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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~~June 30, ~~2017~~2023


☐			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~~July 21, 2023
Common stock, $1-2/3 par value		~~4,924,261,449~~1,823,028,137

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			59
	Consolidated Statement of Comprehensive Income			60
	Consolidated Balance Sheet			61
	Consolidated Statement of Changes in Equity			62
	Consolidated Statement of Cash Flows			64
	Notes to Financial Statements
	1	—	Summary of Significant Accounting Policies	65
	2	—	Trading Activities	68
	3	—	Available-for-Sale and Held-to-Maturity Debt Securities	69
	4	—	Equity Securities	75
	5	—	Loans and Related Allowance for Credit Losses	77
	6	—	Mortgage Banking Activities	91
	7	—	Intangible Assets and Other Assets	93
	8	—	Leasing Activity	94
	9	—	Preferred Stock	95
	10	—	Legal Actions	96
	11	—	Derivatives	98
	12	—	Fair Values of Assets and Liabilities	107
	13	—	Securitizations and Variable Interest Entities	115
	14	—	Guarantees and Other Commitments	120
	15	—	Pledged Assets and Collateral	122
	16	—	Operating Segments	125
	17	—	Revenue and Expenses	128
	18	—	Employee Benefits	130
	19	—	Earnings and Dividends Per Common Share	131
	20	—	Other Comprehensive Income	132
	21	—	Regulatory Capital Requirements and Other Restrictions	134
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			25
	Off-Balance Sheet Arrangements			27
	Risk Management			28
	Capital Management			45
	Regulatory Matters			51
	Critical Accounting Policies			53
	Current Accounting Developments			54
	Forward-Looking Statements			55
	Risk Factors			57
	Glossary of Acronyms			136
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			39
Item 4.	Controls and Procedures			58

PART II	Other Information
Item 1.	Legal Proceedings			137
Item 1A.	Risk Factors			137
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			137
Item 5.	Other Information			137
Item 6.	Exhibits			138

Signature				139


			Wells Fargo & Company			1

FINANCIAL REVIEW


Summary Financial Data (1)
	Quarter ended					Jun 30, 2023 % Change from			Six months ended
($ in millions, except per share amounts)	Jun 30, 2023			Mar 31, 2023	Jun 30, 2022	Mar 31, 2023		Jun 30, 2022	Jun 30, 2023			Jun 30, 2022	% Change
Selected Income Statement Data
Total revenue	$	20,533		20,729	17,040	(1)	%	20	$	41,262		34,768	19	%
Noninterest expense	12,987			13,676	12,862	(5)		1	26,663			26,713	—
Pre-tax pre-provision profit (PTPP) (2)	7,546			7,053	4,178	7		81	14,599			8,055	81
Provision for credit losses (3)	1,713			1,207	580	42		195	2,920			(207)	NM
Wells Fargo net income	4,938			4,991	3,142	(1)		57	9,929			6,930	43
Wells Fargo net income applicable to common stock	4,659			4,713	2,863	(1)		63	9,372			6,372	47
Common Share Data
Diluted earnings per common share	1.25			1.23	0.75	2		67	2.48			1.66	49
Dividends declared per common share	0.30			0.30	0.25	—		20	0.60			0.50	20
Common shares outstanding	3,667.7			3,763.2	3,793.0	(3)		(3)
Average common shares outstanding	3,699.9			3,785.6	3,793.8	(2)		(2)	3,742.6			3,812.3	(2)
Diluted average common shares outstanding	3,724.9			3,818.7	3,819.6	(2)		(2)	3,772.4			3,845.0	(2)
Book value per common share (4)	$	43.87		43.02	41.72	2		5
Tangible book value per common share (4)(5)	36.53			35.87	34.66	2		5
Selected Equity Data (period-end)
Total equity	181,952			183,220	179,798	(1)		1
Common stockholders’ equity	160,916			161,893	158,260	(1)		2
Tangible common equity (5)	133,990			134,992	131,464	(1)		2
Performance Ratios
Return on average assets (ROA) (6)	1.05		%	1.09	0.66				1.07		%	0.73
Return on average equity (ROE) (7)	11.4			11.7	7.2				11.6			7.9
Return on average tangible common equity (ROTCE) (5)	13.7			14.0	8.7				13.9			9.5
Efficiency ratio (8)	63			66	75				65			77
Net interest margin on a taxable-equivalent basis	3.09			3.20	2.39				3.14			2.27
Selected Balance Sheet Data (average)
Loans	$	945,906		948,651	926,567	—		2	$	947,271		912,365	4
Assets	1,878,253			1,863,676	1,902,571	1		(1)	1,871,005			1,910,938	(2)
Deposits	1,347,449			1,356,694	1,445,793	(1)		(7)	1,352,046			1,454,882	(7)
Selected Balance Sheet Data (period-end)
Debt securities	503,468			511,597	516,772	(2)		(3)
Loans	947,960			947,991	943,734	—		—
Allowance for credit losses for loans	14,786			13,705	12,884	8		15
Equity securities	67,471			60,610	61,774	11		9
Assets	1,876,320			1,886,400	1,881,141	(1)		—
Deposits	1,344,584			1,362,629	1,425,153	(1)		(6)

Headcount (#) (period-end)	233,834			235,591	243,674	(1)		(4)
Capital and Other Metrics
Risk-based capital ratios and components (9):
Standardized Approach:
Common equity Tier 1 (CET1)	10.73		%	10.81	10.38
Tier 1 capital	12.25			12.34	11.89
Total capital	15.00			15.09	14.65
Risk-weighted assets (RWAs) (in billions)	$	1,250.7		1,243.8	1,253.6	1		—
Advanced Approach:
Common equity Tier 1 (CET1)	12.00		%	12.03	11.60
Tier 1 capital	13.70			13.73	13.30
Total capital	15.82			15.92	15.58
Risk-weighted assets (RWAs) (in billions)	$	1,118.4		1,117.9	1,121.6	—		—
Tier 1 leverage ratio	8.28		%	8.36	7.96
Supplementary Leverage Ratio (SLR)	6.91			6.96	6.63
Total Loss Absorbing Capacity (TLAC) Ratio (10)	23.12			23.34	22.72
Liquidity Coverage Ratio (LCR) (11)	123			122	121

NM – Not meaningful

(1)In first quarter 2023, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. We adopted ASU 2018-12 with retrospective application, which required revision of prior period financial statements. Prior period risk-based capital and certain other regulatory related metrics were not revised. For additional information, including the financial statement line items impacted by the adoption of ASU 2018-12, 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)Includes provision for credit losses for loans, debt securities, and interest-earning deposits with banks.

(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 investments in consolidated portfolio companies, 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 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)For additional information, see the “Capital Management” section and Note 21 (Regulatory Capital Requirements and Other Restrictions) to Financial Statements in this Report.

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

(11)Represents average high-quality liquid assets divided by average 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~~2022 (2022 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~~“Glossary of ~~Acronyms~~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 a 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. 2547 on Fortune’s ~~2017~~2023 rankings of America’s largest corporations. We ranked ~~third~~fourth in assets and ~~second~~third in the market value of our common stock among all U.S. banks at ~~September~~June 30, ~~2017.~~2023.

~~We use our~~ ~~Vision and Values~~ to guide us toward growth and success. Our vision is to satisfy our customers’ financial needs, help them succeed financially, be recognized as the premier financial services company in our markets, and be one of America’s great companies. We aspire to create deep and enduring relationships 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 foundation for everything we do. First, we value and support our people as a competitive advantage and strive to attract, develop, retain, and motivate the most talented people we can find. Second, we strive for the highest ethical standards with our team members, our customers, our communities, and our shareholders. Third, with respect to our customers, we strive to base our decisions and actions on what is right for them in everything we do. Fourth, for team members we strive to build and sustain a diverse and inclusive culture – one where they feel valued and respected for who they are as well as for the skills and experiences they bring to our company. Fifth, we also look to each of our team members to be leaders in establishing, sharing, and communicating our vision. In addition to our five primary values, one of our key day-to-day priorities is to make risk management a competitive advantage by working hard to ensure that appropriate controls are in place to reduce risks to our customers, maintain and increase our competitive market position, and protect Wells Fargo’s ~~long-term safety, soundness,~~top priority remains building a risk and ~~reputation.~~

~~In keeping with our primary values~~control infrastructure appropriate for its size and complexity. The Company is subject to a number of consent orders and other regulatory actions, which may require the Company, among other things, to undertake certain changes to its business, operations, products and services, and risk management ~~priorities,~~practices. Addressing these regulatory actions is expected to take multiple years, and we ~~announced six long-term goals~~are likely to continue to experience issues or delays along the way in satisfying their requirements. We are also likely to continue to identify more issues as we implement our risk and control infrastructure, which may result in additional regulatory actions. Issues or delays with one regulatory action could affect our progress on others, and regulators have indicated the potential for escalating consequences for banks that do not timely resolve open issues. Failure to satisfy the requirements of a regulatory action on a timely basis could result in additional penalties, business restrictions, limitations on subsidiary capital distributions, increased capital or liquidity requirements, enforcement actions, and other negative consequences, which could be significant. While we still have significant work to do and have not yet satisfied certain aspects of these regulatory actions, 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 of actions~~plan to further enhance ~~Board~~the Board’s governance and oversight ~~and governance. The actions the Board has taken to date, many of which reflect the feedback we received from our shareholders and other stakeholders, include separating the roles of Chairman~~ of the ~~Board~~Company, and ~~Chief Executive Officer, amending Wells Fargo’s By-Laws~~the Company submitted to ~~require that~~ the ~~Chairman be an independent director, adding two new independent directors in February 2017,~~FRB a plan to further improve the

Company’s compliance and ~~amending Board committee charters~~operational risk management program. The Company continues to ~~enhance oversight~~engage with the FRB as the Company works to address the consent order provisions. The consent order also requires the Company, following the FRB’s acceptance and approval of ~~conduct risk. In August 2017,~~ the ~~Board announced additional Board composition~~plans and ~~governance changes that reflected a thoughtful and deliberate process by the Board that was informed by~~ the Company’s ~~engagement with shareholders~~adoption and ~~other stakeholders, as well as~~implementation of the ~~Board’s annual self-evaluation that was conducted~~plans, to complete an initial third-party review of the enhancements and improvements provided for in ~~advance of its typical year-end timing~~the plans. Until this third-party review is complete and ~~facilitated by a third party. The Board’s composition~~the plans are approved 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~~implemented to the ~~Board~~satisfaction of the FRB, the Company’s total consolidated assets as ~~a new independent director, effective September 1, 2017;~~

~~Changes~~defined under the consent order will be limited to the ~~leadership and composition~~level as of ~~key Board committees were made, including appointing new chairs~~December 31, 2017. Compliance with this asset cap is measured on a two-quarter daily average basis to allow for management of temporary fluctuations. After removal of the ~~Board’s Risk Committee~~asset cap, a second third-party review must also be conducted to assess the efficacy and ~~Governance~~sustainability of the enhancements 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. On September 9, 2021, the OCC assessed a $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. On December 20, 2022, the CFPB modified its consent order to clarify how it would terminate.


			Wells Fargo & Company			3

Overview (continued)

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.

Consent Order with the CFPB Regarding Automobile Lending, Consumer Deposit Accounts, and Mortgage Lending

On December 20, 2022, the Company entered into a consent order with the CFPB requiring the Company to provide customer remediation for multiple matters related to automobile lending, consumer deposit accounts, and mortgage lending; maintain practices designed to ensure auto lending customers receive refunds for the unused portion of certain guaranteed automobile protection agreements; comply with certain business practice requirements related to consumer deposit accounts; and pay a $1.7 billion civil penalty to the CFPB. The required actions related to many of these matters were already substantially complete at the time we entered into the consent order, and the consent order lays out a path to termination after the Company completes the remainder of the required actions.

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 top~~a 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 On September 8, 2021, the CFPB consent order regarding retail ~~banking~~ sales practices expired.

For additional information regarding retail sales practices matters, including related legal and regulatory risk, see the “Risk Factors” section in our ~~communities, our customers, our regulators, our team members, and our investors.~~2022 Form 10-K.

Customer Remediation Activities

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

~~Identifying Potential Financial Harm~~

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

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

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


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


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

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

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

▪

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

~~Customer Remediation~~

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

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

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

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

For additional information regarding sales practices matters, including related legal matters, see the “Risk Factors” section in our 2016 Form 10-K and Note 11 (Legal Actions) to Financial Statements in this Report.

~~Additional Efforts to Rebuild Trust~~

~~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.

We have accrued for the probable and estimable costs related to our customer remediation activities, 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 and as we continue to strengthen our risk and control infrastructure, we have identified and may in the future identify additional items or areas of potential concern. To the extent issues are identified, we will continue to assess any customer harm and provide remediation as appropriate. We have previously disclosed key areas of focus as part of ~~this effort, we are focused on the following key areas:~~

these activities.

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

~~Practices concerning the origination, servicing, and/or collection of consumer automobile loans,~~For additional information regarding these activities, 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~~2022 Form ~~10-K~~10-K.

Recent Developments

Federal Deposit Insurance Corporation Special Assessment

In May 2023, the Federal Deposit Insurance Corporation (FDIC) proposed a rule to recover by special assessment losses to the FDIC deposit insurance fund as a result of recent bank failures. Under the proposed rule, the FDIC would collect a special assessment based on a calculation using an insured depository institution’s estimated amount of uninsured deposits. As currently proposed, the amount of our special assessment may be up to $1.8 billion (pre-tax), and ~~Note 11 (Legal Actions)~~we expect to expense the entire amount upon the FDIC’s finalization of the rule. The proposed rule may be changed prior to finalization and any changes may affect the timing or amount of the special assessment.

LIBOR Transition

The London Interbank Offered Rate (LIBOR) was a widely referenced benchmark rate that sought to estimate the cost at which banks could borrow on an unsecured basis from other banks. On March 5, 2021, the United Kingdom’s Financial ~~Statements~~Conduct Authority and ICE Benchmark Administration, the administrator of LIBOR, announced that certain settings of LIBOR would no longer be published on a representative basis after December 31, 2021, and the most commonly used U.S. dollar (USD) LIBOR settings would no longer be published on a representative basis after June 30, 2023.

In first quarter 2022, the Adjustable Interest Rate (LIBOR) Act (the LIBOR Act) was enacted into U.S. federal law to provide a statutory framework to replace LIBOR with a benchmark rate based on the Secured Overnight Financing Rate (SOFR) in U.S. law contracts that do not have fallback provisions or that have fallback provisions resulting in a replacement rate based on LIBOR. The FRB adopted a final rule implementing the LIBOR Act on December 16, 2022, which became effective on February 27, 2023.

We no longer offer new contracts referencing LIBOR and legacy contracts indexed to USD LIBOR have transitioned to SOFR-based or other alternative reference rates in accordance with existing fallback provisions or the LIBOR Act.

For additional 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 2022 Form 10-K.

Capital Matters

In June 2023, the Company completed the annual Comprehensive Capital Analysis and Review (CCAR) stress test process. On July 27, 2023, the FRB confirmed that our stress capital buffer for the period October 1, 2023, through September 30, 2024, will be 2.90%, which is lower than our current stress capital buffer of 3.20%.

On July 25, 2023, the Board approved an increase to the Company's third quarter 2023 common stock dividend to $0.35 per share and the Company announced that the Board authorized a new common stock repurchase program of up to $30 billion.


4			Wells Fargo & Company

increase in its risk-weighted assets and a net increase in its capital requirements based on a preliminary assessment of the proposed rule. The Company is considering a range of potential actions to address the impact of the proposed rule, including balance sheet and capital optimization strategies.

In July 2023, we issued $1.725 billion of our Preferred Stock, Series EE.

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

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

Financial Performance

~~Wells Fargo~~Adoption of Accounting Standards Update 2018-12

In first quarter 2023, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2018-12 –

Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.

We adopted this ASU with retrospective application, which required revision of prior period financial statements. Prior period risk-based capital and certain other regulatory related metrics were not revised. For additional information, including the financial statement line items impacted by the adoption of ASU 2018-12, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.


Consolidated Financial Highlights
	Quarter ended June 30,						Six months ended June 30,
($ in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Selected income statement data
Net interest income	$	13,163	10,198	2,965	29	%	$	26,499	19,419	7,080	36	%
Noninterest income	7,370		6,842	528	8		14,763		15,349	(586)	(4)
Total revenue	20,533		17,040	3,493	20		41,262		34,768	6,494	19
Net charge-offs	764		345	419	121		1,328		650	678	104
Change in the allowance for credit losses	949		235	714	304		1,592		(857)	2,449	286
Provision for credit losses (1)	1,713		580	1,133	195		2,920		(207)	3,127	NM
Noninterest expense	12,987		12,862	125	1		26,663		26,713	(50)	—
Income tax expense	930		622	308	50		1,896		1,368	528	39
Wells Fargo net income	4,938		3,142	1,796	57		9,929		6,930	2,999	43
Wells Fargo net income applicable to common stock	4,659		2,863	1,796	63		9,372		6,372	3,000	47

NM – Not meaningful

(1)Includes provision for credit losses for loans, debt securities, and interest-earning deposits with banks.

In second quarter 2023, we generated $4.9 billion of net income ~~was $4.6 billion in third quarter 2017 with~~and diluted earnings per common share (EPS) of ~~$0.84,~~$1.25, compared with ~~$5.6~~$3.1 billion of net income and ~~$1.03, respectively,~~diluted EPS of $0.75 in the same period a year ago. ~~Third~~Financial performance for second quarter ~~2017 results included~~2023, compared with the ~~impact of a $1.0 billion, or ($0.20) per share, discrete litigation accrual, which was not tax-deductible, for previously disclosed, pre-financial crisis mortgage-related regulatory investigations.~~

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

~~revenue was~~ ~~$21.9 billion, down~~ ~~$402 million~~ ~~compared with~~same period a year ago, ~~with~~included the following:

•total revenue increased due to higher net interest income ~~up 4% from~~and higher noninterest income;

•provision for credit losses reflected increases for commercial real estate loans, primarily office loans, as well as for increases in credit card loan balances;

•noninterest expense increased due to higher personnel, technology and equipment, and advertising expense, partially offset by lower operating losses;

•average loans increased driven by loan growth across both our commercial and consumer loan portfolios; and

•average deposits decreased driven by reductions in all operating segments, partially offset by growth in Corporate.

In the first half of 2023, we generated $9.9 billion of net income and diluted EPS of $2.48, compared with $6.9 billion of net income and diluted EPS of $1.66 in the same period a year ~~ago;~~ago. Financial performance for the first half of 2023, compared with the same period a year ago, included the following:

•total revenue increased due to higher net interest income, partially offset by lower noninterest income;

•provision for credit losses reflected increases for commercial real estate loans, primarily office loans, as well as for increases in credit card loan balances;

•noninterest expense decreased due to lower operating losses, partially offset by higher personnel, technology and equipment, and advertising expense;

•average loans ~~were $952.3 billion, down $5.1 billion, or 1%, from a year ago;~~increased driven by loan growth across both our commercial and consumer loan portfolios; and

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

decreased driven by reductions in all operating segments, partially offset by growth in Corporate.

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

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

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

~~Balance Sheet~~Capital and Liquidity

~~Our balance sheet remained~~We maintained a strong ~~during third quarter 2017~~capital position in the first half of 2023, with ~~high levels~~total equity of $182.0 billion at June 30, 2023, compared with $182.2 billion at December 31, 2022. In addition, capital and liquidity at June 30, 2023, included the following:

•our Common Equity Tier 1 (CET1) ratio was 10.73% under the Standardized Approach (our binding ratio), which continued to exceed the regulatory minimum and ~~capital. Our~~buffers of 9.20%;

•our total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets ~~were $1.93 trillion~~was 23.12%, compared with the regulatory minimum of 21.50%; and

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

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.


			Wells Fargo & Company			5

Overview (continued)

Credit Quality

Credit quality reflected the following:

•The allowance for credit losses (ACL) for loans of $14.8 billion at ~~September~~June 30, ~~2017. Cash and other short-term investments~~2023, increased ~~$5.5~~$1.2 billion from December 31, ~~2016, reflecting lower loan balances and growth~~2022.

•Our provision for credit losses for loans was $3.0 billion in ~~deposits. Investment securities reached~~the first half of 2023, compared with $(197) million 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 ACL for loans and the ~~sale of approximately $13 billion of lower-yielding short-duration securities. Loans were down $15.7 billion, or 2%, from~~provision for credit losses for loans reflected increases for commercial real estate loans, primarily office loans, as well as for increases in credit card loan balances.

•The allowance coverage for total loans was 1.56% at June 30, 2023, compared with 1.42% at December 31, ~~2016, largely due to a decline in junior lien mortgage and automobile loans.~~2022.

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 from a year ago, primarily driven by an increase in commercial and WIM deposit rates.

~~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~~$200 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~~15 basis points of average commercial loans, in ~~third~~second quarter ~~2017,~~2023, compared with net loan charge-offs of ~~$215~~$23 million, or 172 basis points, in the same period a year ~~ago. Net consumer credit~~ago, driven by higher losses ~~increased to 53~~across all commercial portfolios.

•Consumer portfolio net loan charge-offs were $564 million, or 58 basis points ~~(annualized)~~ of average consumer loans, in ~~third~~second quarter ~~2017 from 51~~2023, compared with net loan charge-offs of $321 million, or 33 basis points, ~~(annualized)~~ in ~~third quarter 2016. Our~~the same period a year ago, driven by higher losses in all consumer portfolios, primarily in our credit card portfolio.

•Nonperforming assets (NPAs) of $7.0 billion at June 30, 2023, increased $1.3 billion, or 22%, from December 31, 2022, driven by higher commercial real estate ~~portfolios were in a net recovery position for~~nonaccrual loans, predominantly within the ~~19th consecutive quarter, reflecting our conservative risk discipline and improved market conditions. Net~~

office property type, partially offset by lower residential mortgage nonaccrual loans. NPAs represented 0.74% of total loans at June 30, 2023.

~~losses on our consumer real estate portfolios improved by $84 million, or 122%, to a net recovery of $15 million from a year ago, reflecting the benefit of the continued improvement~~•Criticized loans in the ~~housing market and our continued focus on originating high quality loans. Approximately 77% of the consumer first mortgage~~commercial portfolio ~~outstanding~~were $29.0 billion at ~~September~~June 30, ~~2017, was originated after 2008, when more stringent underwriting standards were implemented.~~

~~The allowance for credit losses as of September 30, 2017, decreased $585 million~~2023, 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%$25.0 billion 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 million2022, primarily driven by an increase in ~~third quarter 2017, down from $805 million a year ago, primarily reflecting improvement~~criticized commercial real estate loans in the ~~oil and gas portfolio.~~office property type.

Nonperforming assets decreased $512 million, or 5%, from June 30, 2017, the sixth consecutive quarter 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 billion at September 30, 2017, up $6.3 billion from December 31, 2016. Third quarter 2017 was the first quarter our 2017 Capital Plan was effective and we returned $4.0 billion to shareholders in third quarter 2017 through common stock dividends and net share repurchases, an increase of 24% from a year ago. Our net payout ratio (which is the ratio of (i) common stock dividends and share repurchases less issuances and stock compensation-related items, divided by (ii) net income applicable to common stock) was 95%, up from 63% in the prior quarter. We continued to reduce our common shares outstanding through the repurchase of 49.0 million common shares in the quarter. We also entered into a $1 billion forward repurchase contract with an unrelated third party in October 2017 that is expected to settle in first quarter 2018 for approximately 19 million shares. We expect to reduce our common shares outstanding through share repurchases throughout the remainder of 2017.

We believe an important measure of our capital strength is the Common Equity Tier 1 (CET1) ratio under Basel III, fully phased-in, which was 11.82% at September 30, 2017, well above our internal target level of 10%. The growth in our CET1 ratio reflected lower risk-weighted assets (RWA), driven by lower loan balances and commitments, as well as improved RWA efficiency. Likewise, our other regulatory capital ratios remained strong. See the “Capital Management” section in this Report for more information regarding our capital, including the calculation of our regulatory capital amounts.



Earnings Performance

Wells Fargo net income for ~~third~~second quarter ~~2017~~2023 was ~~$4.6~~$4.9 billion ($~~0.84~~1.25 diluted ~~earnings per common share)~~EPS), compared with ~~$5.6~~$3.1 billion ($~~1.03~~0.75 diluted ~~per share) for third quarter 2016. Net income for the first nine months of 2017 was $15.9 billion ($2.91), compared with $16.7 billion ($3.03) for~~EPS) in the same period a year ago. ~~Our financial performance~~Net income increased in ~~the first nine months of 2017,~~second quarter 2023, compared with the same period a year ago, ~~benefited from~~predominantly due to a ~~$1.9~~$3.0 billion increase in net interest income, ~~and~~partially offset by a $1.1 billion ~~decrease~~increase in ~~our~~provision for credit losses.

Net income for the first half of 2023 was $9.9 billion ($2.48 diluted EPS), compared with $6.9 billion ($1.66 diluted EPS) in the same period a year ago. Net income increased in the first half of 2023, compared with the same period a year ago, predominantly due to a $7.1 billion increase in net interest income, partially offset by a $3.1 billion increase in provision for credit losses ~~offset by~~and a ~~$2.5 billion~~$586 million decrease in noninterest income and a $2.5 billion increase in noninterest expense. In the first nine months of 2017, net interest income represented 56% of revenue, compared with 53% for the same period in 2016. Noninterest income was $28.8 billion in the first nine months of 2017, representing 44% of revenue, compared with $31.3 billion (47%) in the first nine months of 2016.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 increased in both the second quarter and first half of 2023, compared with the same periods a year ago, due to the impact of higher interest rates on earning assets and higher loan balances, partially offset by higher expenses for interest bearing deposits and long-term debt.

Table 1 presents the individual components of net interest income and net interest margin. Net interest income and net interest margin are presented on a taxable-equivalent basis in Table 1 to consistently reflect income from taxable and tax-exempt loans and debt and equity securities based on a ~~35%~~21% federal statutory tax ~~rate.~~rate for the periods ended June 30, 2023 and 2022.

~~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” section in our 2022 Form 10-K.

Net interest income on a taxable-equivalent basis was $12.8 billion and $38.2 billion 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.

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

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

Deposits are an important low-cost source of funding and affect both net interest income and the net interest margin. Deposits include noninterest-bearing deposits, interest-bearing checking, market rate and other savings, savings certificates, other time deposits, and deposits in foreign offices. Average deposits of $1.31 trillion and $1.30 trillion in the third quarter and first nine months of 2017, increased compared with $1.26 trillion and $1.24 trillion for the same periods a year ago, and represented 137% of average loans in third quarter 2017 (136% in the first nine months of 2017), compared with 132% in third quarter 2016 (131% in the first nine months of 2016). Average deposits were 74% and 73% of average earning assets in the third quarter and first nine months of 2017, respectively, compared with 73% in both the third quarter and first nine months of 2016.


