8,728	3,130	2,875	178	169

(1)Nonaccrual loans may not have an allowance for credit losses if the loss expectations are zero given solid collateral value.

(in millions) Sep 30,
2017
Dec 31,
2016
Commercial:
Commercial and industrial $ 2,397
3,216
Real estate mortgage 593
685
Real estate construction 38
43
Lease financing 81
115
Total commercial 3,109
4,059
Consumer:
Real estate 1-4 family first mortgage (1) 4,213
4,962
Real estate 1-4 family junior lien mortgage 1,101
1,206
Automobile 137
106
Other revolving credit and installment 59
51
Total consumer (2) 5,510
6,325
Total nonaccrual loans
(excluding PCI)
$ 8,619
10,384

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 billion~~$939 million and ~~$8.1~~$2.1 billion at ~~September~~June 30, ~~2017~~2021, and December 31, ~~2016,~~2020, respectively, which included ~~$4.1 billion~~$650 million and ~~$4.8~~$1.7 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~~residential 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.


			Wells Fargo & Company			91

Note 5:4: Loans and Related Allowance for Credit Losses (~~continued~~)(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~~residential 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~~4.13 shows ~~non-PCI~~ loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed.

Table ~~5.14:~~4.13:Loans 90 Days or More Past Due and Still Accruing


($ in millions)	Jun 30, 2021		Dec 31, 2020
Total:	$	4,703	7,041
Less: FHA insured/VA guaranteed (1)	3,966		6,351

Total, not government insured/guaranteed	$	737	690
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial	$	165	39
Real estate mortgage	105		38
Real estate construction	7		1
Total commercial	277		78
Consumer:
Residential mortgage – first lien	73		135
Residential mortgage – junior lien	12		19
Credit card	271		365
Auto	43		65
Other consumer	61		28
Total consumer	460		612
Total, not government insured/guaranteed	$	737	690

(in millions) Sep 30, 2017
Dec 31, 2016
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, not government insured/guaranteed $ 961
972
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial $ 27
28
Real estate mortgage 11
36
Total commercial 38
64
Consumer:
Real estate 1-4 family first mortgage (2) 190
175
Real estate 1-4 family junior lien mortgage (2) 49
56
Credit card 475
452
Automobile 111
112
Other revolving credit and installment 98
113
Total consumer 923
908
Total, not government insured/guaranteed $ 961
972


~~(1)~~	(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.

~~IMPAIRED LOANS~~ Table 5.15 summarizes key information for impaired loans. Our impaired loans predominantly include loans on nonaccrual status in the commercial portfolio segment and loans modified in a TDR, whether on accrual or nonaccrual status. These impaired loans generally have estimated losses which are included in the allowance for credit losses. We have impaired loans with no allowance for credit losses when loss content has been previously recognized through charge-offs and we do not anticipate additional charge-offs or losses, or certain

loans are currently performing in accordance with their terms and for which no loss has been estimated. Impaired loans exclude PCI loans. Table 5.15 includes trial modifications that totaled $183 million at September 30, 2017, and $299 million at December 31, 2016.

~~For additional information on our impaired loans and allowance for credit losses, see Note 1 (Summary of Significant Accounting Policies) in our 2016 Form 10-K.~~

~~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.~~repayments are predominantly insured by the FHA or guaranteed by the VA.

~~Table 5.16 provides the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans by portfolio segment and class.~~

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~~$12.5 billion and ~~$20.8~~$14.5 billion at ~~September~~June 30, ~~2017~~2021, and December 31, ~~2016,~~2020, 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 and the Interagency Statement. For additional information on the TDR relief, see Note 1 (Summary of Significant Accounting Policies) in our 2020 Form 10-K.

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 $344 million and $489 million at June 30, 2021, and December 31, 2020, respectively.

Table ~~5.17~~4.14 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~~are paid off

or written-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.


