0000072971us-gaap:LoansReceivableMember2021-09-300000072971us-gaap:ForeignGovernmentDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310000072971us-gaap:DebtSecuritiesMemberwfc:ConsumerBankingAndLendingMember2020-01-012020-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

~~THE SECURITIES EXCHANGE ACT OF 1934~~

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


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

For the transition period from __________ to __________

Commission file number 001-2979

WELLS FARGO & COMPANY

(Exact name of registrant as specified in its charter)

Delaware

No.

41-0449260

(State of incorporation)

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

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

(Address of principal executive offices) (Zip ~~Code)~~code)

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 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 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
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series DD	WFC.PRD	NYSE
Guarantee of Medium-Term Notes, Series A, due October 30, 2028 of Wells Fargo Finance LLC	WFC/28A	NYSE

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



~~Yes~~ þ		No o

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



~~Yes~~ þ		No o

Yesþ No¨

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

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



~~Yes~~ o		No þ

Yes☐ Noþ

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


		Shares Outstanding
		~~Shares Outstanding~~
	October ~~25, 2017~~21, 2021
Common stock, $1-2/3 par value		~~4,924,261,449~~3,987,232,567

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			63
	Consolidated Statement of Comprehensive Income			64
	Consolidated Balance Sheet			65
	Consolidated Statement of Changes in Equity			66
	Consolidated Statement of Cash Flows			68
	Notes to Financial Statements
	1	—	Summary of Significant Accounting Policies	69
	2	—	Trading Activities	72
	3	—	Available-for-Sale and Held-to-Maturity Debt Securities	73
	4	—	Loans and Related Allowance for Credit Losses	79
	5	—	Leasing Activity	95
	6	—	Equity Securities	96
	7	—	Other Assets	98
	8	—	Securitizations and Variable Interest Entities	99
	9	—	Mortgage Banking Activities	104
	10	—	Intangible Assets	106
	11	—	Guarantees and Other Commitments	107
	12	—	Pledged Assets and Collateral	109
	13	—	Legal Actions	112
	14	—	Derivatives	116
	15	—	Fair Values of Assets and Liabilities	125
	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			58
	Current Accounting Developments			58
	Forward-Looking Statements			59
	Risk Factors			61
	Glossary of Acronyms			148
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			45
Item 4.	Controls and Procedures			62

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

FINANCIAL REVIEW


Summary Financial Data (1)
	Quarter ended					Sep 30, 2021 % Change from			Nine months ended
($ in millions, except per share amounts)	Sep 30, 2021			Jun 30, 2021	Sep 30, 2020	Jun 30, 2021		Sep 30, 2020	Sep 30, 2021			Sep 30, 2020	% Change
Selected Income Statement Data
Total revenue	$	18,834		20,270	19,316	(7)	%	(2)	$	57,636		55,775	3	%
Noninterest expense	13,303			13,341	15,229	—		(13)	40,633			42,828	(5)
Pre-tax pre-provision profit (PTPP) (2)	5,531			6,929	4,087	(20)		35	17,003			12,947	31
Provision for credit losses	(1,395)			(1,260)	769	(11)		NM	(3,703)			14,308	NM
Wells Fargo net income	5,122			6,040	3,216	(15)		59	15,798			286	NM
Wells Fargo net income (loss) applicable to common stock	4,787			5,743	2,901	(17)		65	14,786			(955)	NM
Common Share Data
Diluted earnings (loss) per common share	1.17			1.38	0.70	(15)		67	3.57			(0.23)	NM
Dividends declared per common share	0.20			0.10	0.10	100		100	0.40			1.12	(64)
Common shares outstanding	3,996.9			4,108.0	4,132.5	(3)		(3)
Average common shares outstanding	4,056.3			4,124.6	4,123.8	(2)		(2)	4,107.1			4,111.4	—
Diluted average common shares outstanding (3)	4,090.4			4,156.1	4,132.2	(2)		(1)	4,140.0			4,111.4	1
Book value per common share (4)	$	42.47		41.74	38.91	2		9
Tangible book value per common share (4)(5)	35.54			34.95	32.15	2		11
Selected Equity Data (period-end)
Total equity	191,071			193,127	181,727	(1)		5
Common stockholders' equity	169,753			171,453	160,804	(1)		6
Tangible common equity (5)	142,047			143,577	132,874	(1)		7
Performance Ratios
Return on average assets (ROA) (6)	1.04		%	1.25	0.66				1.09		%	0.02
Return on average equity (ROE) (7)	11.1			13.6	7.2				11.7			(0.8)
Return on average tangible common equity (ROTCE) (5)	13.2			16.3	8.7				14.0			(0.9)
Efficiency ratio (8)	71			66	79				70			77
Net interest margin on a taxable-equivalent basis	2.03			2.02	2.13				2.03			2.32
Selected Balance Sheet Data (average)
Loans	$	854,024		854,747	931,708	—		(8)	$	860,666		955,918	(10)
Assets	1,949,700			1,939,879	1,945,911	1		—	1,941,391			1,947,315	—
Deposits	1,450,941			1,435,824	1,399,028	1		4	1,426,956			1,374,638	4
Selected Balance Sheet Data (period-end)
Debt securities	542,993			533,565	476,421	2		14
Loans	862,827			852,300	920,082	1		(6)
Allowance for credit losses for loans	14,705			16,391	20,471	(10)		(28)
Equity securities	66,526			64,547	49,348	3		35
Assets	1,954,901			1,945,996	1,920,399	—		2
Deposits	1,470,379			1,440,472	1,383,215	2		6

Headcount (#) (period-end)	253,871			259,196	274,931	(2)		(8)
Capital and other metrics
Risk-based capital ratios and components (9):
Standardized Approach:
Common equity tier 1 (CET1)	11.62		%	12.07	11.38
Tier 1 capital	13.18			13.71	13.05
Total capital	16.21			16.84	16.35
Risk-weighted assets (RWAs) (in billions)	1,218.9			1,188.7	1,185.6	3		3
Advanced Approach:
Common equity tier 1 (CET1)	12.43		%	12.73	11.51
Tier 1 capital	14.11			14.47	13.20
Total capital	16.46			16.88	15.71
Risk-weighted assets (RWAs) (in billions)	$	1,138.6		1,126.5	1,172.0	1		(3)
Tier 1 leverage ratio	8.36		%	8.53	8.05
Supplementary Leverage Ratio (SLR)	6.94			7.09	7.75
Total Loss Absorbing Capacity (TLAC) Ratio (10)	23.68			25.11	25.76
Liquidity Coverage Ratio (LCR) (11)	119			123	134

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 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)For the nine months ended September 30, 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 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
—


~~(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.~~

~~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.

Financial Review


Overview

~~Overview~~

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 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~~are likely to 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~~September 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. On September 9, 2021, the OCC assessed a


			Wells Fargo & Company			3

Overview (continued)

$250 million civil money penalty against the Company related to insufficient progress in addressing requirements under the OCC’s April 2018 consent order and loss mitigation activities in the Company’s Home Lending business.

Consent Order with the OCC Regarding Loss Mitigation Activities

On September 9, 2021, the Company entered into a consent order with the OCC requiring the Company to improve the execution, risk management, and oversight of loss mitigation activities in its Home Lending business. In addition, the consent order restricts the Company from acquiring certain third-party residential mortgage servicing and limits transfers of certain mortgage loans requiring customer remediation out of the Company’s mortgage servicing portfolio until remediation is provided.

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 to customers resulting from these matters and ~~customer remediation:~~

~~Identifying Potential Financial Harm~~

Inproviding remediation. On September 8, 2021, 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~~CFPB 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 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~~regarding 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.

expired.

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

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 $8.8 billion of principal forgiveness has been provided on qualifying PPP loans. As of September 30, 2021, we had $4.7 billion of PPP loans outstanding. We voluntarily committed to donate all of the gross

processing fees received from PPP loans funded in 2020 and 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. Additionally, 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. We have made significant progress in preparation for the December 31, 2021, cessation date and in response to the regulatory guidance.

We have continued to expand our product offerings using the Secured Overnight Financing Rate (SOFR) and other alternative reference rates for our commercial customers. We expect to have a suite of alternative reference rate products available for our customers prior to the end of 2021. In addition, we have continued the transition of interdealer derivative contracts to SOFR in accordance with the recommendation of the Commodity Futures Trading Commission’s Market Risk Advisory Committee.

For additional information on the initiatives undertaken by our LIBOR Transition Office in an effort to ~~identify similar instances~~mitigate the risks associated with a transition away from LIBOR, as well as the amount of our LIBOR-linked assets and liabilities, 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. On August 5, 2021, the FRB confirmed that the Company's stress


4			Wells Fargo & Company

capital buffer (SCB) for the period October 1, 2021, through September 30, 2022, is 3.10%.

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

In July 2021, we issued $1.25 billion of our Preferred Stock, Series DD. In September 2021, we redeemed our Preferred Stock, Series O and Series X, for an aggregate cost of $1.8 billion.

Business Divestitures

On November 1, 2021, we closed our previously announced agreement to sell our Corporate Trust Services business and our previously announced agreement to sell Wells Fargo Asset Management, which ~~customers may have experienced harm~~ is ~~ongoing,~~subject to certain post-closing adjustments and ~~it is possible that we may identify other areas of potential concern.~~earn-out provisions.

Financial Performance

~~Wells Fargo~~


Consolidated Financial Highlights
	Quarter ended Sep 30,						Nine months ended Sep 30,
($ in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Selected income statement data
Net interest income	$	8,909	9,379	(470)	(5)	%	$	26,517	30,601	(4,084)	(13)	%
Noninterest income	9,925		9,937	(12)	—		31,119		25,174	5,945	24
Total revenue	18,834		19,316	(482)	(2)		57,636		55,775	1,861	3
Net charge-offs	257		731	(474)	(65)		1,159		2,786	(1,627)	(58)
Change in the allowance for credit losses	(1,652)		38	(1,690)	NM		(4,862)		11,522	(16,384)	NM
Provision for credit losses	(1,395)		769	(2,164)	NM		(3,703)		14,308	(18,011)	NM
Noninterest expense	13,303		15,229	(1,926)	(13)		40,633		42,828	(2,195)	(5)
Income tax expense (benefit)	1,521		(83)	1,604	NM		3,867		(1,731)	5,598	NM
Wells Fargo net income	5,122		3,216	1,906	59		15,798		286	15,512	NM
Wells Fargo net income (loss) applicable to common stock	4,787		2,901	1,886	65		14,786		(955)	15,741	NM

NM – Not meaningful

In third quarter 2021, we generated $5.1 billion of net income ~~was $4.6 billion in third quarter 2017 with~~and diluted earnings per common share (EPS) of ~~$0.84,~~$1.17, compared with ~~$5.6~~net income of $3.2 billion and ~~$1.03, respectively,~~diluted EPS of $0.70 in the same period a year ago. ~~Third quarter 2017 results included the impact of a $1.0 billion, or ($0.20) per share, discrete litigation accrual, which was not tax-deductible,~~Financial performance 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~~2021, compared with the same period a year ago, ~~with~~included the following:

•total revenue decreased due to lower net interest ~~income up 4% from a year ago;~~

income;

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

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

•average loans ~~were $952.3 billion, down $5.1 billion, or 1%,~~decreased due to lower residential mortgage loans driven by paydowns exceeding originations and the resecuritization of loans we purchased from Government National Mortgage Association (GNMA) loan securitization pools, lower commercial loans driven by weak demand and a ~~year ago;~~reduction of PPP loans outstanding, and the reclassification of student loans to loans held for sale (LHFS) included in other consumer loans; and

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

increased driven by growth in the Consumer Banking and Lending, Commercial Banking, 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. Our~~ savings for consumer and commercial customers reflecting government stimulus programs and continued economic uncertainty associated with the COVID-19 pandemic, as well as the impact of payment deferral programs on consumer customers, 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 nine months of 2021, we generated $15.8 billion of net income and diluted EPS of $3.57, compared with net income of $286 million and diluted loss per common share of $0.23 in the same period a year ago. Financial performance for the first nine months of 2021, compared with the same period a year ago, included the following:

•total ~~assets were $1.93 trillion~~revenue increased due to higher net gains from equity securities, mortgage banking income, and investment advisory and other asset-based fee income, partially offset by lower net interest income;

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

•noninterest expense decreased due to lower operating losses, professional and outside services expense, and restructuring charges, partially offset by higher incentive and revenue-related compensation in personnel expense;

•average loans decreased due to paydowns exceeding originations in our residential mortgage loan portfolio, weak demand for commercial loans, and the reclassification of student loans to LHFS included in other consumer loans; and

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


			Wells Fargo & Company			5

Overview (continued)

Capital and Liquidity

We maintained a strong capital position in the first nine months of 2021, with total equity of $191.1 billion at September 30, ~~2017. Cash~~2021, compared with $185.7 billion at December 31, 2020. Our liquidity and ~~other short-term investments increased $5.5~~regulatory capital ratios remained strong at September 30, 2021, including:

•our liquidity coverage ratio (LCR) was 119%, which continued to exceed the regulatory minimum of 100%;

•our Common Equity Tier 1 (CET1) ratio was 11.62%, 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 was 23.68%, 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 $14.7 billion at September 30, 2021, decreased $5.0 billion from December 31, ~~2016, reflecting lower loan balances and growth~~2020.

•Our provision for credit losses for loans was $(3.7) billion in ~~deposits. Investment securities reached~~the first nine months of 2021, down from $14.1 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 nine months 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 1.70% at September 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~~$38 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~~3 basis points of average commercial loans, in third quarter ~~2017,~~2021, compared with net loan charge-offs of ~~$215~~$356 million, or 1729 basis points, in the same period a year ~~ago. Net consumer credit~~ago, predominantly driven by lower losses ~~increased to 53~~and higher recoveries 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 $221 million, or 23 basis points ~~(annualized)~~ of average consumer loans, in third quarter ~~2017 from 51~~2021, compared with net loan charge-offs of $327 million, or 30 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~~predominantly driven by lower losses in our credit card portfolio as a result of payment deferral activities and government stimulus programs instituted in response to the benefit of the continued improvement in the housing market and our continued focus on originating high quality loans. Approximately 77% of the consumer first mortgage portfolio outstanding at September 30, 2017, was originated after 2008, when more stringent underwriting standards were implemented.COVID-19 pandemic.

The allowance for credit losses as of September 30, 2017, decreased $585 million compared with a year ago and decreased $431 million from December 31, 2016. The allowance for credit losses at September 30, 2017 included $450 million for coverage of our preliminary estimate of potential hurricane-related losses from Hurricanes Harvey, Irma 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, 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 in the oil and gas portfolio.

•Nonperforming assets ~~decreased $512 million, or 5%, from June 30, 2017, the sixth consecutive quarter~~(NPAs) of decreases, with improvement across our consumer and commercial portfolios and lower foreclosed assets. Nonperforming assets were only 0.98% 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.

~~Capital~~

~~Our financial performance in third quarter 2017 resulted in strong capital generation, which increased total equity to a record $206.8~~$7.2 billion at September 30, ~~2017, up $6.3~~2021, decreased $1.7 billion, or 19%, from December 31, ~~2016. Third quarter 2017 was the first quarter~~2020, predominantly driven by our ~~2017 Capital Plan was effective~~commercial 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%industrial portfolio reflecting improvements in the ~~prior quarter. We continued to reduce our common shares outstanding through the repurchase~~economic environment. NPAs represented 0.83% 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%~~total loans 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.

2021.



Earnings Performance

Wells Fargo net income for third quarter ~~2017~~2021 was ~~$4.6~~$5.1 billion ($~~0.84~~1.17 diluted ~~earnings per common share)~~EPS), compared with ~~$5.6~~$3.2 billion ($~~1.03~~0.70 diluted ~~per share) for~~EPS) in the same period a year ago. Net income increased in third quarter ~~2016.~~ 2021, compared with the same period a year ago, predominantly due to a $2.2 billion decrease in provision for credit losses, and a $1.9 billion decrease in noninterest expense, partially offset by a $1.6 billion increase in income tax expense and a $470 million decrease in net interest income.

Net income for the first nine months of ~~2017~~2021 was ~~$15.9~~$15.8 billion ($~~2.91)~~3.57 diluted EPS), compared with ~~$16.7 billion~~$286 million ($~~3.03) for~~0.23 diluted loss per common share) in the same period a year ago. ~~Our financial performance~~Net income increased in the first nine months of ~~2017,~~2021, compared with the same period a year ago, ~~benefited from~~predominantly due to a ~~$1.9 billion increase in net interest income and a $1.1~~$18.0 billion decrease in ~~our~~ provision for credit losses, ~~offset by~~ a ~~$2.5~~$5.9 billion ~~decrease~~increase in noninterest income, and a ~~$2.5~~$2.2 billion decrease in noninterest expense, partially offset by a $5.6 billion increase in ~~noninterest expense. In the first nine months of 2017,~~income tax expense and a $4.1 billion decrease in 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.

income.

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 an increase in interest income from loans and investment securities.

~~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 third quarter and first nine months of 2021, compared with the same periods a year ago. The third quarter 2021 decrease was due to the impact of lower loan balances reflecting soft demand and elevated prepayments, and the impact of lower yields on earning assets, partially offset by a decrease in long-term debt and lower mortgage-backed securities premium amortization. Third quarter 2021 included interest income from PPP loans of $117 million. Additionally, in third quarter 2021, we had interest income associated with loans we purchased from GNMA loan securitization pools of $212 million. For additional information about loans purchased from GNMA loan

securitization pools, see the “Risk Management – Credit Risk Management – Risks Relating to Servicing Activities” section in this Report. The first nine months of 2021 decrease was due to the impact of lower interest rates and lower loan balances reflecting soft demand, elevated prepayments and refinancing activity, as well as unfavorable hedge ineffectiveness accounting results and higher mortgage-backed securities premium amortization, partially offset by a lower cost of funding liabilities.

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 September 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 September 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	$	250,314	97		0.15	%	$	216,958	58		0.11	%
Federal funds sold and securities purchased under resale agreements	68,912		6		0.03		80,431		3		0.02
Debt securities:
Trading debt securities	88,476		517		2.33		88,021		548		2.49
Available-for-sale debt securities	179,237		705		1.57		217,556		1,067		1.96
Held-to-maturity debt securities	261,182		1,223		1.87		176,384		922		2.09
Total debt securities	528,895		2,445		1.85		481,961		2,537		2.10
Loans held for sale (2)	24,490		172		2.81		31,023		239		3.07
Loans:
Commercial loans:
Commercial and industrial – U.S.	247,095		1,608		2.58		270,998		1,721		2.53
Commercial and industrial – Non-U.S.	72,331		361		1.98		64,048		344		2.14
Real estate mortgage	121,453		817		2.67		123,391		870		2.81
Real estate construction	21,794		170		3.10		22,216		175		3.13
Lease financing	15,492		171		4.45		17,091		159		3.72
Total commercial loans	478,165		3,127		2.60		497,744		3,269		2.61
Consumer loans:
Residential mortgage – first lien	243,201		1,897		3.12		290,607		2,357		3.24
Residential mortgage – junior lien	18,809		195		4.11		26,018		270		4.13
Credit card	35,407		1,023		11.47		35,965		1,057		11.70
Auto	52,370		586		4.44		48,718		600		4.90
Other consumer	26,072		243		3.70		32,656		431		5.25
Total consumer loans	375,859		3,944		4.18		433,964		4,715		4.33
Total loans (2)	854,024		7,071		3.29		931,708		7,984		3.41
Equity securities	32,790		146		1.78		25,185		100		1.61
Other	10,070		2		0.09		6,974		—		(0.02)
Total interest-earning assets	1,769,495		9,939		2.24		1,774,240		10,921		2.45
Cash and due from banks	24,201		—				21,991		—
Goodwill	26,192		—				26,388		—
Other (3)	129,812		—				123,292		—
Total noninterest-earning assets	180,205		—				171,671		—
Total assets	$	1,949,700	9,939				1,945,911		10,921
Liabilities
Deposits:
Demand deposits	$	452,301	29		0.03	%	$	49,608	8		0.07	%
Savings deposits	426,201		34		0.03		803,942		157		0.08
Time deposits	34,171		25		0.28		71,728		127		0.71
Deposits in non-U.S. offices	28,341		11		0.16		33,992		22		0.25
Total interest-bearing deposits	941,014		99		0.04		959,270		314		0.13
Short-term borrowings	43,899		(7)		(0.06)		57,292		(12)		(0.08)
Long-term debt	174,643		745		1.71		222,862		1,038		1.86
Other liabilities	30,387		88		1.15		27,679		92		1.33
Total interest-bearing liabilities	1,189,943		925		0.31		1,267,103		1,432		0.45
Noninterest-bearing demand deposits	509,927		—				439,758		—
Other noninterest-bearing liabilities	55,789		—				57,673		—
Total noninterest-bearing liabilities	565,716		—				497,431		—
Total liabilities	1,755,659		925				1,764,534		1,432
Total equity (3)	194,041		—				181,377		—
Total liabilities and equity	$	1,949,700	925				1,945,911		1,432

Interest rate spread on a taxable-equivalent basis (3)					1.93	%					2.00	%
Net interest income and net interest margin on a taxable-equivalent basis (3)			$	9,014	2.03	%			$	9,489	2.13	%

(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


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

~~(3)~~

~~Yields and rates are based on interest income/~~

Earnings Performance (continued)

(continued from previous page)



	Nine months ended September 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	$	243,095	224		0.12	%	$	174,425	490		0.37	%
Federal funds sold and securities purchased under resale agreements	71,179		16		0.03		88,095		385		0.58
Debt securities:
Trading debt securities	86,828		1,552		2.38		95,018		1,981		2.78
Available-for-sale debt securities	192,765		2,232		1.54		234,125		4,293		2.45
Held-to-maturity debt securities	238,769		3,356		1.88		167,061		2,899		2.31
Total debt securities	518,362		7,140		1.84		496,204		9,173		2.47
Loans held for sale (2)	28,702		696		3.24		26,841		685		3.40
Loans:
Commercial loans:
Commercial and industrial – U.S.	249,359		4,831		2.59		289,799		6,257		2.88
Commercial and industrial – Non-U.S.	69,530		1,073		2.06		68,965		1,345		2.61
Real estate mortgage	120,907		2,452		2.71		122,903		2,987		3.25
Real estate construction	21,855		505		3.09		21,288		583		3.66
Lease financing	15,617		529		4.52		18,152		602		4.42
Total commercial loans	477,268		9,390		2.63		521,107		11,774		3.02
Consumer loans:
Residential mortgage – first lien	252,338		5,922		3.13		288,355		7,421		3.43
Residential mortgage – junior lien	20,516		634		4.13		27,535		932		4.52
Credit card	34,942		3,035		11.61		37,415		3,243		11.58
Auto	50,368		1,709		4.54		48,473		1,797		4.95
Other consumer	25,234		709		3.75		33,033		1,405		5.68
Total consumer loans	383,398		12,009		4.18		434,811		14,798		4.54
Total loans (2)	860,666		21,399		3.32		955,918		26,572		3.71
Equity securities	30,678		416		1.81		30,027		425		1.89
Other	9,559		4		0.06		7,373		14		0.24
Total interest-earning assets	1,762,241		29,895		2.27		1,778,883		37,744		2.83
Cash and due from banks	24,377		—				21,266		—
Goodwill	26,262		—				26,386		—
Other(3)	128,511		—				120,780		—
Total noninterest-earning assets	179,150		—				168,432		—
Total assets	$	1,941,391	29,895				1,947,315		37,744
Liabilities
Deposits:
Demand deposits	$	449,777	93		0.03	%	$	55,407	152		0.37	%
Savings deposits	420,202		98		0.03		788,732		1,446		0.24
Time deposits	38,402		101		0.35		90,191		817		1.21
Deposits in non-U.S. offices	29,614		11		0.05		41,642		226		0.73
Total interest-bearing deposits	937,995		303		0.04		975,972		2,641		0.36
Short-term borrowings	50,439		(27)		(0.07)		74,538		263		0.47
Long-term debt	184,608		2,483		1.79		228,067		3,515		2.06
Other liabilities	28,999		298		1.37		29,270		350		1.59
Total interest-bearing liabilities	1,202,041		3,057		0.34		1,307,847		6,769		0.69
Noninterest-bearing demand deposits	488,961		—				398,666		—
Other noninterest-bearing liabilities	59,010		—				56,367		—
Total noninterest-bearing liabilities	547,971		—				455,033		—
Total liabilities	1,750,012		3,057				1,762,880		6,769
Total equity (3)	191,379		—				184,435		—
Total liabilities and equity	$	1,941,391	3,057				1,947,315		6,769

Interest rate spread on a taxable-equivalent basis (3)					1.93	%					2.14	%
Net interest margin and net interest income on a taxable-equivalent basis (3)			$	26,838	2.03	%			$	30,975	2.32	%

(1)The average balance amounts represent amortized costs. The interest rates are based on interest income or 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 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 )

~~Noninterest income was $9.5 billion and $28.8 billion~~ for the ~~third quarter~~period and ~~first nine months~~are annualized. Interest rates and amounts include the effects of ~~2017, respectively, compared~~hedge and risk management activities associated with ~~$10.4 billion~~the respective asset and ~~$31.3 billion~~liability categories.

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

(3)Includes taxable-equivalent adjustments of $105 million and $110 million for the ~~same periods a year ago. This income represented 43% of revenue for third quarter 2017~~quarters ended September 30, 2021 and ~~44%~~2020, respectively, and $321 million and $374 million for the first nine months of ~~2017,~~2021 and 2020, respectively, predominantly related to tax-exempt income on certain loans and securities.


8			Wells Fargo & Company

Noninterest Income

Table 2:Noninterest Income



	Quarter ended Sep 30,						Nine months ended Sep 30,
(in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Deposit-related fees	$	1,416	1,299	117	9	%	$	4,013	3,888	125	3	%
Lending-related fees	365		352	13	4		1,088		1,025	63	6
Investment advisory and other asset-based fees	2,882		2,505	377	15		8,432		7,265	1,167	16
Commissions and brokerage services fees	525		568	(43)	(8)		1,741		1,795	(54)	(3)
Investment banking fees	547		441	106	24		1,685		1,379	306	22
Card fees	1,078		912	166	18		3,104		2,601	503	19
Net servicing income	145		341	(196)	(57)		25		(77)	102	132
Net gains on mortgage loan originations/sales	1,114		1,249	(135)	(11)		3,896		2,363	1,533	65
Mortgage banking	1,259		1,590	(331)	(21)		3,921		2,286	1,635	72
Net gains from trading activities	92		361	(269)	(75)		461		1,232	(771)	(63)
Net gains on debt securities	283		264	19	7		434		713	(279)	(39)
Net gains (losses) from equity securities	869		649	220	34		3,957		(219)	4,176	NM
Lease income	322		333	(11)	(3)		950		1,021	(71)	(7)
Other	287		663	(376)	(57)		1,333		2,188	(855)	(39)
Total	$	9,925	9,937	(12)	—		$	31,119	25,174	5,945	24

NM – Not meaningful

Third quarter 2021 vs. third quarter 2020

Deposit-related fees increased driven by:

•higher consumer transaction volumes compared with ~~46%~~ ~~and~~ ~~47% for the same periods~~ a ~~year ago.~~

~~The decline in noninterest income in the~~ third quarter 2020 that included reduced volumes due to the economic slowdown associated with the COVID-19 pandemic;

•lower fee waivers and ~~first nine months of 2017,~~reversals compared with ~~the same periods~~ a ~~year ago, was~~third quarter 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~~

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.

Net servicing income decreased predominantly due to lower income from mortgage servicing right (MSR) valuation changes and related hedges driven by more favorable valuation adjustments in third quarter 2020 due to improving economic conditions.

Net gains on mortgage loan originations/sales decreased

driven by:

•lower residential real estate held for sale (HFS) origination volumes and margins in our retail and correspondent production channels;

partially offset by:

•higher gains related to the resecuritization of loans we purchased from GNMA loan securitization pools in 2020.

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 driven by:

•lower gains on equity products compared with a third quarter 2020 that reflected higher volumes and customer activity due to volatility in the equities markets;

•lower client trading activity for credit products due to widening credit spreads; and

•lower asset-backed finance client trading activity due to a decline in demand for commercial mortgage-backed securities (CMBS) and residential mortgage-backed securities (RMBS) products.

Net gains (losses) from equity securities increased due to higher unrealized gains on nonmarketable equity securities from our affiliated venture capital and private equity businesses.

Other income decreased due to lower equity method investment ~~management fees~~income compared with a third quarter 2020 that included $228 million of equity method investment income related to a change in the accounting measurement model for certain nonmarketable equity securities from ~~managing and administering assets, including mutual funds, institutional separate accounts, corporate trust, personal trust,~~our affiliated venture capital business.


			Wells Fargo & Company			9

Earnings Performance (~~continued~~)(continued)

~~employee benefit trust~~First nine months of 2021 vs. first nine months of 2020

Lending-related fees increased reflecting higher loan commitment fees.

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

For additional information on certain client investment ~~management fee income is primarily from client~~ assets, ~~under management (AUM) for which~~see the fees are determined based on a tiered scale relative to the market value of the AUM. AUM consists of assets for which we have investment management discretion. Our AUM totaled $678.7 billion at September 30, 2017, compared with $667.5 billion at September 30, 2016, with substantially all of our AUM managed by our WIM operating segment. Additional information regarding our WIM operating segment AUM is provided in Table 4f and the related discussion in the “Operating“Earnings Performance – Operating Segment Results – Wealth and Investment Management – ~~Trust~~WIM Advisory Assets” and ~~Investment Client~~“Earnings Performance – Operating Segment Results – Corporate – Wells Fargo Asset Management (WFAM) Assets Under Management” ~~section~~sections 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~~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.

Net servicing income increased reflecting negative MSR valuation adjustments in the first nine months of ~~2017, compared with the same period in 2016, was~~2020 for higher expected servicing costs and higher prepayment estimates due to ~~growth~~changes in ~~equity originations,~~economic conditions that improved in 2021.

Net gains on mortgage loan ~~syndications,~~originations/sales increased

driven by:

•a higher production margin in our retail production channel;

•higher gains related to the resecuritization of loans we purchased from GNMA loan securitization pools in 2020; and ~~advisory services.~~

~~Card fees were $1.0 billion and $3.0 billion~~•losses 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,~~2020 driven by ~~lower all other fees. All other fees were $122 million~~the impact of interest rate volatility on hedging activities associated with our residential mortgage loans held for sale portfolio and ~~$445 million in the third quarter~~pipeline, as well as valuation losses on certain residential and ~~first nine months of 2017, respectively, compared with $179 million and $562 million~~commercial loans held for ~~the same periods in 2016, driven by lower other fees from discontinued products and~~sale due to the impact of the ~~sale of our global fund services business in fourth quarter 2016.~~COVID-19 pandemic on market conditions.

~~Mortgage banking noninterest income, consisting of net~~

For additional information on 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~~

Net gains from trading activities decreased reflecting:

•lower client trading activity for interest rate products, equities, and ~~$826 million~~commodities;

partially offset by:

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

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

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

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

•higher realized gains on the sales of equity securities;

•higher gains on deferred compensation plan investments (largely offset in personnel expense). Refer to Table 3a for the ~~third quarter~~results for our deferred compensation plan and ~~first nine months~~related hedges; and

•lower impairment of ~~2017, respectively, compared with $293 million and $1.0 billion in~~equity securities due to the ~~same periods a year ago. The decrease in~~market impact of the ~~first nine months of 2017, compared with the same period a year ago, was driven by the divestiture of our crop insurance business~~COVID-19 pandemic in first quarter ~~2016.~~2020.

~~Net~~

Other income decreased due to:

•lower gains ~~from trading activities,~~on the sales of residential mortgage loans which ~~reflect unrealized changes~~were reclassified to held for sale in ~~fair value~~2019; and

•higher valuation losses related to the retained litigation risk, including the timing and amount of ~~our trading positions and realized gains and losses, were $245 million and $921 million in the third quarter and first nine months~~final settlement, associated with shares 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 partially offset by higher deferred compensation plan investment results (offset in employee benefits expense). Net gains from trading activities do not include interest and dividend income and expense on trading securities. Those amounts are reported within interest income from trading assets and other interest expense from trading liabilities.Visa Class B common stock that we previously sold. For additional information, ~~about trading activities,~~ see the “Risk Management – Asset/Liability Management – Market Risk – ~~Trading Activities”~~Equity Securities” section in ~~this Report.~~

our 2020 Form 10-K; and

Net gains on debt and equity securities totaled $404 million and $1.2 billion in the third quarter and first nine months of 2017, respectively, compared with $246 million and $1.4 billion in the third quarter and first nine months of 2016, after other-than-temporary impairment (OTTI) write-downs of $91 million and $293 million for the third quarter and first nine months of 2017, respectively, compared with $136 million and $464 million for the same periods in 2016. The increase in net gains on debt and equity securities in third quarter 2017, compared with the same period a year ago, primarily reflected higher net gains from venture capital equity investments. The decrease in net gains on debt and equity securities in the first nine months of 2017, compared with the same period a year ago, was driven by •lower ~~net gains on debt securities, partially offset by higher net gains from equity investments.~~

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

All other income was $97 million and $347 million in the third quarter and first nine months of 2017, respectively, compared with $163 million and $1.2 billion for the same periods a year ago. All other income includes ineffectiveness recognized on derivatives that qualify for hedge accounting, the results of certain economic hedges, losses on low income housing tax credit investments, foreign currency adjustments, and 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 method;

partially offset by:

•a gain ~~from~~on 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 PCIstudent 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.portfolio.

~~Earnings Performance (continued~~)


10			Wells Fargo & Company

Noninterest Expense

Table 3:Noninterest Expense



	Quarter ended Sep 30,						Nine months ended Sep 30,
(in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Personnel	$	8,690	8,624	66	1	%	$	27,066	25,863	1,203	5	%
Technology, telecommunications and equipment	741		791	(50)	(6)		2,400		2,261	139	6
Occupancy	738		851	(113)	(13)		2,243		2,437	(194)	(8)
Operating losses	540		1,219	(679)	(56)		1,056		2,902	(1,846)	(64)
Professional and outside services	1,417		1,760	(343)	(19)		4,255		5,042	(787)	(16)
Leases (1)	220		291	(71)	(24)		672		795	(123)	(15)
Advertising and promotion	153		144	9	6		375		462	(87)	(19)
Restructuring charges	1		718	(717)	(100)		10		718	(708)	(99)
Other	803		831	(28)	(3)		2,556		2,348	208	9
Total	$	13,303	15,229	(1,926)	(13)		$	40,633	42,828	(2,195)	(5)

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

~~NM - Not meaningful~~(1)Represents expenses for assets we lease to customers.

~~Noninterest expense was $14.4 billion in~~Third quarter 2021 vs. third quarter ~~2017, up 8% from $13.3 billion~~2020

Personnel expense increased driven by:

•higher incentive compensation expense; and

•higher revenue-related compensation expense;

partially offset by:

•lower salaries as a ~~year ago,~~result of reduced headcount.

Technology, telecommunications and equipment expense decreased due to lower expense for contracts related to telecommunications, hardware, and maintenance.

Occupancy expense decreased driven by:

•lower rent expense; and

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

Operating losses decreased driven by ~~higher operating losses, personnel expenses, outside professional~~lower expense for customer remediation accruals and ~~contract services, and foreclosed assets expense,~~litigation accruals, partially offset by a $250 million operating loss associated with the September 2021 OCC enforcement action.

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

Restructuring charges decreased due to lower ~~other expense. In the~~personnel-related charges related to our efficiency initiatives. For additional information on restructuring charges, see Note 19 (Restructuring Charges) to Financial Statements in this Report.

First nine months of 2021 vs. first nine months of ~~2017,~~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 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 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 Sep 30,			Nine months ended Sep 30,
(in millions)	2021		2020	2021		2020
Net interest income	$	—	—	$	—	15
Net gains (losses) from equity securities	—		1	1		(274)
Total revenue (losses) from deferred compensation plan investments	—		1	1		(259)
Decrease (increase) in deferred compensation plan liabilities	42		(220)	(380)		(112)
Net derivative gains (losses) from economic hedges of deferred compensation	(42)		215	357		356
Decrease (increase) in personnel expense	—		(5)	(23)		244
Loss before income tax expense	$	—	(4)	$	(22)	(15)


			Wells Fargo & Company			11

Earnings Performance (continued)

Technology, telecommunications and equipment expense ~~was $41.7 billion, up 6% from the same period a year ago,~~increased due to higher ~~personnel~~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 ~~outside professional~~compared with a first nine months of 2020 that included higher expenses due to the COVID-19 pandemic.

Operating losses decreased driven by lower expense for customer remediation accruals and ~~contract services, operating losses, FDIC expense, and foreclosed assets expense,~~litigation accruals, partially offset by a $250 million operating loss associated with the September 2021 OCC enforcement action.

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

Leases expense decreased reflecting a reduction in the size of the operating lease asset portfolio.

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 decreased due to 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%,~~personnel-related charges related to our efficiency initiatives that began in third quarter ~~2017 compared with the same quarter last year, and up $889 million, or 4%,~~2020. For additional information on restructuring charges, see Note 19 (Restructuring Charges) to Financial Statements in this Report.

Other expenses increased driven by:

•a write-down of goodwill 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 on July 1, 2016. The FDIC expects the surcharge to be in effect for approximately two years.

Outside professional and contract services 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 expense2021 related to ~~sales practices matters.~~

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

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

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

•higher charitable donations expense driven by the donation of PPP processing fees;

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 $1.5 billion in third quarter 2021, compared with an income tax benefit of $83 million in the same period a year ago. Theeffective income tax rate was ~~32.4% and 31.5%~~22.9% for third quarter ~~2017 and 2016, respectively. Our effective income~~2021, compared with (2.6)% for the same period a year ago.

Income tax ~~rate~~expense was ~~29.0%~~$3.9 billion in the first nine months of ~~2017, down from 31.9% in~~

~~the first nine months~~2021, compared with an income tax benefit of ~~2016. The increase~~$1.7 billion in the same period a year ago. Theeffective income tax rate ~~for third quarter 2017~~ was primarily from the non-deductible treatment of the $1.0 billion discrete litigation accrual, partially offset by net discrete tax benefits arising from favorable resolutions of prior period matters with state taxing authorities. The effective income tax rate19.7% for the first nine months of ~~2017 also~~2021, compared with 119.8% for the same period a year ago.

The increase in our income tax expense for both the third quarter and first nine months of 2021, compared with the same periods a year ago, was driven by higher pre-tax income. In addition, the third quarter and first nine months of 2020 included net discrete income tax benefits ~~associated~~primarily related to the resolution and reevaluation of prior period matters with ~~stock compensation activity subject to ASU 2016-09 accounting guidance adopted in first quarter 2017,~~U.S. federal and state tax benefits associated with our agreement to sell Wells Fargo Insurance Services USA (and related businesses) in second quarter 2017. See Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report for additional information about ASU 2016-09.authorities.


12			Wells Fargo & Company

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~~allows management to assess performance consistently across the operating segments.

Funds Transfer Pricing Corporate treasury manages a funds transfer pricing methodology that considers interest rate risk, liquidity risk, and other product characteristics. Operating segments pay a 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 funding charges or credits is ~~no comprehensive, authoritative~~recognized in corporate treasury.

Revenue and Expense Sharing When lines of business jointly serve customers, the 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 Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial ~~accounting guidance equivalent~~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 the assumptions and methodologies used to ~~generally accepted accounting principles (GAAP). Commencing in second quarter 2016,~~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 reflect a shift in expenses between~~results. Management believes that these metrics are useful to investors and others to assess the ~~personnel~~performance, customer growth, and ~~other expense categories as a result~~trends of ~~the movement~~reportable operating segments or lines of support staff from the Wholesale Banking and WIM segments into a consolidated organization within the Community Banking segment. Since then, personnel expenses associated with the transferred support staff have been allocated from Community Banking back to the Wholesale Banking and WIM segments through other expense. 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


			Wells Fargo & Company			13

Earnings Performance (continued)

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.

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 September 30, 2021
Net interest income	$	5,707	1,231	1,866	637	(427)	(105)	8,909
Noninterest income	3,097		845	1,519	2,981	1,752	(269)	9,925
Total revenue	8,804		2,076	3,385	3,618	1,325	(374)	18,834
Provision for credit losses	(518)		(335)	(460)	(73)	(9)	—	(1,395)
Noninterest expense	6,053		1,396	1,797	2,917	1,140	—	13,303
Income (loss) before income tax expense (benefit)	3,269		1,015	2,048	774	194	(374)	6,926
Income tax expense (benefit)	818		254	518	195	110	(374)	1,521
Net income before noncontrolling interests	2,451		761	1,530	579	84	—	5,405
Less: Net income from noncontrolling interests	—		2	—	—	281	—	283
Net income (loss)	$	2,451	759	1,530	579	(197)	—	5,122
Quarter ended September 30, 2020
Net interest income	$	5,918	1,408	1,714	717	(268)	(110)	9,379
Noninterest income	3,228		818	1,593	2,573	1,921	(196)	9,937
Total revenue	9,146		2,226	3,307	3,290	1,653	(306)	19,316
Provision for credit losses	640		339	(121)	(10)	(79)	—	769
Noninterest expense	7,345		1,623	1,991	2,742	1,528	—	15,229
Income (loss) before income tax expense (benefit)	1,161		264	1,437	558	204	(306)	3,318
Income tax expense (benefit)	290		71	355	139	(632)	(306)	(83)
Net income before noncontrolling interests	871		193	1,082	419	836	—	3,401
Less: Net income from noncontrolling interests	—		1	—	—	184	—	185
Net income	$	871	192	1,082	419	652	—	3,216
Nine months ended September 30, 2021
Net interest income	$	16,940	3,687	5,428	1,904	(1,121)	(321)	26,517
Noninterest income	9,204		2,578	4,899	8,794	6,496	(852)	31,119
Total revenue	26,144		6,265	10,327	10,698	5,375	(1,173)	57,636
Provision for credit losses	(1,304)		(1,116)	(1,245)	(92)	54	—	(3,703)
Noninterest expense	18,522		4,469	5,435	8,836	3,371	—	40,633
Income (loss) before income tax expense (benefit)	8,926		2,912	6,137	1,954	1,950	(1,173)	20,706
Income tax expense (benefit)	2,233		727	1,531	491	58	(1,173)	3,867
Net income before noncontrolling interests	6,693		2,185	4,606	1,463	1,892	—	16,839
Less: Net income (loss) from noncontrolling interests	—		5	(2)	—	1,038	—	1,041
Net income	$	6,693	2,180	4,608	1,463	854	—	15,798
Nine months ended September 30, 2020
Net interest income	$	17,637	4,695	5,698	2,274	671	(374)	30,601
Noninterest income	7,766		2,227	5,076	7,492	3,224	(611)	25,174
Total revenue	25,403		6,922	10,774	9,766	3,895	(985)	55,775
Provision for credit losses	5,311		3,675	4,760	253	309	—	14,308
Noninterest expense	20,535		4,776	5,905	8,142	3,470	—	42,828
Income (loss) before income tax expense (benefit)	(443)		(1,529)	109	1,371	116	(985)	(1,361)
Income tax expense (benefit)	(155)		(371)	48	343	(611)	(985)	(1,731)
Net income (loss) before noncontrolling interests	(288)		(1,158)	61	1,028	727	—	370
Less: Net income from noncontrolling interests	—		3	—	—	81	—	84
Net income (loss)	$	(288)	(1,161)	61	1,028	646	—	286

(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.

(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 Sep 30,							Nine months ended Sep 30,
($ in millions, unless otherwise noted)	2021			2020	$ Change	% Change		2021			2020	$ Change	% Change
Income Statement
Net interest income	$	5,707		5,918	(211)	(4)	%	$	16,940		17,637	(697)	(4)	%
Noninterest income:
Deposit-related fees	799			708	91	13		2,192			2,162	30	1
Card fees	1,014			860	154	18		2,923			2,428	495	20
Mortgage banking	1,168			1,544	(376)	(24)		3,585			2,142	1,443	67
Other	116			116	—	—		504			1,034	(530)	(51)
Total noninterest income	3,097			3,228	(131)	(4)		9,204			7,766	1,438	19
Total revenue	8,804			9,146	(342)	(4)		26,144			25,403	741	3
Net charge-offs	302			369	(67)	(18)		1,031			1,543	(512)	(33)
Change in the allowance for credit losses	(820)			271	(1,091)	NM		(2,335)			3,768	(6,103)	NM
Provision for credit losses	(518)			640	(1,158)	NM		(1,304)			5,311	(6,615)	NM
Noninterest expense	6,053			7,345	(1,292)	(18)		18,522			20,535	(2,013)	(10)
Income (loss) before income tax expense (benefit)	3,269			1,161	2,108	182		8,926			(443)	9,369	NM
Income tax expense (benefit)	818			290	528	182		2,233			(155)	2,388	NM
Net income (loss)	$	2,451		871	1,580	181		$	6,693		(288)	6,981	NM
Revenue by Line of Business
Consumer and Small Business Banking	$	4,822		4,721	101	2		$	14,086		13,983	103	1
Consumer Lending:
Home Lending	2,012			2,527	(515)	(20)		6,311			5,880	431	7
Credit Card	1,399			1,345	54	4		4,108			3,916	192	5
Auto	445			404	41	10		1,263			1,172	91	8
Personal Lending	126			149	(23)	(15)		376			452	(76)	(17)
Total revenue	$	8,804		9,146	(342)	(4)		$	26,144		25,403	741	3

Selected Metrics
Consumer Banking and Lending:
Return on allocated capital (1)	19.7		%	6.6				18.1		%	(1.4)
Efficiency ratio (2)	69			80				71			81
Headcount (#) (period-end)	114,334			131,516		(13)		114,334			131,516		(13)
Retail bank branches (#)	4,796			5,229		(8)		4,796			5,229		(8)
Digital active customers (# in millions) (3)	32.7			32.0		2		32.7			32.0		2
Mobile active customers (# in millions) (3)	27.0			25.9		4		27.0			25.9		4

Consumer and Small Business Banking:
Deposit spread (4)	1.5		%	1.8				1.5		%	1.9
Debit card purchase volume ($ in billions) (5)	$	118.6		102.9	15.7	15		$	349.1		286.6	62.5	22
Debit card purchase transactions (# in millions) (5)	2,515			2,273		11		7,285			6,495		12

(continued on following page)


			Wells Fargo & Company			15

Earnings Performance (continued)

(continued from previous page)


	Quarter ended Sep 30,							Nine months ended Sep 30,
($ in millions, unless otherwise noted)	2021			2020	$ Change	% Change		2021			2020	$ Change	% Change
Home Lending:
Mortgage banking:
Net servicing income	$	109		331	(222)	(67)	%	$	(90)		(78)	(12)	(15)	%
Net gains on mortgage loan originations/sales	1,059			1,213	(154)	(13)		3,675			2,220	1,455	66
Total mortgage banking	$	1,168		1,544	(376)	(24)		$	3,585		2,142	1,443	67

Originations ($ in billions):
Retail	$	35.2		32.8	2.4	7		$	105.7		86.4	19.3	22
Correspondent	16.7			28.8	(12.1)	(42)		51.2			82.4	(31.2)	(38)
Total originations	$	51.9		61.6	(9.7)	(16)		$	156.9		168.8	(11.9)	(7)

% of originations held for sale (HFS)	60.6		%	78.1				67.3		%	73.2
Third-party mortgage loans serviced (period-end) ($ in billions) (6)	$	739.5		917.6	(178.1)	(19)		$	739.5		917.6	(178.1)	(19)
Mortgage servicing rights (MSR) carrying value (period-end)	6,862			6,355	507	8		6,862			6,355	507	8
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) (6)	0.93		%	0.69				0.93		%	0.69
Home lending loans 30+ days or more delinquency rate (7)(8)	0.45			0.56				0.45			0.56

Credit Card:
Point of sale (POS) volume ($ in billions)	$	26.5		21.3	5.2	24		$	73.1		58.7	14.4	25
New accounts (# in thousands) (9)	526			212		148		1,115			782		43
Credit card loans 30+ days or more delinquency rate (8)	1.40		%	1.76				1.40		%	1.76

Auto:
Auto originations ($ in billions)	$	9.2		5.4	3.8	70		$	24.5		17.5	7.0	40
Auto loans 30+ days or more delinquency rate (8)	1.46		%	1.67				1.46		%	1.67

Personal Lending:
New funded balances	$	731		323	408	126		$	1,709		1,305	404	31

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.

Third quarter 2021 vs. third quarter 2020

Revenue decreased driven by:

•lower mortgage banking noninterest income due to lower HFS origination volumes and margins, as well as ~~referrals~~lower income from MSR valuation changes and related hedges, partially offset by higher gains related to ~~Wholesale Banking~~the resecuritization of loans we purchased from GNMA loan securitization pools in 2020; and ~~WIM business partners. The Community Banking segment~~

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

partially offset by:

~~also includes the results of our Corporate Treasury activities~~•higher card fees reflecting higher interchange fees, net of ~~allocations~~rewards, driven by increased purchase and transaction volumes; and

•higher deposit-related fees driven by higher consumer transaction volumes compared with a third quarter 2020 that included reduced volumes due to the economic slowdown associated with the COVID-19 pandemic, and lower fee waivers and reversals compared with a third

quarter 2020 that included elevated fee waivers due to our actions to support customers during 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 lower branch staffing expense related to efficiency initiatives in ~~support of~~Consumer and Small Business Banking;

•lower occupancy expense related to lower cleaning fees, supplies, and equipment expenses compared with a third quarter 2020 that included higher expenses due to the ~~other operating segments~~COVID-19 pandemic; and ~~results of investments in our affiliated venture capital partnerships. Table 4a provides additional financial information for Community Banking.~~

•lower advertising and promotion expense.

~~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)~~16			~~Represents income on products and services for WIM customers served through Community Banking distribution channels and is eliminated in consolidation.~~

Wells Fargo & Company
~~(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~~First nine months of ~~$2.2 billion, down $998 million, or 31%, from third quarter 2016, and $8.2 billion for the~~2021 vs. first nine months of 2017, down $1.5 billion, or 15%, compared with the same period a year ago. Third quarter 2017 results included a $1 billion discrete litigation accrual (not tax deductible) for previously disclosed mortgage-related regulatory investigations. 2020

Revenue of $12.1 billion 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 predominantly increased driven by:

•higher mortgage banking noninterest income due to ~~lower mortgage banking revenue and deposit service charges, partially offset by~~a higher ~~net interest income, and~~production margin in our retail production channel, higher 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 other income driven by net hedge ineffectiveness accounting related to ~~our long-term debt hedging results, partially offset by higher net interest income~~the resecuritization of loans we purchased from GNMA loan securitization pools in 2020, and ~~gains on~~

~~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~~losses in the first nine months of ~~2017~~2020 driven by the impact of interest rate volatility on hedging activities and valuation losses due to the impact of the COVID-19 pandemic on market conditions; and

•higher card fees reflecting higher interchange fees, net of rewards, driven by increased purchase and transaction volumes;

partially offset by:

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

•lower other income driven by lower gains on the sales of residential mortgage loans which were reclassified to held for sale in 2019.

Provision for credit losses decreased ~~$8.6 billion, or 2%, from the first nine months of 2016. The decline in average loans was~~driven by an improving economic environment.

Noninterest expense decreased driven by:

•lower operating losses due to lower ~~loan origination in the consumer lending portfolio. Average deposits of $734.5 billion increased $26.5 billion, or 4%, from third quarter 2016~~expense for litigation accruals and ~~average deposits of $726.4 billion~~customer remediation accruals;

•lower personnel expense reflecting additional payments made in the first nine months of ~~2017 increased $28.1 billion, or 4%, from~~2020 to certain customer-facing and support employees and for back-up child care services, as well as lower branch staffing expense in the first nine months of ~~2016. Primary consumer checking customers (customers who actively use their checking account~~2021 related to efficiency initiatives in Consumer and Small Business Banking, partially offset by higher revenue-related compensation in Home Lending;

•lower advertising and promotion expense; and

•lower occupancy expense related to lower cleaning fees, supplies, and equipment expenses compared 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 thea first nine months of ~~2016. The increase from~~2020 that included higher expenses due to the COVID-19 pandemic;

partially offset by:

•higher charitable donations expense driven by the donation of PPP processing fees.

Table 5b: Consumer Banking and Lending – Balance Sheet


	Quarter ended Sep 30,						Nine months ended Sep 30,
(in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Loans by Line of Business:
Home Lending	$	217,011	270,036	(53,025)	(20)	%	$	227,663	269,692	(42,029)	(16)	%
Auto	53,043		49,770	3,273	7		51,121		49,625	1,496	3
Credit Card	35,407		35,965	(558)	(2)		34,942		37,415	(2,473)	(7)
Small Business	15,122		18,100	(2,978)	(16)		17,991		14,248	3,743	26
Personal Lending	4,974		5,912	(938)	(16)		5,026		6,354	(1,328)	(21)
Total loans	$	325,557	379,783	(54,226)	(14)		$	336,743	377,334	(40,591)	(11)
Total deposits	848,419		756,485	91,934	12		824,752		708,288	116,464	16
Allocated capital	48,000		48,000	—	—		48,000		48,000	—	—

Selected Balance Sheet Data (period-end)
Loans by Line of Business:
Home Lending	$	216,649	273,635	(56,986)	(21)		$	216,649	273,635	(56,986)	(21)
Auto	54,472		49,442	5,030	10		54,472		49,442	5,030	10
Credit Card	36,061		36,021	40	—		36,061		36,021	40	—
Small Business	13,686		17,993	(4,307)	(24)		13,686		17,993	(4,307)	(24)
Personal Lending	5,050		5,724	(674)	(12)		5,050		5,724	(674)	(12)
Total loans	$	325,918	382,815	(56,897)	(15)		$	325,918	382,815	(56,897)	(15)
Total deposits	858,424		759,425	98,999	13		858,424		759,425	98,999	13

Third quarter 2021 vs. third quarter ~~2016 was~~2020

Total loans (average) decreased as paydowns exceeded originations. Home Lending loan balances were also impacted by actions taken to temporarily curtail certain non-conforming residential mortgage originations and suspend home equity originations, as well as the resecuritization of loans we purchased from GNMA loan securitization pools. Small Business loan balances were also impacted by a decline in PPP loans.

Total deposits (average) increased 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) and higher personnel expenses mainly due to the~~

COVID-19 pandemic.

~~impact~~First nine months of annual salary increases and higher professional services driven by increased project spending, partially offset by higher expenses allocated to the Wholesale Banking and Wealth and Investment Management operating segments related to increased project and technology spending on regulatory and compliance related initiatives. The increase from the2021 vs. first nine months of ~~2016 was predominantly due~~2020

Total loans (average and period-end) decreased as paydowns exceeded originations. Home Lending loan balances were also impacted by actions taken to ~~higher personnel expenses, including deferred compensation plan expense (offset~~temporarily curtail certain non-conforming residential mortgage originations and suspend home equity originations. Small Business period-end loan balances were also impacted by a decline 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 lendingPPP loans.


			Wells Fargo & Company			17

Earnings Performance (continued)

~~portfolio, primarily~~

Total deposits (average and period-end) increased driven by higher levels of liquidity and savings for consumer ~~real estate, compared~~customers reflecting government stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the ~~same periods a year ago.~~COVID-19 pandemic.

~~Wholesale~~

Commercial 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, Commercial Real Estate, Corporate Banking, Financial Institutions Group, Government~~banking and ~~Institutional Banking, Insurance, Middle Market Banking, Principal Investments, Treasury Management, Wells Fargo Commercial Capital,~~credit products across multiple industry sectors and ~~Wells Fargo Securities.~~municipalities, secured lending and lease products, and treasury management. Table ~~4b provides~~5c and Table 5d provide additional ~~financial~~ information for ~~Wholesale~~Commercial Banking.

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

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 $ 4,353
4,062
7 % $ 12,779
11,729
9 %
Noninterest income:
Service charges on deposit accounts 539
549
(2 ) 1,662
1,667
—
Trust and investment fees:
Brokerage advisory, commissions and other fees 65
91
(29 ) 231
276
(16 )
Trust and investment management 130
117
11
390
351
11
Investment banking 478
444
8
1,407
1,265
11
Total trust and investment fees 673
652
3
2,028
1,892
7
Card fees 90
85
6
260
263
(1 )
Other fees 513
562
(9 ) 1,487
1,660
(10 )
Mortgage banking 110
186
(41 ) 343
367
(7 )
Insurance 224
291
(23 ) 736
1,002
(27 )
Net gains from trading activities 156
302
(48 ) 614
853
(28 )
Net gains (losses) on debt securities (5 ) (25 ) 80
(135 ) 52
NM
Net gains from equity investments 40
26
54
92
118
(22 )
Other income of the segment 392
457
(14 ) 1,208
1,786
(32 )
Total noninterest income 2,732
3,085
(11 ) 8,295
9,660
(14 )

Total revenue 7,085
7,147
(1 ) 21,074
21,389
(1 )

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


	Quarter ended Sep 30,							Nine months ended Sep 30,
($ in millions)	2021			2020	$ Change	% Change		2021			2020	$ Change	% Change
Income Statement
Net interest income	$	1,231		1,408	(177)	(13)	%	$	3,687		4,695	(1,008)	(21)	%
Noninterest income:
Deposit-related fees	323			309	14	5		965			908	57	6
Lending-related fees	132			140	(8)	(6)		403			393	10	3
Lease income	165			186	(21)	(11)		512			573	(61)	(11)
Other	225			183	42	23		698			353	345	98
Total noninterest income	845			818	27	3		2,578			2,227	351	16
Total revenue	2,076			2,226	(150)	(7)		6,265			6,922	(657)	(9)
Net charge-offs	16			219	(203)	(93)		108			509	(401)	(79)
Change in the allowance for credit losses	(351)			120	(471)	NM		(1,224)			3,166	(4,390)	NM
Provision for credit losses	(335)			339	(674)	NM		(1,116)			3,675	(4,791)	NM
Noninterest expense	1,396			1,623	(227)	(14)		4,469			4,776	(307)	(6)
Income (loss) before income tax expense (benefit)	1,015			264	751	284		2,912			(1,529)	4,441	290
Income tax expense (benefit)	254			71	183	258		727			(371)	1,098	296
Less: Net income from noncontrolling interests	2			1	1	100		5			3	2	67
Net income (loss)	$	759		192	567	295		$	2,180		(1,161)	3,341	288

Revenue by Line of Business
Middle Market Banking	$	1,165		1,196	(31)	(3)		$	3,475		3,918	(443)	(11)
Asset-Based Lending and Leasing	911			1,030	(119)	(12)		2,790			3,004	(214)	(7)
Total revenue	$	2,076		2,226	(150)	(7)		$	6,265		6,922	(657)	(9)

Revenue by Product
Lending and leasing	$	1,190		1,335	(145)	(11)		$	3,599		4,170	(571)	(14)
Treasury management and payments	713			749	(36)	(5)		2,114			2,472	(358)	(14)
Other	173			142	31	22		552			280	272	97
Total revenue	$	2,076		2,226	(150)	(7)		$	6,265		6,922	(657)	(9)

Selected Metrics
Return on allocated capital	14.5		%	2.9				14.0		%	(9.0)
Efficiency ratio	67			73				71			69
Headcount (#) (period-end)	18,638			21,900		(15)		18,638			21,900		(15)

NM – Not meaningful

~~Wholesale Banking reported net income of $2.0 billion in~~Third quarter 2021 vs. third quarter ~~2017, down $1 million~~2020

Revenue decreased driven by:

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

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

partially offset by:

•higher income from ~~third quarter 2016. In~~renewable energy investments; and

•higher deposit-related fees due to 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;

•lower occupancy expense; and

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


18			Wells Fargo & Company

First nine months of 2021 vs. first nine months of ~~2017,~~2020

Revenue decreased driven by:

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

•lower lease income reflecting a reduction in the size of ~~$6.5 billion~~the operating lease asset portfolio;

partially offset by:

•higher other noninterest income due to gains on equity securities and higher income from renewable energy investments; and

•higher deposit-related fees due to higher treasury management fees, driven by a lower earnings credit rate due to the 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 Sep 30,						Nine months ended Sep 30,
(in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial	$	118,039	134,531	(16,492)	(12)	%	$	118,840	149,220	(30,380)	(20)	%
Commercial real estate	46,576		52,017	(5,441)	(10)		47,444		52,818	(5,374)	(10)
Lease financing and other	14,007		15,345	(1,338)	(9)		13,812		16,293	(2,481)	(15)
Total loans	$	178,622	201,893	(23,271)	(12)		$	180,096	218,331	(38,235)	(18)
Loans by Line of Business:
Middle Market Banking	$	101,523	110,289	(8,766)	(8)		$	102,642	116,258	(13,616)	(12)
Asset-Based Lending and Leasing	77,099		91,604	(14,505)	(16)		77,454		102,073	(24,619)	(24)
Total loans	$	178,622	201,893	(23,271)	(12)		$	180,096	218,331	(38,235)	(18)
Total deposits	199,226		178,997	20,229	11		193,761		176,959	16,802	9
Allocated capital	19,500		19,500	—	—		19,500		19,500	—	—

Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial	$	120,203	128,270	(8,067)	(6)		$	120,203	128,270	(8,067)	(6)
Commercial real estate	46,318		51,297	(4,979)	(10)		46,318		51,297	(4,979)	(10)
Lease financing and other	14,018		15,180	(1,162)	(8)		14,018		15,180	(1,162)	(8)
Total loans	$	180,539	194,747	(14,208)	(7)		$	180,539	194,747	(14,208)	(7)
Loans by Line of Business:
Middle Market Banking	$	102,279	105,851	(3,572)	(3)		$	102,279	105,851	(3,572)	(3)
Asset-Based Lending and Leasing	78,260		88,896	(10,636)	(12)		78,260		88,896	(10,636)	(12)
Total loans	$	180,539	194,747	(14,208)	(7)		$	180,539	194,747	(14,208)	(7)
Total deposits	204,853		180,948	23,905	13		204,853		180,948	23,905	13

Third quarter 2021 vs. third quarter 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 capital markets.

Total deposits (average) increased ~~$508 million, or 8%, from~~due to higher levels of liquidity and lower investment spending reflecting government stimulus programs and continued economic uncertainty associated with the ~~same period a year ago. Net income results for the~~COVID-19 pandemic.

First nine months of 2021 vs. first nine months of ~~2017 included~~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 ~~tax benefit resulting from our agreement~~suite of capital markets, banking, and financial products and services to ~~sell Wells Fargo Insurance Services USA~~corporate, commercial real estate, government and ~~related businesses. Revenue decreased $62 million, or 1%, from~~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 Sep 30,							Nine months ended Sep 30,
($ in millions)	2021			2020	$ Change	% Change		2021			2020	$ Change	% Change
Income Statement
Net interest income	$	1,866		1,714	152	9	%	$	5,428		5,698	(270)	(5)	%
Noninterest income:
Deposit-related fees	286			272	14	5		829			790	39	5
Lending-related fees	196			171	25	15		569			506	63	12
Investment banking fees	536			428	108	25		1,727			1,493	234	16
Net gains from trading activities	85			374	(289)	(77)		446			1,218	(772)	(63)
Other	416			348	68	20		1,328			1,069	259	24
Total noninterest income	1,519			1,593	(74)	(5)		4,899			5,076	(177)	(3)
Total revenue	3,385			3,307	78	2		10,327			10,774	(447)	(4)
Net charge-offs	(48)			117	(165)	NM		(30)			565	(595)	NM
Change in the allowance for credit losses	(412)			(238)	(174)	(73)		(1,215)			4,195	(5,410)	NM
Provision for credit losses	(460)			(121)	(339)	NM		(1,245)			4,760	(6,005)	NM
Noninterest expense	1,797			1,991	(194)	(10)		5,435			5,905	(470)	(8)
Income before income tax expense	2,048			1,437	611	43		6,137			109	6,028	NM
Income tax expense	518			355	163	46		1,531			48	1,483	NM
Less: Net loss from noncontrolling interests	—			—	—	NM		(2)			—	(2)	NM
Net income	$	1,530		1,082	448	41		$	4,608		61	4,547	NM

Revenue by Line of Business
Banking:
Lending	$	502		422	80	19		$	1,429		1,343	86	6
Treasury Management and Payments	372			395	(23)	(6)		1,095			1,296	(201)	(16)
Investment Banking	367			295	72	24		1,190			1,100	90	8
Total Banking	1,241			1,112	129	12		3,714			3,739	(25)	(1)
Commercial Real Estate	942			855	87	10		2,868			2,595	273	11
Markets:
Fixed Income, Currencies, and Commodities (FICC)	884			1,005	(121)	(12)		2,916			3,425	(509)	(15)
Equities	234			312	(78)	(25)		692			1,010	(318)	(31)
Credit Adjustment (CVA/DVA) and Other	58			62	(4)	(6)		78			93	(15)	(16)
Total Markets	1,176			1,379	(203)	(15)		3,686			4,528	(842)	(19)
Other	26			(39)	65	167		59			(88)	147	167
Total revenue	$	3,385		3,307	78	2		$	10,327		10,774	(447)	(4)

Selected Metrics
Return on allocated capital	16.9		%	11.6				17.2		%	(0.8)
Efficiency ratio	53			60				53			55
Headcount (#) (period-end)	8,459			8,205		3		8,459			8,205		3

NM – Not meaningful

Third quarter 2021 vs. third quarter ~~2016~~2020

Revenue increased driven by:

•higher net interest income reflecting higher loan balances and ~~$315 million, or 1%,~~higher trading assets, partially offset by lower deposit balances and margins;

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

•higher other noninterest income due to higher gains from equity securities and higher mortgage banking income

related to higher servicing income and higher gains on the sales of mortgage loans;

partially offset by:

•lower net gains from trading activities due to lower gains on equity products compared with a third quarter 2020 that reflected higher volumes and customer activity due to volatility in the equities markets, lower client trading activity for credit products due to widening credit spreads, and lower asset-backed finance client trading activity due to a decline in demand for CMBS and RMBS products.


20			Wells Fargo & Company

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

Noninterest expense decreased driven by:

•lower personnel expense driven by lower incentive compensation; and

•lower expenses allocated from enterprise functions reflecting lower spending due to efficiency initiatives.

First nine months of 2021 vs. first nine months of ~~2016 as an increase in~~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 ~~was more than~~reflecting the lower interest rate environment, lower deposit balances, and lower average 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 and gains on the sales of mortgage loans, as well as higher income from low income housing investments; and

•higher lending-related fees reflecting increased loan commitment fees.

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

Noninterest expense decreased driven by:

•lower ~~noninterest income. Net interest income increased $291 million, or 7%,~~operating losses due to lower expense for litigation accruals and customer remediation accruals;

•lower expenses allocated from 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 – Balance Sheet


	Quarter ended Sep 30,						Nine months ended Sep 30,
(in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial	$	170,486	165,445	5,041	3	%	$	166,647	178,140	(11,493)	(6)	%
Commercial real estate	86,809		84,408	2,401	3		85,349		82,382	2,967	4
Total loans	$	257,295	249,853	7,442	3		$	251,996	260,522	(8,526)	(3)
Loans by Line of Business:
Banking	$	95,911	88,936	6,975	8		$	91,130	97,224	(6,094)	(6)
Commercial Real Estate	110,683		109,482	1,201	1		109,073		108,428	645	1
Markets	50,701		51,435	(734)	(1)		51,793		54,870	(3,077)	(6)
Total loans	$	257,295	249,853	7,442	3		$	251,996	260,522	(8,526)	(3)
Trading-related assets:
Trading account securities	$	112,148	100,193	11,955	12		$	107,771	110,082	(2,311)	(2)
Reverse repurchase agreements/securities borrowed	56,758		68,818	(12,060)	(18)		60,903		76,069	(15,166)	(20)
Derivative assets	25,191		23,640	1,551	7		25,668		21,443	4,225	20
Total trading-related assets	$	194,097	192,651	1,446	1		$	194,342	207,594	(13,252)	(6)
Total assets	524,124		503,627	20,497	4		516,401		530,082	(13,681)	(3)
Total deposits	189,424		226,129	(36,705)	(16)		191,560		243,913	(52,353)	(21)
Allocated capital	34,000		34,000	—	—		34,000		34,000	—	—

Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial	$	177,002	157,193	19,809	13		$	177,002	157,193	19,809	13
Commercial real estate	86,955		83,920	3,035	4		86,955		83,920	3,035	4
Total loans	$	263,957	241,113	22,844	9		$	263,957	241,113	22,844	9
Loans by Line of Business:
Banking	$	99,683	83,128	16,555	20		$	99,683	83,128	16,555	20
Commercial Real Estate	112,050		108,240	3,810	4		112,050		108,240	3,810	4
Markets	52,224		49,745	2,479	5		52,224		49,745	2,479	5
Total loans	$	263,957	241,113	22,844	9		$	263,957	241,113	22,844	9
Trading-related assets:
Trading account securities	$	114,187	100,157	14,030	14		$	114,187	100,157	14,030	14
Reverse repurchase agreements/securities borrowed	55,123		61,027	(5,904)	(10)		55,123		61,027	(5,904)	(10)
Derivative assets	27,096		23,844	3,252	14		27,096		23,844	3,252	14
Total trading-related assets	$	196,406	185,028	11,378	6		$	196,406	185,028	11,378	6
Total assets	535,385		490,373	45,012	9		535,385		490,373	45,012	9
Total deposits	191,786		212,532	(20,746)	(10)		191,786		212,532	(20,746)	(10)

Third quarter 2021 vs. third quarter ~~2016 and $1.1 billion, or 9%, from~~2020

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

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

Total assets (period-end) increased reflecting higher loan balances 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 lower~~ customer ~~accommodation trading, mortgage banking fees, and insurance income. Noninterest income decreased $1.4 billion, or 14%, from the first nine months~~usage of ~~2016 largely~~lines due to increased corporate spending, and higher trading-related asset balances due to increased customer activity.

Total deposits (average and period-end) decreased reflecting continued actions to manage under the first quarter 2016 sale of our crop insurance business, which resulted in lower insurance and gain on sale income, and the second quarter 2016 gain on the sale of our health benefits services business, as well as lower gains on debt securities and customer accommodation trading. The decrease in noninterest income from the first nine months of 2016 was partially offset by higher investment banking fees as well as higher lease incomeasset cap.

~~Earnings Performance (continued~~)


22			Wells Fargo & Company

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 was 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. Noninterest expense increased $128 million, or 3%, from third quarter 2016 and $427 million, or 4%, from the first nine months of 2016, due to higher expenses allocated from Community Banking related to increased project and technology spending on regulatory and compliance related initiatives, and higher expense related to growth initiatives. The provision for credit losses decreased $88 million from third

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

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 Sep 30,							Nine months ended Sep 30,
($ in millions, unless otherwise noted)	2021			2020	$ Change	% Change		2021			2020	$ Change	% Change
Income Statement
Net interest income	$	637		717	(80)	(11)	%	$	1,904		2,274	(370)	(16)	%
Noninterest income:
Investment advisory and other asset-based fees	2,457			2,043	414	20		7,145			5,951	1,194	20
Commissions and brokerage services fees	458			497	(39)	(8)		1,526			1,560	(34)	(2)
Other	66			33	33	100		123			(19)	142	747
Total noninterest income	2,981			2,573	408	16		8,794			7,492	1,302	17
Total revenue	3,618			3,290	328	10		10,698			9,766	932	10
Net charge-offs	(3)			(2)	(1)	(50)		(9)			—	(9)	NM
Change in the allowance for credit losses	(70)			(8)	(62)	NM		(83)			253	(336)	NM
Provision for credit losses	(73)			(10)	(63)	NM		(92)			253	(345)	NM
Noninterest expense	2,917			2,742	175	6		8,836			8,142	694	9
Income before income tax expense	774			558	216	39		1,954			1,371	583	43
Income tax expense	195			139	56	40		491			343	148	43

Net income	$	579		419	160	38		$	1,463		1,028	435	42

Selected Metrics
Return on allocated capital	25.7		%	18.4				21.8		%	15.1
Efficiency ratio	81			83				83			83
Headcount (#) (period-end)	26,112			28,996		(10)		26,112			28,996		(10)
Advisory assets ($ in billions)	$	920		779	141	18		$	920		779	141	18
Other brokerage assets and deposits ($ in billions)	1,171			1,076	95	9		1,171			1,076	95	9
Total client assets ($ in billions)	$	2,091		1,855	236	13		$	2,091		1,855	236	13
Annualized revenue per advisor ($ in thousands) (1)	1,141			940	201	21		1,094			916	178	19
Total financial and wealth advisors (#) (period-end)	12,552			13,793		(9)		12,552			13,793		(9)

Selected Balance Sheet Data (average)
Total loans	$	82,785		79,001	3,784	5		$	81,810		78,327	3,483	4
Total deposits	176,570			169,441	7,129	4		175,087			160,012	15,075	9
Allocated capital	8,750			8,750	—	—		8,750			8,750	—	—

Selected Balance Sheet Data (period-end)
Total loans	$	82,824		79,472	3,352	4		$	82,824		79,472	3,352	4
Total deposits	177,809			168,132	9,677	6		177,809			168,132	9,677	6

NM – Not meaningful

(1)Represents annualized segment total revenue divided by average total financial and wealth advisors for the period.