6			Wells Fargo & Company

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


	Quarter ended June 30,
	2023						2022
(in millions)	Average balance		Interest income/ expense		Interest rates		Average balance		Interest income/ expense		Interest rates
Assets
Interest-earning deposits with banks	$	129,236	1,450		4.50	%	$	146,271	321		0.88	%
Federal funds sold and securities purchased under resale agreements	69,505		820		4.73		60,450		72		0.47
Debt securities:
Trading debt securities	102,605		898		3.50		89,258		557		2.50
Available-for-sale debt securities	149,320		1,388		3.72		147,138		701		1.91
Held-to-maturity debt securities	279,093		1,829		2.62		298,101		1,536		2.06
Total debt securities	531,018		4,115		3.10		534,497		2,794		2.09
Loans held for sale (2)	6,031		94		6.22		14,828		126		3.41
Loans:
Commercial and industrial – U.S.	307,858		5,156		6.72		288,831		2,179		3.02
Commercial and industrial – Non-U.S.	75,503		1,249		6.64		81,784		521		2.56
Commercial real estate mortgage	130,222		2,076		6.39		131,128		980		3.00
Commercial real estate construction	24,438		468		7.68		21,328		191		3.59
Lease financing	15,010		178		4.76		14,445		153		4.24
Total commercial loans	553,031		9,127		6.62		537,516		4,024		3.00
Residential mortgage – first lien	253,797		2,109		3.32		248,879		1,943		3.12
Residential mortgage – junior lien	12,331		210		6.83		14,998		168		4.48
Credit card	46,762		1,511		12.96		39,614		1,100		11.13
Auto	51,880		603		4.67		56,262		586		4.18
Other consumer	28,105		582		8.29		29,298		311		4.26
Total consumer loans	392,875		5,015		5.11		389,051		4,108		4.23
Total loans (2)	945,906		14,142		5.99		926,567		8,132		3.52
Equity securities	27,891		194		2.79		30,770		193		2.51
Other	10,118		120		4.76		16,085		26		0.65
Total interest-earning assets	$	1,719,705	20,935		4.88	%	$	1,729,468	11,664		2.70	%
Cash and due from banks	27,344		—				26,018		—
Goodwill	25,175		—				25,179		—
Other	106,029		—				121,906		—
Total noninterest-earning assets	$	158,548	—				173,103		—
Total assets	$	1,878,253	20,935				1,902,571		11,664
Liabilities
Deposits:
Demand deposits	$	415,886	1,667		1.61	%	$	439,983	90		0.08	%
Savings deposits	386,831		734		0.76		440,478		32		0.03
Time deposits	115,025		1,260		4.40		25,381		26		0.41
Deposits in non-U.S. offices	19,144		144		3.02		18,684		10		0.22
Total interest-bearing deposits	936,886		3,805		1.63		924,526		158		0.07
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase	66,568		811		4.89		22,593		33		0.58
Other short-term borrowings	16,491		150		3.65		12,998		(2)		(0.07)
Total short-term borrowings	83,059		961		4.64		35,591		31		0.34
Long-term debt	170,843		2,693		6.31		151,230		1,011		2.67
Other liabilities	34,496		208		2.41		35,583		158		1.78
Total interest-bearing liabilities	$	1,225,284	7,667		2.51	%	$	1,146,930	1,358		0.47	%
Noninterest-bearing demand deposits	410,563		—				521,267		—
Other noninterest-bearing liabilities	57,963		—				53,448		—
Total noninterest-bearing liabilities	$	468,526	—				574,715		—
Total liabilities	$	1,693,810	7,667				1,721,645		1,358
Total equity	184,443		—				180,926		—
Total liabilities and equity	$	1,878,253	7,667				1,902,571		1,358

Interest rate spread on a taxable-equivalent basis (3)					2.37	%					2.23	%
Net interest income and net interest margin on a taxable-equivalent basis (3)			$	13,268	3.09	%			$	10,306	2.39	%

(continued on following page)

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

Yields/
rates

Interest
income/
expense

Average
balance

Yields/
rates

Interest
income/
expense

Earning assets
Federal funds sold, securities purchased under resale agreements and other short-term investments $ 276,129
1.20 % $ 832
299,351
0.50 % $ 373
Trading assets 103,589
2.96
767
88,838
2.72
605
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies 14,529
1.31
48
25,817
1.52
99
Securities of U.S. states and political subdivisions 52,500
4.16
546
55,170
4.28
590
Mortgage-backed securities:
Federal agencies 139,781
2.58
903
105,780
2.39
631
Residential and commercial 11,013
5.43
149
18,080
5.54
250
Total mortgage-backed securities 150,794
2.79
1,052
123,860
2.85
881
Other debt and equity securities 48,082
3.75
453
54,176
3.37
459
Total available-for-sale securities 265,905
3.15
2,099
259,023
3.13
2,029
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 44,708
2.18
246
44,678
2.19
246
Securities of U.S. states and political subdivisions 6,266
5.44
85
2,507
5.24
33
Federal agency and other mortgage-backed securities 88,272
2.26
498
47,971
1.97
236
Other debt securities 1,488
3.05
12
3,909
1.98
19
Total held-to-maturity securities 140,734
2.38
841
99,065
2.15
534
Total investment securities 406,639
2.89
2,940
358,088
2.86
2,563
Mortgages held for sale (4) 22,923
3.82
219
24,060
3.44
207
Loans held for sale (4) 152
13.35
5
199
3.04
2
Loans:
Commercial:
Commercial and industrial – U.S. 270,091
3.81
2,590
271,226
3.48
2,369
Commercial and industrial – Non U.S. 57,738
2.90
421
51,261
2.40
309
Real estate mortgage 129,087
3.83
1,245
128,809
3.48
1,127
Real estate construction 24,981
4.18
263
23,212
3.50
205
Lease financing 19,155
4.59
220
18,896
4.70
223
Total commercial 501,052
3.76
4,739
493,404
3.42
4,233
Consumer:
Real estate 1-4 family first mortgage 278,371
4.03
2,809
278,509
3.97
2,764
Real estate 1-4 family junior lien mortgage 41,916
4.95
521
48,927
4.37
537
Credit card 35,657
12.41
1,114
34,578
11.60
1,008
Automobile 56,746
5.34
764
62,461
5.60
880
Other revolving credit and installment 38,601
6.31
615
39,605
5.92
590
Total consumer 451,291
5.14
5,823
464,080
4.97
5,779
Total loans (4) 952,343
4.41
10,562
957,484
4.17
10,012
Other 15,007
1.69
65
6,488
2.30
36
Total earning assets $ 1,776,782
3.45 % $ 15,390
1,734,508
3.17 % $ 13,798
Funding sources
Deposits:
Interest-bearing checking $ 48,278
0.57 % $ 69
44,056
0.15 % $ 17
Market rate and other savings 681,187
0.17
293
667,185
0.07
110
Savings certificates 21,806
0.31
16
25,185
0.30
19
Other time deposits 66,046
1.51
252
54,921
0.93
128
Deposits in foreign offices 124,746
0.76
240
107,072
0.30
82
Total interest-bearing deposits 942,063
0.37
870
898,419
0.16
356
Short-term borrowings 99,193
0.91
226
116,228
0.29
86
Long-term debt 243,137
2.26
1,377
252,400
1.59
1,006
Other liabilities 24,851
1.74
109
16,771
2.11
88
Total interest-bearing liabilities 1,309,244
0.79
2,582
1,283,818
0.48
1,536
Portion of noninterest-bearing funding sources 467,538
—
—
450,690
—
—
Total funding sources $ 1,776,782
0.58
2,582
1,734,508
0.35
1,536
Net interest margin and net interest income on a taxable-equivalent basis (5) 2.87 % $ 12,808
2.82 % $ 12,262
Noninterest-earning assets
Cash and due from banks $ 18,456
      18,682

Goodwill 26,600
      26,979

Other 116,685
134,417

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

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

Other liabilities 57,052
63,777

Total equity 207,934
203,883

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

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


~~(1)~~			~~Our average prime rate was~~ ~~4.25%~~ ~~and~~ ~~3.50%~~ ~~for the quarters ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016, respectively, and~~ ~~4.03%~~ ~~and~~ ~~3.50%~~ ~~for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016, respectively. The average three-month London Interbank Offered Rate (LIBOR) was~~ ~~1.31%~~ ~~and~~ ~~0.79%~~ ~~for the quarters ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016, respectively, and~~ ~~1.20%~~ ~~and~~ ~~0.69%~~ ~~for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016, respectively.~~ Wells Fargo & Company			7

Earnings Performance (continued)

(continued from previous page)



	Six months ended June 30,
					2023						2022
(in millions)	Average balance		Interest income/ expense		Interest rates		Average balance		Interest income/ expense		Interest rates
Assets
Interest-earning deposits with banks	$	122,087	2,617		4.32	%	$	162,570	417		0.52	%
Federal funds sold and securities purchased under resale agreements	69,071		1,516		4.43		62,636		63		0.20
Debt securities:
Trading debt securities	99,522		1,699		3.42		89,964		1,110		2.47
Available-for-sale debt securities	147,616		2,670		3.63		158,032		1,424		1.81
Held-to-maturity debt securities	279,522		3,609		2.59		288,725		2,915		2.02
Total debt securities	526,660		7,978		3.04		536,721		5,449		2.03
Loans held for sale (2)	6,320		191		6.05		17,158		266		3.10
Loans:
Commercial and industrial – U.S.	307,519		9,928		6.51		282,485		3,879		2.77
Commercial and industrial – Non-U.S.	75,800		2,383		6.34		79,782		924		2.34
Commercial real estate mortgage	130,532		4,025		6.22		129,306		1,813		2.83
Commercial real estate construction	24,333		906		7.51		20,797		356		3.46
Lease financing	14,922		350		4.69		14,516		308		4.24
Total commercial loans	553,106		17,592		6.41		526,886		7,280		2.78
Residential mortgage – first lien	254,404		4,197		3.30		245,898		3,850		3.13
Residential mortgage – junior lien	12,647		420		6.68		15,505		333		4.32
Credit card	46,304		2,951		12.85		38,893		2,165		11.22
Auto	52,470		1,200		4.61		56,480		1,170		4.18
Other consumer	28,340		1,127		8.02		28,703		567		3.98
Total consumer loans	394,165		9,895		5.04		385,479		8,085		4.21
Total loans (2)	947,271		27,487		5.84		912,365		15,365		3.39
Equity securities	28,269		364		2.59		32,019		363		2.27
Other	10,578		245		4.67		13,804		29		0.43
Total interest-earning assets	$	1,710,256	40,398		4.75	%	$	1,737,273	21,952		2.54	%
Cash and due from banks	27,743		—				25,500		—
Goodwill	25,174		—				25,180		—
Other	107,832		—				122,985		—
Total noninterest-earning assets	$	160,749	—				173,665		—
Total assets	$	1,871,005	40,398				1,910,938		21,952
Liabilities
Deposits:
Demand deposits	$	418,347	3,046		1.47	%	$	447,624	128		0.06	%
Savings deposits	394,515		1,281		0.66		440,579		56		0.03
Time deposits	97,045		1,985		4.12		26,608		45		0.34
Deposits in non-U.S. offices	18,695		254		2.74		20,062		12		0.12
Total interest-bearing deposits	928,602		6,566		1.43		934,873		241		0.05
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase	52,977		1,227		4.67		21,518		30		0.28
Other short-term borrowings	17,868		304		3.43		12,664		(13)		(0.21)
Total short-term borrowings	70,845		1,531		4.36		34,182		17		0.10
Long-term debt	171,700		5,204		6.07		152,509		1,772		2.32
Other liabilities	33,964		386		2.29		33,350		288		1.74
Total interest-bearing liabilities	$	1,205,111	13,687		2.28	%	$	1,154,914	2,318		0.40	%
Noninterest-bearing demand deposits	423,444		—				520,009		—
Other noninterest-bearing liabilities	58,079		—				52,508		—
Total noninterest-bearing liabilities	$	481,523	—				572,517		—
Total liabilities	$	1,686,634	13,687				1,727,431		2,318
Total equity	184,371		—				183,507		—
Total liabilities and equity	$	1,871,005	13,687				1,910,938		2,318

Interest rate spread on a taxable-equivalent basis (3)					2.47	%					2.14	%
Net interest margin and net interest income on a taxable-equivalent basis (3)			$	26,711	3.14	%			$	19,634	2.27	%

(1)The average balance amounts represent amortized costs, except for certain held-to-maturity (HTM) debt securities, which exclude unamortized basis adjustments related to the transfer of those securities from available-for-sale (AFS) debt securities. The interest rates are based on interest income or expense amounts for the period and are annualized. Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.

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

(3)Includes taxable-equivalent adjustments of $105 million and $108 million for the quarters ended June 30, 2023 and 2022, respectively, and $212 million and $215 million for the first half of 2023 and 2022, respectively, predominantly related to tax-exempt income on certain loans and securities.


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

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


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

~~(5)~~

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

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

Yields/
rates

Interest
income/
expense

Average
balance

Yields/
rates

Interest
income/
expense

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

Goodwill 26,645
26,696

Other 114,073
129,324

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

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

Other liabilities 55,221
62,169

Total equity 205,246
200,502

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

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

Noninterest Income

Table 2:Noninterest Income

Quarter ended 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 )



	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Deposit-related fees	$	1,165	1,376	(211)	(15)	%	$	2,313	2,849	(536)	(19)	%
Lending-related fees	352		353	(1)	—		708		695	13	2
Investment advisory and other asset-based fees	2,163		2,346	(183)	(8)		4,277		4,844	(567)	(12)
Commissions and brokerage services fees	570		542	28	5		1,189		1,079	110	10
Investment banking fees	376		286	90	31		702		733	(31)	(4)
Card fees	1,098		1,112	(14)	(1)		2,131		2,141	(10)	—
Net servicing income	100		125	(25)	(20)		212		279	(67)	(24)
Net gains on mortgage loan originations/sales	102		162	(60)	(37)		222		701	(479)	(68)
Mortgage banking	202		287	(85)	(30)		434		980	(546)	(56)
Net gains from trading activities	1,122		446	676	152		2,464		664	1,800	271
Net gains from debt securities	4		143	(139)	(97)		4		145	(141)	(97)
Net losses from equity securities	(94)		(615)	521	85		(451)		(39)	(412)	NM
Lease income	307		333	(26)	(8)		654		660	(6)	(1)
Other	105		233	(128)	(55)		338		598	(260)	(43)
Total	$	7,370	6,842	528	8		$	14,763	15,349	(586)	(4)

NM – Not meaningful

~~Noninterest income was $9.5 billion~~Second quarter 2023 vs. second quarter 2022

Deposit-related fees decreased reflecting:

•our efforts to help customers avoid overdraft fees; and $28.8 billion for the third quarter and first nine months of 2017, respectively, compared with $10.4 billion and $31.3 billion for the same periods a year ago. This income represented 43% of revenue for third quarter 2017 and 44% for the first nine months of 2017, compared with 46% ~~and~~ ~~47% for the same periods a year ago.~~

~~The decline in noninterest income in the third quarter and first nine months of 2017, compared with the same periods a year ago, was due to~~ •lower ~~mortgage banking income, lower net gains from trading activities, and lower service charges~~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 and business checking account service charges, lower overdraft fees, and a~~ higher earnings credit ~~rate applied to commercial accounts~~rates due to ~~increased~~an increase in interest rates.

~~Brokerage~~Investment advisory ~~commissions~~ and other asset-based fees ~~are received for providing full-service~~decreased reflecting lower average market valuations.

Fees from the majority of Wealth and ~~discount brokerage services predominantly to retail brokerage clients. Income from these brokerage-related activities include asset-based fees for~~Investment Management (WIM) advisory ~~accounts, which~~assets are based on a percentage of 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~~beginning of 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.quarter. 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 in this Report.

~~We earn trust~~

Investment banking fees increased due to a $107 million write-down on unfunded leveraged finance commitments in second quarter 2022.

Net servicing income decreased driven by:

•lower servicing fees due to a lower balance of mortgage loans serviced for others, including the impact of mortgage servicing right (MSR) sales;

partially offset by:

•higher income from net favorable hedge results related to MSR valuations.

Net gains on mortgage loan originations/sales decreased

due to lower residential mortgage origination volumes.

For additional information on servicing income and ~~investment management fees~~net gains on mortgage loan originations/sales, see Note 6 (Mortgage Banking Activities) to Financial Statements in this Report.

Net gains from ~~managing~~trading activities increased driven by higher trading revenue in equities, structured products, credit products, rates, and ~~administering assets, including mutual funds, institutional separate accounts, corporate trust, personal trust,~~

foreign exchange.

~~Earnings Performance (continued~~)

~~employee benefit trust~~Net gains from debt securities decreased due to lower gains on sales of asset-based securities and ~~agency assets. Trust~~municipal bonds in our investment portfolio as a result of decreased sales volumes.

Net losses from equity securities decreased reflecting:

•lower impairment of equity securities; and ~~investment management fee~~

•higher unrealized gains on marketable equity securities;

partially offset by:

•lower unrealized gains on nonmarketable equity securities driven by our affiliated venture capital and private equity businesses.

Other income ~~is primarily~~ decreased driven by:

•higher amortization due to growth in renewable energy investments (offset by benefits and credits in income tax expense); and

•higher valuation losses related to the retained litigation risk associated with shares of Visa B common stock that we previously sold.

First half of 2023 vs. first half of 2022

Deposit-related fees decreased reflecting:

•the elimination of non-sufficient funds fees and our efforts to help customers avoid overdraft fees; and

•lower fees on commercial accounts driven by higher earnings credit rates due to an increase in interest rates.

Investment advisory and other asset-based fees decreased reflecting lower average market valuations.

Fees from ~~client~~the majority of WIM advisory assets ~~under management (AUM) for which the fees~~ are ~~determined~~ based on a ~~tiered scale relative to~~percentage of the market value of the ~~AUM. AUM consists~~assets at the beginning of the quarter. For additional information on certain client investment 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 andsee the ~~related discussion in the “Operating~~“Earnings Performance – Operating Segment Results – Wealth and Investment Management – ~~Trust and Investment Client Assets Under Management”~~WIM Advisory Assets” section in this Report. ~~In addition to AUM we have client assets under administration (AUA) that earn various administrative~~

Commissions and brokerage services fees which are generally based on the extent of the services provided to administer the account. Our AUA totaled $1.7 trillion at September 30, 2017, compared with $1.6 trillion at September 30, 2016. Trust and investment management fees were $840 million and $2.5 billion in the third quarter and first nine months of 2017, respectively, compared with $849 million and $2.5 billion for the same periods in 2016.

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

~~Card~~


			Wells Fargo & Company			9

Earnings Performance (continued)

Net servicing income decreased driven by:

•lower servicing fees ~~were $1.0 billion and $3.0 billion in the third quarter and first nine months~~due to a lower balance of ~~2017, respectively, compared with $997 million and $2.9 billion~~mortgage loans serviced for ~~the same periods a year ago.~~

Other fees decreased to $877 million and $2.6 billion in the third quarter and first nine months of 2017, respectively, from $926 million and $2.8 billion for the same periods in 2016, driven by lower all other fees. All other fees were $122 million and $445 million in the third quarter and first nine months of 2017, respectively, compared with $179 million and $562 million for the same periods in 2016, driven by lower other fees from discontinued products andothers, including the impact of MSR sales;

partially offset by:

•higher income from net favorable hedge results related to MSR valuations.

Net gains on mortgage loan originations/sales decreased

driven by:

•lower residential mortgage origination volumes; and

•lower gains related to the ~~sale~~resecuritization of ~~our global fund services business in fourth quarter 2016.~~loans we purchased from Government National Mortgage Association (GNMA) loan securitization pools.

~~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 86 (Mortgage Banking Activities) to Financial Statements in this Report.

~~Insurance~~

Net gains from trading activities increased driven by higher trading results across all asset classes.

Net gains from debt securities decreased due to lower gains on sales of asset-based securities and municipal bonds in our investment portfolio as a result of decreased sales volumes.

Net losses from equity securities increased reflecting:

•lower unrealized and realized gains on nonmarketable equity securities driven by our affiliated venture capital and private equity businesses;

partially offset by:

•lower impairment of equity securities; and

•higher unrealized gains on marketable equity securities.

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

~~Net gains from trading activities, which reflect unrealized changes~~change in fair value of liabilities associated with our ~~trading positions and realized gains and losses, were $245 million and $921 million~~reinsurance business, which was recognized as a result of our adoption of ASU 2018-12 in ~~the third~~first quarter and first nine months 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.2023. For additional information ~~about trading activities, see the “Risk Management – Asset/Liability Management – Market Risk – Trading Activities” section in this Report.~~

~~Net gains~~ on ~~debt and equity securities totaled $404 million and $1.2 billion in the third quarter and first nine months~~our adoption of ~~2017, respectively, compared with $246 million and $1.4 billion in the third quarter and first nine months~~ASU 2018-12, see Note 1 (Summary 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 a gain from the sale of our crop insurance business in first quarter 2016, and a gain from the sale of our health benefits services business in second quarter 2016, partially offset by a $309 million gain from the sale of a Pick-a-Pay PCI loan portfolio in second quarter 2017 and higher income from equity method investments. Hedge ineffectiveness was driven by changes in ineffectiveness recognized on interest rate swaps used to hedge our exposure to interest rate risk on long-term debt and cross-currency swaps, cross-currency interest rate swaps and forward contracts used to hedge our exposure to foreign currency risk and interest rate risk involving non-U.S. dollar denominated long-term debt. The portion of the hedge ineffectiveness recognized was partially offset by the results of certain economic hedges and, accordingly, we recognized a net hedge benefit of $93 million for third quarter 2017 and a net hedge loss of $79 million for the first nine months of 2017, compared with a net hedge benefit of $142 million and $577 million for the same periods a year ago. For additional information about derivatives used as part of our asset/liability management, see Note 12 (Derivatives)Significant Accounting Policies) to Financial Statements in this Report.

~~Earnings Performance (continued~~)


10			Wells Fargo & Company

Noninterest Expense

Table 3:Noninterest Expense



	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Personnel	$	8,606	8,442	164	2	%	$	18,021	17,713	308	2	%
Technology, telecommunications and equipment	947		799	148	19		1,869		1,675	194	12
Occupancy	707		705	2	—		1,420		1,427	(7)	—
Operating losses	232		576	(344)	(60)		499		1,249	(750)	(60)
Professional and outside services	1,304		1,310	(6)	—		2,533		2,596	(63)	(2)
Leases (1)	180		185	(5)	(3)		357		373	(16)	(4)
Advertising and promotion	184		102	82	80		338		201	137	68
Restructuring charges	—		—	—	—		—		5	(5)	(100)
Other	827		743	84	11		1,626		1,474	152	10
Total	$	12,987	12,862	125	1		$	26,663	26,713	(50)	—

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~~Second quarter 2023 vs. second quarter 2022

Personnel expense ~~was $14.4 billion in third quarter 2017, up 8% from $13.3 billion a year ago,~~ increased driven by by:

•higher ~~operating losses, personnel expenses, outside professional and contract services, and foreclosed assets~~salaries expense, including higher severance expense;

partially offset ~~by lower other expense. In~~ by:

•the ~~first nine months~~impact of ~~2017, noninterest~~efficiency initiatives.

Technology, telecommunications and equipment expense ~~was $41.7 billion, up 6% from the same period a year ago,~~increased due to higher ~~personnel expenses, outside professional~~expense for the amortization of internally developed software and ~~contract services,~~higher expense for technology contracts.

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

As previously disclosed, we have outstanding litigation, regulatory, and customer remediation matters that could impact operating losses ~~FDIC~~in the coming quarters.

Advertising and promotion expense increased due to higher marketing and ~~foreclosed assets~~brand campaign volumes.

Other expense increased due to higher Federal Deposit Insurance Corporation (FDIC) deposit assessment expense driven by a higher assessment rate.

First half of 2023 vs. first half of 2022

Personnel expense increased driven by:

•higher salaries expense, including higher severance expense;

partially offset by:

•lower incentive compensation expense; and

•the impact of efficiency initiatives.

Technology, telecommunications and equipment expense increased due to higher expense for the amortization of internally developed software and higher expense for technology contracts.

Operating losses decreased driven by lower ~~insurance~~ expense for customer remediation and ~~postage, stationery~~litigation matters.

As previously disclosed, we have outstanding litigation, regulatory, and ~~supplies expense.~~

Personnel expenses, which include salaries, commissions, incentive compensation, and employee benefits, were up $221 million, or 3%, in third quarter 2017 compared with the same quarter last year, and up $889 million, or 4%,customer remediation matters that could impact operating losses in the ~~first nine months of 2017 compared with the same period a year ago. The increase in both periods was~~coming quarters.

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

Advertising and promotion expense increased due to ~~annual salary increases~~higher marketing and brand campaign volumes.

Other expense increased due to higher ~~benefits~~FDIC deposit assessment expense ~~partially offset by one fewer payroll day. The increase in the first nine months of 2017 was also~~ driven by a higher ~~deferred compensation costs (offset in trading revenue).~~assessment rate.

We expect our 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~~assessment expense will increase ~~in the first nine months of 2017 was due to an increase in deposit assessments~~significantly as a result of the FDIC's proposed rule to charge a ~~temporary surcharge which became effective on July 1, 2016. The FDIC expects the surcharge to be in effect for approximately two years.~~special assessment.

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 expense related to sales practices matters.

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

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

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

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

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 effective~~

Table 4:Income Tax Expense



	Quarter ended June 30,							Six months ended June 30,
(in millions)	2023			2022	$ Change	% Change		2023			2022	$ Change	% Change
Income before income tax expense	$	5,833		3,598	2,235	62	%	$	11,679		8,262	3,417	41	%
Income tax expense	930			622	308	50		1,896			1,368	528	39
Effective income tax rate (1)	15.8		%	16.5				16.0		%	16.5

(1)Represents Income tax expense (benefit) divided by Income (loss) before income tax ~~rate was 32.4% and 31.5% for third quarter 2017 and 2016, respectively. Our effective~~expense (benefit) less Net income ~~tax rate was 29.0% in the first nine months of 2017, down~~(loss) from ~~31.9% in~~

noncontrolling interests.

~~the first nine months of 2016. The increase in the effective~~For additional information on 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 rate for the first nine months of 2017 also included net discrete tax benefits associated with stock compensation activity subject to ASU 2016-09 accounting guidance adopted in first quarter 2017, and tax benefits associated with our agreement to sell Wells Fargo Insurance Services USA (and related businesses) in second quarter 2017. Seetaxes, see Note ~~1 (Summary of Significant Accounting Policies)~~22 (Income Taxes) to Financial Statements in ~~this Report for additional information about ASU 2016-09.~~our 2022 Form 10-K.


			Wells Fargo & Company			11

Earnings Performance (continued)

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 5. 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 with our Chief Executive Officer and relevant senior management. The management reporting process is based on U.S. GAAP and includes specific adjustments, such as funds transfer pricing for asset/liability management, shared revenue 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. Effective January 1, 2023, management modified its capital allocation methodology to improve alignment of allocated capital with the binding regulatory constraints of the Company. 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 45: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


12			Wells Fargo & Company

Table 6 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 1816 (Operating Segments) to Financial Statements in this Report.