92			Wells Fargo & Company

Table ~~5.17:~~4.14:TDR Modifications



	Primary modification type (1)					Financial effects of modifications
($ in millions)	Principal forgiveness		Interest rate reduction	Other concessions (2)	Total	Charge- offs (3)	Weighted average interest rate reduction		Recorded investment related to interest rate reduction (4)
Quarter ended June 30, 2021
Commercial:
Commercial and industrial	$	0	1	330	331	14	1.22	%	$	1
Real estate mortgage	41		5	86	132	0	1.15		5
Real estate construction	0		0	2	2	0	0		0
Lease financing	0		0	1	1	0	0		0
Total commercial	41		6	419	466	14	1.17		6
Consumer:
Residential mortgage – first lien	0		8	353	361	1	1.26		8
Residential mortgage – junior lien	0		2	9	11	0	2.51		2
Credit card	0		24	0	24	0	19.02		24
Auto	1		1	72	74	30	3.93		1
Other consumer	0		4	0	4	0	12.02		4
Trial modifications (5)	0		0	2	2	0	0		0
Total consumer	1		39	436	476	31	13.24		39
Total	$	42	45	855	942	45	11.68	%	$	45
Quarter ended June 30, 2020
Commercial:
Commercial and industrial	$	0	17	948	965	38	0.79	%	$	17
Real estate mortgage	0		5	98	103	0	1.75		5
Real estate construction	0		0	0	0	0	0		0
Lease financing	0		0	1	1	0	0		0
Total commercial	0		22	1,047	1,069	38	1.00		22
Consumer:
Residential mortgage – first lien	0		14	288	302	1	1.84		14
Residential mortgage – junior lien	0		3	24	27	0	2.39		3
Credit card	0		62	0	62	0	12.79		62
Auto	1		2	44	47	28	4.42		2
Other consumer	0		3	6	9	0	5.90		3
Trial modifications (5)	0		0	(13)	(13)	0	0		0
Total consumer	1		84	349	434	29	10.09		84
Total	$	1	106	1,396	1,503	67	8.17	%	$	106

(continued on following page)

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


			Wells Fargo & Company			93

Note 5:4: Loans and Related Allowance for Credit Losses (~~continued~~)(continued)

(continued from previous page)


														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)													($ in millions)	Principal forgiveness		Interest rate reduction	Other concessions (2)	Total	Charge- offs (3)	Weighted average interest rate reduction		Recorded investment related to interest rate reduction (4)
Six months ended June 30, 2021													Six months ended June 30, 2021
Commercial:													Commercial:
Commercial and industrial	$	17	38	2,323		2,378		154	0.61	%	$	37	Commercial and industrial	$	0	2	560	562	20	1.10	%	$	2
Real estate mortgage	5		51	416		472		20	1.31		52		Real estate mortgage	41		9	186	236	0	1.04		9
Real estate construction	—		1	24		25		—	0.90		1		Real estate construction	0		0	3	3	0	0		0
Lease financing	—		—	37		37		—	—		—		Lease financing	0		0	4	4	0	0		0
Total commercial	22		90	2,800		2,912		174	1.02		90		Total commercial	41		11	753	805	20	1.05		11
Consumer:													Consumer:
Real estate 1-4 family first mortgage	196		132	797		1,125		14	2.59		227
Real estate 1-4 family junior lien mortgage	23		70	64		157		13	3.26		80
Residential mortgage – first lien													Residential mortgage – first lien	0		15	885	900	1	1.53		15
Residential mortgage – junior lien													Residential mortgage – junior lien	0		7	22	29	1	2.44		7
Credit card	—		188	—		188		—	12.21		188		Credit card	0		56	0	56	0	18.93		56
Automobile	2		11	52		65		30	5.92		11
Other revolving credit and installment	—		38	5		43		1	7.41		38
Trial modifications (6)	—		—	(54	)	(54	)	—	—		—
Auto													Auto	1		2	86	89	37	3.90		2
Other consumer													Other consumer	0		11	1	12	0	12.14		11
Trial modifications (5)													Trial modifications (5)	0		0	2	2	0	0		0
Total consumer	221		439	864		1,524		58	6.41		544		Total consumer	1		91	996	1,088	39	13.67		91
Total	$	243	529	3,664		4,436		232	5.64	%	$	634	Total	$	42	102	1,749	1,893	59	12.31	%	$	102
Nine months ended September 30, 2016
Six months ended June 30, 2020													Six months ended June 30, 2020
Commercial:													Commercial:
Commercial and industrial	$	42	123	2,361		2,526		304	1.95	%	$	123	Commercial and industrial	$	18	32	1,262	1,312	82	0.73	%	$	32
Real estate mortgage	—		81	462		543		1	1.14		81		Real estate mortgage	0		18	250	268	0	1.17		18
Real estate construction	—		26	62		88		—	0.94		26		Real estate construction	0		0	6	6	0	2.49		0
Lease financing	—		—	8		8		—	—		—		Lease financing	0		0	1	1	0	0		0
Total commercial	42		230	2,893		3,165		305	1.55		230		Total commercial	18		50	1,519	1,587	82	0.90		50
Consumer:													Consumer:
Real estate 1-4 family first mortgage	272		222	1,094		1,588		36	2.66		395
Real estate 1-4 family junior lien mortgage	17		81	82		180		30	3.03		96
Residential mortgage – first lien													Residential mortgage – first lien	0		31	461	492	1	1.73		31
Residential mortgage – junior lien													Residential mortgage – junior lien	0		9	39	48	0	2.38		9
Credit card	—		131	—		131		—	12.02		131		Credit card	0		157	0	157	0	12.51		157
Automobile	2		11	44		57		27	6.45		11
Other revolving credit and installment	—		25	8		33		1	6.64		25
Trial modifications (6)	—		—	47		47		—	—		—
Auto													Auto	3		4	54	61	34	4.56		4
Other consumer													Other consumer	0		15	8	23	0	7.71		15
Trial modifications (5)													Trial modifications (5)	0		0	(11)	(11)	0	0		0
Total consumer	291		470	1,275		2,036		94	4.80		658		Total consumer	3		216	551	770	35	10.04		216
Total	$	333	700	4,168		5,201		399	3.96	%	$	888	Total	$	21	266	2,070	2,357	117	8.30	%	$	266