Third quarter 2021 vs. third quarter 2020

Revenue increased driven by:

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

partially offset by:

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

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

Noninterest expense increased due to higher personnel expense driven by higher revenue-related compensation.

Total loans (average) increased primarily due to higher securities-based lending balances.


~~(1)~~			~~Includes syndication and underwriting fees paid to~~ Wells Fargo ~~Securities which are offset in our Wholesale Banking segment.~~& Company			23

Earnings Performance (continued)

~~WIM reported net income~~First nine months of ~~$710 million in third quarter 2017, up $33 million from third quarter 2016. Net income for the~~2021 vs. first nine months of ~~2017 was $2.0 billion, up $242 million, or 14%, compared with the same period a year ago.~~ 2020

Revenue ~~was up $147 million, or 4%, from third quarter 2016,~~ increased driven by:

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

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

partially offset by:

•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~~revenue-related compensation and

higher deferred compensation plan investments (offset in employee benefits expense), partially offset by lower brokerage transaction revenue. Asset-based fees were up predominantly due to higher brokerage advisory account client assets driven by higher market valuationsexpense; and ~~positive net flows. Average loans~~

•the reversal of ~~$72.4 billion in third quarter 2017 increased 6% from third quarter 2016. Average loans~~a software licensing liability accrual in the first nine months of ~~2017 increased 8% from the same period a year ago. Average loan growth was~~2020;

partially offset by:

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

Total deposits (average and period-end) increased primarily due to growth in ~~non-conforming mortgage loans. Average deposits~~customer balances 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~~The Private Bank and ~~first nine months of 2016, due~~Wells Fargo Advisors.

WIM Advisory Assets In addition to higher expenses allocated from Community Banking related to increased project and technology spending on regulatory and compliance related initiatives, and higher broker commissions mainly due to higher brokerage revenue. The increase in noninterest expense from the first nine months of 2016 was also affected by higher deferred compensation plan expense (offset in trading revenue). Total provision for credit losses decreased $5 million from third quarter 2016 driven by lower net charge-offs, and increased $10 million from the first nine months of 2016 driven by higher

~~net charge-offs.~~

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

~~Retail Brokerage Client Assets~~ ~~Brokerage advisory, commissions and other fees are received for providing full-service and discount brokerage services predominantly 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 ~~the~~these assets. Table 5h presents advisory assets ~~which vary across the account types based on the distinct services provided,~~

~~and are affected~~activity by ~~investment performance as well as asset inflows and outflows. For~~WIM line of business for the third quarter and first nine months 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 third 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						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, 2021
Client-directed (4)	$	201.3	9.4	(11.7)	(2.1)	196.9	$	186.3	31.1	(33.7)	13.2	196.9
Financial advisor-directed (5)	238.0		11.0	(9.0)	(0.7)	239.3	211.0		35.6	(28.9)	21.6	239.3
Separate accounts (6)	192.9		7.5	(8.7)	(0.8)	190.9	174.6		24.0	(23.4)	15.7	190.9
Mutual fund advisory (7)	100.1		3.9	(4.0)	(0.8)	99.2	91.4		12.2	(11.1)	6.7	99.2
Total Wells Fargo Advisors	$	732.3	31.8	(33.4)	(4.4)	726.3	$	663.3	102.9	(97.1)	57.2	726.3
The Private Bank (8)	198.4		9.6	(13.1)	(1.3)	193.6	189.4		27.8	(36.7)	13.1	193.6
Total WIM advisory assets	$	930.7	41.4	(46.5)	(5.7)	919.9	$	852.7	130.7	(133.8)	70.3	919.9
September 30, 2020
Client directed (4)	$	162.2	8.8	(10.2)	9.5	170.3	$	169.4	26.2	(27.6)	2.3	170.3
Financial advisor directed (5)	176.8		9.9	(9.0)	11.6	189.3	176.3		29.0	(24.2)	8.2	189.3
Separate accounts (6)	151.5		5.9	(6.0)	8.0	159.4	160.1		17.7	(20.3)	1.9	159.4
Mutual fund advisory (7)	78.9		2.9	(3.3)	4.2	82.7	83.7		8.3	(10.5)	1.2	82.7
Total Wells Fargo Advisors	$	569.4	27.5	(28.5)	33.3	601.7	$	589.5	81.2	(82.6)	13.6	601.7
The Private Bank (8)	173.2		7.0	(10.8)	7.7	177.1	188.0		22.7	(33.6)	—	177.1
Total WIM advisory assets	$	742.6	34.5	(39.3)	41.0	778.8	$	777.5	103.9	(116.2)	13.6	778.8

(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~~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 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.

(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.


24			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. Table 5i,

Table 5j, and Table 5k provide additional information for Corporate.

Table 5i:Corporate – Income Statement and Selected Metrics


	Quarter ended Sep 30,						Nine months ended Sep 30,
($ in millions, unless otherwise noted)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Income Statement
Net interest income	$	(427)	(268)	(159)	(59)	%	$	(1,121)	671	(1,792)	NM
Noninterest income	1,752		1,921	(169)	(9)		6,496		3,224	3,272	101	%
Total revenue	1,325		1,653	(328)	(20)		5,375		3,895	1,480	38
Net charge-offs	(10)		28	(38)	NM		59		169	(110)	(65)
Change in the allowance for credit losses	1		(107)	108	101		(5)		140	(145)	NM
Provision for credit losses	(9)		(79)	70	89		54		309	(255)	(83)
Noninterest expense	1,140		1,528	(388)	(25)		3,371		3,470	(99)	(3)
Income before income tax expense (benefit)	194		204	(10)	(5)		1,950		116	1,834	NM
Income tax expense (benefit)	110		(632)	742	117		58		(611)	669	109
Less: Net income from noncontrolling interests (1)	281		184	97	53		1,038		81	957	NM
Net income (loss)	$	(197)	652	(849)	NM		$	854	646	208	32

Selected Metrics
Headcount (#) (period-end) (2)	86,328		84,314		2		86,328		84,314		2
Wells Fargo Asset Management assets under management ($ in billions)	$	588	607	(19)	(3)		$	588	607	(19)	(3)

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.

Third quarter 2021 vs. third quarter 2020

Revenue decreased driven by:

•lower equity method investment income compared with a third quarter 2020 that included $228 million of equity method investment income related to a change in the accounting measurement model for certain nonmarketable equity securities from our affiliated venture capital business;

•lower net interest income driven by lower loan balances; and

•lower gains on debt securities in our investment portfolio;

partially offset by:

•higher realized and unrealized gains on securities in our affiliated venture capital and private equity businesses.

Noninterest expense decreased due to:

•lower restructuring charges;

partially offset by:

•higher incentive compensation expense; and

•higher operating losses driven by a $250 million operating loss associated with the September 2021 OCC enforcement action.

First nine months of 2021 vs. first nine months of ~~2017~~2020

Revenue increased driven by:

•higher unrealized gains on nonmarketable equity securities in our affiliated venture capital and ~~2016.~~private equity businesses, higher realized gains on the sales of equity securities, as well as impairment of 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 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, unfavorable hedge ineffectiveness accounting results, and lower loan balances;

•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 previously sold; and

•lower gains on debt securities in our investment portfolio.

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

Noninterest expense decreased due to:

•lower restructuring charges;

partially offset by:

•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 our student loan portfolio.

Corporate includes our rail car leasing business, which had long-lived operating lease assets (as a lessor) of $5.4 billion, which was net of $1.9 billion of accumulated depreciation, as of

~~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)~~			~~Inflows include new advisory account assets, contributions, dividends and interest.~~Wells Fargo & Company			25

Earnings Performance (continued)

September 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 September 30, 2021, were rail cars used for the transportation of agricultural grain, coal, and cement/sand products. Impairment 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 $565 billion, respectively, at September 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 February 2022.

Table 5j: Corporate – Balance Sheet


	Quarter ended Sep 30,						Nine months ended Sep 30,
(in millions)	2021		2020	$ Change	% Change		2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Cash, cash equivalents, and restricted cash	$	250,414	215,342	35,072	16	%	$	242,853	170,682	72,171	42	%
Available-for-sale debt securities	172,035		211,180	(39,145)	(19)		185,847		226,356	(40,509)	(18)
Held-to-maturity debt securities	260,167		175,748	84,419	48		238,591		166,588	72,003	43
Equity securities	13,254		12,034	1,220	10		11,894		13,198	(1,304)	(10)
Total loans	9,765		21,178	(11,413)	(54)		10,021		21,404	(11,383)	(53)
Total assets	762,067		702,662	59,405	8		748,236		662,709	85,527	13
Total deposits	37,302		67,976	(30,674)	(45)		41,796		85,466	(43,670)	(51)

Selected Balance Sheet Data (period-end)
Cash, cash equivalents, and restricted cash	$	241,423	220,026	21,397	10		$	241,423	220,026	21,397	10
Available-for-sale debt securities	173,237		208,543	(35,306)	(17)		173,237		208,543	(35,306)	(17)
Held-to-maturity debt securities	261,583		181,744	79,839	44		261,583		181,744	79,839	44
Equity securities	14,022		11,010	3,012	27		14,022		11,010	3,012	27
Total loans	9,589		21,935	(12,346)	(56)		9,589		21,935	(12,346)	(56)
Total assets	751,155		696,424	54,731	8		751,155		696,424	54,731	8
Total deposits	37,507		62,178	(24,671)	(40)		37,507		62,178	(24,671)	(40)

Third quarter 2021 vs. third 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;

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

•an increase in equity securities related to our affiliated venture capital business;

partially offset by:

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

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

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

First nine months of 2021 vs. first nine months 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;

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

•in increase in period-end equity securities related to our affiliated venture capital business;

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 affiliated venture capital business; and

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

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


~~(2)~~26			~~Outflows include closed advisory account assets, withdrawals, and client management fees.~~

Wells Fargo & Company
~~(3)~~	~~Market impact reflects gains and losses on portfolio investments.~~


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


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


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


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

~~Earnings Performance (continued~~)

~~Trust and Investment Client~~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 quarter and first nine months 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						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, 2021

Money market funds (4)	$	199.7	—	(6.0)	—	193.7	$	197.4	—	(3.7)	—	193.7
Other assets managed	403.8		18.3	(26.1)	(2.2)	393.8	405.6		64.2	(84.9)	8.9	393.8
Total WFAM assets under management	$	603.5	18.3	(32.1)	(2.2)	587.5	$	603.0	64.2	(88.6)	8.9	587.5
September 30, 2020

Money market funds (4)	$	201.9	19.2	—	—	221.1	$	130.6	90.5	—	—	221.1
Other assets managed	376.4		23.2	(24.1)	10.3	385.8	378.2		76.3	(79.2)	10.5	385.8
Total WFAM assets under management	$	578.3	42.4	(24.1)	10.3	606.9	$	508.8	166.8	(79.2)	10.5	606.9

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

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

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

(4)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 30, ~~2017,~~2021, our assets totaled ~~$1.93~~$1.95 trillion, up ~~$4.8~~$2.0 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 Securities~~

~~Table 5:Investment Securities – Summary~~

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

Net
unrealized
gain (loss)

Fair value
Amortized Cost

Net
unrealized
gain (loss)

Fair value
Available-for-sale securities:

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


~~(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.~~

Table 6:Available-for-Sale and Held-to-Maturity Debt Securities


	September 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)	182,699		2,858	185,557	5.1	215,533	4,859	220,392	4.5
Held-to-maturity (3)	262,493		1,529	264,022	6.4	205,720	6,587	212,307	4.5
Total	$	445,192	4,387	449,579	n/a	421,253	11,446	432,699	n/a

(1)Represents amortized cost of the securities, net of the allowance for credit losses of $21 million and $28 million related to available-for-sale debt securities and $75 million and $41 million related to held-to-maturity debt securities at September 30, 2021, and December 31, 2020.

(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~~The amortized cost, net of the allowance for credit losses, of AFS and HTM debt 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~~increased from December 31, 2020. Purchases of AFS debt securities were partially offset by runoff and sales. Purchases of HTM debt securities, including securitizations of LHFS,were partially offset by runoff. In addition, we transferred $41.3 billion of AFS debt securities to HTM debt securities in the first nine months of ~~2017, $107 million related~~2021 due to actions taken to reposition the overall portfolio for capital management purposes.

The total net unrealized gains on AFS and HTM debt securities $5 million related to marketable equity securities, which are included in available-for-sale securities, and $181 million related to nonmarketable equity investments, which are included in other assets. OTTI write-downs recognized in earnings related to oil and gas investments totaled $77 million in the first nine months of 2017, of which $24 million related to investment securities and $53 million related to nonmarketable equity investments. 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.decreased from December 31, 2020, driven by higher interest rates.

At September 30, ~~2017, investment~~2021, 96% 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~~

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

The weighted-average expected maturity of 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 in interest rates on the fair value and the expected remaining maturity of the MBS available-for-sale portfolio are shown in Table 6.

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

(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.~~grades. See Note ~~4 (Investment~~3 (Available-for-Sale and 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 increased compared with December 31, 2020, predominantly due to an increase in the commercial and industrial loan portfolio, driven by higher loan demand resulting in increased originations and loan draws, partially offset by paydowns and PPP loan forgiveness. Consumer loans decreased ~~$15.7 billion~~ from December 31, ~~2016, reflecting~~2020, predominantly driven by a decrease in the residential mortgage – first lien portfolio due to loan paydowns as a ~~continued decline in~~

~~junior~~result of the low interest rate environment and the transfer of $13.5 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.~~$51.3 billion.

Table 7:Loan Portfolios


(in millions)	September 30, 2017			December 31, 2016	(in millions)	September 30, 2021		December 31, 2020
Commercial	$	500,150		506,536	Commercial	$	484,937	478,417
Consumer	451,723			461,068	Consumer	377,890		409,220
Total loans	$	951,873		967,604	Total loans	$	862,827	887,637
Change from prior year-end	$	(15,731	)	51,045	Change from prior year-end	$	(24,810)	(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)	Sep 30, 2021		% of total deposits		Dec 31, 2020		% of total deposits		% Change
Noninterest-bearing demand deposits	$	529,051	36	%	$	467,068	33	%	13
Interest-bearing demand deposits	454,170		31		447,446		32		2
Savings deposits	426,535		29		404,935		29		5
Time deposits	32,291		2		49,775		4		(35)
Interest-bearing deposits in non-U.S. offices	28,332		2		35,157		2		(19)
Total deposits	$	1,470,379	100	%	$	1,404,381	100	%	5

($ 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)	Sep 30, 2021		Dec 31, 2020
Commercial:				Commercial:
Commercial and industrial	$	327,944	330,840	Commercial and industrial	$	326,425	318,805
Real estate mortgage	128,475		132,491	Real estate mortgage	121,985		121,720
Real estate construction	24,520		23,916	Real estate construction	21,129		21,805
Lease financing	19,211		19,289	Lease financing	15,398		16,087
Total commercial	500,150		506,536	Total commercial	484,937		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	242,935		276,674
Residential mortgage – junior lien				Residential mortgage – junior lien	18,026		23,286
Credit card	36,249		36,700	Credit card	36,061		36,664
Automobile	55,455		62,286
Other revolving credit and installment	38,694		40,266
Auto				Auto	53,827		48,187
Other consumer				Other consumer	27,041		24,409
Total consumer	451,723		461,068	Total consumer	377,890		409,220
Total loans	$	951,873	967,604	Total loans	$	862,827	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 ~~continued~~ in third quarter ~~2017, as our net charge-off rate remained low at 0.30% (annualized) of average total loans. We~~2021 reflected 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~~$7.0 billion at September 30, ~~2017~~,2021, down from ~~$10.4~~$8.7 billion at December 31, ~~2016~~.2020. Commercial nonaccrual loans ~~declined~~decreased to ~~$3.1~~$3.0 billion at September 30, ~~2017~~,2021, compared with ~~$4.1~~$4.8 billion at December 31, ~~2016~~,2020, and consumer nonaccrual loans ~~declined~~increased slightly to ~~$5.5~~$4.0 billion at September 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%~~0.82% of total loans at September 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%~~0.03% and ~~0.53%~~0.23% in the third quarter and ~~0.09%~~0.07% and ~~0.54%~~0.31% in the first nine months of ~~2017~~,2021, respectively, compared with ~~0.17%~~0.29% and ~~0.51%~~0.30% in the third quarter and ~~0.22%~~0.33% and ~~0.52%~~0.44% in the first nine months of ~~2016~~.

2020.

•Loans that are not government insured/guaranteed and 90 days or more past due and still accruing were~~$38~~ $121 million and ~~$923~~$394 million in our commercial and consumer portfolios, respectively, at September 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~~(1.4) billion and $~~1.9~~(3.7) billion in the third quarter and first nine months of ~~2017~~,2021, respectively, compared with ~~$805~~$751 million and $~~3.0~~14.1 billion for the same periods a year ago.

•The ~~allowance~~ACL for ~~credit losses totaled~~ ~~$12.1~~loans decreased to $14.7 billion,, or ~~1.27%~~1.70% of total loans, at September 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 nine months 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~~September 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 September 30, 2017, was $9.2 billion.

A nonaccretable difference is established for PCI loans to absorb losses expected on the contractual amounts of those loans in excess of the fair value recorded at the date of acquisition. Amounts absorbed by the nonaccretable difference do not affect the income statement or the allowance for credit losses. Since December 31, 2008, we have released $13.6 billion in nonaccretable difference, including $11.6 billion transferred from the nonaccretable difference to the accretable yield due to decreases in our initial estimate of loss on contractual amounts, and $2.0 billion released to income through loan resolutions. Also, we have provided $1.7 billion for losses on certain PCI loans or pools of PCI loans that have had credit-related decreases to cash flows expected to be collected. The net result is an $11.9 billion reduction from December 31, 2008, through September 30, 2017, in our initial projected losses of $41.0 billion on all PCI loans acquired in the Wachovia acquisition.a higher risk-weighting normally required with TDR classification. At September 30, ~~2017, $454 million~~2021, substantially all residential mortgage loans that were in ~~nonaccretable difference remained to absorb losses on PCI loans.~~

a deferral period, excluding those that were government insured/guaranteed, met the 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 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 September 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 Sep 30, 2021		% of loan class (1)		% current at Sep 30, 2021 after exit from deferral period (2)
Consumer:
Residential mortgage – first lien (3)	$	5,042	2	%	93
Residential mortgage – junior lien (3)	789		4		88
All other consumer (4)	65		*		92
Subtotal	5,896		2
Residential mortgage – first lien (government insured/guaranteed) (5)	7,265		3
Total consumer	$	13,161

*Less than 1%.

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

(3)For residential mortgage loans still in active COVID-related accommodation programs as of September 30, 2021, 97% of first lien and 89% 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~~We had $13.5 billion of 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, $20.0 billion of the commercial and industrial loan and lease financing portfolio was internally classified as criticized in accordance with regulatory guidance at September 30, ~~2017,~~2021, compared with ~~$24.0~~$19.3 billion at December 31, ~~2016.~~2020. The ~~decrease in criticized loans, which also includes the decrease in nonaccrual loans,~~change was ~~primarily due to improvement~~driven by decreases in the oil, gas and ~~gas portfolio.~~pipelines, retail, transportation services, and entertainment and recreation industries, as these industries continue to recover from the effects of the COVID-19 pandemic.

~~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 increased at September 30, 2021, compared with December 31, 2020, driven by higher loan demand resulting

in increased originations and loan draws, partially offset by paydowns and PPP loan forgiveness. 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


	September 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	$	140	134,060	16	%	$	227,615	$	160	117,726	13	%	$	206,999
Technology, telecom and media	75		21,226	2		60,607		144		23,061	3		56,500
Real estate and construction	87		20,900	2		51,882		133		23,113	3		51,526
Equipment, machinery and parts manufacturing	29		17,503	2		43,111		81		18,158	2		41,332
Retail	36		17,181	2		40,071		94		17,393	2		41,669
Materials and commodities	40		13,225	2		35,454		39		12,071	1		33,879
Food and beverage manufacturing	7		12,637	1		30,898		17		12,401	1		28,908
Health care and pharmaceuticals	28		12,821	1		29,960		145		15,322	2		32,154
Oil, gas and pipelines	280		8,725	1		28,988		953		10,471	1		30,055
Auto related	56		9,290	1		24,881		79		11,817	1		25,034
Commercial services	77		9,537	1		24,328		107		10,284	1		24,442
Utilities	67		7,025	*		21,972		2		5,031	*		18,564
Diversified or miscellaneous	4		6,792	*		18,608		7		5,437	*		14,717
Insurance and fiduciaries	1		4,071	*		18,105		2		3,297	*		14,334
Entertainment and recreation	26		8,451	*		16,764		263		9,884	1		17,551
Transportation services	431		8,319	*		15,951		573		9,236	1		15,531
Banks	—		15,444	2		15,815		—		12,789	1		13,842
Agribusiness	51		5,333	*		11,082		81		6,314	*		11,642
Government and education	4		5,303	*		10,941		9		5,464	*		11,065
Other (2)	23		3,980	*		19,050		68		5,623	*		23,315
Total	$	1,462	341,823	40	%	$	746,083	$	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 $3.3 billion ~~of foreign loans~~and $3.8 billion at September 30, ~~2017. Foreign loans totaled $19.4 billion within the investor category, $16.2 billion within the financial institutions category~~2021, and ~~$1.4 billion within the oil and gas category.~~December 31, 2020, respectively.

~~The investors category includes~~

Loans to financials except banks, our largest industry concentration, is predominantly comprised of loans to ~~special purpose~~investment firms, financial vehicles, ~~(SPVs) formed~~and nonbank creditors. We had $94.7 billion and $80.0 billion of loans originated by ~~sponsoring entities~~our Asset Backed Finance (ABF) and Financial Institution Group (FIG) lines of business at September 30, 2021, and December 31, 2020, respectively. These loans include: (i) loans to ~~invest in~~customers related to their subscription or capital calls, (ii) loans to nonbank lenders collateralized by commercial loans, and (iii) loans to 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 $7.7 billion and $7.9 billion at September 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 $6.1 billion and ~~working capital needs. The $16.2~~$7.5 billion of ~~foreign~~senior secured loans inoutstanding at September 30, 2021, and December 31, 2020, respectively. Oil, gas and

pipelines nonaccrual loans decreased at September 30, 2021, compared with December 31, 2020, driven by loan paydowns.

We continue to perform escalated credit monitoring for certain industries that we consider to be directly and most adversely affected by the ~~financial institutions category were predominantly originated by our Financial Institutions business.~~COVID-19 pandemic.

~~The oil~~Our commercial and ~~gas loan~~industrial loans and lease financing portfolio ~~totaled $12.8~~also includes non-U.S. loans of $74.7 billion ~~or 1%~~and $63.8 billion at September 30, 2021, and December 31, 2020, respectively. Significant industry concentrations of ~~total outstanding~~non-U.S. loans at September 30, ~~2017, compared with $14.8 billion, or 2% of total outstanding loans, at~~2021, and December 31, ~~2016. Unfunded loan commitments~~2020, respectively, included:

•$45.6 billion and $36.2 billion in the financials except banks category;

•$15.2 billion and $12.8 billion in the banks category; and

•$1.5 billion 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 $15.2 billion of CRE mortgage loans classified as criticized at September 30, 2021, compared with $12.0 billion at December 31, 2020, and $2.3 billion of CRE construction loans classified as criticized at September 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 $411 million from December 31, 2020, driven by a decrease in CRE construction

loans predominantly related to hotel/motel and apartments property types, partially offset by an increase in CRE mortgage loans. The CRE loan portfolio ~~which~~ included ~~$8.7~~$8.5 billion of ~~foreign~~non-U.S. CRE ~~loans, totaled $153.0 billion, or 16% of total~~ loans at September 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% 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.

Table 12 summarizes CRE loans by state and property type with the related nonaccrual ~~loans totaled 0.4% of the CRE outstanding balance~~totals 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 CRE loans totaled $118 million, down from $12.3 billion when acquired at December 31, 2008, reflecting principal payments, loan resolutions and write-downs.2021.

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


	September 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	$	239	30,706	3	4,158	242	34,864	4	%
New York	156		12,903	2	2,106	158	15,009	2
Florida	117		8,790	1	1,582	118	10,372	1
Texas	305		8,628	—	1,080	305	9,708	1
Washington	88		3,776	5	1,059	93	4,835	*
Arizona	52		4,259	—	320	52	4,579	*
Georgia	15		4,184	—	333	15	4,517	*
North Carolina	10		3,386	—	869	10	4,255	*
New Jersey	47		2,643	—	1,110	47	3,753	*
Illinois	16		3,155	—	460	16	3,615	*
Other (1)	493		39,555	9	8,052	502	47,607	6
Total	$	1,538	121,985	20	21,129	1,558	143,114	17	%
By property:
Office buildings	$	166	32,987	1	3,219	167	36,206	4	%
Apartments	14		21,095	—	7,853	14	28,948	3
Industrial/warehouse	96		16,005	1	1,753	97	17,758	2
Retail (excluding shopping center)	138		13,026	3	90	141	13,116	2
Hotel/motel	297		10,559	—	1,554	297	12,113	1
Shopping center	593		9,810	—	902	593	10,712	1
Institutional	63		4,558	1	2,626	64	7,184	*
Mixed use properties	94		5,440	—	793	94	6,233	*
Collateral pool	—		2,904	—	191	—	3,095	*
1-4 family structure	—		8	—	1,328	—	1,336	*
Other	77		5,593	14	820	91	6,413	*
Total	$	1,538	121,985	20	21,129	1,558	143,114	17	%

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%.


*	~~Less than 1%.~~


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

~~FOREIGN~~NON-U.S. LOANS ~~AND COUNTRY RISK EXPOSURE~~ ~~We classify~~Our classification of non-U.S. loans ~~for financial statement and certain regulatory purposes as foreign primarily~~is based on whether the borrower’s primary address is outside of the United States. At September 30, ~~2017, foreign~~2021, non-U.S. loans totaled ~~$68.8~~$83.2 billion, representing approximately 7%10% 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 both September 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 30, ~~2017,~~2021, was the United Kingdom, which totaled ~~$29.6~~$36.4 billion, or approximately 2% of our total assets, and included ~~$7.1~~$9.7 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.


			Wells Fargo & Company			33

Risk Management – Credit Risk Management (continued)

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


	September 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	$	9,704	23,643	—	867	—	2,219	9,704	26,729	36,433
Canada	2		17,052	(8)	480	4	715	(2)	18,247	18,245
Cayman Islands	—		6,881	—	—	—	103	—	6,984	6,984
Japan	19		927	5,761	81	—	10	5,780	1,018	6,798
Ireland	305		5,165	—	155	—	63	305	5,383	5,688
Luxembourg	—		4,747	—	131	—	74	—	4,952	4,952
Guernsey	—		4,145	—	—	—	37	—	4,182	4,182
China	—		3,296	(8)	443	5	28	(3)	3,767	3,764
Germany	—		3,093	4	424	—	222	4	3,739	3,743
Bermuda	—		3,438	—	64	(1)	99	(1)	3,601	3,600
South Korea	—		2,105	—	252	2	14	2	2,371	2,373
Netherlands	—		1,996	54	219	—	96	54	2,311	2,365
France	128		1,876	—	256	80	10	208	2,142	2,350
Australia	—		1,178	—	302	—	2	—	1,482	1,482
Switzerland	—		1,191	—	12	1	209	1	1,412	1,413
Chile	—		1,200	—	164	—	1	—	1,365	1,365
India	—		1,258	—	105	—	1	—	1,364	1,364
Brazil	—		1,313	—	—	8	1	8	1,314	1,322
Singapore	—		958	—	54	—	99	—	1,111	1,111
Qatar	—		904	—	—	—	—	—	904	904
Total top 20 country exposures	$	10,158	86,366	5,803	4,009	99	4,003	16,060	94,378	110,438

(1)Total non-sovereign exposure comprised $51.4 billion exposure to ~~Puerto Rico (considered part of U.S. exposure) is largely through automobile lending~~financial institutions and ~~was not material~~$43.0 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 September 30, 2021.

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

~~Table 14:Select Country Exposures~~-

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

~~(1)~~

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


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

~~(3)~~

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


~~(4)~~	~~For countries presented in the table, total non-sovereign exposure comprises~~ ~~$39.9 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~~.

~~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 and retained as part~~comprised 93% of ~~our asset/liability management strategy,~~ the ~~Pick-a-Pay~~total residential mortgage loan portfolio ~~acquired from~~at September 30, 2021, compared with 92% at 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).~~

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

September 30, 2017 December 31, 2016
(in millions) Balance

% of
portfolio

Balance

% of
portfolio

Real estate 1-4 family first mortgage $ 280,173
87 % $ 275,579
86 %
Real estate 1-4 family junior lien mortgage 41,152
13
46,237
14
Total real estate 1-4 family mortgage loans $ 321,325
100 % $ 321,816
100 %

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 both September 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.~~loans 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 information on our modification programs, see the “Risk Management~~ – ~~Credit Risk Management – Real Estate 1-4 Family First and Junior Lien Mortgage Loans” section in our 2016 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 mortgage loan portfolio. These credit risk indicators, which exclude government insured/guaranteed loans, continued to improve in third quarter 2017 on the non-PCI mortgage portfolio. Loans 30 days or more delinquent at September 30, 2017, totaled $5.3 billion, or 2% of total non-PCI mortgages, compared with $5.9 billion, or 2%, at December 31, 2016. Loans with FICO scores lower than 640 totaled $12.2 billion, or 4% of total non-PCI mortgages at September 30, 2017, compared with $16.6 billion, or 5%, at December 31, 2016. Mortgages with a LTV/CLTV greater than 100% totaled $6.7 billion at September 30, 2017, or 2% of total non-PCI mortgages, compared with $8.9 billion, or 3%, at December 31, 2016. Information regarding credit quality indicators, including PCI credit quality indicators, can be found in Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

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

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

~~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~~)

~~First Lien Mortgage Portfolio~~Our total real estate 1-4 family first lien mortgage portfolio increased $3.6 billion in third quarter 2017 and $4.6 billion in the first nine months of 2017, as non-conforming 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) as a percentage of average real estate 1-4 family first lien mortgage loans improved

to a net recovery of 0.02% and 0.01% in the third quarter and first nine months of 2017, respectively, compared with a net charge-off of 0.03% and 0.04% for the same periods 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.

~~Table 17 shows certain delinquency and loss information for the first lien mortgage portfolio and lists the top five states by outstanding balance.~~

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

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

PCI 13,301
16,018

Total first lien mortgages $ 280,173
275,579

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

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

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

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

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

% of
total

Adjusted
unpaid
principal
balance (1)

% of
total

Adjusted
unpaid
principal
balance (1)

% of
total

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


~~(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.

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

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

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

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

Current
LTV
ratio (3)

Carrying
value (4)

Ratio of
carrying
value to
current
value (5)

Carrying
value (4)

Ratio of
carrying
value to
current
value (5)

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


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


~~(2)~~	Adjusted unpaid principal balance includes write-downs taken on loans where severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan.

~~(3)~~

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


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


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

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

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

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

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

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

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

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

~~Junior Lien Mortgage Portfolio~~ ~~The junior lien mortgage~~ portfolio consists of residential mortgage lines of credit 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 junior lien ~~mortgages is high and generally not affected by whether we or a third party own or service the related first lien mortgage, but the frequency of delinquency is typically lower~~performance when ~~we own or service~~ the first lien mortgage. In general, we have limited information available on the delinquency status of the third party owned or serviced senior lien where we also hold a junior lien. To capture this inherent loss content, our allowance process for junior lien mortgages considers the relative difference in loss experience forloan is delinquent.

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

Table 20 shows certain delinquency and loss information for the junior lien mortgage portfolio and lists the top five states by outstanding balance. The decrease in outstanding balances since December 31, 2016, predominantly reflects loan paydowns. As of September 30, 2017, 10% of the outstanding balance of the junior lien mortgage portfolio was associated with loans that had a combined loan to value (CLTV) ratio in excess of 100%. Of those junior lien mortgages with a CLTV ratio in excess of 100%, 2.96% were 30 days or more past due. CLTV means the ratio of the total loan balance of first lien mortgages and junior lien mortgages (including unused line amounts for credit line products) to property collateral value. The unsecured portion (the outstanding amount that was in excess of the most recent property collateral value) of the outstanding balances of these loans totaled 3% of the junior lien mortgage portfolio at September 30, 2017. For additional information on consumer loans by LTV/CLTV, see Table 5.12 in Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

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

Outstanding balance % of loans 30 days or more past due Loss (recovery) rate (annualized) quarter ended
(in millions) Sep 30,
2017
Dec 31,
2016
Sep 30,
2017
Dec 31,
2016 Sep 30,
2017
Jun 30,
2017
Mar 31,
2017
Dec 31,
2016
Sep 30,
2016
California $ 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

Our ~~junior lien, as well as first lien,~~residential mortgage lines of credit ~~portfolios~~(both first and junior lien) 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 September 30, 2021, lines of credit in a draw period primarily used the interest-only option. 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 risk in our ACL estimate.

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 for credit loss estimate.

In anticipation of our residential mortgage line of credit 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


34			Wells Fargo & Company

borrowers moving through the program in an effort to refine our ongoing program strategy.

We monitor changes in real estate values and underlying economic or market conditions for all geographic areas of our residential mortgage portfolio as part of our credit risk management process. Our underwriting and periodic review of this portfolio 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 residential mortgage loan 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. Excluding government insured/guaranteed loans, these credit risk indicators on the residential mortgage portfolio were:

•Loans 30 days or more delinquent at September 30, 2021, totaled $3.5 billion, or 1% of residential mortgage loans, compared with $4.7 billion, or 2%, at December 31, 2020;

•Lines of credit in their draw period that were 30 days or more past due were $329 million, or 2% of such lines, at September 30, 2021, and $381 million, or 2%, at December 31, 2020, compared with amortizing lines of credit that were 30 days or more past due of $337 million, or 6% of such lines, at September 30, 2021, and $378 million, or 5%, at December 31, 2020;

•Loans with FICO scores lower than 640 totaled $4.1 billion, or 2% of residential mortgage loans, at September 30, 2021, compared with $5.6 billion, or 2%, at December 31, 2020; and

•Loans with a LTV/CLTV greater than 100% totaled $583 million at September 30, 2021, or less than 1% of residential mortgage loans, compared with $1.6 billion, or 1%, at December 31, 2020.

With respect to residential mortgage – junior lien loans that had a CLTV greater than 100%:

•Such loans totaled 2% of the junior lien portfolio at September 30, 2021, compared with 3% at December 31, 2020; and

•3% were 30 days or more delinquent at both September 30, 2021, and December 31, 2020.

Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies. For additional information regarding credit quality indicators, see Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

We continue to modify residential mortgage loans to assist homeowners and other borrowers experiencing financial difficulties. For additional information on our modification programs, see the “Risk Management – Credit Risk Management – Residential Mortgage Loans” section in our 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.

Residential Mortgage – First Lien Portfolio Our residential mortgage – first lien portfolio decreased $33.7 billion from December 31, 2020, driven by loan paydowns as a result of the low interest rate environment and the transfer of $13.5 billion of first lien mortgage loans to loans held for sale (LHFS) substantially all of which related to the sales of loans purchased from GNMA loan securitization pools in prior periods, partially offset by originations of $51.3 billion.

Table ~~21 reflects~~14 shows certain delinquency and loss information for the residential mortgage – first lien portfolio and lists the top five states by outstanding balance.

Table 14:Residential Mortgage – First Lien Portfolio Performance


	Outstanding balance			% of total loans			% of loans 30 days or more past due		Net loan charge-off rate quarter ended (1)
($ in millions)	Sep 30, 2021		Dec 31, 2020	Sep 30, 2021		Dec 31, 2020	Sep 30, 2021	Dec 31, 2020	Sep 30, 2021	Dec 31, 2020




California (2)	$	98,513	104,260	11.42	%	11.75	0.83	1.00	(0.02)	(0.03)
New York	29,835		31,028	3.46		3.50	1.19	1.40	(0.02)	0.01
New Jersey	10,315		12,073	1.20		1.36	1.79	1.92	(0.03)	(0.03)
Florida	9,843		10,623	1.14		1.20	1.90	2.56	(0.02)	0.01
Washington	8,310		9,094	0.96		1.02	0.49	0.66	(0.02)	(0.01)
Other (3)	68,774		79,356	7.97		8.94	1.48	1.60	(0.03)	0.02
Total	225,590		246,434	26.15		27.77	1.16	1.34	(0.02)	—
Government insured/guaranteed loans (4)	17,345		30,240	2.01		3.41
Total first lien mortgage portfolio	$	242,935	276,674	28.16		31.18

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

(2)Our residential mortgage loans to borrowers in California are located predominantly within the larger metropolitan areas, with no single California metropolitan area consisting of more than 4% of total loans.

(3)Consists of 45 states; no state in Other had loans in excess of $7.1 billion and $7.8 billion at September 30, 2021, and December 31, 2020, respectively.

(4)Represents loans, substantially all of which were repurchased from GNMA loan securitization pools, where the repayment of the loans is predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). For additional information on GNMA loan securitization pools, see the “Risk Management – Credit Risk Management – Risks Relating to Servicing Activities” section in this Report.


			Wells Fargo & Company			35

Risk Management – Credit Risk Management (continued)

Residential Mortgage – Junior Lien Portfolio Our residential mortgage – junior lien portfolio decreased $5.3 billion from December 31, 2020, driven by loan paydowns.

Table 15 shows certain delinquency and loss information for the residential mortgage – junior lien portfolio and lists the top five states by outstanding balance.

Table 15:Residential Mortgage – Junior Lien Portfolio Performance


	Outstanding balance			% of total loans			% of loans 30 days or more past due		Net loan charge-off rate quarter ended (1)
($ in millions)	Sep 30, 2021		Dec 31, 2020	Sep 30, 2021		Dec 31, 2020	Sep 30, 2021	Dec 31, 2020	Sep 30, 2021	Dec 31, 2020


California	$	4,687	6,237	0.54	%	0.70	2.62	2.20	(0.70)	(0.46)
New Jersey	1,846		2,258	0.21		0.25	2.92	2.84	(0.33)	(0.06)
Florida	1,634		2,119	0.19		0.24	2.69	3.06	(0.36)	(0.35)
Pennsylvania	1,116		1,377	0.13		0.16	2.20	2.30	(0.24)	(0.62)
Virginia	1,050		1,355	0.12		0.15	2.36	2.41	(0.23)	(0.15)
Other (2)	7,693		9,940	0.89		1.12	2.55	2.31	(0.77)	(0.43)
Total junior lien mortgage portfolio	$	18,026	23,286	2.08	%	2.62	2.59	2.41	(0.61)	(0.39)

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

(2)Consists of 45 states; no state in Other had loans in excess of $1.1 billion and $1.3 billion at September 30, 2021, and December 31, 2020, respectively.

The outstanding balance of residential mortgage lines of credit was $24.5 billion at September 30, 2021. The unfunded credit commitments for these lines of credit totaled $47.9 billion at September 30, 2021.

On a monthly basis, we monitor the payment characteristics of borrowers in our residential mortgage – first and junior lien lines of credit portfolios. In September 2021, excluding borrowers with COVID-related loan modification payment deferrals:

•Approximately 44% of these borrowers paid only the minimum amount due and approximately 51% 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 29% paid only the minimum amount due and approximately 66% paid more than the minimum amount due.

CREDIT CARD, AUTO and OTHER CONSUMER LOANSTable 16 shows the outstanding balance of our ~~portfolio of junior lien mortgages, including lines~~credit card, auto and other consumer loan portfolios. For information regarding credit quality indicators for these portfolios, see Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

Table 16: Credit Card, Auto, and Other Consumer Loans


	September 30, 2021				December 31, 2020
($ in millions)	Outstanding balance		% of total loans		Outstanding balance		% of total loans
Credit card	$	36,061	4.18	%	$	36,664	4.13	%
Auto	53,827		6.24		48,187		5.43
Other consumer (1)	27,041		3.13		24,409		2.75
Total	$	116,929	13.55	%	$	109,260	12.31	%

(1)Other consumer loans and senior lien lines segregated into scheduled end of draw or end of term periods and products that are currently amortizing, or in balloon repayment status. It excludes real estate 1-4 family 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 established at the date of acquisition.

primarily include securities-based loans.

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

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~~Credit Card Our credit card portfolio totaled ~~$36.2~~$36.1 billion at September 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.~~$36.7 billion at December 31, 2020.

~~AUTOMOBILE~~AutoOur ~~automobile~~auto portfolio ~~predominantly composed of indirect loans,~~ totaled ~~$55.5~~$53.8 billion at September 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.~~$48.2 billion at December 31, 2020. The increase in ~~net charge-offs in 2017,~~the outstanding balance at September 30, 2021, compared with ~~2016,~~December 31, 2020, was ~~due to increased loss severities resulting from a temporary moratorium on certain repossessions~~driven by strong consumer demand 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 automobileautomobiles.

Other Consumer Other consumer loans, ~~in bankruptcy, and also reflected the current trend of increased charge-offs in the automobile lending industry.~~

~~OTHER REVOLVING CREDIT AND INSTALLMENTOther~~which include revolving credit and installment loans, totaled ~~$38.7~~$27.0 billion at September 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~~December 31, 2020, driven by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program (FFELP) were sold as of March 31, 2017. 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.

an increase in margin loans.

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


36			Wells Fargo & Company

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 2217 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 17:Nonperforming Assets (Nonaccrual Loans and ~~commercial portfolios. Nonaccrual~~Foreclosed Assets)


	September 30, 2021				June 30, 2021				March 31, 2021				December 31, 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	$	1,274	0.39	%	$	1,691	0.53	%	$	2,223	0.70	%	$	2,698	0.85	%
Real estate mortgage	1,538		1.26		1,598		1.32		1,703		1.41		1,774		1.46
Real estate construction	20		0.09		45		0.20		55		0.26		48		0.22
Lease financing	188		1.22		215		1.37		249		1.58		259		1.61
Total commercial	3,020		0.62		3,549		0.74		4,230		0.89		4,779		1.00
Consumer:
Residential mortgage – first lien (1)	3,093		1.27		2,852		1.17		2,859		1.12		2,957		1.07
Residential mortgage – junior lien (1)	702		3.89		713		3.63		747		3.51		754		3.24
Auto	206		0.38		221		0.43		181		0.37		202		0.42
Other consumer	37		0.14		36		0.14		38		0.15		36		0.15
Total consumer	4,038		1.07		3,822		1.02		3,825		1.00		3,949		0.97
Total nonaccrual loans	7,058		0.82		7,371		0.86		8,055		0.93		8,728		0.98
Foreclosed assets:
Government insured/guaranteed (2)	15				15				16				18
Non-government insured/guaranteed	106				114				124				141
Total foreclosed assets	121				129				140				159
Total nonperforming assets	$	7,179	0.83	%	$	7,500	0.88	%	$	8,195	0.95	%	$	8,887	1.00	%
Change in NPAs from prior quarter	$	(321)			$	(695)			$	(692)			$	709

(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 $1.8 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, primarily as a result of paydowns. 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 increased $89 million from December 31, 2020, predominantly driven by an increase in residential mortgage – first lien nonaccrual loans as customers exited from accommodation programs provided in response to the COVID-19 pandemic. Customers requiring further payment assistance after exiting from these programs may have been modified or may be eligible to receive modifications.

~~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)~~			~~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			37


~~(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.~~

Risk Management – Credit Risk Management (continued)

Table 2318 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 18:Analysis of ~~loss content, we~~Changes in Nonaccrual Loans


	Quarter ended


(in millions)	Sep 30, 2021		Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Commercial nonaccrual loans
Balance, beginning of period	$	3,549	4,230	4,779	4,398	4,285
Inflows	481		560	773	1,696	1,316
Outflows:
Returned to accruing	(203)		(287)	(177)	(99)	(166)
Foreclosures	(4)		(3)	(6)	(37)	—
Charge-offs	(105)		(145)	(202)	(367)	(382)
Payments, sales and other	(698)		(806)	(937)	(812)	(655)
Total outflows	(1,010)		(1,241)	(1,322)	(1,315)	(1,203)
Balance, end of period	3,020		3,549	4,230	4,779	4,398
Consumer nonaccrual loans
Balance, beginning of period	3,822		3,825	3,949	3,624	3,320
Inflows	745		563	454	792	696
Outflows:
Returned to accruing	(222)		(200)	(152)	(208)	(160)
Foreclosures	(18)		(16)	(19)	(5)	(4)
Charge-offs	(21)		(17)	(26)	(36)	(36)
Payments, sales and other	(268)		(333)	(381)	(218)	(192)
Total outflows	(529)		(566)	(578)	(467)	(392)
Balance, end of period	4,038		3,822	3,825	3,949	3,624
Total nonaccrual loans	$	7,058	7,371	8,055	8,728	8,022

We believe exposure to loss on nonaccrual loans is ~~significantly~~ mitigated by the following factors at September 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%~~94% are secured by real estate and ~~81%~~95% 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%~~•77% of commercial nonaccrual loans were current on interest and 75% 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~~$685 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.

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


38			Wells Fargo & Company

Table 2419 provides a summary of foreclosed assets and an analysis of changes in foreclosed assets.

Table ~~24:~~19:Foreclosed Assets


	Quarter ended


(in millions)	Sep 30, 2021		Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Summary by loan segment
Government insured/guaranteed	$	15	15	16	18	22
Commercial	61		63	64	70	39
Consumer	45		51	60	71	95
Total foreclosed assets	$	121	129	140	159	156
Analysis of changes in foreclosed assets
Balance, beginning of period	$	129	140	159	156	195
Net change in government insured/guaranteed (1)	—		(1)	(2)	(4)	(9)
Additions to foreclosed assets (2)	101		96	88	114	60
Reductions:
Sales	(123)		(104)	(107)	(104)	(88)
Write-downs and gains (losses) on sales	14		(2)	2	(3)	(2)
Total reductions	(109)		(106)	(105)	(107)	(90)
Balance, end of period	$	121	129	140	159	156

(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 30, ~~2017,~~2021, included ~~$398~~$47 million of foreclosed residential real estate, of which ~~34%~~33% 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~~$121 million in foreclosed assets at September 30, ~~2017, 56%~~2021, 66% 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.


			Wells Fargo & Company			39

Risk Management – Credit Risk Management (continued)

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~~20 provides information regarding the recorded investment of loans modified in TDRs. TDRs decreased from December 31, 2020, predominantly related to commercial and industrial loans and residential mortgage – first lien loans. The ~~allowance for~~decrease in commercial and industrial loans was primarily due to paydowns in the oil, gas, and pipelines industry. The decrease in residential

mortgage – first lien loans was due to paydowns and a $773 million transfer from residential mortgage – first lien loans to LHFS, substantially all of which related to the sales of loans purchased from GNMA loan ~~losses for~~securitization pools in 2020. The amount of our TDRs ~~was $1.6 billion and $2.2 billion~~ at September 30, ~~2017,~~2021, would have otherwise been higher without the TDR relief provided by the CARES Act and ~~December 31, 2016, respectively. See Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report for additional information regarding TDRs.~~ Interagency Statement.

Table 20:TDR Balances


(in millions)	Sep 30, 2021		Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Commercial:
Commercial and industrial	$	917	1,225	1,331	1,933	2,082
Real estate mortgage	604		645	652	774	805
Real estate construction	4		15	21	15	21
Lease financing	11		9	9	9	9
Total commercial TDRs	1,536		1,894	2,013	2,731	2,917
Consumer:
Residential mortgage – first lien	8,280		8,841	9,446	9,764	9,420
Residential mortgage – junior lien	1,021		1,097	1,174	1,237	1,298
Credit card	336		368	411	458	494
Auto	182		196	156	176	156
Other consumer	60		63	67	67	190
Trial modifications	89		77	81	90	91
Total consumer TDRs	9,968		10,642	11,335	11,792	11,649
Total TDRs	$	11,504	12,536	13,348	14,523	14,566
TDRs on nonaccrual status	$	3,233	3,711	3,800	4,456	4,163
TDRs on accrual status:
Government insured/guaranteed	3,145		3,431	3,708	3,721	3,467
Non-government insured/guaranteed	5,126		5,394	5,840	6,346	6,936
Total TDRs	$	11,504	12,536	13,348	14,523	14,566


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 $301 million and $565 million at September 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 2621 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:~~21:Analysis of Changes in TDRs


						Quarter ended


(in millions)	Sep 30, 2021		Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Commercial TDRs
Balance, beginning of period	$	1,894	2,013	2,731	2,917	2,629
Inflows (1)	104		336	155	486	866
Outflows
Charge-offs	(46)		(45)	(49)	(72)	(77)
Foreclosure	—		—	(5)	—	—
Payments, sales and other (2)	(416)		(410)	(819)	(600)	(501)
Balance, end of period	1,536		1,894	2,013	2,731	2,917
Consumer TDRs
Balance, beginning of period	10,642		11,335	11,792	11,649	9,367
Inflows (1)	267		495	633	1,226	2,805
Outflows
Charge-offs	(30)		(36)	(43)	(57)	(58)
Foreclosure	(17)		(15)	(14)	(5)	(7)
Payments, sales and other (2)	(906)		(1,133)	(1,024)	(1,020)	(458)
Net change in trial modifications (3)	12		(4)	(9)	(1)	—
Balance, end of period	9,968		10,642	11,335	11,792	11,649
Total TDRs	$	11,504	12,536	13,348	14,523	14,566

(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 2722 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:~~22:Loans 90 Days or More Past Due and Still Accruing


(in millions)	Sep 30, 2021		Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Total:	$	5,598	4,703	6,273	7,041	11,698
Less: FHA insured/VA guaranteed (1)	5,083		3,966	5,406	6,351	11,041
Total, not government insured/guaranteed	$	515	737	867	690	657
By segment and class, not government insured/guaranteed: Commercial:
Commercial and industrial	$	46	165	55	39	61
Real estate mortgage	75		105	128	38	47
Real estate construction	—		7	86	1	—
Total commercial	121		277	269	78	108
Consumer:
Residential mortgage – first lien	68		73	85	135	97
Residential mortgage – junior lien	13		12	15	19	28
Credit card	238		271	394	365	297
Auto	60		43	46	65	50
Other consumer	15		61	58	28	77
Total consumer	394		460	598	612	549
Total, not government insured/guaranteed	$	515	737	867	690	657

(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 September 30, 2021, were down from December 31, 2020, due to decreases in delinquent consumer loans driven by strong payment performance, partially offset by increases in delinquent commercial real estate mortgage loans. 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 predominantly insured by the FHA or guaranteed by the VA for mortgages at September 30, 2021, were down from December 31, 2020, due 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 28:Net Charge-offs~~

Quarter ended
Sep 30, 2017 Jun 30, 2017 Mar 31, 2017 Dec 31, 2016 Sep 30, 2016
($ 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 $ 125
0.15 % $ 78
0.10 % $ 171
0.21 % $ 256
0.31 % $ 259
0.32 %
Real estate mortgage (3 ) (0.01 ) (6 ) (0.02 ) (25 ) (0.08 ) (12 ) (0.04 ) (28 ) (0.09 )
Real estate construction (15 ) (0.24 ) (4 ) (0.05 ) (8 ) (0.15 ) (8 ) (0.13 ) (18 ) (0.32 )
Lease financing 6
0.12
7
0.15
5
0.11
15
0.32
2
0.04
Total commercial 113
0.09
75
0.06
143
0.11
251
0.20
215
0.17
Consumer:
Real estate 1-4 family
first mortgage
(16 ) (0.02 ) (16 ) (0.02 ) 7
0.01
(3 ) —
20
0.03
Real estate 1-4 family
junior lien mortgage
1
—
(4 ) (0.03 ) 23
0.21
44
0.38
49
0.40
Credit card 277
3.08
320
3.67
309
3.54
275
3.09
245
2.82
Automobile 202
1.41
126
0.86
167
1.10
166
1.05
137
0.87
Other revolving credit and
installment
140
1.44
154
1.58
156
1.60
172
1.70
139
1.40
Total consumer (2) 604
0.53
580
0.51
662
0.59
654
0.56
590
0.51
Total $ 717
0.30 % $ 655
0.27 % $ 805
0.34 % $ 905
0.37 % $ 805
0.33 %


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


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

NET CHARGE-OFFSTable 2823 presents net loan charge-offs for third quarter ~~2017~~2021 and the previous four quarters.

Table 23:Net Loan Charge-offs


		Quarter ended
		Sep 30, 2021			Jun 30, 2021				Mar 31, 2021				Dec 31, 2020				Sep 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		$	46	0.06	%	$	81	0.10	%	$	88	0.11	%	$	111	0.14	%	$	274	0.33	%
	Real estate mortgage		(10)		(0.03)		(5)		(0.02)		46		0.16		162		0.53		56		0.18
	Real estate construction		1		—		(1)		—		—		—		—		—		(2)		(0.03)
	Lease financing		1		0.03		5		0.12		15		0.40		35		0.83		28		0.66
Total commercial			38		0.03		80		0.07		149		0.13		308		0.26		356		0.29
Consumer:
	Residential mortgage – first lien		(14)		(0.02)		(19)		(0.03)		(24)		(0.04)		(3)		—		(1)		—
	Residential mortgage – junior lien		(28)		(0.61)		(31)		(0.60)		(19)		(0.35)		(24)		(0.39)		(14)		(0.22)
	Credit card		158		1.77		256		3.01		236		2.71		190		2.09		245		2.71
	Auto		26		0.20		45		0.35		52		0.44		51		0.43		31		0.25
	Other consumer		79		1.22		50		0.80		119		1.97		62		0.88		66		0.80
Total consumer			221		0.23		301		0.32		364		0.37		276		0.26		327		0.30
	Total		$	259	0.12	%	$	381	0.18	%	$	513	0.24	%	$	584	0.26	%	$	683	0.29	%

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

The decrease in commercial net loan charge-offs in third quarter ~~2017 were $717 million (0.30% of average total loans outstanding)~~2021, compared with ~~$805 million (0.33%)~~the prior quarter, was due to higher recoveries in ~~third quarter 2016.~~the commercial and industrial portfolio driven by the oil, gas, and pipeline industry.

The decrease in ~~commercial and industrial~~consumer net loan charge-offs ~~from~~in third quarter ~~2016 reflected continued improvement 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~~2021, compared with the prior ~~year due to an increase~~quarter, was driven by lower losses in credit card and ~~automobile net charge-offs,~~auto, partially offset by ~~a decrease~~an increase in ~~residential real estate net charge-offs.~~other consumer losses.

~~ALLOWANCE FOR CREDIT LOSSES~~The COVID-19 pandemic may continue to impact the credit quality of our loan portfolio. Although the potential impacts were considered in our 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 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 2924 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:~~24:Allocation of the ~~Allowance~~ACL for Loans (1)


	Sep 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	$	5,193	38		%	$	7,230	36	%	$	3,600	37	%	$	3,628	37	%	$	3,752	35	%
Real estate mortgage	2,422		14			3,167		14		1,236		13		1,282		13		1,374		13
Real estate construction	470		2			410		2		1,079		2		1,200		2		1,238		3
Lease financing	480		2			709		2		330		2		307		2		268		2
Total commercial	8,565		56			11,516		54		6,245		54		6,417		54		6,632		53
Consumer:
Residential mortgage – first lien	1,197		29			1,600		31		692		30		750		30		1,085		30
Residential mortgage – junior lien	201		2			653		3		247		3		431		3		608		4
Credit card	3,356		4			4,082		4		2,252		4		2,064		4		1,944		4
Auto	901		6			1,230		5		459		5		475		5		1,039		5
Other consumer	485		3			632		3		561		4		570		4		652		4
Total consumer	6,140		44			8,197		46		4,211		46		4,290		46		5,328		47
Total	$	14,705	100		%	$	19,713	100	%	$	10,456	100	%	$	10,707	100	%	$	11,960	100	%


Components:
Allowance for loan losses			$	13,517				18,516				9,551				9,775				11,004
Allowance for unfunded credit commitments			1,188					1,197				905				932				956
Allowance for credit losses			$	14,705				19,713				10,456				10,707				11,960
Ratio of allowance for loan losses to total net loan charge-offs (2)			13.14x					5.63				3.46				3.56				3.76
Allowance for loan losses as a percentage of total loans			1.57		%			2.09				0.99				1.03				1.15
Allowance for credit losses for loans as a percentage of total loans			1.70					2.22				1.09				1.12				1.25
Allowance for credit losses for loans as a percentage of total nonaccrual loans			208					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)~~

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

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

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

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


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

~~In addition to 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 September 30, 2021.

The ~~ratio of~~ratios for the allowance for ~~credit~~loan losses ~~to total nonaccrual~~and the ACL for loans presented in Table 24 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,~~ $5.0 billion, or 3%25%, 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 ~~$717 million~~$(1.4) billion in third quarter ~~2017,~~2021, compared with ~~$805~~$751 million 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 ~~allowance~~ACL for loans. The scenarios generally include a base scenario, along with an optimistic (upside) and one or more pessimistic (downside) scenarios. In our estimate of the ACL for loans at September 30, 2021, we weighted the base scenario and the downside scenarios. The base scenario assumed economic improvements in the near term with a return to normalized levels near the end of 2022. The downside scenarios assumed economic conditions ranging from a mild recession to a more

severe recession, reflecting continued economic impacts from the COVID-19 pandemic.

Additionally, 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 September 30 and June 30, 2021, are presented in Table 25.


44			Wells Fargo & Company

Table 25:ForecastedKeyEconomic Variables


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


June 30, 2021	5.6	%	6.2	6.9
September 30, 2021	5.2		6.2	6.6

U.S. real GDP (2):


June 30, 2021	1.0		(0.4)	0.6
September 30, 2021	3.1		(0.2)	0.6

Home price index (3):


June 30, 2021	2.8		(6.5)	(5.2)
September 30, 2021	10.1		(1.2)	(6.5)

Commercial real estate asset prices (3):


June 30, 2021	7.8		(11.9)	(10.4)
September 30, 2021	4.1		(3.3)	(7.7)

(1)Quarterly average.

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

(3)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 nine months 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 or decreases in our ACL.

We believe the ~~allowance~~ACL for ~~credit losses~~loans of ~~$12.1~~$14.7 billion at September 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 nine months of 2021. These repurchased loan balances were $20.4 billion and $34.8 billion at September 30, 2021, and December 31, 2020, respectively, which included $17.0 billion and $29.9 billion, respectively, in our held for investment loan portfolio, with the remainder in loans held for sale.

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


			Wells Fargo & Company			45

Risk Management – Asset/Liability Management (continued)

slower rate than anticipated, which could ~~reduce~~impact portfolio ~~income);~~income; or

•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 26, 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 26:

•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 26:Net Interest Income Sensitivity


($ in billions)	Sep 30, 2021		Dec 31, 2020
Parallel Shift:
+100 bps shift in interest rates	$	7.4	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	2.7		2.2
-50 bps shift in long-term interest rates	(1.2)		(1.4)

The interest rate sensitivity included in Table 26 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 of 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,

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


46			Wells Fargo & Company

see Note 2 (Trading Activities) to Financial Statements in this Report.

Value-at-risk (VaR) ~~metrics complemented with sensitivity analysis and stress testing in measuring and monitoring market risk. VaR~~ is a statistical risk measure used to estimate the potential loss from adverse moves in the financial markets. The Company uses VaR metrics complemented with sensitivity analysis and stress testing in measuring and monitoring market risk. For ~~more~~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 3327 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 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 September 30, 2021. Market volatility present in average Company Trading General VaR for the quarter ended September 30, 2020, was driven by the impact of the COVID-19 pandemic, in particular, changes in interest rate curves and a significant widening of credit spreads.

Table ~~33:~~27:Trading 1-Day 99% General VaR by Risk Category


			Quarter ended
	September 30, 2021					June 30, 2021				September 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	$	19	18	13	26	14	21	12	30	98	85	59	104
Interest rate	12		9	5	15	7	7	4	22	145	155	114	201
Equity	27		28	22	39	29	37	25	56	21	17	9	24
Commodity	6		6	2	20	28	7	2	28	5	5	2	8
Foreign exchange	1		0	0	1	0	1	0	1	1	1	1	2
Diversification benefit (1)	(35)		(28)			(38)	(30)			(121)	(110)
Company Trading General VaR	30		33			40	43			149	153

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 our 2021 Second Quarter Report on Form 10-Q.

Liquidity Standards ~~On September 3, 2014,~~ We are subject to a rule, issued by the FRB, OCC and ~~FDIC issued~~Federal Deposit Insurance Corporation (FDIC), 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, such as Wells Fargo,~~organization to hold high-quality liquid assets (HQLA)~~, such as central bank reserves and government and corporate debt that can be converted easily and quickly into cash,~~ in an amount equal to or greater than its projected net cash outflows during a 30-day stress period. Our HQLA under the rule predominantly consists of central bank deposits, government debt securities, and mortgage-backed securities of federal agencies. 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~~Fargo.


			Wells Fargo & Company			47

Risk Management – Asset/Liability Management (continued)

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

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 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 NSFR applies to the ~~rule would become effective~~Company on ~~January 1, 2018.~~

~~Liquidity Coverage Ratio~~ a consolidated basis and to our IDIs with total assets of $10 billion or more. As of September 30, ~~2017,~~2021, we were compliant with the NSFR requirement.

Liquidity Coverage Ratio As of September 30, 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 4128 presents the Company’s quarterly average values for the daily-calculated LCR and its components calculated pursuant to the LCR rule requirements.

Table ~~41:~~ 28:Liquidity Coverage Ratio


	Average for Quarter ended
(in millions, except ratio)	Sep 30, 2021			Jun 30, 2021	Sep 30, 2020
HQLA (1):
Eligible cash	$	244,260		248,404	210,715
Eligible securities (2)	138,525			137,718	213,358
Total HQLA	382,785			386,122	424,073
Projected net cash outflows	320,782			314,678	317,064
LCR	119		%	123	134

(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 29, 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:~~29:Primary Sources of Liquidity


	September 30, 2021				December 31, 2020
(in millions)	Total		Encumbered	Unencumbered	Total	Encumbered	Unencumbered
Interest-earning deposits with banks	$	241,178	—	241,178	236,376	—	236,376
Debt securities of U.S. Treasury and federal agencies	62,565		3,326	59,239	70,756	5,370	65,386
Federal agency mortgage-backed securities (1)	281,492		47,348	234,144	258,668	49,156	209,512
Total	$	585,235	50,674	534,561	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.~~

(1)Included in encumbered securities at September 30, 2021, were securities with a fair value of $2.0 billion, which were purchased in September 2021, but settled in October 2021.

In addition to our primary sources of liquidity shown in

Table ~~42,~~29, 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 September 30, 2021, we also maintained approximately $208.3 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%~~170% and 158% of total loans at September 30, ~~2017~~2021, and ~~135% at~~ December 31, ~~2016.~~

2020, respectively. Additional funding is provided by long-term debt and short-term borrowings. Table 30 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 30:Short-Term Borrowings


	Quarter ended
(in millions)	Sep 30, 2021		Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020
Balance, period end
Federal funds purchased and securities sold under agreements to repurchase	$	29,445	33,708	46,871	46,362	44,055

Other short-term borrowings	12,535		11,927	12,049	12,637	11,169
Total	$	41,980	45,635	58,920	58,999	55,224
Average daily balance for period
Federal funds purchased and securities sold under agreements to repurchase	$	32,489	36,526	47,358	46,069	46,504

Other short-term borrowings	11,410		11,979	11,724	11,235	10,788
Total	$	43,899	48,505	59,082	57,304	57,292
Maximum month-end balance for period
Federal funds purchased and securities sold under agreements to repurchase (1)	$	33,247	33,708	47,050	46,879	49,148

Other short-term borrowings (2)	12,535		12,563	12,049	12,637	11,169

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

(2)Maximum month-end balance in each of the last five quarters was in September, April and March 2021, and December and September 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 and our liquidity position, we may ~~purchase~~redeem or repurchase, and subsequently retire, our outstanding debt securities ~~from time to time~~ in privately negotiated or open market transactions, by tender offer, or otherwise.

~~Wells Fargo Bank, N.A.~~ As Table 31 provides the aggregate carrying value of ~~September 30, 2017, Wells Fargo Bank, N.A. was authorized by its board of directors to issue $100 billion in outstanding short-term debt and $175 billion in outstanding~~ long-term debt maturities (based on contractual payment dates) for the remainder of 2021 and had available $97.4 billion in short-term debt issuance authority and $98.2 billion in long-term debt issuance authority. In April 2015, Wells Fargo Bank, N.A. established a $100 billion bank note program under which, subject to any other debt outstanding under the limits described above, it may issue $50 billion in outstanding short-term senior notes and $50 billion in outstanding long-term senior or subordinated notes. At September 30, 2017, Wells Fargo Bank, N.A. had remaining issuance capacity under the bank note program of $50.0 billion

in short-term senior notes and $38.0 billion in long-term senior or subordinated notes. During the first nine months of 2017, Wells Fargo Bank, N.A. issued $1.0 billion of unregistered senior notes, none of which were issued under the bank note program. In addition, during the first nine months of 2017, Wells Fargo Bank, N.A. executed advances of $20.4 billion with the Federal Home Loan Bank of Des Moines, andfollowing years thereafter, as of September 30, ~~2017, Wells Fargo Bank, N.A. had outstanding advances~~2021.

Table 31:Maturity of ~~$60.0 billion across the Federal Home Loan Bank System.~~Long-Term Debt


	September 30, 2021
(in millions)	Remaining 2021		2022	2023	2024	2025	Thereafter	Total
Wells Fargo & Company (Parent Only)
Senior notes	$	1,524	13,197	8,092	12,062	14,797	70,046	119,718
Subordinated notes	—		—	3,689	750	1,094	22,347	27,880
Junior subordinated notes	—		—	—	—	—	1,373	1,373
Total long-term debt – Parent	1,524		13,197	11,781	12,812	15,891	93,766	148,971
Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior notes	1		28	4	3	189	228	453
Subordinated notes	—		—	1,056	—	166	4,169	5,391
Junior subordinated notes	—		—	—	—	—	385	385
Securitizations and other bank debt	1,211		1,553	1,088	643	146	1,468	6,109
Total long-term debt – Bank	1,212		1,581	2,148	646	501	6,250	12,338
Other consolidated subsidiaries
Senior notes	114		189	503	106	427	334	1,673


Total long-term debt – Other consolidated subsidiaries	114		189	503	106	427	334	1,673
Total long-term debt	$	2,850	14,967	14,432	13,564	16,819	100,350	162,982


			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 July 12, 2021, Moody’s Investors Service (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 September ~~18, 2017,~~28, 2021, S&P Global Ratings affirmed ~~all of~~ the Company’s ratings and ~~maintained its negative~~retained the stable ratings outlook. On September 20, 2017, DBRS, Inc. (DBRS) downgraded the Company’s long-term ratings by one notch and affirmed the Company’s short-term ratings. DBRS revised the trend on the Company's long-term ratings from negative to stable. On October 3, 2017, Fitch Ratings, Inc. downgraded certain of the Company’s ratings by one notch and revised the ratings 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.

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 30, ~~2017,~~2021, are presented in Table ~~45.~~

32.

Table ~~45:~~32:Credit Ratings as of September 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

A2A1

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 September 30, 2021, increased ~~$8.7~~$13.0 billion from December 31, ~~2016,~~2020, predominantly ~~from~~as a result of $15.8 billion of Wells Fargo net income, ~~of $15.9~~partially offset by $2.6 billion ~~less~~of common and preferred stock ~~dividends~~dividends. During the first nine months of ~~$7.0 billion. During third quarter 2017,~~2021, we issued ~~10.1~~$957 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 nine months of 2021, we repurchased ~~49.0~~167 million shares of common stock ~~in open market transactions, private transactions and from employee benefit plans,~~ at a cost of ~~$2.6~~$7.5 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 ~~our forward repurchase agreements,~~capital planning, see the “Capital Planning and Stress Testing” section below.

In the first nine months of 2021, we issued $5.8 billion of preferred stock and redeemed $6.7 billion of preferred stock. 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 33 and Table 34 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 September 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;Table 33: Risk-Based Capital Requirements – Standardized Approach

~~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%;~~

~~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 34: 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 33 and Table 34, 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, was 2.50%. On August 5, 2021, the FRB confirmed that the Company's stress capital buffer for the period October 1, 2021, through September 30, 2022, is 3.10%.

~~Because the Company has been designated as~~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


			Wells Fargo & Company			51

Capital Management (continued)

and are scheduled to be fully phased-in beginning January 1, 2022.

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 4635 summarizes our CET1, tier 1 capital, total capital, ~~risk-weighted assets~~RWAs and capital ratios on a fully phased-in basis at September 30, ~~2017~~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 36 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:~~35:Capital Components and Ratios (Fully Phased-In) ~~(1)~~


				September 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)			$	141,585	141,585		138,297		138,297
Tier 1 Capital	(B)			160,615		160,615		158,196		158,196
Total Capital	(C)			187,416		197,613		186,803		196,529
Risk-Weighted Assets	(D)			1,138,635		1,218,911		1,158,355		1,193,744
Common Equity Tier 1 Capital Ratio	(A)/(D)	9.00	%	12.43		11.62	*	11.94		11.59	*
Tier 1 Capital Ratio	(B)/(D)	10.50		14.11		13.18	*	13.66		13.25	*
Total Capital Ratio	(C)/(D)	12.50		16.46		16.21	*	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 September 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 4736 provides information regarding the calculation and composition of our risk-based capital under the Advanced and Standardized Approaches at September 30, ~~2017~~2021, and December 31, ~~2016.~~2020.

Table ~~47:~~36:Risk-Based Capital Calculation and Components



		September 30, 2021			December 31, 2020
(in millions)		Advanced Approach		Standardized Approach	Advanced Approach	Standardized Approach
Total equity (1)		$	191,071	191,071	185,712	185,712
Effect of accounting policy changes (1)		—		—	208	208
Total equity (as reported)		191,071		191,071	185,920	185,920
Adjustments:
Preferred stock		(20,270)		(20,270)	(21,136)	(21,136)
Additional paid-in capital on preferred stock		120		120	152	152
Unearned ESOP shares		875		875	875	875
Noncontrolling interests		(2,043)		(2,043)	(1,033)	(1,033)
Total common stockholders’ equity		$	169,753	169,753	164,778	164,778
Adjustments:
Goodwill		(26,191)		(26,191)	(26,392)	(26,392)
Certain identifiable intangible assets (other than MSRs)		(281)		(281)	(342)	(342)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)		(2,120)		(2,120)	(1,965)	(1,965)
Applicable deferred taxes related to goodwill and other intangible assets (2)		886		886	856	856
CECL transition provision (3)		463		463	1,720	1,720
Other		(925)		(925)	(358)	(358)
Common Equity Tier 1		$	141,585	141,585	138,297	138,297
Preferred stock		20,270		20,270	21,136	21,136
Additional paid-in capital on preferred stock		(120)		(120)	(152)	(152)
Unearned ESOP shares		(875)		(875)	(875)	(875)
Other		(245)		(245)	(210)	(210)
Total Tier 1 capital	(A)	$	160,615	160,615	158,196	158,196
Long-term debt and other instruments qualifying as Tier 2		22,753		22,753	24,387	24,387
Qualifying allowance for credit losses (4)		4,368		14,565	4,408	14,134
Other		(320)		(320)	(188)	(188)
Total Tier 2 capital (fully phased-in)	(B)	$	26,801	36,998	28,607	38,333
Effect of Basel III transition requirements		26		26	131	131
Total Tier 2 capital (Basel III transition requirements)		$	26,827	37,024	28,738	38,464

Total qualifying capital (fully phased-in)	(A)+(B)	$	187,416	197,613	186,803	196,529
Total Effect of Basel III transition requirements		26		26	131	131
Total qualifying capital (Basel III transition requirements)		$	187,442	197,639	186,934	196,660

Risk-Weighted Assets (RWAs)(5):
Credit risk (6)		$	742,147	1,164,248	752,999	1,125,813
Market risk		54,663		54,663	67,931	67,931
Operational risk		341,825		—	337,425	—
Total RWAs		$	1,138,635	1,218,911	1,158,355	1,193,744

(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 total equity was revised to conform with the current period presentation. Prior period risk-based capital and certain other regulatory related metrics were not revised.

(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 September 30, 2021, the impact of the CECL transition provision issued by federal banking regulators on our regulatory capital was an increase in capital of $463 million, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $5.8 billion increase in our ACL under CECL from January 1, 2020, through September 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 $132 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 September 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 4837 presents the changes in ~~Common Equity Tier 1 under the Advanced Approach~~CET1 for the nine months ended September 30, ~~2017.~~2021.

Table ~~48:~~37: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		14,786
Common stock dividends		(1,637)
Common stock issued, repurchased, and stock compensation-related items		(6,614)
Changes in cumulative other comprehensive income		(1,371)

Goodwill		201
Certain identifiable intangible assets (other than MSRs)		61
Goodwill and other intangibles on nonmarketable equity ~~investments and on held-for-sale assets, which are included~~securities (included in other ~~assets.~~assets)

	(155)
~~(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)		30
CECL transition provision (2)		(1,257)
Other		(756)
Change in Common Equity Tier 1		3,288
Common Equity Tier 1 at ~~period end.~~September 30, 2021		$	141,585

(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 September 30, 2021, the impact of the CECL transition provision issued by federal banking regulators on our regulatory capital was an increase in capital of $463 million, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $5.8 billion increase in our ACL under CECL from January 1, 2020, through September 30, 2021.