Table 4:6:Operating Segment Results – Highlights



(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate (1)	Reconciling Items (2)	Consolidated Company
Quarter ended June 30, 2023
Net interest income	$	7,490	2,501	2,359	1,009	(91)	(105)	13,163
Noninterest income	1,965		868	2,272	2,639	121	(495)	7,370
Total revenue	9,455		3,369	4,631	3,648	30	(600)	20,533
Provision for credit losses	874		26	933	24	(144)	—	1,713
Noninterest expense	6,027		1,630	2,087	2,974	269	—	12,987
Income (loss) before income tax expense (benefit)	2,554		1,713	1,611	650	(95)	(600)	5,833
Income tax expense (benefit)	640		429	401	163	(103)	(600)	930
Net income before noncontrolling interests	1,914		1,284	1,210	487	8	—	4,903
Less: Net income (loss) from noncontrolling interests	—		3	—	—	(38)	—	(35)
Net income	$	1,914	1,281	1,210	487	46	—	4,938
Quarter ended June 30, 2022
Net interest income	$	6,372	1,580	2,057	916	(619)	(108)	10,198
Noninterest income	2,135		912	1,516	2,789	(102)	(408)	6,842
Total revenue	8,507		2,492	3,573	3,705	(721)	(516)	17,040
Provision for credit losses	613		21	(62)	(7)	15	—	580
Noninterest expense	6,036		1,478	1,840	2,911	597	—	12,862
Income (loss) before income tax expense (benefit)	1,858		993	1,795	801	(1,333)	(516)	3,598
Income tax expense (benefit)	465		249	459	198	(233)	(516)	622
Net income (loss) before noncontrolling interests	1,393		744	1,336	603	(1,100)	—	2,976
Less: Net income (loss) from noncontrolling interests	—		3	—	—	(169)	—	(166)
Net income (loss)	$	1,393	741	1,336	603	(931)	—	3,142

Six months ended June 30, 2023
Net interest income	$	14,923	4,990	4,820	2,053	(75)	(212)	26,499
Noninterest income	3,896		1,686	4,713	5,276	126	(934)	14,763
Total revenue	18,819		6,676	9,533	7,329	51	(1,146)	41,262
Provision for credit losses	1,741		(17)	1,185	35	(24)	—	2,920
Noninterest expense	12,065		3,382	4,304	6,035	877	—	26,663
Income (loss) before income tax expense (benefit)	5,013		3,311	4,044	1,259	(802)	(1,146)	11,679
Income tax expense (benefit)	1,258		828	1,016	315	(375)	(1,146)	1,896
Net income (loss) before noncontrolling interests	3,755		2,483	3,028	944	(427)	—	9,783
Less: Net income (loss) from noncontrolling interests	—		6	—	—	(152)	—	(146)
Net income (loss)	$	3,755	2,477	3,028	944	(275)	—	9,929
Six months ended June 30, 2022
Net interest income	$	12,368	2,941	4,047	1,715	(1,437)	(215)	19,419
Noninterest income	4,702		1,878	2,996	5,747	840	(814)	15,349
Total revenue	17,070		4,819	7,043	7,462	(597)	(1,029)	34,768
Provision for credit losses	423		(323)	(258)	(44)	(5)	—	(207)
Noninterest expense	12,431		3,009	3,823	6,086	1,364	—	26,713
Income (loss) before income tax expense (benefit)	4,216		2,133	3,478	1,420	(1,956)	(1,029)	8,262
Income tax expense (benefit)	1,053		529	884	352	(421)	(1,029)	1,368
Net income (loss) before noncontrolling interests	3,163		1,604	2,594	1,068	(1,535)	—	6,894
Less: Net income (loss) from noncontrolling interests	—		6	—	—	(42)	—	(36)
Net income (loss)	$	3,163	1,598	2,594	1,068	(1,493)	—	6,930

(1)All other business activities that are not included in the reportable operating segments have been included in Corporate. For additional information, see the “Corporate” section below.

(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)~~			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			13

Earnings Performance (~~continued~~) (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 $10 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, as well as referrals to Wholesale~~lending. Table 6a and Table 6b provide additional information for Consumer Banking and ~~WIM business partners. The Community Banking segment~~

also includes the results of our Corporate Treasury activities net of allocations in support of the other operating segments and results of investments in our affiliated venture capital partnerships. Table 4a provides additional financial information for Community Banking.Lending.

Table ~~4a:Community~~6a: Consumer Banking and Lending – Income Statement and Selected Metrics


	Quarter ended June 30,							Six months ended June 30,
($ in millions, unless otherwise noted)	2023			2022	$ Change	% Change		2023			2022	$ Change	% Change
Income Statement
Net interest income	$	7,490		6,372	1,118	18	%	$	14,923		12,368	2,555	21	%
Noninterest income:
Deposit-related fees	666			779	(113)	(15)		1,338			1,624	(286)	(18)
Card fees	1,022			1,038	(16)	(2)		1,980			1,999	(19)	(1)
Mortgage banking	132			211	(79)	(37)		292			865	(573)	(66)
Other	145			107	38	36		286			214	72	34
Total noninterest income	1,965			2,135	(170)	(8)		3,896			4,702	(806)	(17)
Total revenue	9,455			8,507	948	11		18,819			17,070	1,749	10
Net charge-offs	621			358	263	73		1,210			733	477	65
Change in the allowance for credit losses	253			255	(2)	(1)		531			(310)	841	271
Provision for credit losses	874			613	261	43		1,741			423	1,318	312
Noninterest expense	6,027			6,036	(9)	—		12,065			12,431	(366)	(3)
Income before income tax expense	2,554			1,858	696	37		5,013			4,216	797	19
Income tax expense	640			465	175	38		1,258			1,053	205	19
Net income	$	1,914		1,393	521	37		$	3,755		3,163	592	19
Revenue by Line of Business
Consumer and Small Business Banking	$	6,576		5,510	1,066	19		$	13,062		10,581	2,481	23
Consumer Lending:
Home Lending	847			972	(125)	(13)		1,710			2,462	(752)	(31)
Credit Card	1,321			1,304	17	1		2,626			2,569	57	2
Auto	378			436	(58)	(13)		770			880	(110)	(13)
Personal Lending	333			285	48	17		651			578	73	13
Total revenue	$	9,455		8,507	948	11		$	18,819		17,070	1,749	10

Selected Metrics
Consumer Banking and Lending:
Return on allocated capital (1)	16.9		%	11.1				16.7		%	12.7
Efficiency ratio (2)	64			71				64			73

Retail bank branches (#)	4,455			4,660		(4)		4,455			4,660		(4)
Digital active customers (# in millions) (3)	34.2			33.4		2		34.2			33.4		2
Mobile active customers (# in millions) (3)	29.1			28.0		4		29.1			28.0		4

Consumer and Small Business Banking:
Deposit spread (4)	2.6		%	1.7				2.6		%	1.7
Debit card purchase volume ($ in billions) (5)	$	124.9		125.2	(0.3)	—		$	242.2		240.2	2.0	1
Debit card purchase transactions (# in millions) (5)	2,535			2,517		1		4,904			4,855		1

(continued on following page)

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)~~14			~~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~~(continued from previous page)


	Quarter ended June 30,							Six months ended June 30,
($ in millions, unless otherwise noted)	2023			2022	$ Change	% Change		2023			2022	$ Change	% Change
Home Lending:
Mortgage banking:
Net servicing income	$	62		77	(15)	(19)	%	$	146		193	(47)	(24)	%
Net gains on mortgage loan originations/sales	70			134	(64)	(48)		146			672	(526)	(78)
Total mortgage banking	$	132		211	(79)	(37)		$	292		865	(573)	(66)

Originations ($ in billions):
Retail	$	7.7		19.6	(11.9)	(61)		$	13.3		43.7	(30.4)	(70)
Correspondent	0.1			14.5	(14.4)	(99)		1.1			28.3	(27.2)	(96)
Total originations	$	7.8		34.1	(26.3)	(77)		$	14.4		72.0	(57.6)	(80)

% of originations held for sale (HFS)	45.3		%	46.1				46.0		%	48.9
Third-party mortgage loans serviced (period-end) ($ in billions) (6)	$	609.1		696.9	(87.8)	(13)		$	609.1		696.9	(87.8)	(13)
Mortgage servicing rights (MSR) carrying value (period-end)	8,251			9,163	(912)	(10)		8,251			9,163	(912)	(10)
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) (6)	1.35		%	1.31				1.35		%	1.31
Home lending loans 30+ days delinquency rate (7)(8)	0.25			0.28				0.25			0.28


Credit Card:
Point of sale (POS) volume ($ in billions)	$	34.0		30.1	3.9	13		$	64.1		56.1	8.0	14
New accounts (# in thousands)	611			524		17		1,178			1,008		17
Credit card loans 30+ days delinquency rate	2.39		%	1.54				2.39		%	1.54
Credit card loans 90+ days delinquency rate	1.17			0.74				1.17			0.74

Auto:
Auto originations ($ in billions)	$	4.8		5.4	(0.6)	(11)		$	9.8		12.7	(2.9)	(23)
Auto loans 30+ days delinquency rate (8)	2.55		%	1.95				2.55		%	1.95


Personal Lending:
New volume ($ in billions)	$	3.3		3.3	—	—		$	6.2		5.9	0.3	5

(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 ~~$2.2 billion, down $998 million,~~consumer and small business customers who have logged on via a digital or ~~31%, from third~~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)Excludes nonaccrual loans.

Second quarter ~~2016, and $8.2 billion for the first nine months of 2017, down $1.5 billion, or 15%, compared with the same period a year ago. Third~~2023 vs. second quarter ~~2017 results included a $1 billion discrete litigation accrual (not tax deductible) for previously disclosed mortgage-related regulatory investigations.~~ 2022

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 due to lower mortgage banking revenue and deposit service charges, partially offset by increased driven by:

•higher net interest income driven by higher interest rates and ~~gains on equity investments. The decrease from the first nine months of 2016 was predominantly~~deposit spreads, partially offset by lower deposit balances;

partially offset by:

•lower deposit-related fees reflecting our efforts to help customers avoid overdraft fees; and

•lower mortgage banking noninterest income due to lower residential mortgage ~~banking revenue, gains on sales of debt securities, and other income~~origination volumes.

Provision for credit losses increased due to higher net charge-offs driven by ~~net hedge ineffectiveness accounting related~~credit card loans.

Noninterest expense was stable, reflecting:

•lower personnel expense driven by lower revenue-related incentive compensation in Home Lending due to ~~our long-term debt hedging results,~~ lower production, and the impact of efficiency initiatives; and

•lower operating losses reflecting lower expense for customer remediation and litigation matters;

partially offset by by:

•higher operating costs, advertising expense, and FDIC assessments.

First half of 2023 vs. first half of 2022

Revenue increased driven by:

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

impact of annual salary increases and higher professional services driven by increased project spending, partially offset by higher expenses allocated to the Wholesale Banking and Wealth and Investment Management operating segments related to increased project and technology spending on regulatory and compliance related initiatives. The increase from the first nine months of 2016 was predominantly due to higher personnel expenses, including deferred compensation plan expense (offset in trading revenue), and higher operating losses and professional services,deposit spreads, partially offset by lower ~~other expense. The provision~~deposit balances;

partially offset by:

•lower mortgage banking noninterest income due to lower residential mortgage origination volumes and lower revenue related to the resecuritization of loans we purchased from GNMA loan securitization pools; and

•lower deposit-related fees reflecting the elimination of non-sufficient funds fees and our efforts to help customers avoid overdraft fees.

Provision for credit losses ~~was flat compared with third quarter 2016~~included a $841 million increase in the allowance for credit losses reflecting a less favorable economic


			Wells Fargo & Company			15

Earnings Performance (continued)

outlook and portfolio credit normalization, as well as higher net charge-offs driven by credit card loans.

Noninterest expensedecreased ~~$141 million from the first nine months of 2016 predominantly~~driven by:

•lower operating losses reflecting lower expense for customer remediation and litigation matters; and

•lower personnel expense driven by lower revenue-related incentive compensation in Home Lending due to ~~an improvement~~lower production, and the impact of efficiency initiatives;

partially offset by:

•higher operating costs, advertising expense, and FDIC assessments.

Table 6b: Consumer Banking and Lending – Balance Sheet


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Selected Balance Sheet Data (average)
Loans by Line of Business:
Consumer and Small Business Banking	$	9,215	10,453	(1,238)	(12)	%	$	9,289	10,529	(1,240)	(12)	%
Consumer Lending:
Home Lending	220,641		218,371	2,270	1		221,596		216,055	5,541	3
Credit Card	39,225		32,825	6,400	19		38,710		32,168	6,542	20
Auto	52,476		56,813	(4,337)	(8)		53,073		57,044	(3,971)	(7)
Personal Lending	14,794		12,397	2,397	19		14,657		12,177	2,480	20
Total loans	$	336,351	330,859	5,492	2		$	337,325	327,973	9,352	3
Total deposits	823,339		898,650	(75,311)	(8)		832,252		890,042	(57,790)	(6)
Allocated capital	44,000		48,000	(4,000)	(8)		44,000		48,000	(4,000)	(8)

Selected Balance Sheet Data (period-end)
Loans by Line of Business:
Consumer and Small Business Banking	$	9,299	10,400	(1,101)	(11)		$	9,299	10,400	(1,101)	(11)
Consumer Lending:
Home Lending	219,595		222,088	(2,493)	(1)		219,595		222,088	(2,493)	(1)
Credit Card	40,053		34,075	5,978	18		40,053		34,075	5,978	18
Auto	52,175		56,224	(4,049)	(7)		52,175		56,224	(4,049)	(7)
Personal Lending	15,095		12,945	2,150	17		15,095		12,945	2,150	17
Total loans	$	336,217	335,732	485	—		$	336,217	335,732	485	—
Total deposits	820,495		892,373	(71,878)	(8)		820,495		892,373	(71,878)	(8)

Second quarter 2023 vs. second quarter 2022

Total loans (average and period-end) increased driven by:

•higher point of sale volume and the impact of new product launches in ~~the~~our Credit Card business; and

•higher loan balances in our Personal Lending business due to higher origination volumes and slower payment rates;

partially offset by:

•a decline in loan balances in our Auto business due to lower origination volumes reflecting credit tightening actions and rising interest rates; and

•a decline in Paycheck Protection Program loans in Consumer and Small Business Banking.

Total deposits (average and period-end) decreased due to consumer ~~lending~~deposit outflows on consumer spending, as well as customer migration to higher yielding alternatives.

~~portfolio, primarily~~First half of 2023 vs. first half of 2022

Total loans (average) increased driven by:

•higher point of sale volume and the impact of new product launches in our Credit Card business;

•higher loan balances in Home Lending; and

•higher loan balances in our Personal Lending business due to higher origination volumes and slower payment rates;

partially offset by:

•a decline in loan balances in our Auto business due to lower origination volumes reflecting credit tightening actions and rising interest rates; and

•a decline in Paycheck Protection Program loans in Consumer and Small Business Banking.

Total deposits (average) decreased due to consumer ~~real estate, compared with the same periods a year ago.~~deposit outflows on consumer spending, as well as customer migration to higher yielding alternatives.

~~Wholesale~~


16			Wells Fargo & Company

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~~6c and Table 6d provide additional ~~financial~~ information for ~~Wholesale~~Commercial Banking.

Table ~~4b:Wholesale~~6c: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 June 30,							Six months ended June 30,
($ in millions)	2023			2022	$ Change	% Change		2023			2022	$ Change	% Change
Income Statement
Net interest income	$	2,501		1,580	921	58	%	$	4,990		2,941	2,049	70	%
Noninterest income:
Deposit-related fees	248			310	(62)	(20)		484			638	(154)	(24)
Lending-related fees	131			122	9	7		260			243	17	7
Lease income	167			179	(12)	(7)		336			358	(22)	(6)
Other	322			301	21	7		606			639	(33)	(5)
Total noninterest income	868			912	(44)	(5)		1,686			1,878	(192)	(10)
Total revenue	3,369			2,492	877	35		6,676			4,819	1,857	39
Net charge-offs	63			4	59	NM		24			(25)	49	196
Change in the allowance for credit losses	(37)			17	(54)	NM		(41)			(298)	257	86
Provision for credit losses	26			21	5	24		(17)			(323)	306	95
Noninterest expense	1,630			1,478	152	10		3,382			3,009	373	12
Income before income tax expense	1,713			993	720	73		3,311			2,133	1,178	55
Income tax expense	429			249	180	72		828			529	299	57
Less: Net income from noncontrolling interests	3			3	—	—		6			6	—	—
Net income	$	1,281		741	540	73		$	2,477		1,598	879	55

Revenue by Line of Business
Middle Market Banking	$	2,199		1,459	740	51		$	4,354		2,705	1,649	61
Asset-Based Lending and Leasing	1,170			1,033	137	13		2,322			2,114	208	10
Total revenue	$	3,369		2,492	877	35		$	6,676		4,819	1,857	39

Revenue by Product
Lending and leasing	$	1,332		1,308	24	2		$	2,656		2,563	93	4
Treasury management and payments	1,584			943	641	68		3,146			1,722	1,424	83
Other	453			241	212	88		874			534	340	64
Total revenue	$	3,369		2,492	877	35		$	6,676		4,819	1,857	39

Selected Metrics
Return on allocated capital	19.3		%	14.3				18.7		%	15.6
Efficiency ratio	48			59				51			62

NM – Not meaningful

~~Wholesale Banking reported net income of $2.0 billion in third~~Second quarter ~~2017, down $1 million from third~~2023 vs. second quarter ~~2016. In the first nine months of 2017, net income of $6.5 billion~~2022

Revenue increased $508 million, or 8%, from the same period a year ago. Net income results for the first nine months of 2017 included a tax benefit resulting from our agreement to sell Wells Fargo Insurance Services USA and related businesses. Revenue decreased $62 million, or 1%, from third quarter 2016 and $315 million, or 1%, from the first nine months of 2016 as an increase indriven by:

•higher net interest income ~~was more than offset by lower noninterest income. Net~~reflecting higher interest ~~income increased $291 million, or 7%, from third quarter 2016~~rates and ~~$1.1 billion, or 9%, from the first nine months of 2016 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 of 2016 largely due to the first quarter 2016 sale of our crop insurance business, which resulted in lower insurance and gain on sale income, and the second quarter 2016 gain on the sale of our health benefits services business,deposit spreads as well as higher loan balances;

partially offset by:

•lower ~~gains on debt securities and customer accommodation trading. The decrease~~deposit-related fees driven by the impact of higher earnings credit rates, which result in ~~noninterest income from~~lower fees for commercial customers.

Provision for credit losses increased reflecting higher net charge-offs driven by a small number of borrowers, with little signs of systemic weakness across the ~~first nine months of 2016 was~~portfolio, partially offset by a $54 million decrease in the allowance for credit losses.

Noninterest expense increased primarily due to higher personnel expense and operating costs, partially offset by the impact of efficiency initiatives.

First half of 2023 vs. first half of 2022

Revenue increased driven by:

•higher net interest income reflecting higher interest rates and deposit spreads as well as higher loan balances;

partially offset by:

•lower deposit-related fees driven by the impact of higher earnings credit rates, which result in lower fees for commercial customers.

Provision for credit losses reflected loan growth.

Noninterest expense increased driven by higher operating costs and personnel expense, partially offset by the impact of efficiency initiatives.


			Wells Fargo & Company			17

Earnings Performance (continued)

Table 6d:Commercial Banking – Balance Sheet


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial	$	165,980	143,833	22,147	15	%	$	164,603	139,835	24,768	18	%
Commercial real estate	45,855		44,790	1,065	2		45,858		44,921	937	2
Lease financing and other	13,989		13,396	593	4		13,872		13,472	400	3
Total loans	$	225,824	202,019	23,805	12		$	224,333	198,228	26,105	13
Loans by Line of Business:
Middle Market Banking	$	122,204	113,033	9,171	8		$	121,916	110,820	11,096	10
Asset-Based Lending and Leasing	103,620		88,986	14,634	16		102,417		87,408	15,009	17
Total loans	$	225,824	202,019	23,805	12		$	224,333	198,228	26,105	13
Total deposits	166,747		188,286	(21,539)	(11)		168,597		194,458	(25,861)	(13)
Allocated capital	25,500		19,500	6,000	31		25,500		19,500	6,000	31

Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial	$	168,492	146,656	21,836	15		$	168,492	146,656	21,836	15
Commercial real estate	45,784		44,992	792	2		45,784		44,992	792	2
Lease financing and other	14,435		13,593	842	6		14,435		13,593	842	6
Total loans	$	228,711	205,241	23,470	11		$	228,711	205,241	23,470	11
Loans by Line of Business:
Middle Market Banking	$	122,104	116,064	6,040	5		$	122,104	116,064	6,040	5
Asset-Based Lending and Leasing	106,607		89,177	17,430	20		106,607		89,177	17,430	20
Total loans	$	228,711	205,241	23,470	11		$	228,711	205,241	23,470	11
Total deposits	164,764		183,145	(18,381)	(10)		164,764		183,145	(18,381)	(10)

Second quarter 2023 vs. second quarter 2022

Total loans (average and period-end) increased driven by new customer growth and higher line utilization.

Total deposits (average and period-end) decreased due to customer migration to higher yielding alternatives, partially offset by additions of deposits from new and existing customers.

First half of 2023 vs. first half of 2022

Total loans (average) increased driven by new customer growth and higher line utilization.

Total deposits (average) decreased due to customer migration to higher yielding alternatives, partially offset by additions of deposits from new and existing customers.


18			Wells Fargo & Company

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. Table 6e and Table 6fprovide additional information for Corporate and Investment Banking.

Table 6e:Corporate and Investment Banking – Income Statement and Selected Metrics


	Quarter ended June 30,							Six months ended June 30,
($ in millions)	2023			2022	$ Change	% Change		2023			2022	$ Change	% Change
Income Statement
Net interest income	$	2,359		2,057	302	15	%	$	4,820		4,047	773	19	%
Noninterest income:
Deposit-related fees	247			280	(33)	(12)		483			573	(90)	(16)
Lending-related fees	191			195	(4)	(2)		385			380	5	1
Investment banking fees	390			307	83	27		704			769	(65)	(8)
Net gains from trading activities	1,081			378	703	186		2,338			606	1,732	286
Other	363			356	7	2		803			668	135	20
Total noninterest income	2,272			1,516	756	50		4,713			2,996	1,717	57
Total revenue	4,631			3,573	1,058	30		9,533			7,043	2,490	35
Net charge-offs	83			(11)	94	855		100			(42)	142	338
Change in the allowance for credit losses	850			(51)	901	NM		1,085			(216)	1,301	602
Provision for credit losses	933			(62)	995	NM		1,185			(258)	1,443	559
Noninterest expense	2,087			1,840	247	13		4,304			3,823	481	13
Income before income tax expense	1,611			1,795	(184)	(10)		4,044			3,478	566	16
Income tax expense	401			459	(58)	(13)		1,016			884	132	15

Net income	$	1,210		1,336	(126)	(9)		$	3,028		2,594	434	17

Revenue by Line of Business
Banking:
Lending	$	685		528	157	30		$	1,377		1,049	328	31
Treasury Management and Payments	762			529	233	44		1,547			961	586	61
Investment Banking	311			222	89	40		591			553	38	7
Total Banking	1,758			1,279	479	37		3,515			2,563	952	37
Commercial Real Estate	1,333			1,060	273	26		2,644			2,055	589	29
Markets:
Fixed Income, Currencies, and Commodities (FICC)	1,133			934	199	21		2,418			1,811	607	34
Equities	397			253	144	57		834			520	314	60
Credit Adjustment (CVA/DVA) and Other	14			13	1	8		85			38	47	124
Total Markets	1,544			1,200	344	29		3,337			2,369	968	41
Other	(4)			34	(38)	NM		37			56	(19)	(34)
Total revenue	$	4,631		3,573	1,058	30		$	9,533		7,043	2,490	35

Selected Metrics
Return on allocated capital	10.2		%	13.8				13.0		%	13.5
Efficiency ratio	45			51				45			54

NM – Not meaningful

Second quarter 2023 vs. second quarter 2022

Revenue increased driven by:

•higher net gains from trading activities driven by higher trading revenue in equities, structured products, credit products, rates, and foreign exchange;

•higher net interest income reflecting higher interest rates; and

•higher investment banking fees, as second quarter 2022 included a $107 million write-down on unfunded leveraged finance commitments.

Provision for credit losses increased reflecting a $901 million increase in the allowance for credit losses driven by commercial real estate loans, primarily office loans, as well as higher ~~lease income~~net charge-offs.

Noninterest expense increased driven by higher operating costs and personnel expense, partially offset by the impact of efficiency initiatives.


			Wells Fargo & Company			19

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

~~related~~First half of 2023 vs. first half of 2022

Revenue increased driven by:

•higher net gains from trading activities driven by higher trading results across all asset classes; and

•higher net interest income reflecting higher interest rates;

partially offset by:

•lower deposit-related fees driven by the impact of higher earnings credit rates, which result in lower fees for corporate banking customers; and

•lower investment banking fees due to ~~the GE Capital business acquisitions. Average loans of $463.8~~lower market activity.

Provision for credit losses increased reflecting a $1.3 billion ~~in third quarter 2017 increased $9.5 billion, or 2%, from third quarter 2016, and average loans of $465.0 billion~~increase in the ~~first nine months of 2017 increased $19.8 billion, or 4%, from the first nine months of 2016. Average loan growth was~~allowance for credit losses driven by ~~growth in asset backed finance, capital finance, government and institutional banking, middle market banking, and structured~~commercial real estate loans, primarily office loans, 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. higher net charge-offs.

Noninterest expense increased ~~$128 million, or 3%, from third~~driven by higher operating costs and personnel expense, partially offset by the impact of efficiency initiatives.

Table 6f:Corporate and Investment Banking – Balance Sheet


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial	$	190,529	200,527	(9,998)	(5)	%	$	192,141	195,865	(3,724)	(2)	%
Commercial real estate	100,941		98,167	2,774	3		100,956		95,770	5,186	5
Total loans	$	291,470	298,694	(7,224)	(2)		$	293,097	291,635	1,462	1
Loans by Line of Business:
Banking	$	95,413	109,123	(13,710)	(13)		$	97,235	105,822	(8,587)	(8)
Commercial Real Estate	136,473		133,212	3,261	2		136,639		129,749	6,890	5
Markets	59,584		56,359	3,225	6		59,223		56,064	3,159	6
Total loans	$	291,470	298,694	(7,224)	(2)		$	293,097	291,635	1,462	1
Trading-related assets:
Trading account securities	$	118,462	110,499	7,963	7		$	115,561	113,079	2,482	2
Reverse repurchase agreements/securities borrowed	60,164		48,909	11,255	23		58,997		51,854	7,143	14
Derivative assets	17,522		30,845	(13,323)	(43)		17,724		28,557	(10,833)	(38)
Total trading-related assets	$	196,148	190,253	5,895	3		$	192,282	193,490	(1,208)	(1)
Total assets	550,091		564,306	(14,215)	(3)		549,453		557,891	(8,438)	(2)
Total deposits	160,251		164,860	(4,609)	(3)		158,908		167,009	(8,101)	(5)
Allocated capital	44,000		36,000	8,000	22		44,000		36,000	8,000	22

Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial	$	190,317	207,414	(17,097)	(8)		$	190,317	207,414	(17,097)	(8)
Commercial real estate	101,028		100,872	156	—		101,028		100,872	156	—
Total loans	$	291,345	308,286	(16,941)	(5)		$	291,345	308,286	(16,941)	(5)
Loans by Line of Business:
Banking	$	93,596	111,639	(18,043)	(16)		$	93,596	111,639	(18,043)	(16)
Commercial Real Estate	136,257		137,083	(826)	(1)		136,257		137,083	(826)	(1)
Markets	61,492		59,564	1,928	3		61,492		59,564	1,928	3
Total loans	$	291,345	308,286	(16,941)	(5)		$	291,345	308,286	(16,941)	(5)
Trading-related assets:
Trading account securities	$	130,008	109,634	20,374	19		$	130,008	109,634	20,374	19
Reverse repurchase agreements/securities borrowed	59,020		42,696	16,324	38		59,020		42,696	16,324	38
Derivative assets	17,804		24,540	(6,736)	(27)		17,804		24,540	(6,736)	(27)
Total trading-related assets	$	206,832	176,870	29,962	17		$	206,832	176,870	29,962	17
Total assets	559,520		567,733	(8,213)	(1)		559,520		567,733	(8,213)	(1)
Total deposits	158,770		162,439	(3,669)	(2)		158,770		162,439	(3,669)	(2)

Second quarter ~~2016~~2023 vs. second quarter 2022

Total assets (average and ~~$427 million, or 4%, from the first nine months of 2016,~~period-end) decreased reflecting:

•lower loan balances driven by lower originations; and

•lower trading-related derivative assets due to ~~higher expenses allocated from Community Banking related to~~ declines in derivative balances for commodities and equities;

partially offset by:

•increased ~~project~~volume of reverse repurchase agreements; 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~~•higher trading account securities driven by ~~improvement~~higher mortgage-backed securities, equity, and bond trading balances.