(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 $202 million and $221 million for the quarters ended June 30, 2021 and 2020, respectively, and $458 million and $484 million for the first half of 2021 and 2020, respectively.

(2)Other concessions include loans with payment (principal and/or interest) deferral, 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. The reported amounts include COVID-related payment deferrals that are new TDRs and exclude COVID-related payment deferrals previously reported as TDRs given limited current financial effects other than payment deferral.

(3)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.

(4)Recorded investment related to interest rate reduction reflects the effect of reduced interest rates on loans with an interest rate concession as one of their concession types, which includes loans reported as a principal primary modification type that also have an interest rate concession.

(5)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.

~~(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 million~~ ~~and~~ ~~$484 million~~ ~~for the quarters ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016, and~~ ~~$1.7 billion~~ ~~and~~ ~~$1.1 billion, for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016, 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 legally forgiving principal (actual, contingent or deferred) of ~~$4 million~~ ~~and~~ ~~$16 million~~ ~~for the quarters ended~~ ~~September 30~~, ~~2017~~ ~~and~~ ~~2016, and~~ ~~$23 million~~ ~~and~~ ~~$54 million~~ ~~for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016, respectively.~~

~~(5)~~

Reflects the effect of reduced interest rates on loans with an interest rate concession as one of their 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.


94			Wells Fargo & Company

Table ~~5.18~~4.15 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 4.15:Defaulted TDRs


	Recorded investment of defaults
	Quarter ended June 30,			Six months ended June 30,
(in millions)	2021		2020	2021	2020
Commercial:
Commercial and industrial	$	84	37	125	222
Real estate mortgage	9		81	25	102
Real estate construction	0		0	0	0
Lease financing	0		0	0	0
Total commercial	93		118	150	324
Consumer:
Residential mortgage – first lien	2		8	5	18
Residential mortgage – junior lien	0		6	1	8
Credit card	6		19	16	45
Auto	12		1	23	3
Other consumer	0		2	1	3
Total consumer	20		36	46	77
Total	$	113	154	196	401

~~Table 5.18:Defaulted TDRs~~


			Wells Fargo & Company			95

Note 5: Leasing Activity

The information below provides a summary of our leasing activities as a lessor and lessee. See Note 5

(Leasing Activity) in our 2020 Form 10-K for additional information about our leasing activities.

~~Purchased Credit-Impaired Loans~~

As a Lessor

Noninterest income on leases, which is presented in Table 5.1, is included in other noninterest income on our consolidated statement of income. Lease expense, included in other noninterest expense on our consolidated statement of income, was $226 million and $244 million for the quarters ended June 30, 2021 and 2020, respectively, and $452 million and $504 million for the first half of 2021 and 2020, respectively.

Table 5.1:Leasing Revenue


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2021		2020	2021	2020
Interest income on lease financing (1)	$	172	208	353	437
Other lease revenues:
Variable revenues on lease financing	25		26	51	54
Fixed revenues on operating leases	254		294	514	608
Variable revenues on operating leases	18		12	36	25
Other lease-related revenues (2)	16		3	27	1
Noninterest income on leases	313		335	628	688
Total leasing revenue	$	485	543	981	1,125

(1) In second quarter 2021, we elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(2) Predominantly includes net gains (losses) on disposition of assets leased under operating leases or lease financings.

As a Lessee

Substantially all of our ~~PCI loans were acquired from Wachovia on December 31, 2008, at~~leases are operating leases. Table 5.2 presents balances for our operating leases.

Table 5.2:Operating Lease Right of Use (ROU) Assets and Lease Liabilities


(in millions)	Jun 30, 2021		Dec 31, 2020
ROU assets	$	4,053	4,306
Lease liabilities	4,705		4,962

Table 5.3 provides the composition of our lease costs, 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.~~included in net occupancy expense.