Table 4938 presents net changes in the components of RWAs under the Advanced and Standardized Approaches for the nine months ended September 30, ~~2017.~~2021.

Table ~~49:~~38: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)	(10,852)		38,435
Net change in market risk RWAs	(13,268)		(13,268)
Net change in operational risk RWAs	4,400		—
Total change in RWAs	(19,720)		25,167
RWAs at September 30, 2021	$	1,138,635	1,218,911

(1)Includes an increase of $132 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 36 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 5039 provides a reconciliation of these non-GAAP financial measures to GAAP financial measures.

Table ~~50:~~39:Tangible Common Equity


		Balance at period end				Average balance
		Quarter ended				Quarter ended					Nine months ended
(in millions, except ratios)		Sep 30, 2021		Jun 30, 2021	Sep 30, 2020	Sep 30, 2021			Jun 30, 2021	Sep 30, 2020	Sep 30, 2021			Sep 30, 2020
Total equity		$	191,071	193,127	181,727	194,041			190,968	181,377	191,379			184,435
Adjustments:
Preferred stock		(20,270)		(20,820)	(21,098)	(21,403)			(21,108)	(21,098)	(21,449)			(21,411)
Additional paid-in capital on preferred stock		120		136	159	145			138	158	143			145
Unearned ESOP shares		875		875	875	875			875	875	875			1,052
Noncontrolling interests		(2,043)		(1,865)	(859)	(1,845)			(1,313)	(761)	(1,427)			(730)
Total common stockholders’ equity	(A)	169,753		171,453	160,804	171,813			169,560	160,551	169,521			163,491
Adjustments:
Goodwill		(26,191)		(26,194)	(26,387)	(26,192)			(26,213)	(26,388)	(26,262)			(26,386)
Certain identifiable intangible assets (other than MSRs)		(281)		(301)	(366)	(290)			(310)	(378)	(310)			(401)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)		(2,120)		(2,256)	(2,019)	(2,169)			(2,208)	(2,045)	(2,198)			(2,040)
Applicable deferred taxes related to goodwill and other intangible assets (1)		886		875	842	882			873	838	873			828
Tangible common equity	(B)	$	142,047	143,577	132,874	144,044			141,702	132,578	141,624			135,492
Common shares outstanding	(C)	3,996.9		4,108.0	4,132.5	N/A			N/A	N/A	N/A			N/A
Net income applicable to common stock	(D)	N/A		N/A	N/A	$	4,787		5,743	2,901	$	14,786		(955)
Book value per common share	(A)/(C)	$	42.47	41.74	38.91	N/A			N/A	N/A	N/A			N/A
Tangible book value per common share	(B)/(C)	35.54		34.95	32.15	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	11.05		%	13.59	7.19	11.66		%	(0.78)
Return on average tangible common equity (ROTCE) (annualized)	(D)/(B)	N/A		N/A	N/A	13.18			16.26	8.71	13.96			(0.94)

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 40 presents the leverage requirements applicable to the Company as of September 30, 2021.

Table 40: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 the methodology for including off- balance sheet items, including credit derivatives, repo-style transactions and lines of credit, in the denominator of the SLR, and will become effective on January 1, 2018. our 2020 Form 10-K.

At September 30, ~~2017, our~~2021, the Company’s 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~~6.94%, and 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~~41 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 41:Leverage Ratios for the ~~FRB finalized rules~~Company


(in millions, except ratios)		Quarter ended September 30, 2021
Tier 1 capital	(A)	$	160,615
Total average assets		1,950,164
Less: Goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities)		28,814

Total adjusted average assets		1,921,350
Plus adjustments for off-balance sheet exposures:
Derivatives (1)		70,638
Repo-style transactions (2)		3,668
Other (3)		317,978
Total off-balance sheet exposures		392,284
Total leverage exposure	(B)	$	2,313,634
Supplementary leverage ratio	(A)/(B)	6.94		%

Tier 1 leverage ratio (4)		8.36		%

(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 September 30, 2021, are presented in Table 42.

Table 42: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

Greater of method one and 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 43 provides our TLAC and eligible unsecured long-term debt and related ratios as of ~~(i) 18% of RWAs~~September 30, 2021, and ~~(ii) 7.5% of total leverage exposure (the denominator of~~December 31, 2020.

Table 43: TLAC and Eligible Unsecured Long-Term Debt


($ in millions)	TLAC (1)			Regulatory Minimum (2)	Eligible Unsecured Long-term Debt	Regulatory Minimum
	September 30, 2021
Total eligible amount	$	288,605			124,338

Percentage of RWAs (3)	23.68		%	21.50	10.20	8.00
Percentage of total leverage exposure	12.47			9.50	5.37	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 capital plan, which was submitted on April 4, 2017, as part of CCAR, included a comprehensive capital outlook supported by an assessment of expected sources and uses of capital over a given planning horizon under a range of expected and stress scenarios. As part of the 2017 CCAR, the FRB also generated a supervisory stress test, which assumed a sharp decline in the economy and significant decline in asset pricing using the information provided by the Company to estimate performance. The FRB reviewed the supervisory stress results both as required under the Dodd-Frank Act using a common set of capital actions for all large BHCs and by taking into account the Company’s proposed capital actions. The FRB published 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 to our capital plan included in the 2017 CCAR.~~

Federal banking regulators also require large BHCs and banks to conduct their own stress tests to evaluate whether anthe institution has sufficient capital to continue to operate during periods of adverse economic and financial conditions. These stress testing requirements set forth the timing and type of stress test activities large BHCs and banks must undertake as well as rules governing stress testing controls, oversight and disclosure requirements. The rules also limit a large BHC’s ability to make capital distributions to the extent its actual capital issuances were less than amounts indicated in its capital plan. As required under the FRB’s stress testing rule, we must submit a mid-cycle stress test based on second quarter data and scenarios developed by the Company. We submitted the results of the mid-cycle stress test to the FRB and disclosed a summary of the results in October 2017.


56			Wells Fargo & Company

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 30, ~~2017,~~2021, we had remaining Board authority to repurchase approximately ~~122~~500 million shares, subject to regulatory and legal conditions. For ~~more~~additional information about share repurchases during third 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.

~~The following supplements our~~For a discussion of certain consent orders applicable to the Company, see the “Overview” section in this Report. For a discussion of other significant regulations and regulatory oversight initiatives that have affected or may affect our business, ~~contained in~~see the “Regulatory Matters” and “Risk Factors” sections in our ~~2016~~2020 Form 10-K and the “Regulatory Matters” section in our ~~2017~~2021 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~~

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 resolution plans, so-called “living-wills”, that would facilitate their resolution in the event of material distress or failure. Under the rules, resolution plans are required to provide strategies for resolution under the Bankruptcy Code and other applicable insolvency regimes that can be accomplished in a reasonable period of time and in a

manner that mitigates the risk that failure would have serious adverse effects on the financial stability of the United States. We submitted our 2017 resolution plan to the FRB and FDIC on June 30, 2017, but have not yet received regulatory feedback on the plan. If the FRB and FDIC determine that our 2017 resolution plan has deficiencies, they may impose more stringent capital, leverage or liquidity requirements on us or restrict our growth, activities or operations until we adequately remedy the deficiencies. If the FRB and FDIC ultimately determine that we have been unable to remedy any deficiencies, they could require us to divest certain assets or operations.

We must also prepare and submit to the FRB a recovery plan that identifies a range of options that we may consider during times of idiosyncratic or systemic economic stress to remedy any financial weaknesses and restore market confidence without extraordinary government support. Recovery options include the possible sale, transfer or disposal of assets, securities, loan portfolios or businesses. Our insured national bank subsidiary, Wells Fargo Bank, N.A. (the “Bank”), must also prepare and submit to the OCC a recovery plan that sets forth the bank’s plan to remain a going concern when the bank is experiencing considerable financial or operational stress, but has not yet deteriorated to the point where liquidation or resolution is imminent. If either the FRB or the OCC determine that our recovery plan is deficient, they may impose fines, restrictions on our business or ultimately require us to divest assets.

If Wells Fargo were to fail, it may be resolved in a bankruptcy proceeding or, if certain conditions are met, under the resolution regime created by the Dodd-Frank Act known as the “orderly liquidation authority.” The orderly liquidation authority allows for the appointment of the FDIC as receiver for a systemically important financial institution that is in default or in danger of default if, among other things, the resolution of the institution under the U.S. Bankruptcy Code would have serious adverse effects on financial stability in the United States. If the FDIC is appointed as receiver for Wells Fargo & Company (the “Parent”), then the orderly liquidation authority, rather than the U.S. Bankruptcy Code, would determine the powers of the receiver and the rights and obligations of our security holders. The FDIC’s orderly liquidation authority requires that security holders of a company in receivership bear all losses before U.S. taxpayers are exposed to any losses, and allows the FDIC to disregard the strict priority of creditor claims under the U.S. Bankruptcy Code in certain circumstances.

Whether under the U.S. Bankruptcy Code or by the FDIC under the orderly liquidation authority, Wells Fargo could be resolved using a “multiple point of entry” strategy, in which the Parent and one or more of its subsidiaries would each undergo separate resolution proceedings, or a “single point of entry” strategy, in which the Parent would likely be the only material legal entity to enter resolution proceedings. The FDIC has announced that a single point of entry strategy may be a desirable strategy under its implementation of the orderly liquidation authority, but not all aspects of how the FDIC might exercise this authority are known and additional rulemaking is possible.

The strategy described in our most recent resolution plan submission is a multiple point of entry strategy; however, we have made a decision to move to a single point of entry strategy for our next resolution plan submission. We are not obligated to maintain either a single point of entry or multiple point of entry strategy, and the strategies reflected in our resolution plan submissions are not binding in the event of an actual resolution

~~of Wells Fargo, whether conducted under the U.S. Bankruptcy Code or by the FDIC under the orderly liquidation authority.~~

To facilitate the orderly resolution of systemically important financial institutions in case of material distress or failure, federal banking regulations require that institutions, such as Wells Fargo, maintain a minimum amount of equity and unsecured debt to absorb losses and recapitalize operating subsidiaries. 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 (the “Support Agreement”) with WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), and the Bank, Wells Fargo Securities, LLC (“WFS”), and Wells Fargo Clearing Services, LLC (“WFCS”), each an indirect subsidiary of the Parent. Pursuant to the Support Agreement, the Parent transferred a significant amount of its assets, including the majority of its cash, deposits, liquid securities and intercompany loans (but excluding its equity interests in its subsidiaries and certain other assets), to the 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 pursuant to the Support Agreement and to WFS and WFCS through repurchase facilities entered into in connection with the Support Agreement. Under the Support Agreement, the IHC will also provide funding and liquidity to the Parent through subordinated notes and a committed line of credit, which, together with the issuance of dividends, is expected to provide the Parent, during business as usual operating conditions, with the same access to cash necessary to service its debts, pay dividends, repurchase its shares, and perform its other obligations as it would have had if it had not entered into these arrangements and transferred any assets. If certain liquidity and/or capital metrics fall below defined triggers, the subordinated notes would be forgiven and the committed line of credit would terminate, which could materially and adversely impact the Parent’s liquidity and its ability to satisfy its debts and other obligations, and could result in the commencement of bankruptcy proceedings by the Parent at an earlier time than might have otherwise occurred if the Support Agreement were not implemented. The Parent's and the IHC's respective obligations under the Support Agreement are secured pursuant to a related security agreement.



			Wells Fargo & Company			57


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 Exception

Variable 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~~2021-08 – Business Combinations (Topic 805): ~~Clarifying the Definition of a Business~~Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

~~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~~)



58			Wells Fargo & Company


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


			Wells Fargo & Company			59

Forward-Looking Statements (continued)

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.



60			Wells Fargo & Company


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~~


			Wells Fargo & Company			61


Controls and Procedures


Disclosure Controls and Procedures

The Company’s management evaluated the effectiveness, as of September 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 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 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)~~62			~~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
~~(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 September 30,			Nine months ended September 30,
(in millions, except per share amounts)	2021		2020	2021		2020
Interest income
Debt securities	$	2,354	2,446	$	6,865	8,864
Loans held for sale	172		239	696		685
Loans (1)	7,057		7,965	21,353		26,508
Equity securities	146		101	415		423
Other interest income	105		60	244		889
Total interest income	9,834		10,811	29,573		37,369
Interest expense
Deposits	99		314	303		2,641
Short-term borrowings	(7)		(12)	(28)		262
Long-term debt	745		1,038	2,483		3,515
Other interest expense	88		92	298		350
Total interest expense	925		1,432	3,056		6,768
Net interest income	8,909		9,379	26,517		30,601
Noninterest income
Deposit and lending-related fees	1,781		1,651	5,101		4,913
Investment advisory and other asset-based fees (2)	2,882		2,505	8,432		7,265
Commissions and brokerage services fees (2)	525		568	1,741		1,795
Investment banking fees	547		441	1,685		1,379
Card fees	1,078		912	3,104		2,601
Mortgage banking	1,259		1,590	3,921		2,286
Net gains on trading and securities	1,244		1,274	4,852		1,726
Other (1)	609		996	2,283		3,209
Total noninterest income	9,925		9,937	31,119		25,174
Total revenue	18,834		19,316	57,636		55,775
Provision for credit losses	(1,395)		769	(3,703)		14,308
Noninterest expense
Personnel	8,690		8,624	27,066		25,863
Technology, telecommunications and equipment	741		791	2,400		2,261
Occupancy	738		851	2,243		2,437
Operating losses	540		1,219	1,056		2,902
Professional and outside services	1,417		1,760	4,255		5,042
Advertising and promotion	153		144	375		462
Restructuring charges	1		718	10		718
Other	1,023		1,122	3,228		3,143
Total noninterest expense	13,303		15,229	40,633		42,828
Income (loss) before income tax expense	6,926		3,318	20,706		(1,361)
Income tax expense (benefit) (1)	1,521		(83)	3,867		(1,731)
Net income before noncontrolling interests	5,405		3,401	16,839		370
Less: Net income from noncontrolling interests	283		185	1,041		84
Wells Fargo net income (1)	$	5,122	3,216	$	15,798	286
Less: Preferred stock dividends and other	335		315	1,012		1,241
Wells Fargo net income (loss) applicable to common stock (1)	$	4,787	2,901	$	14,786	(955)
Per share information (1)
Earnings (loss) per common share	$	1.18	0.70	$	3.60	(0.23)
Diluted earnings (loss) per common share	1.17		0.70	3.57		(0.23)
Average common shares outstanding	4,056.3		4,123.8	4,107.1		4,111.4
Diluted average common shares outstanding	4,090.4		4,132.2	4,140.0		4,111.4

(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 balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

~~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)~~			~~Prior periods have been revised to conform to the current period presentation.~~Wells Fargo & Company			63


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Comprehensive Income (Unaudited)
	Quarter ended September 30,			Nine months ended September 30,

(in millions)	2021		2020	2021	2020
Net income before noncontrolling interests (1)	$	5,405	3,401	16,839	370
Other comprehensive income (loss), after tax:
Net change in debt securities	(468)		5	(1,689)	920
Net change in derivatives and hedging activities	38		(14)	101	126
Defined benefit plans adjustments	(121)		(15)	248	(416)

Net change in foreign currency translation adjustments	(64)		72	(31)	(70)
Other comprehensive income (loss), after tax	(615)		48	(1,371)	560
Total comprehensive income before noncontrolling interests (1)	4,790		3,449	15,468	930
Less: Other comprehensive loss from noncontrolling interests	(2)		—	—	(1)
Less: Net income from noncontrolling interests	283		185	1,041	84
Wells Fargo comprehensive income (1)	$	4,509	3,264	14,427	847

(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 balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

The accompanying notes are an integral part of these statements.


64			Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet
(in millions, except shares)	Sep 30, 2021		Dec 31, 2020
Assets	(Unaudited)
Cash and due from banks	$	25,509	28,236
Interest-earning deposits with banks	241,178		236,376
Total cash, cash equivalents, and restricted cash	266,687		264,612
Federal funds sold and securities purchased under resale agreements	67,807		65,672
Debt securities:
Trading, at fair value	94,943		75,095
Available-for-sale, at fair value (includes amortized cost of $182,699 and $215,533, net of allowance for credit losses)	185,557		220,392
Held-to-maturity, at amortized cost, net of allowance for credit losses (fair value $264,022 and $212,307)	262,493		205,720
Loans held for sale (includes $17,781 and $18,806 carried at fair value)	24,811		36,384
Loans	862,827		887,637
Allowance for loan losses	(13,517)		(18,516)
Net loans	849,310		869,121
Mortgage servicing rights (includes $6,862 and $6,125 carried at fair value)	8,148		7,437
Premises and equipment, net	8,599		8,895
Goodwill	26,191		26,392
Derivative assets	27,060		25,846
Equity securities (includes $35,556 and $34,009 carried at fair value)	66,526		60,008
Other assets	66,769		87,337
Total assets (1)	$	1,954,901	1,952,911
Liabilities
Noninterest-bearing deposits	$	529,051	467,068
Interest-bearing deposits	941,328		937,313
Total deposits	1,470,379		1,404,381
Short-term borrowings	41,980		58,999
Derivative liabilities	12,976		16,509
Accrued expenses and other liabilities (includes $25,524 and $22,441 carried at fair value)	75,513		74,360
Long-term debt	162,982		212,950
Total liabilities (2)	1,763,830		1,767,199
Equity
Wells Fargo stockholders’ equity:
Preferred stock	20,270		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	60,134		60,197
Retained earnings	175,709		162,683
Cumulative other comprehensive income (loss)	(1,177)		194
Treasury stock – 1,484,890,493 shares and 1,337,799,931 shares	(74,169)		(67,791)
Unearned ESOP shares	(875)		(875)
Total Wells Fargo stockholders’ equity	189,028		184,680
Noncontrolling interests	2,043		1,032
Total equity	191,071		185,712
Total liabilities and equity	$	1,954,901	1,952,911

(1)Our consolidated assets at September 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, $515 million and $967 million; Loans, $4.0 billion and $10.9 billion; All other assets, $334 million and $310 million; and Total assets, $4.9 billion and $12.1 billion, respectively.

(2)Our consolidated liabilities at September 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, $166 million and $203 million; All other liabilities, $589 million and $900 million; and Total liabilities, $755 million and $1.1 billion, respectively.

The accompanying notes are an integral part of these statements.


			Wells Fargo & Company			65


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity – Quarter ended September 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 June 30, 2021	5.6	$	20,820	4,108.0	$	9,136	60,018	171,765	(564)	(69,038)	(875)	1,865	193,127



Net income								5,122				283	5,405
Other comprehensive loss, net of tax									(613)			(2)	(615)
Noncontrolling interests												(103)	(103)
Common stock issued				3.1				(22)		160			138
Common stock repurchased				(114.2)						(5,291)			(5,291)
Preferred stock redeemed (1)	(0.1)	(1,800)					38	(38)					(1,800)




Preferred stock issued	—	1,250					(23)						1,227
Common stock dividends							10	(821)					(811)
Preferred stock dividends								(297)					(297)
Stock incentive compensation expense							139						139
Net change in deferred compensation and related plans							(48)			—			(48)
Net change	(0.1)	(550)		(111.1)	—		116	3,944	(613)	(5,131)	—	178	(2,056)
Balance September 30, 2021	5.5	$	20,270	3,996.9	$	9,136	60,134	175,709	(1,177)	(74,169)	(875)	2,043	191,071
Balance June 30, 2020 (2)	5.5	$	21,098	4,119.6	$	9,136	59,923	158,466	(798)	(69,050)	(875)	735	178,635



Net income (2)								3,216				185	3,401
Other comprehensive income, net of tax									48			—	48
Noncontrolling interests												(60)	(60)
Common stock issued				13.0				(343)		668			325
Common stock repurchased				(0.1)						(3)			(3)
Preferred stock redeemed	—	—					—	—					—




Preferred stock issued	—	—					—						—
Common stock dividends							3	(417)					(414)
Preferred stock dividends								(315)					(315)
Stock incentive compensation expense							136						136
Net change in deferred compensation and related plans							(27)			1			(26)
Net change (2)	—	—		12.9	—		112	2,141	48	666	—	125	3,092
Balance September 30, 2020 (2)	5.5	$	21,098	4,132.5	$	9,136	60,035	160,607	(750)	(68,384)	(875)	860	181,727

(1)Represents the impact of the redemption of Preferred Stock, Series O and Series X, in third quarter 2021. For additional information, see Note 16 (Preferred Stock).

(2)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).

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 – Nine months ended September 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								15,798				1,041	16,839
Other comprehensive loss, net of tax									(1,371)			—	(1,371)
Noncontrolling interests												(30)	(30)
Common stock issued				19.6			—	(103)		1,060			957
Common stock repurchased				(166.7)						(7,452)			(7,452)
Preferred stock redeemed (2)	(0.2)	(6,676)					86	(86)					(6,676)

Preferred stock released by ESOP							—				—		—
Preferred stock converted to common shares	—	—		—			—			—			—

Preferred stock issued	0.2	5,810					(54)						5,756
Common stock dividends							20	(1,657)					(1,637)
Preferred stock dividends								(926)					(926)
Stock incentive compensation expense							863						863
Net change in deferred compensation and related plans							(978)			14			(964)
Net change	—	(866)		(147.1)	—		(63)	13,026	(1,371)	(6,378)	—	1,011	5,359
Balance September 30, 2021	5.5	$	20,270	3,996.9	$	9,136	60,134	175,709	(1,177)	(74,169)	(875)	2,043	191,071
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 (1)								286				84	370
Other comprehensive income (loss), net of tax									561			(1)	560
Noncontrolling interests												(61)	(61)
Common stock issued				63.9			207	(1,200)		3,362			2,369
Common stock repurchased				(75.5)						(3,412)			(3,412)
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			—

Preferred stock issued	0.1	2,013					(45)						1,968
Common stock dividends							41	(4,643)					(4,602)
Preferred stock dividends								(969)					(969)
Stock incentive compensation expense							437						437
Net change in deferred compensation and related plans							(1,409)			5			(1,404)
Net change (1)	(2.0)	(451)		(1.9)	—		(1,014)	(6,798)	561	447	268	22	(6,965)
Balance September 30, 2020 (1)	5.5	$	21,098	4,132.5	$	9,136	60,035	160,607	(750)	(68,384)	(875)	860	181,727

(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; Preferred Stock, Series N, in second quarter 2021; and Preferred Stock, Series O and Series X, in third 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.


			Wells Fargo & Company			67


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
	Nine months ended September 30,
(in millions)	2021		2020
Cash flows from operating activities:
Net income before noncontrolling interests (1)	$	16,839	370
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	(3,703)		14,308
Changes in fair value of MSRs and LHFS carried at fair value	(1,158)		4,434
Depreciation, amortization and accretion (1)	6,090		6,137
Stock-based compensation	1,858		1,337
Deferred income tax benefit (1)	(2,689)		(1,570)
Other net (gains) losses (2)	(10,304)		6,739
Originations and purchases of loans held for sale (2)	(123,983)		(135,618)
Proceeds from sales of and paydowns on loans originally classified as held for sale (2)	78,356		99,642
Net change in:
Debt and equity securities, held for trading (2)	7,638		47,322

Derivative assets and liabilities	(4,639)		(5,823)
Other assets	16,736		(9,482)
Other accrued expenses and liabilities (1)	2,617		(2,980)
Net cash provided (used) by operating activities	(16,342)		24,816
Cash flows from investing activities:
Net change in:
Federal funds sold and securities purchased under resale agreements	(2,135)		32,836
Available-for-sale debt securities:
Proceeds from sales	14,568		40,709
Prepayments and maturities	61,080		59,393
Purchases	(84,576)		(54,010)
Held-to-maturity debt securities:
Paydowns and maturities	60,613		22,767
Purchases	(59,480)		(41,758)
Equity securities, not held for trading:
Proceeds from sales and capital returns	2,706		10,344
Purchases	(4,480)		(6,518)
Loans:
Loans originated by banking subsidiaries, net of principal collected	8,292		33,296
Proceeds from sales of loans originally classified as held for investment	26,388		6,828
Purchases of loans	(313)		(1,036)
Principal collected on nonbank entities’ loans	7,642		7,150
Loans originated by nonbank entities	(8,242)		(8,703)

Proceeds from sales of foreclosed assets and short sales	566		967
Other, net	1,154		(223)
Net cash provided by investing activities	23,783		102,042
Cash flows from financing activities:
Net change in:
Deposits	66,482		60,589
Short-term borrowings	(17,019)		(49,288)
Long-term debt:
Proceeds from issuance	1,143		37,901
Repayment	(44,739)		(61,151)
Preferred stock:
Proceeds from issuance	5,756		1,968
Redeemed	(6,675)		(2,470)
Cash dividends paid	(867)		(910)
Common stock:
Proceeds from issuance	214		513
Stock tendered for payment of withholding taxes	(277)		(326)
Repurchased	(7,452)		(3,412)
Cash dividends paid	(1,603)		(4,454)
Net change in noncontrolling interests	(76)		(67)
Other, net	(253)		(231)
Net cash used by financing activities	(5,366)		(21,338)
Net change in cash, cash equivalents, and restricted cash	2,075		105,520
Cash, cash equivalents, and restricted cash at beginning of period	264,612		141,250
Cash, cash equivalents, and restricted cash at end of period	$	266,687	246,770
Supplemental cash flow disclosures:
Cash paid for interest	$	3,407	7,099
Cash paid for income taxes, net (2)	3,114		2,171

(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 balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(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~~)


68			Wells Fargo & Company

~~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.


			Wells Fargo & Company			69

Note 1: Summary of Significant Accounting Policies (continued)

Table 1.1:Impact of the Accounting Policy Changes for LIHTC Investments and Solar Energy Investments


	Quarter ended September 30, 2020					Nine months ended September 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	$	7,954	—	11	7,965	26,467		—	41	26,508
Noninterest income	9,494		370	73	9,937	23,855		1,109	210	25,174
Income tax expense (benefit) (1)	645		(554)	(174)	(83)	(3,113)		1,031	351	(1,731)
Net income (loss)	2,035		924	257	3,216	309		79	(102)	286
Earnings (loss) per common share	0.42		0.22	0.06	0.70	(0.23)		0.02	(0.02)	(0.23)
Diluted earnings (loss) per common share	0.42		0.22	0.06	0.70	(0.23)		0.02	(0.02)	(0.23)

						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)	—	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


70			Wells Fargo & Company

~~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


	Nine months ended September 30,
(in millions)	2021		2020
Available-for-sale debt securities purchased from securitization of LHFS (1)	$	256	2,710
Held-to-maturity debt securities purchased from securitization of LHFS (1)	17,600		9,016
Transfers from loans to LHFS (2)	14,842		4,374
Transfers from available-for-sale debt securities to held-to-maturity debt securities	41,298		1,236

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
(1)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

~~Subsequent Events~~

On November 1, 2021, we closed our previously announced agreement to sell our Corporate Trust Services business and our previously announced agreement to sell Wells Fargo Asset Management, which is subject to certain post-closing adjustments and earn-out provisions. We have evaluated the effects of events that have occurred subsequent to September 30, ~~2017,~~2021, and, except for the closing of the sales of our Corporate Trust Services business and Wells Fargo Asset Management, there have been no material events that would require recognition in our third quarter ~~2017~~2021 consolidated financial statements or disclosure in the Notes to the consolidated financial statements.



~~Note 2:~~ ~~Business Combinations~~	Wells Fargo & Company	71

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)	Sep 30, 2021		Dec 31, 2020
Trading assets:
Debt securities	$	94,943	75,095
Equity securities	24,277		23,032
Loans held for sale	2,405		1,015
Gross trading derivative assets	56,191		58,767
Netting (1)	(30,603)		(34,301)
Total trading derivative assets	25,588		24,466
Total trading assets	147,213		123,608
Trading liabilities:
Short sale	25,524		22,441
Gross trading derivative liabilities	43,788		53,285
Netting (1)	(32,164)		(39,444)
Total trading derivative liabilities	11,624		13,841
Total trading liabilities	$	37,148	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 September 30,				Nine months ended September 30,
(in millions)	2021		2020		2021		2020
Interest income:
Debt securities	$	512	$	546	$	1,537	1,971
Equity securities	104		68		300		273
Loans held for sale	12		6		27		24
Total interest income	628		620		1,864		2,268
Less: Interest expense	90		93		305		350
Net interest income	538		527		1,559		1,918
Net gains (losses) from trading activities (1):
Debt securities	(284)		214		(1,621)		2,898
Equity securities	771		1,381		2,780		(691)
Loans held for sale	9		14		48		26
Derivatives (2)	(404)		(1,248)		(746)		(1,001)
Total net gains from trading activities	92		361		461		1,232
Total trading-related net interest and noninterest income	$	630	$	888	$	2,020	3,150

(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.


72			Wells Fargo & Company


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 third quarter and first nine months 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
September 30, 2021
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	38,273	163	(58)	38,378
Non-U.S. government securities	5,787		—	—	5,787
Securities of U.S. states and political subdivisions (2)	19,320		373	(54)	19,639
Federal agency mortgage-backed securities	91,981		2,433	(429)	93,985
Non-agency mortgage-backed securities (3)	4,366		41	(18)	4,389
Collateralized loan obligations	14,450		8	(4)	14,454
Other debt securities	8,522		416	(13)	8,925
Total available-for-sale debt securities	182,699		3,434	(576)	185,557
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	23,853		748	(414)	24,187
Securities of U.S. states and political subdivisions	29,358		721	(209)	29,870
Federal agency mortgage-backed securities	187,048		2,510	(2,051)	187,507
Non-agency mortgage-backed securities	965		45	(13)	997
Collateralized loan obligations	21,269		193	(1)	21,461

Total held-to-maturity debt securities	262,493		4,217	(2,688)	264,022
Total (4)	$	445,192	7,651	(3,264)	449,579
December 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	21,954	205	—	22,159
Non-U.S. government securities	16,816		—	(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	—	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 $21 million and $28 million related to AFS debt securities and $75 million and $41 million related to HTM debt securities at September 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 September 30, 2021, and $5.0 billion at December 31, 2020.

(3)Predominantly consists of commercial mortgage-backed securities at both September 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 $126.7 billion and $84.0 billion and a fair value of $128.0 billion and $84.7 billion at September 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)~~			~~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			73

Note 3: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

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 September 30,			Nine months ended September 30,
(in millions)	2021		2020	2021		2020
Purchases of held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies	$	—	—	$	—	3,016
Securities of U.S. states and political subdivisions	1,409		—	4,492		881
Federal agency mortgage-backed securities	14,296		23,664	64,018		46,485
Non-agency mortgage-backed securities	30		19	114		93
Collateralized loan obligations	839		—	8,177		—
Total purchases of held-to-maturity debt securities	16,574		23,683	76,801		50,475
Transfers from available-for-sale debt securities to held-to-maturity debt securities:

Securities of U.S. states and political subdivisions	—		1,236	—		1,236
Federal agency mortgage-backed securities	—		—	41,298		—


Total transfers from available-for-sale debt securities to held-to-maturity debt securities	$	—	1,236	$	41,298	1,236

(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 September 30,				Nine months ended September 30,
(in millions)	2021		2020		2021		2020
Interest income (1):
Available-for-sale	$	676	1,009		$	2,142	4,084
Held-to-maturity	1,166		891		3,186		2,809
Total interest income	1,842		1,900		5,328		6,893
Provision for credit losses:
Available-for-sale	(5)		12		7		140
Held-to-maturity	(3)		6		33		19
Total provision for credit losses	(8)		18		40		159
Realized gains and losses (2):
Gross realized gains	291		264		443		768
Gross realized losses	—		—		(1)		(40)


Impairment write-downs	(8)		—		(8)		(15)
Net realized gains	$	283	$	264	$	434	713

(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 no 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 September 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)~~74			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

Table 3.4:Investment Grade Debt Securities


	Available-for-Sale				Held-to-Maturity
($ in millions)	Fair value		% investment grade		Amortized cost	% investment grade
September 30, 2021
Total portfolio (1)	$	185,557	99	%	262,568	99	%
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)	$	132,363	100	%	210,901	100	%
Securities of U.S. states and political subdivisions	19,639		99		29,372	100
Collateralized loan obligations (3)	14,454		100		21,309	100
All other debt securities (4)	19,101		92		986	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)96% and 92% were rated AA- and above at September 30, 2021, and December 31, 2020, respectively.

(2)Includes federal agency mortgage-backed securities.

(3)99% and 98% were rated AA- and above at September 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 September 30, 2021, and December 31, 2020. The carrying value of debt securities in nonaccrual status was insignificant at both September 30, 2021, and December 31, 2020. Charge-offs on debt securities were insignificant in the third quarter and first nine months 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 third quarter and first nine months of both 2021 and 2020.


~~(3)~~			~~Predominantly consists of federal agency mortgage-backed securities at both~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~. Wells Fargo & Company			75

Note ~~4: Investment~~3: Available-for-Sale and Held-to-Maturity Debt Securities (~~continued~~)(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
September 30, 2021
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	(58)	15,082	—	—	(58)	15,082
Non-U.S. government securities	—		—	—	—	—	—
Securities of U.S. states and political subdivisions	(45)		2,326	(9)	494	(54)	2,820
Federal agency mortgage-backed securities	(389)		28,889	(40)	2,653	(429)	31,542
Non-agency mortgage-backed securities	(2)		356	(16)	628	(18)	984
Collateralized loan obligations	(1)		868	(3)	1,283	(4)	2,151
Other debt securities	(6)		1,202	(7)	685	(13)	1,887
Total available-for-sale debt securities	$	(501)	48,723	(75)	5,743	(576)	54,466
December 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	—	—	—	—	—	—
Non-U.S. government securities	(3)		16,812	—	—	(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


76			Wells Fargo & Company

~~Note 4: Investment Securities (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
September 30, 2021
Available-for-sale debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	38,273		5	18,925	17,381	1,962
Fair value	38,378			5	18,934	17,362	2,077
Weighted average yield	0.76		%	2.00	0.34	1.13	1.44
Non-U.S. government securities
Amortized cost, net	$	5,787		5,762	25	—	—
Fair value	5,787			5,762	25	—	—
Weighted average yield	(0.11		%)	(0.12)	0.42	—	—
Securities of U.S. states and political subdivisions
Amortized cost, net	$	19,320		1,207	2,472	5,329	10,312
Fair value	19,639			1,208	2,513	5,327	10,591
Weighted average yield	2.02		%	1.37	1.45	1.41	2.55
Federal agency mortgage-backed securities
Amortized cost, net	$	91,981		9	221	2,969	88,782
Fair value	93,985			9	235	3,074	90,667
Weighted average yield	2.62		%	2.29	3.33	2.29	2.63
Non-agency mortgage-backed securities
Amortized cost, net	$	4,366		—	—	148	4,218
Fair value	4,389			—	—	147	4,242
Weighted average yield	1.99		%	—	—	2.28	1.98
Collateralized loan obligations
Amortized cost, net	$	14,450		—	92	7,086	7,272
Fair value	14,454			—	92	7,086	7,276
Weighted average yield	1.38		%	—	2.17	1.37	1.39
Other debt securities
Amortized cost, net	$	8,522		263	2,393	2,566	3,300
Fair value	8,925			264	2,478	2,606	3,577
Weighted average yield	3.08		%	3.27	4.23	3.23	2.11
Total available-for-sale debt securities
Amortized cost, net	$	182,699		7,246	24,128	35,479	115,846
Fair value	185,557			7,248	24,277	35,602	118,430
Weighted average yield	1.99		%	0.35	0.87	1.47	2.49

(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)~~			~~Weighted-average~~Wells Fargo & Company			77

Note 3: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

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
September 30, 2021
Held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	23,853		7,661	12,409	—	3,783
Fair value	24,187			7,688	13,077	—	3,422
Weighted average yield	2.09		%	1.91	2.37	—	1.57
Securities of U.S. states and political subdivisions
Amortized cost, net	$	29,358		1,123	1,833	2,174	24,228
Fair value	29,870			1,138	1,891	2,248	24,593
Weighted average yield	2.21		%	2.37	1.80	2.60	2.20
Federal agency mortgage-backed securities
Amortized cost, net	$	187,048		—	—	—	187,048
Fair value	187,507			—	—	—	187,507
Weighted average yield	2.17		%	—	—	—	2.17
Non-agency mortgage-backed securities
Amortized cost, net	$	965		—	15	18	932
Fair value	997			—	15	20	962
Weighted average yield	3.05		%	—	1.56	3.65	3.06
Collateralized loan obligations
Amortized cost, net	$	21,269		—	—	9,715	11,554
Fair value	21,461			—	—	9,833	11,628
Weighted average yield	1.64		%	—	—	1.67	1.61
Total held-to-maturity debt securities
Amortized cost, net	$	262,493		8,784	14,257	11,907	227,545
Fair value	264,022			8,826	14,983	12,101	228,112
Weighted average yield	2.13		%	1.97	2.29	1.84	2.14

(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)~~78			~~Weighted-average yields displayed by maturity bucket are weighted based on amortized cost and predominantly represent contractual coupon rates.~~Wells Fargo & Company

~~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 September 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 nine months of 2021, we reversed accrued interest receivable of $36 million for our commercial portfolio segment and $143 million for our consumer portfolio segment, compared with $29 million and $161 million, respectively, for the same period a year ago.

Table ~~5.1:~~4.1:Loans Outstanding


(in millions)				(in millions)	Sep 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	$	326,425	318,805
Real estate mortgage	128,475		132,491	Real estate mortgage	121,985		121,720
Real estate construction	24,520		23,916	Real estate construction	21,129		21,805
Lease financing	19,211		19,289	Lease financing	15,398		16,087
Total commercial	500,150		506,536	Total commercial	484,937		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	242,935		276,674
Residential mortgage – junior lien				Residential mortgage – junior lien	18,026		23,286
Credit card	36,249		36,700	Credit card	36,061		36,664
Automobile	55,455		62,286
Other revolving credit and installment	38,694		40,266
Auto				Auto	53,827		48,187
Other consumer				Other consumer	27,041		24,409
Total consumer	451,723		461,068	Total consumer	377,890		409,220
Total loans	$	951,873	967,604	Total loans	$	862,827	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)	Sep 30, 2021		Dec 31, 2020




Non-U.S. commercial loans:
Commercial and industrial	$	74,030	63,128
Real estate mortgage	6,731		7,278
Real estate construction	1,727		1,603
Lease financing	668		629
Total non-U.S. commercial loans	$	83,156	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


			Wells Fargo & Company			79

Note 4: Loans and Related Allowance for Credit Losses (continued)

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 September 30,
Purchases	$	124	1	125	260	2	262
Sales	(621)		—	(621)	(564)	—	(564)
Transfers (to)/from LHFS	(565)		(11)	(576)	(170)	8,990	8,820
Nine months ended September 30,
Purchases	$	306	3	309	1,034	5	1,039
Sales	(959)		(188)	(1,147)	(3,334)	(27)	(3,361)
Transfers (to)/from LHFS	(1,359)		(47)	(1,406)	(101)	(1,387)	(1,488)

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~~$85.4 billion at September 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 30, ~~2017,~~2021, and December 31, ~~2016,~~2020, we had ~~$1.2~~$1.5 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)	Sep 30, 2021		Dec 31, 2020
Commercial:
Commercial and industrial	$	404,260	378,167
Real estate mortgage	8,322		7,993
Real estate construction	17,932		15,650

Total commercial	430,514		401,810
Consumer:
Residential mortgage – first lien	38,872		31,530
Residential mortgage – junior lien	28,917		32,820
Credit card	128,004		121,096
Other consumer	56,389		49,179
Total consumer	252,182		234,625
Total unfunded credit commitments	$	682,696	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


80			Wells Fargo & Company

~~Note 5: Loans and Allowance for Credit Losses (continued~~)

Allowance for Credit Losses

impact to our customers and our business as a result of the hurricanes and refine our estimates as more information becomes available. However, in light of the ongoing recovery challenges in Puerto Rico after Hurricane Maria, it may take longer to assess the hurricane’s impact on our portfolios there. We are still evaluating the impact on our portfolio from the California wildfires that occurred in October 2017.

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 $5.0 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 September 30,				Nine months ended September 30,
($ in millions)	2021			2020	2021	2020
Balance, beginning of period	$	16,391		20,436	19,713	10,456

Cumulative effect from change in accounting policies (1)	—			—	—	(1,337)
Allowance for purchased credit-deteriorated (PCD) loans (2)	—			—	—	8

Balance, beginning of period, adjusted	16,391			20,436	19,713	9,127
Provision for credit losses	(1,387)			751	(3,743)	14,149
Interest income on certain impaired loans (3)	(35)			(41)	(112)	(117)
Loan charge-offs:
Commercial:
Commercial and industrial	(144)			(327)	(452)	(1,260)
Real estate mortgage	(5)			(59)	(68)	(134)
Real estate construction	(1)			—	(1)	—
Lease financing	(7)			(34)	(38)	(66)
Total commercial	(157)			(420)	(559)	(1,460)
Consumer:
Residential mortgage – first lien	(10)			(20)	(33)	(63)
Residential mortgage – junior lien	(15)			(22)	(46)	(70)
Credit card	(258)			(339)	(950)	(1,225)
Auto	(107)			(99)	(364)	(413)
Other consumer	(107)			(94)	(333)	(372)
Total consumer	(497)			(574)	(1,726)	(2,143)
Total loan charge-offs	(654)			(994)	(2,285)	(3,603)
Loan recoveries:
Commercial:
Commercial and industrial	98			53	237	132
Real estate mortgage	15			3	37	13
Real estate construction	—			2	1	19
Lease financing	6			6	17	14
Total commercial	119			64	292	178
Consumer:
Residential mortgage – first lien	24			21	90	65
Residential mortgage – junior lien	43			36	124	101
Credit card	100			94	300	276
Auto	81			68	241	194
Other consumer	28			28	85	84
Total consumer	276			247	840	720
Total loan recoveries	395			311	1,132	898
Net loan charge-offs	(259)			(683)	(1,153)	(2,705)
Other	(5)			8	—	17
Balance, end of period	$	14,705		20,471	14,705	20,471

Components:
Allowance for loan losses	$	13,517		19,463	13,517	19,463
Allowance for unfunded credit commitments	1,188			1,008	1,188	1,008
Allowance for credit losses	$	14,705		20,471	14,705	20,471
Net loan charge-offs (annualized) as a percentage of average total loans	0.12		%	0.29	0.18	0.38
Allowance for loan losses as a percentage of total loans	1.57			2.12	1.57	2.12
Allowance for credit losses for loans as a percentage of total loans	1.70			2.22	1.70	2.22

(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)~~			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			81


~~(2)~~	~~Quarter and nine months ended September 30, 2017, include an incremental~~ ~~$29 million~~ ~~of charge-offs in accordance with updated industry regulatory guidance regarding the timing of loss recognition for real estate 1-4 family mortgage and automobile loans in bankruptcy.~~ Note 4: Loans and Related Allowance for Credit Losses (continued)

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 September 30,
Balance, beginning of period	$	9,570	6,821	16,391	11,669	8,767	20,436



Provision for credit losses	(949)		(438)	(1,387)	241	510	751
Interest income on certain loans (1)	(13)		(22)	(35)	(18)	(23)	(41)
Loan charge-offs	(157)		(497)	(654)	(420)	(574)	(994)
Loan recoveries	119		276	395	64	247	311
Net loan charge-offs	(38)		(221)	(259)	(356)	(327)	(683)
Other	(5)		—	(5)	6	2	8
Balance, end of period	$	8,565	6,140	14,705	11,542	8,929	20,471
Nine months ended September 30,
Balance, beginning of period	$	11,516	8,197	19,713	6,245	4,211	10,456
Cumulative effect from change in accounting policies (2)	—		—	—	(2,861)	1,524	(1,337)
Allowance for purchased credit-deteriorated (PCD) loans (3)	—		—	—	—	8	8
Balance, beginning of period, adjusted	11,516		8,197	19,713	3,384	5,743	9,127
Provision for credit losses	(2,637)		(1,106)	(3,743)	9,480	4,669	14,149
Interest income on certain loans (1)	(47)		(65)	(112)	(44)	(73)	(117)
Loan charge-offs	(559)		(1,726)	(2,285)	(1,460)	(2,143)	(3,603)
Loan recoveries	292		840	1,132	178	720	898
Net loan charge-offs	(267)		(886)	(1,153)	(1,282)	(1,423)	(2,705)
Other	—		—	—	4	13	17
Balance, end of period	$	8,565	6,140	14,705	11,542	8,929	20,471

(1)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.

(2)Represents the overall decrease in our ACL for loans as a result of our adoption of CECL on January 1, 2020.

(3)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)~~82			~~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
~~(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.~~


~~(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.~~

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 September 30, 2021, we had $453.9 billion inand $31.1 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
September 30, 2021
Commercial and industrial
Pass	$	49,829	19,105	24,674	8,883	4,594	13,466	193,037	606	314,194
Criticized	684		1,103	1,129	1,215	696	922	6,463	19	12,231
Total commercial and industrial	50,513		20,208	25,803	10,098	5,290	14,388	199,500	625	326,425
Real estate mortgage
Pass	23,100		18,119	20,763	13,879	8,351	17,837	4,685	3	106,737
Criticized	2,314		2,140	3,267	2,389	1,115	3,516	507	—	15,248
Total real estate mortgage	25,414		20,259	24,030	16,268	9,466	21,353	5,192	3	121,985
Real estate construction
Pass	4,057		4,404	5,572	2,739	579	344	1,097	2	18,794
Criticized	609		282	653	349	434	8	—	—	2,335
Total real estate construction	4,666		4,686	6,225	3,088	1,013	352	1,097	2	21,129
Lease financing
Pass	3,163		3,275	2,860	1,557	985	2,292	—	—	14,132
Criticized	214		264	329	230	106	123	—	—	1,266
Total lease financing	3,377		3,539	3,189	1,787	1,091	2,415	—	—	15,398
Total commercial loans	$	83,970	48,692	59,247	31,241	16,860	38,508	205,789	630	484,937
	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	—	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	—	—	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	—	—	14,584
Criticized	308		433	372	197	108	85	—	—	1,503
Total lease financing	4,278		4,284	2,548	1,661	1,307	2,009	—	—	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


			Wells Fargo & Company			83

Note 4: Loans and Related Allowance for Credit Losses (continued)

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
September 30, 2021
By delinquency status:
Current-29 days past due (DPD) and still accruing	$	324,702	120,112	21,079	15,067	480,960
30-89 DPD and still accruing	403		260	30	143	836
90+ DPD and still accruing	46		75	—	—	121
Nonaccrual loans	1,274		1,538	20	188	3,020
Total commercial loans	$	326,425	121,985	21,129	15,398	484,937
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	—	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)~~84			~~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

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
September 30, 2021
Residential mortgage – first lien
By delinquency status:
Current-29 DPD	$	50,157	44,546	28,298	8,767	15,531	68,415	5,622	1,570	222,906
30-59 DPD	66		30	41	15	27	524	16	27	746
60-89 DPD	1		8	2	4	6	161	6	15	203
90-119 DPD	—		10	1	1	5	57	3	11	88
120-179 DPD	1		17	5	2	2	70	7	20	124
180+ DPD	—		136	24	31	44	972	86	230	1,523
Government insured/guaranteed loans (1)	5		170	295	466	516	15,893	��	—	17,345
Total residential mortgage – first lien	50,230		44,917	28,666	9,286	16,131	86,092	5,740	1,873	242,935
Residential mortgage – junior lien
By delinquency status:
Current-29 DPD	20		21	33	29	24	813	11,906	4,393	17,239
30-59 DPD	—		—	—	—	—	15	27	41	83
60-89 DPD	—		—	—	—	—	6	11	22	39
90-119 DPD	—		—	—	1	—	3	8	16	28
120-179 DPD	—		—	1	—	—	5	15	26	47
180+ DPD	—		—	—	—	—	35	168	387	590
Total residential mortgage – junior lien	20		21	34	30	24	877	12,135	4,885	18,026
Credit cards
By delinquency status:
Current-29 DPD	—		—	—	—	—	—	35,347	208	35,555
30-59 DPD	—		—	—	—	—	—	156	7	163
60-89 DPD	—		—	—	—	—	—	100	6	106
90-119 DPD	—		—	—	—	—	—	86	6	92
120-179 DPD	—		—	—	—	—	—	144	1	145
180+ DPD	—		—	—	—	—	—	—	—	—
Total credit cards	—		—	—	—	—	—	35,833	228	36,061
Auto
By delinquency status:
Current-29 DPD	22,161		14,105	9,816	3,914	1,829	1,123	—	—	52,948
30-59 DPD	103		165	151	78	48	69	—	—	614
60-89 DPD	28		54	48	24	14	23	—	—	191
90-119 DPD	11		22	18	9	5	8	—	—	73
120-179 DPD	—		—	1	—	—	—	—	—	1
180+ DPD	—		—	—	—	—	—	—	—	—
Total auto	22,303		14,346	10,034	4,025	1,896	1,223	—	—	53,827
Other consumer
By delinquency status:
Current-29 DPD	1,581		853	841	262	129	146	23,017	138	26,967
30-59 DPD	2		2	3	2	1	2	13	3	28
60-89 DPD	1		1	2	1	—	1	5	1	12
90-119 DPD	—		1	2	1	—	1	4	1	10
120-179 DPD	—		—	—	—	—	—	6	2	8
180+ DPD	—		—	—	—	—	1	5	10	16
Total other consumer	1,584		857	848	266	130	151	23,050	155	27,041
Total consumer loans	$	74,137	60,141	39,582	13,607	18,181	88,343	76,758	7,141	377,890

(continued on following page)


			Wells Fargo & Company			85

Note 4: Loans and Related Allowance for Credit Losses (continued)

(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	—	—	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	—		—	1	1	—	22	113	160	297
60-89 DPD	—		—	1	—	—	11	154	271	437
90-119 DPD	—		—	—	1	—	7	45	84	137
120-179 DPD	—		—	—	—	—	9	36	77	122
180+ DPD	—		—	—	—	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	—		—	—	—	—	—	35,612	255	35,867
30-59 DPD	—		—	—	—	—	—	243	12	255
60-89 DPD	—		—	—	—	—	—	167	10	177
90-119 DPD	—		—	—	—	—	—	144	10	154
120-179 DPD	—		—	—	—	—	—	208	3	211
180+ DPD	—		—	—	—	—	—	—	—	—
Total credit cards	—		—	—	—	—	—	36,374	290	36,664
Auto
By delinquency status:
Current-29 DPD	19,625		14,561	6,307	3,459	2,603	697	—	—	47,252
30-59 DPD	120		183	114	80	107	46	—	—	650
60-89 DPD	32		60	36	25	35	16	—	—	204
90-119 DPD	13		26	14	9	12	6	—	—	80
120-179 DPD	—		1	—	—	—	—	—	—	1
180+ DPD	—		—	—	—	—	—	—	—	—
Total auto	19,790		14,831	6,471	3,573	2,757	765	—	—	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	—	1	8	3	20
120-179 DPD	—		—	—	—	—	—	10	4	14
180+ DPD	—		—	—	—	—	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 $6.7 billion and $11.1 billion at September 30, 2021, and December 31, 2020, respectively.

Of the ~~$3.0~~$2.7 billion of consumer loans not government insured/guaranteed that are 90 days or more past due at September 30, ~~2017, $923~~2021, $394 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.

~~Note 5: Loans and Allowance for Credit Losses (continued~~)


86			Wells Fargo & Company

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 $17.3 billion and $13.2 billion at September 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
September 30, 2021
By FICO:
Residential mortgage – first lien
800+	$	24,509	28,900	18,666	5,804	10,712	41,687	2,792	442	133,512
760-799	17,997		10,795	6,279	1,731	2,801	11,710	1,137	249	52,699
720-759	5,792		3,649	2,243	749	1,303	6,941	707	231	21,615
680-719	1,425		933	773	318	478	3,874	442	207	8,450
640-679	350		271	210	100	151	1,965	204	143	3,394
600-639	69		49	70	40	39	1,093	108	87	1,555
< 600	4		18	26	15	41	1,229	123	132	1,588
No FICO available	79		132	104	63	90	1,700	227	382	2,777
Government insured/guaranteed loans (1)	5		170	295	466	516	15,893	—	—	17,345
Total residential mortgage – first lien	50,230		44,917	28,666	9,286	16,131	86,092	5,740	1,873	242,935
Residential mortgage – junior lien
800+	—		—	—	—	—	214	6,095	1,484	7,793
760-799	—		—	—	—	—	128	2,381	833	3,342
720-759	—		—	—	—	—	149	1,626	824	2,599
680-719	—		—	—	—	—	131	944	656	1,731
640-679	—		—	—	—	—	74	361	368	803
600-639	—		—	—	—	—	49	180	211	440
< 600	—		—	—	—	—	49	178	246	473
No FICO available	20		21	34	30	24	83	370	263	845
Total residential mortgage – junior lien	20		21	34	30	24	877	12,135	4,885	18,026
Credit card
800+	—		—	—	—	—	—	4,063	1	4,064
760-799	—		—	—	—	—	—	5,629	8	5,637
720-759	—		—	—	—	—	—	7,960	28	7,988
680-719	—		—	—	—	—	—	8,660	53	8,713
640-679	—		—	—	—	—	—	5,433	52	5,485
600-639	—		—	—	—	—	—	2,085	34	2,119
< 600	—		—	—	—	—	—	1,873	51	1,924
No FICO available	—		—	—	—	—	—	130	1	131
Total credit card	—		—	—	—	—	—	35,833	228	36,061
Auto
800+	3,612		2,142	1,899	803	403	173	—	—	9,032
760-799	3,721		2,393	1,840	705	304	140	—	—	9,103
720-759	3,642		2,386	1,741	697	309	166	—	—	8,941
680-719	3,814		2,602	1,681	639	280	173	—	—	9,189
640-679	3,507		2,150	1,195	442	203	151	—	—	7,648
600-639	2,349		1,319	720	285	146	136	—	—	4,955
< 600	1,652		1,322	954	443	241	270	—	—	4,882
No FICO available	6		32	4	11	10	14	—	—	77
Total auto	22,303		14,346	10,034	4,025	1,896	1,223	—	—	53,827
Other consumer
800+	375		201	165	44	12	52	1,583	15	2,447
760-799	392		185	144	44	11	25	909	21	1,731
720-759	321		156	143	50	14	21	787	21	1,513
680-719	221		110	121	49	13	18	651	25	1,208
640-679	100		48	65	27	8	9	347	17	621
600-639	23		14	21	11	4	6	124	11	214
< 600	9		12	24	13	4	6	118	12	198
No FICO available	143		131	165	28	64	14	1,236	33	1,814
FICO not required	—		—	—	—	—	—	17,295	—	17,295
Total other consumer	1,584		857	848	266	130	151	23,050	155	27,041
Total consumer loans	$	74,137	60,141	39,582	13,607	18,181	88,343	76,758	7,141	377,890

(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)~~			~~The~~ ~~September 30, 2017, amounts reflect updated FICO score version implemented in first quarter 2017.~~ Wells Fargo & Company			87


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

Note 4: Loans and Related Allowance for Credit Losses (continued)

(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
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	—	—	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+	—		—	—	—	—	293	7,973	1,819	10,085
760-799	—		—	—	—	—	177	3,005	1,032	4,214
720-759	—		—	—	—	—	207	2,093	1,034	3,334
680-719	—		—	—	—	—	183	1,233	854	2,270
640-679	—		—	—	—	—	103	503	493	1,099
600-639	—		—	—	—	—	67	241	299	607
< 600	—		—	—	—	—	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+	—		—	—	—	—	—	3,860	1	3,861
760-799	—		—	—	—	—	—	5,438	7	5,445
720-759	—		—	—	—	—	—	7,897	29	7,926
680-719	—		—	—	—	—	—	8,854	60	8,914
640-679	—		—	—	—	—	—	5,657	64	5,721
600-639	—		—	—	—	—	—	2,242	46	2,288
< 600	—		—	—	—	—	—	2,416	82	2,498
No FICO available	—		—	—	—	—	—	10	1	11
Total credit card	—		—	—	—	—	—	36,374	290	36,664
Auto
800+	2,875		2,606	1,211	731	452	104	—	—	7,979
760-799	3,036		2,662	1,122	579	349	81	—	—	7,829
720-759	3,162		2,514	1,095	576	395	98	—	—	7,840
680-719	3,534		2,542	1,066	545	400	105	—	—	8,192
640-679	3,381		1,948	763	395	334	94	—	—	6,915
600-639	2,208		1,165	479	274	276	87	—	—	4,489
< 600	1,581		1,357	730	463	533	186	—	—	4,850
No FICO available	13		37	5	10	18	10	—	—	93
Total auto	19,790		14,831	6,471	3,573	2,757	765	—	—	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	—		—	—	—	—	—	13,249	—	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.


88			Wells Fargo & Company

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.

Table ~~5.12:~~4.11:Consumer ~~Loans~~Loan Categories by LTV/CLTV and Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2021		2020	2019	2018	2017	Prior			Total
September 30, 2021
Residential mortgage – first lien
By LTV:
0-60%	$	17,470	21,545	16,381	5,544	11,914	62,715	4,558	1,586	141,713
60.01-80%	32,587		22,365	11,153	2,967	3,407	6,618	848	208	80,153
80.01-100%	98		695	724	250	237	520	218	51	2,793
100.01-120% (1)	2		31	27	5	9	58	47	13	192
> 120% (1)	3		12	13	6	3	42	19	4	102
No LTV available	65		99	73	48	45	246	50	11	637
Government insured/guaranteed loans (2)	5		170	295	466	516	15,893	—	—	17,345
Total residential mortgage – first lien	50,230		44,917	28,666	9,286	16,131	86,092	5,740	1,873	242,935
Residential mortgage – junior lien
By CLTV:
0-60%	—		—	—	—	—	509	8,319	3,543	12,371
60.01-80%	—		—	—	—	—	212	2,865	950	4,027
80.01-100%	—		—	—	—	—	79	735	288	1,102
100.01-120% (2)	—		—	—	—	—	18	143	56	217
> 120% (2)	—		—	—	—	—	5	51	16	72
No CLTV available	20		21	34	30	24	54	22	32	237
Total residential mortgage – junior lien	20		21	34	30	24	877	12,135	4,885	18,026
Total	$	50,250	44,938	28,700	9,316	16,155	86,969	17,875	6,758	260,961
	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	—	—	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%	—		—	—	—	—	548	8,626	3,742	12,916
60.01-80%	—		—	—	—	—	335	5,081	1,554	6,970
80.01-100%	—		—	—	—	—	187	1,507	641	2,335
100.01-120% (2)	—		—	—	—	—	59	376	156	591
> 120% (2)	—		—	—	—	—	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)~~			~~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			89


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

Note 4: Loans and Related Allowance for Credit Losses (continued)

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)		Nine months ended September 30,
(in millions)	Sep 30, 2021		Dec 31, 2020	Sep 30, 2021	Dec 31, 2020	2021	2020
Commercial:
Commercial and industrial	$	1,274	2,698	229	382	73	48
Real estate mortgage	1,538		1,774	143	93	51	25
Real estate construction	20		48	14	15	3	6
Lease financing	188		259	39	16	1	—
Total commercial	3,020		4,779	425	506	128	79
Consumer:
Residential mortgage- first lien	3,093		2,957	1,998	1,908	86	116
Residential mortgage- junior lien	702		754	472	461	38	39
Auto	206		202	—	—	26	12
Other consumer	37		36	—	—	2	2
Total consumer	4,038		3,949	2,470	2,369	152	169
Total nonaccrual loans	$	7,058	8,728	2,895	2,875	280	248

(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


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


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

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~~$836 million and ~~$8.1~~$2.1 billion at September 30, ~~2017~~2021, and December 31, ~~2016,~~2020, respectively, which included ~~$4.1 billion~~$574 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.

~~Note 5: Loans and Allowance for Credit Losses (continued~~)


90			Wells Fargo & Company

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)	Sep 30, 2021		Dec 31, 2020
Total:	$	5,598	7,041
Less: FHA insured/VA guaranteed (1)	5,083		6,351

Total, not government insured/guaranteed	$	515	690
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial	$	46	39
Real estate mortgage	75		38
Real estate construction	—		1
Total commercial	121		78
Consumer:
Residential mortgage – first lien	68		135
Residential mortgage – junior lien	13		19
Credit card	238		365
Auto	60		65
Other consumer	15		28
Total consumer	394		612
Total, not government insured/guaranteed	$	515	690

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

(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)~~	~~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.~~

~~Table 5.15:Impaired Loans Summary~~

Recorded investment
(in millions)
Unpaid
principal
balance (1)

Impaired
loans

Impaired loans
with related
allowance for
credit losses

Related
allowance for
credit losses

September 30, 2017
Commercial:
Commercial and industrial $ 4,259
3,098
2,779
518
Real estate mortgage 1,541
1,263
1,243
230
Real estate construction 87
53
53
11
Lease financing 143
107
107
27
Total commercial 6,030
4,521
4,182
786
Consumer:
Real estate 1-4 family first mortgage 14,635
12,756
6,353
781
Real estate 1-4 family junior lien mortgage 2,206
1,981
1,466
237
Credit card 341
340
340
129
Automobile 158
88
33
5
Other revolving credit and installment 134
126
115
31
Total consumer (2) 17,474
15,291
8,307
1,183
Total impaired loans (excluding PCI) $ 23,504
19,812
12,489
1,969
December 31, 2016
Commercial:
Commercial and industrial $ 5,058
3,742
3,418
675
Real estate mortgage 1,777
1,418
1,396
280
Real estate construction 167
93
93
22
Lease financing 146
119
119
23
Total commercial 7,148
5,372
5,026
1,000
Consumer:
Real estate 1-4 family first mortgage 16,438
14,362
9,475
1,117
Real estate 1-4 family junior lien mortgage 2,399
2,156
1,681
350
Credit card 300
300
300
104
Automobile 153
85
31
5
Other revolving credit and installment 109
102
91
17
Total consumer (2) 19,399
17,005
11,578
1,593
Total impaired loans (excluding PCI) $ 26,547
22,377
16,604
2,593


~~(1)~~	~~Excludes the unpaid principal balance for loans that have been fully charged off or otherwise have zero recorded investment.~~

~~(2)~~

~~Includes the recorded investment of~~ ~~$1.4 billion~~ ~~and~~ ~~$1.5 billion~~ at ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~, respectively, of government insured/guaranteed loans that are predominantly insured by the FHA or guaranteed by the VA and generally do not have an allowance. Impaired loans may also have limited, if any, allowance when the recorded investment of the loan approximates estimated net realizable value as a result of charge-offs prior to a TDR modification.

~~Note 5: Loans and Allowance for Credit Losses (continued~~)

~~Commitments to lend additional funds on loans whose terms have been modified in a TDRamounted to $628 million and $403 million at September 30, 2017 and December 31, 2016, respectively.~~

~~Table 5.16 provides the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans by portfolio segment and class.~~

~~Table 5.16:Average Recorded Investment in Impaired Loans~~

Quarter ended September 30, Nine months ended September 30,
2017 2016 2017 2016
(in millions)
Average
recorded
investment

Recognized
interest
income

Average
recorded
investment

Recognized
interest
income

Average
recorded
investment

Recognized
interest
income

Average
recorded
investment

Recognized
interest
income

Commercial:
Commercial and industrial $ 3,208
22
3,961
25
3,460
91
3,350
65
Real estate mortgage 1,293
19
1,644
33
1,351
70
1,699
99
Real estate construction 58
—
108
3
69
3
117
8
Lease financing 105
1
99
—
110
1
89
—
Total commercial 4,664
42
5,812
61
4,990
165
5,255
172
Consumer:
Real estate 1-4 family first mortgage 13,044
180
15,471
203
13,594
555
16,224
635
Real estate 1-4 family junior lien mortgage 2,009
30
2,268
32
2,072
92
2,327
99
Credit card 326
9
292
9
314
26
294
26
Automobile 86
2
90
3
84
8
95
9
Other revolving credit and installment 123
2
91
2
114
6
84
5
Total consumer 15,588
223
18,212
249
16,178
687
19,024
774
Total impaired loans (excluding PCI) $ 20,252
265
24,024
310
21,168
852
24,279
946
Interest income:
Cash basis of accounting $ 64
87
219
274
Other (1) 201
223
633
672
Total interest income $ 265
310
852
946


~~(1)~~	Includes interest recognized on accruing TDRs, interest recognized related to certain impaired loans which have an allowance calculated using discounting, and amortization of purchase accounting adjustments related to certain impaired loans.

TROUBLED DEBT RESTRUCTURINGS (TDRs) When, for economic or legal reasons related to a borrower’s financial difficulties, we grant a concession for other than an insignificant period of time to a borrower that we would not otherwise consider, the related loan is classified as a TDR, the balance of which totaled ~~$18.7~~$11.5 billion and ~~$20.8~~$14.5 billion at September 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 $415 million and $489 million at September 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.

~~Table 5.17:TDR Modifications~~

Primary modification type (1) Financial effects of modifications
(in millions) Principal (2)

Interest
rate
reduction

Other
concessions (3)

Total

Charge-
offs (4)

Weighted
average
interest
rate
reduction

Recorded
investment
related to
interest rate
reduction (5)

Quarter ended September 30, 2017
Commercial:
Commercial and industrial $ —
19
481
500
60
0.34 % $ 18
Real estate mortgage 1
12
98
111
7
1.58
13
Real estate construction —
—
1
1
—
1.85
—
Lease financing —
—
23
23
—
—
—
Total commercial 1
31
603
635
67
0.85
31
Consumer:
Real estate 1-4 family first mortgage 48
15
272
335
2
2.62
41
Real estate 1-4 family junior lien mortgage 3
23
20
46
4
3.97
26
Credit card —
74
—
74
—
12.00
74
Automobile 1
4
20
25
12
5.53
4
Other revolving credit and installment —
11
1
12
—
7.72
12
Trial modifications (6) —
—
(10 ) (10 ) —
—
—
Total consumer 52
127
303
482
18
7.68
157
Total $ 53
158
906
1,117
85
6.56 % $ 188
Quarter ended September 30, 2016
Commercial:
Commercial and industrial $ —
10
1,032
1,042
61
1.28 % $ 10
Real estate mortgage —
28
168
196
1
0.99
29
Real estate construction —
12
—
12
—
0.80
12
Lease financing —
—
4
4
—
—
—
Total commercial —
50
1,204
1,254
62
1.01
51
Consumer:
Real estate 1-4 family first mortgage 84
79
330
493
11
2.56
138
Real estate 1-4 family junior lien mortgage 5
25
22
52
9
3.08
29
Credit card —
46
—
46
—
12.13
46
Automobile 1
4
15
20
11
6.42
4
Other revolving credit and installment —
9
3
12
—
6.86
9
Trial modifications (6) —
—
15
15
—
—
—
Total consumer 90
163
385
638
31
4.82
226
Total $ 90
213
1,589
1,892
93
4.13 % $ 277


			Wells Fargo & Company			91

Note 5:4: Loans and Related Allowance for Credit Losses (~~continued~~)(continued)

Table 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 September 30, 2021
Commercial:
Commercial and industrial	$	2	6	192	200	—	0.61	%	$	6
Real estate mortgage	—		2	26	28	—	2.95		2
Real estate construction	—		—	—	—	—	—		—
Lease financing	—		—	3	3	—	—		—
Total commercial	2		8	221	231	—	1.32		8
Consumer:
Residential mortgage – first lien	—		11	204	215	—	1.68		11
Residential mortgage – junior lien	—		3	7	10	—	3.45		3
Credit card	—		25	—	25	—	19.18		25
Auto	—		1	23	24	9	4.00		1
Other consumer	—		4	—	4	—	11.52		4
Trial modifications (5)	—		—	2	2	—	—		—
Total consumer	—		44	236	280	9	12.54		44
Total	$	2	52	457	511	9	10.69	%	$	52
Quarter ended September 30, 2020
Commercial:
Commercial and industrial	$	—	7	882	889	44	0.79	%	$	7
Real estate mortgage	—		5	238	243	5	1.38		5
Real estate construction	9		1	1	11	—	5.25		1
Lease financing	—		—	—	—	—	—		—
Total commercial	9		13	1,121	1,143	49	1.29		13
Consumer:
Residential mortgage – first lien	—		4	2,577	2,581	1	2.06		4
Residential mortgage – junior lien	—		2	59	61	2	2.63		2
Credit card	—		72	—	72	—	15.06		72
Auto	—		1	65	66	35	3.99		1
Other consumer	—		3	24	27	1	7.36		3
Trial modifications (5)	—		—	10	10	—	—		—
Total consumer	—		82	2,735	2,817	39	13.64		82
Total	$	9	95	3,856	3,960	88	12.07	%	$	95

(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)

Nine months ended September 30, 2017
Commercial:
Commercial and industrial $ 17
38
2,323
2,378
154
0.61 % $ 37
Real estate mortgage 5
51
416
472
20
1.31
52
Real estate construction —
1
24
25
—
0.90
1
Lease financing —
—
37
37
—
—
—
Total commercial 22
90
2,800
2,912
174
1.02
90
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
Credit card —
188
—
188
—
12.21
188
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 ) —
—
—
Total consumer 221
439
864
1,524
58
6.41
544
Total $ 243
529
3,664
4,436
232
5.64 % $ 634
Nine months ended September 30, 2016
Commercial:
Commercial and industrial $ 42
123
2,361
2,526
304
1.95 % $ 123
Real estate mortgage —
81
462
543
1
1.14
81
Real estate construction —
26
62
88
—
0.94
26
Lease financing —
—
8
8
—
—
—
Total commercial 42
230
2,893
3,165
305
1.55
230
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
Credit card —
131
—
131
—
12.02
131
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
—
—
—
Total consumer 291
470
1,275
2,036
94
4.80
658
Total $ 333
700
4,168
5,201
399
3.96 % $ 888


~~(1)~~92			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.~~ Wells Fargo & Company

(continued from previous page)


	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)
Nine months ended September 30, 2021
Commercial:
Commercial and industrial	$	2	8	752	762	20	0.74	%	$	8
Real estate mortgage	41		11	212	264	—	1.48		11
Real estate construction	—		—	3	3	—	—		—
Lease financing	—		—	7	7	—	—		—
Total commercial	43		19	974	1,036	20	1.17		19
Consumer:
Residential mortgage – first lien	—		26	1,089	1,115	1	1.60		26
Residential mortgage – junior lien	—		10	29	39	1	2.71		10
Credit card	—		81	—	81	—	19.01		81
Auto	1		3	109	113	46	3.94		3
Other consumer	—		15	1	16	—	11.99		15
Trial modifications (5)	—		—	4	4	—	—		—
Total consumer	1		135	1,232	1,368	48	13.31		135
Total	$	44	154	2,206	2,404	68	11.76	%	$	154
Nine months ended September 30, 2020
Commercial:
Commercial and industrial	$	18	39	2,144	2,201	126	0.74	%	$	39
Real estate mortgage	—		23	488	511	5	1.21		23
Real estate construction	9		1	7	17	—	4.29		1
Lease financing	—		—	1	1	—	—		—
Total commercial	27		63	2,640	2,730	131	0.98		63
Consumer:
Residential mortgage – first lien	—		10	3,063	3,073	2	1.76		35
Residential mortgage – junior lien	—		10	99	109	2	2.43		11
Credit card	—		229	—	229	—	13.31		229
Auto	3		5	119	127	69	4.45		5
Other consumer	—		18	32	50	1	7.65		18
Trial modifications (5)	—		—	(1)	(1)	—	—		—
Total consumer	3		272	3,312	3,587	74	11.03		298
Total	$	30	335	5,952	6,317	205	9.29	%	$	361

(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 $188 million and $382 million for the quarters ended September 30, 2021 and 2020, respectively, and $646 million and $866 million for the first nine months 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.

~~(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.


			Wells Fargo & Company			93

Note 4: Loans and Related Allowance for Credit Losses (continued)

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 September 30,			Nine months ended September 30,
(in millions)	2021		2020	2021	2020
Commercial:
Commercial and industrial	$	4	138	129	360
Real estate mortgage	2		3	27	105
Real estate construction	—		—	—	—
Lease financing	—		—	1	—
Total commercial	6		141	157	465
Consumer:
Residential mortgage – first lien	4		8	9	26
Residential mortgage – junior lien	—		1	1	9
Credit card	5		11	21	56
Auto	11		11	34	14
Other consumer	1		1	2	4
Total consumer	21		32	67	109
Total	$	27	173	224	574

~~Table 5.18:Defaulted TDRs~~


94			Wells Fargo & Company

Recorded investment of defaults
Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
Commercial:
Commercial and industrial $ 14
39
106
84
Real estate mortgage 16
7
47
58
Real estate construction 4
—
4
3
Total commercial 34
46
157
145
Consumer:
Real estate 1-4 family first mortgage 32
36
83
97
Real estate 1-4 family junior lien mortgage 5
6
14
15
Credit card 20
15
52
41
Automobile 4
4
11
10
Other revolving credit and installment 1
—
3
2
Total consumer 62
61
163
165
Total $ 96
107
320
310


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 $220 million and $291 million for the quarters ended September 30, 2021 and 2020, respectively, and $672 million and $795 million for the first nine months of 2021 and 2020, respectively.