Total deposits (average and period-end) decreased due to customer migration to higher yielding alternatives, partially offset by additions of deposits from new and existing customers.


20			Wells Fargo & Company

First half of 2023 vs. first half of 2022

Total assets (average) decreased driven by lower trading-related derivative assets due to declines in ~~the oil~~derivative balances for commodities and ~~gas portfolio.~~equities.

Total deposits (average) decreased due to customer migration to higher yielding alternatives, partially offset by additions of deposits from new and existing customers.

Wealth and Investment Managementprovides ~~a full range of~~ personalized wealth management, ~~investment~~brokerage, financial planning, lending, private banking, trust and ~~retirement~~fiduciary products and services to clients across U.S. based businesses including Wells Fargo Advisors, The Private Bank, Abbot Downing, Wells Fargo Institutional Retirement and Trust, and Wells Fargo Asset Management. We deliver financial planning, private banking, credit, investment management and fiduciary services toaffluent, high-net worth and ultra-high-net worth ~~individuals~~clients. We operate through financial advisors in our brokerage and ~~families. We also serve clients’ brokerage needs, supply retirement~~wealth offices, consumer bank branches, independent offices, and ~~trust services to institutional clients~~digitally through WellsTrade® and Intuitive Investor®. Table 6g and Table 6h 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.~~

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

(WIM).

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
Table 6g:Wealth and Investment Management

~~NM – Not meaningful~~


	Quarter ended June 30,							Six months ended June 30,
($ in millions, unless otherwise noted)	2023			2022	$ Change	% Change		2023			2022	$ Change	% Change
Income Statement
Net interest income	$	1,009		916	93	10	%	$	2,053		1,715	338	20	%
Noninterest income:
Investment advisory and other asset-based fees	2,110			2,306	(196)	(8)		4,171			4,782	(611)	(13)
Commissions and brokerage services fees	494			459	35	8		1,035			913	122	13
Other	35			24	11	46		70			52	18	35
Total noninterest income	2,639			2,789	(150)	(5)		5,276			5,747	(471)	(8)
Total revenue	3,648			3,705	(57)	(2)		7,329			7,462	(133)	(2)
Net charge-offs	(1)			—	(1)	(100)		(2)			(4)	2	50
Change in the allowance for credit losses	25			(7)	32	457		37			(40)	77	193
Provision for credit losses	24			(7)	31	443		35			(44)	79	180
Noninterest expense	2,974			2,911	63	2		6,035			6,086	(51)	(1)
Income before income tax expense	650			801	(151)	(19)		1,259			1,420	(161)	(11)
Income tax expense	163			198	(35)	(18)		315			352	(37)	(11)

Net income	$	487		603	(116)	(19)		$	944		1,068	(124)	(12)

Selected Metrics
Return on allocated capital	30.5		%	27.1				29.7		%	24.1
Efficiency ratio	82			79				82			82

Client assets ($ in billions, period-end):
Advisory assets	$	850		800	50	6		$	850		800	50	6
Other brokerage assets and deposits	1,148			1,035	113	11		1,148			1,035	113	11
Total client assets	$	1,998		1,835	163	9		$	1,998		1,835	163	9



Selected Balance Sheet Data (average)
Total loans	$	83,045		85,912	(2,867)	(3)		$	83,331		85,342	(2,011)	(2)
Total deposits	112,360			173,670	(61,310)	(35)		119,443			179,708	(60,265)	(34)
Allocated capital	6,250			8,750	(2,500)	(29)		6,250			8,750	(2,500)	(29)

Selected Balance Sheet Data (period-end)
Total loans	$	82,456		85,342	(2,886)	(3)		$	82,456		85,342	(2,886)	(3)
Total deposits	108,532			165,633	(57,101)	(34)		108,532			165,633	(57,101)	(34)


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

~~WIM reported net income of $710 million in third~~Second quarter ~~2017, up $33 million from third~~2023 vs. second quarter ~~2016. Net income for the first nine months of 2017 was $2.0 billion, up $242 million, or 14%, compared with the same period a year ago.~~ 2022

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

•lower investment advisory and other asset-based fees due to ~~an increase in~~lower average market valuations and net outflows of advisory assets;

partially offset by:

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

~~income and noninterest income. Net interest income increased 19% from third quarter 2016 and 18% from the first nine months of 2016, due to~~reflecting higher interest rates, and growth in investment securities and loan balances. Noninterest income decreased 1% from third quarter 2016 substantially driven by lower brokerage transaction revenue, and increased 3% from the first nine months of 2016 substantially driven by higher asset-based fees and

~~deferred compensation plan investments (offset in employee benefits expense),~~ partially offset by lower deposit balances.

Noninterest expense increased driven by:

•higher operating costs;

partially offset by:

•lower personnel expense driven by lower revenue-related incentive compensation; and

•the impact of efficiency initiatives.

Total deposits (average and period-end) decreased due to customer migration to higher yielding alternatives.


			Wells Fargo & Company			21

Earnings Performance (continued)

First half of 2023 vs. first half of 2022

Revenue decreased driven by:

•lower investment advisory and other asset-based fees due to lower average market valuations and net outflows of advisory assets;

partially offset by:

•higher net interest income reflecting higher interest rates, partially offset by lower deposit balances; and

•higher commissions and brokerage ~~transaction revenue. Asset-based~~services fees ~~were up predominantly~~ due to higher brokerage advisory account client assets driven by higher market valuations and positive net flows. Average loans of $72.4 billion in third quarter 2017 increased 6% from third quarter 2016. Average loansservice fee rates.

Provision for credit losses included a $77 million increase in the first nine months of 2017 increased 8% from the same period a year ago. Average loan growth was driven by growth in non-conforming mortgage loans. Average deposits in third quarter 2017 of $188.1 billion decreased 1% from third quarter 2016. Average deposits in the first nine months of 2017 increased 3% from the same period a year ago. Noninterest expense was up 4% from both the third quarter and first nine months of 2016, due to higher expenses allocated from Community Banking related to increased project and technology spending on regulatory 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 provisionallowance for credit losses reflecting a less favorable economic outlook and portfolio credit normalization.

Noninterest expensedecreased ~~$5 million from third quarter 2016~~driven by:

•lower personnel expense driven by lower ~~net charge-offs,~~revenue-related incentive compensation; and ~~increased $10 million from~~

•the ~~first nine months~~impact of ~~2016 driven by~~ efficiency initiatives;

partially offset by:

•higher operating costs.

Total deposits (average) decreased due to customer migration to higher yielding alternatives.

~~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~~WIM Advisory Assets ~~Brokerage advisory, commissions and other fees are received for providing full-service and discount brokerage services predominantly~~In addition to ~~retail brokerage clients. Offering~~transactional accounts, WIM offers advisory account relationships to ~~our~~ brokerage clients is an important component of our broader strategy of meeting their financial needs. Although a majority of our retail brokerage client assets are in accounts that earn brokerage commissions, the fees from those accounts generally represent transactional commissions based on the number and size of transactions executed at the client’s direction.customers. Fees ~~earned~~ from advisory accounts are ~~asset-based and depend~~based on ~~changes in~~a percentage of the market value of the ~~client’s~~ assets as of the beginning of the quarter, which vary across the account types based on the distinct services provided, and are affected by investment performance as well as ~~the level of assets resulting from~~asset inflows and outflows. A majority of our brokerage advisory, commissions and other fee income is earned from advisory accounts. Table 4d shows advisory account client assets as a percentage of total retail brokerage client assets at September 30, 2017 and 2016.

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

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

~~Retail Brokerage advisory~~Advisory accounts include assets that are financial advisor-directed and separately managed by third-party managers as well as certain client-directed brokerage assets where we earn a fee for advisory and other services, but do not have investment discretion. ~~These advisory accounts generate fees as~~

WIM also manages personal trust and other assets for high net worth clients, with fee income earned based on a percentage of the market value of these assets. Table 6h presents advisory assets activity by WIM line of business. 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 ~~assets, which vary across the account types based on the distinct services provided,~~

generation of certain asset-based fees.

For both second quarter 2023 and ~~are affected by investment performance as well as asset inflows and outflows. For the third quarter and first nine months of 2017 and 2016,~~2022, the average fee rate by account type ranged from 8050 to 120 basis points.

Table ~~4e presents retail brokerage~~6h:WIM Advisory Assets


	Quarter ended						Six months ended
(in billions)	Balance, beginning of period		Inflows (1)	Outflows (2)	Market impact (3)	Balance, end of period	Balance, beginning of period		Inflows (1)	Outflows (2)	Market impact (3)	Balance, end of period
June 30, 2023
Client-directed (4)	$	171.9	8.2	(9.1)	6.4	177.4	$	165.2	16.4	(17.5)	13.3	177.4
Financial advisor-directed (5)	233.1		9.5	(10.1)	11.2	243.7	222.9		18.9	(19.3)	21.2	243.7
Separate accounts (6)	182.7		5.8	(6.8)	6.8	188.5	176.5		11.7	(12.9)	13.2	188.5
Mutual fund advisory (7)	80.6		1.8	(3.1)	2.6	81.9	78.6		3.8	(6.2)	5.7	81.9
Total Wells Fargo Advisors	$	668.3	25.3	(29.1)	27.0	691.5	$	643.2	50.8	(55.9)	53.4	691.5
The Private Bank (8)	156.8		6.1	(8.9)	4.0	158.0	153.6		13.4	(18.2)	9.2	158.0
Total WIM advisory assets	$	825.1	31.4	(38.0)	31.0	849.5	$	796.8	64.2	(74.1)	62.6	849.5
June 30, 2022
Client-directed (4)	$	193.7	7.5	(10.0)	(24.2)	167.0	$	205.6	16.3	(20.2)	(34.7)	167.0
Financial advisor-directed (5)	247.2		9.8	(11.3)	(27.1)	218.6	255.5		22.4	(21.2)	(38.1)	218.6
Separate accounts (6)	192.8		6.1	(7.2)	(20.1)	171.6	203.3		13.6	(14.2)	(31.1)	171.6
Mutual fund advisory (7)	95.1		2.1	(4.0)	(11.0)	82.2	102.1		5.3	(8.0)	(17.2)	82.2
Total Wells Fargo Advisors	$	728.8	25.5	(32.5)	(82.4)	639.4	$	766.5	57.6	(63.6)	(121.1)	639.4
The Private Bank (8)	183.6		7.1	(13.5)	(16.8)	160.4	198.0		14.5	(25.2)	(26.9)	160.4
Total WIM advisory assets	$	912.4	32.6	(46.0)	(99.2)	799.8	$	964.5	72.1	(88.8)	(148.0)	799.8

(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 for~~ the ~~third quarter and first nine months of 2017 and 2016.~~

client.

~~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.~~


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


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


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


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


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


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

~~Earnings Performance (continued~~)

~~Trust and Investment Client Assets Under Management~~ We earn trust and investment management fees from managing and administering assets, including mutual funds, institutional separate accounts, 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), 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 earned from AUM where we have discretionary management authority over the investments and generate fees as a percentage of ~~the market value~~certain client assets.

(6)Professional advisory portfolios managed by third-party asset managers. Fees are earned based on a percentage of ~~the AUM. Table 4f presents AUM activity for the third quarter~~certain client assets.

(7)Program with portfolios constructed of load-waived, no-load and ~~first nine months~~institutional share class mutual funds. Fees are earned based on a percentage of ~~2017~~certain client assets.

(8)Discretionary and ~~2016.~~non-discretionary portfolios held in personal trusts, investment agency, or custody accounts with fees earned based on a percentage of client assets.

~~Table 4f:WIM Trust and Investment – 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, 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)~~22			~~Inflows include new managed account assets, contributions, dividends and interest.~~Wells Fargo & Company

Corporate includes corporate treasury and enterprise functions, net of allocations (including funds transfer pricing, capital, liquidity and certain expenses), in support of the reportable operating segments as well as our investment portfolio and affiliated venture capital and private equity businesses.

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 6i and Table 6j provide additional information for Corporate.

Table 6i:Corporate – Income Statement


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Income Statement
Net interest income	$	(91)	(619)	528	85	%	$	(75)	(1,437)	1,362	95	%
Noninterest income	121		(102)	223	219		126		840	(714)	(85)
Total revenue	30		(721)	751	104		51		(597)	648	109
Net charge-offs	(2)		(6)	4	67		(4)		(12)	8	67
Change in the allowance for credit losses	(142)		21	(163)	NM		(20)		7	(27)	NM
Provision for credit losses	(144)		15	(159)	NM		(24)		(5)	(19)	NM
Noninterest expense	269		597	(328)	(55)		877		1,364	(487)	(36)
Loss before income tax benefit	(95)		(1,333)	1,238	93		(802)		(1,956)	1,154	59
Income tax benefit	(103)		(233)	130	56		(375)		(421)	46	11
Less: Net loss from noncontrolling interests (1)	(38)		(169)	131	78		(152)		(42)	(110)	NM
Net income (loss)	$	46	(931)	977	105		$	(275)	(1,493)	1,218	82

NM – Not meaningful

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

Second quarter 2023 vs. second quarter 2022

Revenue increased driven by:

•higher net interest income reflecting higher interest rates; and

•lower impairments of equity securities and higher unrealized gains on marketable equity securities, partially offset by lower unrealized gains on nonmarketable equity securities from our affiliated venture capital and private equity businesses;

partially offset by:

•lower gains on the sales of debt securities in our investment portfolio.

Provision for credit losses reflected a decrease in allowance for credit losses.

Noninterest expense decreased driven by lower operating losses.

First half of 2023 vs. first half of 2022

Revenue increased driven by:

•higher net interest income reflecting higher interest rates;

partially offset by:

•lower unrealized and realized gains on nonmarketable equity securities from our affiliated venture capital and private equity businesses, partially offset by lower impairment of equity securities and higher unrealized gains on marketable equity securities.

Noninterest expense decreased driven by:

•the impact of divestitures; and

•lower operating losses.


~~(2)~~			~~Outflows include closed managed account assets, withdrawals and client management fees.~~Wells Fargo & Company			23

Earnings Performance (continued)

Corporate includes our rail car leasing business, which had long-lived operating lease assets, net of accumulated depreciation, of $4.5 billion and $4.7 billion as of June 30, 2023, and December 31, 2022, respectively. The average age of our rail cars is 22 years and the rail cars are typically leased to customers under short-term leases of 3 to 5 years. Our four largest concentrations, which represented 67% of our rail car fleet as of June 30, 2023, were rail cars used for the transportation of cement/sand, agricultural grain, plastics, and coal products. We

may incur impairment charges 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) and Note 8 (Leasing Activity) to Financial Statements in our 2022 Form 10-K.

Table 6j: Corporate – Balance Sheet


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Selected Balance Sheet Data (average)
Cash and due from banks, and interest-earning deposits with banks	$	132,505	145,637	(13,132)	(9)	%	$	125,004	162,101	(37,097)	(23)	%
Available-for-sale debt securities (1)	130,496		127,997	2,499	2		129,638		142,297	(12,659)	(9)
Held-to-maturity debt securities (1)	270,999		291,710	(20,711)	(7)		271,854		283,655	(11,801)	(4)
Equity securities	15,327		15,681	(354)	(2)		15,422		15,720	(298)	(2)
Total loans	9,216		9,083	133	1		9,185		9,187	(2)	—
Total assets	610,417		642,606	(32,189)	(5)		603,293		664,853	(61,560)	(9)
Total deposits	84,752		20,327	64,425	317		72,846		23,665	49,181	208

Selected Balance Sheet Data (period-end)
Cash and due from banks, and interest-earning deposits with banks	$	128,077	123,872	4,205	3		$	128,077	123,872	4,205	3
Available-for-sale debt securities (1)	123,169		114,469	8,700	8		123,169		114,469	8,700	8
Held-to-maturity debt securities (1)	269,414		298,895	(29,481)	(10)		269,414		298,895	(29,481)	(10)
Equity securities	15,097		15,004	93	1		15,097		15,004	93	1
Total loans	9,231		9,133	98	1		9,231		9,133	98	1
Total assets	593,597		611,657	(18,060)	(3)		593,597		611,657	(18,060)	(3)
Total deposits	92,023		21,563	70,460	327		92,023		21,563	70,460	327

(1)In first quarter 2023, we reclassified HTM debt securities with a fair value of $23.2 billion to AFS debt securities in connection with the adoption of ASU 2022-01 – Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

Second quarter 2023 vs. second quarter 2022

Total assets (average and period-end) decreased reflecting:

•a decrease in average cash and due from banks, and interest-earning deposits with banks that are managed by corporate treasury as a result of a decrease in deposits in the operating segments and an increase in loans originated in the operating segments; and

•sales of and net unrealized losses on AFS debt securities.

Total deposits (average and period-end) increased driven by issuances of certificates of deposit (CDs).

First half of 2023 vs. first half of 2022

Total assets (average) decreased reflecting:

•a decrease in cash and due from banks, and interest-earning deposits with banks that are managed by corporate treasury as a result of a decrease in deposits in the operating segments and an increase in loans originated in the operating segments; and

•sales of and net unrealized losses on AFS debt securities.

Total deposits (average) increased driven by issuances of CDs.


~~(3)~~24			~~Market impact reflects gains and losses on portfolio investments.~~Wells Fargo & Company


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


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


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

Balance Sheet Analysis

At ~~September~~June 30, ~~2017,~~2023, our assets totaled ~~$1.93~~$1.88 trillion, ~~up $4.8~~down $4.7 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.2022.

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”~~equity.

Available-for-Sale and ~~“Capital Management” sections and Note 19 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.~~

Held-to-Maturity Debt Securities

~~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
Table 7: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.~~


	June 30, 2023					December 31, 2022
($ in millions)	Amortized cost, net (1)		Net unrealized gains (losses)	Fair value	Weighted average expected maturity (yrs)	Amortized cost, net (1)		Net unrealized gains (losses)	Fair value	Weighted average expected maturity (yrs)

Available-for-sale (2)	$	142,283	(8,032)	134,251	4.9	$	121,725	(8,131)	113,594	5.4
Held-to-maturity (3)	272,360		(38,524)	233,836	8.2	297,059		(41,538)	255,521	8.1
Total	$	414,643	(46,556)	368,087	n/a	$	418,784	(49,669)	369,115	n/a

(1)Represents amortized cost of the securities, net of the allowance for credit losses of $7 million and $6 million related to available-for-sale debt securities and $76 million and $85 million related to held-to-maturity debt securities at June 30, 2023, and December 31, 2022, respectively.

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

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

Table 57 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 2022 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~~decreased from December 31, 2022. Purchases of AFS and HTM debt securities were more ~~often if~~than offset by portfolio runoff and sales of AFS debt securities.

In addition, we transferred AFS debt securities with a ~~potential loss-triggering event occurs. Of the $293 million in OTTI write-downs recognized in earnings~~fair value of $3.7 billion to HTM debt securities in the first ~~nine months~~half of ~~2017, $107 million related~~2023 due to ~~debt~~actions taken to reposition the overall portfolio for capital management purposes. Debt securities ~~$5 million related~~transferred from AFS 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 millionHTM in the first ~~nine months~~half of ~~2017,~~2023 had $320 million of ~~which $24 million related~~pre-tax unrealized losses at the time of the transfers.

Additionally, in first quarter 2023, we also reclassified HTM debt securities with an aggregate fair value of $23.2 billion and amortized cost of $23.9 billion to ~~investment~~AFS debt securities in connection with the adoption of ASU 2022-01, Derivatives and ~~$53 million related to nonmarketable equity investments.~~Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. For ~~a discussion~~additional information on our adoption of ~~our OTTI accounting policies and underlying considerations and analysis~~ASU 2022-01, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in ~~our 2016 Form 10-K~~this Report.

The total net unrealized losses on AFS and ~~Note 4 (Investment Securities)~~HTM debt securities decreased from December 31, 2022 due to ~~Financial Statements~~changes in ~~this Report.~~interest rates.

At ~~September~~June 30, ~~2017, investment~~2023, 99% 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.


			Wells Fargo & Company			25

Balance Sheet Analysis (~~continued~~)(continued)

Loan Portfolios

Table 78 provides a summary of total outstanding loans by portfolio segment. ~~Total~~Commercial loans decreased ~~$15.7 billion~~ from December 31, ~~2016, reflecting~~2022, predominantly due to a decrease in the commercial real estate loan portfolio as paydowns ~~a continued decline in~~exceeded

~~junior lien~~originations and advances. Consumer loans decreased from December 31, 2022, as increases in the credit card portfolio were more than offset by decreases in all other consumer loan portfolios, primarily the residential mortgage ~~loans, and an expected decline in automobile loans as the effect of tighter underwriting standards implemented last year resulted in lower origination volume.~~loan portfolio.

Table 7:8:Loan Portfolios


(in millions)	September 30, 2017			December 31, 2016
($ in millions)					($ in millions)	Jun 30, 2023		Dec 31, 2022	$ Change	% Change
Commercial	$	500,150		506,536	Commercial	$	555,621	557,516	(1,895)	—	%
Consumer	451,723			461,068	Consumer	392,339		398,355	(6,016)	(2)
Total loans	$	951,873		967,604	Total loans	$	947,960	955,871	(7,911)	(1)
Change from prior year-end	$	(15,731	)	51,045

~~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 5 (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 2022 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

Deposits

Deposits ~~were $1.3 trillion at September 30, 2017, up $627 million~~decreased from December 31, ~~2016, reflecting growth in retail~~2022, reflecting:

•customer migration to higher yielding alternatives; and

•consumer deposit outflows on consumer spending;

partially offset by:

•higher time deposits ~~and Treasury institutional~~driven by issuances of certificates of deposit ~~partially offset by lower wealth and commercial deposits.~~ (CDs).

Table 9

provides additional information regarding ~~deposits.~~deposit balances. 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. In response to higher interest rates, our average deposit cost in second quarter 2023 increased to 1.13%, compared with 0.46% in fourth quarter 2022.

Table 9:Deposits


($ in millions)	Jun 30, 2023		% of total deposits		Dec 31, 2022		% of total deposits		$ Change		% Change
Noninterest-bearing demand deposits	$	402,322	30	%	$	458,010	33	%	$	(55,688)	(12)	%
Interest-bearing demand deposits	417,159		31		428,877		31		(11,718)		(3)
Savings deposits	376,538		28		410,139		30		(33,601)		(8)
Time deposits	126,387		9		66,197		5		60,190		91
Interest-bearing deposits in non-U.S. offices	22,178		2		20,762		1		1,416		7
Total deposits	$	1,344,584	100	%	$	1,383,985	100	%	$	(39,401)	(3)

($ in millions) Sep 30,
2017

% of
total
deposits

Dec 31,
2016
% of
total
deposits

% Change

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


~~(1)~~26			~~Includes Eurodollar sweep balances of $72.8 billion and $74.8 billion at September 30, 2017, and December 31, 2016, respectively.~~Wells Fargo & Company

~~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~~our consolidated balance sheet, or may be recorded on ~~the~~our consolidated balance sheet in amounts that are different from the full contract or notional amount of the transaction. Our off-balance sheet arrangements include unfunded credit commitments, ~~to lend and purchase securities,~~ transactions with unconsolidated entities, guarantees, commitments to purchase debt and equity securities, 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.

Unfunded Credit Commitments ~~to Lend and Purchase Securities~~

~~We enter into~~Unfunded credit commitments are legally binding agreements to lend ~~funds~~ to customers ~~which are usually at a stated~~with terms covering usage of funds, contractual interest ~~rate, if funded,~~rates, expiration dates, and ~~for specific purposes and time periods. When we make commitments, we are exposed to credit risk. However, the~~any required collateral. 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~~may expire without being used byor may be cancelled at the ~~customer.~~customer’s request. Our credit risk monitoring activities include managing the amount of commitments, both to individual customers and in total, and the size and maturity structure of these commitments. For ~~more~~additional information, ~~on lending commitments,~~ see Note 5 (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

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 1014 (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 14 (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~~our 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~~our 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 1211 (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			27


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~~2022 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~~2022 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~~the Company’s 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, Corporate Credit Risk, which is part of Independent Risk Management, has oversight responsibility for credit risk. Corporate Credit Risk reports to the Chief Risk Officer 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 1110 presents our total loans outstanding by portfolio segment and class of financing receivable.

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

(in millions) Sep 30, 2017
Dec 31, 2016
Commercial:
Commercial and industrial $ 327,944
330,840
Real estate mortgage 128,475
132,491
Real estate construction 24,520
23,916
Lease financing 19,211
19,289
Total commercial 500,150
506,536
Consumer:
Real estate 1-4 family first mortgage 280,173
275,579
Real estate 1-4 family junior lien mortgage 41,152
46,237
Credit card 36,249
36,700
Automobile 55,455
62,286
Other revolving credit and installment 38,694
40,266
Total consumer 451,723
461,068
Total loans $ 951,873
967,604


(in millions)	Jun 30, 2023		Dec 31, 2022
Commercial and industrial	$	386,011	386,806


Commercial real estate	154,276		155,802
Lease financing	15,334		14,908
Total commercial	555,621		557,516


Residential mortgage	265,085		269,117
Credit card	47,717		46,293
Auto	51,587		53,669
Other consumer	27,950		29,276
Total consumer	392,339		398,355
Total loans	$	947,960	955,871

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.

In addition, the Company will continue to integrate climate considerations into its credit risk management activities.

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~~Solid~~Table 11 provides credit quality continued in third quarter 2017, as our net charge-off rate remained low at 0.30% (annualized) of average total loans. We continued to benefit from improvements in the performance of our residential real estate portfolio as well as reduced losses in our oil and gas portfolio. In particular:trends.

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

Table 11:Credit Quality Overview

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

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

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

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

During third quarter 2017, Hurricanes Harvey, Irma and Maria caused considerable damage in several geographic markets where the Company has significant lending exposure. The impact was in both our commercial and consumer lending portfolios. Based on our analysis to 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.~~


($ in millions)	Jun 30, 2023			Dec 31, 2022
Nonaccrual loans
Commercial loans	$	3,429		1,823
Consumer loans	3,457			3,803
Total nonaccrual loans	$	6,886		5,626
Nonaccrual loans as a % of total loans	0.73		%	0.59





Allowance for credit losses (ACL) for loans	$	14,786		13,609
ACL for loans as a % of total loans	1.56		%	1.42

	Quarter ended June 30,
	2023			2022
Net loan charge-offs as a % of:
Average commercial loans	0.15		%	0.02
Average consumer loans	0.58			0.33

	Six months ended June 30,
	2023			2022
Average commercial loans	0.10		%	—
Average consumer loans	0.57			0.34

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

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

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

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

Significant Loan Portfolio ReviewsMeasuring and monitoring our credit risk is an ongoing process that tracks delinquencies, collateral values, FICO 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 5 (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 FINANCING

For 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~~


28			Wells Fargo & Company

We had $13.0 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~~June 30, ~~2017,~~2023, compared with ~~$24.0~~$12.6 billion at December 31, ~~2016.~~ 2022.