Table ~~5.19:PCI Loans~~5.3:Lease Costs


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2021		2020	2021	2020
Fixed lease expense – operating leases	$	265	292	530	583
Variable lease expense	69		80	147	146
Other (1)	(28)		(42)	(31)	(56)
Total lease costs	$	306	330	646	673

(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

(1)Predominantly includes gains recognized from sale leaseback transactions and sublease rental income.

~~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~~

~~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~~

~~Table 5.22 provides past due information for commercial PCI loans.~~

~~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.~~

~~Note 5: Loans and Allowance for Credit Losses (continued~~)

~~Table 5.24 provides FICO scores forconsumer PCI loans.~~

~~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.~~

Note 6: ~~Other Assets~~ Equity Securities

Table 6.1 ~~presents the components~~provides a summary of ~~other assets.~~our equity securities by business purpose and accounting method.

~~Table 6.1:Other Assets~~

(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


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


~~(2)~~	~~Represents nonmarketable equity investments for which we have elected the fair value option. See Note 13 (Fair Values of Assets and Liabilities) for additional information.~~

~~(3)~~

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~~ ~~10-K.~~

Table 6.1: Equity Securities


(in millions)	Jun 30, 2021		Dec 31, 2020
Held for trading at fair value:
Marketable equity securities (1)	$	23,701	23,032
Not held for trading:
Fair value:
Marketable equity securities	1,624		1,564
Nonmarketable equity securities (2)	10,006		9,413
Total equity securities at fair value	11,630		10,977
Equity method:
Private equity	2,897		2,960
Tax-advantaged renewable energy (3)	3,853		3,481
New market tax credit and other	378		409
Total equity method	7,128		6,850
Other methods :
Low-income housing tax credit investments (3)	11,439		11,353
Federal Reserve Bank stock and other at cost (4)	3,585		3,588
Private equity (5)	7,064		4,208
Total equity securities not held for trading	40,846		36,976
Total equity securities	$	64,547	60,008

(1) Represents securities held as part of our customer accommodation trading activities. For additional information on these activities, see Note 2 (Trading Activities).

(2) Substantially all of these securities are economically hedged with equity derivatives.

~~Table 6.2 presents income (expense)~~(3) In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(4) Substantially all relates to investments in Federal Reserve Bank stock at both June 30, 2021, and December 31, 2020.

We invest in affordable housing projects that qualify for the ~~low income~~low-income housing tax credit (LIHTC), which isare designed to promote private development of ~~low income~~low-income housing. These investments typically generate a return ~~mostly~~ through the realization of ~~federal~~ tax ~~credits.~~

~~Total LIHTC~~credits and other tax benefits. Table 6.2 summarizes the amortization of the investments ~~were $9.9 billion~~ and ~~$9.7 billion at September 30, 2017~~the related tax credits 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 totalother tax benefits ~~of $360 million and $1.1 billion in the third quarter and first nine months of 2017, which included tax credits recorded~~that are recognized in income ~~taxes~~tax expense/(benefit) on our consolidated statement 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.income. 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 ~~$3.1~~$4.2 billion at ~~September~~both June 30, ~~2017~~2021, and ~~$3.6 billion at~~ December 31, ~~2016. Predominantly all of this~~2020. This liability ~~is expected to be paid over the next three years. This liability~~for unfunded commitments is included in long-term ~~debt.~~

debt on our consolidated balance sheet.

Table 6.2: LIHTC Investments (1)



	Quarter ended June 30,			Six months ended June 30,
(in millions)	2021		2020	2021	2020
Proportional amortization of investments	$	382	352	764	703
Tax credits and other tax benefits	(431)		(401)	(875)	(797)
Net expense/(benefit) recognized within income tax expense	$	(49)	(49)	(111)	(94)

(1)Excludes the impact of the estimated annual effective income tax rate applied to each period.

~~Note 7: Securitizations and Variable Interest Entities (continued~~)



			Wells Fargo & Company			97

Note 6: Equity Securities (continued)

Realized Gains and Losses Not Held for Trading

Table 6.3 provides a summary of the net gains and losses from equity securities not held for trading, which excludes equity method adjustments for our share of the investee’s earnings or

losses that are recognized in other noninterest income. Gains and losses for securities held for trading are reported in net gains on trading and securities.