Table 5.1:Leasing Revenue


	Quarter ended September 30,			Nine months ended September 30,
(in millions)	2021		2020	2021	2020
Interest income on lease financing (1)	$	169	155	522	592
Other lease revenues:
Variable revenues on lease financing	25		26	76	80
Fixed revenues on operating leases	244		287	758	895
Variable revenues on operating leases	14		9	50	34
Other lease-related revenues (2)	39		11	66	12
Noninterest income on leases	322		333	950	1,021
Total leasing revenue	$	491	488	1,472	1,613

(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)	Sep 30, 2021		Dec 31, 2020
ROU assets	$	3,990	4,306
Lease liabilities	4,638		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 September 30,			Nine months ended September 30,
(in millions)	2021		2020	2021	2020
Fixed lease expense – operating leases	$	262	286	792	869
Variable lease expense	72		81	219	227
Other (1)	(15)		(7)	(46)	(63)
Total lease costs	$	319	360	965	1,033

(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~~

(in millions) Quarter
ended
Sep 30,
2017
Nine months ended
Sep 30,
2017
2009-2016
Balance, beginning of period $ 9,369
11,216
10,447
Change in accretable yield due to acquisitions —
2
159
Accretion into interest income (1) (340 ) (1,071 ) (15,577 )
Accretion into noninterest income due to sales (2) —
(334 ) (467 )
Reclassification from nonaccretable difference for loans with improving credit-related cash flows 234
640
10,955
Changes in expected cash flows that do not affect nonaccretable difference (3) (20 ) (1,210 ) 5,699
Balance, end of period $ 9,243
9,243
11,216


~~(1)~~			~~Includes accretable yield released as a result of settlements with borrowers, which is included in interest income.~~Wells Fargo & Company			95


~~(2)~~			~~Includes accretable yield released as a result of sales to third parties, which is included in noninterest income.~~


~~(3)~~	Represents changes in cash flows expected to be collected due to the impact of modifications, changes in prepayment assumptions, changes in interest rates on variable rate PCI loans and sales to third parties.

~~COMMERCIAL PCI CREDIT QUALITY INDICATORSTable 5.21 provides a breakdown of commercial PCI loans by risk category.~~

~~Table 5.21:Commercial PCI Loans by Risk Category~~

(in millions)
Commercial
and
industrial

Real
estate
mortgage

Real
estate
construction

Total
September 30, 2017
By risk category:
Pass $ 18
81
4
103
Criticized 98
27
6
131
Total commercial PCI loans $ 116
108
10
234
December 31, 2016
By risk category:
Pass $ 92
263
47
402
Criticized 145
120
10
275
Total commercial PCI loans $ 237
383
57
677

~~Table 5.22 provides past due information for commercial PCI loans.~~

~~Table 5.22:Commercial PCI Loans by Delinquency Status~~

(in millions)
Commercial
and
industrial

Real
estate
mortgage

Real
estate
construction

Total
September 30, 2017
By delinquency status:
Current-29 DPD and still accruing $ 114
87
10
211
30-89 DPD and still accruing 2
—
—
2
90+ DPD and still accruing —
21
—
21
Total commercial PCI loans $ 116
108
10
234
December 31, 2016
By delinquency status:
Current-29 DPD and still accruing $ 235
353
48
636
30-89 DPD and still accruing 2
10
—
12
90+ DPD and still accruing —
20
9
29
Total commercial PCI loans $ 237
383
57
677

~~CONSUMER PCI CREDIT QUALITY INDICATORS~~Our consumer PCI loans were aggregated into several pools of loans at acquisition. Below, we have provided credit quality indicators based on the unpaid principal balance (adjusted for write-downs) of the individual loans included in the pool, but we have not

~~allocated the remaining purchase accounting adjustments, which were established at a pool level. Table 5.23 provides the delinquency status of consumer PCI loans.~~

~~Table 5.23:Consumer PCI Loans by Delinquency Status~~ -

September 30, 2017 December 31, 2016
(in millions)
Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Total

Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Total
By delinquency status:
Current-29 DPD and still accruing $ 13,672
149
13,821
16,095
171
16,266
30-59 DPD and still accruing 1,410
6
1,416
1,488
7
1,495
60-89 DPD and still accruing 605
3
608
668
2
670
90-119 DPD and still accruing 257
1
258
233
2
235
120-179 DPD and still accruing 191
1
192
238
2
240
180+ DPD and still accruing 1,425
5
1,430
2,081
8
2,089
Total consumer PCI loans (adjusted unpaid principal balance) $ 17,560
165
17,725
20,803
192
20,995
Total consumer PCI loans (carrying value) $ 13,301
29
13,330
16,018
36
16,054

~~Note 5: Loans and Allowance for Credit Losses (continued~~)

~~Table 5.24 provides FICO scores forconsumer PCI loans.~~

~~Table 5.24:Consumer PCI Loans by FICO~~

September 30, 2017 (1) December 31, 2016
(in millions)
Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Total

Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Total
By FICO:
< 600 $ 4,175
37
4,212
4,292
46
4,338
600-639 2,153
21
2,174
3,001
26
3,027
640-679 2,496
27
2,523
3,972
35
4,007
680-719 2,359
32
2,391
3,170
37
3,207
720-759 1,840
23
1,863
1,767
24
1,791
760-799 957
13
970
962
15
977
800+ 471
7
478
254
4
258
No FICO available 3,109
5
3,114
3,385
5
3,390
Total consumer PCI loans (adjusted unpaid principal balance) $ 17,560
165
17,725
20,803
192
20,995
Total consumer PCI loans (carrying value) $ 13,301
29
13,330
16,018
36
16,054


~~(1)~~	~~September 30, 2017~~ ~~amounts reflect updated FICO score version implemented in first quarter 2017.~~

~~Table 5.25 shows the distribution of consumer PCIloans by LTV for real estate 1-4 family first mortgages and byCLTV for real estate 1-4 family junior lien mortgages.~~

~~Table 5.25:Consumer PCI Loans by LTV/CLTV~~

September 30, 2017 December 31, 2016
(in millions)
Real estate
1-4 family
first
mortgage
by LTV

Real estate
1-4 family
junior lien
mortgage
by CLTV

Total

Real estate
1-4 family
first
mortgage
by LTV

Real estate
1-4 family
junior lien
mortgage
by CLTV

Total
By LTV/CLTV:
0-60% $ 7,642
41
7,683
7,513
38
7,551
60.01-80% 7,079
66
7,145
9,000
76
9,076
80.01-100% 2,358
42
2,400
3,458
54
3,512
100.01-120% (1) 392
12
404
669
18
687
> 120% (1) 87
3
90
161
5
166
No LTV/CLTV available 2
1
3
2
1
3
Total consumer PCI loans (adjusted unpaid principal balance) $ 17,560
165
17,725
20,803
192
20,995
Total consumer PCI loans (carrying value) $ 13,301
29
13,330
16,018
36
16,054


~~(1)~~	~~Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV.~~

Note 6: ~~Other Assets~~ 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)	Sep 30, 2021		Dec 31, 2020
Held for trading at fair value:
Marketable equity securities (1)	$	24,277	23,032
Not held for trading:
Fair value:
Marketable equity securities	1,881		1,564
Nonmarketable equity securities (2)	9,398		9,413
Total equity securities at fair value	11,279		10,977
Equity method:
Private equity	3,155		2,960
Tax-advantaged renewable energy	3,978		3,481
New market tax credit and other	355		409
Total equity method	7,488		6,850
Other methods :
Low-income housing tax credit investments	11,826		11,353
Federal Reserve Bank stock and other at cost (3)	3,584		3,588
Private equity (4)	8,072		4,208
Total equity securities not held for trading	42,249		36,976
Total equity securities	$	66,526	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) related~~(3) Substantially all relates to investments in Federal Reserve Bank stock at both September 30, 2021, and December 31, 2020.

(4) Represents nonmarketable equity ~~investments.~~

~~Table 6.2:Nonmarketable Equity Investments~~securities accounted for under the measurement alternative, which were predominantly securities associated with our affiliated venture capital business.

Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
Net realized gains from nonmarketable equity investments $ 132
55
506
369
All other (184 ) (83 ) (424 ) (404 )
Total $ (52 ) (28 ) 82
(35 )

~~Low Income~~Low-Income Housing Tax Credit Investments

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~~$4.5 billion at September 30, ~~2017~~2021, and ~~$3.6~~$4.2 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)(2)



	Quarter ended September 30,			Nine months ended September 30,
(in millions)	2021		2020	2021	2020
Proportional amortization of investments	$	382	351	1,146	1,054
Tax credits and other tax benefits	(447)		(421)	(1,322)	(1,218)
Net expense/(benefit) recognized within income tax expense	$	(65)	(70)	(176)	(164)

(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit 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)Excludes the impact of the estimated annual effective income tax rate applied to each period.

~~Note 7: Securitizations and Variable Interest Entities (continued~~)



96			Wells Fargo & Company

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 September 30,			Nine months ended September 30,
(in millions)	2021		2020	2021		2020
Net gains (losses) from equity securities carried at fair value:
Marketable equity securities	$	(157)	38	$	(23)	(371)
Nonmarketable equity securities	(522)		265	13		585
Total equity securities carried at fair value	(679)		303	(10)		214
Net gains (losses) from nonmarketable equity securities not carried at fair value (1):
Impairment write-downs	(23)		(535)	(80)		(1,576)
Net unrealized gains related to measurement alternative observable transactions	816		1,030	3,078		1,276
Net realized gains on sale	191		60	742		259

Total nonmarketable equity securities not carried at fair value	984		555	3,740		(41)
Net losses from economic hedge derivatives (2)	564		(209)	227		(392)
Total net gains (losses) from equity securities not held for trading	$	869	649	$	3,957	(219)

(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 September 30,				Nine months ended September 30,
(in millions)	2021		2020		2021		2020
Net gains (losses) recognized in earnings during the period:
Gross unrealized gains due to observable price changes	$	816	1,030		$	3,078	1,276

Impairment write-downs	(19)		(506)		(69)		(918)
Realized net gains from sale	1		8		196		21
Total net gains recognized during the period	$	798	$	532	$	3,205	379

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)	Sep 30, 2021		Dec 31, 2020


Cumulative gains (losses):
Gross unrealized gains due to observable price changes	$	5,336	2,356
Gross unrealized losses due to observable price changes	(25)		(25)
Impairment write-downs	(985)		(969)


			Wells Fargo & Company			97


Note 7: Other Assets

Table 7.1 presents the components of other assets.

Table 7.1:Other Assets


(in millions)	Sep 30, 2021		Dec 31, 2020
Corporate/bank-owned life insurance	$	20,567	20,380
Accounts receivable	19,014		38,116
Interest receivable:
AFS and HTM debt securities	1,350		1,368
Loans	2,147		2,838
Trading and other	346		415
Customer relationship and other amortized intangibles	267		328
Foreclosed assets:
Residential real estate	47		73
Other	74		86
Operating lease assets (lessor)	6,611		7,391
Operating lease ROU assets (lessee)	3,990		4,306
Due from customers on acceptances	132		268
Other	12,224		11,768
Total other assets	$	66,769	87,337


98			Wells Fargo & Company


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.~~

~~Table 7.1:Balance Sheet Transactions with VIEs~~

(in millions)
VIEs that we
do not
consolidate

VIEs
that we
consolidate

Transfers that
we account
for as secured
borrowings
Total
September 30, 2017
Cash $ —
115
—
115
Federal funds sold, securities purchased under resale agreements and other short-term investments —
402
—
402
Trading assets 1,150
130
201
1,481
Investment securities (1)
4,944
—
364
5,308
Loans 4,491
11,905
508
16,904
Mortgage servicing rights 13,340
—
—
13,340
Derivative assets 80
—
—
80
Other assets 10,355
352
7
10,714
Total assets 34,360
12,904
1,080
48,344
Short-term borrowings —
—
523
523
Derivative liabilities 101
26
(2) —
127
Accrued expenses and other liabilities
240
141
(2) 32
413
Long-term debt
3,103
2,103
(2) 489
5,695
Total liabilities 3,444
2,270
1,044
6,758
Noncontrolling interests —
119
—
119
Net assets $ 30,916
10,515
36
41,467
December 31, 2016
Cash $ —
168
—
168
Federal funds sold, securities purchased under resale agreements and other short-term investments —
74
—
74
Trading assets 2,034
130
201
2,365
Investment securities (1) 8,530
—
786
9,316
Loans 6,698
12,589
138
19,425
Mortgage servicing rights 13,386
—
—
13,386
Derivative assets 91
1
—
92
Other assets 10,281
452
11
10,744
Total assets 41,020
13,414
1,136
55,570
Short-term borrowings —
—
905
905
Derivative liabilities 59
33
(2) —
92
Accrued expenses and other liabilities 306
107
(2) 2
415
Long-term debt 3,598
3,694
(2) 136
7,428
Total liabilities 3,963
3,834
1,043
8,840
Noncontrolling interests —
138
—
138
Net assets $ 37,057
9,442
93
46,592


~~(1)~~	~~Excludes certain debt securities related to loans serviced for the Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and GNMA.~~


~~(2)~~	~~There were~~ nosecuritization or other VIE ~~liabilities with recourse to the general credit of Wells Fargo for the periods presented.~~

~~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).

~~Table 7.2:Unconsolidated VIEs~~

Carrying value – asset (liability)
(in millions)
Total
VIE
assets

Debt and
equity
interests (1)

Servicing
assets

Derivatives

Other
commitments
and
guarantees

Net
assets

September 30, 2017
Residential mortgage loan securitizations:
Conforming (2) $ 1,172,135
2,056
12,387
—
(188 ) 14,255
Other/nonconforming 15,226
774
85
—
—
859
Commercial mortgage securitizations 142,525
2,535
868
70
(33 ) 3,440
Collateralized debt obligations:
Debt securities 1,074
—
—
5
(20 ) (15 )
Loans (3) 1,494
1,457
—
—
—
1,457
Asset-based finance structures 3,569
2,666
—
—
—
2,666
Tax credit structures 29,295
10,820
—
—
(3,103 ) 7,717
Collateralized loan obligations 18
4
—
—
—
4
Investment funds 216
51
—
—
—
51
Other (4) 2,521
577
—
(95 ) —
482
Total $ 1,368,073
20,940
13,340
(20 ) (3,344 ) 30,916
Maximum exposure to loss

Debt and
equity
interests (1)

Servicing
assets

Derivatives

Other
commitments
and
guarantees

Total
exposure

Residential mortgage loan securitizations:
Conforming $ 2,056
12,387
—
976
15,419
Other/nonconforming 774
85
—
—
859
Commercial mortgage securitizations 2,535
868
73
9,901
13,377
Collateralized debt obligations:
Debt securities —
—
5
20
25
Loans (3) 1,457
—
—
—
1,457
Asset-based finance structures 2,666
—
—
71
2,737
Tax credit structures 10,820
—
—
947
11,767
Collateralized loan obligations 4
—
—
—
4
Investment funds 51
—
—
—
51
Other (4) 577
—
120
157
854
Total $ 20,940
13,340
198
12,072
46,550

~~(continued on following page)~~

~~Note 7: Securitizations and Variable Interest Entities (continued~~)

~~(continued from previous page)~~

Carrying value – asset (liability)
(in millions)
Total
VIE
assets

Debt and
equity
interests (1)

Servicing
assets

Derivatives

Other
commitments
and
guarantees

Net
assets

December 31, 2016
Residential mortgage loan securitizations:
Conforming (2) $ 1,166,296
3,026
12,434
—
(232 ) 15,228
Other/nonconforming 18,805
873
109
—
(2 ) 980
Commercial mortgage securitizations 166,596
4,258
843
87
(35 ) 5,153
Collateralized debt obligations:
Debt securities 1,472
—
—
—
(25 ) (25 )
Loans (3) 1,545
1,507
—
—
—
1,507
Asset-based finance structures 9,152
6,522
—
—
—
6,522
Tax credit structures 29,713
10,669
—
—
(3,609 ) 7,060
Collateralized loan obligations 78
10
—
—
—
10
Investment funds 214
48
—
—
—
48
Other (4) 1,733
630
—
(56 ) —
574
Total $ 1,395,604
27,543
13,386
31
(3,903 ) 37,057
Maximum exposure to loss

Debt and
equity
interests (1)

Servicing
assets

Derivatives

Other
commitments
and
guarantees

Total
exposure

Residential mortgage loan securitizations:
Conforming $ 3,026
12,434
—
979
16,439
Other/nonconforming 873
109
—
2
984
Commercial mortgage securitizations 4,258
843
94
9,566
14,761
Collateralized debt obligations:
Debt securities —
—
—
25
25
Loans (3) 1,507
—
—
—
1,507
Asset-based finance structures 6,522
—
—
72
6,594
Tax credit structures 10,669
—
—
1,104
11,773
Collateralized loan obligations 10
—
—
—
10
Investment funds 48
—
—
—
48
Other (4) 630
—
93
—
723
Total $ 27,543
13,386
187
11,748
52,864


~~(1)~~	~~Includes total equity interests of~~ ~~$10.4 billion~~ ~~and~~ ~~$10.3 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively. Also includes debt interests in the form of both loans and securities. Excludes certain debt securities held related to loans serviced for FNMA, FHLMC and GNMA.~~

~~(2)~~

~~Excludes assets and related liabilities with a recorded carrying value on our balance sheet of~~ ~~$1.3 billion~~ ~~and~~ ~~$1.2 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016~~, respectively, for certain delinquent loans that are eligible for repurchase from GNMA loan securitizations. The recorded carrying value represents the amount that would be payable if the Company was to exercise the repurchase option. The carrying amounts are excluded from the table because the loans eligible for repurchase do not represent interests in the VIEs.

~~(3)~~

Represents senior loans to trusts that are collateralized by asset-backed securities. The trusts invest in senior tranches from a diversified pool of U.S. asset securitizations, of which all are current and ~~100%~~ ~~were rated as investment grade by the primary rating agencies at both~~ ~~September 30, 2017, and~~ ~~December 31, 2016. These senior loans are accounted for at amortized cost and are subject to the Company’s allowance and credit charge-off policies.~~


~~(4)~~	Includes structured financing and credit-linked note structures. Also contains investments in auction rate securities (ARS) issued by VIEs that we do not sponsor and, accordingly, are unable to obtain the total assets of the entity.

In Table 7.2, “Total VIE assets” represents the remaining principal balance of assets held by unconsolidated VIEs using the most current information available. For VIEs that obtain exposure to assets synthetically through derivative instruments, the remaining notional amount of the derivative is included in the asset balance. “Carrying value” is the amount in our consolidated balance sheet related to our involvement with the unconsolidated VIEs. “Maximum exposure to loss” from our involvement with off-balance sheet entities, which is a required disclosure under GAAP, is determined as the carrying value of our involvement with off-balance sheet (unconsolidated) VIEs plus the remaining undrawn liquidity and lending commitments, the notional amount of net written derivative contracts, and generally the notional amount of, or stressed loss estimate for, other commitments and guarantees. It represents estimated loss that would be incurred under severe, hypothetical circumstances, for which we believe the possibility is extremely remote, such as where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. Accordingly, this required disclosure is not an indication of expected loss.

~~For complete descriptions of our types of transactions with unconsolidated VIEs with which we have a significant continuing involvement, but we are not the primary beneficiary, see Note 8~~

~~(Securitizations and Variable Interest Entities) to Financial Statements in our 2016 Form 10-K.~~

~~INVESTMENT FUNDS~~ ~~Subsequent to adopting ASU 2015-02 (Amendments to the Consolidation Analysis) in first quarter 2016, we do not consolidate these investment funds because we do not hold variable interests that are considered significant to the funds.~~

We voluntarily waived a portion of our management fees for certain money market funds that are exempt from the consolidation analysis to ensure the funds maintained a minimum level of daily net investment income. The amount of fees waived in the third quarter and first nine months of 2017 was $12 million ~~and~~ ~~$39 million, respectively, compared with $28 million and $84 million, respectively, in the same periods of 2016.~~

~~OTHER TRANSACTIONS WITH VIEs~~ Other VIEs include certain entities that issue auction rate securities (ARS) which are debt instruments with long-term maturities, that re-price more frequently, and preferred equities with no maturity. At September 30, 2017, we held $400 million of ARS issued by VIEs compared with $453 million at December 31, 2016. We acquired the ARS pursuant to agreements entered into in 2008 and 2009.

~~We do not consolidate the VIEs that issued the ARS because we do not have power over the activities of the VIEs.~~

~~TRUST PREFERRED SECURITIES~~VIEs that we wholly own issue debt securities or preferred equity to third party investors. All of the proceeds of the issuance are invested in debt securities or preferred equity that we issue to the VIEs. The VIEs’ operations and cash flows relate only to the issuance, administration and repayment of the securities held by third parties. We do not consolidate these VIEs because the sole assets of the VIEs are receivables from us, even though we own all of the voting equity shares of the VIEs, have fully guaranteed the obligations of the VIEs and may have the right to redeem the third party securities under certain circumstances. In our consolidated balance sheet at September 30, 2017, and December 31, 2016, we reported the debt securities issued to the VIEs as long-term junior subordinated debt with a carrying value of $2.0 billion and $2.1 billion, respectively, and the preferred equity securities issued to the VIEs as preferred stock with a carrying value of $2.5 billion at both dates. These amounts are in addition to the involvements in these VIEs included in the preceding table.

In the first nine months of 2017, we redeemed $150 million of trust preferred securities which were partially included in Tier 2 capital (50% credit in 2017) in the transitional framework and were not included under the fully-phased framework under the Basel III standards.

Loan Sales and Securitization Activity

We periodically transfer consumer and ~~CRE~~commercial loans and other types of financial assets in securitization and whole loan sale transactions.

MORTGAGE LOANS SOLD TO U.S. GOVERNMENT SPONSORED ENTITIES AND TRANSACTIONS WITH GINNIE MAE In the normal course of business we sell originated and purchased residential and commercial mortgage loans to government-sponsored entities (GSEs). These loans are generally transferred into securitizations sponsored by the GSEs, which provide certain credit guarantees to investors and servicers. We ~~typically~~also transfer mortgage loans into securitizations pursuant to Government National Mortgage Association (GNMA) guidelines which are insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Mortgage loans eligible for securitization with the GSEs or GNMA are considered conforming loans. The GSEs or GNMA design the structure of these securitizations, sponsor the involved VIEs, and have power over the activities most significant to the VIE.

We account for loans transferred in conforming mortgage loan securitization transactions as sales and do not consolidate the VIEs as we are not the primary beneficiary. In exchange for the transfer of loans, we typically receive securities issued by the VIEs which we sell to third parties for cash or hold for investment purposes as HTM or AFS securities. We also retain servicing rights on the transferred loans. As a servicer, we retain the ~~servicing rights~~option

to repurchase loans from ~~these sales and may continue to hold other beneficial interests in~~GNMA loan securitization pools, which becomes exercisable when three scheduled loan payments remain unpaid by the ~~transferred financial assets.~~borrower. We ~~may also provide liquidity to investors in the beneficial interests and credit enhancements in the form~~repurchased loans of standby letters of credit. Through these transfers we may be exposed to liability under limited amounts of recourse as well as standard representations and warranties we make to purchasers and issuers. Table 7.3 presents the cash flows for our transfers accounted for as sales.

~~Table 7.3:Cash Flows From Sales and Securitization Activity~~

2017 2016
(in millions)
Mortgage
loans

Other
financial
assets

Mortgage
loans

Other
financial
assets

Quarter ended September 30,



Proceeds from securitizations and whole loan sales $ 61,756
—
66,830
53
Fees from servicing rights retained 826
—
891
—
Cash flows from other interests held (1) 408
—
930
—
Repurchases of assets/loss reimbursements (2):
Non-agency securitizations and whole loan transactions 5
—
4
—
Agency securitizations (3) 20
—
22
—
Servicing advances, net of repayments (90 ) —
(52 ) —
Nine months ended September 30,
Proceeds from securitizations and whole loan sales $ 172,837
25
178,301
186
Fees from servicing rights retained 2,520
—
2,636
—
Cash flows from other interests held (1) 1,883
—
1,964
1
Repurchases of assets/loss reimbursements (2):
Non-agency securitizations and whole loan transactions 12
—
22
—
Agency securitizations (3) 66
—
104
—
Servicing advances, net of repayments (252 ) —
(159 ) —


~~(1)~~	~~Cash flows from other interests held include principal and interest payments received on retained bonds and excess cash flows received on interest-only strips.~~


~~(2)~~	~~Consists of cash paid to repurchase loans from investors and cash paid to investors to reimburse them for losses on individual loans that are already liquidated.~~

~~(3)~~

~~Represent loans repurchased from GNMA, FNMA, and FHLMC under representation and warranty provisions included in our loan sales contracts.~~ ~~Third~~ ~~quarter and~~ ~~first nine months of 2017~~ ~~exclude~~ ~~$2.1 billion~~ ~~and $6.0 billion, respectively in delinquent insured/guaranteed loans that we service and have exercised our option to purchase out of GNMA pools, compared with~~ ~~$2.4 billion~~ ~~and~~ ~~$7.3 billion, respectively, in the same periods of~~ ~~2016. These loans are predominantly insured by the FHA or guaranteed by the VA.~~

~~In the third quarter and first nine months of 2017, we recognized net gains of $91 million~~ ~~and~~ ~~$616 million, respectively, from transfers accounted for as sales of financial assets, compared with $141~~$780 million and $436 million, respectively, in the same periods of 2016. These net gains largely relate to commercial mortgage securitizations and residential mortgage securitizations where the loans were not already carried at fair value.

~~Sales with continuing involvement~~$3.7 billion, during the third quarter and first nine months of ~~2017~~2021, respectively, and ~~2016 largely related to securitizations of residential mortgages that are sold to the government-sponsored entities (GSEs), including FNMA, FHLMC~~$22.1 billion and ~~GNMA (conforming residential mortgage~~

~~securitizations). During~~$27.2 billion during the third quarter and first nine months of ~~2017,~~2020, respectively, which predominantly represented repurchases of government insured loans. We recorded assets and related liabilities of $124 million and $176 million at September 30, 2021, and December 31, 2020, respectively, where we did not exercise our option to repurchase eligible loans.

Upon transfers of loans, we also provide indemnification for losses incurred due to material breaches of contractual representations and warranties, as well as other recourse arrangements. At September 30, 2021, and December 31, 2020, our liability associated with these provisions was $202 million and $221 million, respectively, and the maximum exposure to loss was $13.5 billion and $13.7 billion, respectively.

Off-balance sheet mortgage loans sold or securitized presented in Table 8.5 are predominantly loans securitized by the GSEs and GNMA. See Note 9 (Mortgage Banking Activities) for additional information about residential and commercial servicing rights, advances and servicing fees. Substantially all residential servicing activity is related to assets transferred ~~$57.8 billion~~to GSE and ~~$163.0 billion, respectively,~~GNMA securitizations.

NONCONFORMING MORTGAGE LOAN SECURITIZATIONS In the normal course of business, we sell nonconforming residential and commercial mortgage loans in ~~fair value~~securitization transactions that we design and sponsor. Nonconforming mortgage loan securitizations do not involve a government credit guarantee, and accordingly, beneficial interest holders are subject to credit risk of the underlying assets held by the securitization VIE. We typically originate the transferred loans, account for the transfers as sales and do not consolidate the VIE. We also typically retain the right to service the loans and may hold other beneficial interests issued by the VIEs, such as debt securities held for investment purposes. Our servicing role related to nonconforming commercial mortgage loan securitizations is limited to primary or master servicer and the most significant decisions impacting the performance of the VIE are generally made by the special servicer or the controlling class security holder. For our residential ~~mortgages~~nonconforming mortgage loan securitizations accounted for as sales, we either do not hold variable interests that we consider potentially significant or are not the primary servicer for a majority of the VIE assets.

WHOLE LOAN SALE TRANSACTIONS We also sell whole loans to ~~unconsolidated~~ VIEs where we have continuing involvement in the form of financing. We account for these transfers as sales, and ~~third-party investors and~~do not consolidate the VIEs as we do not have the power to direct the most significant activities of the VIEs.

Table 8.1 presents information about transfers of assets during the period for which we recorded the transfers as sales ~~compared~~and have continuing involvement with ~~$63.3 billion~~the transferred assets. In connection with these transfers, we received proceeds and ~~$165.6 billion, respectively, in the same periods of 2016.~~recorded servicing assets, securities, and loans. Substantially all ~~of these~~ transfers ~~did not result~~were related to residential mortgage securitizations with the GSEs or GNMA and resulted in ano gain or loss because the loans were already ~~carried at fair value. In connection with all of these transfers, in the first nine months of 2017, we recorded a $1.5 billion servicing asset,~~ measured at fair value ~~using~~on a ~~Level 3 measurement technique, securities~~recurring basis. Each of ~~$2.2 billion, classified as Level 2, and a $20 million liability for repurchase losses which reflects management’s estimate of probable losses related to~~these interests are initially measured at fair value.


			Wells Fargo & Company			99

Note 7:8: Securitizations and Variable Interest Entities (~~continued~~)(continued)

~~various representations~~Servicing rights are classified as Level 3 measurements, and ~~warranties~~generally securities are classified as Level 2.

Table 8.1:Transfers with Continuing Involvement



	2021			2020
(in millions)	Residential mortgages		Commercial mortgages	Residential mortgages	Commercial mortgages
Quarter ended September 30,
Assets sold	$	37,230	3,502	50,272	2,430
Proceeds from transfer (1)	37,412		3,583	50,273	2,484
Net gains (losses) on sale	182		81	1	54

Continuing involvement (2):
Servicing rights recognized	$	378	52	477	32
Securities recognized (3)	1,363		30	11,057	6
Loans recognized	—		—	—	—
Nine months ended September 30,
Assets sold	$	123,719	11,866	132,259	7,663
Proceeds from transfer (1)	124,333		12,092	132,298	7,850
Net gains (losses) on sale	614		226	39	187

Continuing involvement (2):
Servicing rights recognized	$	1,272	123	1,366	114
Securities recognized (3)	17,757		98	11,647	79
Loans recognized	926		—	—	—

(1)Represents cash proceeds and the fair value of non-cash beneficial interests recognized at securitization settlement.

(2)Represents assets or liabilities recognized at securitization settlement date related to our continuing involvement in the transferred assets.

(3)Represents debt securities obtained at securitization settlement held for investment purposes that are classified as available-for-sale or held-to-maturity, which predominantly relate to agency securities. Excludes trading debt securities held temporarily for market-marking purposes, which are sold to third parties at or shortly after securitization settlement, of $13.6 billion and $31.6 billion during the ~~loans transferred, initially measured at fair value. In the~~third quarter and first nine months of ~~2016, we recorded a $1.3 billion servicing asset, securities of $3.0~~2021, respectively, and $12.8 billion and ~~a $26~~$29.9 billion during the third quarter and first nine months of 2020, respectively.

In the normal course of business we purchase certain non-agency securities at initial securitization or subsequently in the secondary market, which we hold for investment. We also provide seller financing in the form of loans. We received cash flows of $816 million ~~liability.~~and $3.9 billion during the third quarter and first nine months of 2021, respectively, and $41 million and $158 million during the third quarter and first nine months of 2020, respectively, related to principal and interest payments on these securities and loans, which exclude cash flows related to trading activities.

Table ~~7.4~~8.2 presents the key weighted-average assumptions we used to initially measure residential ~~mortgage servicing rights at~~MSRs recognized during the ~~date of securitization.~~periods presented.

Table ~~7.4:~~8.2:Residential Mortgage Servicing Rights



	2021			2020
Quarter ended September 30,
Prepayment rate (1)	14.8		%	16.7
Discount rate	5.4			6.7
Cost to service ($ per loan) (2)	$	94		107
Nine months ended September 30,
Prepayment rate (1)	14.1		%	15.0
Discount rate	5.7			6.8
Cost to service ($ per loan) (2)	$	89		99

(1)Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

(2)Includes costs to service and estimates for unreimbursed delinquency and foreclosure costs, which can vary period to period due to changes in model assumptions and the mix of modified government-guaranteed loans sold to GNMA.

See Note 15 (Fair Values of Assets and Liabilities) and Note 9 (Mortgage Banking Activities) for additional information on key economic assumptions for residential MSRs.

Residential mortgage
servicing rights

2017
2016
Quarter ended September 30,

Prepayment speed (1) 12.1 % 12.4
Discount rate 6.9
6.2
Cost to service ($ per loan) (2) $ 122
124
Nine months ended September 30,
Prepayment speed (1) 11.7 % 12.5
Discount rate 6.9
6.5
Cost to service ($ per loan) (2) $ 135
136


~~(1)~~	The prepayment speed assumption for residential mortgage servicing rights includes a blend of prepayment speeds and default rates. Prepayment speed assumptions are influenced by mortgage interest rate inputs as well as our estimation of drivers of borrower behavior.


~~(2)~~	~~Includes costs to service and unreimbursed foreclosure costs, which can vary period to period depending on~~SALE OF STUDENT LOAN PORTFOLIO In the ~~mix of modified government-guaranteed loans sold to GNMA.~~

~~During the third quarter and~~ first nine months of ~~2017,~~2021, we ~~transferred $4.6~~sold $9.5 billion ~~and~~ ~~$11.2 billion, respectively, in carrying value~~ of ~~commercial mortgages to unconsolidated VIEs and third-party investors and recorded the transfers as sales, compared with $4.0 billion and $13.9 billion, respectively, in~~student loans, servicing-released. For the same ~~periods~~period, we received $9.9 billion in proceeds from the sales and recognized $355 million of ~~2016. These transfers resulted~~gains, which are included in ~~gains~~other noninterest income on our consolidated statement of ~~$89 million~~ ~~and~~ $265 million in the third quarter and first nine months of 2017, respectively, because the loans were carried at lower of cost or market value (LOCOM), compared with gains of $134 million and $327 million, respectively, in the same periods of 2016.income. In connection with ~~these transfers,~~the sales, we provided $3.8 billion of collateralized loan financing to a third-party sponsored VIE in the first nine months of ~~2017, we recorded a servicing asset of $123 million, initially~~2021. The loans are measured at fair value using a Level 3 measurement technique, and securities of $65 million, classified as Level 2. In the first nine months of 2016, we recorded a servicing asset of $204 million and securities of $236 million.

~~Retained Interests from Unconsolidated VIEs~~

Table 7.5 provides key economic assumptions and the sensitivity of the current fair value of residential mortgage servicing rights and other interests held to immediate adverse changes in those assumptions. “Other interests held” relate to residential and commercial mortgage loan securitizations. Residential mortgage-backed securities retained in securitizations issued through GSEs, such as FNMA, FHLMC and GNMA, are excluded from the table because these securities have a remote risk of credit loss due to

the GSE guarantee. These securities also have economic characteristics similar to GSE mortgage-backed securities that we purchase, which are not included in the table. Subordinated interests include only those bonds whose credit rating was below AAA by a major rating agency at issuance. Senior interests include only those bonds whose credit rating was AAA by a major rating agency at issuance. The information presented excludes trading positions held in inventory.

~~Table 7.5:Retained Interests from Unconsolidated VIEs~~

Other interests held

Residential
mortgage
servicing
rights (1)

Interest-only
strips

Consumer
Commercial (2)
($ in millions, except cost to service amounts)
Subordinated
bonds

Subordinated
bonds

Senior
bonds

Fair value of interests held at September 30, 2017 $ 13,338
23
—
561
526
Expected weighted-average life (in years) 6.1
3.8
0.0
5.7
5.2
Key economic assumptions:
Prepayment speed assumption (3) 10.8 % 17.4
—

Decrease in fair value from:
10% adverse change $ 575
1
—

25% adverse change 1,359
2
—

Discount rate assumption 6.7 % 12.7
—
3.0
2.9
Decrease in fair value from:
100 basis point increase $ 647
—
—
25
22
200 basis point increase 1,236
1
—
47
44
Cost to service assumption ($ per loan) 145

Decrease in fair value from:
10% adverse change 476

25% adverse change 1,189

Credit loss assumption — % 2.0
—
Decrease in fair value from:
10% higher losses $ —
—
—
25% higher losses —
—
—
Fair value of interests held at December 31, 2016 $ 12,959
28
1
249
552
Expected weighted-average life (in years) 6.3
3.9
8.3
3.1
5.1
Key economic assumptions:
Prepayment speed assumption (3) 10.3 % 17.4
13.5

Decrease in fair value from:
10% adverse change $ 583
1
—

25% adverse change 1,385
2
—

Discount rate assumption 6.8 % 13.3
10.7
5.2
2.7
Decrease in fair value from:
100 basis point increase $ 649
1
—
7
23
200 basis point increase 1,239
1
—
12
45
Cost to service assumption ($ per loan) 155

Decrease in fair value from:
10% adverse change 515

25% adverse change 1,282

Credit loss assumption 3.0 % 4.7
—
Decrease in fair value from:
10% higher losses $ —
—
—
25% higher losses —
—
—


~~(1)~~	~~See narrative following this table for a discussion of commercial mortgage servicing rights.~~


~~(2)~~	Prepayment speed assumptions do not significantly impact the value of commercial mortgage securitization bonds as the underlying commercial mortgage loans experience significantly lower prepayments due to certain contractual restrictions, impacting the borrower’s ability to prepay the mortgage.


~~(3)~~	The prepayment speed assumption for residential mortgage servicing rights includes a blend of prepayment speeds and default rates. Prepayment speed assumptions are influenced by mortgage interest rate inputs as well as our estimation of drivers of borrower behavior.

~~Note 7: Securitizations and Variable Interest Entities (continued~~)

In addition to residential mortgage servicing rights (MSRs) included in the previous table, we have a small portfolio of commercial MSRs with a fair value of $2.0 billion at both September 30, 2017, and December 31, 2016. The nature of our commercial MSRs, which are carried at LOCOM, is different from our residential MSRs. Prepayment activity on serviced loans does not significantly impact the value of commercial MSRs because, unlike residential mortgages, commercial mortgages experience significantly lower prepayments due to certain contractual restrictions, impacting the borrower’s ability to prepay the mortgage. Additionally, for our commercial MSR portfolio, we are typically master/primary servicer, but not the special servicer, who is separately responsible for the servicing and workout of delinquent and foreclosed loans. It is the special servicer, similar to our role as servicer of residential mortgage loans, who is affected by higher servicing and foreclosure costs due to an increase in delinquent and foreclosed loans. Accordingly, prepayment speeds and costs to service are not key assumptions for commercial MSRs as they do not significantly impact the valuation. The primary economic driver impacting the fair value of our commercial MSRs is forward interest rates, which are derived from market observable yield curves used to price capital markets instruments. Market interest rates significantly affect interest earned on custodial deposit balances. The sensitivity of the current fair value to an immediate adverse 25% change in the assumption about interest earned on deposit balances at September 30, 2017, and December 31, 2016, results in a decrease in fair value of $238 million and $259 million, respectively. See Note 8 (Mortgage Banking Activities) for further information on our commercial MSRs.

~~We also have a loan to an unconsolidated third party VIE that we extended in fourth quarter 2014 in conjunction with our sale of government guaranteed student loans. The loan is carried~~ at amortized cost and ~~approximates fair value at September 30, 2017, and December 31, 2016.~~are classified in loans on the consolidated balance sheet. The ~~carrying amount~~collateral supporting our loan includes the student loans we sold. We do not consolidate the VIE as we do not have power over the significant activities of the ~~loan at September 30, 2017,~~entity.

RESECURITIZATION ACTIVITIES We enter into resecuritization transactions as part of our trading activities to accommodate the investment and ~~December 31, 2016, was $1.3 billion and $3.2 billion, respectively. The estimated fair value~~risk management activities of ~~the loan is considered a Level 3 measurement that is determined using~~

~~discounted cash flows~~our customers. In our resecuritization transactions, we transfer trading debt securities to VIEs in exchange for new beneficial interests that are ~~based on changes~~sold to third parties at or shortly after securitization settlement. This activity is performed for customers seeking a specific return or risk profile. Substantially all of our transactions involve the resecuritization of conforming mortgage-backed securities issued by the GSEs or GNMA. We do not consolidate the resecuritization VIEs as we share in the ~~discount rate due to changes~~decision-making power with third parties and do not hold significant economic interests in the ~~risk premium component (credit spreads). The primary economic assumption impacting the fair value of~~VIEs other than for market-making activities. Table 8.3 presents information about assets transferred to resecuritization VIEs and Table 8.4 presents information about our ~~loan is the discount rate. Changes in the credit loss assumption are not expected~~resecuritization VIEs.


100			Wells Fargo & Company

Table 8.3:Transfers to affect the estimated fair value of the loan due to the government guarantee of the underlying collateral. The sensitivity of the current fair value to an immediate adverse increase of 200 basis points in the risk premium component of the discount rate assumption is a decrease in fair value of $23 million and $154 million at September 30, 2017, and December 31, 2016, respectively.Resecuritization VIEs

The sensitivities in the preceding paragraphs and table are hypothetical and caution should be exercised when relying on this data. Changes in value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in value may not be linear. Also, the effect of a variation in a particular assumption on the value of the other interests held is calculated independently without changing any other assumptions. In reality, changes in one factor may result in changes in others (for example, changes in prepayment speed estimates could result in changes in the credit losses), which might magnify or counteract the sensitivities.



(in millions)	2021		2020
Quarter ended September 30,
Assets sold	$	8,462	20,759
Securities recognized	146		309
Nine months ended September 30,
Assets sold	$	33,764	50,213
Securities recognized	1,061		1,124

Table 8.4:Resecuritization VIEs


(in millions)	Sep 30, 2021		Dec 31, 2020
Total VIE assets	$	121,999	130,446
Carrying value of securities	1,208		1,461

Off-Balance Sheet Loans

Table ~~7.6~~8.5 presents information about the principal balances of off-balance sheet loans that were sold or securitized, including residential mortgage loans sold to ~~FNMA, FHLMC,~~the GSEs, GNMA and other investors, for which we have some form of continuing involvement (including servicer). Delinquent loans include loans 90 days or more past due and loans in bankruptcy, regardless of delinquency status. In accordance with applicable servicing guidelines, delinquency status continues to advance for loans with COVID-related payment deferrals. For loans sold or securitized where servicing is our only form of continuing involvement, we ~~would only~~generally experience a loss only if we were required to repurchase a delinquent loan or foreclosed asset due to a breach in representations and warranties associated with our loan sale or servicing contracts.

Table ~~7.6:~~8.5:Off-Balance Sheet Loans Sold or Securitized


						Net charge-offs (2)
	Total loans			Delinquent loans and foreclosed assets (1)		Nine months ended September 30,
(in millions)	Sep 30, 2021		Dec 31, 2020	Sep 30, 2021	Dec 31, 2020	2021	2020
Commercial	$	118,260	114,134	1,895	2,217	123	129
Residential	711,413		818,886	14,932	29,962	16	71
Total off-balance sheet sold or securitized loans (3)	$	829,673	933,020	16,827	32,179	139	200

Net charge-offs
Total loans Delinquent loans and foreclosed assets (1) Nine months ended September 30,
(in millions) Sep 30, 2017
Dec 31, 2016
Sep 30, 2017
Dec 31, 2016
2017
2016
Commercial:
Real estate mortgage $ 98,350
106,745
2,879
3,325
718
210
Total commercial 98,350
106,745
2,879
3,325
718
210
Consumer:
Real estate 1-4 family first mortgage 1,135,409
1,160,191
12,434
16,453
546
764
Total consumer 1,135,409
1,160,191
12,434
16,453
546
764
Total off-balance sheet sold or securitized loans (2) $ 1,233,759
1,266,936
15,313
19,778
1,264
974
(1)Includes $258 million and $394 million of commercial foreclosed assets and $156 million and $204 million of residential foreclosed assets at September 30, 2021, and December 31, 2020, respectively.


~~(1)~~	~~Includes~~ ~~$1.4 billion~~ ~~and~~ ~~$1.7 billion~~ ~~of commercial foreclosed assets and~~ ~~$1.1 billion~~ ~~and~~ ~~$1.8 billion~~ ~~of consumer foreclosed assets at~~ ~~September 30, 2017, and~~ ~~December 31, 2016, respectively.~~

~~(2)~~

At ~~September 30, 2017, and~~ ~~December 31, 2016, the table includes total loans of~~ ~~$1.2 trillion~~ ~~at both dates, delinquent loans of~~ ~~$7.6 billion~~ ~~and~~ ~~$9.8 billion, and foreclosed assets of~~ ~~$730 million~~ ~~and~~ ~~$1.3 billion~~, respectively, for FNMA, FHLMC and GNMA. Net charge-offs exclude loans sold to FNMA, FHLMC and GNMA as we do not service or manage the underlying real estate upon foreclosure and, as such, do not have access to net charge-off information.

(2)Net charge-offs exclude loans sold to FNMA, FHLMC and GNMA as we do not service or manage the underlying real estate upon foreclosure and, as such, do not have access to net charge-off information

(3) At September 30, 2021, and December 31, 2020, the table includes total loans of $756.9 billion and $864.8 billion, delinquent loans of $14.1 billion and $28.5 billion, and foreclosed assets of $117 million and $152 million, respectively, for FNMA, FHLMC and GNMA.

Transactions with Unconsolidated VIEs

MORTGAGE LOAN SECURITIZATIONS Table 8.6 includes nonconforming mortgage loan securitizations where we originate and transfer the loans to the unconsolidated securitization VIEs that we sponsor. For additional information about these VIEs, see the “Loan Sales and Securitization Activity” section within this Note. Nonconforming mortgage loan securitizations also include commercial mortgage loan securitizations sponsored by third parties where we did not originate or transfer the loans but serve as master servicer and invest in securities that could be potentially significant to the VIE.

Conforming loan securitization and resecuritization transactions involving the GSEs and GNMA are excluded from Table 8.6 because we are not the sponsor or we do not have power over the activities most significant to the VIEs. Additionally, due to the nature of the guarantees provided by the GSEs and the FHA and VA, our credit risk associated with these VIEs is limited. For additional information about conforming mortgage loan securitizations and resecuritizations, see the “Loan Sales and Securitization Activity” and "Resecuritization Activities" sections within this Note.

TAX CREDIT STRUCTURESWe co-sponsor and make investments in affordable housing projects that are designed to generate a return primarily through the realization of federal tax credits. The projects are typically managed by project sponsors who have the power over the VIE’s assets. In some instances, our investments in these structures may require that we fund future capital commitments at the discretion of the project sponsors.

COMMERCIAL REAL ESTATE LOANS We transfer purchased industrial development bonds and GSE credit enhancements to VIEs in exchange for beneficial interests. We own all of the beneficial interests and may also service the underlying mortgages that serve as collateral to the bonds. Prior to first quarter 2021, we consolidated these VIEs as we controlled the key decisions. During first quarter 2021, we amended the structures such that we no longer control the key decisions of the VIEs. The GSEs have the power to direct the servicing and workout activities of the VIE in the event of a default. As a result, we deconsolidated the VIEs during first quarter 2021, and recognized the beneficial interests at fair value on our consolidated balance sheet.

OTHER VIE STRUCTURESWe engage in various forms of structured finance arrangements with other VIEs, including collateralized debt obligations, asset-backed finance structures and other securitizations collateralized by asset classes other than mortgages. Collateral may include rental properties, asset-backed securities, student loans, mortgage loans and auto loans. We may participate in structuring or marketing the arrangements, as well as provide financing, service one or more of the underlying assets, or enter into derivatives with the VIEs. We may also receive fees for those services. We are not the primary beneficiary of these structures because we do not have power to direct the most significant activities of the VIEs.


			Wells Fargo & Company			101

Note 8: Securitizations and Variable Interest Entities (continued)

Table 8.6 provides a summary of our exposure to the unconsolidated VIEs described above, which includes investments in securities, loans, guarantees, liquidity agreements, commitments and certain derivatives. We exclude certain transactions with unconsolidated VIEs when our continuing involvement is temporary or administrative in nature or insignificant in size.

In Table 8.6, “Total VIE assets” represents the remaining principal balance of assets held by unconsolidated VIEs using the most current information available. “Carrying value” is the amount in our consolidated balance sheet related to our involvement with the unconsolidated VIEs. “Maximum exposure to loss” is determined as the carrying value of our investment in the VIEs excluding the unconditional repurchase options that have not been exercised, plus the remaining undrawn liquidity and lending commitments, the notional amount of net written derivative contracts, and generally the notional amount of, or stressed loss estimate for, other commitments and guarantees.

Debt, guarantees and other commitments include amounts related to loans sold that we may be required to repurchase, or otherwise indemnify or reimburse the investor or insurer for losses incurred, due to material breach of contractual representations and warranties as well as other retained recourse arrangements. The maximum exposure to loss for material breach of contractual representations and warranties represents a stressed case estimate we utilize for determining stressed case regulatory capital needs and is considered to be a remote scenario.

“Maximum exposure to loss” represents estimated loss that would be incurred under severe, hypothetical circumstances, for which we believe the possibility is extremely remote, such as where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. Accordingly, this disclosure is not an indication of expected loss.

Table 8.6:Unconsolidated VIEs


			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans		Debt securities (1)	Equity securities	All other assets (2)	Debt and other liabilities	Net assets
September 30, 2021


Nonconforming mortgage loan securitizations	$	136,919	—		2,358	—	690	—	3,048
Tax credit structures	42,392		1,855		—	11,834	—	(4,476)	9,213
Commercial real estate loans	5,357		5,349		—	—	8	—	5,357
Other	4,700		1,120		3	54	49	(1)	1,225
Total	$	189,368	8,324		2,361	11,888	747	(4,477)	18,843
			Maximum exposure to loss
			Loans		Debt securities (1)	Equity securities	All other assets (2)	Debt, guarantees, and other commitments	Total exposure


Nonconforming mortgage loan securitizations			$	—	2,358	—	690	29	3,077
Tax credit structures			1,855		—	11,834	—	3,186	16,875
Commercial real estate loans			5,349		—	—	8	711	6,068
Other			1,120		3	54	49	230	1,456
Total			$	8,324	2,361	11,888	747	4,156	27,476
			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans		Debt securities (1)	Equity securities	All other assets (2)	Debt and other liabilities	Net assets
December 31, 2020


Nonconforming mortgage loan securitizations	$	127,717	—		2,303	—	606	—	2,909
Tax credit structures	41,125		1,760		—	11,362	—	(4,202)	8,920
Commercial real estate loans	—		—		—	—	—	—	—
Other	1,991		89		—	51	62	(1)	201
Total	$	170,833	1,849		2,303	11,413	668	(4,203)	12,030
			Maximum exposure to loss
			Loans		Debt securities (1)	Equity securities	All other assets (2)	Debt, guarantees, and other commitments	Total exposure


Nonconforming mortgage loan securitizations			$	—	2,303	—	607	34	2,944
Tax credit structures			1,760		—	11,362	—	3,108	16,230
Commercial real estate loans			—		—	—	—	—	—
Other			89		—	51	62	230	432
Total			$	1,849	2,303	11,413	669	3,372	19,606

(1)Includes $319 million and $310 million of securities classified as trading at September 30, 2021, and December 31, 2020, respectively.

(2)All other assets includes mortgage servicing rights, derivative assets, and other assets (predominantly servicing advances).


102			Wells Fargo & Company

Consolidated VIEs

We consolidate VIEs where we are the primary beneficiary. We are the primary beneficiary of the following structure types:

COMMERCIAL AND INDUSTRIAL LOANS AND LEASES We securitize dealer floor plan loans and ~~Secured Borrowings~~leases in a revolving master trust entity and hold the subordinated notes and residual equity interests. As servicer and residual interest holder, we control the key decisions of the trust and consolidate the entity. The total VIE assets held by the master trust represent a majority of the total VIE assets presented for this category in Table 8.7. In a separate transaction structure, we also provide the majority of debt and equity financing to an SPE that engages in lending and leasing to specific vendors and service the underlying collateral.

OTHER VIE STRUCTURESOther VIEs are primarily related to municipal tender option bond (MTOB) transactions and nonconforming mortgage loan securitizations that we sponsor. MTOBs are vehicles to finance the purchase of municipal bonds through the issuance of short-term debt to investors. Our

involvement with MTOBs includes serving as the residual interest holder, which provides control over the key decisions of the VIE, as well as the remarketing agent or liquidity provider related to the debt issued to investors. We also securitize nonconforming mortgage loans, in which our involvement includes servicer of the underlying assets and holder of subordinate or senior securities issued by the VIE.

Table ~~7.7~~8.7 presents a summary of financial assets and liabilities ~~for asset transfers accounted for as secured borrowings~~of our consolidated VIEs. The carrying value represents assets and ~~involvements with~~liabilities recorded on our consolidated ~~VIEs.~~balance sheet. Carrying values of ~~“Assets”~~assets are presented using GAAP measurement methods, which may include fair value, credit impairment or other adjustments, and

therefore in some instances will differ from “Total VIE assets.” ~~For VIEs that obtain exposure synthetically through derivative instruments, the remaining notional amount of the derivative is included in “Total VIE assets.”~~

On ~~the~~our consolidated balance sheet, we separately disclose (1) the consolidated assets of certain VIEs that can only be used to settle the liabilities of those ~~VIEs.~~VIEs, and (2) the consolidated liabilities of certain VIEs for which the VIE creditors do not have recourse to Wells Fargo.

Table ~~7.7:~~8.7:Transactions with Consolidated VIEs


			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans	Debt securities (1)	All other assets (2)	Long-term debt	All other liabilities (3)
September 30, 2021
Commercial and industrial loans and leases	$	6,999	3,598	—	237	—	(183)
Commercial real estate loans (4)	—		—	—	—	—	—
Other	1,096		417	515	97	(166)	(406)
Total consolidated VIEs	$	8,095	4,015	515	334	(166)	(589)
December 31, 2020
Commercial and industrial loans and leases	$	6,987	5,005	—	223	—	(200)
Commercial real estate loans (4)	5,369		5,357	—	12	—	—
Other	1,627		507	967	75	(203)	(900)
Total consolidated VIEs	$	13,983	10,869	967	310	(203)	(1,100)

(1)Includes $114 million and ~~Secured Borrowings~~$269 million of securities classified as trading at September 30, 2021, and December 31, 2020, respectively.

(2)All other assets includes cash and due from banks, Interest-earning deposits with banks, derivative assets, equity securities, and other assets.

Carrying value
(in millions)
Total VIE
assets

Assets
Liabilities

Noncontrolling
interests

Net assets
September 30, 2017
Secured borrowings:
Municipal tender option bond securitizations $ 670
572
(539 ) —
33
Commercial real estate loans 392
392
(388 ) —
4
Residential mortgage securitizations 119
116
(117 ) —
(1 )
Total secured borrowings 1,181
1,080
(1,044 ) —
36
Consolidated VIEs:
Commercial and industrial loans and leases 8,546
8,051
(1,425 ) (14 ) 6,612
Nonconforming residential mortgage loan securitizations 2,812
2,486
(837 ) —
1,649
Commercial real estate loans 2,120
2,120
—
—
2,120
Structured asset finance 13
8
(6 ) —
2
Investment funds 135
135
(1 ) (72 ) 62
Other 118
104
(1 ) (33 ) 70
Total consolidated VIEs 13,744
12,904
(2,270 ) (119 ) 10,515
Total secured borrowings and consolidated VIEs $ 14,925
13,984
(3,314 ) (119 ) 10,551
December 31, 2016
Secured borrowings:
Municipal tender option bond securitizations $ 1,473
998
(907 ) —
91
Residential mortgage securitizations 139
138
(136 ) —
2
Total secured borrowings 1,612
1,136
(1,043 ) —
93
Consolidated VIEs:
Commercial and industrial loans and leases 8,821
8,623
(2,819 ) (14 ) 5,790
Nonconforming residential mortgage loan securitizations 3,349
2,974
(1,003 ) —
1,971
Commercial real estate loans 1,516
1,516
—
—
1,516
Structured asset finance 23
13
(9 ) —
4
Investment funds 142
142
(2 ) (67 ) 73
Other 166
146
(1 ) (57 ) 88
Total consolidated VIEs 14,017
13,414
(3,834 ) (138 ) 9,442
Total secured borrowings and consolidated VIEs $ 15,629
14,550
(4,877 ) (138 ) 9,535
(3)All other liabilities includes short-term borrowings, derivative liabilities, and accrued expenses and other liabilities.

~~INVESTMENT FUNDS~~ ~~Subsequent to adopting ASU 2015-02 (Amendments to~~(4)For structure description, see the ~~Consolidation Analysis~~)"Transactions with Unconsolidated VIEs" section within this Note. These consolidated VIEs were deconsolidated in first quarter ~~2016, we consolidate certain investment funds because we have both the power to manage fund assets and hold variable interests that are considered significant.~~2021.

Other Transactions

~~OTHER CONSOLIDATED VIE STRUCTURES~~In addition to the ~~structure types~~transactions included in the previous ~~table,~~tables, we have used wholly-owned trust preferred security VIEs to issue debt securities or preferred equity exclusively to third-party investors. As the sole assets of the VIEs are receivables from us, we do not consolidate the VIEs even though we own all of the voting equity shares of the VIEs, have fully guaranteed the obligations of the VIEs, and may have the right to redeem the third-party securities under certain circumstances. In our consolidated balance sheet we reported the debt securities issued to the VIEs as long-term junior subordinated debt with a carrying value of $385 million and $704 million at September 30, 2021, and December 31, ~~2016,~~2020, respectively. In second quarter 2021, we ~~had approximately $6.0 billion~~liquidated certain of ~~private placement debt financing~~our trust preferred security VIEs. As part of these liquidations, the preferred securities issued ~~through~~by the trusts were canceled and junior subordinated debentures with a ~~consolidated VIE. The issuance was classified as long-term debt in our consolidated financial statements. At December 31, 2016, we pledged approximately $434~~total carrying value of $332 million ~~in loans (principal and interest eligible to be capitalized) and $6.1 billion in available-for-sale securities to collateralize the VIE’s borrowings. These assets~~ were ~~not transferred~~distributed to the ~~VIE, and accordingly we~~preferred security holders. See Note 16 (Preferred Stock) for additional information about trust preferred securities.

Certain money market funds are also excluded ~~the VIE~~ from the previous ~~table. During second quarter 2017,~~tables because they are exempt from the ~~private~~

~~placement debt financing was repaid, and the entity was no longer considered~~consolidation analysis. We voluntarily waived a ~~VIE.~~

~~For complete descriptions~~portion of our ~~accounting~~management fees for ~~transfers accounted for as secured borrowings~~these money market funds to maintain a minimum level of daily net investment income. The amount of fees waived was insignificant in the third quarter and ~~involvements with consolidated VIEs, see Note 8 (Securitizations~~first nine months of both 2021 and ~~Variable Interest Entities) to Financial Statements in our 2016 Form 10-K.~~2020.

~~Note 8: Mortgage Banking Activities (continued~~)



			Wells Fargo & Company			103


Note 8:9: Mortgage Banking Activities

Mortgage banking activities ~~included in the Community Banking and Wholesale Banking operating segments,~~ consist of residential and commercial mortgage originations, ~~sale activity~~sales and servicing.

We apply the amortization method to commercial MSRs and apply the fair value method to residential MSRs. The amortized cost of commercial MSRs was $1.3 billion for both periods, with

an estimated fair value of $1.5 billion and $1.4 billion at September 30, 2021, and September 30, 2020, respectively. Table ~~8.1~~9.1 presents the changes in MSRs measured using the fair value method.

Table ~~8.1:~~9.1:Analysis of Changes in Fair Value MSRs


	Quarter ended September 30,			Nine months ended September 30,
(in millions)	2021		2020	2021	2020
Fair value, beginning of period	$	6,717	6,819	6,125	11,517
Servicing from securitizations or asset transfers (1)	379		351	1,270	1,274
Sales and other (2)	(2)		—	(10)	(32)
Net additions	377		351	1,260	1,242
Changes in fair value:
Due to valuation inputs or assumptions:
Mortgage interest rates (3)	320		(294)	1,421	(3,916)
Servicing and foreclosure costs (4)	2		157	11	(265)
Discount rates	(263)		—	(56)	27
Prepayment estimates and other (5)	216		(80)	(319)	(451)
Net changes in valuation inputs or assumptions	275		(217)	1,057	(4,605)
Changes due to collection/realization of expected cash flows (6)	(507)		(598)	(1,580)	(1,799)
Total changes in fair value	(232)		(815)	(523)	(6,404)
Fair value, end of period	$	6,862	6,355	6,862	6,355

(1)Includes impacts associated with exercising cleanup calls on securitizations and our right to repurchase delinquent loans from GNMA loan securitization pools. MSRs may increase upon repurchase due to servicing liabilities associated with these delinquent GNMA loans.

(2)Includes sales and transfers of MSRs, which can result in an increase in MSRs if related to portfolios with servicing liabilities.

(3)Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates.

(4)Includes costs to service and unreimbursed foreclosure costs.

(5)Represents other changes in valuation model inputs or assumptions including prepayment speed estimation changes that are independent of mortgage interest rate changes.

(6)Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.

Table 9.2 provides key economic assumptions and sensitivity of the current fair value of residential MSRs to immediate adverse changes in those assumptions. Amounts for residential MSRs include purchased servicing rights as well as servicing

rights resulting from the transfer of loans. See Note 15 (Fair Values of Assets and Liabilities) for additional information on key economic assumptions for residential MSRs.

Table 9.2: Economic Assumptions and Sensitivity of Residential MSRs


($ in millions, except cost to service amounts)	Sep 30, 2021			Dec 31, 2020
Fair value of interests held	$	6,862		6,125
Expected weighted-average life (in years)	4.6			3.7

Key economic assumptions:
Prepayment rate assumption (1)	15.4		%	19.9
Impact on fair value from 10% adverse change	$	384		434
Impact on fair value from 25% adverse change	896			1,002

Discount rate assumption	6.3		%	5.8
Impact on fair value from 100 basis point increase	$	281		229
Impact on fair value from 200 basis point increase	539			440

Cost to service assumption ($ per loan)	108			130
Impact on fair value from 10% adverse change	167			181
Impact on fair value from 25% adverse change	417			454

1) Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

The sensitivities in the preceding table are hypothetical and caution should be exercised when relying on this data. Changes in value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in value may not be linear. Also, the effect of a variation in a particular assumption on the value of the

other interests held is calculated independently without changing any other assumptions. In reality, changes in one factor may result in changes in others, which might magnify or counteract the sensitivities.

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2017
2016
2017
2016
Fair value, beginning of period $ 12,789
10,396
12,959
12,415
Purchases 541
—
541
—
Servicing from securitizations or asset transfers (1) 605
609
1,624
1,452
Sales and other (2) 64
4
9
(18 )
Net additions 1,210
613
2,174
1,434
Changes in fair value:
Due to changes in valuation model inputs or assumptions:
Mortgage interest rates (3) (171 ) 39
(324 ) (1,824 )
Servicing and foreclosure costs (4) 60
(10 ) 73
13
Prepayment estimates and other (5) (31 ) (37 ) (77 ) 22
Net changes in valuation model inputs or assumptions (142 ) (8 ) (328 ) (1,789 )
Changes due to collection/realization of expected cash flows over time (519 ) (586 ) (1,467 ) (1,645 )
Total changes in fair value (661 ) (594 ) (1,795 ) (3,434 )
Fair value, end of period $ 13,338
10,415
13,338
10,415


~~(1)~~104			~~Includes impacts associated with exercising our right to repurchase delinquent loans from GNMA loan securitization pools.~~

Wells Fargo & Company
~~(2)~~	Includes sales and transfers of MSRs, which can result in an increase of total reported MSRs if the sales or transfers are related to nonperforming loan portfolios or portfolios with servicing liabilities.


~~(3)~~	~~Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates (such as changes in estimated interest earned on custodial deposit balances).~~


~~(4)~~	~~Includes costs to service and unreimbursed foreclosure costs.~~


~~(5)~~	Represents changes driven by other valuation model inputs or assumptions including prepayment speed estimation changes and other assumption updates. Prepayment speed estimation changes are influenced by observed changes in borrower behavior and other external factors that occur independent of interest rate changes.

~~Table 8.2 presents the changes in amortized MSRs.~~

~~Table 8.2:Analysis of Changes in Amortized MSRs~~

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2017
2016
2017
2016
Balance, beginning of period $ 1,399
1,353
1,406
1,308
Purchases 31
18
75
63
Servicing from securitizations or asset transfers 41
69
123
204
Amortization (65 ) (67 ) (198 ) (202 )
Balance, end of period (1) $ 1,406
1,373
1,406
1,373
Fair value of amortized MSRs:
Beginning of period $ 1,989
1,620
1,956
1,680
End of period 1,990
1,627
1,990
1,627


~~(1)~~	Commercial amortized MSRs are evaluated for impairment purposes by the following risk strata: agency (GSEs) for multi-family properties and non-agency. There was no valuation allowance recorded for the periods presented on the commercial amortized MSRs.

We present the components of our managed servicing portfolio in Table ~~8.3~~9.3 at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced.

Table ~~8.3:~~9.3:Managed Servicing Portfolio


(in billions)	Sep 30, 2021			Dec 31, 2020
Residential mortgage servicing:
Serviced and subserviced for others	$	741		859
Owned loans serviced	280			323
Total residential servicing	1,021			1,182
Commercial mortgage servicing:
Serviced and subserviced for others	586			583
Owned loans serviced	125			123
Total commercial servicing	711			706
Total managed servicing portfolio	$	1,732		1,888
Total serviced for others, excluding subserviced for others	$	1,315		1,431
MSRs as a percentage of loans serviced for others	0.62		%	0.52
Weighted average note rate (mortgage loans serviced for others)	3.86			4.03

(in billions) Sep 30, 2017
Dec 31, 2016
Residential mortgage servicing:
Serviced for others $ 1,223
1,205
Owned loans serviced 340
347
Subserviced for others 3
8
Total residential servicing 1,566
1,560
Commercial mortgage servicing:
Serviced for others 480
479
Owned loans serviced 128
132
Subserviced for others 8
8
Total commercial servicing 616
619
Total managed servicing portfolio $ 2,182
2,179
Total serviced for others $ 1,703
1,684
Ratio of MSRs to related loans serviced for others 0.87 % 0.85

At September 30, 2021, and December 31, 2020, we had servicer advances, net of an allowance for uncollectible amounts, of $3.2 billion and $3.4 billion, respectively. As the servicer of loans for others, we advance certain payments of principal, interest, taxes, insurance, and default-related expenses which are generally reimbursed within a short timeframe from cash flows from the trust, GSEs, insurer or borrower. The credit risk related to these advances is limited since the reimbursement is generally senior to cash payments to investors. We also advance payments of taxes and insurance for our owned loans which are collectible

from the borrower. We maintain an allowance for uncollectible amounts for advances on loans serviced for others that may not be reimbursed if the payments were not made in accordance with applicable servicing agreements or if the insurance or servicing agreements contain limitations on reimbursements. Servicing advances on owned loans are charged-off when deemed uncollectible.

Table ~~8.4~~9.4 presents the components of mortgage banking noninterest income.

Table ~~8.4:~~9.4:Mortgage Banking Noninterest Income


		Quarter ended September 30,			Nine months ended September 30,
(in millions)		2021		2020	2021	2020
Servicing fees:
Contractually specified servicing fees, late charges and ancillary fees		$	684	838	2,100	2,452
Unreimbursed direct servicing costs (1)		(70)		(121)	(284)	(333)
Servicing fees		614		717	1,816	2,119
Amortization (2)		(61)		(74)	(159)	(240)
Changes due to collection/realization of expected cash flows (3)	(A)	(507)		(598)	(1,580)	(1,799)
Net servicing fees		46		45	77	80
Changes in fair value of MSRs due to valuation inputs or assumptions (4)	(B)	275		(217)	1,057	(4,605)
Net derivative gains (losses) from economic hedges (5)		(176)		513	(1,109)	4,448
Market-related valuation changes to MSRs, net of hedge results		99		296	(52)	(157)
Total net servicing income		145		341	25	(77)
Net gains on mortgage loan originations/sales (6)		1,114		1,249	3,896	2,363
Total mortgage banking noninterest income		$	1,259	1,590	3,921	2,286
Total changes in fair value of MSRs carried at fair value	(A)+(B)	$	(232)	(815)	(523)	(6,404)

(1)Includes costs associated with foreclosures, unreimbursed interest advances to investors, and other interest costs.

(2)Includes a $4 million and $41 million reversal of impairment recorded in the third quarter and first nine months of 2021, respectively, on the commercial amortized MSRs. Also, includes a $7 million and $37 million impairment recorded in the third quarter and first nine months of 2020, respectively, on the commercial amortized MSRs.

(3)Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.

(4)Refer to the analysis of changes in fair value MSRs presented in Table 9.1 in this Note for more detail.

(5)See Note 14 (Derivatives) for additional discussion and detail on economic hedges.

(6)Includes net gains (losses) of $142 million and $987 million in the third quarter and first nine months of 2021, respectively, and $(297) million and $(1.6) billion in the third quarter and first nine months of 2020, respectively, related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments.

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2017
2016
2017
2016
Servicing income, net:
Servicing fees:
Contractually specified servicing fees $ 889
954
2,696
2,857
Late charges 41
45
133
135
Ancillary fees 51
56
160
171
Unreimbursed direct servicing costs (1) (186 ) (177 ) (430 ) (533 )
Net servicing fees 795
878
2,559
2,630
Changes in fair value of MSRs carried at fair value:
Due to changes in valuation model inputs or assumptions (2) (A) (142 ) (8 ) (328 ) (1,789 )
Changes due to collection/realization of expected cash flows over time (519 ) (586 ) (1,467 ) (1,645 )
Total changes in fair value of MSRs carried at fair value (661 ) (594 ) (1,795 ) (3,434 )
Amortization (65 ) (67 ) (198 ) (202 )
Net derivative gains from economic hedges (3) (B) 240
142
599
2,575
Total servicing income, net 309
359
1,165
1,569
Net gains on mortgage loan origination/sales activities 737
1,308
2,257
3,110
Total mortgage banking noninterest income $ 1,046
1,667
3,422
4,679
Market-related valuation changes to MSRs, net of hedge results (2)(3) (A)+(B) $ 98
134
271
786


~~(1)~~			~~Includes costs associated with foreclosures, unreimbursed interest advances to investors, and other interest costs.~~Wells Fargo & Company			105


~~(2)~~			~~Refer to the analysis of changes in fair value MSRs presented in Table 8.1 in this~~ Note ~~for more detail.~~


~~(3)~~	~~Represents results from economic hedges used to hedge the risk of changes in fair value of MSRs. See Note 12 (Derivatives Not Designated as Hedging Instruments) for additional discussion and detail.~~

~~Note 8: Mortgage Banking Activities (continued~~)

Table 8.5 summarizes the changes in our liability for mortgage loan repurchase losses. This liability is in “Accrued expenses and other liabilities” in our consolidated balance sheet and adjustments to the repurchase liability are recorded in net gains on mortgage loan origination/sales activities in “Mortgage banking” in our consolidated income statement.

loss, and is based on currently available information, significant judgment, and a number of assumptions that are subject to change. The high end of this range of reasonably possible losses exceeded our recorded liability by $180 million at September 30, 2017, and was determined based upon modifying the assumptions (particularly to assume significant changes in investor repurchase demand practices) used in our best estimate of probable loss to reflect what we believe to be the high end of reasonably possible adverse assumptions.

~~Table 8.5:Analysis of Changes in Liability for Mortgage Loan Repurchase Losses~~

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2017
2016
2017
2016
Balance, beginning of period $ 178
255
229
378
Assumed with MSR purchases (1) 10
—
10
—
Provision for repurchase losses:
Loan sales 6
11
20
26
Change in estimate (2) (12 ) (24 ) (65 ) (132 )
Net reductions to provision (6 ) (13 ) (45 ) (106 )
Losses (3 ) (3 ) (15 ) (33 )
Balance, end of period $ 179
239
179
239


~~(1)~~	~~Represents repurchase liability associated with portfolio of loans underlying mortgage servicing rights acquired during the period.~~


~~(2)~~	~~Results from changes in investor demand and mortgage insurer practices, credit deterioration and changes in the financial stability of correspondent lenders.~~

~~Note 9:~~10: Intangible Assets

Table ~~9.1~~10.1 presents the gross carrying value of intangible assets and accumulated amortization.

~~Table 9.1:Intangible Assets~~

September 30, 2017 December 31, 2016
(in millions)
Gross
carrying
value

Accumulated
amortization

Net
carrying
value

Gross
carrying
value

Accumulated
amortization

Net
carrying
value

Amortized intangible assets (1):
MSRs (2) $ 3,793
(2,387 ) 1,406
3,595
(2,189 ) 1,406
Core deposit intangibles 12,834
(11,853 ) 981
12,834
(11,214 ) 1,620
Customer relationship and other intangibles 3,991
(3,073 ) 918
3,928
(2,839 ) 1,089
Total amortized intangible assets $ 20,618
(17,313 ) 3,305
20,357
(16,242 ) 4,115
Unamortized intangible assets:
MSRs (carried at fair value) (2) $ 13,338
12,959

Goodwill 26,581
26,693

Trademark 14
14


~~(1)~~	~~Excludes fully amortized intangible assets.~~


~~(2)~~	~~See Note 8 (Mortgage Banking Activities) for additional information on MSRs.~~

Table 10.1:Intangible Assets


	September 30, 2021				December 31, 2020
(in millions)	Gross carrying value		Accumulated amortization	Net carrying value	Gross carrying value	Accumulated amortization	Net carrying value
Amortized intangible assets (1):
MSRs (2)	$	4,745	(3,459)	1,286	4,612	(3,300)	1,312

Customer relationship and other intangibles	879		(612)	267	879	(551)	328
Total amortized intangible assets	$	5,624	(4,071)	1,553	5,491	(3,851)	1,640
Unamortized intangible assets:
MSRs (carried at fair value)	$	6,862			6,125
Goodwill	26,191				26,392
Trademark	14				14

(1)Balances are excluded commencing in the period following full amortization.