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

~~Most~~majority of our commercial and industrial loans and lease financing portfolio is secured by short-term assets, such as accounts receivable, inventory and debt securities, as well as long-lived assets, such as equipment and other business assets. Generally, the 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 was stable at June 30, 2023, compared with December 31, 2022. Table 12 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 12:Commercial and ~~includes $59.7~~Industrial Loans and Lease Financing by Industry


	June 30, 2023							December 31, 2022
($ in millions)	Nonaccrual loans		Loans outstanding balance	% of total loans		Total commitments (1)		Nonaccrual loans	Loans outstanding balance	% of total loans		Total commitments (1)
Financials except banks	$	10	148,643	16	%	$	232,177	44	147,171	15	%	$	229,822
Technology, telecom and media	43		27,186	3		65,437		31	27,767	3		66,340
Real estate and construction	61		25,180	3		55,929		73	24,478	3		56,393
Retail	83		20,658	2		50,233		47	19,487	2		49,334
Equipment, machinery and parts manufacturing	187		26,032	3		48,614		83	23,675	2		47,507
Materials and commodities	185		16,073	2		40,820		86	16,610	2		39,667
Food and beverage manufacturing	3		16,161	2		33,081		17	17,393	2		33,951
Oil, gas and pipelines	32		10,456	1		32,157		55	9,991	1		31,077
Health care and pharmaceuticals	19		14,996	2		30,655		21	14,861	2		30,294
Auto related	8		13,888	1		28,264		10	13,168	1		27,451
Commercial services	57		11,206	1		26,355		50	11,418	1		26,693
Utilities	1		7,709	*		24,736		18	9,457	*		26,899
Diversified or miscellaneous	2		8,069	*		20,156		2	8,161	*		21,498
Entertainment and recreation	25		12,935	1		19,273		28	13,085	1		18,741
Transportation services	147		8,993	*		16,057		237	8,389	*		16,064
Insurance and fiduciaries	1		5,016	*		15,347		1	4,691	*		15,592
Government and education	27		6,168	*		12,320		25	6,482	*		12,590
Banks	—		11,080	1		11,984		—	14,403	2		16,537
Agribusiness	6		6,107	*		11,510		24	6,180	*		11,457
Other (2)	25		4,789	*		12,187		13	4,847	*		12,301
Total	$	922	401,345	42	%	$	787,292	865	401,714	42	%	$	790,208

*Less than 1%.

(1)Total commitments consist of loans outstanding plus unfunded credit commitments, excluding issued letters of credit. Effective first quarter 2023, unfunded credit commitments exclude discretionary amounts where our approval or consent is required prior to any loan funding or commitment increase. Prior period balances have been revised to conform with the current period presentation. For additional information on issued letters of credit, see Note 14 (Guarantees and Other Commitments) to Financial Statements in this Report.

(2)No other single industry had total loans in excess of $2.8 billion ~~of foreign loans~~ at ~~September~~June 30, ~~2017. Foreign loans totaled $19.4~~2023, and $3.4 billion ~~within the investor~~at December 31, 2022, respectively.


			Wells Fargo & Company			29

Risk Management – Credit Risk Management (continued)

Table 12a provides further loan segmentation for our largest industry category, ~~$16.2 billion within the financial institutions category and $1.4 billion within the oil and gas category.~~

~~The investors~~financials except banks. This category includes loans to ~~special purpose~~investment firms, financial vehicles, ~~(SPVs) formed by sponsoring entities~~nonbank creditors, rental and leasing companies, securities firms, and investment banks. These loans are generally secured and have features to ~~invest in financial assets backed predominantly by commercial~~

help manage credit risk, such as structural credit enhancements, collateral eligibility requirements, contractual re-margining of collateral supporting the loans, and ~~residential real estate or corporate cash flow, and 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 assets ~~as determined by us, based on analysis of~~considering underlying credit risk, ~~and other factors such as~~ asset duration, and ongoing performance.

Table 12a:Financials Except Banks Industry Category


	June 30, 2023							December 31, 2022
($ in millions)	Nonaccrual loans		Loans outstanding balance	% of total loans		Total commitments (1)		Nonaccrual loans	Loans outstanding balance	% of total loans		Total commitments (1)
Asset managers and funds (2)	$	—	51,525	5	%	$	96,166	1	52,254	5	%	$	97,998
Commercial finance (3)	2		55,057	6		79,987		31	53,269	5		76,016
Consumer finance (4)	—		17,639	2		28,854		4	17,028	2		29,047
Real estate finance (5)	8		24,422	3		27,170		8	24,620	3		26,761
Total	$	10	148,643	16	%	$	232,177	44	147,171	15	%	$	229,822

~~We provide financial institutions~~(1)Total commitments consist of loans outstanding plus unfunded credit commitments. Effective first quarter 2023, unfunded credit commitments exclude discretionary amounts where our approval or consent is required prior to any loan funding or commitment increase. Prior period balances have been revised to conform with ~~a variety~~the current period presentation. For additional information on issued letters of ~~relationship focused products~~credit, see Note 14 (Guarantees and ~~services,~~Other Commitments) to Financial Statements in this Report.

(2)Includes loans for subscription or capital calls and loans to prime brokerage customers and securities firms.

(3)Includes asset-based lending and leasing, including loans ~~supporting short-term trade finance~~to special purpose entities, loans to commercial leasing entities, structured lending facilities to commercial loan managers, and ~~working capital needs. The $16.2~~also includes collateralized loan obligations (CLOs) in loan form, all of which were rated AA or above, of $7.7 billion and $7.8 billion at June 30, 2023, and December 31, 2022, respectively.

(4)Includes originators or servicers of ~~foreign~~financial assets collateralized by consumer loans such as auto loans and leases, and credit cards.

(5)Includes originators or servicers of financial assets collateralized by commercial or residential real estate loans.

Our commercial and industrial loans and lease financing portfolio included non-U.S. loans of $75.8 billion and $79.7 billion at June 30, 2023, and December 31, 2022, respectively. Significant industry concentrations of non-U.S. loans at June 30, 2023, and December 31, 2022, respectively, included:

•$43.5 billion and $45.7 billion in the ~~financial institutions category were predominantly originated by our Financial Institutions business.~~financials except banks industry;

~~The oil~~•$11.1 billion and ~~gas loan portfolio totaled $12.8~~$14.1 billion ~~or 1% of total outstanding loans at September 30, 2017, compared with $14.8~~in the banks industry; and

•$1.5 billion ~~or 2% of total outstanding loans, at December 31, 2016. Unfunded loan commitments~~and $1.2 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 industry.

~~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)~~30			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.

Wells Fargo & Company
~~(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~~Our CRE ~~loans to individual risk assessment using our internal borrower~~loan portfolio is comprised of CRE mortgage and ~~collateral quality ratings. Our ratings are aligned to regulatory definitions of pass~~CRE construction loans. The total CRE loan portfolio decreased $1.5 billion from December 31, 2022, as paydowns exceeded originations and criticized categories with criticized divided among special mention, substandard, doubtful and loss categories. The CRE portfolio, which included $8.7 billion of foreign 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.~~advances. The portfolio is diversified both geographically and by property type. The largest geographic concentrations of CRE loans are in California, New York, Texas,

and Florida, which represented a combined ~~represented 49%~~48% of the total CRE portfolio. ByThe largest property type ~~the largest~~ concentrations are ~~office buildings at 28% and~~ apartments at ~~16%~~26% and office at 21% of the portfolio. ~~CRE nonaccrual loans totaled 0.4% of the CRE outstanding balance~~Unfunded credit commitments were $8.7 billion and $8.8 billion at ~~September~~June 30, ~~2017, compared with 0.5% at~~2023, and December 31, ~~2016. At September 30, 2017, we had $4.8 billion of criticized~~2022, respectively, for CRE mortgage loans and $16.6 billion and $20.7 billion, respectively, for CRE construction loans.

We generally subject CRE loans to individual risk assessment using our internal borrower and collateral quality ratings. We had

$14.9 billion of CRE mortgage loans classified as criticized at June 30, 2023, compared with ~~$5.4~~$11.3 billion at December 31, ~~2016,~~2022, and ~~$327 million~~$1.1 billion of ~~criticized~~ CRE construction loans ~~compared with $461 million~~classified as criticized at both June 30, 2023, and December 31, ~~2016.~~

~~At September 30, 2017, the recorded investment~~2022. The increase in ~~PCI~~criticized CRE loans ~~totaled $118 million, down from $12.3 billion when acquired~~was primarily driven by the office property type. The credit quality of the office property type continued to be adversely affected as weakened demand for office space continued to drive higher vacancy rates and deteriorating operating performance. We continue to closely monitor this portfolio. At June 30, 2023, nearly one-third of the CRE loans in the office property type had recourse to a guarantor, typically through a repayment guarantee, in addition to the related collateral. Loans in California and New York represented approximately 40% of the office property type at ~~December 31, 2008, reflecting principal payments, loan resolutions~~June 30, 2023.

Table 13 provides our CRE loans by state and ~~write-downs.~~property type.

Table 13:CRE Loans by State and Property Type


									June 30, 2023							December 31, 2022
		Real estate mortgage				Real estate construction			Total commercial real estate							Total commercial real estate
($ in millions)	Nonaccrual loans	Loans outstanding balance			Nonaccrual loans	Loans outstanding balance		Nonaccrual loans	Loans outstanding balance	Loans as % of total loans	Total commitments (1)				Loans outstanding balance	Total commitments (1)
By state:
California		$	740	28,465		1	4,300		741	32,765	3%		$	37,556		34,285	39,594
New York		319		14,121		—	2,476		319	16,597	2		18,358			17,294	19,360
Texas		20		11,509		—	1,393		20	12,902	1		14,815			12,807	14,941
Florida		65		9,714		—	2,091		65	11,805	1		14,417			11,418	14,690
Georgia		90		4,862		—	932		90	5,794	*		7,288			5,428	6,651
Washington		349		4,218		—	1,520		349	5,738	*		6,753			5,603	6,868
North Carolina		4		4,302		—	1,179		4	5,481	*		6,700			5,227	6,650
Arizona		16		4,600		—	601		16	5,201	*		6,107			5,302	6,288
New Jersey		6		2,745		—	1,490		6	4,235	*		5,346			4,119	5,660
Massachusetts		4		2,763		41	1,311		45	4,074	*		5,187			4,094	5,324
Other (2)		851		42,256		1	7,428		852	49,684	5		57,097			50,225	59,294
Total		$	2,464	129,555		43	24,721		2,507	154,276	16%		$	179,624		155,802	185,320
By property:
Apartments		$	9	30,513		—	10,239		9	40,752	4%		$	50,699		39,743	51,567
Office (3)		1,517		29,437		—	3,652		1,517	33,089	3		36,757			36,144	40,827
Industrial/warehouse		38		19,654		—	4,246		38	23,900	3		27,802			20,634	24,546
Hotel/motel		149		11,911		—	1,012		149	12,923	1		13,910			12,751	13,758
Retail (excl shopping center)		355		11,301		2	111		357	11,412	1		12,334			11,753	12,486
Shopping center		193		8,848		—	401		193	9,249	*		9,816			9,534	10,131
Institutional		118		4,160		—	1,939		118	6,099	*		6,906			7,725	9,178
Mixed use properties		72		4,440		41	903		113	5,343	*		6,330			5,887	7,139
Collateral pool		—		2,987		—	44		—	3,031	*		3,410			3,062	3,662
Storage facility		—		2,819		—	164		—	2,983	*		3,299			2,929	3,201
Other		13		3,485		—	2,010		13	5,495	*		8,361			5,640	8,825
Total		$	2,464	129,555		43	24,721		2,507	154,276	16	%	$	179,624		155,802	185,320

* Less than 1%.

(1)Total commitments consist of loans outstanding plus unfunded credit commitments, excluding issued letters of credit. For additional information on issued letters of credit, see Note 14 (Guarantees and Other Commitments) to Financial Statements in this Report.

(2)Includes 40 states and non-U.S. loans. No state in Other had loans in excess of $4.1 billion at both June 30, 2023, and December 31, 2022. Non-U.S. loans were $7.5 billion and $7.6 billion at June 30, 2023, and December 31, 2022, respectively.

(3)In second quarter 2023, we reclassified certain CRE loans to better align with regulatory reporting guidance, which resulted in a decrease in loans outstanding of approximately $2.0 billion to the office property type.

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

Total
portfolio

(1)
Nonaccrual
loans

Total
portfolio

(1)
Nonaccrual
loans

Total
portfolio

(1)
% of
total
loans

By state:
California $ 127
36,398
2
4,245
129
40,643
4 %
New York 12
10,366
—
2,869
12
13,235
1
Texas 102
9,245
—
2,160
102
11,405
1
Florida 33
8,016
—
1,830
33
9,846
1
North Carolina 31
4,100
6
785
37
4,885
1
Arizona 27
3,944
—
643
27
4,587
*
Georgia 17
3,356
1
852
18
4,208
*
Virginia 11
3,230
—
893
11
4,123
*
Washington 15
3,381
—
619
15
4,000
*
Illinois 5
3,263
—
590
5
3,853
*
Other 213
43,176
29
9,034
242
52,210
(2) 5
Total $ 593
128,475
38
24,520
631
152,995
16 %
By property:
Office buildings $ 130
39,959
2
3,187
132
43,146
5 %
Apartments 24
15,417
—
8,857
24
24,274
3
Industrial/warehouse 142
15,801
2
1,847
144
17,648
2
Retail (excluding shopping center) 66
16,873
—
617
66
17,490
2
Shopping center 16
11,835
—
1,158
16
12,993
1
Hotel/motel 8
9,685
4
1,716
12
11,401
1
Real estate - other 90
6,849
—
170
90
7,019
1
Institutional 36
3,247
—
1,564
36
4,811
1
Agriculture 30
2,613
—
19
30
2,632
*
1-4 family structure —
10
7
2,460
7
2,470
*
Other 51
6,186
23
2,925
74
9,111
1
Total $ 593
128,475
38
24,520
631
152,995
16 %


*			~~Less than 1%.~~Wells Fargo & Company			31


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


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

Risk Management – Credit Risk Management (continued)

~~FOREIGN~~NON-U.S. LOANS ~~AND COUNTRY RISK EXPOSURE~~ ~~We classify~~Our classification of non-U.S. loans ~~for financial statement and certain regulatory purposes as foreign primarily~~is based on whether the borrower’s primary address is outside of the United States. At ~~September~~June 30, ~~2017, foreign~~2023, non-U.S. loans totaled ~~$68.8~~$83.5 billion, representing approximately 7%9% of our total consolidated loans outstanding, compared with ~~$65.7~~$87.5 billion, or approximately 7%9% of our total consolidated loans outstanding, at December 31, ~~2016. Foreign~~2022. Non-U.S. loans were approximately 4% and 5% of our total consolidated ~~total~~ assets at ~~September~~June 30, ~~2017~~2023, and ~~3% at~~ December 31, ~~2016.~~2022, respectively.

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~~a 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~~a borrower’s primary address.

Our largest single ~~foreign~~ country exposure ~~based on our assessment of risk~~outside the U.S. at ~~September~~June 30, ~~2017,~~2023, was the United Kingdom, which totaled ~~$29.6~~

$28.6 billion, or approximately 2% of our total assets, and included ~~$7.1~~$3.2 billion of sovereign claims. Our United Kingdom sovereign claims arise ~~predominantly~~ from deposits we have placed with the Bank of England pursuant to regulatory requirements in support of our London branch. The United Kingdom officially announced its intention to leave the European Union (Brexit) on March 29, 2017, starting the two-year negotiation process leading to its departure. We continue to conduct assessments and are executing our implementation plans to ensure we can continue to prudently serve our customers post-Brexit.

We conduct periodic stress tests of our significant country risk exposures, analyzing the direct and indirect impacts on the risk of loss from various macroeconomic and capital markets scenarios. We do not have significant exposure to foreign country risks because our foreign credit exposure is relatively small. However, we have identified exposure to increased loss from U.S. borrowers associated with the potential impact of a regional or worldwide economic downturn on the U.S. economy. We seek to mitigate these potential impacts on the risk of loss through our normal risk management processes which include active monitoring and, if necessary, the application of aggressive loss mitigation strategies.

Table 14 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 14:

•Lending and deposits exposure includes outstanding loans, unfunded credit commitments (excluding discretionary amounts where our approval or consent is required prior to any loan funding or commitment increase), 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 14:Select Country Exposures


	June 30, 2023
	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	$	3,184	23,434	—	599	—	1,372	3,184	25,405	28,589
Canada	9		16,658	382	447	96	175	487	17,280	17,767
Cayman Islands	—		8,089	—	—	—	336	—	8,425	8,425
Japan	6,058		737	—	383	—	178	6,058	1,298	7,356
Luxembourg	—		6,608	—	(1)	—	281	—	6,888	6,888
France	107		3,893	540	239	644	61	1,291	4,193	5,484
Ireland	6		4,733	—	141	—	233	6	5,107	5,113
Bermuda	—		3,407	—	34	—	57	—	3,498	3,498
Germany	—		3,000	—	19	—	242	—	3,261	3,261
Guernsey	—		3,078	—	—	—	9	—	3,087	3,087
Netherlands	—		2,644	—	146	—	102	—	2,892	2,892
South Korea	—		1,989	3	336	1	2	4	2,327	2,331
Australia	—		1,669	—	254	—	16	—	1,939	1,939
Chile	—		1,639	—	242	—	1	—	1,882	1,882
China	12		1,221	(23)	323	25	35	14	1,579	1,593
Brazil	—		1,415	—	(7)	—	3	—	1,411	1,411
Switzerland	—		1,155	—	(12)	—	145	—	1,288	1,288
Belgium	—		1,057	—	(4)	—	1	—	1,054	1,054
Norway	—		776	—	220	1	22	1	1,018	1,019
Spain	—		643	—	144	—	172	—	959	959
Total top 20 country exposures	$	9,376	87,845	902	3,503	767	3,443	11,045	94,791	105,836

(1)Total non-sovereign exposure comprised $45.6 billion exposure to ~~Puerto Rico (considered part of U.S. exposure) is largely through automobile lending~~financial institutions and ~~was not material~~$49.2 billion to our consolidated country exposure. For information on potential credit impacts from recent hurricanes, see the “Risk Management – Credit Risk Management – Credit Quality Overview” section and Note 5 (Loans and Allowance for Credit Losses) to Financial Statements in this Report.

non-financial corporations at June 30, 2023.

~~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 1-4~~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~~comprised 95% of the total residential mortgage loan portfolio at both June 30, 2023, and December 31, 2022.

The residential mortgage loan portfolio includes loans ~~we have made to customers and retained as part~~with adjustable-rate features. We monitor the risk of ~~our asset/liability management strategy, the Pick-a-Pay portfolio acquired from~~

~~Wachovia which is discussed later in this Report and other purchased loans, and loans included on our balance sheet~~default 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~~rate increases on adjustable-rate mortgage ~~loan portfolio includes some~~(ARM) loans, ~~with adjustable-rate~~which may be mitigated by product features ~~and some with an interest-only feature as part~~that limit the amount of the ~~loan terms. Interest-only~~increase in the contractual interest rate. The default risk of these loans is considered in our ACL for loans.

ARM loans were ~~approximately 5% and~~ 7% of total loans at ~~September~~both June 30, ~~2017,~~2023, and December 31, ~~2016, respectively. We believe we have manageable adjustable-rate mortgage (ARM)~~2022, with an initial reset ~~risk across our owned mortgage loan portfolios.~~date in 2025 or later for the majority of this portfolio at June 30, 2023. 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~~residential mortgage – junior lien portfolio consists of residential mortgage lines of credit and loans that are subordinate in rights to an existing lien on the same property. These lines and loans may have ~~are included in the Pick-a-Pay portfolio which~~draw periods, interest-only


32			Wells Fargo & Company

payments, balloon payments, adjustable rates and similar features. The outstanding balance of residential mortgage lines of credit was ~~acquired from Wachovia. Since our acquisition~~$16.4 billion at June 30, 2023, compared with $18.3 billion at December 31, 2022. The unfunded credit commitments for these lines of ~~the Pick-a-Pay loan portfolio~~credit totaled $31.9 billion at ~~the end of 2008, the option payment portion of the portfolio has reduced from 86% to 36%~~June 30, 2023, compared with $35.5 billion at ~~September 30, 2017, as a result of our modification and loss mitigation efforts.~~December 31, 2022. For ~~more information, see the “Pick-a-Pay Portfolio” section in this Report.~~

~~We continue to modify real estate 1-4 family mortgage loans to assist homeowners and other borrowers experiencing financial difficulties. For more~~additional information on our ~~modification programs,~~residential loan portfolio, see the “Risk Management – Credit Risk Management – ~~Real Estate 1-4 Family First and Junior Lien~~Residential Mortgage Loans” section in our ~~2016~~2022 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~~residential mortgage portfolio as part of

our credit risk management process. Our ~~underwriting and~~ periodic review of ~~loans secured by residential real estate collateral~~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~~For additional information about our use of appraisals and AVMs, ~~and our policy for their use can be found in~~see Note 5 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report and the “Risk Management – Credit Risk Management – ~~Real Estate 1-4 Family First and Junior Lien~~Residential Mortgage Loans” section in our ~~2016~~2022 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%Part of our ~~total real estate 1-4 family first lien mortgage portfolio as of September 30, 2017.~~

~~Table 17 shows certain~~credit monitoring includes tracking delinquency, current Fair Isaac Corporation (FICO) credit scores and ~~loss information for the first lien mortgage portfolio and lists the top five states by outstanding balance.~~

loan/

~~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 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 payments, balloon payments, adjustable rates and similar features. Junior lien loan products are mostly amortizing payment loans with fixed interest rates and repayment periods between five to 30 years.

We continuously monitor the credit performance of our junior lien mortgage portfolio for trends and factors that influence the frequency and severity of loss. We have observed that the severity of loss for 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 when we own or service the first lien mortgage. In general, we have limited information available on the delinquency status of the third party owned or serviced senior lien where we also hold a junior lien. To capture this inherent loss content, our allowance process for junior lien mortgages considers the relative difference in loss experience for

junior lien mortgages behind first lien mortgage loans we own or service, compared with those behind first lien mortgage loans owned or serviced by third parties. In addition, our allowance process for junior lien mortgages that are current, but are in their revolving period, considers the inherent loss where the 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~~collateral values (LTV/CLTV) on the entire residential mortgage loan portfolio. CLTV ~~ratio in excess of 100%, 2.96% were 30 days or more past due. CLTV means~~represents 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,~~regarding credit quality indicators, see ~~Table 5.12 in~~ Note 5 (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 loan modifications, see Note 5 (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 2022 Form 10-K.

Residential Mortgage – First Lien Portfolio Our residential mortgage – first lien portfolio decreased $2.8 billion from

December 31, 2022, due to loan paydowns, partially offset by originations.

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

Table ~~20:Junior~~15:Residential Mortgage – First Lien ~~Mortgage~~ 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)	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023	Dec 31, 2022	Jun 30, 2023	Dec 31, 2022




California (2)	$	110,513	110,877	11.66	%	11.60	0.36	0.45	(0.01)	—
New York	31,569		31,753	3.33		3.32	0.65	0.80	(0.01)	(0.02)
Washington	10,688		10,523	1.13		1.10	0.23	0.30	(0.01)	0.02
Florida	10,307		10,535	1.09		1.10	0.96	1.13	(0.05)	(0.14)
New Jersey	10,292		10,416	1.09		1.09	1.05	1.24	0.01	(0.01)
Other (3)	71,619		72,843	7.56		7.62	0.73	0.93	(0.02)	—
Total	244,988		246,947	25.86		25.83	0.55	0.69	(0.01)	(0.01)
Government insured/guaranteed loans (4)	8,067		8,860	0.85		0.93
Total first lien mortgage portfolio	$	253,055	255,807	26.71	%	26.76

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

(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 $7.6 billion and $7.7 billion at June 30, 2023, and December 31, 2022, respectively.

~~Our junior lien, as well as first lien, lines~~(4)Represents loans, substantially all of ~~credit portfolios generally have draw periods of 10, 15 or 20 years with variable interest rate and payment options during~~which were purchased from GNMA loan securitization pools, where the draw period of (1) interest only or (2) 1.5% of outstanding principal balance plus accrued interest. 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~~loans is predominantly insured by the ~~end~~Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). For additional information on GNMA loan securitization pools, see the ~~term period. The conversion of lines or loans to fully amortizing or balloon payoff may result~~“Risk Management – Credit Risk Management – Mortgage Banking Activities” section in ~~a significant payment increase, which can affect some borrowers’ ability to repay~~this Report.


			Wells Fargo & Company			33

Risk Management – Credit Risk Management (continued)

Residential Mortgage – Junior Lien Portfolio Our residential mortgage – junior lien portfolio decreased $1.3 billion from December 31, 2022, driven by loan paydowns.

Table 16 shows certain delinquency and loss information for the residential mortgage – junior lien portfolio and lists the top five states by outstanding balance.

OnTable 16: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)	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023	Dec 31, 2022	Jun 30, 2023	Dec 31, 2022




California	$	3,268	3,550	0.34	%	0.37	1.78	2.02	(0.07)	(0.16)
New Jersey	1,236		1,383	0.13		0.14	2.71	2.76	—	0.21
Florida	1,025		1,165	0.11		0.12	2.52	2.69	(0.35)	(0.92)
Pennsylvania	744		832	0.08		0.09	2.80	2.76	0.03	(0.01)
New York	721		794	0.08		0.08	2.67	2.86	0.36	0.05
Other (2)	5,036		5,586	0.53		0.58	2.02	2.05	(0.31)	(0.36)
Total junior lien mortgage portfolio	$	12,030	13,310	1.27	%	1.38	2.16	2.27	(0.16)	(0.25)

(1)Quarterly net charge-offs as a ~~monthly basis, we monitor the payment characteristics~~percentage of ~~borrowers~~average respective loans are annualized.

(2)Consists of 45 states; no state in ~~our junior lien portfolio. In September 2017, approximately 48%~~Other had loans in excess of ~~these borrowers paid only the minimum amount due~~$710 million 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~~

$790 million at June 30, 2023, and December 31, 2022, respectively.

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

CREDIT CARD, AUTO, AND OTHER CONSUMER LOANSTable ~~21 reflects~~17 shows the outstanding balance of our ~~portfolio~~credit card, auto, and other consumer loan portfolios. For information regarding credit quality indicators for these portfolios, see Note 5 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

Table 17: Credit Card, Auto, and Other Consumer Loans


	June 30, 2023				December 31, 2022
($ in millions)	Outstanding balance		% of total loans		Outstanding balance		% of total loans
Credit card	$	47,717	5.03	%	$	46,293	4.84	%
Auto	51,587		5.44		53,669		5.61
Other consumer (1)	27,950		2.95		29,276		3.06
Total	$	127,254	13.42	%	$	129,238	13.51	%

(1)Includes $17.9 billion and $19.4 billion at June 30, 2023, and December 31, 2022, respectively, of ~~junior lien mortgages, including lines~~commercial and consumer securities-based 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 insuredoriginated by the ~~FHA,~~WIM operating segment.

Credit Card The increase in the outstanding balance at June 30, 2023, compared with December 31, 2022, was due to higher purchase volume driven by new account growth.

Auto The decrease in the outstanding balance at June 30, 2023, compared with December 31, 2022, was due to lower origination volumes reflecting credit tightening actions and ~~it excludes PCI loans, which total $51 million, because their losses were generally reflected~~continued price competition due to rising interest rates.