Table 6.3:Net Gains (Losses) from Equity Securities Not Held for Trading



	Quarter ended June 30,			Six months ended June 30,
(in millions)	2021		2020	2021		2020
Net gains (losses) from equity securities carried at fair value:
Marketable equity securities	$	74	394	$	134	(409)
Nonmarketable equity securities	893		1,424	535		320
Total equity securities carried at fair value	967		1,818	669		(89)
Net gains (losses) from nonmarketable equity securities not carried at fair value (1):
Impairment write-downs	(42)		(106)	(57)		(1,041)
Net unrealized gains related to measurement alternative observable transactions	2,037		24	2,262		246
Net realized gains on sale	496		199	551		199

Total nonmarketable equity securities not carried at fair value	2,491		117	2,756		(596)
Net losses from economic hedge derivatives (2)	(762)		(1,402)	(337)		(183)
Total net gains (losses) from equity securities not held for trading	$	2,696	533	$	3,088	(868)

(1)Includes impairment write-downs and net realized gains on sale related to private equity and venture capital investments in consolidated portfolio companies, which are not reported in equity securities on our consolidated balance sheet.

(2)Includes net gains (losses) on derivatives not designated as hedging instruments.

Measurement Alternative

Table 6.4 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 6.3.

Table 6.4:Net Gains (Losses) from Measurement Alternative Equity Securities



	Quarter ended June 30,				Six months ended June 30,
(in millions)	2021		2020		2021		2020
Net gains (losses) recognized in earnings during the period:
Gross unrealized gains due to observable price changes	$	2,037	24		$	2,262	246

Impairment write-downs	(38)		(58)		(50)		(412)
Realized net gains from sale	195		11		195		13
Total net gains recognized during the period	$	2,194	$	(23)	$	2,407	(153)

Table 6.5 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 6.5:Measurement Alternative Cumulative Gains (Losses)



(in millions)	Jun 30, 2021		Dec 31, 2020


Cumulative gains (losses):
Gross unrealized gains due to observable price changes	$	4,577	2,356
Gross unrealized losses due to observable price changes	(25)		(25)
Impairment write-downs	(1,008)		(969)


98			Wells Fargo & Company

Note 7: Other Assets

Table 7.1 presents the components of other assets.

Table 7.1:Other Assets


(in millions)	Jun 30, 2021		Dec 31, 2020
Corporate/bank-owned life insurance	$	20,488	20,380
Accounts receivable	24,372		38,116
Interest receivable:
AFS and HTM debt securities	1,366		1,368
Loans	2,224		2,838
Trading and other	482		415
Customer relationship and other amortized intangibles	287		328
Foreclosed assets:
Residential real estate	49		73
Other	80		86
Operating lease assets (lessor)	6,773		7,391
Operating lease ROU assets (lessee)	4,053		4,306
Due from customers on acceptances	144		268
Other	12,135		11,768
Total other assets	$	72,453	87,337


			Wells Fargo & Company			99

Note 8: Securitizations and Variable Interest Entities

Involvement with ~~SPEs~~Variable Interest Entities (VIEs)

In the normal course of business, we enter into various types of on- and off-balance sheet transactions with ~~SPEs,~~special purpose entities (SPEs), which are corporations, trusts, limited liability companies or partnerships that are established for a limited purpose. ~~Generally,~~ SPEs are often formed in connection with securitization transactions ~~and~~whereby financial assets are transferred to an SPE. SPEs formed in connection with securitization transactions are generally considered variable interest entities (VIEs). ~~For further description~~The VIE may alter the risk profile of the asset by entering into derivative transactions or obtaining credit support, and issues various forms of interests in those assets to investors. When we transfer financial assets from our ~~involvement~~consolidated balance sheet to a VIE in connection with ~~SPEs, see Note 8 (Securitizations~~a securitization, we typically receive cash and ~~Variable Interest Entities) to Financial Statements~~sometimes other interests in ~~our 2016 Form 10-K.~~

~~We have segregated our involvement~~the VIE as proceeds for the assets we transfer. In certain transactions with VIEs, ~~between those VIEs which~~ we ~~consolidate, those which we do not consolidate and those for which we account for~~may retain the ~~transfers of financial assets as secured borrowings. Secured borrowings are transactions involving transfers of our financial assets~~right to ~~third parties that are accounted for as financings with the assets pledged as collateral. Accordingly,~~service the transferred assets ~~remain recognized on~~and repurchase the transferred assets if the outstanding balance of the assets falls below the level at which the cost to service the assets exceed the benefits. In addition, we may purchase the right to service loans transferred to a VIE by a third party.