(2)Includes a $1 million and $37 million valuation allowance recorded for amortized MSRs at September 30, 2021, and December 31, 2020, respectively. See Note 9 (Mortgage Banking Activities) for additional information on MSRs.

Table ~~9.2~~10.2 provides the current year and estimated future amortization expense for amortized intangible assets. We based our projections of amortization expense shown below on existing

asset balances at September 30, ~~2017.~~2021. Future amortization expense may vary from these projections.

Table ~~9.2:~~10.2:Amortization Expense for Intangible Assets

(in millions) Amortized MSRs

Core deposit
intangibles

Customer
relationship
and other
intangibles (1)

Total
Nine months ended September 30, 2017 (actual) $ 198
639
235
1,072
Estimate for the remainder of 2017 $ 64
212
76
352
Estimate for year ended December 31,
2018 240
769
301
1,310
2019 212
—
116
328
2020 192
—
96
288
2021 166
—
82
248
2022 146
—
68
214


~~(1)~~	~~The~~ ~~nine months endedSeptember 30, 2017~~ ~~balance includes~~ ~~$11 million~~ ~~for lease intangible amortization.~~


(in millions)	Amortized MSRs		Customer relationship and other intangibles	Total
Nine months ended September 30, 2021 (actual)	$	159	61	220
Estimate for the remainder of 2021	$	63	20	83
Estimate for year ended December 31,
2022	234		68	302
2023	203		59	262
2024	177		48	225
2025	153		39	192
2026	119		32	151

In the first nine months of 2021, we announced agreements to sell Wells Fargo Asset Management and Corporate Trust Services and transferred the associated goodwill from the Wealth and Investment Management operating segment and the Commercial Banking operating segment, respectively, to

Corporate. Also in the first nine months of 2021, we recognized goodwill write-downs related to sales of the student loan portfolio and our Canadian equipment finance business.

Table ~~9.3~~10.3 shows the allocation of goodwill to our reportable operating segments.

Table ~~9.3:~~10.3:Goodwill


(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate	Consolidated Company





December 31, 2020	$	16,418	3,018	5,375	1,276	305	26,392

Divestitures	—		—	—	—	(201)	(201)
Foreign currency translation	—		—	—	—	—	—
Transfers of goodwill	—		(80)	—	(932)	1,012	—
September 30, 2021	$	16,418	2,938	5,375	344	1,116	26,191

(in millions)
Community
Banking

Wholesale
Banking

Wealth and Investment Management

Consolidated
Company

December 31, 2015 $ 16,849
7,475
1,205

25,529
Reduction in goodwill related to divested businesses and other —
(84 ) (2 ) (86 )
Goodwill from business combinations —
1,245
—
1,245
September 30, 2016 $ 16,849
8,636
1,203
26,688
December 31, 2016 $ 16,849
8,585
1,259
26,693
Reclassification of goodwill held for sale to Other Assets (1) —
(116 ) —
(116 )
Reduction in goodwill related to divested businesses and other —
(20 ) —
(20 )
Goodwill from business combinations —
—
24
24
September 30, 2017 (1) $ 16,849
8,449
1,283
26,581


~~(1)~~106			~~Goodwill reclassified to held-for-sale in other assets of~~ ~~$116 million~~ ~~for the nine months ended~~ ~~September 30, 2017~~ ~~relates to the sales agreement for~~ Wells Fargo ~~Insurance Services USA (and related businesses) and Wells Fargo Shareowner Services.~~ No ~~goodwill was classified as held-for-sale in other assets at~~ ~~December 31, 2016~~ ~~and~~ ~~2015~~. & Company

~~We assess goodwill for impairment at a reporting unit level, which is one level below the operating segments. See Note 18 (Operating Segments) for further information on management reporting.~~



Note ~~10:~~11: Guarantees ~~Pledged Assets~~ and ~~Collateral~~Other Commitments

written ~~put~~ options, recourse obligations, and other types of similar arrangements. ~~For complete~~

~~descriptions of our guarantees, see Note 14 (Guarantees, Pledged Assets and Collateral) to Financial Statements in our 2016 Form 10-K.~~ Table ~~10.1~~11.1 shows carrying value, maximum exposure to loss on our guarantees and the related non-investment grade amounts.

Table ~~10.1:~~11.1:Guarantees – Carrying Value and Maximum Exposure to Loss


			Maximum exposure to loss
(in millions)	Carrying value of obligation (asset)		Expires in one year or less	Expires after one year through three years	Expires after three years through five years	Expires after five years	Total	Non-investment grade
September 30, 2021
Standby letters of credit	$	124	13,659	4,698	1,832	450	20,639	6,897
Direct pay letters of credit	9		1,632	2,172	1,054	44	4,902	1,130
Written options (1)	(423)		11,828	6,102	695	58	18,683	13,205
Loans and LHFS sold with recourse (2)	33		81	910	3,001	9,322	13,314	11,307
Exchange and clearing house guarantees	—		—	—	—	7,653	7,653	—
Other guarantees and indemnifications (3)	—		723	2	9	247	981	668
Total guarantees	$	(257)	27,923	13,884	6,591	17,774	66,172	33,207
December 31, 2020
Standby letters of credit	$	156	11,977	4,962	1,897	433	19,269	7,528
Direct pay letters of credit	18		2,256	2,746	531	39	5,572	1,102
Written options (1)	(538)		12,735	7,972	889	58	21,654	13,394
Loans and LHFS sold with recourse (2)	33		177	819	1,870	9,723	12,589	10,332
Exchange and clearing house guarantees	—		—	—	—	5,510	5,510	—
Other guarantees and indemnifications (3)	—		734	1	1	1,414	2,150	590
Total guarantees	$	(331)	27,879	16,500	5,188	17,177	66,744	32,946

Maximum exposure to loss
(in millions)
Carrying
value of obligation (asset)

Expires in
one year
or less

Expires after
one year
through
three years

Expires after
three years
through
five years

Expires
after five
years

Total

Non-
investment
grade

September 30, 2017
Standby letters of credit (1) $ 37
14,045
8,621
3,251
689
26,606
8,325
Securities lending and other indemnifications (2) —
—
—
2
929
931
2
Written put options (3) (407 ) 15,576
11,921
4,392
1,260
33,149
19,817
Loans and MHFS sold with recourse (4) 51
203
508
914
9,160
10,785
7,964
Factoring guarantees (5) —
775
—
—
—
775
711
Other guarantees 1
4
4
2
4,093
4,103
7
Total guarantees $ (318 ) 30,603
21,054
8,561
16,131
76,349
36,826
December 31, 2016
Standby letters of credit (1) $ 38
16,050
8,727
3,194
658
28,629
9,898
Securities lending and other indemnifications (2) —
—
—
1
1,166
1,167
2
Written put options (3) 37
10,427
10,805
4,573
1,216
27,021
15,915
Loans and MHFS sold with recourse (4) 55
84
637
947
8,592
10,260
7,228
Factoring guarantees (5) —
1,109
—
—
—
1,109
1,109
Other guarantees 6
19
21
17
3,580
3,637
15
Total guarantees $ 136
27,689
20,190
8,732
15,212
71,823
34,167
(1)Written options, which are in the form of derivatives, are also included in the derivative disclosures in Note 14 (Derivatives). Carrying value net asset position is a result of certain deferred premium option trades.

~~(1)~~

~~Total maximum exposure to loss includes direct pay letters of credit (DPLCs) of~~ ~~$8.6 billion~~ ~~and~~ ~~$9.2 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016~~, respectively. We issue DPLCs to provide credit enhancements for certain bond issuances. Beneficiaries (bond trustees) may draw upon these instruments to make scheduled principal and interest payments, redeem all outstanding bonds because a default event has occurred, or for other reasons as permitted by the agreement. We also originate multipurpose lending commitments under which borrowers have the option to draw on the facility in one of several forms, including as a standby letter of credit. Total maximum exposure to loss includes the portion of these facilities for which we have issued standby letters of credit under the commitments.

~~(2)~~

~~Includes indemnifications provided to certain third-party clearing agents. Outstanding customer obligations under these arrangements were~~ ~~$92 million~~ ~~and~~ ~~$175 million~~ ~~with related collateral of~~ ~~$837 million~~ ~~and~~ ~~$991 million~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively. Estimated maximum exposure to loss was~~ ~~$929 million~~ at ~~September 30, 2017~~ ~~and~~ ~~$1.2 billion~~ at ~~December 31, 2016~~.


~~(3)~~	~~Written put options, which are in the form of derivatives, are also included in the derivative disclosures in Note 12 (Derivatives).~~

~~(4)~~

~~Represent recourse provided, predominantly to the GSEs, on loans sold under various programs and arrangements. Under these arrangements, we repurchased~~ ~~$1 million~~ ~~and~~ ~~$3 million~~ ~~respectively, of loans associated with these agreements in the~~ ~~third~~ ~~quarter and~~ ~~first nine months of 2017, and~~ ~~$2 million~~ ~~and~~ ~~$4 million~~ ~~in the same periods of~~ ~~2016, respectively.~~


~~(5)~~	Consists of guarantees made under certain factoring arrangements to purchase trade receivables from third parties, generally upon their request, if receivable debtors default on their payment obligations.

(2)Represents recourse provided, all to the GSEs, on loans sold under various programs and arrangements.

(3)Includes indemnifications provided to certain third-party clearing agents. Estimated maximum exposure to loss was $218 million and $1.4 billion with related collateral of $2.5 billion and $1.2 billion as of September 30, 2021, and December 31, 2020, respectively.

“Maximum exposure to loss” and “Non-investment grade” are required disclosures under GAAP. Maximum exposure to loss represents the estimated loss that would be incurred under an assumed hypothetical circumstance, despite what we believe is a remote possibility, where the value of our interests and any associated collateral declines to zero. Maximum exposure to loss estimates in Table 11.1 do not reflect economic hedges or collateral we could use to offset or recover losses we may incur under our guarantee agreements. Accordingly, this required disclosure is not an indication of expected loss. We believe the carrying value is more representative of our exposure to loss than maximum exposure to loss. The carrying value represents the fair value of the guarantee, if any, and also includes an ACL for guarantees, if applicable.

Non-investment grade represents those guarantees on which we have a higher risk of ~~being required to perform~~performance under the terms of the guarantee. If the underlying assets under the guarantee are non-investment grade (that is, an external rating that is below investment grade or an internal credit default grade that is equivalent to a below investment grade external rating), we consider the risk of performance to be high. Internal credit default grades are determined based upon the same credit policies that we use to evaluate the risk of payment or performance when making loans and other extensions of credit. Credit quality indicators we usually consider in evaluating risk of payments or performance are described in Note 54 (Loans and Related Allowance for Credit Losses).

~~Maximum exposure~~MERCHANT PROCESSING SERVICES We provide debit and credit card transaction processing services through payment networks directly for merchants and as a sponsor for merchant processing servicers, including our joint venture with a third party that is accounted for as an equity method investment. In our role as the merchant acquiring bank, we have a potential obligation in connection with payment and delivery disputes between the merchant and the cardholder that are resolved in favor of the cardholder. If we are unable to collect the amounts from the merchant, we incur a loss ~~represents~~for the ~~estimated~~refund to the cardholder. We are secondarily obligated to make a refund for transactions involving sponsored merchant processing servicers. We generally have a low likelihood of loss in connection with our merchant processing services because most products and services are delivered when purchased and amounts are generally refunded when items are returned to the merchant. In addition, we may reduce our risk in connection with these transactions by withholding future payments and requiring cash or other collateral. For the first nine months of 2021, we processed card transaction volume of $1.2 trillion as a merchant acquiring bank, and related losses, including those from our joint venture entity, were immaterial.


			Wells Fargo & Company			107

Note 11: Guarantees and Other Commitments (continued)

GUARANTEES OF SUBSIDIARIES In the normal course of business, the Parent may provide counterparties with guarantees related to its subsidiaries’ obligations. These obligations are included in the Company’s consolidated balance sheet or are reflected as off-balance sheet commitments, and therefore, the Parent has not recognized a separate liability for these guarantees.

The Parent fully and unconditionally guarantees the payment of principal, interest, and any other amounts that ~~would~~may be ~~incurred under an assumed hypothetical circumstance, despite what we believe~~due on securities that its 100% owned finance subsidiary, Wells Fargo Finance LLC, may issue. These securities are not guaranteed by any other subsidiary of the Parent. The guaranteed liabilities were $1.3 billion and $2.3 billion at September 30, 2021, and December 31, 2020, respectively. These guarantees rank on parity with all of the Parent’s other unsecured and unsubordinated indebtedness. The assets of the Parent consist primarily of equity in its subsidiaries, and the Parent is a ~~remote possibility, where~~separate and distinct legal entity from its subsidiaries. As a result, the ~~value~~Parent’s ability to address claims of holders of these debt securities against the Parent under the guarantee depends on the Parent’s receipt of dividends, loan payments and other funds from its subsidiaries. If any of the Parent’s subsidiaries becomes insolvent, the direct creditors of that subsidiary will have a prior claim on that subsidiary’s assets. The rights of the Parent and the rights of the Parent’s creditors will be subject to that prior claim unless the Parent is also a direct creditor of that subsidiary. For additional information regarding other restrictions on the Parent’s ability to receive dividends, loan payments and other funds from its subsidiaries, see Note 23 (Regulatory Capital Requirements and Other Restrictions).

OTHER COMMITMENTS To meet the financing needs of our ~~interests~~customers, we may enter into commitments to purchase debt and ~~any associated collateral declines~~equity securities to ~~zero. Maximum exposure~~provide capital for their funding, liquidity or other future needs. As of both September 30, 2021, and December 31, 2020, we had commitments to ~~loss estimates~~purchase debt securities of $18 million and commitments to purchase equity securities of $2.9 billion and $3.2 billion, respectively.

As part of maintaining our memberships in certain clearing organizations, we are required to stand ready to provide liquidity to sustain market clearing activity in the event unforeseen events occur or are deemed likely to occur. Certain of these obligations are guarantees of other members’ performance and accordingly are included in Table ~~10.1 do not reflect economic hedges or collateral~~11.1 in Other guarantees and indemnifications.

Also, we ~~could use~~have commitments to ~~offset or recover losses we may incur~~purchase loans and securities under our guarantee agreements. Accordingly, this required disclosure is not an indication of expected loss. We believe the carrying value, which is either fair value for derivative-related products or the allowance for lending-related commitments, is more representativeresale agreements from certain counterparties, including central clearing organizations. The amount of our ~~exposure to loss than maximum exposure to loss.~~unfunded contractual commitments was $10.8 billion and $12.0 billion as of September 30, 2021, and December 31, 2020, respectively.

Given the nature of these commitments, they are excluded from Table 4.4 (Unfunded Credit Commitments) in Note 4 (Loans and Related Allowance for Credit Losses).

~~Note 10: Guarantees, Pledged Assets and Collateral (continued~~)


108			Wells Fargo & Company


Note 12: Pledged Assets and Collateral

Pledged Assets

Table 12.1 provides the carrying amount of on-balance sheet pledged assets and the fair value of other pledged collateral. Other pledged collateral is collateral we have received from third parties, have the right to repledge and is not recognized on our consolidated balance sheet.

TRADING RELATED ACTIVITYOur trading businesses may pledge debt and equity securities in connection with securities sold under agreements to repurchase (repurchase agreements) and securities lending arrangements. The collateral that we pledge related to our trading activities may include our own collateral as well as collateral that we have received from third parties and have the right to repledge. All of the collateral we pledge related to trading activity is eligible to be repledged or sold by the secured party.

NON-TRADING RELATED ACTIVITYAs part of our liquidity management strategy, we may pledge ~~various~~loans, debt securities, and

other financial assets to secure trust and public deposits, borrowings and letters of credit from the ~~FHLB~~Federal Home Loan Bank (FHLB) and ~~FRB, securities sold under agreements to repurchase (repurchase agreements), securities lending arrangements,~~the Board of Governors of the Federal Reserve System (FRB) and for other purposes as required or permitted by law or insurance statutory requirements. ~~The~~Substantially all of the non-trading activity pledged collateral is not eligible to be repledged or sold by the secured party.

VIE RELATED We pledge assets in connection with various types of ~~collateral we pledge include securities issued by federal agencies, GSEs, domestic and foreign companies and various commercial and consumer loans. Table 10.2 provides the total carrying amount of~~transactions entered into with VIEs. These pledged assets ~~by asset type and pledged off-~~

balance sheet securities for securities financings. The table excludes pledged consolidated VIE assets of $12.9 billion and $13.4 billion at September 30, 2017, and December 31, 2016, respectively, which can only be used to settle the liabilities of those entities. ~~The table~~

We also ~~excludes $1.1 billion in assets pledged in transactions with VIE's accounted~~have loans recorded on our consolidated balance sheet which represent certain delinquent loans that are eligible for ~~as secured borrowings at both September 30, 2017, and December 31, 2016, respectively.~~repurchase from GNMA loan securitizations. See Note 78 (Securitizations and Variable Interest Entities) for additional information on consolidated VIE ~~assets and secured borrowings.~~assets.

Table ~~10.2:~~12.1:Pledged Assets

(in millions) Sep 30,
2017
Dec 31,
2016
Trading assets and other (1) $ 100,160
84,603
Investment securities (2) 67,142
90,946
Mortgages held for sale and loans (3) 480,422
516,112
Total pledged assets $ 647,724
691,661

~~(1)~~

~~Consists of trading assets of~~ ~~$40.1 billion~~ ~~and~~ ~~$33.2 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively and off-balance sheet securities of~~ ~~$60.1 billion~~ ~~and~~ ~~$51.4 billion~~ ~~as of the same dates, respectively, that are pledged as collateral for repurchase agreements and other securities financings. Total trading assets and other includes~~ ~~$100.1 billion~~ ~~and~~ ~~$84.2 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively that permit the secured parties to sell or repledge the collateral.~~

~~(2)~~

~~Includes carrying value of~~ ~~$5.0 billion~~ ~~and~~ ~~$6.2 billion~~ ~~(fair value of~~ ~~$5.0 billion~~ ~~and $6.2 billion) in collateral for repurchase agreements at~~ ~~September 30, 2017, and~~ ~~December 31, 2016, respectively, which are pledged under agreements that do not permit the secured parties to sell or repledge the collateral. Also includes~~ ~~$84 million~~ ~~and~~ ~~$617 million~~ ~~in collateral pledged under repurchase agreements at~~ ~~September 30, 2017, and~~ ~~December 31, 2016~~, respectively, that permit the secured parties to sell or repledge the collateral. All other pledged securities are pursuant to agreements that do not permit the secured party to sell or repledge the collateral.

~~(3)~~

~~Includes mortgages held for sale of~~ ~~$1.3 billion~~ ~~and~~ ~~$15.8 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively. Substantially all of the total mortgages held for sale and loans are pledged under agreements that do not permit the secured parties to sell or repledge the collateral. Amounts exclude~~ ~~$1.3 billion~~ ~~and~~ ~~$1.2 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively, of pledged loans recorded on our balance sheet representing certain delinquent loans that are eligible for repurchase from GNMA loan securitizations.~~


(in millions)	Sep 30, 2021		Dec 31, 2020
Related to trading activities:
Repledged third-party owned debt and equity securities	$	34,470	44,765
Trading debt securities and other	21,246		19,572
Equity securities	884		470
Total pledged assets related to trading activities	56,600		64,807
Related to non-trading activities:
Loans	285,792		344,220
Debt securities:

Available-for-sale	52,392		57,289
Held-to-maturity	13,001		17,290
Other financial assets	576		230
Total pledged assets related to non-trading activities	351,761		419,029
Related to VIEs:
Consolidated VIE assets	4,864		12,146
Loans eligible for repurchase from GNMA securitizations	126		179
Total pledged assets related to VIEs	4,990		12,325
Total pledged assets	$	413,351	496,161

Securities Financing Activities

We enter into resale and repurchase agreements and securities borrowing and lending agreements (collectively, “securities financing activities”) typically to finance trading positions (including securities and derivatives), acquire securities to cover short trading positions, accommodate customers’ financing needs, and settle other securities obligations. These activities are conducted through our ~~broker dealer~~broker-dealer subsidiaries and, to a lesser extent, through other bank entities. ~~Most of our~~Our securities financing activities primarily involve ~~high quality,~~high-quality, liquid securities such as U.S. Treasury securities and government agency securities and, to a lesser extent, less liquid securities, including equity securities, corporate bonds and asset-backed securities. We account for these transactions as collateralized financings in which we typically receive or pledge securities as collateral. We believe these financing transactions generally do not have material credit risk given the collateral provided and the related monitoring processes.

OFFSETTING OF ~~RESALE AND REPURCHASE AGREEMENTS AND~~ SECURITIES ~~BORROWING AND LENDING AGREEMENTS~~FINANCING ACTIVITIES Table ~~10.3~~12.2 presents resale and repurchase agreements subject to master repurchase agreements (MRA) and securities borrowing and lending agreements subject to master securities lending agreements (MSLA). ~~We account for~~

~~transactions subject to these agreements as collateralized~~Collateralized financings, and those with a single counterparty, are presented net on our consolidated balance sheet, provided certain criteria are met that permit balance sheet netting. ~~Most~~The majority of transactions subject to these agreements do not meet those criteria and thus are not eligible for balance sheet netting.

Collateral we pledged consists of non-cash instruments, such as securities or loans, and is not netted on the consolidated balance sheet against the related liability. Collateral we received includes securities or loans and is not recognized on our consolidated balance sheet. Collateral pledged or received may be increased or decreased over time to maintain certain contractual thresholds, as the assets underlying each arrangement fluctuate in value. Generally, these agreements require collateral to exceed the asset or liability recognized on


			Wells Fargo & Company			109

Note 12: Pledged Assets and Collateral (continued)

the balance sheet. The following table includes the amount of collateral pledged or received related to exposures subject to enforceable MRAs or MSLAs. While these agreements are typically over-collateralized, U.S. GAAP requires disclosure in this table to limit the reported amount of such collateral to the

amount of the related recognized asset or liability for each counterparty.

In addition to the amounts included in Table ~~10.3,~~12.2, we also have balance sheet netting related to derivatives that is disclosed in Note 1214 (Derivatives).

Table ~~10.3:~~12.2:Offsetting – ~~Resale~~Securities Financing Activities


(in millions)	Sep 30, 2021		Dec 31, 2020
Assets:
Resale and securities borrowing agreements
Gross amounts recognized	$	105,084	92,446
Gross amounts offset in consolidated balance sheet (1)	(18,142)		(11,513)
Net amounts in consolidated balance sheet (2)	86,942		80,933
Collateral not recognized in consolidated balance sheet (3)	(86,140)		(80,158)
Net amount (4)	$	802	775
Liabilities:
Repurchase and securities lending agreements
Gross amounts recognized	$	47,319	57,622
Gross amounts offset in consolidated balance sheet (1)	(18,142)		(11,513)
Net amounts in consolidated balance sheet (5)	29,177		46,109
Collateral pledged but not netted in consolidated balance sheet (6)	(28,971)		(45,819)
Net amount (4)	$	206	290

(1)Represents recognized amount of resale and ~~Repurchase Agreements~~repurchase agreements with counterparties subject to enforceable MRAs that have been offset in the consolidated balance sheet.

(2)Includes $67.8 billion and $65.6 billion classified on our consolidated balance sheet in federal funds sold and securities purchased under resale agreements at September 30, 2021, and December 31, 2020, respectively. Also includes securities purchased under long-term resale agreements (generally one year or more) classified in loans, which totaled $19.2 billion and $15.3 billion, at September 30, 2021, and December 31, 2020, respectively.

(in millions) Sep 30,
2017
Dec 31,
2016
Assets:
Resale and securities borrowing agreements
Gross amounts recognized $ 109,529
91,123
Gross amounts offset in consolidated balance sheet (1) (22,954 ) (11,680 )
Net amounts in consolidated balance sheet (2) 86,575
79,443
Collateral not recognized in consolidated balance sheet (3) (85,777 ) (78,837 )
Net amount (4) $ 798
606
Liabilities:
Repurchase and securities lending agreements
Gross amounts recognized (5) $ 102,281
89,111
Gross amounts offset in consolidated balance sheet (1) (22,954 ) (11,680 )
Net amounts in consolidated balance sheet (6) 79,327
77,431
Collateral pledged but not netted in consolidated balance sheet (7) (79,060 ) (77,184 )
Net amount (8) $ 267
247


~~(1)~~	~~Represents recognized amount of resale and repurchase agreements with counterparties subject to enforceable MRAs that have been offset in the consolidated balance sheet.~~


~~(2)~~	At ~~September 30, 2017, and~~ ~~December 31, 2016, includes~~ ~~$66.0 billion~~ ~~and~~ ~~$58.1 billion, respectively, classified on our consolidated balance sheet in federal funds sold, securities purchased under resale agreements and other short-term investments and~~ ~~$20.6 billionand~~ ~~$21.3 billion, respectively, in loans.~~

~~(3)~~

~~Represents the fair value of collateral we have received under enforceable MRAs or MSLAs, limited for table presentation purposes to the amount of the recognized asset due from each counterparty. At~~ ~~September 30, 2017, and~~ ~~December 31, 2016, we have received total collateral with a fair value of~~ ~~$120.5 billion~~ ~~and~~ ~~$102.3 billion, respectively, all of which, we have the right to sell or repledge. These amounts include securities we have sold or repledged to others with a fair value of~~ ~~$58.4 billion~~ at ~~September 30, 2017, and~~ ~~$50.0 billion~~ at ~~December 31, 2016~~.


~~(4)~~	~~Represents the amount of our exposure that is not collateralized and/or is not subject to an enforceable MRA or MSLA.~~


~~(5)~~	~~For additional information on underlying collateral and contractual maturities, see the “Repurchase and Securities Lending Agreements” section in this Note.~~


~~(6)~~	~~Amount is classified in short-term borrowings on our consolidated balance sheet.~~

~~(7)~~

Represents the fair value of collateral we have pledged, related to enforceable MRAs or MSLAs, limited for table presentation purposes to the amount of the recognized liability owed to each counterparty. At ~~September 30, 2017, and~~ ~~December 31, 2016, we have pledged total collateral with a fair value of~~ ~~$104.2 billion~~ ~~and~~ ~~$91.4 billion, respectively, of which, the counterparty does not have the right to sell or repledge~~ ~~$5.0 billion~~ ~~as of~~ ~~September 30, 2017~~ ~~and~~ ~~$6.6 billion~~ ~~as of~~ ~~December 31, 2016~~.


~~(8)~~	~~Represents the amount of our obligation that is not covered by pledged collateral and/or is not subject to an enforceable MRA or MSLA.~~

(3)Represents the fair value of collateral we have received under enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized asset due from each counterparty. At September 30, 2021, and December 31, 2020, we have received total collateral with a fair value of $122.0 billion and $108.5 billion, respectively, all of which we have the right to sell or repledge. These amounts include securities we have sold or repledged to others with a fair value of $32.1 billion and $36.1 billion at September 30, 2021, and December 31, 2020, respectively.

(4)Represents the amount of our exposure (assets) or obligation (liabilities) that is not collateralized and/or is not subject to an enforceable MRA or MSLA.

~~Note 10: Guarantees, Pledged Assets~~(5)Amount is classified in short-term borrowings on our consolidated balance sheet.

(6)Represents the fair value of collateral we have pledged, related to enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized liability owed to each counterparty. At September 30, 2021, and ~~Collateral (continued~~)

December 31, 2020, we have pledged total collateral with a fair value of $48.3 billion and $59.2 billion, respectively, substantially all of which may be sold or repledged by the counterparty.

REPURCHASE AND SECURITIES LENDING AGREEMENTS Securities sold under repurchase agreements and securities lending arrangements are effectively short-term collateralized borrowings. In these transactions, we receive cash in exchange for transferring securities as collateral and recognize an obligation to reacquire the securities for cash at the ~~transaction's~~transaction’s maturity. These types of transactions create risks, including (1) the counterparty may fail to return the securities at maturity, (2) the fair value of the securities transferred may decline below the amount of our obligation to reacquire the securities, and therefore create an obligation for us to pledge additional amounts, and (3) the counterparty may accelerate the maturity

on demand, requiring us to reacquire the security prior to contractual maturity. We attempt to mitigate these risks ~~by the fact that most~~in various ways. Our collateral primarily consists of ~~our securities financing activities involve~~ highly liquid ~~securities,~~securities. In addition, we underwrite and monitor the financial strength of our counterparties, we monitor the fair value of collateral pledged relative to contractually required repurchase amounts, and we monitor that our collateral is properly returned through the clearing and settlement process in advance of our cash repayment. Table ~~10.4~~12.3 provides the ~~underlying collateral types~~gross amounts recognized on the consolidated balance sheet (before the effects of offsetting) of our ~~gross obligations under~~liabilities for repurchase and securities lending ~~agreements.~~agreements disaggregated by underlying collateral type.

~~Table 10.4:Underlying Collateral Types of Gross Obligations~~

(in millions) Sep 30,
2017
Dec 31,
2016
Repurchase agreements:
Securities of U.S. Treasury and federal agencies $ 44,312
34,335
Securities of U.S. States and political subdivisions 120
81
Federal agency mortgage-backed securities 33,456
32,669
Non-agency mortgage-backed securities 1,548
2,167
Corporate debt securities 7,381
6,829
Asset-backed securities 1,873
3,010
Equity securities 368
1,309
Other 1,300
1,704
Total repurchases 90,358
82,104
Securities lending:
Securities of U.S. Treasury and federal agencies 134
152
Federal agency mortgage-backed securities 80
104
Non-agency mortgage-backed securities —
1
Corporate debt securities 592
653
Equity securities (1) 11,117
6,097
Total securities lending 11,923
7,007
Total repurchases and securities lending $ 102,281
89,111


~~(1)~~110			Equity securities are generally exchange traded and either re-hypothecated under margin lending agreements or obtained through contemporaneous securities borrowing transactions with other counterparties.Wells Fargo & Company

Table 12.3:Gross Obligations by Underlying Collateral Type


(in millions)	Sep 30, 2021		Dec 31, 2020
Repurchase agreements:
Securities of U.S. Treasury and federal agencies	$	22,779	22,922
Securities of U.S. States and political subdivisions	1		4
Federal agency mortgage-backed securities	5,465		15,353
Non-agency mortgage-backed securities	877		1,069
Corporate debt securities	9,517		9,944
Asset-backed securities	972		1,054
Equity securities	725		1,500
Other	778		336
Total repurchases	41,114		52,182
Securities lending arrangements:
Securities of U.S. Treasury and federal agencies	47		64

Federal agency mortgage-backed securities	35		23

Corporate debt securities	98		79

Equity securities (1)	5,992		5,189
Other	33		85
Total securities lending	6,205		5,440
Total repurchases and securities lending	$	47,319	57,622

(1)Equity securities are generally exchange traded and represent collateral received from third parties that has been repledged. We received the collateral through either margin lending agreements or contemporaneous securities borrowing transactions with other counterparties.

Table ~~10.5~~12.4 provides the contractual maturities of our gross obligations under repurchase and securities lending agreements.

Table ~~10.5:~~12.4:Contractual Maturities of Gross Obligations


(in millions)	Overnight/continuous		Up to 30 days	30-90 days	>90 days	Total gross obligation
September 30, 2021
Repurchase agreements	$	28,665	1,913	5,651	4,885	41,114
Securities lending arrangements	5,405		200	600	—	6,205
Total repurchases and securities lending (1)	$	34,070	2,113	6,251	4,885	47,319
December 31, 2020
Repurchase agreements	$	36,946	5,251	5,100	4,885	52,182
Securities lending arrangements	4,690		400	350	—	5,440
Total repurchases and securities lending (1)	$	41,636	5,651	5,450	4,885	57,622

(1)Securities lending is executed under agreements that allow either party to terminate the transaction without notice, while repurchase agreements have a term structure to them that technically matures at a point in time. The overnight/continuous repurchase agreements require election of both parties to roll the trade rather than the election to terminate the arrangement as in securities lending.

(in millions) Overnight/continuous
Up to 30 days
30-90 days
>90 days
Total gross obligation
September 30, 2017
Repurchase agreements $ 73,953
8,212
3,898
4,295
90,358
Securities lending 9,765
405
1,753
—
11,923
Total repurchases and securities lending (1) $ 83,718
8,617
5,651
4,295
102,281
December 31, 2016
Repurchase agreements $ 60,516
9,598
6,762
5,228
82,104
Securities lending 5,565
167
1,275
—
7,007
Total repurchases and securities lending (1) $ 66,081
9,765
8,037
5,228
89,111


~~(1)~~			Securities lending is executed under agreements that allow either party to terminate the transaction without notice, while repurchase agreements have a term structure to them that technically matures at a point in time. The overnight/continuous repurchase agreements require election of both parties to roll the trade rather than the election to terminate the arrangement as in securities lending.Wells Fargo & Company			111



Note ~~11:~~13: Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory, governmental, arbitration, and other proceedings or investigations concerning matters arising from the conduct of our business activities, and many of those proceedings and investigations expose Wells Fargo to potential financial ~~loss.~~loss or other adverse consequences. These proceedings and investigations include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate-related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant legal actions pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. We establish accruals for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. For such accruals, we record the amount we consider to be the best estimate within a range of potential losses that are both probable and estimable; however, if we cannot determine a best estimate, then we record the low end of the range of those potential losses. ~~The~~There can be no assurance as to the ultimate outcome of legal actions, including the matters described below, and the actual costs of resolving legal actions may be substantially higher or lower than the amounts accrued for those actions.

ATM ACCESS FEE LITIGATION In October 2011, plaintiffs filed a putative class action, Mackmin, ~~et.~~et al. v. Visa, Inc. ~~et.~~et al., against Wells Fargo & Company, Wells Fargo Bank, N.A., Visa, MasterCard, and several other banks in the United States District Court for the District of Columbia. Plaintiffs allege that the Visa and MasterCard requirement that if an ATM operator charges an access fee on Visa and MasterCard transactions, then that fee cannot be greater than the access fee charged for transactions on other networks, violates antitrust rules. Plaintiffs seek treble damages, restitution, injunctive relief, and attorneys’ fees where available under federal and state law. Two other antitrust cases ~~which~~that make similar allegations were filed in the same court, but these cases did not name Wells Fargo as a defendant. On February 13, 2013, the district court granted defendants’ motions to dismiss the ~~three~~3 actions. Plaintiffs appealed the dismissals and, on August 4, 2015, the United States Court of Appeals for the District of Columbia Circuit vacated the district court’s decisions and remanded the ~~three~~3 cases to the district court for further proceedings. On June 28, 2016, the United States Supreme Court granted defendants’ petitions for writ of certiorari to review the decisions of the United States Court of Appeals for the District of Columbia. On November 17, 2016, the United States Supreme Court dismissed the petitions as improvidently granted, and the ~~three~~3 cases returned to the district court for further proceedings. The Company has entered into an agreement pursuant to which the Company will pay $20.8 million to resolve the cases, subject to court approval.

AUTOMOBILE LENDING MATTERS As On April 20, 2018, the Company ~~centralizes operations in its dealer services business~~entered into consent orders with the Office of the Comptroller of the Currency (OCC) and ~~tightens controls and oversight of third-party~~the Consumer Financial Protection Bureau (CFPB) to resolve, among other things, investigations by the agencies into the Company’s compliance risk management program and its past practices involving certain automobile collateral protection insurance (CPI) policies and certain mortgage interest rate lock extensions. The consent orders require remediation to customers and the ~~Company anticipates it will identify and remediate issues related~~payment of a total of $1.0 billion in civil money penalties to ~~historical practices concerning~~ the ~~origination, servicing, and/or collection of consumer automobile loans, including related insurance products. For example, in~~agencies. In July 2017, the Company announced a plan to remediate customers who may have been

financially harmed due to issues related to automobile ~~collateral protection insurance (CPI)~~CPI policies purchased through a third-party vendor on their behalf. The Company determined that certain external vendor processes and operational controls were inadequate and, as a result, customers may have been charged premiums for CPI even if they were paying for their own vehicle insurance, as required, and in some cases the CPI premiums may have contributed to a default that led to their vehicle’s repossession. The Company discontinued the practice of placing CPI in September 2016. Multiple putative class ~~action cases~~actions alleging, among other things, unfair and deceptive practices relating to these CPI policies, ~~have been~~were filed against the Company and consolidated into ~~one~~1 multi-district litigation in the United States District Court for the Central District of California. ~~Further,~~As previously disclosed, the Company entered into a settlement to resolve the multi-district litigation. Shareholders also filed a putative securities fraud class action against the Company and its executive officers alleging material misstatements and omissions of CPI-related information in the Company’s public disclosures. In January 2020, the court dismissed this action as to all defendants except the Company and a former ~~team member has~~executive officer and limited the action to two alleged ~~retaliation for raising concerns regarding automobile lending practices.~~misstatements. In addition, the Company ~~has identified certain issues~~is subject to a class action in the United States District Court for the Central District of California alleging that customers are entitled to refunds related to the unused portion of guaranteed automobile protection (GAP) waiver or insurance agreements between the customer and dealer and, by assignment, the ~~lender,~~lender. In June 2021, the court granted preliminary approval of an agreement pursuant to which ~~may result~~the Company will pay $45 million and make certain changes to its GAP refund practices in ~~refunds~~order to ~~customers in certain states.~~settle the action. Allegations related to ~~both~~ the CPI and GAP programs ~~are~~were among the subjects of ~~two~~a shareholder derivative ~~lawsuits filed~~lawsuit in the United States District Court for the Northern District of California, which has been dismissed. In addition, federal and state ~~court. These~~government agencies, including the CFPB, have undertaken formal or informal inquiries, investigations, or examinations regarding these and other issues related to the origination, servicing, ~~and/or~~and collection of consumer ~~automobile~~auto loans, including related insurance ~~products, have also subjected~~products. As previously disclosed, the Company entered into an agreement to ~~formal~~resolve investigations by the state attorneys general.

COMMERCIAL LENDING SHAREHOLDER LITIGATION In October and November 2020, plaintiffs filed two putative securities fraud class actions, which were consolidated into 1 lawsuit pending in the United States District Court for the Northern District of California alleging that the Company and certain of its current and former officers made false and misleading statements or ~~informal inquiries, investigations~~omissions regarding, among other things, the Company’s commercial lending underwriting practices, the credit quality of its commercial credit portfolios, and the value of its commercial loans, collateralized loan obligations and commercial mortgage-backed securities.


112			Wells Fargo & Company

CONSENT ORDER DISCLOSURE LITIGATION Wells Fargo shareholders have brought a putative securities fraud class action in the United States District Court for the Southern District of New York alleging that the Company and certain of its current and former executive officers and directors made false or ~~examinations from federal~~misleading statements regarding the Company’s efforts to comply with the February 2018 consent order with the Federal Reserve Board and ~~state government agencies.~~the April 2018 consent orders with the CFPB and OCC. Allegations related to the Company’s efforts to comply with these three consent orders are also among the subjects of a shareholder derivative lawsuit pending in the United States District Court for the Northern District of California.

CONSUMER DEPOSIT ACCOUNT RELATED REGULATORY ~~INVESTIGATION~~INVESTIGATIONS The ~~Consumer Financial Protection Bureau (the “CFPB”) has commenced~~CFPB is conducting an investigation into whether customers were unduly harmed by the Company’s ~~procedures regarding~~historical practices associated with the freezing (and, in many cases, closing) of consumer deposit accounts after the Company detected suspected fraudulent activity (by ~~third-parties~~third parties or account holders) that affected those accounts. The CFPB is also investigating certain of the Company's past disclosures to customers regarding the minimum qualifying debit card usage required for customers to receive a waiver of monthly service fees on certain consumer deposit accounts.

~~INADVERTENT CLIENT INFORMATION DISCLOSURE~~ ~~In July 2017,~~FOREIGN EXCHANGE BUSINESSThe United States Department of Justice (Department of Justice) is investigating certain activities in the Company’s foreign exchange business, including whether customers may have received pricing inconsistent with commitments made to those customers. On September 27, 2021, the United States District Court for the Southern District of New York approved a settlement pursuant to which the Company inadvertently provided certain client information in response to a third-party subpoena issued in a civil litigation. The Company obtained permanent injunctions in New Jersey and New York state courts requiring the electronic data and all copies to be deliveredpaid $37.5 million to the ~~New Jersey state court~~United States and provided customer remediation in order to resolve the ~~Company for safekeeping. The Company has made voluntary self-disclosure to various state and~~investigation. Previous investigations by other federal ~~regulatory agencies. Notifications~~government agencies have been ~~sent to clients whose personal identifying data was contained in the inadvertent production.~~resolved.

INTERCHANGE LITIGATIONPlaintiffs representing a ~~putative~~ class of merchants have filed putative class actions, and individual merchants have filed individual actions, against Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A., and Wachovia Corporation regarding the interchange fees associated with Visa and MasterCard payment card transactions. Visa, MasterCard, and several other banks and bank holding companies are also named as defendants in these actions. These actions have been consolidated in the United States District Court for the Eastern District of New York. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard, and payment card issuing banks unlawfully

~~Note 11: Legal Actions (continued~~)

colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012, Visa, MasterCard, and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve the consolidated class action and reached a separate settlement in principle of the consolidated individual actions. The settlement payments to be made by all defendants in the consolidated class and individual actions totaled approximately ~~$6.6~~

$6.6 billion before reductions applicable to certain merchants opting out of the settlement. The class settlement also provided for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months. The district court granted final approval of the settlement, which was appealed to the United States Court of Appeals for the Second Circuit by settlement objector merchants. Other merchants opted out of the settlement and are pursuing several individual actions. On June 30, 2016, the Second Circuit vacated the settlement agreement and reversed and remanded the consolidated action to the United States District Court for the Eastern District of New York for further proceedings. On November 23, 2016, prior class counsel filed a petition to the United States Supreme Court, seeking review of the reversal of the settlement by the Second Circuit, and the Supreme Court denied the petition on March 27, 2017. On November 30, 2016, the district court appointed lead class counsel for a damages class and an equitable relief class. The parties have entered into a settlement agreement to resolve the money damages class claims pursuant to which defendants will pay a total of approximately $6.2 billion, which includes approximately $5.3 billion of funds remaining from the 2012 settlement and $900 million in additional funding. The Company’s allocated responsibility for the additional funding is approximately $94.5 million. The court granted final approval of the settlement on December 13, 2019, which was appealed to the United States Court of Appeals for the Second Circuit by settlement objector merchants. On September 27, 2021, the district court granted the plaintiffs’ motion for class certification in the equitable relief case. Several of the opt-out and direct action litigations ~~were~~have been settled ~~during the pendency of the Second Circuit appeal~~ while others remain pending. ~~Discovery is proceeding~~

LOW INCOME HOUSING TAX CREDITSFederal government agencies have undertaken formal or informal inquiries or investigations regarding the manner in which the ~~opt-out litigations~~Company purchased, and negotiated the ~~remanded class cases.~~purchase of, certain federal low income housing tax credits in connection with the financing of low income housing developments.

MORTGAGE ~~BANKRUPTCY LOAN MODIFICATION LITIGATION~~ LENDING MATTERSPlaintiffs representing a ~~putative~~ class of mortgage borrowers ~~who were debtors in Chapter 13 bankruptcy cases,~~have filed aseparate putative class ~~action,~~ ~~Cotton, et al.~~actions, Hernandez v. Wells Fargo, et alal., Coordes v. Wells Fargo, et al., Ryder v. Wells Fargo, Liguori v. Wells Fargo, and Dore v. Wells Fargo, against Wells Fargo ~~& Company and Wells Fargo~~ Bank, N.A., in the United States ~~Bankruptcy~~District Court for the Northern District of California, the United States District Court for the District of Washington, the United States District Court for the Southern District of Ohio, the United States District Court for the Southern District of New York, and the United States District Court for the Western District of ~~North Carolina on June 7, 2017. The plaintiffs~~Pennsylvania, respectively. Plaintiffs allege that Wells Fargo improperly ~~and unilaterally modified~~denied mortgage loan modifications or repayment plans to customers in the ~~mortgages~~foreclosure process due to the overstatement of foreclosure attorneys’ fees that were included for purposes of determining whether a customer in the foreclosure process qualified for a mortgage loan modification or repayment plan. In March 2020, the Company entered into an agreement pursuant to which the Company paid $18.5 million to resolve the claims of the initial certified class in the Hernandez case, which was approved by the district court in October 2020. The Hernandez settlement has been reopened to include additional borrowers who the Company determined should have been included in the settlement class because the Company identified a population of additional borrowers during the relevant class period whose loans had not previously been reviewed for inclusion in the original population of impacted


			Wells Fargo & Company			113

Note 13: Legal Actions (continued)

customers. In June 2021, the Company entered into an agreement pursuant to which the Company will pay an additional approximately $22 million to resolve the Hernandez case. In July 2021, the Company entered into an agreement in the Ryder case pursuant to which the Company will pay $12 million to cover other impacted borrowers who were debtors in Chapter 13 bankruptcy cases. The plaintiffs allege that Wells Fargo implemented these modifications by improperly filing mortgage payment change notices in Chapter 13 bankruptcy cases, in violation of bankruptcy rules and process. The amended complaint asserts claims based on, among other things, alleged fraud, violations of bankruptcy rules and laws, and unfair and deceptive trade practices. The amended complaint seeks monetary damages, attorneys’ fees, and declaratory and injunctive relief.

~~MORTGAGE INTEREST RATE LOCK RELATED REGULATORY INVESTIGATION~~ The CFPB has commenced an investigation into the Company’s policies and procedures regarding the circumstances in which the Company required customers to pay fees for the extension of interest rate lock periods for residential mortgages. On October 4, 2017, the Company announced plans to reach out to all home lending customers who paid fees for mortgage rate lock extensions requested from September 16, 2013, through February 28, 2017, and to refund customers who believe they shouldn't have paid those fees. The Company is named in two putative class actions, filednot included in the ~~United States~~

~~District Courts for the Central District of California~~ Hernandez case. The Dore,Coordes, and ~~the Northern District of California, alleging violations of federal and state consumer fraud statutes relating to mortgage rate lock extension fees.~~ Liguori cases have been voluntarily dismissed. In addition, former team members have asserted claims, including in pending litigation, that they were terminated for raising concerns regarding these policies and procedures. Allegations related to mortgage interest rate lock extension fees are also among the subjects of two shareholder derivative lawsuits filed in California state court.

~~MORTGAGE RELATED REGULATORY INVESTIGATIONS~~ ~~Federal~~federal and state government agencies, including the ~~United States Department~~CFPB, have undertaken formal or informal inquiries or investigations regarding these and other mortgage servicing matters. On September 9, 2021, the OCC assessed a $250 million civil money penalty against the Company regarding loss mitigation activities in the Company’s Home Lending business and insufficient progress in addressing requirements under the OCC’s April 2018 consent order. In addition, on September 9, 2021, the Company entered into a consent order with the OCC requiring the Company to improve the execution, risk management, and oversight of ~~Justice (the “Department~~loss mitigation activities in its Home Lending business.

NOMURA/NATIXIS MORTGAGE-RELATED LITIGATION In August 2014 and August 2015, Nomura Credit & Capital Inc. (Nomura) and Natixis Real Estate Holdings, LLC (Natixis) filed a total of ~~Justice”), continue investigations or examinations of certain mortgage related activities of~~7 third-party complaints against Wells Fargo Bank, N.A., in New York state court. In the underlying first-party actions, Nomura and ~~predecessor institutions.~~Natixis have been sued for alleged breaches of representations and warranties made in connection with residential mortgage-backed securities sponsored by them. In the third-party actions, Nomura and Natixis allege that Wells Fargo, ~~for itself~~as master servicer, primary servicer or securities administrator, failed to notify Nomura and ~~for predecessor institutions, has responded,~~Natixis of their own breaches, failed to properly oversee the primary servicers, and ~~continues~~failed to ~~respond,~~adhere to requests from these agencies seeking information regarding the origination, underwriting and securitization of residential mortgages, including sub-prime mortgages. These agencies have advanced theories of purported liability with respect to certain of these activities. The Department of Justice andaccepted servicing practices. Natixis additionally alleges that Wells Fargo ~~continue~~failed to ~~discuss the matter, including potential settlement~~perform default oversight duties. Wells Fargo has asserted counterclaims alleging that Nomura and Natixis failed to provide Wells Fargo notice of the Department of Justice's concerns; however, litigation with these agencies, including with the Department of Justice, remains a possibility. Other financial institutions have entered into similar settlements with these agencies, the nature of which related to the specific activities of those financial institutions, including the imposition of significant financial penaltiestheir representation and ~~remedial actions.~~warranty breaches.

OFAC RELATED INVESTIGATION The Company has self-identified an issue whereby certain foreign banks utilized a Wells Fargo software-based solution to conduct import/export trade-related financing transactions with countries and entities prohibited by the Office of Foreign Assets Control ~~(“OFAC”)~~(OFAC) of the United States Department of the Treasury. We do not believe any funds related to these transactions flowed through accounts at Wells Fargo as a result of the aforementioned conduct. The Company has made voluntary self-disclosures to OFAC and is cooperating with an inquiry from the Department of Justice.

~~ORDER OF POSTING LITIGATION~~ ~~Plaintiffs filed a series~~RETAIL SALES PRACTICES MATTERSA number of ~~putative class actions against Wachovia Bank, N.A.~~bodies or entities, including (a) federal, state, and ~~Wells Fargo Bank, N.A.~~local government agencies, including the Department of Justice, the United States Securities and Exchange Commission (SEC), and the United States Department of Labor, (b) state attorneys general, including the New York Attorney General, and (c) Congressional committees, have undertaken formal or informal inquiries, investigations, or examinations arising out of certain retail sales practices of the Company that were the subject of settlements with the CFPB, the OCC, and the Office of the Los Angeles City Attorney announced by the Company on September 8, 2016. The Company has responded to requests from certain of the foregoing. As previously disclosed, the Company entered into agreements to resolve the state attorneys general investigations. On February 21, 2020, the Company entered into an agreement with the Department of Justice to resolve the

Department of Justice’s criminal investigation into the Company’s retail sales practices, as well as ~~many other banks, challenging~~a separate agreement to resolve the ~~“high~~Department of Justice’s civil investigation. As part of the Department of Justice criminal settlement, no charges will be filed against the Company provided the Company abides by all the terms of the agreement. The Department of Justice criminal settlement also includes the Company’s agreement that the facts set forth in the settlement document constitute sufficient facts for the finding of criminal violations of statutes regarding bank records and personal information. On February 21, 2020, the Company also entered into an order to ~~low”~~resolve the SEC’s investigation arising out of the Company’s retail sales practices. The SEC order incontains a finding, to which the ~~banks post debit card transactions to consumer deposit accounts. Most~~Company consented, that the facts set forth include violations of ~~these actions were consolidated in multi-district litigation proceedings (the “MDL proceedings”)~~Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. As part of the resolution of the Department of Justice and SEC investigations, the Company made payments totaling $3.0 billion. In addition, as part of the settlements and included in the ~~United States District Court~~$3.0 billion amount, the Company agreed to the creation of a $500 million Fair Fund for the ~~Southern District~~benefit of ~~Florida. The court~~investors who were harmed by the conduct covered in the ~~MDL proceedings has certified~~SEC settlement. In addition, a ~~class~~number of ~~putative plaintiffs, and Wells Fargo moved~~lawsuits were filed by non-governmental parties seeking damages or other remedies related to ~~compel arbitration of~~these retail sales practices. As previously disclosed, the ~~claims of unnamed class members. The court denied the motions~~Company entered into various settlements to ~~compel arbitration on October 17, 2016. Wells Fargo has appealed this decision to the United States Court of Appeals for the Eleventh Circuit.~~resolve these lawsuits.

RMBS TRUSTEE LITIGATION In ~~November~~December 2014, ~~a group of institutional investors (the “Institutional Investor Plaintiffs”), including funds affiliated with BlackRock, Inc.,~~Phoenix Light SF Limited and certain related entities and the National Credit Union Administration (NCUA) filed ~~a putative class action~~complaints in the United States District Court for the Southern District of New York against Wells Fargo Bank, N.A., alleging claims against the Company in its capacity as trustee for a number of residential mortgage-backed securities ~~(RMBS) trusts (the “Federal Court Complaint”). Similar complaints~~trusts. Complaints raising similar allegations have been filed ~~against other trustees in various courts, including~~by Commerzbank AG in the Southern District of New York and by IKB International and IKB Deutsche Industriebank in New

York state ~~court, and in other states, by RMBS investors. The Federal Court Complaint alleges~~court. In each case, the plaintiffs allege that Wells Fargo Bank, N.A., as trustee, caused losses to investors, and ~~asserts~~plaintiffs assert causes of action based upon, among other things, the ~~trustee's~~trustee’s alleged failure to notify and enforce repurchase obligations of mortgage loan sellers for purported breaches of representations and warranties, notify investors of alleged events of default, and abide by appropriate standards of care following alleged events of default. ~~Plaintiffs seek money damages~~The Company previously settled 2 class actions with similar allegations that were filed in ~~an unspecified amount, reimbursement of expenses, and equitable relief. In December~~November 2014 and December ~~2015, certain other~~2016 by institutional investors ~~filed four complaints alleging similar claims against Wells Fargo Bank, N.A.~~ in the Southern District of New York ~~(the “Related Federal Cases”),~~ and ~~the various cases pending against Wells Fargo are proceeding before the same judge. On January 19, 2016, the Southern District of~~ New York entered an order in connection with the Federal Court Complaint dismissing claims related to certain of the trusts at issue (the “Dismissed Trusts”). The Company's motion to dismiss the Federal Court Complaintstate court, respectively. In addition, Park Royal I LLC and ~~the~~Park Royal II LLC have filed complaints ~~for the Related Federal Cases was granted in part and denied in part in March 2017~~. In May 2017, the Company filed third-party complaints against certain investment advisors affiliated with the Institutional Investor Plaintiffs seeking contribution with respect to claims alleged in the Federal Court Complaint.

~~A complaint raising similar allegations to the Federal Court Complaint was filed in May 2016~~ in New York state court alleging Wells Fargo Bank, N.A., as trustee, failed to take appropriate actions upon learning of defective mortgage loan documentation. In March 2021, the Company entered into an agreement to resolve the case filed by ~~a different plaintiff investor. In addition,~~ the ~~Institutional Investor Plaintiffs subsequently~~NCUA.

SEMINOLE TRIBE TRUSTEE LITIGATION The Seminole Tribe of Florida filed a complaint ~~relating~~in Florida state court alleging that Wells Fargo, as trustee, charged excess fees in connection with the administration of a minor’s trust and failed to invest the assets of the trust prudently. The complaint was later amended to include 3 individual current and former beneficiaries as plaintiffs and to remove the Tribe as a party to the ~~Dismissed Trusts and certain additional trusts in California state court (the “California Action”). The California Action was subsequently dismissed in September 2016.~~case. In December 2016, the ~~Institutional Investor Plaintiffs~~Company filed a new putative class action complaint in New York state court in respect of 261 RMBS trusts, including the Dismissed Trusts, for which Wells Fargo Bank, N.A. serves or served as trustee (the “State Court Action”). The Company has movedmotion to dismiss the ~~State Court Action.~~

~~In July 2017, certain of~~amended complaint on the plaintiffs from the State Court Action filed a civil complaint relating to Wells Fargo Bank, N.A.'s setting aside reserves for legal fees and expenses in connection with the liquidation of eleven RMBS trusts at issue in the State Court Action. The complaint seeks, among other relief, declarations that Wells Fargo Bank, N.A. is not entitled to indemnification, the advancement of funds or the taking of reserves from trust funds for legal fees and expenses it incurs in defending the claims in the State Court Action. In September 2017, one of the plaintiffs in the Related Federal Cases filed a similar complaint in the Southern District of New York seeking declaratory and injunctive relief and money damages on an individual and class action basis.

~~SALES PRACTICES MATTERS~~ Federal, state and local government agencies, including the Department of Justice, the United States Securities and Exchange Commission and the United States Department of Labor, and state attorneys general and prosecutors’ offices, as well as Congressional committees, have undertaken formal or informal inquiries, investigations or examinations arising out of certain sales practices of the Company that were the subject of settlements with the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the Office of the Los Angeles City Attorney announced by the Company on September 8, 2016. The Company has responded, and

~~continues to respond, to requests from a number of the foregoing seeking information regarding these sales practices and the circumstances of the settlements and related matters.~~

In addition, a number of lawsuits have also been filed by non-governmental parties seeking damages or other remedies related to these sales practices. First, various class plaintiffs purporting to represent consumers who allege that they received products or services without their authorization or consent have brought separate putative class actions against the Company in the United States District Court for the Northern District of California and various other jurisdictions. In April 2017, the Company entered into a settlement agreement in the first-filed action, ~~Jabbari v. Wells Fargo Bank, N.A~~., to resolve claims regarding certain products or services provided without authorization or consent for the time period May 1, 2002 to April 20, 2017. Pursuant to the settlement, the Company will pay $142 million for remediation, attorneys’ fees, and settlement fund claims administration. In the unlikely eventgrounds that the ~~$142 million settlement total~~Tribe is ~~not enough to provide remediation, pay attorneys' fees, pay settlement fund claims administration costs,~~a necessary party and ~~have at least $25 million left over to distribute to all class members, the Company will contribute additional funds to the settlement. In addition, in the unlikely event~~ that the ~~number of unauthorized accounts identified by settlement class members~~individual beneficiaries lack standing to bring claims. The motion was denied in the claims process and not disputed by the claims administrator exceeds plaintiffs’ 3.5 million account estimate, the Company will proportionately increase the $25 million reserve so that the ratio of reserve to unauthorized accountsJune 2018. The case is no less than what was implied by plaintiffs’ estimate at the time of the district court’s preliminary approval of the settlement in July 2017. A final approval hearing has been scheduled for the first quarter of 2018. Second, Wells Fargo shareholders are pursuing a consolidated securities fraud class action in the United States District Court for the Northern District of California alleging certain misstatements and omissions in the Company’s disclosures related to sales practices matters. Third, Wells Fargo shareholders have brought numerous shareholder derivative lawsuits asserting breach of fiduciary duty claims, among others, against current and former directors and officers for their alleged failure to detect and prevent sales practices issues, which were consolidated into two separate actions in the United States District Court for the Northern District of California and California state court, as well as two separate actions in Delaware state court. Fourth, a range of employment litigation has been brought against Wells Fargo, including an Employee Retirement Income Security Act (ERISA) class action in the United States District Court for the District of Minnesota brought on behalf of 401(k) plan participants; class actions pending in the United States District Courts for the Northern District of California and Eastern District of New York on behalf of employees who allege that they protested sales practice misconduct and/or were terminated for not meeting sales goals; various wage and hour class actions brought in federal and state court in California, New Jersey, Florida, and Pennsylvania on behalf of non-exempt branch based employees alleging sales pressure resulted in uncompensated overtime; and multiple single plaintiff Sarbanes-Oxley Act complaints and state law whistleblower actions filed with the United States Department of Labor or in various state courts alleging adverse employment actions for raising sales practice misconduct issues.trial.


114			Wells Fargo & Company

OUTLOOKAs described above, the Company establishes accruals for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. The high end of the range of reasonably possible potential losses in excess of the Company’s accrual for probable

~~Note 11: Legal Actions (continued~~)

and estimable losses was approximately ~~$3.3~~$3.0 billion as of September 30, 2017. The high end of the range as of September 30, 2017, remained unchanged from June 30, 2017, reflecting a decrease from the $1 billion discrete litigation accrual in third quarter 2017 for the Company's existing mortgage-related regulatory investigations, offset by the possibility of increased risk in a variety of matters, including the Company's existing mortgage-related regulatory investigations.2021. The outcomes of legal actions are unpredictable and subject to significant uncertainties, and it is inherently difficult to determine whether any loss is probable or even possible. It is also inherently difficult to estimate the amount of any loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Accordingly, actual losses may be in excess of the established accrual or the range of reasonably possible loss. Wells Fargo is unable to determine whether the ultimate resolution of either the mortgage related regulatory investigations or the sales practices matters will have a material adverse effect on its consolidated financial condition. Based on information currently available, advice of counsel, available insurance coverage, and established reserves, Wells Fargo believes that the eventual outcome of ~~other~~the actions against Wells Fargo and/or its subsidiaries will not, individually or in the aggregate, have a material adverse effect on Wells Fargo’s consolidated financial condition. However, it is possible that the ultimate resolution of a matter, if unfavorable, may be material to Wells Fargo’s results of operations for any particular period.



			Wells Fargo & Company			115


Note ~~12:~~14: Derivatives

We use derivatives to manage exposure to market risk, including interest rate risk, credit risk and foreign currency risk, and to assist customers with their risk management objectives. We designate certain derivatives as hedging instruments in a qualifying hedge accounting ~~relationship~~relationships (fair value or cash flow ~~hedge)~~hedges). Our remaining derivatives consist of economic hedges that do not qualify for hedge accounting and derivatives held for customer accommodation trading or other purposes. For ~~more~~additional information on our derivative activities, see Note 16 (Derivatives) ~~to Financial Statements~~ in our ~~2016~~2020 Form 10-K.

Table ~~12.1~~14.1 presents the total notional or contractual amounts and fair values for our derivatives. Derivative transactions can be measured in terms of the notional amount, but this amount is not recorded on ~~the~~our consolidated balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. The notional amount is generally not exchanged, but is used only as the basis on which interest and other payments are determined.

Table ~~12.1:~~14.1:Notional or Contractual Amounts and Fair Values of Derivatives

September 30, 2017 December 31, 2016

Notional or
contractual
amount

Fair value

Notional or
contractual
amount

Fair value
(in millions)
Derivative
assets

Derivative
liabilities

Derivative
assets
Derivative
liabilities
Derivatives designated as hedging instruments
Interest rate contracts (1) $ 243,338
2,589
1,190
235,222
6,587
2,710
Foreign exchange contracts (1) 33,398
1,219
1,211
25,861
673
2,779
Total derivatives designated as qualifying hedging instruments 3,808
2,401
7,260
5,489
Derivatives not designated as hedging instruments
Economic hedges:
Interest rate contracts (2) 228,310
219
299
228,051
1,098
1,441
Equity contracts 10,650
640
134
7,964
545
83
Foreign exchange contracts 17,678
66
467
20,435
626
165
Credit contracts – protection purchased 123
52
—
482
102
—
Subtotal 977
900
2,371
1,689
Customer accommodation trading and
other derivatives:
Interest rate contracts 6,717,492
15,533
14,144
6,018,370
57,583
61,058
Commodity contracts 66,743
1,574
1,172
65,532
3,057
2,551
Equity contracts 173,306
6,156
7,501
151,675
4,813
6,029
Foreign exchange contracts 367,266
7,487
7,128
318,999
9,595
9,798
Credit contracts – protection sold 9,754
154
219
10,483
85
389
Credit contracts – protection purchased 20,263
214
257
19,964
365
138
Other contracts 955
—
26
961
—
47
Subtotal 31,118
30,447
75,498
80,010
Total derivatives not designated as hedging instruments 32,095
31,347
77,869
81,699
Total derivatives before netting 35,903
33,748
85,129
87,188
Netting (3) (23,323 ) (24,251 ) (70,631 ) (72,696 )
Total $ 12,580
9,497
14,498
14,492

~~(1)~~

~~Notional amounts presented exclude~~ ~~$500 million~~ ~~and~~ ~~$1.9 billion~~ ~~of interest rate contracts at~~ ~~September 30, 2017, and~~ ~~December 31, 2016, respectively, for certain derivatives that are combined for designation as a hedge on a single instrument. The notional amount for foreign exchange contracts at~~ ~~September 30, 2017, and~~ ~~December 31, 2016, excludes~~ ~~$13.3 billion~~ ~~and~~ ~~$9.6 billion, respectively, for certain derivatives that are combined for designation as a hedge on a single instrument.~~


~~(2)~~	~~Includes economic hedge derivatives used to hedge the risk of changes in the fair value of residential MSRs, MHFS, loans, derivative loan commitments and other interests held.~~


~~(3)~~	~~Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Table 12.2 for further information.~~

~~Note 12: Derivatives (continued~~)


	September 30, 2021					December 31, 2020
	Notional or		Fair value			Notional or	Fair value
	contractual		Derivative		Derivative	contractual	Derivative	Derivative
(in millions)	amount		assets		liabilities	amount	assets	liabilities
Derivatives designated as hedging instruments
Interest rate contracts	$	164,799	2,227		477	184,090	3,212	789
Foreign exchange contracts	32,623		686		688	47,331	1,381	607
Total derivatives designated as qualifying hedging instruments			2,913		1,165		4,593	1,396
Derivatives not designated as hedging instruments
Economic hedges:
Interest rate contracts	252,116		334		305	261,159	341	344
Equity contracts	26,589		1,788		244	25,997	1,363	490
Foreign exchange contracts	33,287		463		319	47,106	331	1,515
Credit contracts	644		12		—	73	31	—
Subtotal			2,597		868		2,066	2,349
Customer accommodation trading and other derivatives:
Interest rate contracts	8,720,001		22,488		18,180	7,947,941	32,510	25,169
Commodity contracts	78,956		10,039		3,294	65,790	2,036	1,543
Equity contracts	335,027		17,641		18,299	280,195	17,522	21,516
Foreign exchange contracts	466,773		6,162		5,279	412,879	6,891	6,034
Credit contracts	38,879		39		42	34,329	64	58

Subtotal			56,369		45,094		59,023	54,320
Total derivatives not designated as hedging instruments			58,966		45,962		61,089	56,669
Total derivatives before netting			61,879		47,127		65,682	58,065
Netting			(34,819)		(34,151)		(39,836)	(41,556)
Total			$	27,060	12,976		25,846	16,509

Table ~~12.2~~14.2 provides information on the gross fair values of derivative assets and liabilities, the balance sheet netting adjustments and the resulting net fair value amount recorded on our consolidated balance sheet, as well as the non-cash collateral associated with such arrangements. We execute ~~largely~~substantially all of our derivative transactions under master netting arrangements and reflect all derivative balances and related cash collateral subject to enforceable master netting arrangements on a net basis within the consolidated balance sheet. The “Gross amounts recognized” column in the following table includes ~~$27.2~~$54.2 billion and ~~$28.8~~$42.5 billion of gross derivative assets and liabilities, respectively, at September 30, ~~2017,~~2021, and ~~$74.4~~$54.6 billion and ~~$78.4~~$50.1 billion, respectively, at December 31, ~~2016,~~2020, with counterparties subject to enforceable master netting arrangements that are ~~carried on the~~eligible for balance sheet ~~net of offsetting amounts.~~netting adjustments. The remaining gross derivative assets and liabilities of ~~$8.7~~$7.7 billion and ~~$4.9~~$4.6 billion, respectively, at September 30, ~~2017,~~2021, and ~~$10.7~~$11.1 billion and ~~$8.7~~$8.0 billion, respectively, at December 31, ~~2016,~~2020, include those with counterparties subject to

master netting arrangements for which we have not assessed the enforceability because they are with counterparties where we do not currently have positions to offset, those subject to master netting arrangements where we have not been able to confirm the enforceability and those not subject to master netting arrangements. As such, we do not net derivative balances or collateral within the consolidated balance sheet for these counterparties. Cash collateral receivables and payables that have not been offset against our derivatives were $3.4 billion and $1.2 billion, respectively, at September 30, 2021, and $1.8 billion and $984 million, respectively, at December 31, 2020.

We determine the balance sheet netting adjustments based on the terms specified within each master netting arrangement. We disclose the balance sheet netting amounts within the column titled “Gross amounts offset in consolidated balance sheet.” Balance sheet netting adjustments are determined at the counterparty level for which there may be multiple contract types. For disclosure purposes, we allocate these netting adjustments to the contract type for each counterparty


116			Wells Fargo & Company

proportionally based upon the “Gross amounts recognized” by counterparty. As a result, the net amounts disclosed by contract type may not represent the actual exposure upon settlement of the contracts.

We do not net non-cash collateral that we receive and pledge on ~~the~~our consolidated balance sheet. For disclosure purposes, we present the fair value of this non-cash collateral in the column titled “Gross amounts not offset in consolidated balance sheet (Disclosure-only netting)” within the table. We determine and allocate the Disclosure-only netting amounts in the same manner as balance sheet netting amounts.

The “Net amounts” column within Table ~~12.2~~14.2 represents the aggregate of our net exposure to each counterparty after considering the balance sheet and Disclosure-only netting

adjustments. We manage derivative exposure by monitoring the credit risk associated with each counterparty using ~~counterparty specific~~counterparty-specific credit risk limits, using master netting arrangements and obtaining collateral. Derivative contracts executed in ~~over-the-counter~~OTC markets include bilateral contractual arrangements that are not cleared through a central clearing organization but are typically subject to master netting arrangements. The ~~percentage~~proportion of ~~our bilateral derivative transactions outstanding at period end in such markets, based on gross fair value, is provided within the following table. Other~~these derivative contracts ~~executed~~relative to our total derivative assets and liabilities are presented in the “Percent exchanged in over-the-counter ~~or exchange-traded markets are settled through a central clearing organization and are excluded from this percentage.~~market” column in Table 14.2. In addition to the netting amounts included in the table, we also have balance sheet netting related to resale and repurchase agreements that are disclosed within Note ~~10 (Guarantees, Pledged~~12 (Pledged Assets and Collateral).

Table ~~12.2:~~14.2:Gross Fair Values of Derivative Assets and Liabilities


(in millions)	Gross amounts recognized		Gross amounts offset in consolidated balance sheet (1)	Net amounts in consolidated balance sheet	Gross amounts not offset in consolidated balance sheet (Disclosure-only netting)	Net amounts	Percent exchanged in over-the-counter market
September 30, 2021
Derivative assets
Interest rate contracts	$	25,049	(15,661)	9,388	(697)	8,691	95	%
Commodity contracts	10,039		(1,905)	8,134	(27)	8,107	93
Equity contracts	19,429		(11,506)	7,923	(994)	6,929	67
Foreign exchange contracts	7,311		(5,713)	1,598	(37)	1,561	100
Credit contracts	51		(34)	17	(1)	16	90

Total derivative assets	$	61,879	(34,819)	27,060	(1,756)	25,304
Derivative liabilities
Interest rate contracts	$	18,962	(15,992)	2,970	(1,271)	1,699	94	%
Commodity contracts	3,294		(1,361)	1,933	(13)	1,920	46
Equity contracts	18,543		(12,340)	6,203	(567)	5,636	73
Foreign exchange contracts	6,286		(4,428)	1,858	(420)	1,438	100
Credit contracts	42		(30)	12	(2)	10	94


Total derivative liabilities	$	47,127	(34,151)	12,976	(2,273)	10,703
December 31, 2020
Derivative assets
Interest rate contracts	$	36,063	(21,968)	14,095	(1,274)	12,821	96	%
Commodity contracts	2,036		(940)	1,096	(4)	1,092	84
Equity contracts	18,885		(10,968)	7,917	(737)	7,180	74
Foreign exchange contracts	8,603		(5,887)	2,716	(141)	2,575	100
Credit contracts	95		(73)	22	(1)	21	90


Total derivative assets	$	65,682	(39,836)	25,846	(2,157)	23,689
Derivative liabilities
Interest rate contracts	$	26,302	(21,934)	4,368	(2,219)	2,149	95	%
Commodity contracts	1,543		(819)	724	—	724	69
Equity contracts	22,006		(12,283)	9,723	(837)	8,886	78
Foreign exchange contracts	8,156		(6,481)	1,675	(529)	1,146	100
Credit contracts	58		(39)	19	(3)	16	91


Total derivative liabilities	$	58,065	(41,556)	16,509	(3,588)	12,921

(1)Represents amounts with counterparties subject to enforceable master netting arrangements that have been offset in the consolidated balance sheet, including related cash collateral and portfolio level counterparty valuation adjustments. Counterparty valuation adjustments related to derivative assets were $273 million and $399 million and debit valuation adjustments related to derivative liabilities were $154 million and $201 million as of September 30, 2021, and December 31, 2020, respectively. Cash collateral totaled $5.4 billion and $4.8 billion, netted against derivative assets and liabilities, respectively, at September 30, 2021, and $5.5 billion and $7.5 billion, respectively, at December 31, 2020.