Other Consumer The decrease in ~~our nonaccretable difference established~~the outstanding balance at ~~the date of acquisition.~~June 30, 2023, compared with December 31, 2022, was due to a decline in securities-based lending.

~~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)~~34			~~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.~~

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

~~(3)~~

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

~~CREDIT CARDS~~ Our credit card portfolio totaled $36.2 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, 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.

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

~~OTHER REVOLVING CREDIT AND INSTALLMENT~~Other revolving credit and installment loans totaled $38.7 billion at September 30, 2017, and primarily included student and securities-based loans. Our private student loan portfolio totaled $12.2 billion at September 30, 2017. All remaining student loans guaranteed by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program (FFELP) were sold as of March 31, 2017. 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.

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

NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS)Table 22 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 and commercial portfolios. Nonaccrual 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.

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

~~the full and timely collection~~see Note 1 (Summary of ~~interest or principal becomes uncertain (generally based on an assessment of the borrower’s financial condition and the adequacy of collateral, if any);~~

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

Accounting Policies) to Financial Statements in our 2022 Form 10-K. Table 18 summarizes nonperforming assets (NPAs).

Table 18:Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)



($ in millions)	Jun 30, 2023			Dec 31, 2022
Nonaccrual loans:
Commercial and industrial	$	845		746


Commercial real estate	2,507			958
Lease financing	77			119
Total commercial	3,429			1,823


Residential mortgage (1)	3,289			3,611
Auto	135			153
Other consumer	33			39
Total consumer	3,457			3,803
Total nonaccrual loans	$	6,886		5,626
As a percentage of total loans	0.73		%	0.59
Foreclosed assets:
Government insured/guaranteed (2)	$	16		22
Non-government insured/guaranteed	117			115
Total foreclosed assets	133			137
Total nonperforming assets	$	7,019		5,763
As a percentage of total loans	0.74		%	0.60

(1)Residential mortgage loans predominantly insured by the FHA or ~~principal, unless both well-secured and in~~guaranteed by 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 the classification of certain government-guaranteed mortgage loans upon foreclosure, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2022 Form 10-K.

Commercial nonaccrual loans increased $1.6 billion from December 31, 2022, driven by an increase in commercial real estate nonaccrual loans, predominantly within the office property type. For additional information on commercial nonaccrual loans, see the “Risk Management – Credit Risk Management – Commercial and Industrial Loans and Lease Financing” and “Risk Management – Credit Risk Management – Commercial Real Estate” sections in this Report.

Consumer nonaccrual loans decreased $346 million from December 31, 2022, due to lower residential mortgage nonaccrual loans.

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

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

% of
total
loans

Balance

% of
total
loans

Balance

% of
total
loans

Balance

% of
total
loans

Nonaccrual loans:
Commercial:
Commercial and industrial $ 2,397
0.73 % $ 2,632
0.79 % $ 2,898
0.88 % $ 3,216
0.97 %
Real estate mortgage 593
0.46
630
0.48
672
0.51
685
0.52
Real estate construction 38
0.15
34
0.13
40
0.16
43
0.18
Lease financing 81
0.42
89
0.46
96
0.50
115
0.60
Total commercial 3,109
0.62
3,385
0.67
3,706
0.73
4,059
0.80
Consumer:
Real estate 1-4 family first mortgage (1) 4,213
1.50
4,413
1.60
4,743
1.73
4,962
1.80
Real estate 1-4 family junior lien mortgage 1,101
2.68
1,095
2.56
1,153
2.60
1,206
2.61
Automobile 137
0.25
104
0.18
101
0.17
106
0.17
Other revolving credit and installment 59
0.15
59
0.15
56
0.14
51
0.13
Total consumer (2) 5,510
1.22
5,671
1.26
6,053
1.34
6,325
1.37
Total nonaccrual loans (3)(4)(5) 8,619
0.91
9,056
0.95
9,759
1.02
10,384
1.07
Foreclosed assets:
Government insured/guaranteed (6) 137
149
179
197

Non-government insured/guaranteed 569
632
726
781

Total foreclosed assets 706
781
905
978

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


~~(1)~~			~~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			35


~~(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 2319 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~~

Table 19:Analysis of Changes in Nonaccrual Loans


	Quarter ended June 30,			Six months ended June 30,


(in millions)	2023		2022	2023		2022
Commercial nonaccrual loans
Balance, beginning of period	$	2,275	1,953	$	1,823	2,376
Inflows	1,761		165	2,807		356
Outflows:
Returned to accruing	(61)		(88)	(207)		(282)
Foreclosures	—		—	—		(19)
Charge-offs	(215)		(56)	(330)		(91)
Payments, sales and other	(331)		(255)	(664)		(621)
Total outflows	(607)		(399)	(1,201)		(1,013)
Balance, end of period	3,429		1,719	3,429		1,719
Consumer nonaccrual loans
Balance, beginning of period	3,735		4,918	3,803		4,836
Inflows	336		408	683		1,002
Outflows:
Returned to accruing	(266)		(729)	(458)		(915)
Foreclosures	(25)		(17)	(51)		(35)
Charge-offs	(44)		(70)	(82)		(144)
Payments, sales and other	(279)		(236)	(438)		(470)
Total outflows	(614)		(1,052)	(1,029)		(1,564)
Balance, end of period	3,457		4,274	3,457		4,274
Total nonaccrual loans	$	6,886	5,993	$	6,886	5,993

We considered the ~~loan remains~~risk of losses on ~~nonaccrual.~~

~~While~~ nonaccrual loans ~~are not free of loss content, we~~in developing our allowance for loan losses. We believe exposure to ~~loss~~losses on nonaccrual loans is ~~significantly~~ mitigated by the following factors at ~~September~~June 30, ~~2017:~~2023:

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

estate.

~~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%~~•84% of commercial nonaccrual loans were current on interest and 67% 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%~~

•99% of ~~commercial~~total consumer nonaccrual loans ~~were current on both principal~~are secured, of which 95% are secured by real estate and ~~interest, and will remain on nonaccrual until~~98% have a CLTV ratio of 80% or less.

•$533 million of 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 billion~~$676 million of consumer loans in bankruptcy or discharged in bankruptcy, and classified as nonaccrual, ~~$1.5 billion~~were current.

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

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

Table 2420 provides a summary of foreclosed assets and an analysis of changes in foreclosed assets.

Table ~~24:~~20:Foreclosed Assets


(in millions)				Jun 30, 2023		Dec 31, 2022



Summary by loan segment
Government insured/guaranteed				$	16	22
Commercial				70		65
Consumer				47		50
Total foreclosed assets				$	133	137
(in millions)	Quarter ended June 30,			Six months ended June 30,
	2023		2022	2023		2022
Analysis of changes in foreclosed assets
Balance, beginning of period	$	132	130	$	137	112
Net change in government insured/guaranteed (1)	(2)		3	(6)		3
Additions to foreclosed assets (2)	135		99	258		201
Reductions from sales and write-downs	(132)		(102)	(256)		(186)
Balance, end of period	$	133	130	$	133	130

(1)Foreclosed government insured/guaranteed loans are temporarily transferred to and held by us as servicer, until reimbursement is received from the FHA or the 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)~~36			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.

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

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 provides~~In January 2023, we adopted ASU 2022-02, which eliminated the accounting and reporting guidance for TDRs. For additional information, ~~regarding the recorded investment~~see Note 1 (Summary of loans modified in TDRs. The allowance for loan losses for TDRs was $1.6 billion and $2.2 billion at September 30, 2017, and December 31, 2016, respectively. See Note 5 (Loans and Allowance for Credit Losses)Significant Accounting Policies) to Financial Statements in this ~~Report for additional information regarding TDRs. In those situations where principal is forgiven, the entire~~Report.

At December 31, 2022, TDRs totaled $9.2 billion. The amount of ~~such forgiveness is immediately charged off~~our TDRs for COVID-related loan modification programs would have otherwise been higher without the TDR relief provided by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with

Customers Affected by the Coronavirus (Revised) (Interagency Statement). Customers who are unable to the extent not done so prior to the modification. 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.

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 Form 10-K.

Table 26 provides an analysis of the changes in TDRs. Loans modified more than once are reported as TDR inflows only in the period they are first modified. Other than resolutions such as foreclosures, sales and transfers to held for sale, we may remove loans held for investment from TDR classification, but only if they have been refinanced or restructured at market terms and qualify as a new loan.

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

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

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.~~

~~(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~~.


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

~~LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING~~

Loans 90 days or more past due as to interest or principal are still accruing if they are (1) well-secured and in the process of collection or (2) real estate 1-4 family mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. 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 withresume making their contractual ~~terms.~~

~~Excluding insured/guaranteed loans, loans 90 days~~loan payments upon exiting from these programs may require further assistance and may receive or ~~more past due and still accruing at September 30, 2017, were down $11 million, or 1%, from December 31, 2016, due~~be eligible 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 27 reflects non-PCI loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed.~~receive modifications. For additional information on ~~delinquencies by~~customer accommodations, including loan ~~class,~~modifications, in response to the COVID-19 pandemic, see Note ~~5 (Loans and Allowance for Credit Losses)~~1 (Summary of Significant Accounting Policies) to Financial Statements in ~~this Report.~~our 2022 Form 10-K.

NET CHARGE-OFFSTable 21 presents net loan charge-offs.

Table ~~27:Loans 90 Days or More Past Due and Still Accruing~~21:Net Loan Charge-offs


		Quarter ended June 30,								Six months ended June 30,
		2023				2022				2023				2022
($ 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)




Commercial and industrial		$	119	0.12	%	$	27	0.03	%	$	162	0.09	%	$	4	—	%


Commercial real estate		79		0.21		(4)		(0.01)		96		0.13		(9)		(0.01)
Lease financing		2		0.05		—		—		5		0.06		(1)		(0.02)
	Total commercial	200		0.15		23		0.02		263		0.10		(6)		—


Residential mortgage		(12)		(0.02)		(16)		(0.03)		(23)		(0.02)		(37)		(0.03)
Credit card		396		3.39		199		2.02		740		3.22		375		1.94
Auto		89		0.68		68		0.49		210		0.81		164		0.24
Other consumer		91		1.31		70		0.98		178		1.26		153		1.08
	Total consumer	564		0.58		321		0.33		1,105		0.57		655		0.34
	Total	$	764	0.32	%	$	344	0.15	%	$	1,368	0.29	%	$	649	0.14	%

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


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


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


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

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

~~NET CHARGE-OFFS~~

~~Table 28:~~(1)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.~~

loan charge-offs as a percentage of average respective loans are annualized.

~~Table 28 presents~~The increase in commercial net ~~charge-offs for third quarter 2017 and the previous four quarters. Net~~loan charge-offs in ~~third~~second quarter ~~2017 were $717 million (0.30% of average total loans outstanding)~~2023, compared with ~~$805 million (0.33%) in third quarter 2016.~~the same period a year ago, was driven by higher losses across all commercial portfolios.

The ~~decrease~~increase in ~~commercial and industrial~~consumer net loan charge-offs ~~from third~~in second quarter ~~2016 reflected continued improvement~~2023, compared with the same period a year ago, was driven by higher losses in all consumer portfolios, primarily in our ~~oil and gas portfolio. Our commercial real estate portfolios were in a net recovery position. Total consumer net charge-offs increased slightly from the prior year due to an increase in~~ credit card ~~and automobile net charge-offs, partially offset by a decrease in residential real estate net charge-offs.~~portfolio.

ALLOWANCE FOR CREDIT LOSSES~~The~~We maintain an allowance for credit losses ~~which consists of the allowance~~(ACL) for ~~loan losses and the allowance for unfunded credit commitments,~~loans, which is management’s estimate of the expected lifetime 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, including deposits with banks, 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~~The process ~~and methodology to establish our allowance~~ for ~~credit losses each quarter. This process~~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~~2022 Form ~~10-K and~~10-K. For additional information on our ACL for loans, see Note 5 (Loans and Related Allowance for Credit Losses) to Financial Statements in this ~~Report.~~

~~Table 29 presents the allocation of the allowance~~Report, and for ~~credit losses by loan segment and class for the most recent quarter end and last four year ends.~~

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

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

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

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

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


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

In addition to the allowance for credit losses, there was $454 million at September 30, 2017, and $954 million at December 31, 2016 of nonaccretable difference to absorb losses for PCI loans, which totaled $13.6 billion at September 30, 2017. The allowance for credit losses 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. For additional information on ~~PCI loans,~~our ACL for debt securities, see ~~the “Risk Management – Credit Risk Management – Purchased Credit-Impaired Loans” section~~Note 3 (Available-for-Sale and ~~Note 5 (Loans and Allowance for Credit Losses)~~Held-to-Maturity Debt Securities) to Financial Statements in this Report.

Table 22 presents the allocation of the ACL for loans by loan portfolio segment and class.


			Wells Fargo & Company			37

Risk Management – Credit Risk Management (continued)

Table 22:Allocation of the ACL for Loans


	Jun 30, 2023							Dec 31, 2022
($ in millions)	ACL		ACL as % of loan class		Loans as % of total loans			ACL		ACL as % of loan class		Loans as % of total loans
Commercial and industrial	$	4,266	1.11	%	41			$	4,507	1.17	%	40


Commercial real estate	3,618		2.35		16			2,231		1.43		16
Lease financing	197		1.28		1			218		1.46		2
Total commercial	8,081		1.45		58			6,956		1.25		58


Residential mortgage (1)	734		0.28		28			1,096		0.41		28
Credit card	3,865		8.10		5			3,567		7.71		5
Auto	1,408		2.73		6			1,380		2.57		6
Other consumer	698		2.50		3			610		2.08		3
Total consumer	6,705		1.71		42			6,653		1.67		42
Total	$	14,786	1.56	%	100			$	13,609	1.42	%	100

Components:
Allowance for loan losses					$	14,258						12,985
Allowance for unfunded credit commitments					528							624
Allowance for credit losses					$	14,786						13,609

Ratio of allowance for loan losses to total net loan charge-offs (2)					4.65x							8.08
Ratio of allowance for loan losses to total nonaccrual loans					2.07							2.31
Allowance for loan losses as a percentage of total loans					1.50		%					1.36

(1)Includes negative allowance for expected recoveries of amounts previously charged off.

(2)Total net loan charge-offs are annualized for the quarter ended June 30, 2023.

The ~~ratio of~~ratios for the allowance for ~~credit~~loan losses ~~to total nonaccrual~~and the ACL for loans presented in Table 22 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,~~increased $1.2 billion, or 3%9%, from December 31, ~~2016, due to a decrease in our~~2022, reflecting increases for commercial ~~allowance reflecting credit quality improvement, including in the oil and gas portfolio,~~real estate loans, primarily office loans, as well as ~~improvement~~for increases in ~~our residential real estate portfolios,~~credit card loan balances, partially offset by ~~increased allowance~~a decrease for residential mortgage loans related to the adoption of ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. For additional information on ASU 2022-02, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report. The detail of the changes in the ~~credit card, automobile~~ACL for loans by portfolio segment (including charge-offs and recoveries by loan class) is included in Note 5 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

We consider multiple economic scenarios to develop our estimate of the ACL for loans, which generally include a base scenario, along with an optimistic (upside) and one or more pessimistic (downside) scenarios. We weighted the base scenario and the downside scenarios in our estimate of the ACL for loans at June 30, 2023. The base scenario assumed elevated inflation and economic contraction in the near term, reflecting declining property values and increased unemployment rates from historically low levels. The downside scenarios assumed a more substantial economic contraction due to declining property values, high inflation, and lower business and consumer confidence.

Additionally, we consider qualitative factors that represent the risk of limitations inherent in our processes and assumptions such as economic environmental factors, modeling assumptions and performance, and other ~~revolving~~subjective factors, including industry trends and emerging risk assessments.

The forecasted key economic variables used in our estimate of the ACL for loans at June 30, 2023, and March 31, 2023, are presented in Table 23.

Table 23:ForecastedKeyEconomic Variables


	4Q 2023		2Q 2024	4Q 2024
Weighted blend of economic scenarios:
U.S. unemployment rate (1):


June 30, 2023	4.2	%	5.2	5.9
March 31, 2023	4.7		5.6	6.0

U.S. real GDP (2):


June 30, 2023	(1.5)		(0.8)	1.0
March 31, 2023	(0.3)		0.5	1.4

Home price index (3):


June 30, 2023	(4.3)		(5.9)	(6.4)
March 31, 2023	(5.5)		(7.7)	(6.6)

Commercial real estate asset prices (3):


June 30, 2023	(12.4)		(12.6)	(7.2)
March 31, 2023	(5.2)		(8.0)	(8.1)

(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 quality and ~~installment portfolios. Total provision~~mix changes, and changes in general economic conditions and expectations (including for ~~credit losses was $717 million in third quarter 2017, compared with $805 million in third quarter 2016, reflecting the same changes mentioned above for the allowance for credit losses.~~unemployment and real GDP), among other factors.


38			Wells Fargo & Company

We believe the ~~allowance~~ACL for ~~credit losses~~loans of ~~$12.1~~$14.8 billion at ~~September~~June 30, ~~2017,~~2023, 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~~2022 Form 10-K.

~~LIABILITY FOR~~

MORTGAGE ~~LOAN REPURCHASE LOSSES~~

BANKING ACTIVITIES We sell residential and commercial mortgage loans to various parties. 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”~~Banking Activities” section in our ~~2016~~2022 Form ~~10-K and Note 8 (Mortgage Banking Activities) to Financial Statements in this Report.~~10-K.

~~RISKS RELATING TO SERVICING ACTIVITIES~~In addition to servicing loans in our portfolio, we act as servicer and/or master servicer of residential and commercial 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.

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 for advances of delinquent payments vary by investor and the applicable servicing agreements. See Note 6 (Mortgage Banking Activities) to Financial Statements in this Report for additional information about residential and commercial servicing rights, servicer advances and servicing fees.

In ~~connection~~accordance with applicable servicing guidelines, upon transfer as servicer, we retain the option to repurchase loans from GNMA loan securitization pools, which generally becomes exercisable when three scheduled loan payments remain unpaid by the borrower. We may repurchase these loans for cash and as a result, our total consolidated assets do not change. Repurchased loans that regain current status or are otherwise modified in accordance with applicable servicing ~~activities,~~guidelines may be included in future GNMA loan securitization pools. At June 30, 2023, and December 31, 2022, these loans, which we have ~~entered into various settlements~~repurchased or have the option to repurchase, were $8.5 billion and $9.8 billion, respectively, which included $7.8 billion and $8.6 billion, respectively, in loans held for investment, with ~~federal~~the remainder in loans held for sale. See Note 13 (Securitizations and ~~state regulators~~Variable Interest Entities) to ~~resolve certain alleged servicing issues and practices. In general, these settlements required us to provide customers~~Financial Statements in this Report for additional information about our involvement with mortgage loan ~~modification relief, refinancing relief, and foreclosure prevention and assistance, as well as imposed certain monetary penalties on us.~~securitizations.

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~~Mortgage Banking Activities” section in our ~~2016~~2022 Form 10-K. For additional information on mortgage banking activities, see Note 6 (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.2022 Form 10-K.

INTEREST RATE RISK Interest rate risk ~~which potentially~~is the risk that market fluctuations in interest rates, credit spreads, or foreign exchange can ~~have~~cause a ~~significant~~loss of the Company’s earnings ~~impact, is an integral part of being a financial intermediary.~~and capital stemming from mismatches in the Company’s asset and liability cash flows primarily arising from customer-related activities such as lending and deposit-taking. 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 securities portfolio~~mortgage-related products may ~~prepay significantly earlier~~pay down at a 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~~rates 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 24, 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 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 24:

•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.


			Wells Fargo & Company			39

Risk Management – Asset/Liability Management (continued)

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

•The interest rate sensitivity of deposits is modeled using the historical behavior of our deposits portfolio and reflects the expectations of deposit products repricing as market interest rates change (referred to as deposit betas). Our actual experience in base and alternative scenarios may differ from expectations due to the lag or acceleration of deposit repricing, changes in consumer behavior, and other factors.

•We hold the size of the projected debt and equity securities portfolios constant across scenarios.

Table 24:Net Interest Income Sensitivity Over the Next 12 Months Using Instantaneous Movements


($ in billions)	Jun 30, 2023		Dec 31, 2022
Parallel shift:
+100 bps shift in interest rates	$	1.8	2.3
-100 bps shift in interest rates	(2.1)		(1.7)

Steeper yield curve:
+100 bps shift in long-term interest rates	1.0		0.8
-100 bps shift in short-term interest rates	(1.1)		(1.0)



Flatter yield curve:
+100 bps shift in short-term interest rates	0.8		1.5
-100 bps shift in long-term interest rates	(1.0)		(0.7)

The changes in our interest rate sensitivity from December 31, 2022, to June 30, 2023, in Table 24 reflected updates to our base scenario, including expectations for balance sheet composition and interest rates. Our interest rate sensitivity 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 driven~~are impacted by mortgage ~~activity, and~~banking activities that may have sensitivity impacts that 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 2022 Form 10-K for additional information.

Interest rate sensitive noninterest income is also impacted by changes in earnings credit for noninterest-bearing deposits that reduce treasury management deposit-related service fees on commercial accounts, and by trading assets. In addition, the impact to net interest income does not include the fair value changes of trading securities, which, along with the effects of related economic hedges, are recorded in noninterest income. In addition to changes in interest rates, net interest income and noninterest income from trading securities may be impacted by the actual composition of the trading portfolio. 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~~As interest rates increase, changes in ~~this Report for more information on the use of the available-for-sale and held-to-~~

~~Asset/Liability Management (continued~~)

~~maturity securities portfolios. The notional or contractual amount, credit risk amount and~~the fair value of AFS debt securities may negatively affect accumulated other comprehensive income (AOCI), which lowers the ~~derivatives used~~amount of our regulatory capital. AOCI also includes unrealized gains or losses related to ~~hedge our~~the transfer of debt securities from AFS to HTM, which are subsequently amortized into earnings over the life of the security with no further impact from interest rate ~~risk exposures as~~changes. See Note 1 (Summary of ~~September 30, 2017,~~Significant Accounting Policies) and ~~December 31, 2016, are presented in~~ Note ~~12 (Derivatives)~~3 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this ~~Report.~~Report for additional information on the debt securities portfolios. We use derivatives for asset/liability management in ~~two~~the following main ways:

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

•to reduce AOCI sensitivity of our AFS debt securities portfolio; and

•to economically hedge our mortgage origination pipeline, funded mortgage loans, and ~~MSRs using~~MSRs.

Derivatives used to hedge our interest rate ~~swaps, swaptions, futures, forwards and options.~~risk exposures are presented in Note 11 (Derivatives) to Financial Statements in this Report.

MORTGAGE BANKING INTEREST RATE AND MARKET RISK We originate, fund and service mortgage loans, which subjects us to various risks, including ~~credit, liquidity and~~market, interest rate, ~~risks.~~credit, and liquidity risks that can be substantial. Based on market conditions and other factors, we reduce credit and liquidity risks by selling or securitizing mortgage loans. We determine whether mortgage loans will be held for investment or held for sale at the time of commitment, but may change our intent to hold loans for investment or sale as part of our corporate asset/liability management activities. We may also retain securities in our investment portfolio at the time we securitize mortgage loans.

Changes in interest rates may impact mortgage banking noninterest income, including origination and servicing fees, and the fair value of our residential MSRs, LHFS, and derivative loan commitments (interest rate “locks”) extended to mortgage applicants. Interest rate changes will generally impact our mortgage banking noninterest income on a lagging basis due to the time it takes for the market to reflect a shift in customer demand, as well as the time required for processing a new application, providing the commitment, and securitizing and selling the loan. The amount and timing of the impact will depend on the magnitude, speed and duration of the changes in interest rates. For ~~more~~additional information on mortgage banking, ~~interest rate~~including key assumptions and ~~market risk,~~the sensitivity of the fair value of MSRs, see the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section and Note 6 (Mortgage Banking Activities), Note 14 (Derivatives), and Note 15 (Fair Values of Assets and Liabilities) to Financial Statements in our ~~2016~~2022 Form 10-K.

While our hedging activities are designed to balance our mortgage banking interest rate risks, the financial instruments we use may not perfectly correlate with the values and income being hedged. For example, the change in the value of ARM production held for sale from changes in mortgage interest rates may or may not be fully offset by LIBOR index-based financial instruments used as economic hedges for such ARMs. Additionally, hedge-carry income on our economic 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 includes price risk in the trading book, mortgage servicing rights and the hedge effectiveness risk associated with mortgage loans held at fair value, and impairment of private equity investments. For


40			Wells Fargo & Company

information on our oversight of market risk, see the “Risk Management – Asset/Liability Management – Market ~~risk is intrinsic~~Risk” section in our 2022 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~~

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~~2022 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 and monitor 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 3325 shows the Company’s Trading General VaR by risk category. ~~As presented~~The increase in ~~the table,~~ average Company Trading General VaR ~~was $15 million~~ for the quarter ended ~~September~~June 30, ~~2017,~~2023, compared with ~~$29 million for the quarter~~

~~ended June 30, 2017. The decrease was mainly driven by changes in historical VaR dates dropping out of the 1-year time horizon.~~

~~Table 33:Trading 1-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
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)~~

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 andperiod 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~~year ago, was primarily driven by changes in portfolio composition.

Table ~~34:Regulatory 10-Day~~25:Trading 1-Day 99% General VaR by Risk Category


	Quarter ended
	June 30, 2023					March 31, 2023				June 30, 2022
(in millions)	Period end		Average	Low	High	Period end	Average	Low	High		Period end	Average	Low	High
Company Trading General VaR Risk Categories
Credit	50		39	21	51	34	27	20	37		28	31	21	40
Interest rate	42		44	29	65	40	32	19	48		26	23	11	35
Equity	19		19	13	24	24	24	19	31		20	24	17	36
Commodity	4		4	3	6	3	4	3	8		5	5	4	7
Foreign exchange	1		1	0	4	0	1	0	3		1	1	0	1
Diversification benefit (1)	(78)		(72)			(67)	(49)				(44)	(52)
Company Trading General VaR	$	38	35			34	39				36	32

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)~~

(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 2022 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)~~4 (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 Liquidity risk is the risk arising from the inability of the Company to meet obligations when they

come due, or roll over funds at a reasonable cost, without incurring heightened costs. 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~~withdrawals, debt service, leases for premises and equipment, and other cash commitments. Liquidity risk also considers the stability of ~~September 30, 2017, and December 31, 2016.~~

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


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


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


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


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

~~LIQUIDITY AND FUNDING~~deposits, including the risk of losing uninsured or non-operational deposits. 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 management-level Corporate ~~ALCO~~Asset/Liability Committee and on a quarterly basis by the ~~Board of Directors.~~Board. These guidelines are established and monitored for both the ~~consolidated company~~Company and ~~for~~ the Parent on a stand-alone basis ~~to ensure~~so that the Parent is a source of strength for its ~~regulated, deposit-taking~~ banking subsidiaries. For additional information on liquidity risk and funding management,


			Wells Fargo & Company			41

Risk Management – Asset/Liability Management (continued)

see the “Risk Management – Liquidity Risk and Funding” section in our 2022 Form 10-K.

Liquidity Standards ~~On September 3, 2014,~~ We are subject to a rule issued by the FRB, OCC and FDIC ~~issued~~that establishes a ~~final rule that implements a~~ quantitative minimum liquidity requirement consistent with the liquidity coverage ratio (LCR) established by the Basel Committee on Banking Supervision (BCBS). The rule requires a covered banking ~~institutions, 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~~Fargo.