In connection with our ~~balance sheet. Subsequent tables within this Note further segregate these transactions by structure type.~~

~~Table 7.1 provides the classifications of assets and liabilities in our balance sheet for our transactions with VIEs.~~

Investment securities (1)

Accrued expenses and other liabilities

~~Transactions with Unconsolidated VIEs~~

Our transactions with unconsolidated VIEs include securitizations of residential 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, tax credit structures, collateralized loan obligations (CLOs) backed by corporate loans, and other types of structured financing. Wewe have various forms of ongoing involvement with VIEs, ~~including servicing,~~ which may include:

•underwriting securities issued by VIEs and subsequently making markets in those securities;

•providing credit enhancement on securities issued by VIEs through the use of letters of credit or financial guarantees;

•entering into other derivative contracts with VIEs;

•holding senior or subordinated interests ~~entering into liquidity arrangements, credit default swaps~~in VIEs;

•acting as servicer or investment manager for VIEs;

•providing administrative or trustee services to VIEs; and other derivative contracts. Involvements with these unconsolidated VIEs are recorded on our balance sheet in trading assets, investment securities, loans, MSRs, derivative assets and liabilities, other assets, other liabilities, and long-term debt, as appropriate.

Table 7.2 provides a summary of unconsolidated VIEs with which we have significant continuing involvement, but we are not the primary beneficiary. We do not consider our continuing involvement in an unconsolidated VIE•providing seller financing 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

VIEs.

~~and servicer but do not have any other forms of significant involvement.~~

Significant continuing involvement includes transactions where we were the sponsor or transferor and have other significant forms of involvement. Sponsorship includes transactions with unconsolidated VIEs where we solely or materially participated in the initial design or structuring of the entity or marketing of the transaction to investors. When we transfer assets to a VIE and account for the transfer as a sale, we are considered the transferor. We consider investments in securities (other than those held temporarily in trading), loans, guarantees, liquidity agreements, written options and servicing of collateral to be other forms of involvement that may be significant. We have excluded certain transactions with unconsolidated VIEs from the balances presented in the following table where we have determined that our continuing involvement is not significant due to the temporary nature and size of our variable interests, because we were not the transferor or because we were not involved in the design of the unconsolidated VIEs. 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).


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


~~(1)~~2			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 goodwill and intangible assets associated with certain of our nonmarketable equity investments and held-for-sale assets, but excluding mortgage servicing rights), 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 use of equity. For additional information, including a corresponding reconciliation to GAAP financial measures, see the “Capital Management – Tangible Common Equity” section in this Report.

Wells Fargo & Company
~~(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 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 Standardized or Advanced Approach determined pursuant to Basel III 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 19 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report for additional information.~~


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



	Quarter 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	$	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:
Securities of U.S. Treasury and federal agencies	14,529			1.31		48		25,817		1.52		99
Securities of U.S. states and political subdivisions	52,500			4.16		546		55,170		4.28		590
Mortgage-backed securities:
Federal agencies	139,781			2.58		903		105,780		2.39		631
Residential and commercial	11,013			5.43		149		18,080		5.54		250
Total mortgage-backed securities	150,794			2.79		1,052		123,860		2.85		881
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:
Securities of U.S. Treasury and federal agencies	44,708			2.18		246		44,678		2.19		246
Securities of U.S. states and political subdivisions	6,266			5.44		85		2,507		5.24		33
Federal agency and other mortgage-backed securities	88,272			2.26		498		47,971		1.97		236
Other debt securities	1,488			3.05		12		3,909		1.98		19
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
Loans:
Commercial:
Commercial and industrial – U.S.	270,091			3.81		2,590		271,226		3.48		2,369
Commercial and industrial – Non U.S.	57,738			2.90		421		51,261		2.40		309
Real estate mortgage	129,087			3.83		1,245		128,809		3.48		1,127
Real estate construction	24,981			4.18		263		23,212		3.50		205
Lease financing	19,155			4.59		220		18,896		4.70		223
Total commercial	501,052			3.76		4,739		493,404		3.42		4,233
Consumer:
Real estate 1-4 family first mortgage	278,371			4.03		2,809		278,509		3.97		2,764
Real estate 1-4 family junior lien mortgage	41,916			4.95		521		48,927		4.37		537
Credit card	35,657			12.41		1,114		34,578		11.60		1,008
Automobile	56,746			5.34		764		62,461		5.60		880
Other revolving credit and installment	38,601			6.31		615		39,605		5.92		590
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
Other	15,007			1.69		65		6,488		2.30		36
Total earning assets	$	1,776,782		3.45	%	$	15,390	1,734,508		3.17	%	$	13,798
Funding sources
Deposits:
Interest-bearing checking	$	48,278		0.57	%	$	69	44,056		0.15	%	$	17
Market rate and other savings	681,187			0.17		293		667,185		0.07		110
Savings certificates	21,806			0.31		16		25,185		0.30		19
Other time deposits	66,046			1.51		252		54,921		0.93		128
Deposits in foreign offices	124,746			0.76		240		107,072		0.30		82
Total interest-bearing deposits	942,063			0.37		870		898,419		0.16		356
Short-term borrowings	99,193			0.91		226		116,228		0.29		86
Long-term debt	243,137			2.26		1,377		252,400		1.59		1,006
Other liabilities	24,851			1.74		109		16,771		2.11		88
Total interest-bearing liabilities	1,309,244			0.79		2,582		1,283,818		0.48		1,536
Portion of noninterest-bearing funding sources	467,538			—		—		450,690		—		—
Total funding sources	$	1,776,782		0.58		2,582		1,734,508		0.35		1,536
Net interest margin and net interest income on a taxable-equivalent basis (5)				2.87	%	$	12,808			2.82	%	$	12,262
Noninterest-earning assets
Cash and due from banks	$	18,456						18,682
Goodwill	26,600							26,979
Other	116,685							134,417
Total noninterest-earning assets	$	161,741						180,078
Noninterest-bearing funding sources
Deposits	$	364,293						363,108
Other liabilities	57,052							63,777
Total equity	207,934							203,883
Noninterest-bearing funding sources used to fund earning assets	(467,538		)					(450,690	)
Net noninterest-bearing funding sources	$	161,741						180,078
Total assets	$	1,938,523						1,914,586