(in millions)
Gross
amounts
recognized (1)

Gross amounts
offset in
consolidated
balance
sheet (1)(2)

Net amounts in
consolidated
balance
sheet

Gross amounts
not offset in
consolidated
balance sheet
(Disclosure-only
netting) (3)

Net
amounts

Percent
exchanged in
over-the-counter
market (1)(4)

September 30, 2017
Derivative assets
Interest rate contracts $ 18,341
(11,991 ) 6,350
(313 ) 6,037
99 %
Commodity contracts 1,574
(672 ) 902
(5 ) 897
83
Equity contracts 6,796
(4,149 ) 2,647
(473 ) 2,174
75
Foreign exchange contracts 8,772
(6,306 ) 2,466
(63 ) 2,403
100
Credit contracts – protection sold 154
(14 ) 140
—
140
10
Credit contracts – protection purchased 266
(191 ) 75
(1 ) 74
94
Total derivative assets $ 35,903
(23,323 ) 12,580
(855 ) 11,725

Derivative liabilities
Interest rate contracts $ 15,633
(12,932 ) 2,701
(1,567 ) 1,134
99 %
Commodity contracts 1,172
(361 ) 811
(13 ) 798
80
Equity contracts 7,635
(3,708 ) 3,927
(365 ) 3,562
85
Foreign exchange contracts 8,806
(7,049 ) 1,757
(429 ) 1,328
100
Credit contracts – protection sold 219
(196 ) 23
(17 ) 6
89
Credit contracts – protection purchased 257
(5 ) 252
—
252
7
Other contracts 26
—
26
—
26
100
Total derivative liabilities $ 33,748
(24,251 ) 9,497
(2,391 ) 7,106

December 31, 2016
Derivative assets
Interest rate contracts $ 65,268
(59,880 ) 5,388
(987 ) 4,401
34 %
Commodity contracts 3,057
(707 ) 2,350
(30 ) 2,320
74
Equity contracts 5,358
(3,018 ) 2,340
(365 ) 1,975
75
Foreign exchange contracts 10,894
(6,663 ) 4,231
(362 ) 3,869
97
Credit contracts – protection sold 85
(48 ) 37
—
37
61
Credit contracts – protection purchased 467
(315 ) 152
(1 ) 151
98
Total derivative assets $ 85,129
(70,631 ) 14,498
(1,745 ) 12,753

Derivative liabilities
Interest rate contracts $ 65,209
(58,956 ) 6,253
(3,129 ) 3,124
30 %
Commodity contracts 2,551
(402 ) 2,149
(37 ) 2,112
38
Equity contracts 6,112
(2,433 ) 3,679
(331 ) 3,348
85
Foreign exchange contracts 12,742
(10,572 ) 2,170
(251 ) 1,919
100
Credit contracts – protection sold 389
(295 ) 94
(44 ) 50
98
Credit contracts – protection purchased 138
(38 ) 100
(2 ) 98
50
Other contracts 47
—
47
—
47
100
Total derivative liabilities $ 87,188
(72,696 ) 14,492
(3,794 ) 10,698


~~(1)~~			In~~second quarter,2017, we adopted Settlement to Market treatment for the cash collateralizing our interest rate derivative contracts with certain centrally cleared counterparties.~~As a result of this adoption, the “gross amounts recognized” and “gross amounts offset in the consolidated balance sheet” columns do not include exposure with certain centrally cleared counterparties because the contracts are considered settled by the collateral. Likewise, what remains in these gross amount columns consists primarily of over-the-counter (OTC) market contracts for most of the contract types as reflected by the high percentage of OTC contracts in the “percent exchanged in over-the counter market” column as of September 30, 2017. Wells Fargo & Company			117

~~(2)~~

Represents amounts with counterparties subject to enforceable master netting arrangements that have been offset in the consolidated balance sheet, including related cash collateral and portfolio level counterparty valuation adjustments. Counterparty valuation adjustments were ~~$273 million~~ ~~and~~ ~~$348 million~~ ~~related to derivative assets and~~ ~~$98 million~~ ~~and~~ ~~$114 million~~ ~~related to derivative liabilities at~~ ~~September 30, 2017, and~~ ~~December 31, 2016, respectively. Cash collateral totaled~~ ~~$3.1 billion~~ ~~and~~ ~~$4.2 billion, netted against derivative assets and liabilities, respectively, at~~ ~~September 30, 2017, and~~ ~~$4.8 billion~~ ~~and~~ ~~$7.1 billion, respectively, at~~ ~~December 31, 2016~~.


~~(3)~~	Represents non-cash collateral pledged and received against derivative assets and liabilities with the same counterparty that are subject to enforceable master netting arrangements. U.S. GAAP does not permit netting of such non-cash collateral balances in the consolidated balance sheet but requires disclosure of these amounts.

~~(4)~~

Represents derivatives executed in over-the-counter markets that are not settled through a central clearing organization. Over-the-counter percentages are calculated based on gross amounts recognized as of the respective balance sheet date. The remaining percentage represents derivatives settled through a central clearing organization, which are executed in either over-the-counter or exchange-traded markets.

Note ~~12:~~14: Derivatives (~~continued~~)(continued)

Fair Value and Cash Flow Hedges

For fair value hedges, we use interest rate swaps to convert certain of our fixed-rate long-term debt and time certificates of deposit to floating rates to hedge our exposure to interest rate risk. We also enter into cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge our exposure to foreign currency risk and interest rate risk associated with the issuance of non-U.S. dollar denominated long-term debt. In addition, we use ~~derivatives~~interest rate swaps, cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge against changes in fair value of certain ~~financial instruments, including~~investments in available-for-sale debt securities ~~mortgages held for sale, and long-term debt.~~due to changes in interest rates, foreign currency rates, or both. For ~~more information on~~certain fair value hedges ~~see Note 1 (Summary~~ of ~~Significant Accounting Policies) and Note 16 (Derivatives) to Financial Statements in our 2016 Form 10-K.~~

~~Table 12.3 shows the net gains (losses) recognized in the income statement related to derivatives~~foreign currency risk, changes in fair value ~~hedging relationships.~~of cross-currency swaps attributable to changes in cross-currency basis spreads are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income. See Note 21 (Other Comprehensive Income) for the amounts recognized in other comprehensive income.

~~Table 12.3:Derivatives in Fair Value Hedging Relationships~~

Interest rate
contracts hedging:

Foreign exchange
contracts hedging:

Total net
gains
(losses)
on fair
value
hedges

(in millions)
Available-
for-sale
securities

Mortgages
held for
sale

Long-term
debt

Available-
for-sale
securities

Long-term
debt

Quarter ended September 30, 2017





Net interest income (expense) recognized on derivatives $ (110 ) (1 ) 271
4
(60 ) 104
Gains (losses) recorded in noninterest income

Recognized on derivatives (6 ) —
(161 ) (87 ) 996
742
Recognized on hedged item (6 ) (2 ) 173
86
(878 ) (627 )
Net recognized on fair value hedges (ineffective portion) (1) $ (12 ) (2 ) 12
(1 ) 118
115
Quarter ended September 30, 2016





Net interest income (expense) recognized on derivatives $ (117 ) (1 ) 471
2
9
364
Gains (losses) recorded in noninterest income




Recognized on derivatives 21
6
(271 ) 30
312
98
Recognized on hedged item (10 ) (7 ) 354
(32 ) (234 ) 71
Net recognized on fair value hedges (ineffective portion) (1) $ 11
(1 ) 83
(2 ) 78
169
Nine months ended September 30, 2017





Net interest income (expense) recognized on derivatives (1) $ (363 ) (5 ) 1,070
10
(142 ) 570
Gains (losses) recorded in noninterest income

Recognized on derivatives (167 ) (11 ) (294 ) (216 ) 2,579
1,891
Recognized on hedged item 121
4
314
216
(2,554 ) (1,899 )
Net recognized on fair value hedges (ineffective portion) $ (46 )
(7 )
20

—

25
(8 )
Nine months ended September 30, 2016





Net interest income (expense) recognized on derivatives (1) $ (468 ) (5 ) 1,436
4
40
1,007
Gains (losses) recorded in noninterest income




Recognized on derivatives (2,674 ) (36 ) 4,815
98
1,475
3,678
Recognized on hedged item 2,699
32
(4,215 ) (106 ) (1,242 ) (2,832 )
Net recognized on fair value hedges (ineffective portion) $ 25
(4 ) 600
(8 ) 233
846

~~(1)~~

~~The third quarter and~~ ~~first nine months of 2017~~ ~~included~~ ~~$(1) million~~ ~~and~~ ~~$(2) million, respectively, and the third quarter and~~ ~~first nine months of 2016~~ ~~included~~ ~~$(3) million~~ ~~and~~ ~~$(10) million, respectively, of the time value component recognized as net interest income (expense) on forward derivatives hedging foreign currency that were excluded from the assessment of hedge effectiveness.~~

~~Cash Flow Hedges~~

WeFor cash flow hedges, we use ~~derivatives~~interest rate swaps to hedge ~~certain financial instruments against future interest rate increases and to limit~~ the variability ~~of cash flows~~in interest payments received on certain ~~financial instruments~~floating-

rate commercial loans and paid on certain floating-rate debt due to changes in the ~~benchmark~~contractually specified interest rate. ~~For more information~~We also use cross-currency swaps to hedge variability in interest payments on fixed-rate foreign currency-denominated long-term debt due to changes in foreign exchange rates.

We estimate $52 million pre-tax of deferred net losses related to cash flow hedges ~~see Note 1 (Summary of Significant Accounting Policies) and Note 16 (Derivatives) to Financial Statements in our 2016 Form 10-K.~~

~~Based upon current interest rates, we estimate that $224 million (pre tax) of deferred net gains on derivatives~~ in OCI

at September 30, ~~2017,~~2021, will be reclassified into net interest income during the next twelve months. ~~Future changes~~The deferred losses expected to be reclassified into net interest ~~rates may significantly change actual amounts reclassified~~income are predominantly related to ~~earnings. We~~discontinued hedges of floating rate loans. For cash flow hedges as of September 30, 2021, we are hedging our foreign currency exposure to the variability of future cash flows for all forecasted transactions for a maximum of 59 years. For additional information on our accounting hedges, see Note 1 (Summary of Significant Accounting Policies).

Table ~~12.4 shows~~14.3 and Table 14.4 show the net gains (losses) ~~recognized~~ related to derivatives in fair value and cash flow hedging ~~relationships.~~

relationships, respectively.

Table ~~12.4:~~14.3:Gains (Losses) Recognized on Fair Value Hedging Relationships


	Net interest income				Noninterest income	Total recorded in net income	Total recorded in OCI
(in millions)	Debt securities		Deposits	Long-term debt	Other	Derivative gains (losses)	Derivative gains (losses)
Quarter ended September 30, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income	$	2,354	(99)	(745)	609	N/A	50
Interest contracts
Amounts related to interest settlements on derivatives	(65)		68	534	—	537
Recognized on derivatives	138		(64)	(1,159)	—	(1,085)	—
Recognized on hedged items	(139)		64	1,159	—	1,084
Total gains (losses) (pre-tax) on interest rate contracts	(66)		68	534	—	536	—
Foreign exchange contracts
Amounts related to interest settlements on derivatives	9		—	4	—	13
Recognized on derivatives	—		—	(94)	(436)	(530)	29
Recognized on hedged items	(1)		—	72	431	502
Total gains (losses) (pre-tax) on foreign exchange contracts	8		—	(18)	(5)	(15)	29
Total gains (losses) (pre-tax) recognized on fair value hedges	$	(58)	68	516	(5)	521	29
Quarter ended September 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income	$	2,446	(314)	(1,038)	996	N/A	(18)
Interest contracts
Amounts related to interest settlements on derivatives	(114)		157	542	—	585
Recognized on derivatives	280		(156)	(1,357)	—	(1,233)	—
Recognized on hedged items	(265)		156	1,269	—	1,160
Total gains (losses) (pre-tax) on interest rate contracts	(99)		157	454	—	512	—
Foreign exchange contracts
Amounts related to interest settlements on derivatives	16		—	(5)	—	11
Recognized on derivatives	1		—	52	856	909	(82)
Recognized on hedged items	(1)		—	(5)	(849)	(855)
Total gains (losses) (pre-tax) on foreign exchange contracts	16		—	42	7	65	(82)
Total gains (losses) (pre-tax) recognized on fair value hedges	$	(83)	157	496	7	577	(82)

(continued on following page)


118			Wells Fargo & Company

(continued from previous page)


	Net interest income				Noninterest income		Total recorded in net income		Total recorded in OCI
(in millions)	Debt securities		Deposits	Long-term debt		Other		Derivative gains (losses)		Derivative gains (losses)
Nine months ended September 30, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income	$	6,865	(303)	(2,483)		2,283		N/A		134
Interest contracts
Amounts related to interest settlements on derivatives	(200)		233	1,625		—		1,658
Recognized on derivatives	964		(248)	(5,777)		—		(5,061)		—
Recognized on hedged items	(945)		245	5,701		—		5,001
Total gains (losses) (pre-tax) on interest rate contracts	(181)		230	1,549		—		1,598		—
Foreign exchange contracts
Amounts related to interest settlements on derivatives	52		—	7		—		59
Recognized on derivatives	3		—	(363)		73		(287)		40
Recognized on hedged items	(3)		—	310		(89)		218
Total gains (losses) (pre-tax) on foreign exchange contracts	52		—	(46)		(16)		(10)		40
Total gains (losses) (pre-tax) recognized on fair value hedges	$	(129)	230	1,503		(16)		1,588		40
Nine months ended September 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income	$	8,864	(2,641)	(3,515)		3,209		N/A		167
Interest contracts
Amounts related to interest settlements on derivatives	(253)		379	1,144		—		1,270
Recognized on derivatives	(1,612)		288	8,967		—		7,643		—
Recognized on hedged items	1,654		(278)	(8,775)		—		(7,399)
Total gains (losses) (pre-tax) on interest rate contracts	(211)		389	1,336		—		1,514		—
Foreign exchange contracts
Amounts related to interest settlements on derivatives	33		—	(136)		—		(103)
Recognized on derivatives	(1)		—	276		780		1,055		5
Recognized on hedged items	2		—	(249)		(769)		(1,016)
Total gains (losses) (pre-tax) on foreign exchange contracts	34		—	(109)		11		(64)		5
Total gains (losses) (pre-tax) recognized on fair value hedges	$	(177)	389	1,227		11		1,450		5


			Wells Fargo & Company			119

Note 14:Derivatives in(continued)

Table 14.4:Gains (Losses) Recognized on Cash Flow Hedging Relationships


	Net interest income			Total recorded in net income	Total recorded in OCI
(in millions)	Loans		Long-term debt	Derivative gains (losses)	Derivative gains (losses)
Quarter ended September 30, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income	$	7,057	(745)	N/A	50
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(26)		—	(26)	26
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	(1)
Total gains (losses) (pre-tax) on interest rate contracts	(26)		—	(26)	25
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	—		(2)	(2)	2
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	(6)
Total gains (losses) (pre-tax) on foreign exchange contracts	—		(2)	(2)	(4)
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	(26)	(2)	(28)	21
Quarter ended September 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income	$	7,965	(1,038)	N/A	(18)
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(53)		2	(51)	51
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	—
Total gains (losses) (pre-tax) on interest rate contracts	(53)		2	(51)	51
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	—		(1)	(1)	1
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	12
Total gains (losses) (pre-tax) on foreign exchange contracts	—		(1)	(1)	13
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	(53)	1	(52)	64
Nine months ended September 30, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income	$	21,353	(2,483)	N/A	134
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(117)		—	(117)	117
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	(11)
Total gains (losses) (pre-tax) on interest rate contracts	(117)		—	(117)	106
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	—		(4)	(4)	4
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	(16)
Total gains (losses) (pre-tax) on foreign exchange contracts	—		(4)	(4)	(12)
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	(117)	(4)	(121)	94
Nine months ended September 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income	$	26,508	(3,515)	N/A	167
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(162)		3	(159)	159
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	—
Total gains (losses) (pre-tax) on interest rate contracts	(162)		3	(159)	159
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	—		(6)	(6)	6
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	(3)
Total gains (losses) (pre-tax) on foreign exchange contracts	—		(6)	(6)	3
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	(162)	(3)	(165)	162

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2017
2016
2017
2016
Gains (losses) (pre tax) recognized in OCI on derivatives $ 36
(445 ) 279
2,611
Gains (pre tax) reclassified from cumulative OCI into net income (1) 105
262
460
783
Gains (losses) (pre tax) recognized in noninterest income for hedge ineffectiveness (2) (4 ) —
(7 ) 1


~~(1)~~120			~~See Note 17 (Other Comprehensive Income) for detail on components of net income.~~Wells Fargo & Company

Table 14.5 shows the carrying amount and associated cumulative basis adjustment related to the application of hedge accounting that is included in the carrying amount of hedged assets and liabilities in fair value hedging relationships.

Table 14.5:Hedged Items in Fair Value Hedging Relationship


	Hedged Items Currently Designated			Hedged Items No Longer Designated (1)
(in millions)	Carrying Amount of Assets/(Liabilities) (2)(4)		Hedge Accounting Basis Adjustment Assets/(Liabilities) (3)	Carrying Amount of Assets/(Liabilities) (4)	Hedge Accounting Basis Adjustment Assets/(Liabilities)
September 30, 2021
Available-for-sale debt securities (5)	$	28,009	(202)	16,597	940


Deposits	(11,912)		(231)	—	—
Long-term debt	(141,329)		(5,922)	—	—
December 31, 2020
Available-for-sale debt securities (5)	$	29,538	827	17,091	1,111


Deposits	(22,384)		(477)	—	—
Long-term debt	(156,907)		(12,466)	(14,468)	31

(1)Represents hedged items no longer designated in qualifying fair value hedging relationships for which an associated basis adjustment exists at the balance sheet date.

(2)Does not include the carrying amount of hedged items where only foreign currency risk is the designated hedged risk. The carrying amount excluded for debt securities is $6.6 billion and for long-term debt is $(2.7) billion as of September 30, 2021, and $17.6 billion for debt securities and $(4.7) billion for long-term debt as of December 31, 2020.

(3)The balance includes $185 million and $177 million of debt securities and long-term debt cumulative basis adjustments as of September 30, 2021, respectively, and $205 million and $130 million of debt securities and long-term debt cumulative basis adjustments as of December 31, 2020, respectively, on terminated hedges whereby the hedged items have subsequently been re-designated into existing hedges.

(4)Represents the full carrying amount of the hedged asset or liability item as of the balance sheet date, except for circumstances in which only a portion of the asset or liability was designated as the hedged item in which case only the portion designated is presented.

(5)Carrying amount represents the amortized cost.


~~(2)~~			~~None of the change in value of the derivatives was excluded from the assessment of hedge effectiveness.~~ Wells Fargo & Company			121

Note 14: Derivatives (continued)

Derivatives Not Designated as Hedging Instruments

Derivatives not designated as hedging instruments include economic hedges and derivatives entered into for customer accommodation trading purposes.

We use economic ~~hedges primarily~~ hedge derivativesto ~~hedge the~~manage our exposure to interest rate risk, ~~of changes in the fair value of certain residential MHFS, residential MSRs measured at fair value, loans, derivative loan commitments~~equity price risk, foreign currency risk, and ~~other interests held.~~credit risk. We also use economic hedge derivatives to mitigate the periodic earnings volatility caused by ~~ineffectiveness~~mismatches between the changes in fair value of the hedged item and hedging instrument recognized on our fair value accounting hedges. ~~The resulting gain or loss on these~~In second quarter 2020, we entered into arrangements to

transition the economic ~~hedge derivatives is reflected in mortgage banking noninterest income, net gains (losses)~~hedges of our deferred compensation plan liabilities from equity ~~investments and other noninterest income.~~

~~The~~securities to derivative instruments. Changes in the fair values of derivatives used to economically hedge ~~MSRs measured at fair value, resulted~~the deferred compensation plan are reported in ~~net derivative gains of $240 million~~ ~~and~~ ~~$599 million in the third quarter and first nine months of 2017, respectively, and $142 million~~ ~~and~~ $2.6 billion in the third quarter and first nine months of 2016, respectively, which are included in mortgage banking noninterest income. The aggregate fair value of these derivatives was a net liability of $9 million at September 30, 2017, and net liability of $617 million at

December 31, 2016. The change in fair value of these derivatives for each period end is due to changes in the underlying market indices and interest rates as well as the purchase and sale of derivative financial instruments throughout the period as part of our dynamic MSR risk management process.

Interest rate lock commitments for mortgage loans that we intend to sell are considered derivatives. The aggregate fair value of derivative loan commitments on the balance sheet was a net asset of $25 million and net liability of $6 million at September 30, 2017, and December 31, 2016, respectively, and is included in the caption “Interest rate contracts” under “Customer accommodation trading and other derivatives” in Table 12.1 in this Note.personnel expense.

For ~~more~~additional information on economic hedges and other derivatives, see Note 1614 (Derivatives) to Financial Statements in our ~~2016~~2020 Form 10-K.

Table ~~12.5~~14.6 shows the net gains (losses), recognized ~~in the~~by income statement lines, related to derivatives not designated as hedging instruments.

Table ~~12.5:~~14.6:Gains (Losses) on Derivatives Not Designated as Hedging Instruments


	Noninterest income					Noninterest expense
(in millions)	Mortgage banking		Net gains (losses) on trading and securities	Other	Total		Personnel expense
Quarter ended September 30, 2021
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	(34)	—	(1)	(35)		—
Equity contracts	—		564	(2)	562		42
Foreign exchange contracts	—		—	310	310		—
Credit contracts	—		—	(5)	(5)		—
Subtotal	(34)		564	302	832		42
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	109		189	—	298		—
Commodity contracts	—		31	—	31		—
Equity contracts	—		(722)	(51)	(773)		—
Foreign exchange contracts	—		105	—	105		—
Credit contracts	—		(7)	—	(7)		—
Subtotal	109		(404)	(51)	(346)		—
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	75	160	251	486		42
Quarter ended September 30, 2020
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	216	—	(27)	189		—
Equity contracts	—		(209)	(1)	(210)		(215)
Foreign exchange contracts	—		—	(523)	(523)		—
Credit contracts	—		—	(3)	(3)		—
Subtotal	216		(209)	(554)	(547)		(215)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	485		271	—	756		—
Commodity contracts	—		(356)	—	(356)		—
Equity contracts	—		(1,291)	(142)	(1,433)		—
Foreign exchange contracts	—		160	—	160		—
Credit contracts	—		(32)	—	(32)		—
Subtotal	485		(1,248)	(142)	(905)		—
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	701	(1,457)	(696)	(1,452)		(215)

(continued on following page)

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2017
2016
2017
2016
Net gains (losses) recognized on economic hedges derivatives:
Interest rate contracts
Recognized in noninterest income:

Mortgage banking (1) $ 138
4
480
1,435
Other (2) (19 ) (56 ) (64 ) (308 )
Equity contracts (3) (489 ) (372 ) (1,175 ) (84 )
Foreign exchange contracts (2) (300 ) 175
(834 ) 504
Credit contracts (2) (6 ) 12
8
12
Subtotal (4) (676 ) (237 ) (1,585 ) 1,559
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest rate contracts
Recognized in noninterest income:

Mortgage banking (5) 152
510
599
1,485
Other (6) 17
210
80
(520 )
Commodity contracts (6) 63
45
138
162
Equity contracts (6) (851 ) (982 ) (2,525 ) (1,277 )
Foreign exchange contracts (6) 155
188
356
686
Credit contracts (6) (31 ) (25 ) (59 ) (66 )
Other (2) 8
15
22
(15 )
Subtotal (487 ) (39 ) (1,389 ) 455
Net gains (losses) recognized related to derivatives not designated as hedging instruments $ (1,163 ) (276 ) (2,974 ) 2,014


~~(1)~~122			Reflected in mortgage banking noninterest income including gains (losses) on the derivatives used as economic hedges of MSRs measured at fair value, interest rate lock commitments and mortgages held for sale.Wells Fargo & Company

(continued from previous page)


	Noninterest income					Noninterest expense
(in millions)	Mortgage banking		Net gains (losses) on trading and securities	Other	Total		Personnel expense
Nine months ended September 30, 2021
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	(122)	—	(7)	(129)		—
Equity contracts	—		227	(1)	226		(357)
Foreign exchange contracts	—		—	291	291		—
Credit contracts	—		—	(10)	(10)		—
Subtotal	(122)		227	273	378		(357)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	60		1,519	—	1,579		—
Commodity contracts	—		75	—	75		—
Equity contracts	—		(2,807)	(444)	(3,251)		—
Foreign exchange contracts	—		545	—	545		—
Credit contracts	—		(78)	—	(78)		—
Subtotal	60		(746)	(444)	(1,130)		—
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	(62)	(519)	(171)	(752)		(357)
Nine months ended September 30, 2020
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	2,829	—	(72)	2,757		—
Equity contracts	—		(392)	(35)	(427)		(356)
Foreign exchange contracts	—		—	49	49		—
Credit contracts	—		—	14	14		—
Subtotal	2,829		(392)	(44)	2,393		(356)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	1,584		(1,516)	—	68		—
Commodity contracts	—		(468)	—	(468)		—
Equity contracts	—		1,110	(214)	896		—
Foreign exchange contracts	—		(242)	—	(242)		—
Credit contracts	—		115	—	115		—
Subtotal	1,584		(1,001)	(214)	369		—
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	4,413	(1,393)	(258)	2,762		(356)

(1)Mortgage banking amounts for the third quarter and first nine months of 2021 are comprised of gains (losses) of $(176) million and $(1.1) billion, respectively, related to derivatives used as economic hedges of MSRs measured at fair value offset by gains (losses) of $142 million and $987 million related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments. The corresponding amounts for the third quarter and first nine months of 2020 are comprised of gains (losses) of $513 million and $4.4 billion offset by gains (losses) of $(297) million and $(1.6) billion, respectively.


~~(2)~~			~~Included in other noninterest income.~~Wells Fargo & Company			123


~~(3)~~	~~Included in net gains from equity investments and other noninterest income.~~


~~(4)~~	~~Includes hedging gains (losses) of~~ ~~$(18) million~~ ~~and~~ ~~$(64) million~~ ~~for the third quarter and first nine months of 2017, respectively, and~~ ~~$(29) million~~ ~~and~~ ~~$(272) million~~ ~~for the third quarter and first nine months of~~ ~~2016, respectively, which partially offset hedge accounting ineffectiveness.~~


~~(5)~~	~~Reflected in mortgage banking noninterest income including gains (losses) on interest rate lock commitments and net gains from trading activities in noninterest income.~~


~~(6)~~	~~Included in net gains from trading activities in noninterest income.~~

Note ~~12:~~14: Derivatives (~~continued~~)(continued)

Credit Derivatives

Credit derivative contracts are arrangements whose value is derived from the transfer of credit risk of a reference asset or entity from one party (the purchaser of credit protection) to another party (the seller of credit protection). We use credit derivatives to assist customers with their risk management objectives. We may also use credit derivatives in structured product transactions or liquidity agreements written to special purpose vehicles. The maximum exposure of sold credit derivatives is managed through posted collateral, purchased credit derivatives and similar products in order to achieve our desired credit risk profile. This credit risk management provides an ability to recover a significant portion of any amounts that

would be paid under ~~the~~ sold credit derivatives. We would be

required to perform under the sold credit derivatives in the event of default by the referenced obligors. Events of default include events such as bankruptcy, capital restructuring or lack of principal and/or interest payment. In certain cases, other triggers may exist, such as the credit downgrade of the referenced obligors or the inability of the special purpose vehicle for which we have provided liquidity to obtain funding.

Table ~~12.6~~14.7 provides details of sold and purchased credit derivatives.

Table ~~12.6:~~14.7:Sold and Purchased Credit Derivatives


				Notional amount
(in millions)	Fair value asset		Fair value liability	Protection sold (A)	Protection sold – non-investment grade	Protection purchased with identical underlyings (B)	Net protection sold (A)-(B)	Other protection purchased	Range of maturities
September 30, 2021
Credit default swaps on:
Corporate bonds	$	6	2	5,567	1,417	3,833	1,734	3,733	2021 - 2031
Structured products	1		—	16	16	12	4	54	2034 - 2047
Credit protection on:
Default swap index	—		—	2,068	401	490	1,578	4,825	2021 - 2030
Commercial mortgage-backed securities index	2		11	277	23	252	25	145	2047 - 2072
Asset-backed securities index	—		8	41	41	40	1	1	2045 - 2046
Other	—		2	7,358	6,870	—	7,358	10,811	2021 - 2040
Total credit derivatives	$	9	23	15,327	8,768	4,627	10,700	19,569
December 31, 2020
Credit default swaps on:
Corporate bonds	$	7	2	3,767	971	2,709	1,058	3,012	2021 - 2029
Structured products	—		5	20	20	19	1	84	2034 - 2047
Credit protection on:
Default swap index	—		—	1,582	731	559	1,023	3,925	2021 - 2030
Commercial mortgage-backed securities index	3		21	297	42	272	25	75	2047 - 2072
Asset-backed securities index	—		7	41	41	40	1	1	2045 - 2046
Other	—		4	6,378	6,262	—	6,378	11,621	2021 - 2040
Total credit derivatives	$	10	39	12,085	8,067	3,599	8,486	18,718

Notional amount
(in millions)
Fair value
liability

Protection
sold (A)

Protection
sold –
non-
investment
grade

Protection
purchased
with
identical
underlyings (B)

Net
protection
sold
(A) - (B)

Other
protection
purchased

Range of
maturities
September 30, 2017
Credit default swaps on:
Corporate bonds $ 26
1,932
535
1,255
677
1,379
2017 - 2027
Structured products 91
210
205
184
26
140
2020 - 2047
Credit protection on:
Default swap index —
3,553
537
62
3,491
5,665
2017 - 2027
Commercial mortgage-backed securities index 92
441
—
410
31
146
2047 - 2058
Asset-backed securities index 9
42
—
38
4
5
2045 - 2046
Other 1
3,576
3,576
—
3,576
11,102
2017 - 2028
Total credit derivatives $ 219
9,754
4,853
1,949
7,805
18,437

December 31, 2016
Credit default swaps on:
Corporate bonds $ 22
4,324
1,704
3,060
1,264
1,804
2017 - 2026
Structured products 193
405
333
295
110
79
2020 - 2047
Credit protection on:
Default swap index —
1,515
257
139
1,376
3,668
2017 - 2021
Commercial mortgage-backed securities index 156
627
—
584
43
71
2047 - 2058
Asset-backed securities index 17
45
—
40
5
187
2045 - 2046
Other 1
3,567
3,568
—
3,567
10,519
2017 - 2047
Total credit derivatives $ 389
10,483
5,862
4,118
6,365
16,328

Protection sold represents the estimated maximum exposure to loss that would be incurred under an assumed hypothetical circumstance, where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. We believe this hypothetical circumstance to be aan extremely remote possibility and accordingly, this required disclosure is not an indication of expected loss. The amounts under non-investment grade represent the notional amounts of those credit derivatives on which we have a higher risk of being required to perform under the terms of the credit derivative and are a function of the underlying assets.

We consider the risk of performance to be high if the underlying assets under the credit derivative have an external rating that is below investment grade or an internal credit default grade that is equivalent thereto. We believe the net protection sold, which is representative of the net notional amount of protection sold and purchased with identical underlyings, in combination with other protection purchased, is more representative of our exposure to loss than either non-investment grade or protection sold. Other protection purchased represents additional protection, which may offset the exposure to loss for protection sold, that was not purchased with an identical underlying of the protection sold.

Credit-Risk Contingent Features

Certain of our derivative contracts contain provisions whereby if the credit rating of our debt were to be downgraded by certain major credit rating agencies, the counterparty could demand additional collateral or require termination or replacement of derivative instruments in a net liability position. ~~The aggregate fair value of all~~Table 14.8 illustrates our exposure to OTC bilateral derivative ~~instruments~~contracts with ~~such credit-risk-related~~credit-risk contingent features, ~~that are in a net liability position was $9.2 billion at September 30, 2017,~~collateral we have posted, and ~~$12.8 billion at December 31, 2016, for which~~the additional collateral we ~~posted $8.0 billion and $8.9 billion, respectively, in collateral in the normal course of business. A credit rating below investment grade is the credit-risk-related contingent feature that~~would be required to post if ~~triggered requires the maximum amount of collateral to be posted. If~~ the credit rating of our debt ~~had been~~was downgraded below investment grade.

Table 14.8:Credit-Risk Contingent Features


(in billions)	Sep 30, 2021		Dec 31, 2020
Net derivative liabilities with credit-risk contingent features	$	9.6	10.5
Collateral posted	8.4		9.0
Additional collateral to be posted upon a below investment grade credit rating (1)	1.2		1.5

(1)Any credit rating below investment grade ~~on September 30, 2017, or December 31, 2016, we would have been required~~requires us to post ~~additional collateral~~the maximum amount of $1.2 billion or $4.0 billion, respectively, or potentially settle the contract in an amount equal to its fair value. Some contracts require that we provide more collateral than the fair value of derivatives that are in a net liability position if a downgrade occurs.collateral.

~~Counterparty Credit Risk~~

By using derivatives, we are exposed to counterparty credit risk if counterparties to the derivative contracts do not perform as expected. If a counterparty fails to perform, our counterparty credit risk is equal to the amount reported as a derivative asset on our balance sheet. The amounts reported as a derivative asset are derivative contracts in a gain position, and to the extent subject to legally enforceable master netting arrangements, net of derivatives in a loss position with the same counterparty and cash collateral received. We minimize counterparty credit risk through credit approvals, limits, monitoring procedures, executing master netting arrangements and obtaining collateral, where appropriate. To the extent the master netting arrangements and other criteria meet the applicable requirements, including determining the legal enforceability of the arrangement, it is our policy to present derivative balances and related cash collateral amounts net on the balance sheet. We incorporate credit valuation adjustments (CVA) to reflect counterparty credit risk in determining the fair value of our derivatives. Such adjustments, which consider the effects of enforceable master netting agreements and collateral arrangements, reflect market-based views of the credit quality of each counterparty. Our CVA calculation is determined based on observed credit spreads in the credit default swap market and indices indicative of the credit quality of the counterparties to our derivatives.

~~Note 13: Fair Values of Assets and Liabilities (continued~~)



124			Wells Fargo & Company


Note ~~13:~~15: Fair Values of Assets and Liabilities

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Assets and liabilities recorded at fair value on a recurring basis, such as derivatives, residential MSRs, and trading or AFS debt securities, are presented in Table ~~13.2~~15.1 in this Note. ~~From~~Additionally, from time to time, we ~~may be required to~~ record fair value adjustments on a nonrecurring basis. These nonrecurring ~~fair value~~ adjustments typically involve application of ~~LOCOM~~lower of cost or fair value (LOCOM) accounting, or write-downs of individual ~~assets.~~assets or application of the measurement alternative for nonmarketable equity securities. Assets recorded at fair value on a nonrecurring basis are presented in Table ~~13.14~~15.4 in this Note. We provide in Table 15.8 estimates of fair value for financial instruments that are not recorded at fair value, such as loans and debt liabilities carried at amortized cost.

See Note 1 (Summary of Significant Accounting Policies) ~~to Financial Statements~~ in our ~~2016~~2020 Form 10-K for discussion of how we determine fair value. For descriptions of the valuation methodologies we use for assets and liabilities recorded at fair value on a recurring or nonrecurring basis, ~~and for estimating fair value for financial instruments that are not recorded at fair value,~~ see Note 17 (Fair Values of Assets and Liabilities) ~~to Financial Statements~~ in our ~~2016~~2020 Form 10-K.

FAIR VALUE HIERARCHY We ~~group~~classify our assets and liabilities ~~measured~~recorded at fair value as either Level 1, 2, or 3 in ~~three levels~~the fair value hierarchy. The highest priority (Level 1) is assigned to valuations based on ~~the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:~~

~~Level 1 – Valuation is based upon~~unadjusted quoted prices ~~for identical instruments traded in active markets.~~

~~Level 2 – Valuation is based upon quoted prices for similar instruments~~ in active markets ~~quoted prices~~and the lowest priority (Level 3) is assigned to valuations based on significant unobservable inputs. See Note 1 (Summary of Significant Accounting Policies) in our 2020 Form 10-K for ~~identical or similar~~a detailed description of the fair value hierarchy.

In the determination of the classification of financial instruments in ~~markets that are not active,~~Level 2 or Level 3 of the fair value hierarchy, we consider all available information, including observable market data, indications of market liquidity and ~~model-based~~orderliness, and our understanding of the valuation techniques ~~for which all~~and significant ~~assumptions~~inputs used. This determination is ultimately based upon the specific facts and circumstances of each instrument or instrument category and judgments are ~~observable~~made regarding the significance of the unobservable inputs to the instruments’ fair value measurement in its entirety. If unobservable inputs are considered significant, the ~~market.~~instrument is classified as Level 3.

Level 3 – Valuation is generated from techniques that use significant assumptions that are not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

~~In accordance with new accounting guidance that we adopted effective January 1, 2016, we~~We do not classify ~~an investment~~nonmarketable equity securities in the fair value hierarchy if we use the non-published net asset value (NAV) per share (or its equivalent) ~~that has been communicated to us as an investor~~ as a practical expedient to measure fair value. We generally use NAV per share as the fair value measurement for certain nonmarketable equity fund investments. This guidance was required to be applied retrospectively. Accordingly, certain prior period fair value disclosures have been revised to conform with current period presentation. Marketable equity ~~investments~~securities with published NAVs ~~continue to be~~are classified in the fair value hierarchy.

~~Fair Value Measurements from Vendors~~

For certain assets and liabilities, we obtain fair value measurements from vendors, which predominantly consist of third-party pricing services, and record the unadjusted fair value in our financial statements. For additional information, see Note 17 (Fair Values of Assets and Liabilities) to Financial Statements in our 2016 Form 10-K. Table 13.1. presents unadjusted fair value measurements provided by brokers or third-party pricing services by fair value hierarchy level. Fair value measurements obtained from brokers or third-party pricing services that we have adjusted to determine the fair value recorded in our financial statements are excluded from Table 13.1.

~~Table 13.1:Fair Value Measurements by Brokers or Third-Party Pricing Services~~

   Brokers Third-party pricing services
(in millions) Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
September 30, 2017
Trading assets $ —
—
—
674
211
—
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies —
—
—
3,400
2,950
—
Securities of U.S. states and political subdivisions —
—
—
—
52,068
50
Mortgage-backed securities —
37
—
—
160,628
76
Other debt securities (1) —
684
1,146
—
46,098
22
Total debt securities —
721
1,146
3,400
261,744
148
Total marketable equity securities —
—
—
—
264
—
Total available-for-sale securities —
721
1,146
3,400
262,008
148
Derivatives assets —
—
—
19
—
—
Derivatives liabilities —
—
—
(16 ) —
—
Other liabilities (2) —
—
—
—
—
—
December 31, 2016
Trading assets $ —
—
—
899
60
—
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies —
—
—
22,870
2,949
—
Securities of U.S. states and political subdivisions —
—
—
—
49,837
208
Mortgage-backed securities —
171
—
—
176,923
92
Other debt securities (1) —
450
968
—
49,162
54
Total debt securities —
621
968
22,870
278,871
354
Total marketable equity securities —
—
—
—
358
—
Total available-for-sale securities —
621
968
22,870
279,229
354
Derivatives assets —
—
—
22
—
—
Derivatives liabilities —
—
—
(109 ) (1 ) —
Other liabilities (2) —
—
—
—
—
—


~~(1)~~			~~Includes corporate debt securities, collateralized loan and other debt obligations, asset-backed securities, and other debt securities.~~Wells Fargo & Company			125


~~(2)~~	~~Includes short sale liabilities and other liabilities.~~

Note ~~13:~~15: Fair Values of Assets and Liabilities (~~continued~~)(continued)

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Table ~~13.2~~15.1 presents the balances of assets and liabilities recorded at fair value on a recurring basis.

Table ~~13.2:~~15.1:Fair Value on a Recurring Basis

(in millions) Level 1
Level 2
Level 3
Netting
Total
September 30, 2017
Trading assets
Securities of U.S. Treasury and federal agencies $ 16,882
3,012
—
   —
   19,894
Securities of U.S. states and political subdivisions —
4,401
3
   —
   4,404
Collateralized loan obligations —
359
383
   —
   742
Corporate debt securities —
11,098
34
   —
   11,132
Mortgage-backed securities —
23,966
—
   —
23,966
Asset-backed securities —
799
—
   —
799
Equity securities 25,980
270
—
—
26,250
Total trading securities (1) 42,862
43,905
420
—
87,187
Other trading assets —
1,161
56
   —
1,217
Total trading assets 42,862
45,066
476
—
88,404
Securities of U.S. Treasury and federal agencies 3,400
2,950
—
   —
6,350
Securities of U.S. states and political subdivisions —
52,068
706
(2) —
52,774
Mortgage-backed securities:
Federal agencies —
150,181
—
   —
150,181
Residential —
6,393
1
   —
6,394
Commercial —
4,576
76
   —
4,652
Total mortgage-backed securities —
161,150
77
—
161,227
Corporate debt securities 56
8,904
380
   —
9,340
Collateralized loan and other debt obligations (3) —
34,594
1,014
(2) —
35,608
Asset-backed securities:
Automobile loans and leases —
544
—
—
544
Home equity loans —
283
—
   —
283
Other asset-backed securities —
4,556
635
(2) —
5,191
Total asset-backed securities —
5,383
635
   —
6,018
Other debt securities —
—
—
   —
—
Total debt securities 3,456
265,049
2,812
   —
271,317
Marketable equity securities:
Perpetual preferred securities 155
264
—
—
419
Other marketable equity securities 474
—
—
   —
474
Total marketable equity securities 629
264
—
—
893
Total available-for-sale securities 4,085
265,313
2,812
—
272,210
Mortgages held for sale —
15,452
1,032
   —
16,484
Loans —
—
410
   —
   410
Mortgage servicing rights (residential) —
—
13,338
   —
   13,338
Derivative assets:
Interest rate contracts 26
18,143
172
   —
   18,341
Commodity contracts —
1,546
28
   —
   1,574
Equity contracts 1,708
3,867
1,221
   —
   6,796
Foreign exchange contracts 19
8,733
20
   —
   8,772
Credit contracts —
275
145
   —
   420
Netting —
—
—
   (23,323 ) (4) (23,323 )
Total derivative assets 1,753
32,564
1,586
   (23,323 ) 12,580
Other assets – excluding nonmarketable equity investments at NAV —
50
4,473
   —
   4,523
Total assets included in the fair value hierarchy $ 48,700
358,445
24,127
(23,323 ) 407,949
Other assets – nonmarketable equity investments at NAV (5)

—
Total assets recorded at fair value

$ 407,949
Derivative liabilities:
Interest rate contracts $ (18 ) (15,557 ) (58 )    —
   (15,633 )
Commodity contracts —
(1,156 ) (16 )    —
   (1,172 )
Equity contracts (1,125 ) (4,698 ) (1,812 )    —
   (7,635 )
Foreign exchange contracts (16 ) (8,777 ) (13 )    —
   (8,806 )
Credit contracts —
(384 ) (92 )    —
   (476 )
Other derivative contracts —
—
(26 )    —
   (26 )
Netting —
—
—
   24,251
(4) 24,251
Total derivative liabilities (1,159 ) (30,572 ) (2,017 )    24,251
   (9,497 )
Short sale liabilities:
Securities of U.S. Treasury and federal agencies (10,401 ) (728 ) —
   —
   (11,129 )
Corporate debt securities —
(5,643 ) —
   —
   (5,643 )
Equity securities (2,283 ) (7 ) —
   —
   (2,290 )
Other securities —
(34 ) (3 )    —
   (37 )
Total short sale liabilities (12,684 ) (6,412 ) (3 )    —
   (19,099 )
Other liabilities —
—
(3 )    —
   (3 )
Total liabilities recorded at fair value $ (13,843 ) (36,984 ) (2,023 )    24,251
   (28,599 )


	September 30, 2021					December 31, 2020
(in millions)	Level 1		Level 2	Level 3	Total	Level 1		Level 2	Level 3	Total
Trading debt securities:
Securities of U.S. Treasury and federal agencies	$	33,705	2,417	—	36,122	$	32,060	3,197	—	35,257
Collateralized loan obligations	—		649	181	830	—		534	148	682
Corporate debt securities	—		12,862	15	12,877	—		10,696	13	10,709
Federal agency mortgage-backed securities	—		37,022	—	37,022	—		23,549	—	23,549
Non-agency mortgage-backed securities	—		1,416	17	1,433	—		1,039	12	1,051
Other debt securities	—		6,658	1	6,659	—		3,847	—	3,847
Total trading debt securities	33,705		61,024	214	94,943	32,060		42,862	173	75,095
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	38,378		—	—	38,378	22,159		—��	—	22,159
Non-U.S. government securities	—		5,787	—	5,787	—		16,813	—	16,813
Securities of U.S. states and political subdivisions	—		19,410	229	19,639	—		19,182	224	19,406
Federal agency mortgage-backed securities	—		93,985	—	93,985	—		139,070	—	139,070
Non-agency mortgage-backed securities	—		4,374	15	4,389	—		3,697	32	3,729
Collateralized loan obligations	—		14,454	—	14,454	—		9,018	—	9,018
Other debt securities	31		6,835	2,059	8,925	38		7,421	2,738	10,197
Total available-for-sale debt securities	38,409		144,845	2,303	185,557	22,197		195,201	2,994	220,392
Loans held for sale	—		16,790	991	17,781	—		17,572	1,234	18,806
Mortgage servicing rights (residential)	—		—	6,862	6,862	—		—	6,125	6,125
Derivative assets (gross):
Interest rate contracts	20		24,797	232	25,049	11		35,590	462	36,063
Commodity contracts	—		9,953	86	10,039	—		1,997	39	2,036
Equity contracts	5,275		12,274	1,880	19,429	4,888		12,384	1,613	18,885
Foreign exchange contracts	26		7,278	7	7,311	19		8,573	11	8,603
Credit contracts	—		31	20	51	—		45	50	95

Total derivative assets (gross)	5,321		54,333	2,225	61,879	4,918		58,589	2,175	65,682
Equity securities:
Marketable	25,937		220	1	26,158	23,995		596	5	24,596
Nonmarketable (1)	—		61	9,176	9,237	10		21	9,228	9,259
Total equity securities	25,937		281	9,177	35,395	24,005		617	9,233	33,855
Total assets prior to derivative netting	$	103,372	277,273	21,772	402,417	$	83,180	314,841	21,934	419,955
Derivative netting (2)					(34,819)					(39,836)
Total assets after derivative netting					367,598					380,119
Derivative liabilities (gross):
Interest rate contracts	$	(16)	(18,878)	(68)	(18,962)	$	(27)	(26,259)	(16)	(26,302)
Commodity contracts	—		(3,181)	(113)	(3,294)	—		(1,503)	(40)	(1,543)
Equity contracts	(4,503)		(11,825)	(2,215)	(18,543)	(4,860)		(15,219)	(1,927)	(22,006)
Foreign exchange contracts	(24)		(6,254)	(8)	(6,286)	(10)		(8,134)	(12)	(8,156)
Credit contracts	—		(38)	(4)	(42)	—		(49)	(9)	(58)

Total derivative liabilities (gross)	(4,543)		(40,176)	(2,408)	(47,127)	(4,897)		(51,164)	(2,004)	(58,065)






Short-sale trading liabilities	(19,405)		(6,119)	—	(25,524)	(15,292)		(7,149)	—	(22,441)
Total liabilities prior to derivative netting	$	(23,948)	(46,295)	(2,408)	(72,651)	$	(20,189)	(58,313)	(2,004)	(80,506)
Derivative netting (2)					34,151					41,556
Total liabilities after derivative netting					(38,500)					(38,950)


~~(1)~~	~~Net gains (losses) from trading activities recognized in the income statement for the~~ ~~first nine monthsSeptember 30,2017~~ ~~and~~ ~~2016~~ ~~both include~~ ~~$1.4 billion~~ ~~in net unrealized gains (losses) on trading securities held at~~ ~~September 30, 2017~~ ~~and~~ ~~2016, respectively.~~

~~(2)~~

~~Balances consist~~

(1)Excludes $161 million and $154 million of nonmarketable equity securities as of September 30, 2021, and December 31, 2020, respectively, that are mostly investment grade based on ratings received from the ratings agencies or internal credit grades categorized as investment grade if external ratings are not available. The securities are classified as Level 3 due to limited market activity.


~~(3)~~	~~Includes collateralized debt obligations of~~ ~~$1.0 billion~~.


~~(4)~~	~~Represents balance sheet netting of derivative asset and liability balances and related cash collateral. See Note 12 (Derivatives) for additional information.~~


~~(5)~~	~~Consists of certain nonmarketable equity investments that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.~~

~~(continued on following page)~~

~~(continued from previous page)~~

(in millions)
Level 1
Level 2
Level 3
Netting
Total
December 31, 2016
Trading assets
Securities of U.S. Treasury and federal agencies $ 14,950
2,710
—
—
17,660
Securities of U.S. states and political subdivisions —
2,910
3
—
2,913
Collateralized loan obligations —
501
309
—
810
Corporate debt securities —
9,481
34
—
9,515
Mortgage-backed securities —
20,254
—
—
20,254
Asset-backed securities —
1,128
—
—
1,128
Equity securities 20,462
290
—
—
20,752
Total trading securities (1) 35,412
37,274
346
—
73,032
Other trading assets —
1,337
28
—
1,365
Total trading assets 35,412
38,611
374
—
74,397
Securities of U.S. Treasury and federal agencies 22,870
2,949
—
—
25,819
Securities of U.S. states and political subdivisions —
49,961
1,140
(2) —
51,101
Mortgage-backed securities:
Federal agencies —
161,230
—
   —
161,230
Residential —
7,815
1
   —
7,816
Commercial —
8,411
91
   —
8,502
Total mortgage-backed securities —
177,456
92
—
177,548
Corporate debt securities 58
10,967
432
   —
11,457
Collateralized loan and other debt obligations (3) —
34,141
879
(2) —
35,020
Asset-backed securities:
Automobile loans and leases —
9
—
—
9
Home equity loans —
327
—
   —
327
Other asset-backed securities —
4,909
962
(2) —
5,871
Total asset-backed securities —
5,245
962
   —
6,207
Other debt securities —
1
—
   —
1
Total debt securities 22,928
280,720
3,505
   —
307,153
Marketable equity securities:
Perpetual preferred securities 112
357
—
—
469
Other marketable equity securities 741
1
—
   —
742
Total marketable equity securities 853
358
—
—
1,211
Total available-for-sale securities 23,781
281,078
3,505
—
308,364
Mortgages held for sale    —
21,057
985
—
22,042
Loans —
—
758
—
758
Mortgage servicing rights (residential) —
—
12,959
—
12,959
Derivative assets:
Interest rate contracts 44
64,986
238
—
65,268
Commodity contracts —
3,020
37
—
3,057
Equity contracts 1,314
2,997
1,047
—
5,358
Foreign exchange contracts 22
10,843
29
—
10,894
Credit contracts —
280
272
—
552
Netting —
—
—
(70,631 ) (4) (70,631 )
Total derivative assets 1,380
82,126
1,623
(70,631 ) 14,498
Other assets – excluding nonmarketable equity investments at NAV —
16
3,259
—
3,275
Total assets included in the fair value hierarchy $ 60,573
422,888
23,463
(70,631 ) 436,293
Other assets – nonmarketable equity investments at NAV (5) —
Total assets recorded at fair value

$ 436,293
Derivative liabilities:
Interest rate contracts $ (45 ) (65,047 ) (117 ) —
(65,209 )
Commodity contracts —
(2,537 ) (14 ) —
(2,551 )
Equity contracts (919 ) (3,879 ) (1,314 ) —
(6,112 )
Foreign exchange contracts (109 ) (12,616 ) (17 ) —
(12,742 )
Credit contracts —
(332 ) (195 ) —
(527 )
Other derivative contracts —
—
(47 ) —
(47 )
Netting —
—
—
72,696
(4) 72,696
Total derivative liabilities (1,073 ) (84,411 ) (1,704 ) 72,696
(14,492 )
Short sale liabilities:

Securities of U.S. Treasury and federal agencies (9,722 ) (701 ) —
—
(10,423 )
Corporate debt securities —
(4,063 ) —
—
(4,063 )
Equity securities (1,795 ) —
—
—
(1,795 )
Other securities —
(98 ) —
—
(98 )
Total short sale liabilities (11,517 ) (4,862 ) —
—
(16,379 )
Other liabilities —
—
(4 ) —
(4 )
Total liabilities recorded at fair value $ (12,590 ) (89,273 ) (1,708 ) 72,696
(30,875 )


~~(1)~~	~~Net gains (losses) from trading activities recognized in the income statement for the year ended~~ ~~December 31, 2016, include~~ ~~$820 million~~ ~~in net unrealized gains (losses) on trading securities held at~~ ~~December 31, 2016~~.


~~(2)~~	Balances consist of securities that are mostly investment grade based on ratings received from the ratings agencies or internal credit grades categorized as investment grade if external ratings are not available. The securities are classified as Level 3 due to limited market activity.


~~(3)~~	~~Includes collateralized debt obligations of~~ ~~$847 million~~.


~~(4)~~	~~Represents balance sheet netting of derivative asset and liability balances and related cash collateral. See Note 12 (Derivatives) for additional information.~~


~~(5)~~	~~Consists of certain nonmarketable equity investments that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.~~

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

~~Changes in Fair Value Levels~~

We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy and transfer between Level 1, Level 2, and Level 3 accordingly. Observable market data includes but is not limited to quoted prices and market transactions. Changes in economic conditions or market liquidity generally will drive changes in availability of observable market data. Changes in availability of observable market data, which also may result in

~~changing the valuation technique used, are generally the cause of transfers between Level 1, Level 2,and Level 3.~~

Transfers into and out of Level 1, Level 2, and Level 3 are provided within Table 13.3 for the periods presented. The amounts reported as transfers represent the fair value as of the beginning of the quarter in which the transfer occurred.

~~Table 13.3:Transfers Between Fair Value Levels~~

   Transfers Between Fair Value Levels
   Level 1 Level 2 Level 3 (1)
(in millions) In Out In Out In Out Total
Quarter ended September 30, 2017
Trading assets $ —
—
—
(20 ) 20
—
—
Available-for-sale securities —
—
838
—
—
(838 ) —
Mortgages held for sale —
—
2
(55 ) 55
(2 ) —
Other assets —
—
—
—
—
—
—
Net derivative assets and liabilities (2) —
—
6
15
(15 ) (6 ) —
Short sale liabilities —
—
—
—
—
—
—
Total transfers $ —
—
846
(60 ) 60
(846 ) —
Quarter ended September 30, 2016
Trading assets $ 1
(44 ) 44
(2 ) 1
—
—
Available-for-sale securities —
—
465
—
—
(465 ) —
Mortgages held for sale —
—
3
(18 ) 18
(3 ) —
Other assets —
—
—
—
—
—
—
Net derivative assets and liabilities (2) —
—
79
(14 ) 14
(79 ) —
Short sale liabilities —
1
(1 ) —
—
—
—
Total transfers $ 1
(43 ) 590
(34 ) 33
(547 ) —
Nine months ended September 30, 2017
Trading assets $ —
—
1
(39 ) 39
(1 ) —
Available-for-sale securities —
—
1,334
(5 ) 5
(1,334 ) —
Mortgages held for sale —
—
8
(116 ) 116
(8 ) —
Other assets —
—
—
(1 ) 1
—
�� —
Net derivative assets and liabilities (2) —
—
89
37
(37 ) (89 ) —
Short sale liabilities —
—
—
—
—
—
—
Total transfers $ —
—
1,432
(124 ) 124
(1,432 ) —
Nine months ended September 30, 2016
Trading assets $ 5
(48 ) 59
(6 ) 1
(11 ) —
Available-for-sale securities —
—
481
(80 ) 80
(481 ) —
Mortgages held for sale —
—
12
(72 ) 72
(12 ) —
Other assets —
—
—
—
—
—
—
Net derivative assets and liabilities (2) —
—
129
(42 ) 42
(129 ) —
Short sale liabilities (1 ) 1
(1 ) 1
—
—
—
Total transfers $ 4
(47 ) 680
(199 ) 195
(633 ) —


~~(1)~~	~~All transfers in and out of Level 3 are disclosed within the recurring Level 3 rollforward tables in this Note.~~


~~(2)~~	~~Includes transfers of net derivative assets and net derivative liabilities between levels due to changes in observable market data.~~

~~The changes in Level 3 assets and liabilities~~ measured at fair value onusing non-published NAV per share (or its equivalent) as a ~~recurring basis~~practical expedient that are not classified in the fair value hierarchy.

(2)Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Note 14 (Derivatives) for ~~the quarter ended September 30, 2017, are presented in Table 13.4.~~additional information.

~~Table 13.4:Changes in~~


126			Wells Fargo & Company

Level 3 ~~Fair Value~~ Assets and Liabilities Recorded at Fair Value on a Recurring Basis ~~– Quarter ended September 30, 2017~~

Total net gains
(losses) included in

Purchases,
sales,
issuances
and
settlements,
net (1)





Net unrealized
gains (losses)
included in
income related
to assets and
liabilities held
at period end


(in millions)
Balance,
beginning
of period

Net
income

Other
compre-
hensive
income

Transfers
into
Level 3

Transfers
out of
Level 3

Balance,
end of
period

(2)
Quarter ended September 30, 2017
Trading assets:
Securities of U.S. states and
political subdivisions
$ 9
—
—
(6 ) —
—
3
—

Collateralized loan obligations 403
—
—
(20 ) —
—
383
(4 )
Corporate debt securities 26
—
—
6
2
—
34
—

Mortgage-backed securities —
—
—
—
—
—
—
—

Asset-backed securities —
—
—
—
—
—
—
—

Equity securities —
—
—
—
—
—
—
—

Total trading securities 438
—
—
(20 ) 2
—
420
(4 )
Other trading assets 39
—
—
(1 ) 18
—
56
—

Total trading assets 477
—
—
(21 ) 20
—
476
(4 ) (3)
Available-for-sale securities:
Securities of U.S. states and
political subdivisions
1,557
3
3
(19 ) —
(838 ) 706
—

Mortgage-backed securities:
Residential 1
—
—
—
—
—
1
—

Commercial 75
—
1
—
—
—
76
—

Total mortgage-backed securities 76
—
1
—
—
—
77
—

Corporate debt securities 376
1
4
(1 ) —
—
380
—

Collateralized loan and other
debt obligations
1,002
7
25
(20 ) —
—
1,014
—

Asset-backed securities:
Automobile loans and leases —
—
—
—
—
—
—
—

Other asset-backed securities 872
1
2
(240 ) —
—
635
—

Total asset-backed securities 872
1
2
(240 ) —
—
635
—

Total debt securities 3,883
12
35
(280 ) —
(838 ) 2,812
—
(4)
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
—
—
—

Other marketable equity securities —
—
—
—
—
—
—
—

Total marketable
equity securities
—
—
—
—
—
—
—
—
(5)
Total available-for-sale
securities
3,883
12
35
(280 ) —
(838 ) 2,812
—

Mortgages held for sale 995
(10 ) —
(6 ) 55
(2 ) 1,032
(11 ) (6)
Loans 443
—
—
(33 ) —
—
410
(3 ) (6)
Mortgage servicing rights (residential) (7) 12,789
(661 ) —
1,210
—
—
13,338
(142 ) (6)
Net derivative assets and liabilities:
Interest rate contracts 115
158
—
(159 ) —
—
114
8

Commodity contracts 17
(16 ) —
9
2
�� —
12
7

Equity contracts (471 ) (70 ) —
(27 ) (17 ) (6 ) (591 ) (130 )
Foreign exchange contracts 4
3
—
—
—
—
7
1

Credit contracts 72
(6 ) —
(13 ) —
—
53
(6 )
Other derivative contracts (34 ) 8
—
—
—
—
(26 ) 8

Total derivative contracts (297 ) 77
—
(190 ) (15 ) (6 ) (431 ) (112 ) (8)
Other assets 3,960
513
—
—
—
—
4,473
513
(5)
Short sale liabilities —
—
—
(3 ) —
—
(3 ) —
(3)
Other liabilities (3 ) —
—
—
—
—
(3 ) —
(6)


~~(1)~~	~~See Table 13.5 for detail.~~


~~(2)~~	Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.


~~(3)~~	~~Included in net gains (losses) from trading activities and other noninterest income in the income statement.~~


~~(4)~~	~~Included in net gains (losses) from debt securities in the income statement.~~


~~(5)~~	~~Included in net gains (losses) from equity investments in the income statement.~~


~~(6)~~	~~Included in mortgage banking and other noninterest income in the income statement.~~


~~(7)~~	~~For more information on the changes in mortgage servicing rights, see Note 8 (Mortgage Banking Activities).~~


~~(8)~~	~~Included in mortgage banking, trading activities, equity investments and other noninterest income in the income statement.~~

~~(continued on following page)~~

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

~~(continued from previous page)~~

Table ~~13.5~~15.2 presents ~~gross purchases, sales, issuances and settlements related to~~ the changes in Level 3 assets and liabilities measured at fair value on a recurring ~~basis for the quarter ended September 30, 2017.~~basis.

~~Table 13.5:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Quarter ended September 30, 2017~~

(in millions) Purchases
Sales
Issuances
Settlements
Net
Quarter ended September 30, 2017
Trading assets:
Securities of U.S. states and political subdivisions $ 30
(35 ) —
(1 ) (6 )
Collateralized loan obligations 51
(36 ) —
(35 ) (20 )
Corporate debt securities 9
(3 ) —
—
6
Mortgage-backed securities —
—
—
—
—
Asset-backed securities —
—
—
—
—
Equity securities —
—
—
—
—
Total trading securities 90
(74 ) —
(36 ) (20 )
Other trading assets —
(1 ) —
—
(1 )
Total trading assets 90
(75 ) —
(36 ) (21 )
Available-for-sale securities:
Securities of U.S. states and political subdivisions —
(68 ) 98
(49 ) (19 )
Mortgage-backed securities:
Residential —
—
—
—
—
Commercial —
—
—
—
—
Total mortgage-backed securities —
—
—
—
—
Corporate debt securities —
—
—
(1 ) (1 )
Collateralized loan and other debt obligations 6
—
—
(26 ) (20 )
Asset-backed securities:
Automobile loans and leases —
—
—
—
—
Other asset-backed securities —
—
16
(256 ) (240 )
Total asset-backed securities —
—
16
(256 ) (240 )
Total debt securities 6
(68 ) 114
(332 ) (280 )
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
Other marketable equity securities —
—
—
—
—
Total marketable equity securities —
—
—
—
—
Total available-for-sale securities 6
(68 ) 114
(332 ) (280 )
Mortgages held for sale 17
(130 ) 147
(40 ) (6 )
Loans 2
—
5
(40 ) (33 )
Mortgage servicing rights (residential) (1) 541
64
605
—
1,210
Net derivative assets and liabilities:
Interest rate contracts —
—
—
(159 ) (159 )
Commodity contracts —
—
—
9
9
Equity contracts —
(48 ) —
21
(27 )
Foreign exchange contracts —
—
—
—
—
Credit contracts 1
—
—
(14 ) (13 )
Other derivative contracts —
—
—
—
—
Total derivative contracts 1
(48 ) —
(143 ) (190 )
Other assets —
—
—
—
—
Short sale liabilities —
(3 ) —
—
(3 )
Other liabilities —
—
—
—
—


~~(1)~~	~~For more information on the changes in mortgage servicing rights, see Note 8 (Mortgage Banking Activities).~~

~~The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the quarter ended September 30, 2016, are presented in~~ Table ~~13.6.~~

~~Table 13.6:~~15.2:Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis ~~– Quarter ended September 30, 2016~~


										Net unrealized gains (losses) related to assets and liabilities held at period end
(in millions)	Balance, beginning of period		Net gains/(losses) (1)	Purchases (2)	Sales	Settlements	Transfers into Level 3 (3)	Transfers out of Level 3 (4)	Balance, end of period		(5)
Quarter ended September 30, 2021
Trading debt securities	$	192	1	130	(101)	(2)	—	(6)	214	(3)	(6)
Available-for-sale debt securities	2,805		1	362	—	(49)	—	(816)	2,303	7	(6)
Loans held for sale	1,069		(8)	117	(79)	(83)	106	(131)	991	(10)	(7)
Mortgage servicing rights (residential) (8)	6,717		(232)	379	(2)	—	—	—	6,862	275	(7)
Net derivative assets and liabilities:
Interest rate contracts	314		110	—	—	(260)	—	—	164	16
Equity contracts	(425)		(493)	—	—	595	(58)	46	(335)	45
Other derivative contracts	35		(68)	1	(3)	25	(2)	—	(12)	(25)
Total derivative contracts	(76)		(451)	1	(3)	360	(60)	46	(183)	36	(9)
Equity securities	9,660		(487)	—	—	—	4	—	9,177	(487)	(6)
Quarter ended September 30, 2020
Trading debt securities	$	223	17	64	(82)	—	—	(59)	163	7	(6)
Available-for-sale debt securities	2,098		(7)	1	(35)	(50)	16	(36)	1,987	(10)	(6)
Loans held for sale	758		(7)	144	(36)	(66)	66	(4)	855	(6)	(7)
Mortgage servicing rights (residential) (8)	6,819		(815)	351	—	—	—	—	6,355	(217)	(7)
Net derivative assets and liabilities:
Interest rate contracts	523		469	—	—	(546)	—	—	446	226
Equity contracts	20		(191)	—	—	78	—	(15)	(108)	(114)
Other derivative contracts	35		(16)	—	7	10	10	—	46	(13)
Total derivative contracts	578		262	—	7	(458)	10	(15)	384	99	(9)
Equity securities	8,165		253	—	—	—	12	—	8,430	253	(6)
Nine months ended September 30, 2021
Trading debt securities	$	173	21	422	(403)	(7)	22	(14)	214	2	(6)
Available-for-sale debt securities	2,994		22	386	—	(237)	253	(1,115)	2,303	(13)	(6)
Loans held for sale	1,234		(12)	377	(458)	(300)	284	(134)	991	(13)	(7)
Mortgage servicing rights (residential) (8)	6,125		(523)	1,270	(10)	—	—	—	6,862	1,057	(7)
Net derivative assets and liabilities:
Interest rate contracts	446		27	—	—	(304)	—	(5)	164	(14)
Equity contracts	(314)		(819)	—	—	755	(95)	138	(335)	(154)
Other derivative contracts	39		(108)	3	(4)	57	(2)	3	(12)	(10)
Total derivative contracts	171		(900)	3	(4)	508	(97)	136	(183)	(178)	(9)
Equity securities	9,233		(58)	—	(5)	—	7	—	9,177	(59)	(6)
Nine months ended September 30, 2020
Trading debt securities	$	223	(68)	540	(521)	(15)	115	(111)	163	(58)	(6)
Available-for-sale debt securities	1,565		(128)	32	(68)	(198)	1,188	(404)	1,987	(108)	(6)
Loans held for sale	1,214		(111)	1,104	(394)	(228)	1,475	(2,205)	855	(36)	(7)
Mortgage servicing rights (residential) (8)	11,517		(6,404)	1,274	(33)	1	—	—	6,355	(4,605)	(7)
Net derivative assets and liabilities:
Interest rate contracts	214		1,673	—	—	(1,441)	—	—	446	335
Equity contracts	(269)		(38)	—	—	230	(10)	(21)	(108)	194
Other derivative contracts	(5)		(64)	8	3	82	22	—	46	18
Total derivative contracts	(60)		1,571	8	3	(1,129)	12	(21)	384	547	(9)
Equity securities	7,850		566	—	—	—	19	(5)	8,430	561	(6)

(1)Includes net gains (losses) included in both net income and other comprehensive income. All amounts represent net gains (losses) included in net income except for $(2) million and $34 million included in other comprehensive income from available-for-sale debt securities in the third quarter and first nine months of 2021, respectively. The corresponding amounts for the third quarter and first nine months of 2020 were $7 million and $(68) million, respectively.

(2)Includes originations of mortgage servicing rights and loans held for sale.

(3)All assets and liabilities transferred into Level 3 were previously classified within Level 2.

(4)All assets and liabilities transferred out of Level 3 are classified as Level 2.

(5)Includes net unrealized gains (losses) related to assets and liabilities held at period end included in both net income and other comprehensive income. All amounts represent net unrealized gains (losses) included in net income except for $5 million and $(3) million included in other comprehensive income from available-for-sale debt securities in the third quarter and first nine months of 2021, respectively. The corresponding amounts for the third quarter and first nine months of 2020 were $13 million and $(26) million, respectively.

(6)Included in net gains on trading and securities in the consolidated statement of income.

(7)Included in mortgage banking income in the consolidated statement of income.

(8)For additional information on the changes in mortgage servicing rights, see Note 9 (Mortgage Banking Activities).

(9)Included in mortgage banking income, net gains on trading and securities, and other noninterest income in the consolidated statement of income.

Balance,
beginning
of period

Total net gains
(losses) included in

Purchases,
sales,
issuances
and
settlements,
net (1)





Net unrealized
gains (losses)
included in
income related
to assets and
liabilities held
at period end


(in millions)
Net
income

Other
compre-
hensive
income

Transfers
into
Level 3

Transfers
out of
Level 3

Balance,
end of
period

(2)
Quarter ended September 30, 2016
Trading assets:
Securities of U.S. states and
political subdivisions
$ 7
—
—
(4 ) —
—
3
—

Collateralized loan obligations 249
—
—
39
—
—
288
(1 )
Corporate debt securities 36
1
—
9
—
—
46
1

Mortgage-backed securities —
—
—
—
—
—
—
—

Asset-backed securities —
—
—
—
—
—
—
—

Equity securities —
—
—
(1 ) 1
—
—
—

Total trading securities 292
1
—
43
1
—
337
—

Other trading assets 33
(3 ) —
—
—
—
30
(2 )
Total trading assets 325
(2 ) —
43
1
—
367
(2 ) (3)
Available-for-sale securities:
Securities of U.S. states and
political subdivisions
1,793
1
(15 ) (114 ) —
(465 ) 1,200
—

Mortgage-backed securities:
Residential 1
—
—
—
—
—
1
—

Commercial 94
—
1
(2 ) —
—
93
(1 )
Total mortgage-backed securities 95
—
1
(2 ) —
—
94
(1 )
Corporate debt securities 471
3
5
(4 ) —
—
475
—

Collateralized loan and other
debt obligations
951
19
2
(12 ) —
—
960
—

Asset-backed securities:
Automobile loans and leases —
—
—
—
—
—
—
—

Other asset-backed securities 1,117
(1 ) —
(70 ) —
—
1,046
—

Total asset-backed securities 1,117
(1 ) —
(70 ) —
—
1,046
—

Total debt securities 4,427
22
(7 ) (202 ) —
(465 ) 3,775
(1 ) (4)
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
—
—
—

Other marketable equity securities —
—
—
—
—
—
—
—

Total marketable equity securities —
—
—
—
—
—
—
—
(5)
Total available-for-sale
securities
4,427
22
(7 ) (202 ) —
(465 ) 3,775
(1 )
Mortgages held for sale 1,084
(10 ) —
18
18
(3 ) 1,107
(11 ) (6)
Loans 5,032
(25 ) —
(219 ) —
—
4,788
(26 ) (6)
Mortgage servicing rights (residential) (7) 10,396
(594 ) —
613
—
—
10,415
(8 ) (6)
Net derivative assets and liabilities:
Interest rate contracts 690
504
—
(561 ) —
—
633
186

Commodity contracts 21
(3 ) —
—
1
1
20
(1 )
Equity contracts (252 ) (33 ) —
(7 ) (3 ) (80 ) (375 ) (54 )
Foreign exchange contracts —
1
—
—
16
—
17
2

Credit contracts 61
17
—
(8 ) —
—
70
14

Other derivative contracts (88 ) 15
—
—
—
—
(73 ) 16

Total derivative contracts 432
501
—
(576 ) 14
(79 ) 292
163
(8)
Other assets 3,038
380
—
—
—
—
3,418
381
(5)
Short sale liabilities —
—
—
—
—
—
—
—
(3)
Other liabilities (5 ) 1
—
—
—
—
(4 ) —
(6)


~~(1)~~			~~See Table 13.7 for detail.~~Wells Fargo & Company			127


~~(2)~~	Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.


~~(3)~~	~~Included in net gains (losses) from trading activities and other noninterest income in the income statement.~~


~~(4)~~	~~Included in net gains (losses) from debt securities in the income statement.~~


~~(5)~~	~~Included in net gains (losses) from equity investments in the income statement.~~


~~(6)~~	~~Included in mortgage banking and other noninterest income in the income statement.~~


~~(7)~~	~~For more information on the changes in mortgage servicing rights, see Note 8 (Mortgage Banking Activities).~~


~~(8)~~	~~Included in mortgage banking, trading activities, equity investments and other noninterest income in the income statement.~~

~~(continued on following page)~~

Note ~~13:~~15: Fair Values of Assets and Liabilities (~~continued~~)(continued)

~~(continued from previous page)~~

Table 13.7 presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the quarter ended September 30, 2016.