We are also subject to a rule ~~that requires large bank holding companies to publicly disclose on a quarterly basis beginning~~

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

~~The~~issued by the FRB, OCC and FDIC ~~have proposed a rule~~ that ~~would implement~~establishes 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. The NSFR applies to the Company and to our IDIs with total assets of $10 billion or more. As ~~proposed,~~of June 30, 2023, we were compliant with the ~~rule would become effective on January 1, 2018.~~NSFR requirement.

Liquidity Coverage Ratio As of ~~September~~June 30, ~~2017,~~2023, 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 4126 presents the Company’s quarterly average values for the daily-calculated LCR and its components calculated pursuant to the LCR rule requirements. The LCR represents average HQLA divided by average projected net cash outflows, as each is defined under the LCR rule.

Table ~~41:~~ 26:Liquidity Coverage Ratio


	Average for quarter ended
(in millions, except ratio)	Jun 30, 2023			Mar 31, 2023	Jun 30, 2022
HQLA (1):
Eligible cash	$	121,126		108,725	137,147
Eligible securities (2)	227,955			239,123	232,815
Total HQLA	349,081			347,848	369,962
Projected net cash outflows (3)	283,609			284,290	305,212
LCR	123		%	122	121

(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 are not transferable to other Wells Fargo ~~Bank, N.A.~~entities.

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

(3)Projected net cash outflows are calculated by applying a standardized set of outflow and inflow assumptions, defined by the LCR rule, to various exposures and liability types, such as deposits and unfunded loan commitments, which are prescribed based on a number of factors, including the type of customer and the nature of the account.

Liquidity Sources We maintain liquidity in the form of cash, ~~cash equivalents~~interest-earning deposits with banks, 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 27 at fair value, which also includes encumbered securities that are not included as available HQLA in the calculation of the LCR.

Table 27:Primary Sources of Liquidity


	June 30, 2023				December 31, 2022
(in millions)	Total		Encumbered	Unencumbered	Total	Encumbered	Unencumbered
Interest-earning deposits with banks (1)	$	122,503	—	122,503	124,561	—	124,561
Debt securities of U.S. Treasury and federal agencies	49,267		11,549	37,718	59,570	12,080	47,490
Federal agency mortgage-backed securities (2)	241,250		24,523	216,727	230,881	34,151	196,730
Total	$	413,020	36,072	376,948	415,012	46,231	368,781

(1)Excludes time deposits, which are included in interest-earning deposits with banks in our consolidated balance sheet.

(2)Encumbered securities at June 30, 2023, included securities with a fair value of $1.5 billion which were purchased in June 2023, but settled in July 2023.

Our ~~cash is predominantly~~interest-earning deposits with banks are mainly on deposit with the Federal Reserve. Securities included as part of our primary sources of liquidity are comprised of U.S. Treasury and federal agency debt, and mortgage-backed securities issued by federal agencies within our investment securities portfolio. We believe ~~these~~the debt securities included in Table 27 provide quick and reliable 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~~

As of June 30, 2023, we had approximately $438.1 billion of available borrowing capacity at various Federal Home Loan Banks and the ~~legal entities within our consolidated group~~Federal Reserve Discount Window, based on collateral pledged. Although available, we do not view this borrowing capacity as a primary source 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.

liquidity.

~~Asset/Liability Management (continued~~)

~~Table 42:Primary Sources of Liquidity~~

September 30, 2017 December 31, 2016
(in millions) Total
Encumbered
Unencumbered
Total
Encumbered
Unencumbered
Interest-earning deposits $ 205,648
—
205,648
$ 200,671
—
200,671
Securities of U.S. Treasury and federal agencies 51,632
1,101
50,531
70,898
1,160
69,738
Mortgage-backed securities of federal agencies (1) 239,798
46,137
193,661
205,655
52,672
152,983
Total $ 497,078
47,238
449,840
$ 477,224
53,832
423,392


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

In addition, ~~to our primary sources of liquidity shown in Table 42,~~ 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~~

Funding Sources The Parent acts as a source of funding for the Company through the issuance of long-term debt and equity. WFC Holdings, LLC (the “IHC”) is an intermediate holding company and subsidiary of the Parent, which provides funding support for the ongoing operational requirements of the Parent and certain of its direct and indirect subsidiaries. For additional


42			Wells Fargo & Company

information on the IHC, see the “Regulatory Matters – ‘Living Will’ Requirements and Related Matters” section in ~~our held-to-maturity portfolio, to the extent not encumbered, may be pledged to obtain financing.~~this Report. Additional subsidiary funding is provided by deposits, short-term borrowings and long-term debt.

Deposits have historically provided a sizable source of relatively low-cost funds. Deposits were ~~137%~~142% and 145% of total loans at ~~September~~June 30, ~~2017~~2023, and ~~135% at~~ December 31, ~~2016.~~2022, respectively.

Table 28 presents a summary of our short-term borrowings, which generally mature in less than 30 days. The balances of federal funds purchased and securities sold under agreements to

~~Additional funding is provided by long-term debt~~repurchase may vary over time due to client activity, our own demand for financing, and our overall mix of liabilities. For additional information on the classification of our short-term ~~borrowings.~~ borrowings, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2022 Form 10-K. 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 15 (Pledged Assets and Collateral) to Financial Statements in this Report.

Table 28:Short-Term Borrowings


(in millions)	Jun 30, 2023		Dec 31, 2022
Federal funds purchased and securities sold under agreements to repurchase	$	67,602	30,623

Other short-term borrowings (1)	16,653		20,522
Total	$	84,255	51,145

(1)Includes $2.0 billion and $7.0 billion of Federal Home Loan Bank (FHLB) advances at June 30, 2023, and December 31, 2022, respectively.

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~~Proceeds from securities issued were used for general corporate purposes unless otherwise specified in the applicable prospectus or prospectus supplement, and 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 redeem or repurchase, and subsequently retire, our outstanding debt ~~of $238.9 billion at September 30, 2017, decreased $16.2 billion from December 31, 2016.~~securities in privately negotiated or open market transactions, by tender offer, or otherwise. We issued ~~$10.4 billion and $38.4~~$8.5 billion of long-term debt in ~~the third quarter and first nine months of 2017, respectively.~~July 2023. Table 4429 provides the aggregate carrying value of long-term debt maturities (based on contractual payment dates) for the remainder of ~~2017~~2023 and the following years thereafter, as of ~~September~~June 30, ~~2017.~~2023.

Table ~~44:~~29:Maturity of Long-Term Debt


	June 30, 2023
(in millions)	Remaining 2023		2024	2025	2026	2027	Thereafter	Total
Wells Fargo & Company (Parent Only)
Senior notes	$	2,099	8,536	14,185	23,463	7,510	56,341	112,134
Subordinated notes	1,568		710	959	2,611	2,329	12,110	20,287
Junior subordinated notes	—		—	—	—	349	821	1,170
Total long-term debt – Parent	3,667		9,246	15,144	26,074	10,188	69,272	133,591
Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior notes (1)	5,002		17,513	1,173	79	3	132	23,902
Subordinated notes	949		—	148	—	27	3,226	4,350
Junior subordinated notes	—		—	—	—	407	—	407
Other bank debt (2)	1,835		1,790	858	479	418	2,184	7,564
Total long-term debt – Bank	7,786		19,303	2,179	558	855	5,542	36,223
Other consolidated subsidiaries
Senior notes	11		82	410	220	—	95	818


Total long-term debt – Other consolidated subsidiaries	11		82	410	220	—	95	818
Total long-term debt	$	11,464	28,631	17,733	26,852	11,043	74,909	170,632

(1)Includes $23.0 billion of FHLB advances.

(2)Primarily relates to unfunded commitments for low-income housing tax credit (LIHTC) investments. For additional information, see Note 16 (Securitizations and Variable Interest Entities) to Financial Statements in our 2022 Form 10-K.

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 from securities issued were used for general corporate purposes, and, unless otherwise specified in the applicable prospectus or prospectus supplement, we expect the proceeds from securities issued in the future will be used for the same purposes. Depending on market conditions, we may purchase our outstanding debt securities from time to time in privately negotiated or open market transactions, by tender offer, or otherwise.

~~Wells Fargo Bank, N.A.~~ As of September 30, 2017, Wells Fargo Bank, N.A. was authorized by its board of directors to issue $100 billion in outstanding short-term debt and $175 billion in outstanding long-term debt and had available $97.4 billion in short-term debt issuance authority and $98.2 billion in long-term debt issuance authority. In April 2015, Wells Fargo Bank, N.A. established a $100 billion bank note program under which, subject to any other debt outstanding under the limits described above, it may issue $50 billion in outstanding short-term senior notes and $50 billion in outstanding long-term senior or subordinated notes. At September 30, 2017, Wells Fargo Bank, N.A. had remaining issuance capacity under the bank note program of $50.0 billion


			Wells Fargo & Company			43

Risk Management – Asset/Liability Management (continued)

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, and as of September 30, 2017, Wells Fargo Bank, N.A. had outstanding advances of $60.0 billion across the Federal Home Loan Bank System.

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

On ~~September~~May 18, ~~2017, S&P Global Ratings~~2023, DBRS Morningstar affirmed ~~all of~~ the Company’s ratings and maintained ~~its negative ratings outlook.~~the stable trend. On ~~September 20, 2017, DBRS, Inc. (DBRS) downgraded the Company’s long-term ratings by one notch and~~June 1, 2023, Fitch Ratings affirmed the Company’s ~~short-term ratings. DBRS revised~~ ratings and retained

the ~~trend on~~stable ratings outlook. There were no other actions undertaken by the ~~Company's long-term~~rating agencies with regard to our credit 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.during second quarter 2023.

See the “Risk Factors” section in our ~~2016~~2022 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 1211 (Derivatives) to Financial Statements in this Report for information regarding additional collateral and funding obligations required for certain

~~Asset/Liability Management (continued~~)

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

The credit ratings of the Parent and Wells Fargo Bank, N.A., as of ~~September~~June 30, ~~2017,~~2023, are presented in Table ~~45.~~

30.

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

2023

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 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. Because the extent of any obligation to increase our investment in any of the FHLBs depends entirely upon the occurrence of a future event, potential future payments to the FHLBs are not determinable.



~~Capital Management~~44			Wells Fargo & Company


Capital Management

We have an active program for managing capital through a comprehensive process for assessing the Company’s overall capital adequacy. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, and to meet both regulatory and market expectations. We primarily fund our capital needs through the retention of earnings net of both dividends and share repurchases, as well as through the issuance of preferred stock and ~~long~~long- and short-term debt. Retained earnings at June 30, 2023, increased ~~$8.7~~$7.2 billion from December 31, ~~2016,~~2022, predominantly ~~from~~as a result of $9.9 billion of Wells Fargo net income, ~~of $15.9~~partially offset by $2.9 billion ~~less~~of common and preferred stock ~~dividends~~dividends. During the first half of ~~$7.0 billion. During third quarter 2017,~~2023, we issued ~~10.1~~$860 million ~~shares~~ of common ~~stock. During third quarter 2017,~~stock, substantially all of which was issued in connection with employee compensation and benefits. In the first half of 2023, we repurchased ~~49.0~~187 million shares of common stock ~~in open market transactions, private transactions and from employee benefit plans,~~ at a cost of ~~$2.6~~$8.1 billion. ~~We also entered into a $1 billion forward repurchase contract with an unrelated third party in October 2017 that is expected to settle in first quarter 2018 for approximately 19 million shares.~~ For additional information about capital planning, see the “Capital Planning and Stress Testing” section below.

In July 2023, we issued $1.725 billion of our ~~forward repurchase agreements, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.~~Preferred Stock, Series EE.

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 contain two frameworks for calculating capital requirements, a Standardized Approach and an Advanced Approach applicable to certain institutions, including Wells Fargo, and we must calculate our risk-based capital ratios under both approaches. The Company is required to satisfy the risk-based capital ratio requirements to avoid restrictions on capital distributions and discretionary bonus payments.

On July 27, 2023, federal banking regulators issued a proposed rule that would impact the way in which risk-based capital requirements are determined for certain banks. The proposed rule would eliminate the current Advanced Approach and replace it with a new expanded risk-based approach for the measurement of risk-weighted assets, including more granular risk weights for credit risk, a new market risk framework, and a new standardized approach for measuring operational risk. The new requirements would be phased in over a three-year period beginning July 1, 2025. The Company expects a significant increase in its risk-weighted assets and a net increase in its capital requirements based on ~~international guidelines for determining regulatory~~a preliminary assessment of the proposed rule. The Company is considering a range of potential actions to address the impact of the proposed rule, including balance sheet and capital ~~issued by~~optimization strategies.

Table 31 and Table 32 present the ~~Basel Committee on Banking Supervision (BCBS). The federal banking regulators’~~risk-based capital ~~rules, among other things, require on a fully phased-in basis:~~

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

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

~~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~~requirements applicable to the ~~minimum~~Company under the Standardized Approach and Advanced Approach, respectively, as of June 30, 2023.

Table 31: Risk-Based Capital Requirements – Standardized Approach

Table 32: Risk-Based Capital Requirements – Advanced Approach

In addition to the risk-based capital ~~ratios, which is currently not~~requirements described in ~~effect but could be imposed by regulators at their discretion~~Table 31 and Table 32, 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. The countercyclical buffer in effect at June 30, 2023, was 0.00%.

~~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.


			Wells Fargo & Company			45

Capital Management (continued)

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. Our stress capital buffer for the ~~Advanced Approach.~~period October 1, 2022, through September 30, 2023, is 3.20%. On July 27, 2023, the FRB confirmed that the Company’s stress capital buffer for the period October 1, 2023, through September 30, 2024, will be 2.90%.

~~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. If our annual calculation results in a decrease to our G-SIB capital surcharge, the decrease takes effect the next calendar year. If our annual calculation results in an increase to our G-SIB capital surcharge, the increase takes effect in two calendar years. Our G-SIB capital surcharge will continue to be 1.50% in 2023. On July 27, 2023, the FRB issued a proposed rule that would impact the methodology used to calculate the G-SIB capital surcharge.

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 risk-weighted assets (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 regulatory reporting purposes, we report our capital in accordance with Transition Requirements but are managing our capital based on a fully phased-in calculation. For information about our capital requirements calculated in accordance with Transition Requirements, see Note 19 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.

~~Capital Management (continued~~)

rules. Table 4633 summarizes our CET1, ~~tier~~Tier 1 capital, total capital, ~~risk-weighted assets~~RWAs and capital ~~ratios on a fully phased-in basis at September 30, 2017~~ratios.

Table 33:Capital Components and ~~December 31, 2016. As of September 30, 2017, our CET1 and tier 1 capital ratios were lower using RWAs calculated~~Ratios


		Standardized Approach						Advanced Approach
($ in millions)		Required Capital Ratios (1)		Jun 30, 2023			Dec 31, 2022	Required Capital Ratios (1)	Jun 30, 2023	Dec 31, 2022
Common Equity Tier 1	(A)			$	134,221		133,527		134,221	133,527
Tier 1 capital	(B)			153,201			152,567		153,201	152,567
Total capital	(C)			187,563			186,747		176,926	177,258
Risk-weighted assets	(D)			1,250,690			1,259,889		1,118,379	1,112,307
Common Equity Tier 1 capital ratio	(A)/(D)	9.20	%	10.73		*	10.60	8.50	12.00	12.00
Tier 1 capital ratio	(B)/(D)	10.70		12.25		*	12.11	10.00	13.70	13.72
Total capital ratio	(C)/(D)	12.70		15.00		*	14.82	12.00	15.82	15.94

*Denotes the binding ratio under the Standardized ~~Approach.~~and Advanced Approaches at June 30, 2023.

(1)Represents the minimum ratios required to avoid restrictions on capital distributions and discretionary bonus payments at June 30, 2023.

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

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 ratio as determined under the Advanced and Standardized Approaches.


~~(1)~~46			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 4734 provides information regarding the calculation and composition of our risk-based capital under the Standardized and Advanced ~~and Standardized Approaches at September 30, 2017 and December 31, 2016.~~Approaches.

Table ~~47:~~34:Risk-Based Capital Calculation and Components


(in millions)		Jun 30, 2023		Dec 31, 2022
Total equity (1)		$	181,952	182,213
Effect of accounting policy change (1)		—		338
Total equity (as reported)		181,952		181,875
Adjustments:
Preferred stock		(19,448)		(19,448)
Additional paid-in capital on preferred stock		173		173

Noncontrolling interests		(1,761)		(1,986)
Total common stockholders’ equity		$	160,916	160,614
Adjustments:
Goodwill		(25,175)		(25,173)
Certain identifiable intangible assets (other than MSRs)		(145)		(152)
Goodwill and other intangibles on investments in consolidated portfolio companies (included in other assets)		(2,511)		(2,427)
Applicable deferred taxes related to goodwill and other intangible assets (2)		905		890
CECL transition provision (3)		120		180
Other		111		(405)
Common Equity Tier 1 under the Standardized and Advanced Approaches		$	134,221	133,527
Preferred stock		19,448		19,448
Additional paid-in capital on preferred stock		(173)		(173)

Other		(295)		(235)
Total Tier 1 capital under the Standardized and Advanced Approaches	(A)	$	153,201	152,567

Long-term debt and other instruments qualifying as Tier 2		19,681		20,503
Qualifying allowance for credit losses (4)		15,110		13,959
Other		(429)		(282)
Total Tier 2 capital under the Standardized Approach	(B)	$	34,362	34,180
Total qualifying capital under the Standardized Approach	(A)+(B)	$	187,563	186,747

Long-term debt and other instruments qualifying as Tier 2		19,681		20,503
Qualifying allowance for credit losses (4)		4,473		4,470
Other		(429)		(282)
Total Tier 2 capital under the Advanced Approach	(C)	$	23,725	24,691
Total qualifying capital under the Advanced Approach	(A)+(C)	$	176,926	177,258

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.~~


~~(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~~)

(1)In first quarter 2023, we adopted ASU 2018-12. We adopted this ASU with retrospective application, which required revision of prior period financial statements. 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)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)In second quarter 2020, the Company elected to apply a modified transition provision issued by federal banking regulators related to the impact of the current expected credit loss accounting standard (CECL) on regulatory capital. The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the allowance for credit losses (ACL) under CECL for each period until December 31, 2021, followed by a three-year phase-out period in which the benefit is reduced by 25% in year one, 50% in year two and 75% in year three.

(4)Differences between the approaches are driven by the qualifying amounts of ACL includable in Tier 2 capital. Under the Advanced Approach, eligible credit reserves represented by the amount of qualifying ACL in excess of expected credit losses (using regulatory definitions) is limited to 0.60% of Advanced credit RWAs, whereas the Standardized Approach includes ACL in Tier 2 capital up to 1.25% of Standardized credit RWAs. Under both approaches, any excess ACL is deducted from the respective total RWAs.

Table ~~48 presents~~35 provides the ~~changes in Common Equity Tier 1~~composition of our RWAs under the Standardized and Advanced Approaches.

Table 35: Risk-Weighted Assets


	Standardized Approach			Advanced Approach (1)
(in millions)	Jun 30, 2023		Dec 31, 2022		Jun 30, 2023	Dec 31, 2022
Risk-weighted assets (RWAs):
Credit risk	$	1,210,424	1,218,006		757,013	757,436
Market risk	40,266		41,883		40,266	41,883
Operational risk	—		—		321,100	312,988
Total RWAs	$	1,250,690	1,259,889		1,118,379	1,112,307

(1)RWAs calculated under the Advanced Approach ~~for~~utilize a risk-sensitive methodology, which relies upon the ~~nine months ended September 30, 2017.~~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.


			Wells Fargo & Company			47

Capital Management (continued)

Table ~~48:~~36 provides an analysis of changes in CET1.

Table 36: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, 2022		$	133,527
Cumulative effect from change in accounting policy (1)		323
Net income applicable to common stock		9,372
Common stock dividends		(2,253)
Common stock issued, repurchased, and stock compensation-related items		(7,400)
Changes in accumulated other comprehensive income (loss)		(79)
Goodwill		(2)
Certain identifiable intangible assets (other than MSRs)		7
Goodwill and other intangibles on ~~nonmarketable equity~~ investments ~~and on held-for-sale assets, which are included~~in consolidated portfolio companies (included in other ~~assets.~~assets)

	(84)
~~(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 (2)		15
CECL transition provision (3)		(60)
Other (4)		855
Change in Common Equity Tier 1		694
Common Equity Tier 1 at ~~period end.~~June 30, 2023		$	134,221

(1)Effective January 1, 2023, we adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

(3)In second quarter 2020, the Company elected to apply a modified transition provision issued by federal banking regulators related to the impact of CECL on regulatory capital. The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the allowance for credit losses (ACL) under CECL for each period until December 31, 2021, followed by a three-year phase-out period in which the benefit is reduced by 25% in year one, 50% in year two and 75% in year three.

(4)Includes $338 million related to our first quarter 2023 adoption of ASU 2018-12. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

Table 4937 presents net changes in the components of RWAs under the Standardized and Advanced ~~and Standardized Approaches for the nine months ended September 30, 2017.~~Approaches.

Table ~~49:~~37:Analysis of Changes in RWAs


(in millions)	Standardized Approach		Advanced Approach
Risk-weighted assets (RWAs) at December 31, 2022	$	1,259,889	1,112,307
Net change in credit risk RWAs	(7,582)		(423)
Net change in market risk RWAs	(1,617)		(1,617)
Net change in operational risk RWAs	—		8,112
Total change in RWAs	(9,199)		6,072
RWAs at June 30, 2023	$	1,250,690	1,118,379

(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


48			Wells Fargo & Company

TANGIBLE COMMON EQUITY We also evaluate our business based on certain ratios that utilize tangible common equity. Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, ~~and~~ goodwill, ~~and~~ certain identifiable intangible assets ~~(including~~(other than MSRs) and goodwill and ~~intangible assets associated with certain of our nonmarketable equity~~other intangibles on investments ~~but excluding mortgage servicing rights),~~in consolidated portfolio companies, 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 5038 provides a reconciliation of these non-GAAP financial measures to GAAP financial measures.

Table ~~50:~~38:Tangible Common Equity


		Balance at period-end				Average balance
		Quarter ended				Quarter ended						Six months ended
(in millions, except ratios)		Jun 30, 2023		Mar 31, 2023	Jun 30, 2022		Jun 30, 2023			Mar 31, 2023	Jun 30, 2022		Jun 30, 2023			Jun 30, 2022
Total equity		$	181,952	183,220	179,798		184,443			184,297	180,926		184,371			183,507
Adjustments:
Preferred stock (1)		(19,448)		(19,448)	(20,057)		(19,448)			(19,448)	(20,057)		(19,448)			(20,057)
Additional paid-in capital on preferred stock (1)		173		173	135		173			173	135		173			135
Unearned ESOP shares (1)		—		—	646		—			—	646		—			646
Noncontrolling interests		(1,761)		(2,052)	(2,262)		(1,924)			(2,019)	(2,386)		(1,971)			(2,427)
Total common stockholders’ equity	(A)	160,916		161,893	158,260		163,244			163,003	159,264		163,125			161,804
Adjustments:
Goodwill		(25,175)		(25,173)	(25,178)		(25,175)			(25,173)	(25,179)		(25,174)			(25,180)
Certain identifiable intangible assets (other than MSRs)		(145)		(139)	(191)		(140)			(145)	(200)		(142)			(209)
Goodwill and other intangibles on investments in consolidated portfolio companies (included in other assets)		(2,511)		(2,486)	(2,307)		(2,487)			(2,440)	(2,304)		(2,464)			(2,349)
Applicable deferred taxes related to goodwill and other intangible assets (2)		905		897	880		903			895	877		899			840
Tangible common equity	(B)	$	133,990	134,992	131,464		136,345			136,140	132,458		136,244			134,906
Common shares outstanding	(C)	3,667.7		3,763.2	3,793.0		N/A			N/A	N/A		N/A			N/A
Net income applicable to common stock	(D)	N/A		N/A	N/A		$	4,659		4,713	2,863		$	9,372		6,372
Book value per common share	(A)/(C)	$	43.87	43.02	41.72		N/A			N/A	N/A		N/A			N/A
Tangible book value per common share	(B)/(C)	36.53		35.87	34.66		N/A			N/A	N/A		N/A			N/A
Return on average common stockholders’ equity (ROE)	(D)/(A)	N/A		N/A	N/A		11.45		%	11.73	7.21		11.59		%	7.94
Return on average tangible common equity (ROTCE)	(D)/(B)	N/A		N/A	N/A		13.71			14.04	8.67		13.87			9.52

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~~)

(1)In fourth quarter 2022, we redeemed all outstanding shares of our Employee Stock Ownership Plan (ESOP) Cumulative Convertible Preferred Stock in exchange for shares of the Company's common stock. For additional information, see Note 11 (Preferred Stock) to Financial Statements in our 2022 Form 10-K.

~~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 39 presents the leverage requirements applicable to the Company as of June 30, 2023.

Table 39: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. At September 30, 2017, our SLR for the Company was 7.9% assuming full phase-in of the Advanced Approach capital framework. Based on our review, our current leverage levels would exceed the applicable requirements for each of our insured depository institutions as well. The fully phased-in 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 2022 Form 10-K.


			Wells Fargo & Company			49

Capital Management (continued)

Table ~~51 for~~40 presents information regarding the calculation and components of the ~~SLR.~~Company’s SLR and Tier 1 leverage ratio. At June 30, 2023, each of our IDIs exceeded their applicable SLR requirements.

Table ~~51:Fully Phased-In SLR~~40:Leverage Ratios for the Company


($ in millions)		Quarter ended June 30, 2023
Tier 1 capital	(A)	$	153,201
Total average assets		1,878,373
Less: Goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities)		28,289
Total adjusted average assets		1,850,084
Plus adjustments for off-balance sheet exposures:
Derivatives (1)		57,430
Repo-style transactions (2)		4,023
Other (3)		306,038
Total off-balance sheet exposures		367,491
Total leverage exposure	(B)	$	2,217,575
Supplementary leverage ratio	(A)/(B)	6.91		%

Tier 1 leverage ratio (4)		8.28		%

(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 %
(1)Adjustment represents derivatives and collateral netting exposures as defined for supplementary leverage ratio determination purposes.

~~OTHER REGULATORY CAPITAL MATTERS~~ ~~In December 2016,~~(2)Adjustment represents counterparty credit risk for repo-style transactions where Wells Fargo & Company is the ~~FRB finalized rules~~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~~Tier 1 capital issued directly by the top-tier or covered BHC plus eligible external long-term debt) to avoid restrictions on capital distributions and discretionary bonus payments as well as a minimum amount of eligible unsecured long-term debt.The components used to calculate our minimum TLAC and eligible unsecured long-term debt requirements as of June 30, 2023, are presented in Table 41.

Table 41: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 of (i) 18% of RWAs~~ TLAC

and ~~(ii) 7.5% of total leverage exposure (the denominator of~~eligible unsecured long-term debt requirements. For information regarding these proposed amendments, see the SLR calculation). Additionally, U.S. G-SIBs will be 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

“Capital Management – Total Loss Absorbing Capacity” section in our 2022 Form 10-K.

Table 42 provides our TLAC ~~leverage buffer equal to 2.0% of total leverage exposure that will be added to~~and eligible unsecured long-term debt and related ratios.