	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



~~Yes~~ þ		No o



~~Yes~~ þ		No o



~~Yes~~ o		No þ



	Quarter ended Sep 30,			%		Nine months ended Sep 30,			%
(in millions)	2017		2016	Change		2017		2016	Change
Service charges on deposit accounts	$	1,276	1,370	(7	)%	$	3,865	4,015	(4	)%
Trust and investment fees:
Brokerage advisory, commissions and other fees	2,304		2,344	(2	)	6,957		6,874	1
Trust and investment management	840		849	(1	)	2,506		2,499	—
Investment banking	465		420	11		1,345		1,172	15
Total trust and investment fees	3,609		3,613	—		10,808		10,545	2
Card fees	1,000		997	—		2,964		2,935	1
Other fees:
Charges and fees on loans	318		306	4		950		936	1
Cash network fees	126		138	(9	)	386		407	(5	)
Commercial real estate brokerage commissions	120		119	1		303		322	(6	)
Letters of credit fees	77		81	(5	)	227		242	(6	)
Wire transfer and other remittance fees	114		103	11		333		296	13
All other fees	122		179	(32	)	445		562	(21	)
Total other fees	877		926	(5	)	2,644		2,765	(4	)
Mortgage banking:
Servicing income, net	309		359	(14	)	1,165		1,569	(26	)
Net gains on mortgage loan origination/sales activities	737		1,308	(44	)	2,257		3,110	(27	)
Total mortgage banking	1,046		1,667	(37	)	3,422		4,679	(27	)
Insurance	269		293	(8	)	826		1,006	(18	)
Net gains from trading activities	245		415	(41	)	921		943	(2	)
Net gains on debt securities	166		106	57		322		797	(60	)
Net gains from equity investments	238		140	70		829		573	45
Lease income	475		534	(11	)	1,449		1,404	3
Life insurance investment income	152		152	—		441		455	(3	)
All other	97		163	(40	)	347		1,216	(71	)
Total	$	9,450	10,376	(9	)	$	28,838	31,333	(8	)



(income/expense in millions,	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,
Revenue	$	12,060	12,387	7,085		7,147	4,246		4,099		(1,465	)	(1,305	)	21,926	22,328
Provision (reversal of provision) for credit losses	650		651	69		157	(1	)	4		(1	)	(7	)	717	805
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
Average loans	$	473.5	489.2	463.8		454.3	72.4		68.4		(57.4	)	(54.4	)	952.3	957.5
Average deposits	734.5		708.0	463.4		441.2	188.1		189.2		(79.6	)	(76.9	)	1,306.4	1,261.5
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



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

Total revenue	12,060			12,387		(3	)	36,442			37,205		(2	)

Provision for credit losses	650			651		—		1,919			2,060		(7	)
Noninterest expense:
Personnel expense	5,027			4,606		9		15,193			13,886		9
Equipment	511			462		11		1,569			1,421		10
Net occupancy	532			520		2		1,573			1,551		1
Core deposit and other intangibles	112			123		(9	)	335			380		(12	)
FDIC and other deposit assessments	171			159		8		547			453		21
Outside professional services	464			300		55		1,355			749		81
Operating losses	1,294			525		146		1,853			1,224		51
Other expense of the segment	(277		)	258		NM		(147		)	773		NM
Total noninterest expense	7,834			6,953		13		22,278			20,437		9
Income before income tax expense and noncontrolling interests	3,576			4,783		(25	)	12,245			14,708		(17	)
Income tax expense	1,286			1,546		(17	)	3,817			4,910		(22	)
Net income from noncontrolling interests (4)	61			10		510		197			96		105
Net income	$	2,229		3,227		(31	)	$	8,231		9,702		(15	)
Average loans	$	473.5		489.2		(3	)	$	477.8		486.4		(2	)
Average deposits	734.5			708.0		4		726.4			698.3		4