~~Table 13.7:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Quarter ended September 30, 2016~~

(in millions) Purchases
Sales
Issuances
Settlements
Net
Quarter ended September 30, 2016
Trading assets:
Securities of U.S. states and political subdivisions $ —
—
—
(4 ) (4 )
Collateralized loan obligations 75
(36 ) —
—
39
Corporate debt securities 19
(10 ) —
—
9
Mortgage-backed securities —
—
—
—
—
Asset-backed securities —
—
—
—
—
Equity securities —
(1 ) —
—
(1 )
Total trading securities 94
(47 ) —
(4 ) 43
Other trading assets —
—
—
—
—
Total trading assets 94
(47 ) —
(4 ) 43
Available-for-sale securities:
Securities of U.S. states and political subdivisions —
—
—
(114 ) (114 )
Mortgage-backed securities:
Residential —
—
—
—
—
Commercial —
—
—
(2 ) (2 )
Total mortgage-backed securities —
—
—
(2 ) (2 )
Corporate debt securities 1
(4 ) —
(1 ) (4 )
Collateralized loan and other debt obligations 121
(45 ) —
(88 ) (12 )
Asset-backed securities:
Automobile loans and leases —
—
—
—
—
Other asset-backed securities —
—
16
(86 ) (70 )
Total asset-backed securities —
—
16
(86 ) (70 )
Total debt securities 122
(49 ) 16
(291 ) (202 )
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
Other marketable equity securities —
—
—
—
—
Total marketable equity securities —
—
—
—
—
Total available-for-sale securities 122
(49 ) 16
(291 ) (202 )
Mortgages held for sale 23
(113 ) 161
(53 ) 18
Loans —
—
76
(295 ) (219 )
Mortgage servicing rights (residential) (1) —
3
609
1
613
Net derivative assets and liabilities:
Interest rate contracts —
—
—
(561 ) (561 )
Commodity contracts —
—
—
—
—
Equity contracts —
—
—
(7 ) (7 )
Foreign exchange contracts —
—
—
—
—
Credit contracts 2
(1 ) —
(9 ) (8 )
Other derivative contracts —
—
—
—
—
Total derivative contracts 2
(1 ) —
(577 ) (576 )
Other assets —
—
—
—
—
Short sale liabilities —
—
—
—
—
Other liabilities —
—
—
—
—


~~(1)~~	~~For more information on the changes in mortgage servicing rights, see Note 8 (Mortgage Banking Activities).~~

~~The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the first nine months of 2017, are presented in Table 13.8.~~

~~Table 13.8:Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – Nine months ended September 30, 2017~~

Total net gains
(losses) included in

Purchases,
sales,
issuances
and
settlements,
net (1)





Net unrealized
gains (losses)
included in
income related
to assets and
liabilities held
at period end


(in millions)
Balance,
beginning
of period

Net
income

Other
compre-
hensive
income

Transfers
into
Level 3

Transfers
out of
Level 3

Balance,
end of
period

(2)
Nine months ended September 30, 2017
Trading assets:
Securities of U.S. states and
political subdivisions
$ 3
—
—
—
—
—
3
—

Collateralized loan obligations 309
(3 ) —
77
—
—
383
(12 )
Corporate debt securities 34
1
—
(5 ) 5
(1 ) 34
—

Mortgage-backed securities —
—
—
—
—
—
—
—

Asset-backed securities —
—
—
—
—
—
—
—

Equity securities —
—
—
—
—
—
—
—

Total trading securities 346
(2 ) —
72
5
(1 ) 420
(12 )
Other trading assets 28
(3 ) —
(3 ) 34
—
56
(2 )
Total trading assets 374
(5 ) —
69
39
(1 ) 476
(14 ) (3)
Available-for-sale securities:
Securities of U.S. states and
political subdivisions
1,140
4
7
884
5
(1,334 ) 706
—

Mortgage-backed securities:
Residential 1
—
—
—
—
—
1
—

Commercial 91
(6 ) —
(9 ) —
—
76
(11 )
Total mortgage-backed securities 92
(6 ) —
(9 ) —
—
77
(11 )
Corporate debt securities 432
(13 ) 14
(53 ) —
—
380
—

Collateralized loan and other
debt obligations
879
17
70
48
—
—
1,014
—

Asset-backed securities:
Automobile loans and leases —
—
—
—
—
—
—
—

Other asset-backed securities 962
1
5
(333 ) —
—
635
—

Total asset-backed securities 962
1
5
(333 ) —
—
635
—

Total debt securities 3,505
3
96
537
5
(1,334 ) 2,812
(11 ) (4)
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
—
—
—

Other marketable equity securities —
—
—
—
—
—
—
—

Total marketable
equity securities
—
—
—
—
—
—
—
—
(5)
Total available-for-sale
securities
3,505
3
96
537
5
(1,334 ) 2,812
(11 )
Mortgages held for sale 985
(20 ) —
(41 ) 116
(8 ) 1,032
(21 ) (6)
Loans 758
(6 ) —
(342 ) —
—
410
(9 ) (6)
Mortgage servicing rights (residential) (7) 12,959
(1,795 ) —
2,174
—
—
13,338
(328 ) (6)
Net derivative assets and liabilities:
Interest rate contracts 121
625
—
(632 ) —
—
114
(10 )
Commodity contracts 23
(14 ) —
3
2
(2 ) 12
9

Equity contracts (267 ) (128 ) —
(70 ) (39 ) (87 ) (591 ) (223 )
Foreign exchange contracts 12
(5 ) —
—
—
—
7
(1 )
Credit contracts 77
29
—
(53 ) —
—
53
(42 )
Other derivative contracts (47 ) 22
—
(1 ) —
—
(26 ) 22

Total derivative contracts (81 ) 529
—
(753 ) (37 ) (89 ) (431 ) (245 ) (8)
Other assets 3,259
1,214
—
(1 ) 1
—
4,473
1,215
(5)
Short sale liabilities —
—
—
(3 ) —
—
(3 ) —
(3)
Other liabilities (4 ) 1
—
—
—
—
(3 ) —
(6)


~~(1)~~	~~See Table 13.9 for detail.~~


~~(2)~~	Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.


~~(3)~~	~~Included in net gains (losses) from trading activities and other noninterest income in the income statement.~~


~~(4)~~	~~Included in net gains (losses) from debt securities in the income statement.~~


~~(5)~~	~~Included in net gains (losses) from equity investments in the income statement.~~


~~(6)~~	~~Included in mortgage banking and other noninterest income in the income statement.~~


~~(7)~~	~~For more information on the changes in mortgage servicing rights, see Note 8 (Mortgage Banking Activities).~~


~~(8)~~	~~Included in mortgage banking, trading activities, equity investments and other noninterest income in the income statement.~~

~~(continued on following page)~~

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

~~(continued from previous page)~~

Table 13.9 presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the first nine months of 2017.

~~Table 13.9:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Nine months ended September 30, 2017~~

(in millions) Purchases
Sales
Issuances
Settlements
Net
Nine months ended September 30, 2017
Trading assets:
Securities of U.S. states and political subdivisions $ 37
(36 ) —
(1 ) —
Collateralized loan obligations 337
(165 ) —
(95 ) 77
Corporate debt securities 18
(23 ) —
—
(5 )
Mortgage-backed securities —
—
—
—
—
Asset-backed securities —
—
—
—
—
Equity securities —
—
—
—
—
Total trading securities 392
(224 ) —
(96 ) 72
Other trading assets —
(1 ) —
(2 ) (3 )
Total trading assets 392
(225 ) —
(98 ) 69
Available-for-sale securities:
Securities of U.S. states and political subdivisions —
(68 ) 1,099
(147 ) 884
Mortgage-backed securities:
Residential —
—
—
—
—
Commercial —
—
—
(9 ) (9 )
Total mortgage-backed securities —
—
—
(9 ) (9 )
Corporate debt securities 4
—
—
(57 ) (53 )
Collateralized loan and other debt obligations 135
—
—
(87 ) 48
Asset-backed securities:
Automobile loans and leases —
—
—
—
—
Other asset-backed securities —
—
198
(531 ) (333 )
Total asset-backed securities —
—
198
(531 ) (333 )
Total debt securities 139
(68 ) 1,297
(831 ) 537
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
Other marketable equity securities —
—
—
—
—
Total marketable equity securities —
—
—
—
—
Total available-for-sale securities 139
(68 ) 1,297
(831 ) 537
Mortgages held for sale 57
(374 ) 386
(110 ) (41 )
Loans 5
(129 ) 14
(232 ) (342 )
Mortgage servicing rights (residential) (1) 541
9
1,624
—
2,174
Net derivative assets and liabilities:
Interest rate contracts —
—
—
(632 ) (632 )
Commodity contracts —
—
—
3
3
Equity contracts —
(117 ) —
47
(70 )
Foreign exchange contracts —
—
—
—
—
Credit contracts 5
(2 ) —
(56 ) (53 )
Other derivative contracts —
—
—
(1 ) (1 )
Total derivative contracts 5
(119 ) —
(639 ) (753 )
Other assets —
(1 ) —
—
(1 )
Short sale liabilities —
(3 ) —
—
(3 )
Other liabilities —
—
—
—
—


~~(1)~~	~~For more information on the changes in mortgage servicing rights, see Note 8 (Mortgage Banking Activities).~~

~~The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the first nine months of 2016, are presented in Table 13.10.~~

~~Table 13.10:Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – Nine months ended September 30, 2016~~

Balance,
beginning
of period

Total net gains
(losses) included in

Purchases,
sales,
issuances
and
settlements,
net (1)





Net unrealized
gains (losses)
included in
income related
to assets and
liabilities held
at period end


(in millions)
Net
income

Other
compre-
hensive
income

Transfers
into
Level 3

Transfers
out of
Level 3

Balance,
end of
period

(2)
Nine months ended September 30, 2016
Trading assets:
Securities of U.S. states and
political subdivisions
$ 8
—
—
(5 ) —
—
3
—

Collateralized loan obligations 343
(24 ) —
(20 ) —
(11 ) 288
(25 )
Corporate debt securities 56
(7 ) —
(3 ) —
—
46
(6 )
Mortgage-backed securities —
—
—
—
—
—
—
—

Asset-backed securities —
—
—
—
—
—
—
—

Equity securities —
—
—
(1 ) 1
—
—
—

Total trading securities 407
(31 ) —
(29 ) 1
(11 ) 337
(31 )
Other trading assets 34
(4 ) —
—
—
—
30
1

Total trading assets 441
(35 ) —
(29 ) 1
(11 ) 367
(30 ) (3)
Available-for-sale securities:
Securities of U.S. states and
political subdivisions
1,500
5
(11 ) 107
80
(481 ) 1,200
—

Mortgage-backed securities:
Residential 1
—
—
—
—
—
1
—

Commercial 73
—
1
19
—
—
93
(1 )
Total mortgage-backed securities 74
—
1
19
—
—
94
(1 )
Corporate debt securities 405
8
33
29
—
—
475
—

Collateralized loan and other
debt obligations
565
42
(18 ) 371
—
—
960
—

Asset-backed securities:
Automobile loans and leases —
—
—
—
—
—
—
—

Other asset-backed securities 1,182
1
(7 ) (130 ) —
—
1,046
(4 )
Total asset-backed securities 1,182
1
(7 ) (130 ) —
—
1,046
(4 )
Total debt securities 3,726
56
(2 ) 396
80
(481 ) 3,775
(5 ) (4)
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
—
—
—

Other marketable equity securities —
—
—
—
—
—
—
—

Total marketable equity securities —
—
—
—
—
—
—
—
(5)
Total available-for-sale
securities
3,726
56
(2 ) 396
80
(481 ) 3,775
(5 )
Mortgages held for sale 1,082
20
—
(55 ) 72
(12 ) 1,107
15
(6)
Loans 5,316
(29 ) —
(499 ) —
—
4,788
(30 ) (6)
Mortgage servicing rights (residential) (7) 12,415
(3,434 ) —
1,434
—
—
10,415
(1,789 ) (6)
Net derivative assets and liabilities:
Interest rate contracts 288
1,763
—
(1,411 ) —
(7 ) 633
374

Commodity contracts 12
5
—
(2 ) 4
1
20
13

Equity contracts (111 ) (26 ) —
(137 ) 22
(123 ) (375 ) (278 )
Foreign exchange contracts —
1
—
—
16
—
17
16

Credit contracts (3 ) 25
—
48
—
—
70
16

Other derivative contracts (58 ) (15 ) —
—
—
—
(73 ) (15 )
Total derivative contracts 128
1,753
—
(1,502 ) 42
(129 ) 292
126
(8)
Other assets 3,065
142
—
211
—
—
3,418
142
(5)
Short sale liabilities —
—
—
—
—
—
—
—
(3)
Other liabilities (30 ) 1
—
25
—
—
(4 ) —
(6)


~~(1)~~	~~See Table 13.11 for detail.~~


~~(2)~~	Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.


~~(3)~~	~~Included in net gains (losses) from trading activities and other noninterest income in the income statement.~~


~~(4)~~	~~Included in net gains (losses) from debt securities in the income statement.~~


~~(5)~~	~~Included in net gains (losses) from equity investments in the income statement.~~


~~(6)~~	~~Included in mortgage banking and other noninterest income in the income statement.~~


~~(7)~~	~~For more information on the changes in mortgage servicing rights, see Note 8 (Mortgage Banking Activities).~~


~~(8)~~	~~Included in mortgage banking, trading activities, equity investments and other noninterest income in the income statement.~~

~~(continued on following page)~~

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

~~(continued from previous page)~~

Table 13.11 presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the first nine months of 2016.

~~Table 13.11:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Nine months ended September 30, 2016~~

(in millions) Purchases
Sales
Issuances
Settlements
Net
Nine months ended September 30, 2016
Trading assets:
Securities of U.S. states and political subdivisions $ 2
(2 ) —
(5 ) (5 )
Collateralized loan obligations 265
(285 ) —
—
(20 )
Corporate debt securities 32
(35 ) —
—
(3 )
Mortgage-backed securities —
—
—
—
—
Asset-backed securities —
—
—
—
—
Equity securities —
(1 ) —
—
(1 )
Total trading securities 299
(323 ) —
(5 ) (29 )
Other trading assets —
—
—
—
—
Total trading assets 299
(323 ) —
(5 ) (29 )
Available-for-sale securities:
Securities of U.S. states and political subdivisions 28
(7 ) 475
(389 ) 107
Mortgage-backed securities:
Residential —
—
—
—
—
Commercial 22
—
—
(3 ) 19
Total mortgage-backed securities 22
—
—
(3 ) 19
Corporate debt securities 35
(4 ) —
(2 ) 29
Collateralized loan and other debt obligations 610
(49 ) —
(190 ) 371
Asset-backed securities:
Automobile loans and leases —
—
—
—
—
Other asset-backed securities —
(28 ) 214
(316 ) (130 )
Total asset-backed securities —
(28 ) 214
(316 ) (130 )
Total debt securities 695
(88 ) 689
(900 ) 396
Marketable equity securities:
Perpetual preferred securities —
—
—
—
—
Other marketable equity securities —
—
—
—
—
Total marketable equity securities —
—
—
—
—
Total available-for-sale securities 695
(88 ) 689
(900 ) 396
Mortgages held for sale 67
(424 ) 443
(141 ) (55 )
Loans 12
—
248
(759 ) (499 )
Mortgage servicing rights (residential) (1) —
(19 ) 1,452
1
1,434
Net derivative assets and liabilities:
Interest rate contracts —
—
—
(1,411 ) (1,411 )
Commodity contracts —
—
—
(2 ) (2 )
Equity contracts 29
(146 ) —
(20 ) (137 )
Foreign exchange contracts —
—
—
—
—
Credit contracts 5
(2 ) —
45
48
Other derivative contracts —
—
—
—
—
Total derivative contracts 34
(148 ) —
(1,388 ) (1,502 )
Other assets 211
—
—
—
211
Short sale liabilities —
—
—
—
—
Other liabilities —
—
—
25
25


~~(1)~~	~~For more information on the changes in mortgage servicing rights, see Note 8 (Mortgage Banking Activities).~~

Table ~~13.12 and Table 13.13 provide~~15.3 provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of ~~substantially all of~~ our Level 3 assets and liabilities measured at fair value on a recurring ~~basis for which we use an internal model.~~basis.

The significant unobservable inputs for Level 3 assets ~~and liabilities that are valued using~~inherent in the fair values obtained from ~~third party~~third-party vendors are not included in the table, as the specific inputs applied are not

provided by the vendor. In addition, the table excludes the valuation techniques and significant unobservable inputs for certain classes of Level 3 assets and liabilities measured using an internal model that we consider, both individually and in the aggregate, insignificant relative to our overall Level 3 assets and liabilities. We made this determination

based upon an evaluation of each class, which considered the magnitude of the positions, nature of the unobservable inputs and potential for significant changes in fair value due to changes in those inputs. Forvendor (for additional information on ~~how changes in significant unobservable inputs affect the fair values of Level 3 assets and liabilities,~~vendor-developed valuations, see Note 17 (Fair Values of Assets and Liabilities) ~~to Financial Statements~~ in our ~~2016~~2020 Form ~~10-K.~~ 10-K).

Weighted averages of inputs are calculated using outstanding unpaid principal balance for cash instruments, such as loans and securities, and notional amounts for derivative instruments.

Table ~~13.12:~~15.3:Valuation Techniques – Recurring Basis –


($ in millions, except cost to service amounts)	Fair Value Level 3			Valuation Technique	Significant Unobservable Input	Range of Inputs					Weighted Average
September 30, 2021
Trading and available-for-sale debt securities	$	2,038		Discounted cash flow	Discount rate	0.4		-	11.5	%	4.1
	134			Vendor priced
	214			Market comparable pricing	Comparability adjustment	(37.7)		-	13.9		(6.1)
	131			Market comparable pricing	Multiples	0.4x		-	12.1x		6.5x
Loans held for sale	991			Discounted cash flow	Default rate	0.0		-	30.2	%	1.3
					Discount rate	1.6		-	12.6		4.9
					Loss severity	0.0		-	46.8		15.6
					Prepayment rate	7.3		-	19.4		13.5
Mortgage servicing rights (residential)	6,862			Discounted cash flow	Cost to service per loan (1)	$	56	-	611		108
					Discount rate	5.6		-	8.9	%	6.3
					Prepayment rate (2)	13.1		-	20.9		15.4
Net derivative assets and (liabilities):
Interest rate contracts	113			Discounted cash flow	Default rate	0.0		-	5.0		1.9
					Loss severity	50.0		-	50.0		50.0
					Prepayment rate	2.8		-	22.0		18.6
Interest rate contracts: derivative loan commitments	51			Discounted cash flow	Fall-out factor	1.0		-	99.0		16.6
					Initial-value servicing	(63.0)		-	151.0	bps	72.7
Equity contracts	244			Discounted cash flow	Conversion factor	(9.8)		-	0.0	%	(9.4)
					Weighted average life	0.3		-	2.3	yrs	1.3
	(579)			Option model	Correlation factor	(77.0)		-	99.0	%	21.1
					Volatility factor	6.5		-	78.8		16.2
Nonmarketable equity securities	9,176			Market comparable pricing	Comparability adjustment	(19.1)		-	(5.2)		(15.9)

Insignificant Level 3 assets, net of liabilities	(11)
Total Level 3 assets, net of liabilities	$	19,364	(3)
December 31, 2020
Trading and available-for-sale debt securities	$	2,126		Discounted cash flow	Discount rate	0.4		-	14.7	%	3.6
	759			Vendor priced
	173			Market comparable pricing	Comparability adjustment	(39.8)		-	0.3		(8.4)
	109			Market comparable pricing	Multiples	7.2x		-	12.1x		8.0x
Loans held for sale	1,234			Discounted cash flow	Default rate	0.0		-	31.6	%	1.7
					Discount rate	1.3		-	12.0		4.5
					Loss severity	0.0		-	32.3		18.4
					Prepayment rate	8.3		-	23.6		15.1
Mortgage servicing rights (residential)	6,125			Discounted cash flow	Cost to service per loan (1)	$	63	-	712		130
					Discount rate	4.9		-	8.3	%	5.8
					Prepayment rate (2)	14.3		-	22.8		19.9
Net derivative assets and (liabilities):
Interest rate contracts	206			Discounted cash flow	Default rate	0.0		-	6.0		1.7
					Loss severity	50.0		-	50.0		50.0
					Prepayment rate	2.8		-	22.0		18.2
Interest rate contracts: derivative loan commitments	240			Discounted cash flow	Fall-out factor	1.0		-	99.0		28.8
					Initial-value servicing	(51.6)		-	268.0	bps	65.5
Equity contracts	220			Discounted cash flow	Conversion factor	(8.6)		-	0.0	%	(8.2)
					Weighted average life	0.5		-	2.0	yrs	1.0
	(534)			Option model	Correlation factor	(77.0)		-	99.0	%	24.8
					Volatility factor	6.5		-	96.6		26.4
Nonmarketable equity securities	9,228			Market comparable pricing	Comparability adjustment	(20.3)		-	(3.2)		(13.8)

Insignificant Level 3 assets, net of liabilities	44
Total Level 3 assets, net of liabilities	$	19,930	(3)

(1)The high end of the range of inputs is for servicing modified loans. For non-modified loans the range is $56 - $234 at September 30, ~~2017~~2021, and $63 - $252 at December 31, 2020.

(2)Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

(3)Consists of total Level 3 assets of $21.8 billion and $21.9 billion and total Level 3 liabilities of $2.4 billion and $2.0 billion, before netting of derivative balances, at September 30, 2021, and December 31, 2020, respectively.

($ in millions, except cost to service amounts) Fair Value Level 3
Valuation Technique(s) Significant Unobservable Input Range of Inputs
Weighted
Average (1)

September 30, 2017
Trading and available-for-sale securities:
Securities of U.S. states and
political subdivisions:

Government, healthcare and
other revenue bonds
$ 630
Discounted cash flow Discount rate 1.3
- 5.4
% 2.4
Other municipal bonds 29
Discounted cash flow Discount rate 4.2
- 4.3
4.3
50
Vendor priced
Collateralized loan and other debt
obligations (2)
383
Market comparable pricing Comparability adjustment (16.5 ) - 24.0
3.1
1,014
Vendor priced
Asset-backed securities:
Diversified payment rights (3) 324
Discounted cash flow Discount rate 2.1
- 3.7
2.8
Other commercial and consumer 285
(4) Discounted cash flow Discount rate 3.3
- 4.7
3.9
Weighted average life 1.3
- 3.5
yrs 1.9
26
Vendor priced
Mortgages held for sale (residential) 1,009
Discounted cash flow Default rate 0.0
- 5.6
% 1.2
Discount rate 1.1
- 7.1
5.3
Loss severity 0.1
- 40.8
18.8
Prepayment rate 6.5
- 15.8
9.2
23
Market comparable pricing Comparability adjustment (53.3 ) - (20.0 ) (43.2 )
Loans 410
(5) Discounted cash flow Discount rate 2.8
- 7.3
4.1
Prepayment rate 8.5
- 100.0
92.4
Loss severity 0.0
- 31.9
5.8
Mortgage servicing rights (residential) 13,338
Discounted cash flow Cost to service per loan (6) $ 79
- 584
145
Discount rate 6.5
- 12.0
% 6.7
Prepayment rate (7) 10.0
- 20.5
10.8
Net derivative assets and (liabilities):
Interest rate contracts 89
Discounted cash flow Default rate 0.0
- 5.0
1.7
Loss severity 50.0
- 50.0
50.0
Prepayment rate 2.8
- 12.5
10.1
Interest rate contracts: derivative loan
commitments
25
Discounted cash flow Fall-out factor 1.0
- 99.0
17.8
Initial-value servicing (38.0 ) - 98.2
bps 27.9
Equity contracts 105
Discounted cash flow Conversion factor (9.8 ) - 0.0
% (7.8 )
Weighted average life 0.3
- 2.3
yrs 1.4
(696 ) Option model Correlation factor (77.0 ) - 98.0
% 29.5
Volatility factor 5.0
- 100.0
19.2
Credit contracts (3 ) Market comparable pricing Comparability adjustment (25.8 ) - 15.7
(0.8 )
56
Option model Credit spread 0.0
- 12.2
1.2
Loss severity 12.0
- 60.0
48.8
Other assets: nonmarketable equity investments 10
Discounted cash flow Discount rate 5.0
- 10.3
9.7
Volatility Factor 0.5
- 1.3
0.8
4,463
Market comparable pricing Comparability adjustment (19.1 ) - (3.3 ) (14.6 )

Insignificant Level 3 assets, net of liabilities 534
(8)
Total level 3 assets, net of liabilities $ 22,104
(9)


~~(1)~~128			~~Weighted averages are calculated using outstanding unpaid principal balance for cash instruments, such as loans and securities, and notional amounts for derivative instruments.~~

Wells Fargo & Company
~~(2)~~	~~Includes~~ ~~$1.0 billion~~ ~~of collateralized debt obligations.~~


~~(3)~~	~~Securities backed by specified sources of current and future receivables generated from foreign originators.~~


~~(4)~~	~~A significant portion of the balance consists of investments in asset-backed securities that are revolving in nature, for which the timing of advances and repayments of principal are uncertain.~~


~~(5)~~	~~Consists of reverse mortgage loans.~~


~~(6)~~	~~The high end of the range of inputs is for servicing modified loans. For non-modified loans the range is~~ ~~$79~~ - ~~$282~~.


~~(7)~~	~~Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.~~

~~(8)~~

Represents the aggregate amount of Level 3 assets and liabilities measured at fair value on a recurring basis that are individually and in the aggregate insignificant. The amount includes corporate debt securities, mortgage-backed securities, other trading assets, other liabilities and certain net derivative assets and liabilities, such as commodity contracts, foreign exchange contracts, and other derivative contracts.


~~(9)~~	~~Consists of total Level 3 assets of~~ ~~$24.1 billion~~ ~~and total Level 3 liabilities of~~ ~~$2.0 billion, before netting of derivative balances.~~

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

~~Table 13.13:Valuation Techniques – Recurring Basis – December 31, 2016~~

($ in millions, except cost to service amounts) Fair Value Level 3
Valuation Technique(s) Significant Unobservable Input Range of Inputs
Weighted
Average (1)

December 31, 2016
Trading and available-for-sale securities:
Securities of U.S. states and
political subdivisions:

Government, healthcare and
other revenue bonds
$ 906
Discounted cash flow Discount rate 1.1
- 5.6
% 2.0
Other municipal bonds 29
Discounted cash flow Discount rate 3.7
- 4.9
4.5
Weighted average life 3.6
- 3.6
yrs 3.6
208
Vendor priced
Collateralized loan and other debt
obligations (2)
309
Market comparable pricing Comparability adjustment (15.5 ) - 20.3
% 2.9
879
Vendor priced
Asset-backed securities:
Diversified payment rights (3) 443
Discounted cash flow Discount rate 1.9
- 4.8
3.3
Other commercial and consumer 492
(4) Discounted cash flow Discount rate 3.0
- 4.6
3.9
Weighted average life 0.8
- 4.2
yrs 2.9
27
Vendor priced
Mortgages held for sale (residential) 955
Discounted cash flow Default rate 0.5
- 7.9
% 1.9
Discount rate 1.1
- 6.9
5.1
Loss severity 0.1
- 42.5
26.9
Prepayment rate 6.3
- 17.1
10.0
30
Market comparable pricing Comparability adjustment (53.3 ) - 0.0
(37.8 )
Loans 758
(5) Discounted cash flow Discount rate 0.0
- 3.9
0.6
Prepayment rate 0.4
- 100.0
83.7
Utilization rate 0.0
- 0.8
0.1
Mortgage servicing rights (residential) 12,959
Discounted cash flow Cost to service per loan (6) $ 79
- 598
155
Discount rate 6.5
- 18.4
% 6.8
Prepayment rate (7) 9.4
- 20.6
10.3
Net derivative assets and (liabilities):
Interest rate contracts 127
Discounted cash flow Default rate 0.1
- 6.8
2.1
Loss severity 50.0
- 50.0
50.0
Prepayment rate 2.8
- 12.5
9.6
Interest rate contracts: derivative loan
commitments
(6 ) Discounted cash flow Fall-out factor 1.0
- 99.0
15.0
Initial-value servicing (23.0 ) - 131.2
bps 56.8
Equity contracts 79
Discounted cash flow Conversion factor (10.6 ) - 0.0
% (7.9 )
Weighted average life �� 1.0
- 3.0
yrs 2.0
(346 ) Option model Correlation factor (65.0 ) - 98.5
% 39.9
Volatility factor 6.5
- 100.0
20.7
Credit contracts (28 ) Market comparable pricing Comparability adjustment (27.7 ) - 21.3
0.02
105
Option model Credit spread 0.0
- 11.6
1.2
Loss severity 12.0
- 60.0
50.4
Other assets: nonmarketable equity investments 21
Discounted cash flow Discount rate 5.0
- 10.3
8.7
Volatility Factor 0.3
- 2.4
1.1
3,238
Market comparable pricing Comparability adjustment (22.1 ) - (5.5 ) (16.4 )

Insignificant Level 3 assets, net of liabilities 570
(8)
Total level 3 assets, net of liabilities $ 21,755
(9)


~~(1)~~	~~Weighted averages are calculated using outstanding unpaid principal balance for cash instruments, such as loans and securities, and notional amounts for derivative instruments.~~


~~(2)~~	~~Includes~~ ~~$847 million~~ ~~of collateralized debt obligations.~~


~~(3)~~	~~Securities backed by specified sources of current and future receivables generated from foreign originators.~~


~~(4)~~	~~A significant portion of the balance consists of investments in asset-backed securities that are revolving in nature, for which the timing of advances and repayments of principal are uncertain.~~


~~(5)~~	~~Consists of reverse mortgage loans.~~


~~(6)~~	~~The high end of the range of inputs is for servicing modified loans. For non-modified loans the range is~~ ~~$79~~ - ~~$293~~.


~~(7)~~	~~Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.~~

~~(8)~~


~~(9)~~	~~Consists of total Level 3 assets of~~ ~~$23.5 billion~~ ~~and total Level 3 liabilities of~~ ~~$1.7 billion, before netting of derivative balances.~~

~~The~~For additional information on the valuation techniques and significant unobservable inputs used ~~for~~in the valuation of our Level 3 assets and liabilities, ~~as presented~~including how changes in ~~the previous tables, are described as follows:~~

~~Discounted cash flow~~ – Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument and then discounting those cash flows at a rate of return that results in thethese inputs affect fair value ~~amount.~~

~~Market comparable pricing~~ – Market comparable pricing valuation techniques are used to determine the fair value of certain instruments by incorporating known inputs, such as recent transaction prices, pending transactions, or prices of other similar investments that require significant adjustment to reflect differences in instrument characteristics.

~~Option model~~ – Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, ~~price of the underlying instrument and expected rate of return.~~

~~Vendor-priced~~ – Prices obtained from third party pricing vendors or brokers that are used to record the fair value of the asset or liability for which the related valuation technique and significant unobservable inputs are not provided.

Significant unobservable inputs presented in the previous tables are those we consider significant to the fair value of the Level 3 asset or liability. We consider unobservable inputs to be significant if by their exclusion the fair value of the Level 3 asset or liability would be impacted by a predetermined percentage change. We also consider qualitative factors, such as nature of the instrument, type of valuation technique used, and the significance of the unobservable inputs relative to other inputs used within the valuation. Following is a description of the significant unobservable inputs provided in the table.

~~Comparability adjustment~~ – is an adjustment made to observed market data, such as a transaction price in order to reflect dissimilarities in underlying collateral, issuer, rating, or other factors used within a market valuation approach, expressed as a percentage of an observed price.

~~Conversion Factor~~ ~~– is the risk-adjusted rate in which a particular instrument may be exchanged for another instrument upon settlement, expressed as a percentage change from a specified rate.~~

~~Correlation factor~~ ~~– is the likelihood of one instrument changing in price relative to another based on an established relationship expressed as a percentage of relative change in price over a period over time.~~

~~Cost to service~~ – is the expected cost per loan of servicing a portfolio of loans, which includes estimates for unreimbursed expenses (including delinquency and foreclosure costs) that may occur as a result of servicing such loan portfolios.

~~Credit spread~~ – is the portion of the interest rate in excess of a benchmark interest rate, such as Overnight Index Swap (OIS), LIBOR or U.S. Treasury rates, that when applied to an investment captures changes in the obligor’s creditworthiness.

~~Default rate~~ ~~– is an estimate of the likelihood of not collecting contractual amounts owed expressed as a constant default rate (CDR).~~

~~Discount rate~~ – is a rate of return used to calculate the present value of the future expected cash flow to arrive at the fair value of an instrument. The discount rate consists of a benchmark rate component and a risk premium component. The benchmark rate component, for example, OIS, LIBOR or U.S. Treasury rates, is generally observable within the market and is necessary to appropriately reflect the time value of money. The risk premium component reflects the amount of compensation market participants require due to the uncertainty inherent in the instruments’ cash flows resulting from risks such as credit and liquidity.

~~Fall-out factor~~ ~~– is the expected percentage of loans associated with our interest rate lock commitment portfolio that are likely of not funding.~~

~~Initial-value servicing~~ ~~– is the estimated value of the underlying loan, including the value attributable to the embedded servicing right, expressed in basis points of outstanding unpaid principal balance.~~

~~Loss severity~~ ~~– is the estimated percentage of contractual cash flows lost in the event of a default.~~

~~Prepayment rate~~ ~~– is the estimated rate at which forecasted prepayments of principal of the related loan or debt instrument are expected to occur, expressed as a constant prepayment rate (CPR).~~

~~Utilization rate~~ ~~– is the estimated rate in which incremental portions of existing reverse mortgage credit lines are expected to be drawn by borrowers, expressed as an annualized rate.~~

~~Volatility factor~~ ~~– is the extent of change in price an item is estimated to fluctuate over a specified period of time expressed as a percentage of relative change in price over a period over time.~~

~~Weighted average life~~ – is the weighted average number of years an investment is expected to remain outstanding based on its expected cash flows reflecting the estimated date the issuer will call or extend the maturity of the instrument or otherwise reflecting an estimate of the timing of an instrument’s cash flows whose timing is not contractually fixed.

see Note ~~13: Fair~~17 (Fair Values of Assets and ~~Liabilities (continued~~)

Liabilities) in our 2020 Form 10-K.

Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis

We may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with

GAAP. These adjustments to fair value usually result from application of

LOCOM accounting, or write-downs of individual ~~assets.~~ assets, or application of the measurement alternative for nonmarketable equity securities.

Table ~~13.14~~15.4 provides the fair value hierarchy and ~~carrying amount~~fair value at the date of the nonrecurring fair value adjustment for all assets that were still held as of September 30, ~~2017,~~2021, and December 31, ~~2016,~~2020, and for which a nonrecurring fair value adjustment was recorded during the ~~periods presented.~~nine months ended September 30, 2021, and year ended December 31, 2020.

Table ~~13.14:~~15.4:Fair Value on a Nonrecurring Basis


	September 30, 2021				December 31, 2020
(in millions)	Level 2		Level 3	Total	Level 2	Level 3	Total
Loans held for sale (1)	$	3,429	1,436	4,865	2,672	2,945	5,617
Loans:
Commercial	372		—	372	1,385	—	1,385
Consumer	311		—	311	395	—	395
Total loans	683		—	683	1,780	—	1,780
Mortgage servicing rights (commercial)	—		570	570	—	510	510
Nonmarketable equity securities	5,101		68	5,169	2,397	790	3,187
Other assets	984		173	1,157	1,350	428	1,778
Total assets at fair value on a nonrecurring basis	$	10,197	2,247	12,444	8,199	4,673	12,872

September 30, 2017 December 31, 2016
(in millions) Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Mortgages held for sale (LOCOM) (1) $ —
1,652
1,340
2,992
—
2,312
1,350
3,662
Loans held for sale —
18
—
18
—
8
—
8
Loans:
Commercial —
386
—
386
—
464
—
464
Consumer —
460
10
470
—
822
7
829
Total loans (2) —
846
10
856
—
1,286
7
1,293
Other assets - excluding nonmarketable equity investments at NAV (3) —
198
146
344
—
233
412
645
Total included in the fair value hierarchy $ —
2,714
1,496
4,210
—
3,839
1,769
5,608
Other assets - nonmarketable equity investments at NAV (4)

5

13
Total assets at fair value on a nonrecurring basis

$ 4,215

5,621


~~(1)~~	~~Consists of commercial mortgages and residential real estate 1-4 family first mortgage loans.~~


~~(2)~~	~~Represents the carrying value of loans for which nonrecurring adjustments are based on the appraised value of the collateral.~~


~~(3)~~	~~Includes the fair value of foreclosed real estate, other collateral owned, operating lease assets and nonmarketable equity investments.~~


~~(4)~~	Consists of certain nonmarketable equity investments that are measured at fair value on a nonrecurring basis using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.

(1)Predominantly consists of commercial mortgages and residential mortgage – first lien loans.

Table ~~13.15~~15.5 presents the increase (decrease) in value of certain assets held at the end of the ~~respective~~ reporting periods presented for which a nonrecurring fair value adjustment was recognized during the ~~periods presented.~~respective periods.

Table ~~13.15:~~15.5:Change in Value of Assets with Nonrecurring Fair Value Adjustment


	Nine months ended September 30,
(in millions)	2021		2020
Loans held for sale	$	28	(77)
Loans:
Commercial	(254)		(594)
Consumer	(409)		(192)
Total loans	(663)		(786)
Mortgage servicing rights (commercial)	36		(37)
Nonmarketable equity securities (1)	2,974		102

Other assets (2)	(84)		(468)
Total	$	2,291	(1,266)

(1)Includes impairment of nonmarketable equity securities and observable price adjustments related to nonmarketable equity securities accounted for under the measurement alternative.

(2)Includes impairment of operating lease ROU assets, valuation losses on foreclosed real estate and other collateral owned, and impairment of private equity and venture capital investments in consolidated portfolio companies.

Nine months ended September 30,
(in millions) 2017
2016
Mortgages held for sale (LOCOM) $ 23
26
Loans held for sale (1 ) (21 )
Loans:
Commercial (286 ) (736 )
Consumer (371 ) (578 )
Total loans (1)
(657 ) (1,314 )
Other assets (2)
(179 ) (339 )
Total $ (814 ) (1,648 )


~~(1)~~			~~Represents write-downs of loans based on the appraised value of the collateral.~~

Wells Fargo & Company
~~(2)~~	Includes the losses on foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets. Also includes impairment losses on nonmarketable equity investments. 129

Note 15: Fair Values of Assets and Liabilities (continued)

Table ~~13.16~~15.6 provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of ~~substantially all of~~ our Level 3 assets that are measured at fair value on a nonrecurring basis and determined using an internal model. The table is limited to financial instruments that had

nonrecurring fair value adjustments during the periods presented. Weighted averages of inputs are calculated using outstanding unpaid principal balance for cash instruments, such as loans, and carrying value prior to the nonrecurring fair value measurement for nonmarketable equity securities.

~~We have excluded from~~Table 15.6:Valuation Techniques – Nonrecurring Basis


($ in millions)	Fair Value Level 3		Valuation Technique (1)	Significant Unobservable Input (1)		Range of Inputs Positive (Negative)					Weighted Average
September 30, 2021
Loans held for sale (2)	$	1,273	Discounted cash flow	Default rate	(3)	0.7		-	79.0	%	29.1
				Discount rate		0.6		-	12.7		3.1
				Loss severity		0.4		-	48.6		5.6
				Prepayment rate	(4)	5.3		-	100.0		40.1
	163		Market comparable pricing	Comparability adjustment		(8.1)		-	(0.8)		(5.9)
Mortgage servicing rights (commercial)	570		Discounted cash flow	Cost to service per loan		$	150	-	3,381		2,773
				Discount rate		4.0		-	4.2	%	4.0
				Prepayment rate		0.0		-	20.6		5.5
Nonmarketable equity securities	15		Market comparable pricing	Multiples		2.0x		-	3.3x		2.8x

	48		Market comparable pricing	Comparability Adjustment		(100.0)		-	(56.2)	%	(67.6)
	5		Discounted cash flow	Discount rate		10.5		-	10.5		10.5



Other assets	173		Discounted cash flow	Discount rate		0.3		-	4.4		2.9

Total	$	2,247
December 31, 2020
Loans held for sale (2)	$	1,628	Discounted cash flow	Default rate	(3)	0.3		-	85.5	%	31.5
				Discount rate		0.6		-	11.9		3.0
				Loss severity		0.4		-	45.0		8.1
				Prepayment rate	(4)	8.3		-	100.0		42.5
	1,317		Market comparable pricing	Comparability adjustment		(11.6)		-	(1.8)		(3.1)
Mortgage servicing rights (commercial)	510		Discounted cash flow	Cost to service per loan		$	150	-	3,377		2,779
				Discount rate		1.9		-	1.9	%	1.9
				Prepayment rate		0.0		-	20.0		5.4
Nonmarketable equity securities (5)	844		Market comparable pricing	Multiples		0.1x		-	10.9x		5.0x
	188		Market comparable pricing	Comparability adjustment		(100.0)		-	(20.0)	%	(61.4)
	76		Other	Company risk factor		(100.0)		-	(20.0)		(57.7)
	91		Discounted cash flow	Discount rate		10.0		-	20.0		11.5
				Company risk factor		(62.6)		-	0.0		(30.3)
				Crude oil prices ($/barrel)		$	42	-	48		47
				Natural gas prices ($/MMBtu)		2		-	2		2
Insignificant Level 3 assets	19
Total	$	4,673

(1)See Note 17 (Fair Values of Assets and Liabilities) in our 2020 Form 10-K for additional information on the ~~table~~ valuation ~~techniques~~technique(s) and significant unobservable inputs ~~for certain classes~~used in the valuation of Level 3

assets.

(2)Consists of approximately $1.2 billion and $2.6 billion of government insured/guaranteed loans purchased from GNMA-guaranteed mortgage securitizations at September 30, 2021, and December 31, 2020, respectively, and approximately $200 million and $300 million of other mortgage loans that are not government insured/guaranteed at September 30, 2021, and December 31, 2020, respectively.

(3)Applies only to non-government insured/guaranteed loans.

(4)Includes the impact on prepayment rate of expected defaults for government insured/guaranteed loans, which impact the frequency and timing of early resolution of loans.

(5)Includes $417 million of private equity and venture capital investments in consolidated portfolio companies classified in other assets on the consolidated balance sheet at December 31, 2020.

assets measured using an internal model that we consider, both individually and in the aggregate, insignificant relative to our overall Level 3 nonrecurring measurements. We made this determination based upon an evaluation of each class that considered the magnitude of the positions, nature of the unobservable inputs and potential for significant changes in fair value due to changes in those inputs.

~~Table 13.16:Valuation Techniques – Nonrecurring Basis~~

($ in millions)
Fair Value
Level 3

Valuation Technique(s) (1)

Significant
Unobservable Inputs (1)
Range of inputs
Weighted
Average (2)

September 30, 2017
Residential mortgages held for sale (LOCOM) $ 1,340
(3) Discounted cash flow Default rate (4) 0.1 — 10.3 % 2.6 %
Discount rate 1.5 — 8.5
3.8
Loss severity 0.8 — 57.6
2.6
Prepayment rate (5) 5.3 — 100.0
49.8
Other assets: nonmarketable equity investments 34
Discounted cash flow Discount rate 5.0 — 10.5
9.4
Insignificant level 3 assets 122

Total $ 1,496

December 31, 2016
Residential mortgages held for sale (LOCOM) $ 1,350
(3) Discounted cash flow Default rate (4) 0.2 — 4.3 % 1.9 %
Discount rate 1.5 — 8.5
3.8
Loss severity 0.7 — 50.1
2.4
Prepayment rate (5) 3.0 — 100.0
50.7
Other assets: nonmarketable equity investments 220
Discounted cash flow Discount rate 4.7 — 9.3
7.3
Insignificant level 3 assets 199

Total $ 1,769


~~(1)~~130			~~Refer to the narrative following Table 13.13 for a definition of the valuation technique(s) and significant unobservable inputs.~~

Wells Fargo & Company
~~(2)~~	~~For residential MHFS, weighted averages are calculated using the outstanding unpaid principal balance of the loans.~~


~~(3)~~	~~Consists of approximately~~ ~~$1.3 billion~~ ~~of government insured/guaranteed loans purchased from GNMA-guaranteed mortgage securitizations at both~~ ~~September 30, 2017, and~~ ~~December 31, 2016, and~~ ~~$30 million~~ ~~and~~ ~~$33 million~~ ~~of other mortgage loans that are not government insured/guaranteed at~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, respectively.~~


~~(4)~~	~~Applies only to non-government insured/guaranteed loans.~~


~~(5)~~	~~Includes the impact on prepayment rate of expected defaults for government insured/guaranteed loans, which impact the frequency and timing of early resolution of loans.~~

~~Alternative Investments~~

We hold certain nonmarketable equity investments for which we use NAV per share (or its equivalent) as a practical expedient for fair value measurements, including estimated fair values for investments accounted for under the cost method. The investments consist of private equity funds that invest in equity and debt securities issued by private and publicly-held companies. The fair values of these investments and related unfunded commitments totaled $27 million and $25 million, respectively, at September 30, 2017, and $48 million and $37 million, respectively, at December 31, 2016. The investments do not allow redemptions. We receive distributions as the underlying assets of the funds liquidate, which we expect to occur through 2025.

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

Fair Value Option

The fair value option is an irrevocable election, generally only permitted upon initial recognition of financial assets or liabilities, to measure eligible financial instruments at fair value with changes in fair value reflected in earnings. We may elect the fair value option to align the measurement model with how the financial assets or liabilities are managed or to reduce complexity or accounting asymmetry. Following is a discussion of the portfolios for which we elected the fair value option. For ~~more~~additional information, including the basis for our fair value

option elections, see Note 17 (Fair Values of Assets and Liabilities) ~~to Financial Statements~~ in our ~~2016~~2020 Form 10-K.

Table ~~13.17~~15.7 reflects differences between the fair value carrying amount of the assets for which we have elected the fair value option and the contractual aggregate unpaid principal amount at maturity.

~~Table 13.17:Fair Value Option~~

   September 30, 2017 December 31, 2016
(in millions)
Fair value
carrying
amount

Aggregate
unpaid
principal

Fair value
carrying
amount
less
aggregate
unpaid
principal

Fair value
carrying
amount

Aggregate
unpaid
principal

Fair value
carrying
amount
less
aggregate
unpaid
principal

Trading assets – loans:
     Total loans $ 1,182
1,231
(49 ) 1,332
1,418
(86 )
     Nonaccrual loans 65
84
(19 ) 100
115
(15 )
Mortgages held for sale:
Total loans 16,484
16,087
397
22,042
21,961
81
Nonaccrual loans 120
159
(39 ) 136
182
(46 )
Loans 90 days or more past due and still accruing 13
16
(3 ) 12
16
(4 )
Loans held for sale:
Total loans —
6
(6 ) —
6
(6 )
Nonaccrual loans —
6
(6 ) —
6
(6 )
Loans:
Total loans 410
437
(27 ) 758
775
(17 )
Nonaccrual loans 267
293
(26 ) 297
318
(21 )
Other assets (1) 4,523
N/A
N/A
3,275
N/A
N/A


~~(1)~~	~~Consists of nonmarketable equity investments carried at fair value. See Note 6 (Other Assets) for more information.~~

~~The assets accounted~~ Nonaccrual loans and loans 90 days or more past due and still accruing included in LHFS for ~~under~~which we have elected the fair value option ~~are initially measured~~were insignificant at ~~fair value. Gains~~September 30, 2021, and ~~losses from initial measurement and subsequent changes in fair value are recognized in earnings.~~ December 31, 2020.

Table 15.7:Fair Value Option


	September 30, 2021				December 31, 2020
(in millions)	Fair value carrying amount		Aggregate unpaid principal	Fair value carrying amount less aggregate unpaid principal	Fair value carrying amount	Aggregate unpaid principal	Fair value carrying amount less aggregate unpaid principal
Loans held for sale	$	17,781	17,509	272	18,806	18,217	589

The changes in fair value related to initial

measurement and subsequent changes in fair value included in earnings for ~~these assets measured at~~LHFS accounted for under the fair value ~~are shown~~option were $495 million and $1.7 billion in ~~Table 13.18 by~~the third quarter and first nine months of 2021, respectively, and $862 million and $2.0 billion in the third quarter and first nine months of 2020, respectively. Substantially all of these amounts were included in the mortgage banking noninterest income line of the consolidated statement ~~line item.~~

~~Table 13.18:Fair Value Option – Changes in Fair Value Included in Earnings~~

   2017 2016
(in millions) Mortgage banking noninterest income

Net gains
(losses)
from
trading
activities

Other
noninterest
income

Mortgage
banking
noninterest
income

Net gains
(losses)
from
trading
activities

Other
noninterest
income

Quarter ended September 30,




Trading assets - loans $ —
6
—
—
21
1
Mortgages held for sale 400
—
—
563
—
—
Loans —
—
—
—
—
(25 )
Other assets —
—
522
—
—
383
Other interests held (1) —
(1 ) —
—
(3 ) —
Nine months ended September 30,
Trading assets – loans $ —
42
1
—
47
2
Mortgages held for sale 967
—
—
1,739
—
—
Loans —
—
—
—
—
(29 )
Other assets —
—
1,233
—
—
149
Other interests held (1) —
(5 ) —
—
(4 ) —


~~(1)~~	~~Includes retained interests in securitizations.~~

of income. For performing loans, instrument-specific credit risk gains or losses were derived principally by determining the change in fair value of the loans due to changes in the observable or implied credit spread. Credit spread is the market yield on the loans less the relevant risk-free benchmark interest rate. For

nonperforming loans, we attribute all changes in fair value to instrument-specific credit risk. ~~Table 13.19 shows the estimated gains~~Gains and losses ~~from earnings~~ attributable to instrument-specific credit risk related to assets accounted for under the fair value ~~option.~~option in the third quarter and first nine months of both 2021 and 2020 were insignificant.

~~Table 13.19:~~


			Wells Fargo & Company			131

Note 15:Fair ~~Value Option – Gains/Losses Attributable to Instrument-Specific Credit Risk~~Values of Assets and Liabilities (continued)

   Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
Gains (losses) attributable to instrument-specific credit risk:


Trading assets – loans $ 6
21
42
47
Mortgages held for sale (4 ) 1
(9 ) (4 )
Total $ 2
22
33
43

Disclosures about Fair Value of Financial Instruments

Table ~~13.20 is~~15.8 presents a summary of fair value estimates for financial instruments ~~excluding financial instruments recorded~~that are not carried at fair value on a recurring ~~basis,~~basis. Some financial instruments are excluded from the scope of this table, such as ~~they are included within Table 13.2 in this Note. The carrying amounts in the following table are recorded on the balance sheet under the indicated captions, except for~~certain insurance contracts, certain nonmarketable equity ~~investments, which are included in other assets.~~

~~We have not included~~securities, and leases. This table also excludes assets and liabilities that are not financial instruments ~~in our disclosure,~~ such as the value of the long-term relationships with our deposit, credit card and trust customers, ~~amortized~~ MSRs, premises and equipment, goodwill and ~~other intangibles,~~ deferred ~~taxes and other liabilities. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.~~

taxes.

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

~~Table 13.20:Fair Value Estimates for Financial Instruments~~

Estimated fair value
(in millions) Carrying amount
Level 1
Level 2
Level 3
Total
September 30, 2017
Financial assets
Cash and due from banks (1) $ 19,206
19,206
—
—
19,206
Federal funds sold, securities purchased under resale agreements and other short-term investments (1) 273,105
206,073
66,963
69
273,105
Held-to-maturity securities 142,423
45,282
96,627
909
142,818
Mortgages held for sale (2) 3,525
—
2,189
1,340
3,529
Loans held for sale 157
—
157
—
157
Loans, net (3) 921,420
—
54,106
881,812
935,918
Nonmarketable equity investments (cost method)
Excluding investments at NAV 7,642
—
23
8,084
8,107
Total financial assets included in the fair value hierarchy 1,367,478
270,561
220,065
892,214
1,382,840
Investments at NAV (4) 25
27
Total financial assets $ 1,367,503

1,382,867
Financial liabilities
Deposits $ 1,306,706
—
1,285,239
21,455
1,306,694
Short-term borrowings (1) 93,811
—
93,811
—
93,811
Long-term debt (5) 238,854
—
240,846
2,306
243,152
Total financial liabilities $ 1,639,371

—

1,619,896

23,761
1,643,657
December 31, 2016
Financial assets
Cash and due from banks (1) $ 20,729
20,729
—
—
20,729
Federal funds sold, securities purchased under resale agreements and other short-term investments (1) (6) 266,038
207,003
58,953
82
266,038
Held-to-maturity securities 99,583
45,079
51,706
2,370
99,155
Mortgages held for sale (2) 4,267
—
2,927
1,350
4,277
Loans held for sale 80
—
81
—
81
Loans, net (3) 936,358
—
60,245
887,589
947,834
Nonmarketable equity investments (cost method)
Excluding investments at NAV 8,362
—
18
8,924
8,942
Total financial assets included in the fair value hierarchy 1,335,417
272,811
173,930
900,315
1,347,056
Investments at NAV (4) 35

48
Total financial assets $ 1,335,452

1,347,104
Financial liabilities
Deposits $ 1,306,079
—
1,282,158
23,995
1,306,153
Short-term borrowings (1) 96,781
—
96,781
—
96,781
Long-term debt (5) 255,070
—
245,704
10,075
255,779
Total financial liabilities $ 1,657,930

—

1,624,643

34,070
1,658,713


~~(1)~~	~~Amounts consist of financial instruments for which carrying value approximates fair value.~~


~~(2)~~	~~Excludes MHFS for which we elected the fair value option.~~


~~(3)~~	~~Excludes loans for which the fair value option was elected and also excludes lease financing with a carrying amount of~~ ~~$19.2 billion~~ ~~and~~ ~~$19.3 billion~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively.~~


~~(4)~~	Consists of certain nonmarketable equity investments for which estimated fair values are determined using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.


~~(5)~~	~~Excludes capital lease obligations under capital leases of~~ ~~$39 million~~ ~~and~~ ~~$7 million~~ at ~~September 30, 2017, and~~ ~~December 31, 2016, respectively.~~


~~(6)~~	~~The fair value classification level of certain interest-earning deposits have been reclassified to conform with the current period end classification.~~

Loan commitments, standby letters of credit and commercial and similar letters of credit are not included in ~~the table above.~~

Table 15.8. A reasonable estimate of the fair value of these instruments is the carrying value of deferred fees plus the allowance for unfunded credit commitments, which totaled ~~$1.1~~$1.3 billion and ~~$1.2~~$1.4 billion at September 30, ~~2017,~~2021, and December 31, ~~2016,~~2020, respectively.

The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying fair value of the Company.

Table 15.8:Fair Value Estimates for Financial Instruments


			Estimated fair value
(in millions)	Carrying amount		Level 1	Level 2	Level 3	Total
September 30, 2021
Financial assets
Cash and due from banks (1)	$	25,509	25,509	—	—	25,509
Interest-earning deposits with banks (1)	241,178		240,998	180	—	241,178
Federal funds sold and securities purchased under resale agreements (1)	67,807		—	67,807	—	67,807
Held-to-maturity debt securities	262,493		24,186	238,839	997	264,022
Loans held for sale	7,030		—	5,564	1,661	7,225
Loans, net (2)	834,220		—	61,387	791,076	852,463
Nonmarketable equity securities (cost method)	3,584		—	—	3,646	3,646
Total financial assets	$	1,441,821	290,693	373,777	797,380	1,461,850
Financial liabilities
Deposits (3)	$	32,877	—	16,539	16,566	33,105
Short-term borrowings	41,980		—	41,980	—	41,980
Long-term debt (4)	162,952		—	169,790	1,259	171,049
Total financial liabilities	$	237,809	—	228,309	17,825	246,134
December 31, 2020
Financial assets
Cash and due from banks (1)	$	28,236	28,236	—	—	28,236
Interest-earning deposits with banks (1)	236,376		236,258	118	—	236,376
Federal funds sold and securities purchased under resale agreements (1)	65,672		—	65,672	—	65,672
Held-to-maturity debt securities	205,720		48,597	162,777	933	212,307
Loans held for sale	17,578		—	14,952	3,419	18,371
Loans, net (2)	853,595		—	56,270	817,827	874,097
Nonmarketable equity securities (cost method)	3,588		—	—	3,632	3,632
Total financial assets	$	1,410,765	313,091	299,789	825,811	1,438,691
Financial liabilities
Deposits (3)	$	52,807	—	33,321	19,940	53,261
Short-term borrowings	58,999		—	58,999	—	58,999
Long-term debt (4)	212,922		—	219,321	1,381	220,702
Total financial liabilities	$	324,728	—	311,641	21,321	332,962

(1)Amounts consist of financial instruments for which carrying value approximates fair value.

(2)Excludes lease financing with a carrying amount of $14.9 billion and $15.4 billion at September 30, 2021, and December 31, 2020, respectively.

(3)Excludes deposit liabilities with no defined or contractual maturity of $1.4 trillion at both September 30, 2021, and December 31, 2020, respectively.

(4)Excludes capital lease obligations under capital leases of $27 million and $28 million at September 30, 2021, and December 31, 2020, respectively.



132			Wells Fargo & Company


Note ~~14:~~16: Preferred Stock

We are authorized to issue 20 million shares of preferred stock and 4 million shares of preference stock, both without par value. Preferred shares outstanding rank senior to common shares both as to dividends and liquidation preference but have no general voting rights. We have not issued any preference shares under

this authorization. If issued, preference shares would be limited to ~~one~~1 vote per share. Our total authorized, issued and outstanding preferred stock is presented in the following two tables along with the Employee Stock Ownership Plan (ESOP) Cumulative Convertible Preferred Stock.

In January 2021, we issued $3.5 billion of our Preferred Stock, Series BB, and in February 2021, we issued $1.05 billion of

our Preferred Stock, Series CC. In March 2021, we redeemed our Preferred Stock, Series I, Series P and Series W, and partially redeemed our Preferred Stock, Series N, for an aggregate cost of $4.5 billion. In June 2021, we redeemed the remaining outstanding shares of our Preferred Stock, Series N, for a cost of $350 million. In July 2021, we issued $1.25 billion of our Preferred Stock, Series DD. In September 2021, we redeemed our Preferred Stock, Series O and Series X, for an aggregate cost of $1.8 billion.

Table ~~14.1:~~16.1:Preferred Stock Shares


	September 30, 2021			December 31, 2020
	Liquidation preference per share		Shares authorized and designated	Liquidation preference per share		Shares authorized and designated
DEP Shares
Dividend Equalization Preferred Shares (DEP)	$	10	97,000	$	10	97,000
Series I (1)
Floating Class A Preferred Stock	—		—	100,000		25,010
Series L (2)
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock	1,000		4,025,000	1,000		4,025,000
Series N (3)
5.20% Non-Cumulative Perpetual Class A Preferred Stock	—		—	25,000		30,000
Series O (3)
5.125% Non-Cumulative Perpetual Class A Preferred Stock	—		—	25,000		27,600
Series P (3)
5.25% Non-Cumulative Perpetual Class A Preferred Stock	—		—	25,000		26,400
Series Q
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	25,000		69,000	25,000		69,000
Series R
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	25,000		34,500	25,000		34,500
Series S
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	25,000		80,000	25,000		80,000
Series U
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	25,000		80,000	25,000		80,000
Series W (3)
5.70% Non-Cumulative Perpetual Class A Preferred Stock	—		—	25,000		40,000
Series X (3)
5.50% Non-Cumulative Perpetual Class A Preferred Stock	—		—	25,000		46,000
Series Y
5.625% Non-Cumulative Perpetual Class A Preferred Stock	25,000		27,600	25,000		27,600
Series Z
4.75% Non-Cumulative Perpetual Class A Preferred Stock	25,000		80,500	25,000		80,500
Series AA
4.70% Non-Cumulative Perpetual Class A Preferred Stock	25,000		46,800	25,000		46,800
Series BB
3.90% Fixed-Reset Non-Cumulative Perpetual Class A Preferred Stock	25,000		140,400	—		—
Series CC
4.375% Non-Cumulative Perpetual Class A Preferred Stock	25,000		46,000	—		—
Series DD
4.25% Non-Cumulative Perpetual Class A Preferred Stock	25,000		50,000	—		—
ESOP (4)
Cumulative Convertible Preferred Stock	—		822,242	—		822,242
Total			5,599,042			5,557,652

(1)Series I preferred stock issuance relates to trust preferred securities. See Note 8 (Securitizations and Variable Interest Entities) for additional information. This issuance has a floating interest rate that is the greater of three-month London Interbank Offered Rate (LIBOR) plus 0.93% and 5.56975%. In first quarter 2021, Preferred Stock, Series I, was redeemed.

(2)Preferred Stock, Series L, may be converted at any time, at the option of the holder, into 6.3814 shares of our common stock, plus cash in lieu of fractional shares, subject to anti-dilution adjustments.

(3)In first quarter 2021, 16,000 shares of Preferred Stock, Series N, were redeemed and Preferred Stock, Series P and Series W, were fully redeemed; in second quarter 2021, the remaining 14,000 shares of Preferred Stock, Series N, were redeemed; in third quarter 2021, Preferred Stock, Series O and Series X, were fully redeemed.

(4)See the “ESOP Cumulative Convertible Preferred Stock” section in this Note for additional information about the liquidation preference for the ESOP Cumulative Convertible Preferred Stock.

   September 30, 2017 December 31, 2016

Liquidation
preference
per share

Shares
authorized
and designated

Liquidation
preference
per share

Shares
authorized
and designated

DEP Shares



Dividend Equalization Preferred Shares (DEP) $ 10
97,000
$ 10
97,000
Series H
Floating Class A Preferred Stock (1) —
—
20,000
50,000
Series I
Floating Class A Preferred Stock 100,000
25,010
100,000
25,010
Series J
8.00% Non-Cumulative Perpetual Class A Preferred Stock 1,000
2,300,000
1,000
2,300,000
Series K
7.98% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 1,000
3,500,000
1,000
3,500,000
Series L
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock 1,000
4,025,000
1,000
4,025,000
Series N
5.20% Non-Cumulative Perpetual Class A Preferred Stock 25,000
30,000
25,000
30,000
Series O
5.125% Non-Cumulative Perpetual Class A Preferred Stock 25,000
27,600
25,000
27,600
Series P
5.25% Non-Cumulative Perpetual Class A Preferred Stock 25,000
26,400
25,000
26,400
Series Q
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 25,000
69,000
25,000
69,000
Series R
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 25,000
34,500
25,000
34,500
Series S
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 25,000
80,000
25,000
80,000
Series T
6.00% Non-Cumulative Perpetual Class A Preferred Stock 25,000
32,200
25,000
32,200
Series U
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 25,000
80,000
25,000
80,000
Series V
6.00% Non-Cumulative Perpetual Class A Preferred Stock 25,000
40,000
25,000
40,000
Series W
5.70% Non-Cumulative Perpetual Class A Preferred Stock 25,000
40,000
25,000
40,000
Series X
5.50% Non-Cumulative Perpetual Class A Preferred Stock 25,000
46,000
25,000
46,000
Series Y
5.625% Non-Cumulative Perpetual Class A Preferred Stock 25,000
27,600
—
—
ESOP
Cumulative Convertible Preferred Stock (2) —
1,774,652
—
1,439,181
Total 12,254,962
11,941,891


~~(1)~~			~~On January 26, 2017, we filed with the Delaware Secretary of State a Certificate Eliminating the Certificate of Designations with respect to the Series H preferred stock.~~Wells Fargo & Company			133


~~(2)~~	~~See the ESOP Cumulative Convertible Preferred Stock section in this Note for additional information about the liquidation preference for the ESOP Cumulative Convertible Preferred Stock.~~

Note ~~14:~~16: Preferred Stock (~~continued~~)(continued)

Table ~~14.2:~~16.2:Preferred Stock – Shares Issued and Carrying Value


	September 30, 2021					December 31, 2020
(in millions, except shares)	Shares issued and outstanding	Liquidation preference value		Carrying value	Discount	Shares issued and outstanding	Liquidation preference value		Carrying value	Discount
DEP Shares
Dividend Equalization Preferred Shares (DEP)	96,546	$	—	—	—	96,546	$	—	—	—
Series I (1)
Floating Class A Preferred Stock	—	—		—	—	25,010	2,501		2,501	—
Series L (2)
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock	3,967,995	3,968		3,200	768	3,967,995	3,968		3,200	768
Series N (3)
5.20% Non-Cumulative Perpetual Class A Preferred Stock	—	—		—	—	30,000	750		750	—
Series O (3)
5.125% Non-Cumulative Perpetual Class A Preferred Stock	—	—		—	—	26,000	650		650	—
Series P (3)
5.25% Non-Cumulative Perpetual Class A Preferred Stock	—	—		—	—	25,000	625		625	—
Series Q
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	69,000	1,725		1,725	—	69,000	1,725		1,725	—
Series R
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	33,600	840		840	—	33,600	840		840	—
Series S
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	80,000	2,000		2,000	—	80,000	2,000		2,000	—
Series U
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock	80,000	2,000		2,000	—	80,000	2,000		2,000	—
Series W (3)
5.70% Non-Cumulative Perpetual Class A Preferred Stock	—	—		—	—	40,000	1,000		1,000	—
Series X (3)
5.50% Non-Cumulative Perpetual Class A Preferred Stock	—	—		—	—	46,000	1,150		1,150	—
Series Y
5.625% Non-Cumulative Perpetual Class A Preferred Stock	27,600	690		690	—	27,600	690		690	—
Series Z
4.75% Non-Cumulative Perpetual Class A Preferred Stock	80,500	2,013		2,013	—	80,500	2,013		2,013	—
Series AA
4.70% Non-Cumulative Perpetual Class A Preferred Stock	46,800	1,170		1,170	—	46,800	1,170		1,170	—
Series BB
3.90% Fixed-Reset Non-Cumulative Perpetual Class A Preferred Stock	140,400	3,510		3,510	—	—	—		—	—
Series CC
4.375% Non-Cumulative Perpetual Class A Preferred Stock	42,000	1,050		1,050	—	—	—		—	—
Series DD
4.25% Non-Cumulative Perpetual Class A Preferred Stock	50,000	1,250		1,250	—	—	—		—	—
ESOP (4)
Cumulative Convertible Preferred Stock	822,242	822		822	—	822,242	822		822	—
Total	5,536,683	$	21,038	20,270	768	5,496,293	$	21,904	21,136	768

(1)Floating rate for Preferred Stock, Series I, is the greater of three-month London Interbank Offered Rate (LIBOR) plus 0.93% and 5.56975%. In first quarter 2021, Preferred Stock, Series I, was redeemed.

(3)In first quarter 2021, $400 million of Preferred Stock, Series N, was redeemed and Preferred Stock, Series P and Series W, were fully redeemed; in second quarter 2021, the remaining $350 million of Preferred Stock, Series N, was redeemed; in third quarter 2021, Preferred Stock, Series O and Series X, were fully redeemed.

(4)See the “ESOP Cumulative Convertible Preferred Stock” section in this Note for additional information about the liquidation preference for the ESOP Cumulative Convertible Preferred Stock.

   September 30, 2017 December 31, 2016
(in millions, except shares)
Shares
issued and
outstanding

Liquidation preference
value

Carrying
value

Discount

Shares
issued and
outstanding

Liquidation preference
value

Carrying
value

Discount
DEP Shares







Dividend Equalization Preferred Shares (DEP) 96,546
$ —
—
—
96,546
$ —
—
—
Series I (1)

Floating Class A Preferred Stock 25,010
2,501
2,501
—
25,010
2,501
2,501
—
Series J (1)

8.00% Non-Cumulative Perpetual Class A Preferred Stock 2,150,375
2,150
1,995
155
2,150,375
2,150
1,995
155
Series K (1)

7.98% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 3,352,000
3,352
2,876
476
3,352,000
3,352
2,876
476
Series L (1)

7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock 3,968,000
3,968
3,200
768
3,968,000
3,968
3,200
768
Series N (1)

5.20% Non-Cumulative Perpetual Class A Preferred Stock 30,000
750
750
—
30,000
750
750
—
Series O (1)

5.125% Non-Cumulative Perpetual Class A Preferred Stock 26,000
650
650
—
26,000
650
650
—
Series P (1)

5.25% Non-Cumulative Perpetual Class A Preferred Stock 25,000
625
625
—
25,000
625
625
—
Series Q (1)

5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 69,000
1,725
1,725
—
69,000
1,725
1,725
—
Series R (1)

6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 33,600
840
840
—
33,600
840
840
—
Series S (1)

5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 80,000
2,000
2,000
—
80,000
2,000
2,000
—
Series T (1)

6.00% Non-Cumulative Perpetual Class A Preferred Stock 32,000
800
800
—
32,000
800
800
—
Series U (1)

5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock 80,000
2,000
2,000
—
80,000
2,000
2,000
—
Series V (1)

6.00% Non-Cumulative Perpetual Class A Preferred Stock 40,000
1,000
1,000
—
40,000
1,000
1,000
—
Series W (1)

5.70% Non-Cumulative Perpetual Class A Preferred Stock 40,000
1,000
1,000
—
40,000
1,000
1,000
—
Series X (1)

5.50% Non-Cumulative Perpetual Class A Preferred Stock 46,000
1,150
1,150
—
46,000
1,150
1,150
—
Series Y (1)

5.625% Non-Cumulative Perpetual Class A Preferred Stock 27,600
690
690
—
—
—
—
—
ESOP
Cumulative Convertible Preferred Stock 1,774,652
1,774
1,774
—
1,439,181
1,439
1,439
—
Total 11,895,783
$ 26,975
25,576
1,399
11,532,712
$ 25,950
24,551
1,399


~~(1)~~134			~~Preferred shares qualify as Tier 1 capital.~~Wells Fargo & Company

In April 2017, we issued 27.6 million Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series Y, for an aggregate public offering price of $690 million.

~~See Note 7 (Securitizations and Variable Interest Entities) for additional information on our trust preferred securities.~~

ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCKAll shares of our ESOP Cumulative Convertible Preferred Stock (ESOP Preferred Stock) were issued to a trustee acting on behalf of the Wells Fargo & Company 401(k) Plan (the 401(k) Plan). Dividends on the ESOP Preferred Stock are cumulative from the date of initial issuance and are payable quarterly at annual rates based upon the year of issuance. Each share of ESOP Preferred Stock released from the unallocated reserve of the 401(k) Plan is converted into shares of our common stock based on the stated

value of the ESOP Preferred Stock and the then current market price of our common stock. The ESOP Preferred Stock is also convertible at the option of the holder at any time, unless previously redeemed. We have the option to redeem the ESOP Preferred Stock at any time, in whole or in part, at a redemption price per share equal to the higher of (a) $1,000 per share plus accrued and unpaid dividends or (b) the fair market value, as defined in the Certificates of Designation for the ESOP Preferred Stock.

Table ~~14.3:~~16.3:ESOP Preferred Stock


	Shares issued and outstanding		Carrying value			Adjustable dividend rate
(in millions, except shares)	Sep 30, 2021	Dec 31, 2020	Sep 30, 2021		Dec 31, 2020	Minimum		Maximum
ESOP Preferred Stock
$1,000 liquidation preference per share
2018	221,945	221,945	$	222	222	7.00	%	8.00	%
2017	163,210	163,210	163		163	7.00		8.00
2016	162,450	162,450	162		162	9.30		10.30
2015	92,904	92,904	93		93	8.90		9.90
2014	99,151	99,151	99		99	8.70		9.70
2013	61,948	61,948	62		62	8.50		9.50
2012	20,634	20,634	21		21	10.00		11.00
Total ESOP Preferred Stock (1)	822,242	822,242	$	822	822
Unearned ESOP shares (2)			$	(875)	(875)

(1)At both September 30, 2021, and December 31, 2020, additional paid-in capital included $53 million related to ESOP preferred stock.

(2)We recorded a corresponding charge to unearned ESOP shares in connection with the issuance of the ESOP Preferred Stock. The unearned ESOP shares are reduced as shares of the ESOP Preferred Stock are committed to be released.

Shares issued and outstanding Carrying value Adjustable dividend rate
(in millions, except shares) Sep 30,
2017
Dec 31,
2016
Sep 30,
2017
Dec 31,
2016
Minimum
Maximum
ESOP Preferred Stock
$1,000 liquidation preference per share
2017 491,758
—
$ 492
—
7.00 % 8.00
2016 322,826
358,528
323
358
9.30
10.30
2015 187,436
200,820
187
201
8.90
9.90
2014 237,151
255,413
237
255
8.70
9.70
2013 201,948
222,558
202
223
8.50
9.50
2012 128,634
144,072
129
144
10.00
11.00
2011 129,296
149,301
129
149
9.00
10.00
2010 75,603
90,775
75
91
9.50
10.50
2008 —
17,714
—
18
10.50
11.50
Total ESOP Preferred Stock (1) 1,774,652
1,439,181
$ 1,774
1,439

Unearned ESOP shares (2) $ (1,904 ) (1,565 )


~~(1)~~			At ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, additional paid-in capital included~~ ~~$130 million~~ ~~and~~ ~~$126 million, respectively, related to ESOP preferred stock.~~ Wells Fargo & Company			135


~~(2)~~			~~We recorded a corresponding charge to unearned ESOP shares in connection~~ Note 17: Revenue from Contracts with ~~the issuance of the ESOP Preferred Stock. The unearned ESOP shares are reduced as shares of the ESOP Preferred Stock are committed to be released.~~Customers

Our revenue includes net interest income on financial instruments and noninterest income. Table 17.1 presents our revenue by operating segment. For additional description of our

operating segments, including additional financial information and the underlying management accounting process, see

Note 22 (Operating Segments).

Table 17.1: Revenue by Operating Segment


(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate	Reconciling Items (1)	Consolidated Company
Quarter ended September 30, 2021
Net interest income (2)	$	5,707	1,231	1,866	637	(427)	(105)	8,909
Noninterest income:
Deposit-related fees	799		323	286	7	1	—	1,416
Lending-related fees (2)	35		132	196	2	—	—	365
Investment advisory and other asset-based fees (3)	—		1	9	2,457	415	—	2,882
Commissions and brokerage services fees	—		—	67	458	—	—	525
Investment banking fees	(1)		16	536	4	(8)	—	547
Card fees:
Card interchange and network revenues (4)	878		51	12	1	—	—	942
Other card fees (2)	136		—	—	—	—	—	136
Total card fees	1,014		51	12	1	—	—	1,078
Mortgage banking (2)	1,168		—	94	(3)	—	—	1,259
Net gains (losses) from trading activities (2)	(1)		(1)	85	4	5	—	92
Net gains on debt securities (2)	—		44	—	—	239	—	283
Net gains (losses) from equity securities (2)	(2)		(40)	100	37	774	—	869
Lease income (2)	—		165	—	—	157	—	322
Other (2)	85		154	134	14	169	(269)	287
Total noninterest income	3,097		845	1,519	2,981	1,752	(269)	9,925
Total revenue	$	8,804	2,076	3,385	3,618	1,325	(374)	18,834
Quarter ended September 30, 2020
Net interest income (2)	$	5,918	1,408	1,714	717	(268)	(110)	9,379
Noninterest income:
Deposit-related fees	708		309	272	7	3	—	1,299
Lending-related fees (2)	39		140	171	2	—	—	352
Investment advisory and other asset-based fees (3)	—		9	26	2,043	427	—	2,505
Commissions and brokerage services fees	—		—	70	497	1	—	568
Investment banking fees	(3)		13	428	4	(1)	—	441
Card fees:
Card interchange and network revenues (4)	737		41	11	1	(1)	—	789
Other card fees (2)	123		—	—	—	—	—	123
Total card fees	860		41	11	1	(1)	—	912
Mortgage banking (2)	1,544		—	49	(3)	—	—	1,590
Net gains (losses) from trading activities (2)	—		(1)	374	8	(20)	—	361
Net gains on debt securities (2)	—		—	—	—	264	—	264
Net gains from equity securities (2)	10		—	50	—	589	—	649
Lease income (2)	—		186	14	—	133	—	333
Other (2)	70		121	128	14	526	(196)	663
Total noninterest income	3,228		818	1,593	2,573	1,921	(196)	9,937
Total revenue	$	9,146	2,226	3,307	3,290	1,653	(306)	19,316
Nine months ended September 30, 2021
Net interest income (2)	$	16,940	3,687	5,428	1,904	(1,121)	(321)	26,517
Noninterest income:
Deposit-related fees	2,192		965	829	21	6	—	4,013
Lending-related fees (2)	111		403	569	6	(1)	—	1,088
Investment advisory and other asset-based fees (3)	—		8	43	7,145	1,236	—	8,432
Commissions and brokerage services fees	—		—	216	1,526	(1)	—	1,741
Investment banking fees	(9)		38	1,727	2	(73)	—	1,685
Card fees:
Card interchange and network revenues (4)	2,552		145	33	3	—	—	2,733
Other card fees (2)	371		—	—	—	—	—	371
Total card fees	2,923		145	33	3	—	—	3,104
Mortgage banking (2)	3,585		—	345	(9)	—	—	3,921
Net gains (losses) from trading activities (2)	—		—	446	16	(1)	—	461
Net gains on debt securities (2)	—		44	—	—	390	—	434
Net gains from equity securities (2)	32		5	221	43	3,656	—	3,957
Lease income (2)	—		512	1	—	437	—	950
Other (2)	370		458	469	41	847	(852)	1,333
Total noninterest income	9,204		2,578	4,899	8,794	6,496	(852)	31,119
Total revenue	$	26,144	6,265	10,327	10,698	5,375	(1,173)	57,636

(continued on following page)



136			Wells Fargo & Company


(continued from previous page)

(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate	Reconciling Items (1)	Consolidated Company
Nine months ended September 30, 2020
Net interest income (2)	$	17,637	4,695	5,698	2,274	671	(374)	30,601
Noninterest income:
Deposit-related fees	2,162		908	790	20	8	—	3,888
Lending-related fees (2)	120		393	506	6	—	—	1,025
Investment advisory and other asset-based fees (3)	—		25	66	5,951	1,223	—	7,265
Commissions and brokerage services fees	—		—	239	1,560	(4)	—	1,795
Investment banking fees	(5)		52	1,493	6	(167)	—	1,379
Card fees:
Card interchange and network revenues (4)	2,044		129	40	3	1	—	2,217
Other card fees (2)	384		—	—	—	—	—	384
Total card fees	2,428		129	40	3	1	—	2,601
Mortgage banking (2)	2,142		—	154	(9)	(1)	—	2,286
Net gains (losses) from trading activities (2)	1		(5)	1,218	16	2	—	1,232
Net gains on debt securities (2)	6		—	—	—	707	—	713
Net gains (losses) from equity securities (2)	10		(222)	174	(111)	(70)	—	(219)
Lease income (2)	—		573	20	—	428	—	1,021
Other (2)	902		374	376	50	1,097	(611)	2,188
Total noninterest income	7,766		2,227	5,076	7,492	3,224	(611)	25,174
Total revenue	$	25,403	6,922	10,774	9,766	3,895	(985)	55,775

(1)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.

(2)These revenues are related to financial assets and liabilities, including loans, leases, securities and derivatives, with additional details included in other footnotes to our financial statements.

(3)We earned trailing commissions of $297 million and $895 million for the third quarter and first nine months of 2021, respectively, and $284 million and $816 million for the third quarter and first nine months of 2020, respectively.

(4)The cost of credit card rewards and rebates of $416 million and $1.1 billion for the third quarter and first nine months of 2021, respectively, and $318 million and $969 million for the third quarter and first nine months of 2020, respectively, are presented net against the related revenues.

INVESTMENT ADVISORY AND OTHER ASSET-BASED FEES are earned for providing brokerage advisory, asset management and trust services.

Fees from advisory account relationships with brokerage customers are charged based on a percentage of the market value of the client’s assets. Services and obligations related to providing investment advice, active management of client assets, and assistance with selecting and engaging a third-party advisory manager are generally satisfied over a month or quarter. Trailing commissions are earned for selling shares to investors and our obligation is satisfied at the time shares are sold. However, these fees are received and recognized over time during the period the customer owns the shares and we remain the broker of record. The amount of trailing commissions is variable based on the length of time the customer holds the shares and on changes in the value of the underlying assets.

Asset management services include managing and administering assets, including mutual funds, and institutional separate accounts. Fees for these services are generally determined based on a tiered scale relative to the market value of assets under management (AUM). In addition to AUM, we have client assets under administration (AUA) that earn various administrative fees which are generally based on the extent of the services provided to administer the account. Services with AUM and AUA-based fees are generally satisfied over time.

Trust services include acting as a trustee or agent for corporate trust, personal trust, and agency assets. Obligations for trust services are generally satisfied over time; however, obligations for activities that are transitional in nature are satisfied at the time of the transaction.

COMMISSIONS AND BROKERAGE SERVICES FEES are earned for providing brokerage services.

Commissions from transactional accounts with brokerage customers are earned for executing transactions at the client’s direction. Our obligation is generally satisfied upon the execution of the transaction and the fees are based on the size and number of transactions executed.

Fees earned from other brokerage services include securities clearance, omnibus and networking fees received from mutual fund companies in return for providing record keeping and other administrative services, and annual account maintenance fees charged to customers. Our obligation is satisfied at the time we provide the service which is generally at the time of the transaction.

For a description of our other revenues, see Note 20 (Revenue from Contracts with Customers) in our 2020 Form 10-K.


			Wells Fargo & Company			137


Note ~~15:~~18: Employee Benefits and Other Expenses

Pension and Postretirement Plans

We sponsor a frozen noncontributory qualified defined benefit retirement plan, ~~called~~ the Wells Fargo & Company Cash Balance Plan (Cash Balance Plan), which covers eligible employees of Wells Fargo. The Cash Balance Plan was frozen on July 1, 2009, and no new benefits accrue after that date. For additional information on our pension and postretirement plans, including plan assumptions, investment strategy and asset allocation, projected benefit payments, and valuation methodologies used for assets measured at fair value, see Note 21 (Employee Benefits and Other Expenses) in our 2020 Form 10-K.

We recognize settlement losses for our Cash Balance Plan based on an assessment of whether lump sum benefit payments will, in aggregate for the year, exceed the sum of its annual service and interest cost (threshold). Settlement losses of $35 million and $97 million were recognized during the third quarter and first nine months of 2021, respectively, compared with $29 million and $99 million, respectively, for the same periods a year ago, representing the pro rata portion of the net loss in cumulative other comprehensive income based on the percentage reduction in the Cash Balance Plan’s projected benefit obligation attributable to lump sum benefit payments during the first nine months of both 2021 and 2020. As a result

of the settlement losses, we remeasured the Cash Balance Plan obligation and plan assets as of both September 30, 2021 and 2020, and used a discount rate of 2.80% and 2.60%, respectively, based on our consistent methodology of determining our discount rate using a yield curve with maturity dates that closely match the estimated timing of the expected benefit payments. In the third quarter and first nine months of 2021, respectively, the result of the settlement losses and remeasurement was:

•a decrease of $224 million and an increase of $123 million in the Cash Balance Plan asset; and

•a decrease of $189 million and an increase of $220 million in other comprehensive income (pre-tax).

In the third quarter and first nine months of 2020, respectively, the result of the settlement losses and remeasurement was:

•an increase of $89 million and $763 million in the Cash Balance Plan liability; and

•a decrease of $60 million and $664 million in other comprehensive income (pre-tax).

Table ~~15.1~~18.1 presents the components of net periodic benefit cost.

Service cost is reported in personnel expense and all other components of net periodic benefit cost are reported in other noninterest expense on the consolidated statement of income.

Table ~~15.1:~~18.1:Net Periodic Benefit Cost


	2021				2020
	Pension benefits				Pension benefits
(in millions)	Qualified		Non- qualified	Other benefits	Qualified	Non- qualified	Other benefits
Quarter ended September 30,
Service cost	$	4	—	—	4	—	—
Interest cost	77		3	2	77	5	4
Expected return on plan assets	(150)		—	(5)	(148)	—	(5)
Amortization of net actuarial loss (gain)	31		4	(5)	43	3	(5)
Amortization of prior service credit	—		—	(2)	—	—	(2)
Settlement loss	35		—	—	29	—	—
Net periodic benefit cost	$	(3)	7	(10)	5	8	(8)
Nine months ended September 30,
Service cost	$	13	—	—	11	—	—
Interest cost	219		9	8	249	13	12
Expected return on plan assets	(456)		—	(14)	(445)	—	(16)
Amortization of net actuarial loss (gain)	106		11	(15)	114	10	(14)
Amortization of prior service credit	—		—	(7)	—	—	(7)
Settlement loss	97		2	—	99	3	—
Net periodic benefit cost	$	(21)	22	(28)	28	26	(25)

Other Expenses

Regulatory Charges and Assessments expense, which is included in other noninterest expense, was $213 million and $622 million in the third quarter and first nine months of 2021, respectively, compared with $248 million and $622 million in the same periods a year ago, and primarily consisted of Federal Deposit Insurance Corporation (FDIC) deposit assessment expense.

   2017 2016
   Pension benefits
Pension benefits
(in millions) Qualified
Non-qualified

Other
benefits

Qualified
Non-qualified

Other
benefits

Quarter ended September 30,
Service cost $ 1
—
—
—
—
—
Interest cost 103
5
7
105
6
11
Expected return on plan assets (163 ) —
(7 ) (152 ) —
(8 )
Amortization of net actuarial loss (gain) 37
3
(3 ) 37
3
(1 )
Amortization of prior service credit —
—
(2 ) —
—
—
Settlement loss 6
—
—
—
—
—
Net periodic benefit cost (income) $ (16 ) 8
(5 ) (10 ) 9
2
Nine months ended September 30,
Service cost $ 4
—
—
2
—
—
Interest cost 309
17
21
323
19
31
Expected return on plan assets (489 ) —
(22 ) (435 ) —
(23 )
Amortization of net actuarial loss (gain) 113
9
(8 ) 103
9
(3 )
Amortization of prior service credit —
—
(7 ) —
—
—
Settlement loss 7
6
—
4
2
—
Net periodic benefit cost (income) $ (56 ) 32
(16 ) (3 ) 30
5


138			Wells Fargo & Company


Note ~~16:~~19: Restructuring Charges

The Company began pursuing various initiatives to reduce expenses and create a more efficient and streamlined organization in third quarter 2020. Actions from these initiatives may include (i) reorganizing and simplifying business processes and structures to improve internal operations and the customer experience, (ii) reducing headcount, (iii) optimizing third-party spending, including for our technology infrastructure, and (iv) rationalizing our branch and administrative locations, which may include consolidations and closures.

Restructuring charges are recorded as a component of noninterest expense on our consolidated statement of income.

The following costs associated with these initiatives are included in restructuring charges.

•Personnel costs – Severance costs associated with headcount reductions with payments made over time in accordance with our severance plan, as well as payments for other employee benefit costs such as incentive compensation.

•Facility closure costs – Write-downs and acceleration of depreciation and amortization of owned or leased assets for branch and administrative locations, as well as related decommissioning costs.

•Other – Impairment of other assets and costs associated with our technology infrastructure.

Table 19.1 provides details on our restructuring charges.

Table 19.1:Accruals for Restructuring Charges


(in millions)	Personnel costs		Facility closure costs	Other	Total
Quarter ended September 30, 2021
Balance, beginning of period	$	804	—	—	804
Restructuring charges	254		(10)	—	244
Payments and utilization	(159)		10	—	(149)
Changes in estimates (1)	(243)		—	—	(243)
Balance, end of period	$	656	—	—	656






Nine months ended September 30, 2021
Balance, beginning of period	$	1,170	—	44	1,214
Restructuring charges	539		8	—	547
Payments and utilization	(529)		(1)	(38)	(568)
Changes in estimates (1)	(524)		(7)	(6)	(537)
Balance, end of period	$	656	—	—	656
Quarter and nine months ended September 30, 2020
Balance, beginning of period	$	—	—	—	—
Restructuring charges	694		24	—	718
Payments and utilization	—		(24)	—	(24)
Changes in estimates (1)	—		—	—	—
Balance, end of period	$	694	—	—	694

(1)Represents reduction of expense for changes in previously estimated amounts based on refinements of assumptions.


			Wells Fargo & Company			139


Note 20: Earnings and Dividends Per Common Share

Table ~~16.1~~20.1 shows earnings per common share and diluted earnings per common share and reconciles the numerator and denominator of both earnings per common share calculations.

Table ~~16.1:~~20.1:Earnings Per Common Share Calculations


	Quarter ended September 30,				Nine months ended September 30,
(in millions, except per share amounts)	2021		2020		2021		2020
Wells Fargo net income (1)	$	5,122	$	3,216	$	15,798	286
Less: Preferred stock dividends and other (2)	335		315		1,012		1,241
Wells Fargo net income (loss) applicable to common stock (numerator) (1)	$	4,787	2,901		$	14,786	(955)
Earnings per common share
Average common shares outstanding (denominator)	4,056.3		4,123.8		4,107.1		4,111.4
Per share	$	1.18	0.70		$	3.60	(0.23)
Diluted earnings per common share
Average common shares outstanding	4,056.3		4,123.8		4,107.1		4,111.4

Add: Restricted share rights (3)	34.1		8.4		32.9		—
Diluted average common shares outstanding (denominator)	4,090.4		4,132.2		4,140.0		4,111.4
Per share	$	1.17	0.70		$	3.57	(0.23)

Quarter ended September 30, Nine months ended September 30,
(in millions, except per share amounts) 2017
2016
2017
2016
Wells Fargo net income $ 4,596
5,644
$ 15,863
16,664
Less: Preferred stock dividends and other 411
401
1,218
1,163
Wells Fargo net income applicable to common stock (numerator) $ 4,185
5,243
$ 14,645
15,501
Earnings per common share
Average common shares outstanding (denominator) 4,948.6
5,043.4
4,982.1
5,061.9
Per share $ 0.85
1.04
$ 2.94
3.06
Diluted earnings per common share
Average common shares outstanding 4,948.6
5,043.4
4,982.1
5,061.9
Add: Stock options 15.8
18.1
18.1
19.6
Restricted share rights 22.4
23.1
24.1
26.1
Warrants 10.0
10.0
11.1
10.6
Diluted average common shares outstanding (denominator) 4,996.8
5,094.6
5,035.4
5,118.2
Per share $ 0.84
1.03
$ 2.91
3.03
(1)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)The quarter ended September 30, 2021, balance includes $38 million, and the nine months ended September 30, 2021 and 2020, includes $86 million and $272 million, respectively, from the elimination of discounts or issuance costs associated with redemptions of preferred stock.

(3)Calculated using the treasury stock method. For the nine months ended September 30, 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect. Weighted average RSRs outstanding were 53.4 million for the nine months ended September 30, 2020.

Table ~~16.2~~20.2 presents the outstanding ~~options to purchase shares of common stock~~securities that were anti-dilutive ~~(the exercise~~

~~price was higher than the weighted-average market price),~~ and therefore not included in the calculation of diluted earnings per common share.

Table ~~16.2:~~20.2:Outstanding Anti-Dilutive ~~Options~~Securities


			Weighted-average shares
	Quarter ended September 30,		Nine months ended September 30,
(in millions)	2021	2020	2021	2020
Convertible Preferred Stock, Series L (1)	25.3	25.3	25.3	25.3
Restricted share rights (2)	—	17.7	0.4	1.3

(1) Calculated using the if-converted method.

(2) Calculated using the treasury stock method.

Table 20.3 presents dividends declared per common share.

Weighted-average shares
Quarter ended September 30, Nine months ended September 30,
(in millions) 2017
2016
2017
2016
Options 1.8
2.6
2.0
3.4
Table 20.3:Dividends Declared Per Common Share

~~Note 17: Other Comprehensive Income (continued~~)


	Quarter ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Per common share	$	0.20	$	0.10	$	0.40	1.12



140			Wells Fargo & Company


Note ~~17:~~21: Other Comprehensive Income

Table ~~17.1~~21.1 provides the components of other comprehensive income (OCI), reclassifications to net income by income statement line item, and the related tax effects.

Table ~~17.1:~~21.1:Summary of Other Comprehensive Income


	Quarter ended September 30,								Nine months ended September 30,
	2021					2020			2021			2020
(in millions)	Before tax		Tax effect	Net of tax		Before tax	Tax effect	Net of tax	Before tax	Tax effect	Net of tax	Before tax	Tax effect	Net of tax
Debt securities:
Net unrealized gains (losses) arising during the period	$	(447)	112	(335)		96	(18)	78	(2,187)	544	(1,643)	1,582	(391)	1,191
Reclassification of net (gains) losses to net income:
Interest income on debt securities (1)	108		(27)	81		167	(41)	126	379	(94)	285	356	(88)	268
Net gains on debt securities	(283)		70	(213)		(264)	63	(201)	(434)	105	(329)	(713)	174	(539)
Other noninterest income	—		(1)	(1)		2	—	2	(2)	—	(2)	—	—	—
Subtotal reclassifications to net income	(175)		42	(133)		(95)	22	(73)	(57)	11	(46)	(357)	86	(271)
Net change	(622)		154	(468)		1	4	5	(2,244)	555	(1,689)	1,225	(305)	920
Derivatives and hedging activities:
Fair Value Hedges:
Change in fair value of excluded components on fair value hedges (2)	29		(6)	23		(82)	20	(62)	40	(9)	31	5	(2)	3
Cash Flow Hedges:
Net unrealized gains (losses) arising during the period on cash flow hedges	(7)		1	(6)		12	(3)	9	(27)	6	(21)	(3)	1	(2)
Reclassification of net (gains) losses to net income:
Interest income on loans	26		(6)	20		53	(14)	39	117	(29)	88	162	(40)	122
Interest expense on long-term debt	2		(1)	1		(1)	1	—	4	(1)	3	3	—	3
Subtotal reclassifications to net income	28		(7)	21		52	(13)	39	121	(30)	91	165	(40)	125
Net change	50		(12)	38		(18)	4	(14)	134	(33)	101	167	(41)	126
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period	(224)		55	(169)		(89)	22	(67)	133	(33)	100	(760)	188	(572)
Reclassification of amounts to noninterest expense (3):
Amortization of net actuarial loss	30		(7)	23		41	(10)	31	102	(25)	77	110	(27)	83
Settlements and other	33		(8)	25		27	(6)	21	92	(21)	71	95	(22)	73
Subtotal reclassifications to noninterest expense	63		(15)	48		68	(16)	52	194	(46)	148	205	(49)	156
Net change	(161)		40	(121)		(21)	6	(15)	327	(79)	248	(555)	139	(416)





Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period	(66)		2	(64)		73	(1)	72	(30)	(1)	(31)	(71)	1	(70)
Net change	(66)		2	(64)		73	(1)	72	(30)	(1)	(31)	(71)	1	(70)
Other comprehensive income (loss)	$	(799)	184	(615)		35	13	48	(1,813)	442	(1,371)	766	(206)	560
Less: Other comprehensive loss from noncontrolling interests, net of tax				(2)				—			—			(1)
Wells Fargo other comprehensive income (loss), net of tax				$	(613)			48			(1,371)			561

(1)Represents net unrealized gains and losses amortized over the remaining lives of securities that were transferred from the available-for-sale portfolio to the held-to-maturity portfolio.

(2)Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income.

(3)These items are included in the computation of net periodic benefit cost (see Note 18 (Employee Benefits and Other Expenses) for additional information).

Quarter ended September 30, Nine months ended September 30,
2017 2016 2017 2016
(in millions)
Before
tax

Tax
effect

Net of
tax

Before
tax

Tax
effect

Net of
tax

Before
tax

Tax
effect

Net of
tax

Before
tax

Tax
effect

Net of
tax

Investment securities:
Net unrealized gains arising during the period $ 891
(353 ) 538
112
(32 ) 80
2,825
(1,075 ) 1,750
2,478
(938 ) 1,540
Reclassification of net (gains) losses to net income:


Interest income on investment securities (1) 70
(26 ) 44
2
(1 ) 1
122
(46 ) 76
5
(2 ) 3
Net gains on debt securities (166 ) 62
(104 ) (106 ) 40
(66 ) (322 ) 119
(203 ) (797 ) 299
(498 )
Net gains from equity investments (106 ) 41
(65 ) (85 ) 32
(53 ) (323 ) 120
(203 ) (204 ) 77
(127 )
Other noninterest income 2
—
2
(4 ) 2
(2 ) 1
—
1
(5 ) 2
(3 )
Subtotal reclassifications to net income (200 )
77

(123 ) (193 ) 73
(120 ) (522 ) 193
(329 ) (1,001 ) 376
(625 )
Net change 691

(276 )
415
(81 ) 41
(40 ) 2,303
(882 ) 1,421
1,477
(562 ) 915
Derivatives and hedging activities:
Net unrealized gains (losses) arising during the period 36
(13 ) 23
(445 ) 168
(277 ) 279
(105 ) 174
2,611
(984 ) 1,627
Reclassification of net (gains) losses to net income:


Interest income on loans (107 ) 41
(66 ) (266 ) 100
(166 ) (468 ) 177
(291 ) (794 ) 299
(495 )
Interest expense on long-term debt 2
(1 ) 1
4
(1 ) 3
8
(3 ) 5
11
(4 ) 7
Subtotal reclassifications to net income (105 )
40

(65 )
(262 )
99

(163 )
(460 )
174

(286 )
(783 )
295

(488 )
Net change (69 )
27

(42 ) (707 ) 267
(440 ) (181 )
69

(112 ) 1,828

(689 )
1,139
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period 11
(5 ) 6
(447 ) 168
(279 ) 4
(2 ) 2
(474 ) 178
(296 )
Reclassification of amounts to net periodic benefit costs (2):
Amortization of net actuarial loss 37
(13 ) 24
39
(14 ) 25
114
(43 ) 71
109
(41 ) 68
Settlements and other 4
(1 ) 3
—
—
—
6
—
6
6
(2 ) 4
Subtotal reclassifications to net periodic benefit costs 41

(14 )
27
39
(14 ) 25
120
(43 ) 77
115
(43 ) 72
Net change 52

(19 )
33
(408 ) 154
(254 ) 124
(45 ) 79
(359 ) 135
(224 )
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period 40
3
43
(10 ) (1 ) (11 ) 87
6
93
27
6
33
Net change 40

3

43
(10 ) (1 ) (11 ) 87
6
93
27
6
33
Other comprehensive income (loss) $ 714

(265 )
449
(1,206 )
461

(745 ) 2,333
(852 ) 1,481
2,973
(1,110 ) 1,863
Less: Other comprehensive income (loss) from noncontrolling interests, net of tax (34 ) 19
      (29 ) (24 )
Wells Fargo other comprehensive income (loss), net of tax $ 483
(764 )       1,510
1,887


~~(1)~~			~~Represents net unrealized gains and losses amortized over the remaining lives of securities that were transferred from the available-for-sale portfolio to the held-to-maturity portfolio.~~Wells Fargo & Company			141

Note 21: Other Comprehensive Income (continued)

Table 21.2 provides the cumulative OCI balance activity on an after-tax basis.

Table 21.2:Cumulative OCI Balances


(in millions)	Debt securities		Fair value hedges (1)	Cash flow hedges (2)	Defined benefit plans adjustments	Foreign currency translation adjustments	Cumulative other comprehensive income (loss)
Quarter ended September 30, 2021
Balance, beginning of period	$	1,817	(196)	(70)	(2,035)	(80)	(564)


Net unrealized gains (losses) arising during the period	(335)		23	(6)	(169)	(64)	(551)
Amounts reclassified from accumulated other comprehensive income	(133)		—	21	48	—	(64)
Net change	(468)		23	15	(121)	(64)	(615)
Less: Other comprehensive loss from noncontrolling interests	(1)		—	—	—	(1)	(2)
Balance, end of period	$	1,350	(173)	(55)	(2,156)	(143)	(1,177)
Quarter ended September 30, 2020
Balance, beginning of period	$	2,467	(115)	(223)	(2,624)	(303)	(798)


Net unrealized gains (losses) arising during the period	78		(62)	9	(67)	72	30
Amounts reclassified from accumulated other comprehensive income	(73)		—	39	52	—	18
Net change	5		(62)	48	(15)	72	48
Less: Other comprehensive income from noncontrolling interests	—		—	—	—	—	—
Balance, end of period	$	2,472	(177)	(175)	(2,639)	(231)	(750)
Nine months ended September 30, 2021
Balance, beginning of period	$	3,039	(204)	(125)	(2,404)	(112)	194


Net unrealized gains (losses) arising during the period	(1,643)		31	(21)	100	(31)	(1,564)
Amounts reclassified from accumulated other comprehensive income	(46)		—	91	148	—	193
Net change	(1,689)		31	70	248	(31)	(1,371)
Less: Other comprehensive income from noncontrolling interests	—		—	—	—	—	—
Balance, end of period	$	1,350	(173)	(55)	(2,156)	(143)	(1,177)
Nine months ended September 30, 2020


Balance, beginning of period	$	1,552	(180)	(298)	(2,223)	(162)	(1,311)
Net unrealized gains (losses) arising during the period	1,191		3	(2)	(572)	(70)	550
Amounts reclassified from accumulated other comprehensive income	(271)		—	125	156	—	10
Net change	920		3	123	(416)	(70)	560
Less: Other comprehensive loss from noncontrolling interests	—		—	—	—	(1)	(1)
Balance, end of period	$	2,472	(177)	(175)	(2,639)	(231)	(750)

(1)Substantially all of the amounts for fair value hedges are foreign exchange contracts.

(2)Majority of the amounts for cash flow hedges are interest rate contracts.


~~(2)~~142			~~These items are included in the computation of net periodic benefit cost, which is recorded in employee benefits expense (see Note 15 (Employee Benefits) for additional details).~~Wells Fargo & Company

~~Table 17.2:Cumulative OCI Balances~~

(in millions)
Investment
securities

Derivatives
and
hedging
activities

Defined
benefit
plans
adjustments

Foreign
currency
translation
adjustments

Cumulative
other
compre-
hensive
income

Quarter ended September 30, 2017
Balance, beginning of period $ (96 ) 19
(1,897 ) (136 ) (2,110 )
Net unrealized gains arising during the period 538
23
6
43
610
Amounts reclassified from accumulated other comprehensive income (123 ) (65 ) 27
—
(161 )
Net change 415
(42 ) 33
43
449
Less: Other comprehensive loss from noncontrolling interests (34 ) —
—
—
(34 )
Balance, end of period $ 353
(23 ) (1,864 ) (93 ) (1,627 )
Quarter ended September 30, 2016
Balance, beginning of period $ 2,812
2,199
(1,921 ) (142 ) 2,948
Net unrealized gains (losses) arising during the period 80
(277 ) (279 ) (11 ) (487 )
Amounts reclassified from accumulated other comprehensive income (120 ) (163 ) 25
—
(258 )
Net change (40 ) (440 ) (254 ) (11 ) (745 )
Less: Other comprehensive income from noncontrolling interests 19
—
—
—
19
Balance, end of period $ 2,753
1,759
(2,175 ) (153 ) 2,184
Nine months ended September 30, 2017




Balance, beginning of period $ (1,099 ) 89
(1,943 ) (184 ) (3,137 )
Net unrealized gains arising during the period 1,750
174
2
93
2,019
Amounts reclassified from accumulated other comprehensive income (329 ) (286 ) 77
—
(538 )
Net change 1,421
(112 ) 79
93
1,481
Less: Other comprehensive income (loss) from noncontrolling interests (31 ) —
—
2
(29 )
Balance, end of period $ 353
(23 ) (1,864 ) (93 ) (1,627 )
Nine months ended September 30, 2016




Balance, beginning of period $ 1,813
620
(1,951 ) (185 ) 297
Net unrealized gains (losses) arising during the period 1,540
1,627
(296 ) 33
2,904
Amounts reclassified from accumulated other comprehensive income (625 ) (488 ) 72
—
(1,041 )
Net change 915
1,139
(224 ) 33
1,863
Less: Other comprehensive income (loss) from noncontrolling interests (25 ) —
—
1
(24 )
Balance, end of period $ 2,753
1,759
(2,175 ) (153 ) 2,184



Note ~~18:~~22: Operating Segments

~~We have three~~Our management reporting is organized into 4 reportable operating segments: ~~Community~~Consumer Banking and Lending; Commercial Banking; ~~Wholesale~~Corporate and Investment Banking; and Wealth and Investment ~~Management (WIM).~~Management. All other business activities that are not included in the reportable operating segments have been included in Corporate. We define our reportable operating segments by type of product ~~type~~ and customer segment, and their results are based on our management ~~accounting process, for which there is no comprehensive, authoritative guidance equivalent to GAAP for financial accounting.~~reporting process. The management ~~accounting~~reporting process measures the performance of the reportable operating segments based on

~~our~~ the Company’s management structure, and the results are regularly reviewed by our Chief Executive Officer and Operating Committee. The management reporting process is ~~not necessarily comparable~~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 allows management to assess performance consistently across the operating segments.

Consumer Banking and Lending offers diversified financial products and services for consumers and small businesses with ~~similar information for other~~annual sales generally up to $5 million. These financial products and services include checking and savings accounts, credit and debit cards, as well as home, auto, personal, and small business lending.

Commercial Banking provides financial solutions to private, family owned and certain public companies. IfProducts and services include banking and credit products across multiple industry sectors and municipalities, secured lending and lease products, and treasury management.

Corporate and Investment Banking delivers a suite of capital markets, banking, and financial products and services 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.

Wealth and Investment Management provides personalized wealth management, investment and retirement products and services to clients across U.S.-based businesses including Wells Fargo Advisors and The Private Bank. We serve clients’ brokerage needs, and deliver financial planning, private banking, credit, and fiduciary services to high-net worth and ultra-high-net worth individuals and families.

Corporate includes corporate treasury and enterprise functions, net of allocations (including funds transfer pricing, capital, liquidity and certain expenses), in support of the ~~management structure and/or the allocation process changes, allocations, transfers and assignments may change. For a description of our~~reportable operating segments, ~~including~~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) for additional information on restructuring charges. Corporate also includes certain lines of business that management has determined are no longer consistent with the ~~underlying management accounting process, see~~ long-term strategic goals of the Company, as well as results for previously divested businesses.

Basis of Presentation

FUNDS TRANSFER PRICING Corporate treasury manages a funds transfer pricing methodology that considers interest rate risk, liquidity risk, and other product characteristics. Operating segments pay a 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 funding charges or credits is recognized in corporate treasury.

REVENUE AND EXPENSE SHARING When lines of business jointly serve customers, the 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.

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 Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial results.


			Wells Fargo & Company			143

Note ~~24 (Operating Segments) to Financial Statements in our 2016 Form 10-K.~~ 22: Operating Segments (continued)

Table ~~18.1~~22.1 presents our results by operating segment.

Table ~~18.1:~~22.1:Operating Segments



(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate	Reconciling Items (1)	Consolidated Company
Quarter ended September 30, 2021
Net interest income (2)	$	5,707	1,231	1,866	637	(427)	(105)	8,909
Noninterest income	3,097		845	1,519	2,981	1,752	(269)	9,925
Total revenue	8,804		2,076	3,385	3,618	1,325	(374)	18,834
Provision for credit losses	(518)		(335)	(460)	(73)	(9)	—	(1,395)
Noninterest expense	6,053		1,396	1,797	2,917	1,140	—	13,303
Income (loss) before income tax expense (benefit)	3,269		1,015	2,048	774	194	(374)	6,926
Income tax expense (benefit)	818		254	518	195	110	(374)	1,521
Net income before noncontrolling interests	2,451		761	1,530	579	84	—	5,405
Less: Net income from noncontrolling interests	—		2	—	—	281	—	283
Net income (loss)	$	2,451	759	1,530	579	(197)	—	5,122
Quarter ended September 30, 2020
Net interest income (2)	$	5,918	1,408	1,714	717	(268)	(110)	9,379
Noninterest income	3,228		818	1,593	2,573	1,921	(196)	9,937
Total revenue	9,146		2,226	3,307	3,290	1,653	(306)	19,316
Provision for credit losses	640		339	(121)	(10)	(79)	—	769
Noninterest expense	7,345		1,623	1,991	2,742	1,528	—	15,229
Income (loss) before income tax expense (benefit)	1,161		264	1,437	558	204	(306)	3,318
Income tax expense (benefit)	290		71	355	139	(632)	(306)	(83)
Net income before noncontrolling interests	871		193	1,082	419	836	—	3,401
Less: Net income from noncontrolling interests	—		1	—	—	184	—	185
Net income	$	871	192	1,082	419	652	—	3,216
Nine months ended September 30, 2021

Net interest income (2)	$	16,940	3,687	5,428	1,904	(1,121)	(321)	26,517
Noninterest income	9,204		2,578	4,899	8,794	6,496	(852)	31,119
Total revenue	26,144		6,265	10,327	10,698	5,375	(1,173)	57,636
Provision for credit losses	(1,304)		(1,116)	(1,245)	(92)	54	—	(3,703)
Noninterest expense	18,522		4,469	5,435	8,836	3,371	—	40,633
Income (loss) before income tax expense (benefit)	8,926		2,912	6,137	1,954	1,950	(1,173)	20,706
Income tax expense (benefit)	2,233		727	1,531	491	58	(1,173)	3,867
Net income before noncontrolling interests	6,693		2,185	4,606	1,463	1,892	—	16,839
Less: Net income (loss) from noncontrolling interests	—		5	(2)	—	1,038	—	1,041
Net income	$	6,693	2,180	4,608	1,463	854	—	15,798
Nine months ended September 30, 2020

Net interest income (2)	$	17,637	4,695	5,698	2,274	671	(374)	30,601
Noninterest income	7,766		2,227	5,076	7,492	3,224	(611)	25,174
Total revenue	25,403		6,922	10,774	9,766	3,895	(985)	55,775
Provision for credit losses	5,311		3,675	4,760	253	309	—	14,308
Noninterest expense	20,535		4,776	5,905	8,142	3,470	—	42,828
Income (loss) before income tax expense (benefit)	(443)		(1,529)	109	1,371	116	(985)	(1,361)
Income tax expense (benefit)	(155)		(371)	48	343	(611)	(985)	(1,731)
Net income (loss) before noncontrolling interests	(288)		(1,158)	61	1,028	727	—	370
Less: Net income from noncontrolling interests	—		3	—	—	81	—	84
Net income (loss)	$	(288)	(1,161)	61	1,028	646	—	286












(continued on following page)

Community
Banking

Wholesale
Banking
Wealth and Investment Management Other (1)
Consolidated
Company

(income/expense in millions, average balances in billions) 2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Quarter ended Sep 30,









Net interest income (2) $ 7,645
7,430
4,353
4,062
1,159
977
(681 ) (517 ) 12,476
11,952
Provision (reversal of provision) for credit losses 650
651
69
157
(1 ) 4
(1 ) (7 ) 717
805
Noninterest income 4,415
4,957
2,732
3,085
3,087
3,122
(784 ) (788 ) 9,450
10,376
Noninterest expense 7,834
6,953
4,248
4,120
3,106
2,999
(837 ) (804 ) 14,351
13,268
Income (loss) before income tax expense (benefit) 3,576
4,783
2,768
2,870
1,141
1,096
(627 ) (494 ) 6,858
8,255
Income tax expense (benefit) 1,286
1,546
729
827
427
415
(238 ) (187 ) 2,204
2,601
Net income (loss) before noncontrolling interests 2,290
3,237
2,039
2,043
714
681
(389 ) (307 ) 4,654
5,654
Less: Net income (loss) from noncontrolling interests 61
10
(7 ) (4 ) 4
4
—
—
58
10
Net income (loss) (3) $ 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 assets 988.9
993.6
824.3
794.2
213.4
212.1
(88.1 ) (85.3 ) 1,938.5
1,914.6
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,
Net interest income (2) $ 22,820
22,277
12,779
11,729
3,360
2,852
(1,700 ) (1,506 ) 37,259
35,352
Provision (reversal of provision) for credit losses 1,919
2,060
(39 ) 905
2
(8 ) (5 ) 8
1,877
2,965
Noninterest income 13,622
14,928
8,295
9,660
9,261
9,020
(2,340 ) (2,275 ) 28,838
31,333
Noninterest expense 22,278
20,437
12,551
12,124
9,387
9,017
(2,532 ) (2,416 ) 41,684
39,162
Income (loss) before income tax expense (benefit) 12,245
14,708
8,562
8,360
3,232
2,863
(1,503 ) (1,373 ) 22,536
24,558
Income tax expense (benefit) 3,817
4,910
2,034
2,341
1,206
1,087
(571 ) (521 ) 6,486
7,817
Net income (loss) before noncontrolling interests 8,428
9,798
6,528
6,019
2,026
1,776
(932 ) (852 ) 16,050
16,741
Less: Net income (loss) from noncontrolling interests 197
96
(21 ) (22 ) 11
3
—
—
187
77
Net income (loss) (3) $ 8,231
9,702
6,549
6,041
2,015
1,773
(932 ) (852 ) 15,863
16,664
Average loans $ 477.8
486.4
465.0
445.2
71.6
66.4
(56.8 ) (52.8 ) 957.6
945.2
Average assets 987.7
969.6
816.5
771.9
216.1
208.5
(88.1 ) (84.3 ) 1,932.2
1,865.7
Average deposits 726.4
698.3
464.1
431.7
190.6
185.4
(78.8 ) (76.1 ) 1,302.3
1,239.3


~~(1)~~144			Includes the elimination of certain items that are included in more than one business segment, most of which represents products and services for Wealth and Investment Management customers served through Community Banking distribution channels. Wells Fargo & Company


(continued from previous page)

	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate	Reconciling Items (1)	Consolidated Company
Quarter ended September 30, 2021
Loans (average)	$	325,557	178,622	257,295	82,785	9,765	—	854,024
Assets (average)	378,665		196,192	524,124	88,652	762,067	—	1,949,700
Deposits (average)	848,419		199,226	189,424	176,570	37,302	—	1,450,941

Nine months ended September 30, 2021

Loans (average)	$	336,743	180,096	251,996	81,810	10,021	—	860,666
Assets (average)	391,835		196,990	516,401	87,929	748,236	—	1,941,391
Deposits (average)	824,752		193,761	191,560	175,087	41,796	—	1,426,956

Loans (period-end)	325,918		180,539	263,957	82,824	9,589	—	862,827
Assets (period-end)	379,564		200,204	535,385	88,593	751,155	—	1,954,901
Deposits (period-end)	858,424		204,853	191,786	177,809	37,507	—	1,470,379
Quarter ended September 30, 2020
Loans (average)	$	379,783	201,893	249,853	79,001	21,178	—	931,708
Assets (average)	437,780		216,067	503,627	85,775	702,662	—	1,945,911
Deposits (average)	756,485		178,997	226,129	169,441	67,976	—	1,399,028

Nine months ended September 30, 2020

Loans (average)	$	377,334	218,331	260,522	78,327	21,404	—	955,918
Assets (average)	434,755		234,151	530,082	85,618	662,709	—	1,947,315
Deposits (average)	708,288		176,959	243,913	160,012	85,466	—	1,374,638

Loans (period-end)	382,815		194,747	241,113	79,472	21,935	—	920,082
Assets (period-end)	435,414		211,962	490,373	86,226	696,424	—	1,920,399
Deposits (period-end)	759,425		180,948	212,532	168,132	62,178	—	1,383,215

(2)Net interest income is interest earned on assets minus the interest paid on liabilities to fund those assets. Segment interest earned includes actual interest income on segment assets as well as a funding credit for their deposits. Segment interest paid on liabilities includes actual interest expense on segment liabilities as well as a funding charge for their assets.


~~(2)~~			Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to other segments. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of excess liabilities from another segment.Wells Fargo & Company			145


~~(3)~~			~~Represents segment net income (loss) for Community Banking; Wholesale Banking;~~ Note 23: Regulatory Capital Requirements and ~~Wealth and Investment Management segments and Wells Fargo net income for the consolidated company.~~

Other Restrictions

~~Note 19: Regulatory and Agency Capital Requirements~~

Regulatory Capital Requirements

The Company and each of its subsidiary banks are subject to regulatory capital adequacy requirements promulgated by federal ~~bank regulatory agencies.~~banking regulators. The ~~Federal Reserve~~FRB establishes capital requirements for the consolidated financial holding company, and the OCC has similar requirements for the Company’s national banks, including Wells Fargo Bank, N.A. (the Bank).

Table ~~19.1~~23.1 presents regulatory capital information for Wells Fargo & Company and the Bank ~~using~~in accordance with Basel III ~~which increased minimum required~~ capital ~~ratios, and introduced a minimum Common Equity Tier 1 (CET1) ratio. We must report~~requirements. Our capital adequacy is assessed based on the lower of our ~~CET1, tier 1 and total~~risk-based capital ratios calculated under the Standardized Approach and under the Advanced ~~Approach in the assessment of our capital adequacy. The information presented reflects risk-weighted assets (RWAs) under the Standardized and Advanced Approaches with Transition Requirements.~~Approach. The Standardized Approach applies assigned risk weights to broad risk categories, while the calculation of ~~RWAs~~risk-weighted assets (RWAs) under the

Advanced Approach differs by requiring

applicable banks to utilize a risk-sensitive methodology, which relies upon the use of internal credit models, and includes an operational risk component. The Basel III ~~revised definition of~~capital requirements for calculating Common Equity Tier 1 (CET1) and tier 1 capital, along with 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 beginning January 1, 2022. Accordingly, the information presented below reflects fully phased-in CET1 capital, tier 1 capital, and ~~changes are being phased-in effective January 1, 2014, through the end of 2021.~~RWAs, but reflects total capital still in accordance with transition requirements.

The Bank is an approved seller/servicer of mortgage loans and is required to maintain minimum levels of shareholders’ equity, as specified by various agencies, including the United States Department of Housing and Urban Development, GNMA, FHLMC and FNMA. At September 30, ~~2017,~~2021, the Bank ~~met these requirements. Other subsidiaries, including~~and our other insured depository institutions were considered well-capitalized under the Company’s insurance and broker-dealer subsidiaries, are also subject to various minimum capital levels, as defined by applicable industry regulations. The minimum capital levels for these subsidiaries, and related restrictions, are not significant to our consolidated operations.requirements of the Federal Deposit Insurance Act.

Table ~~19.1:~~23.1:Regulatory Capital Information

(1)


	Wells Fargo & Company										Wells Fargo Bank, N.A.							Wells Fargo & Company										Wells Fargo Bank, N.A.
	September 30, 2017						December 31, 2016				September 30, 2017			December 31, 2016				September 30, 2021						December 31, 2020				September 30, 2021			December 31, 2020
(in millions, except ratios)	Advanced Approach				Standardized Approach		Advanced Approach		Standardized Approach		Advanced Approach	Standardized Approach		Advanced Approach	Standardized Approach		(in millions, except ratios)	Advanced Approach			Standardized Approach			Advanced Approach		Standardized Approach		Advanced Approach	Standardized Approach		Advanced Approach	Standardized Approach
Regulatory capital:	Regulatory capital:																Regulatory capital:
Common equity tier 1	$	153,548			153,548		148,785		148,785		140,021	140,021		132,225	132,225
Common Equity Tier 1																	Common Equity Tier 1	$	141,585		141,585			138,297		138,297		150,046	150,046		150,168	150,168
Tier 1	176,996				176,996		171,364		171,364		140,021	140,021		132,225	132,225		Tier 1	160,615			160,615			158,196		158,196		150,046	150,046		150,168	150,168
Total	209,522				219,208		204,425		214,877		153,558	162,723		145,665	155,281		Total	187,442			197,639			186,934		196,660		163,907	173,608		164,412	173,719
Assets:																	Assets:
Risk-weighted	$	1,217,700			1,268,638		1,274,589		1,336,198		1,103,800	1,173,294		1,143,681	1,222,876
Adjusted average (1)	1,908,883				1,908,883		1,914,802		1,914,802		1,713,046	1,713,046		1,714,524	1,714,524
Risk-weighted assets (2)																	Risk-weighted assets (2)	1,138,635			1,218,911			1,158,355		1,193,744		995,699	1,117,279		1,012,751	1,085,599
Adjusted average assets																	Adjusted average assets	1,921,350			1,921,350			1,900,258		1,900,258		1,758,333	1,758,333		1,735,406	1,735,406
Regulatory capital ratios:																	Regulatory capital ratios:
Common equity tier 1 capital	12.61		%		12.10	*	11.67		11.13	*	12.69	11.93	*	11.56	10.81	*
Common Equity Tier 1 capital																	Common Equity Tier 1 capital	12.43		%	11.62		*	11.94		11.59	*	15.07	13.43	*	14.83	13.83	*
Tier 1 capital	14.54				13.95	*	13.44		12.82	*	12.69	11.93	*	11.56	10.81	*	Tier 1 capital	14.11			13.18		*	13.66		13.25	*	15.07	13.43	*	14.83	13.83	*
Total capital	17.21			*	17.28		16.04	*	16.08		13.91	13.87	*	12.74	12.70	*	Total capital	16.46			16.21		*	16.14	*	16.47		16.46	15.54	*	16.23	16.00	*
Tier 1 leverage (1)	9.27				9.27		8.95		8.95		8.17	8.17		7.71	7.71

																		Wells Fargo & Company										Wells Fargo Bank, N.A.
																		September 30, 2021						December 31, 2020				September 30, 2021			December 31, 2020
Regulatory leverage:																	Regulatory leverage:
Total leverage exposure (3)																	Total leverage exposure (3)	$	2,313,634					1,963,971				2,126,015			2,041,952
Supplementary leverage ratio (SLR) (3)																	Supplementary leverage ratio (SLR) (3)	6.94				%		8.05				7.06			7.35
Tier 1 leverage ratio (4)																	Tier 1 leverage ratio (4)	8.36						8.32				8.53			8.65

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


~~(1)~~	~~The leverage ratio consists of Tier 1 capital divided by quarterly average total assets, excluding goodwill and certain other items.~~

(1)At September 30, 2021, the impact of the CECL transition provision issued by federal banking regulators on the regulatory capital of the Company was an increase in capital of $463 million, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $5.8 billion increase in our ACL under CECL from January 1, 2020, through September 30, 2021. The impact of the CECL transition provision on the regulatory capital of the Bank at September 30, 2021, was an increase in capital of $463 million.

(2)RWAs for the Company and the Bank included an increase of $132 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 the excess allowance for credit losses as of September 30, 2021.

(3)The SLR consists of tier 1 capital divided by total leverage exposure. Total leverage exposure consists of total average assets, less goodwill and other permitted tier 1 capital deductions (net of deferred tax liabilities), plus certain off-balance sheet exposures.

(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.

At September 30, 2021, under transition requirements, the CET1, tier 1 and total capital ratio requirements for the Company included a global systemically important bank (G-SIB) surcharge of 2.00%. The G-SIB surcharge is not applicable to the Bank. In addition, the CET1, tier 1 and total capital ratio requirements for the Company and the Bank included a stress capital buffer of 2.50% under the Standardized Approach and a capital conservation buffer of 2.50% under the Advanced Approach. The Company is required to maintain these risk-based capital ratios and to maintain an SLR of at least 5.00% (comprised of a 3.00% minimum requirement plus a supplementary leverage buffer of 2.00%) to avoid restrictions on capital distributions and discretionary bonus payments. The Bank is required to maintain an SLR of at least 6.00% to be considered well-capitalized under applicable regulatory capital adequacy rules. Table ~~19.2~~23.2 presents the ~~minimum required regulatory~~risk-based capital ~~ratios~~and leverage requirements under ~~Transition Requirements~~transition requirements to which the Company and the Bank were subject as of September 30, ~~2017~~2021, and December 31, ~~2016.~~2020,

which were the same under both the Standardized and Advanced Approaches.

Table ~~19.2:Minimum Required Regulatory~~23.2:Risk-Based Capital and Leverage Ratios – Transition Requirements ~~(1)~~


	Wells Fargo & Company		Wells Fargo Bank, N.A.

	Sep 30, 2021		Sep 30, 2021
	and Dec 31, 2020		and Dec 31, 2020
Common Equity Tier 1 capital	9.00	%	7.00
Tier 1 capital	10.50		8.50
Total capital	12.50		10.50
Tier 1 leverage	4.00		4.00
Supplementary leverage	5.00		6.00

Wells Fargo & Company Wells Fargo Bank, N.A.
September 30, 2017
December 31, 2016 September 30, 2017 December 31, 2016
Regulatory capital ratios:
Common equity tier 1 capital 6.750 % 5.625 5.750 5.125
Tier 1 capital 8.250
7.125 7.250 6.625
Total capital 10.250
9.125 9.250 8.625
Tier 1 leverage 4.000
4.000 4.000 4.000


~~(1)~~146			At ~~September 30, 2017, under transition requirements, the CET1, tier 1 and total capital minimum ratio requirements for~~ Wells Fargo & Company ~~include a capital conservation buffer of~~ ~~1.250%~~ ~~and a global systemically important bank (G-SIB) surcharge of~~ ~~1.000%. Only the~~ ~~1.250%~~ ~~capital conservation buffer applies to the Bank at~~ ~~September 30, 2017~~.

Capital Planning Requirements

The FRB’s capital plan rule establishes capital planning and other requirements that govern capital distributions, including dividends and share repurchases, by certain large bank holding companies (BHCs), including Wells Fargo. The FRB conducts an annual Comprehensive Capital Analysis and Review exercise and has also published guidance regarding its supervisory expectations for capital planning, including capital policies regarding the process relating to common stock dividend and repurchase decisions in the FRB’s SR Letter 15-18. The Parent’s ability to make certain capital distributions is subject to the requirements of the capital plan rule and is also subject to the Parent meeting or exceeding certain regulatory capital minimums.

Loan and Dividend Restrictions

Federal law restricts the amount and the terms of both credit and non-credit transactions between a bank and its nonbank affiliates. Additionally, federal laws and regulations limit the dividends that a national bank may pay.

Our nonbank subsidiaries are also limited by certain federal and state statutory provisions and regulations covering the amount of dividends that may be paid in any given year. In addition, under a Support Agreement dated June 28, 2017, as amended and restated on June 26, 2019, among Wells Fargo & Company, the parent holding company (the “Parent”), WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), Wells Fargo Bank, N.A., Wells Fargo Securities, LLC, Wells Fargo Clearing Services, LLC, and certain other subsidiaries of the Parent designated from time to time as material entities for resolution planning purposes or identified from time to time as related support entities in our resolution plan, the IHC may be restricted from making dividend payments to the Parent if certain liquidity and/or capital metrics fall below defined triggers or if the Parent’s board of directors authorizes it to file a case under the U.S. Bankruptcy Code.

For additional information on loan and dividend restrictions, see Note 28 (Regulatory Capital Requirements and Other Restrictions) in our 2020 Form 10-K.

Cash Restrictions

Cash and cash equivalents may be restricted as to usage or withdrawal. Table 23.3 provides a summary of restrictions on cash and cash equivalents.

Table 23.3:Nature of Restrictions on Cash and Cash Equivalents


(in millions)	Sep 30, 2021		Dec 31, 2020
Reserve balance for non-U.S. central banks	$	200	243
Segregated for benefit of brokerage customers under federal and other brokerage regulations	845		957


			Wells Fargo & Company			147


Glossary of Acronyms

~~Glossary of Acronyms~~
ACL
~~ABS~~	~~Asset-backed security~~	~~G-SIB~~	~~Globally systemic important bank~~
~~ACL~~	Allowance for credit losses	~~HAMP~~HTM		~~Home Affordability Modification Program~~Held-to-maturity
~~ALCO~~AFS			~~Asset/Liability Management Committee~~Available-for-sale		~~HUD~~LCR		~~U.S. Department of Housing and Urban Development~~
~~ARM~~	~~Adjustable-rate mortgage~~	~~LCR~~	Liquidity coverage ratio
~~ASC~~ ALCO			~~Accounting Standards Codification~~Asset/Liability Committee		LHFS		Loans held for sale
~~ASU~~ARM			~~Accounting Standards Update~~Adjustable-rate mortgage		LIBOR		London Interbank Offered Rate
~~AUA~~ASC			~~Assets under administration~~Accounting Standards Codification		LIHTC		~~Low income~~Low-income housing tax credit
~~AUM~~ASU			~~Assets under management~~Accounting Standards Update		LOCOM		Lower of cost or ~~market~~fair value
~~AVM~~AUA			Assets under administration		LTV		Loan-to-value
AUM			Assets under management		MBS		Mortgage-backed security
AVM			Automated valuation model		~~LTV~~MSR		~~Loan-to-value~~Mortgage servicing right
BCBS			Basel Committee on ~~Bank~~Banking Supervision		~~MBS~~NAV		~~Mortgage-backed security~~Net asset value
BHC			Bank holding company		~~MHA~~NPA		~~Making Home Affordable programs~~Nonperforming asset
CCAR			Comprehensive Capital Analysis and Review		~~MHFS~~NSFR		~~Mortgages held for sale~~Net stable funding ratio
CD			Certificate of deposit		~~MSR~~OCC		~~Mortgage servicing right~~
~~CDO~~	~~Collateralized debt obligation~~	~~MTN~~	~~Medium-term note~~
~~CDS~~	~~Credit default swaps~~	~~NAV~~	~~Net asset value~~
~~CECL~~	~~Current expected credit loss~~	~~NPA~~	~~Nonperforming asset~~
~~CET1~~	~~Common Equity Tier 1~~	~~OCC~~	Office of the Comptroller of the Currency
~~CFPB~~CECL			Current expected credit loss		OCI		Other comprehensive income
CET1			Common Equity Tier 1		OTC		Over-the-counter
CFPB			Consumer Financial Protection Bureau		~~OCI~~OTTI		~~Other comprehensive income~~Other-than-temporary impairment
CLO			Collateralized loan obligation		~~OTC~~PCD		~~Over-the-counter~~Purchased credit-deteriorated
CLTV			Combined loan-to-value		~~OTTI~~PCI		~~Other-than-temporary impairment~~Purchased credit-impaired
~~CMBS~~CPI			~~Commercial mortgage-backed securities~~		~~PCI Loans~~	~~Purchased credit-impaired loans~~
~~CPI~~	Collateral protection insurance	PTPP		Pre-tax pre-provision profit
~~CPP~~CRE			~~Capital Purchase Program~~		~~RBC~~	~~Risk-based capital~~
~~CRE~~	Commercial real estate	RMBS		Residential mortgage-backed securities
DPD			Days past due		ROA		~~Wells Fargo net income to~~Return on average ~~total~~ assets
ESOP			Employee Stock Ownership Plan		ROE		~~Wells Fargo net income applicable to common stock~~Return on average equity
~~FAS~~FASB			~~Statement of Financial Accounting Standards~~			~~to average Wells Fargo common stockholders' equity~~
~~FASB~~	Financial Accounting Standards Board	ROTCE		Return on average tangible common equity
FDIC			Federal Deposit Insurance Corporation		RWAs		Risk-weighted assets
~~FFELP~~FHA			Federal ~~Family Education Loan Program~~Housing Administration		SEC		Securities and Exchange Commission
~~FHA~~FHLB			Federal ~~Housing Administration~~Home Loan Bank		S&P		Standard & Poor’s Ratings Services
~~FHLB~~FHLMC			~~Federal Home Loan Bank~~		~~SLR~~	~~Supplementary leverage ratio~~
~~FHLMC~~	Federal Home Loan Mortgage Corporation	~~SPE~~SLR		~~Special purpose entity~~Supplementary leverage ratio
FICO			Fair Isaac Corporation (credit rating)		~~TARP~~SOFR		~~Troubled Asset Relief Program~~Secured Overnight Financing Rate
FNMA			Federal National Mortgage Association		~~TDR~~SPE		~~Troubled debt restructuring~~Special purpose entity
FRB			Board of Governors of the Federal Reserve System		~~TLAC~~TDR		Troubled debt restructuring
GAAP			Generally accepted accounting principles		TLAC		Total Loss Absorbing Capacity
~~GAAP~~GNMA			~~Generally accepted accounting principles~~Government National Mortgage Association		VA		Department of Veterans Affairs
~~GNMA~~GSE			~~Government National Mortgage Association~~Government-sponsored entity		VaR		Value-at-Risk
~~GSE~~G-SIB			~~Government-sponsored entity~~Global systemically important bank		VIE		Variable interest entity
HQLA			High-quality liquid assets		WIM		Wealth and Investment Management


148			Wells Fargo & Company

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Information in response to this item can be found in Note 1113 (Legal Actions) to Financial Statements in this Report which information is incorporated by reference into this item.

Item 1A. Risk Factors

Information in response to this item can be found under the “Financial Review – Risk Factors” section in this Report which information is incorporated by reference into this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows Company repurchases of its common stock for each calendar month in the quarter ended September 30, ~~2017.~~2021.


Calendar month	Total number of shares repurchased (1)	Weighted average price paid per share		Maximum number of shares that may yet be repurchased under the authorizations
July	36,810,627	$	44.76	577,895,706
August	41,340,615	47.85		536,555,091
September	36,057,193	46.18		500,497,898
Total	114,208,435

(1)All shares were repurchased under an authorization covering up to 350 million shares of common stock approved by the Board of Directors and publicly announced by the Company on July 23, 2019. In addition, the Company publicly announced on January 15, 2021, that the Board of Directors authorized the repurchase of an additional 500 million shares of common stock. Unless modified or revoked by the Board, these authorizations do not expire.

Calendar month
Total number
of shares
repurchased (1)

Weighted-average
price paid per share

Maximum number of
shares that may yet
be repurchased under
the authorization
July 6,616,050
$ 54.73
164,594,913
August (2) 30,887,246
53.26
133,707,667
September (2) 11,519,239
51.50
122,188,428
Total 49,022,535


~~(1)~~	~~All shares were repurchased under an authorization covering up to~~ ~~350 million~~ ~~shares of common stock approved by the Board of Directors and publicly announced by the Company on January 26, 2016. Unless modified or revoked by the Board, this authorization does not expire.~~


~~(2)~~	~~August includes a private repurchase transaction of~~ ~~18,746,180~~ ~~shares at a weighted-average price per share of~~ ~~$53.34. September includes a private repurchase transaction of~~ ~~9,717,399~~ ~~shares at a weighted-average price per share of~~ ~~$51.45~~.

~~The following table shows Company repurchases of the warrants for each calendar month in the quarter ended September 30, 2017.~~



~~Calendar month~~		~~Total number~~ ~~of warrants~~ ~~repurchased (1)~~ Wells Fargo & Company				~~Average price~~ ~~paid per warrant~~	~~Maximum dollar value~~ ~~of warrants that~~ ~~may yet be repurchased~~
~~July~~	—		$	—	~~451,944,402~~
~~August~~	—		—		~~451,944,402~~
~~September~~	—		—		~~451,944,402~~
~~Total~~	—
					149


~~(1)~~	~~Warrants are repurchased under the authorization covering up to~~ ~~$1 billion~~ ~~in warrants approved by the Board of Directors (ratified and approved on June 22, 2010). Unless modified or revoked by the Board, this authorization does not expire.~~

Item 6. Exhibits


~~Item 6.~~	~~Exhibits~~

A list of exhibits to this Form 10-Q is set forth below.

The Company’s SEC file number is 001-2979. On and before November 2, 1998, the Company filed documents with the SEC under the name Norwest Corporation. The former Wells Fargo & Company filed documents under SEC file number 001-6214.

Exhibit

Number

Description

Location

3(a)

Restated Certificate of Incorporation, as amended and in effect on the date hereof.

Filed herewith.

3(b)

By-Laws.

Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 1, 2018.

4(a)

See Exhibits 3(a) and 3(b).

4(b)

The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.

Subsidiary guarantors and issuers of guaranteed securities and affiliates whose securities collateralize securities of the registrant.

Incorporated by reference to Exhibit 22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

31(a)

Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

31(b)

Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

32(a)

Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.

Furnished herewith.

32(b)

Certification of Periodic Financial Report by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.

Furnished herewith.

101.INS

Inline XBRL Instance Document

The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

Filed herewith.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith.

101.DEF

Inline XBRL Taxonomy Extension Definitions Linkbase Document

Filed herewith.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

Filed herewith.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith.

104

Cover Page Interactive Data File

Formatted as Inline XBRL and contained in Exhibit 101.

Exhibit
Number
Description Location
3(a)

Restated Certificate of Incorporation, as amended and in effect on the date hereof.
Incorporated by reference to Exhibit 3(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.
3(b)

By-Laws.
Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed December 1, 2016.
4(a) See Exhibits 3(a) and 3(b).
4(b) The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.
12(a)

Computation of Ratios of Earnings to Fixed Charges:
Filed herewith.
      Quarter ended September 30, Nine months ended September 30,
      2017
2016
2017
2016

   Including interest on deposits 3.53
6.03
4.17
6.36

   Excluding interest on deposits 4.75
7.42
5.51
7.86


12(b)

Computation of Ratios of Earnings to Fixed Charges and Preferred Dividends:
Filed herewith.
      Quarter ended September 30, Nine months ended September 30,
      2017
2016
2017
2016

   Including interest on deposits 2.88
4.44
3.35
4.63

   Excluding interest on deposits 3.56
5.10
4.09
5.31


31(a)

Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
31(b)

Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
32(a)

Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.
Furnished herewith.
32(b)

Certification of Periodic Financial Report by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.
Furnished herewith.
101.INS XBRL Instance Document Filed herewith.
101.SCH XBRL Taxonomy Extension Schema Document Filed herewith.
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith.
101.DEF XBRL Taxonomy Extension Definitions Linkbase Document Filed herewith.
101.LAB XBRL Taxonomy Extension Label Linkbase Document Filed herewith.
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith.


150			Wells Fargo & Company

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November ~~3, 2017~~ 1, 2021 WELLS FARGO & COMPANY

~~By:~~ ~~/s/ RICHARD D. LEVY~~


By:			/s/ MUNEERA S. CARR
			Muneera S. Carr
			Executive Vice President, Chief Accounting Officer and Controller
			(Principal Accounting Officer)

~~Richard D. Levy~~

~~Executive Vice President and Controller~~

~~(Principal Accounting Officer)~~

~~168~~


			Wells Fargo & Company			151



(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



(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



	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



	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



					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



	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		)



(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



	Sep 30, 2017				Dec 31, 2016				Dec 31, 2015				Dec 31, 2014				Dec 31, 2013
(in millions)	ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans
Commercial:
Commercial and industrial	$	4,076	34	%	$	4,560	34	%	$	4,231	33	%	$	3,506	32	%	$	3,040	29	%
Real estate mortgage	1,248		14		1,320		14		1,264		13		1,576		13		2,157		14
Real estate construction	1,262		3		1,294		2		1,210		3		1,097		2		775		2
Lease financing	246		2		220		2		167		1		198		1		131		1
Total commercial	6,832		53		7,394		52		6,872		50		6,377		48		6,103		46
Consumer:
Real estate 1-4 family first mortgage	1,173		29		1,270		29		1,895		30		2,878		31		4,087		32
Real estate 1-4 family junior lien mortgage	672		4		815		5		1,223		6		1,566		7		2,534		8
Credit card	1,900		4		1,605		4		1,412		4		1,271		4		1,224		3
Automobile	853		6		817		6		529		6		516		6		475		6
Other revolving credit and installment	679		4		639		4		581		4		561		4		548		5
Total consumer	5,277		47		5,146		48		5,640		50		6,792		52		8,868		54
Total	$	12,109	100	%	$	12,540	100	%	$	12,512	100	%	$	13,169	100	%	$	14,971	100	%

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



		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



	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



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



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

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



(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



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



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



(in millions)
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





						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



(in millions)	Amortized Cost		Gross unrealized gains	Gross unrealized losses		Fair value
September 30, 2017
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	$	6,408	8	(66	)	6,350
Securities of U.S. states and political subdivisions	52,854		774	(854	)	52,774
Mortgage-backed securities:
Federal agencies	149,872		1,237	(928	)	150,181
Residential	5,942		455	(3	)	6,394
Commercial	4,586		74	(8	)	4,652
Total mortgage-backed securities	160,400		1,766	(939	)	161,227
Corporate debt securities	8,962		443	(65	)	9,340
Collateralized loan and other debt obligations (1)	35,298		317	(7	)	35,608
Other (2)	5,857		168	(7	)	6,018
Total debt securities	269,779		3,476	(1,938	)	271,317
Marketable equity securities:
Perpetual preferred securities	412		12	(5	)	419
Other marketable equity securities	194		282	(2	)	474
Total marketable equity securities	606		294	(7	)	893
Total available-for-sale securities	270,385		3,770	(1,945	)	272,210
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies	44,712		606	(36	)	45,282
Securities of U.S. states and political subdivisions	6,321		70	(45	)	6,346
Federal agency and other mortgage-backed securities (3)	90,071		305	(509	)	89,867
Collateralized loan obligations	661		3	—		664
Other (2)	658		1	—		659
Total held-to-maturity securities	142,423		985	(590	)	142,818
Total	$	412,808	4,755	(2,535	)	415,028
December 31, 2016
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	$	25,874	54	(109	)	25,819
Securities of U.S. states and political subdivisions	52,121		551	(1,571	)	51,101
Mortgage-backed securities:
Federal agencies	163,513		1,175	(3,458	)	161,230
Residential	7,375		449	(8	)	7,816
Commercial	8,475		101	(74	)	8,502
Total mortgage-backed securities	179,363		1,725	(3,540	)	177,548
Corporate debt securities	11,186		381	(110	)	11,457
Collateralized loan and other debt obligations (1)	34,764		287	(31	)	35,020
Other (2)	6,139		104	(35	)	6,208
Total debt securities	309,447		3,102	(5,396	)	307,153
Marketable equity securities:
Perpetual preferred securities	445		35	(11	)	469
Other marketable equity securities	261		481	—		742
Total marketable equity securities	706		516	(11	)	1,211
Total available-for-sale securities	310,153		3,618	(5,407	)	308,364
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies	44,690		466	(77	)	45,079
Securities of U.S. states and political subdivisions	6,336		17	(144	)	6,209
Federal agency and other mortgage-backed securities (3)	45,161		100	(804	)	44,457
Collateralized loan obligations	1,065		6	(1	)	1,070
Other (2)	2,331		10	(1	)	2,340
Total held-to-maturity securities	99,583		599	(1,027	)	99,155
Total	$	409,736	4,217	(6,434	)	407,519



	Investment grade				Non-investment grade
(in millions)	Gross unrealized losses			Fair value	Gross unrealized losses		Fair value
September 30, 2017
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	$	(66	)	4,550	—		—
Securities of U.S. states and political subdivisions	(822		)	25,098	(32	)	207
Mortgage-backed securities:
Federal agencies	(928		)	72,811	—		—
Residential	(1		)	134	(2	)	75
Commercial	(2		)	527	(6	)	214
Total mortgage-backed securities	(931		)	73,472	(8	)	289
Corporate debt securities	(14		)	674	(51	)	517
Collateralized loan and other debt obligations	(7		)	3,752	—		—
Other	(5		)	781	(2	)	239
Total debt securities	(1,845		)	108,327	(93	)	1,252
Perpetual preferred securities	(4		)	70	(1	)	18
Total available-for-sale securities	(1,849		)	108,397	(94	)	1,270
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies	(36		)	3,345	—		—
Securities of U.S. states and political subdivisions	(45		)	2,801	—		—
Federal agency and other mortgage-backed securities	(508		)	58,248	(1	)	92
Collateralized loan obligations	—			—	—		—
Other	—			—	—		—
Total held-to-maturity securities	(589		)	64,394	(1	)	92
Total	$	(2,438	)	172,791	(95	)	1,362
December 31, 2016
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	$	(109	)	10,816	—		—
Securities of U.S. states and political subdivisions	(1,517		)	33,271	(54	)	354
Mortgage-backed securities:
Federal agencies	(3,458		)	124,216	—		—
Residential	(1		)	176	(7	)	596
Commercial	(15		)	2,585	(59	)	564
Total mortgage-backed securities	(3,474		)	126,977	(66	)	1,160
Corporate debt securities	(31		)	1,238	(79	)	937
Collateralized loan and other debt obligations	(31		)	5,096	—		—
Other	(30		)	1,842	(5	)	391
Total debt securities	(5,192		)	179,240	(204	)	2,842
Perpetual preferred securities	(10		)	68	(1	)	18
Total available-for-sale securities	(5,202		)	179,308	(205	)	2,860
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies	(77		)	6,351	—		—
Securities of U.S. states and political subdivisions	(144		)	4,871	—		—
Federal agency and other mortgage-backed securities	(803		)	40,078	(1	)	17
Collateralized loan obligations	(1		)	266	—		—
Other	(1		)	633	—		—
Total held-to-maturity securities	(1,026		)	52,199	(1	)	17
Total	$	(6,228	)	231,507	(206	)	2,877



					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	%



	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



(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



			Recorded investment
(in millions)	Unpaid principal balance (1)		Impaired loans	Impaired loans with related allowance for credit losses	Related allowance for credit losses
September 30, 2017
Commercial:
Commercial and industrial	$	4,259	3,098	2,779	518
Real estate mortgage	1,541		1,263	1,243	230
Real estate construction	87		53	53	11
Lease financing	143		107	107	27
Total commercial	6,030		4,521	4,182	786
Consumer:
Real estate 1-4 family first mortgage	14,635		12,756	6,353	781
Real estate 1-4 family junior lien mortgage	2,206		1,981	1,466	237
Credit card	341		340	340	129
Automobile	158		88	33	5
Other revolving credit and installment	134		126	115	31
Total consumer (2)	17,474		15,291	8,307	1,183
Total impaired loans (excluding PCI)	$	23,504	19,812	12,489	1,969
December 31, 2016
Commercial:
Commercial and industrial	$	5,058	3,742	3,418	675
Real estate mortgage	1,777		1,418	1,396	280
Real estate construction	167		93	93	22
Lease financing	146		119	119	23
Total commercial	7,148		5,372	5,026	1,000
Consumer:
Real estate 1-4 family first mortgage	16,438		14,362	9,475	1,117
Real estate 1-4 family junior lien mortgage	2,399		2,156	1,681	350
Credit card	300		300	300	104
Automobile	153		85	31	5
Other revolving credit and installment	109		102	91	17
Total consumer (2)	19,399		17,005	11,578	1,593
Total impaired loans (excluding PCI)	$	26,547	22,377	16,604	2,593



(in millions)	Quarter ended Sep 30, 2017			Nine months ended Sep 30, 2017		2009-2016
Balance, beginning of period	$	9,369		11,216		10,447
Change in accretable yield due to acquisitions	—			2		159
Accretion into interest income (1)	(340		)	(1,071	)	(15,577	)
Accretion into noninterest income due to sales (2)	—			(334	)	(467	)
Reclassification from nonaccretable difference for loans with improving credit-related cash flows	234			640		10,955
Changes in expected cash flows that do not affect nonaccretable difference (3)	(20		)	(1,210	)	5,699
Balance, end of period	$	9,243		9,243		11,216