	September 30,
(in billions)	2017			2016
Retail brokerage client assets	$	1,612.1		1,483.3
Advisory account client assets	521.8			458.3
Advisory account client assets as a percentage of total client assets	32		%	31



	Quarter ended							Nine months 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
September 30, 2017
Client directed (4)	$	163.8	8.2	(8.9	)	3.7	166.8	159.1	28.5	(30.1	)	9.3	166.8
Financial advisor directed (5)	131.7		6.7	(5.2	)	6.0	139.2	115.7	23.0	(17.4	)	17.9	139.2
Separate accounts (6)	137.7		5.6	(5.0	)	4.7	143.0	125.7	20.1	(17.2	)	14.4	143.0
Mutual fund advisory (7)	69.3		3.2	(2.3	)	2.6	72.8	63.3	9.9	(8.0	)	7.6	72.8
Total advisory client assets	$	502.5	23.7	(21.4	)	17.0	521.8	463.8	81.5	(72.7	)	49.2	521.8
September 30, 2016
Client directed (4)	$	158.5	9.2	(9.5	)	3.1	161.3	154.7	27.4	(27.7	)	6.9	161.3
Financial advisor directed (5)	104.2		6.3	(4.7	)	4.7	110.5	91.9	21.4	(13.5	)	10.7	110.5
Separate accounts (6)	118.9		6.0	(5.6	)	3.5	122.8	110.4	19.0	(15.6	)	9.0	122.8
Mutual fund advisory (7)	62.1		2.2	(2.6	)	2.0	63.7	62.9	6.1	(8.5	)	3.2	63.7
Total advisory client assets	$	443.7	23.7	(22.4	)	13.3	458.3	419.9	73.9	(65.3	)	29.8	458.3



(in billions)	Fair value		Net unrealized gain (loss)		Expected remaining maturity (in years)
At September 30, 2017
Actual	$	161.2	0.8		6.5
Assuming a 200 basis point:
Increase in interest rates	143.9		(16.5	)	8.5
Decrease in interest rates	167.4		7.0		2.6



	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	%



	September 30, 2017
	Lending (1)			Securities (2)				Derivatives and other (3)		Total exposure
(in millions)	Sovereign		Non- sovereign	Sovereign		Non- sovereign		Sovereign	Non- sovereign	Sovereign	Non- sovereign (4)	Total
Top 20 country exposures:
United Kingdom	$	7,079	20,200	—		1,852		—	473	7,079	22,525	29,604
Canada	29		18,240	61		189		—	507	90	18,936	19,026
Cayman Islands	—		6,723	—		—		—	151	—	6,874	6,874
Germany	3,349		1,664	5		162		3	392	3,357	2,218	5,575
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
Netherlands	—		2,278	22		285		2	247	24	2,810	2,834
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
Brazil	—		1,689	—		17		—	—	—	1,706	1,706
Chile	—		1,485	—		21		—	—	—	1,506	1,506
South Korea	—		1,352	2		85		2	8	4	1,445	1,449
Switzerland	—		1,210	—		(2	)	—	35	—	1,243	1,243
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
Total top 20 country exposures	$	10,798	73,937	94		4,794		39	2,528	10,931	81,259	92,190
Eurozone exposure:
Eurozone countries included in Top 20 above (5)	$	3,349	9,526	27		1,426		5	966	3,381	11,918	15,299
Austria	—		590	—		3		—	3	—	596	596
Spain	—		362	—		54		—	19	—	435	435
Belgium	—		274	—		(45	)	—	5	—	234	234
Other Eurozone exposure (6)	24		211	—		47		—	—	24	258	282
Total Eurozone exposure	$	3,373	10,963	27		1,485		5	993	3,405	13,441	16,846


~~(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.~~


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


~~(5)~~	~~Consists of exposure to 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~~.



	September 30, 2017
(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 loans (excluding PCI):
California	$	99,380	11,006	110,386	12	%
New York	26,008		1,989	27,997	3
Florida	13,278		3,824	17,102	2
New Jersey	13,116		3,704	16,820	2
Virginia	7,899		2,442	10,341	1
Washington	8,589		900	9,489	1
Texas	8,732		746	9,478	1
North Carolina	6,053		1,930	7,983	1
Pennsylvania	5,681		2,275	7,956	1
Other (1)	64,530		12,307	76,837	8
Government insured/ guaranteed loans (2)	13,606		—	13,606	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	%



	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



					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


~~(1)~~	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.



	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~~.


~~(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.~~