Table 42: TLAC and Eligible Unsecured Long-Term Debt


June 30, 2023
($ in millions)	TLAC (1)			Regulatory Minimum (2)	Eligible Unsecured Long-term Debt	Regulatory Minimum
Total eligible amount	$	289,125			130,576

Percentage of RWAs (3)	23.12		%	21.50	10.44	7.50
Percentage of total leverage exposure	13.04			9.50	5.89	4.50

(1)TLAC ratios are calculated using the ~~7.5%~~CECL transition provision issued by federal banking regulators.

(2)Represents the minimum ~~in order~~required 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% of~~ RWAs ~~plus~~determined under the ~~firm’s applicable G-SIB capital surcharge calculated under method two~~Standardized and (ii) 4.5% of the 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.Advanced Approaches.

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.

Our principal U.S. broker-dealer subsidiaries, Wells Fargo Securities, LLC, and Wells Fargo Clearing Services, LLC, are subject to regulations to maintain minimum net capital requirements. As of June 30, 2023, these broker-dealer subsidiaries were in compliance with their respective regulatory minimum net capital requirements.

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 ~~surcharge. Accordingly, based on~~capital surcharge and the ~~final Basel III~~stress capital rules under the lower of the Standardized or Advanced Approaches CET1 capital ratios, we currently target a long-term CET1 capital ratio at or in excess of 10%, which includes a 2% G-SIB surcharge. Our capital targets are subject to change based on various factors, includingbuffer, as well as potential changes to ~~the~~ regulatory requirements for our capital ~~framework and expectations for large banks promulgated by bank regulatory agencies,~~ratios, planned capital actions, changes in our risk profile and other factors. Accordingly, our long-term target capital levels are set above their respective regulatory minimums plus buffers.

~~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,~~annual Comprehensive Capital Analysis and Review, the FRB ~~also generated~~generates 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.~~test. The FRB ~~reviewed~~reviews the supervisory stress test results ~~both~~ as required under the Dodd-Frank Act using a common set of capital actions for all large BHCs and ~~by taking into account~~also reviews 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.~~ 28, 2023.

On ~~June 28, 2017,~~July 25, 2023, the ~~FRB notified us that it did not object~~Board approved an increase to ~~our capital plan included in~~ the ~~2017 CCAR.~~Company's third quarter 2023 common stock dividend to $0.35 per share.

Federal banking regulators also require large BHCs and banks to conduct their own stress tests to evaluate whether an the


50			Wells Fargo & Company

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

Securities Repurchases

From time to time the Board authorizes the Company to repurchase shares of our common stock. Although we announce when the Board authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Future stock repurchases may be private or open-market repurchases, including block transactions, accelerated or delayed block transactions, forward 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 any acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations, including under the FRB’s ~~response~~capital plan rule. Due to the various factors that may impact the amount of our share repurchases and the fact that we tend to be

in the market regularly to satisfy repurchase considerations under our capital plan, ~~and to changes in~~ our ~~risk profile.~~share repurchases occur at various price levels. We may suspend share repurchase activity at any time.

~~In January 2016, the Board authorized the repurchase of 350 million shares of our common stock.~~ At ~~September~~June 30, ~~2017,~~2023, we had remaining Board authority to repurchase approximately ~~122~~64 million shares, subject to regulatory and legal conditions. The Company publicly announced on July 25, 2023, that the Board authorized a new common stock repurchase program of up to $30 billion. Unless modified or revoked by the Board, this authorization does not expire and supersedes the prior share repurchase authority approved by the Board.

For ~~more~~additional information about share repurchases during ~~third~~second quarter ~~2017,~~2023, see Part II, Item 2 in this Report.

Historically, our policy has been to repurchase shares under the “safe harbor” conditions of Rule 10b-18 of the Securities Exchange Act of 1934 including a limitation on the daily volume of repurchases. Rule 10b-18 imposes an additional daily volume limitation on share repurchases during a pending merger or acquisition in which shares of our stock will constitute some or all of the consideration. Our management may determine that during a pending stock merger or acquisition when the safe harbor would otherwise be available, it is in our best interest to repurchase shares in excess of this additional daily volume limitation. In such cases, we intend to repurchase shares in compliance with the other conditions of the safe harbor, including the standing daily volume limitation that applies whether or not there is a pending stock merger or acquisition.

In connection with our participation in the Capital Purchase Program (CPP), a part of the Troubled Asset Relief Program (TARP), we issued to the U.S. Treasury Department warrants to purchase 110,261,688 shares of our common stock with an original exercise price of $34.01 per share expiring on October 28, 2018. The terms of the warrants require the exercise price to be adjusted under certain circumstances when the Company’s quarterly common stock dividend exceeds $0.34 per share, which began occurring in second quarter 2014. Accordingly, with each quarterly common stock dividend above $0.34 per share, we must calculate whether an adjustment to the exercise price is required by the terms of the warrants, including whether certain minimum thresholds have been met to trigger an adjustment, and notify the holders of any such change. The Board authorized the repurchase by the Company of up to $1 billion of the warrants. At September 30, 2017, there were 26,560,862 warrants outstanding, exercisable at $33.731 per share, and $452 million of unused warrant repurchase authority. Depending on market conditions, we may purchase from time to time additional warrants in privately negotiated or open market transactions, by tender offer or otherwise.

~~Regulatory Matters (continued~~)



Regulatory Matters

~~Since the enactment of the Dodd-Frank Act in 2010, the~~The U.S. financial services industry ~~has been~~is subject to a significant ~~increase in~~ regulation and regulatory oversight initiatives. This ~~increased~~ regulation and oversight ~~has substantially changed~~may continue to impact how ~~most~~ U.S. financial services companies conduct business and ~~has~~may continue to result in increased ~~their~~ regulatory compliance costs.

For a discussion of certain consent orders applicable to the Company, see the “Overview” section in this Report. The following supplements our discussion of ~~the~~other significant regulations and regulatory oversight initiatives that have affected or may affect our business contained in the “Regulatory Matters” and “Risk Factors” sections in our ~~2016~~2022 Form ~~10-K~~10-K.

“Living Will” Requirements and ~~the “Regulatory Matters” section in our 2017 First and Second Quarter Reports on Form 10-Q.~~

~~REGULATION OF CONSUMER FINANCIAL PRODUCTS~~ The Dodd-Frank Act established the Consumer Financial Protection Bureau (CFPB) to ensure consumers receive clear and accurate disclosures regarding financial products and to protect them from hidden fees and unfair or abusive practices. With respect to residential mortgage lending, the CFPB issued a number of final rules implementing new origination, notification, disclosure and other requirements, as well as additional limitations on the fees and charges that may be increased from the estimates provided by lenders. In October 2015, the CFPB finalized amendments to the rule implementing the Home Mortgage Disclosure Act, resulting in a significant expansion of the data points lenders will be required to collect beginning January 1, 2018 and report to the CFPB beginning January 1, 2019. The CFPB also expanded the transactions covered by the rule and increased the reporting frequency from annual to quarterly for large volume lenders, such as Wells Fargo, beginning January 1, 2020. With respect to other financial products, in October 2016, the CFPB finalized rules, most of which become effective on April 1, 2018, to make prepaid cards subject to similar consumer protections as those provided by more traditional debit and credit cards such as fraud protection and expanded access to account information. In July 2017, the CFPB finalized a rule, which became effective on September 18, 2017, prohibiting covered providers of certain consumer financial products and services, such as Wells Fargo, from using arbitration agreements that prevent consumers from filing or participating in class action litigation. However, Congress subsequently used its powers under the Congressional Review Act to overturn the CFPB's arbitration rule and prohibited the CFPB from writing a “substantially similar” rule in the future without congressional action.

In addition to these rulemaking activities, the CFPB is continuing its on-going supervisory examination activities of the financial services industry with respect to a number of consumer businesses and products, including mortgage lending and servicing, fair lending requirements, student lending activities, and automobile finance. At this time, the Company cannot predict the full impact of the CFPB’s rulemaking and supervisory authority on our business practices or financial results.

“~~LIVING WILL~~” ~~REQUIREMENTS AND RELATED MATTERS~~Related Matters

Rules adopted by the FRB and the FDIC under the Dodd-Frank Act require large financial institutions, including Wells Fargo, to prepare and periodically ~~revise~~submit resolution plans, ~~so-called “living-wills”,~~also known as “living wills,” that would facilitate their rapid and orderly resolution in the event of material financial distress or failure. Under the rules, rapid and orderly resolution ~~plans are required to provide strategies for resolution~~means a reorganization or liquidation of the covered company under the U.S. Bankruptcy Code ~~and other applicable insolvency regimes~~ that can be accomplished in a reasonable period of time and in a

manner that substantially mitigates the risk that failure would have serious adverse effects on the financial stability of the United States. ~~We submitted our 2017~~In addition to the Company’s resolution plan, our national bank subsidiary, Wells Fargo Bank, N.A. (the “Bank”), is also required to ~~the FRB~~prepare and ~~FDIC on June 30, 2017, but have not yet received regulatory feedback on the~~periodically submit a resolution plan. If the FRB ~~and~~and/or FDIC determine that our ~~2017~~ resolution plan has deficiencies, they may impose more stringent capital, leverage or liquidity requirements on us or restrict our growth, activities or operations until we adequately remedy the deficiencies. If the FRB ~~and~~and/or FDIC ultimately determine that we have been unable to remedy any deficiencies, they could require us to divest certain assets or operations.

~~We must also prepare and submit~~ On June 27, 2023, we submitted our most recent resolution plan to the FRB ~~a recovery plan that identifies a range of options that we may consider during times of idiosyncratic or systemic economic stress to remedy any financial weaknesses~~ and restore market confidence without extraordinary government support. Recovery options include the possible sale, transfer or disposal of assets, securities, loan portfolios or businesses. Our insured national bank subsidiary, Wells Fargo Bank, N.A. (the “Bank”), must also prepare and submit to the OCC a recovery plan that sets forth the bank’s plan to remain a going concern when the bank is experiencing considerable financial or operational stress, but has not yet deteriorated to the point where liquidation or resolution is imminent. If either the FRB or the OCC determine that our recovery plan is deficient, they may impose fines, restrictions on our business or ultimately require us to divest assets.FDIC.

If Wells Fargo were to fail, it may be resolved in a bankruptcy proceeding or, if certain conditions are met, under the resolution regime created by the Dodd-Frank Act known as the “orderly liquidation authority.” The orderly liquidation authority allows for the appointment of the FDIC as receiver for a systemically important financial institution that is in default or in danger of default if, among other things, the resolution of the institution under the U.S. Bankruptcy Code would have serious adverse effects on financial stability in the United States. If the FDIC is appointed as receiver for ~~Wells Fargo & Company (the “Parent”),~~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,~~losses. There are substantial differences in the rights of creditors between the orderly liquidation authority and ~~allows~~the U.S. Bankruptcy Code, including the right of the FDIC to disregard the strict priority of creditor claims under the U.S. Bankruptcy Code in certain ~~circumstances.~~circumstances and the use of an administrative claims procedure instead of a judicial procedure to determine creditors’ claims.

~~Whether~~The strategy described in our most recent resolution plan is a single point of entry strategy, in which the Parent would be the only material legal entity to enter resolution proceedings. However, the strategy described in our resolution plan is not binding in the event of an actual resolution of Wells Fargo, whether conducted under the U.S. Bankruptcy Code or by the FDIC under the orderly liquidation authority, 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.authority. The FDIC has announced that a single point of entry strategy may be a desirable strategy under its implementation of the orderly liquidation authority, but not all aspects of how the FDIC might exercise this authority are known and additional rulemaking is possible.

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

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

To facilitate the orderly resolution of systemically important financial institutions in case of material distress or failure, federal banking regulations require that institutions, such as Wells Fargo, maintain a minimum amount of equity and unsecured debt to absorb losses and recapitalize operating subsidiaries. Federal banking regulators have also required measures to facilitate the continued operation of operating subsidiaries notwithstanding the failure of their parent companies, such as limitations on parent guarantees, and have issued guidance encouraging institutions to take legally binding measures to provide capital and liquidity resources to certain subsidiaries ~~in order~~ to facilitate an orderly resolution. In response to the regulators’ guidance and to facilitate the orderly resolution of the Company, ~~using either a single point of entry or multiple point of entry resolution strategy,~~ on June 28, 2017, the Parent entered into a support agreement, as amended and restated on June 26, 2019 (the “Support Agreement”), with WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), ~~and~~ the Bank, Wells Fargo Securities, LLC (“WFS”), ~~and~~ Wells Fargo Clearing Services, LLC (“WFCS”), ~~each an indirect subsidiary~~and certain other subsidiaries of the ~~Parent.~~Parent designated from time to time as material entities for resolution planning purposes (the “Covered Entities”) or identified from time to time as related support entities in our resolution plan (the “Related Support Entities”). Pursuant to the Support Agreement, the


			Wells Fargo & Company			51

Regulatory Matters (continued)

Parent transferred a significant amount of its assets, including the majority of its cash, deposits, liquid securities and intercompany loans (but excluding its equity interests in its subsidiaries and certain other assets), to the IHC

and will continue to transfer those types of assets to the IHC from time to time. In the event of our material financial distress or failure, the IHC will be obligated to use the transferred assets to provide capital and/or liquidity to the Bank, WFS, WFCS, and the Covered Entities pursuant to ~~the Support Agreement and to WFS and WFCS through repurchase facilities entered into in connection with~~ the Support Agreement. Under the Support Agreement, the IHC will also provide funding and liquidity to the Parent through subordinated notes and a committed line of credit, which, together with the issuance of dividends, is expected to provide the Parent, during business as usual operating conditions, with the same access to cash necessary to service its debts, pay dividends, repurchase its shares, and perform its other obligations as it would have had if it had not entered into these arrangements and transferred any assets. If certain liquidity and/or capital metrics fall below defined triggers, or if the Parent’s board of directors authorizes it to file a case under the U.S. Bankruptcy Code, the subordinated notes would be forgiven, ~~and~~ the committed line of credit would terminate, and the IHC’s ability to pay dividends to the Parent would be restricted, any of which could materially and adversely impact the Parent’s liquidity and its ability to satisfy its debts and other obligations, and could result in the commencement of bankruptcy proceedings by the Parent at an earlier time than might have otherwise occurred if the Support Agreement were not implemented. The ~~Parent's and the IHC's~~ respective obligations under the Support Agreement of the Parent, the IHC, the Bank, and the Related Support Entities are secured pursuant to a related security agreement.

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



52			Wells Fargo & Company


Critical Accounting Policies

Our significant accounting policies (see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2016~~2022 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~~2022 Form ~~10-K.~~

~~Liability for Contingent Litigation Losses~~

~~The Company is involved in a number~~10-K and Note 1 (Summary 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)~~Significant Accounting Policies) 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~~)Report.



			Wells Fargo & Company			53


Current Accounting Developments

Table 5243 provides the significant accounting ~~pronouncements~~updates applicable to us that have been issued by the ~~FASB~~Financial Accounting Standards Board (FASB) but are not yet effective.

Table ~~52:~~43:Current Accounting Developments – Issued Standards



~~Standard~~Description and Effective Date					~~Description~~		~~Effective date and financial~~Financial statement impact
Accounting Standards Update ~~(ASU or Update) 2017-12 - Derivatives~~(ASU) 2023-02 – Investments – Equity Method and ~~Hedging~~Joint Ventures (Topic ~~815)~~323):~~Targeted Improvements to~~ Accounting for ~~Hedging Activities~~Investments in Tax Credit Structures Using the Proportional Amortization Method
		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.~~2024 (with early adoption permitted), permits entities to elect to account for additional tax credit investments using the proportional amortization method. The ~~new guidance significantly reduces but does not eliminate interest-rate and foreign-currency related hedge ineffectiveness. However, we may continue~~Update requires a separate accounting policy election for each tax credit program. For any tax credit program where the proportional amortization method is elected, all investments within that program that meet eligibility criteria are required to ~~experience hedge ineffectiveness volatility related to certain hedges of foreign-currency denominated debt liabilities.~~apply the proportional amortization method. 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 applicationUpdate also requires additional disclosures for any tax credit program where the proportional amortization method is elected.		The Update eliminates the low-income housing tax credit (LIHTC)-only scope limitation of the ~~new guidance.~~
~~ASU 2017-08 – Receivables – Nonrefundable Fees~~proportional amortization method and ~~Other Costs (Subtopic 310-20):~~ ~~Premium Amortization on Purchased Callable Debt Securities~~	permits entities to account for all tax credit investments made primarily for the purpose of receiving income tax credits and income tax benefits using a consistent accounting method. Under the proportional amortization method, tax credit investments are carried at amortized cost and amortized in proportion to the income tax credits and income tax benefits received. The amortization of the investment and the related income tax credits and income tax benefits are recorded in income tax expense. The Update ~~changes the accounting for certain purchased callable debt securities held at~~may be adopted on either 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~~full retrospective or 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)~~basis and ~~held-to-maturity (HTM) callable debt securities held at a premium. At~~early 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~~permitted. Upon 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, onwe will identify our ~~consolidated financial statements~~tax credit programs and make a separate accounting policy election as to whether to apply the proportional amortization method for each program. For any investments that will apply the proportional amortization method upon adoption of the Update, the cumulative effect of the difference between the current carrying value and the carrying value under the proportional amortization method 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 requiresrecorded as 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 the opening balance of retained earnings, asthe period of ~~the beginning of the year of adoption. While early adoption~~which is ~~permitted beginning in first quarter 2019, we do not expect to elect that option.~~ dependent upon which transition method is selected. We are currently 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, the~~Other Accounting Developments

The following ~~updates are~~Update is applicable to us but ~~subject to completion of our assessment, are~~is not expected to have a material impact on our consolidated financial statements:

•ASU ~~2017-11, Earnings Per Share~~2022-03 – Fair Value Measurement (Topic ~~260); Distinguishing Liabilities from~~820): Fair Value Measurement of Equity ~~(Topic 480); Derivatives and Hedging (Topic 815):~~ (Part I) Accounting for Certain Financial Instruments 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 ExceptionSecurities Subject to Contractual Sale Restrictions

~~ASU 2017-09 – Compensation – Stock Compensation (Topic718):~~ ~~Scope of Modification Accounting~~

~~ASU 2017-04 – Goodwill and Other (Topic 350):~~ ~~Simplifying the Test for Goodwill Impairment~~

~~ASU 2017-03 – Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323):~~ ~~Amendments to SEC Paragraphs~~

~~Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update)~~

~~ASU 2017-01 – Business Combinations (Topic 805):~~ ~~Clarifying the Definition of a Business~~

~~ASU 2016-18 – Statement of Cash Flows (Topic 230):~~ ~~Restricted Cash~~

~~ASU 2016-16 – Income Taxes (Topic 740):~~ ~~Intra-Entity Transfers of Assets Other Than Inventory~~

~~ASU 2016-15 – Statement of Cash Flows (Topic 230):~~ ~~Classification of Certain Cash Receipts and Cash Payments~~

~~ASU 2016-04 – Liabilities – Extinguishment of Liabilities (Subtopic 405-20):~~ ~~Recognition of Breakage for Certain Prepaid Stored-Value Products~~

We have determined that other existing accounting updates are either not applicable to us or have completed our assessment and determined will not have a material impact on our consolidated financial statements.

~~Forward-Looking Statements (continued~~)



54			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 expectations regarding noninterest expense and our 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~~targets; (vii) our ~~estimated Common Equity Tier 1 ratio under Basel III capital standards; (viii) the performance of~~expectations regarding our mortgage business and any related commitments or 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, declines in commercial real estate prices, U.S. fiscal debt, budget and tax matters, geopolitical matters (including the conflict in Ukraine), 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;

~~the extent of our success~~•developments in our ~~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~~banking business, including 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~~and any changes in industry standards, ~~or practices,~~ regulatory or judicial requirements, ~~penalties~~ or ~~fines, increased servicing and other costs or obligations, including loan modification requirements, or delays or moratoriums on foreclosures;~~our strategic plans for the business;

•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 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,~~•regulatory matters, including the failure to resolve outstanding matters on a timely basis and the potential impact of new 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~~.2022.


			Wells Fargo & Company			55

Forward-Looking Statements (continued)

In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and

financial condition of the Company, market conditions, capital requirements (including under Basel capital standards), common stock issuance requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the ~~Company’s Board of Directors,~~Company, 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,~~2022, 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.



56			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~~2022 Form 10-K.

~~Controls and Procedures~~


			Wells Fargo & Company			57


Controls and Procedures


Disclosure Controls and Procedures

The Company’s management evaluated the effectiveness, as of ~~September~~June 30, ~~2017,~~2023, of the Company’s disclosure controls and procedures. The Company’s chief executive officer and chief financial officer participated in the evaluation. Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of ~~September~~June 30, ~~2017.~~2023.



Internal Control Over Financial Reporting

Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (GAAP) and includes those policies and procedures that:

•pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the Company;

•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No change occurred during ~~third~~second quarter ~~2017~~2023 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)~~58			~~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 June 30,			Six months ended June 30,
(in millions, except per share amounts)	2023		2022	2023		2022
Interest income
Debt securities	$	4,037	2,702	$	7,820	5,265
Loans held for sale	94		126	191		266
Loans	14,115		8,116	27,433		15,334
Equity securities	194		193	364		363
Other interest income	2,390		419	4,378		509
Total interest income	20,830		11,556	40,186		21,737
Interest expense
Deposits	3,805		158	6,566		241
Short-term borrowings	961		31	1,531		17
Long-term debt	2,693		1,011	5,204		1,772
Other interest expense	208		158	386		288
Total interest expense	7,667		1,358	13,687		2,318
Net interest income	13,163		10,198	26,499		19,419
Noninterest income
Deposit and lending-related fees	1,517		1,729	3,021		3,544
Investment advisory and other asset-based fees	2,163		2,346	4,277		4,844
Commissions and brokerage services fees	570		542	1,189		1,079
Investment banking fees	376		286	702		733
Card fees	1,098		1,112	2,131		2,141
Mortgage banking	202		287	434		980
Net gains (losses) from trading and securities	1,032		(26)	2,017		770
Other (1)	412		566	992		1,258
Total noninterest income	7,370		6,842	14,763		15,349
Total revenue	20,533		17,040	41,262		34,768
Provision for credit losses	1,713		580	2,920		(207)
Noninterest expense
Personnel	8,606		8,442	18,021		17,713
Technology, telecommunications and equipment	947		799	1,869		1,675
Occupancy	707		705	1,420		1,427
Operating losses	232		576	499		1,249
Professional and outside services	1,304		1,310	2,533		2,596
Advertising and promotion	184		102	338		201
Restructuring charges	—		—	—		5
Other (1)	1,007		928	1,983		1,847
Total noninterest expense	12,987		12,862	26,663		26,713
Income before income tax expense	5,833		3,598	11,679		8,262
Income tax expense (1)	930		622	1,896		1,368
Net income before noncontrolling interests	4,903		2,976	9,783		6,894
Less: Net loss from noncontrolling interests	(35)		(166)	(146)		(36)
Wells Fargo net income (1)	$	4,938	3,142	$	9,929	6,930
Less: Preferred stock dividends and other	279		279	557		558
Wells Fargo net income applicable to common stock	$	4,659	2,863	$	9,372	6,372
Per share information
Earnings per common share	$	1.26	0.75	$	2.50	1.67
Diluted earnings per common share	1.25		0.75	2.48		1.66
Average common shares outstanding	3,699.9		3,793.8	3,742.6		3,812.3
Diluted average common shares outstanding	3,724.9		3,819.6	3,772.4		3,845.0

~~The accompanying notes are an integral part~~(1)In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary 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.~~

Significant Accounting Policies).

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			59


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

(in millions)	2023		2022	2023	2022
Net income before noncontrolling interests (1)	$	4,903	2,976	9,783	6,894
Other comprehensive income (loss), after tax:
Net change in debt securities	(308)		(3,620)	54	(8,768)
Net change in derivatives and hedging activities	(610)		(83)	(232)	(63)
Defined benefit plans adjustments	21		(22)	42	50

Other (1)	29		(44)	57	(40)
Other comprehensive loss, after tax	(868)		(3,769)	(79)	(8,821)
Total comprehensive income (loss) before noncontrolling interests	4,035		(793)	9,704	(1,927)
Less: Other comprehensive income from noncontrolling interests	1		—	—	1
Less: Net loss from noncontrolling interests	(35)		(166)	(146)	(36)
Wells Fargo comprehensive income (loss)	$	4,069	(627)	9,850	(1,892)

(1)In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).

The accompanying notes are an integral part of these statements.


60			Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet (Unaudited)
(in millions, except shares)	Jun 30, 2023		Dec 31, 2022
Assets
Cash and due from banks	$	31,915	34,596
Interest-earning deposits with banks	123,418		124,561

Federal funds sold and securities purchased under resale agreements	66,500		68,036
Debt securities:
Trading, at fair value (includes assets pledged as collateral of $50,474 and $26,932)	96,857		86,155
Available-for-sale, at fair value (amortized cost of $142,283 and $121,725, net of allowance for credit losses)	134,251		113,594
Held-to-maturity, at amortized cost, net of allowance for credit losses (fair value $233,836 and $255,521)	272,360		297,059
Loans held for sale (includes $2,974 and $4,220 carried at fair value)	6,029		7,104
Loans	947,960		955,871
Allowance for loan losses	(14,258)		(12,985)
Net loans	933,702		942,886
Mortgage servicing rights (includes $8,251 and $9,310 carried at fair value)	9,345		10,480
Premises and equipment, net	8,392		8,350
Goodwill	25,175		25,173
Derivative assets	17,990		22,774
Equity securities (includes $31,609 and $28,383 carried at fair value; and assets pledged as collateral of $1,515 and $747)	67,471		64,414
Other assets (1)	82,915		75,838
Total assets (2)	$	1,876,320	1,881,020
Liabilities
Noninterest-bearing deposits	$	402,322	458,010
Interest-bearing deposits	942,262		925,975
Total deposits	1,344,584		1,383,985
Short-term borrowings (includes $201 and $181 carried at fair value)	84,255		51,145
Derivative liabilities (1)	21,431		20,067
Accrued expenses and other liabilities (includes $27,604 and $20,290 carried at fair value) (1)	73,466		68,740
Long-term debt (includes $1,600 and $1,346 carried at fair value)	170,632		174,870
Total liabilities (3)	1,694,368		1,698,807
Equity
Wells Fargo stockholders’ equity:
Preferred stock – aggregate liquidation preference of $20,216 and $20,216	19,448		19,448
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	60,173		60,319
Retained earnings (1)	195,164		187,968
Accumulated other comprehensive loss (1)	(13,441)		(13,362)
Treasury stock, at cost – 1,814,145,600 shares and 1,648,007,022 shares	(89,860)		(82,853)
Unearned ESOP shares	(429)		(429)
Total Wells Fargo stockholders’ equity	180,191		180,227
Noncontrolling interests	1,761		1,986
Total equity	181,952		182,213
Total liabilities and equity	$	1,876,320	1,881,020

(2)Our consolidated assets at June 30, 2023, and December 31, 2022, include the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Debt securities, $71 million and $71 million; Loans, $4.9 billion and $4.8 billion; All other assets, $205 million and $191 million; and Total assets, $5.2 billion and $5.1 billion, respectively.

(3)Our consolidated liabilities at June 30, 2023, and December 31, 2022, include $208 million and $201 million, respectively, of VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo.

The accompanying notes are an integral part of these statements.


			Wells Fargo & Company			61


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity (Unaudited)
	Wells Fargo stockholders’ equity
	Preferred stock			Common stock
($ and shares in millions)	Shares	Amount		Shares	Amount		Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock	Unearned ESOP shares	Noncontrolling interests	Total equity
Balance March 31, 2023	4.7	$	19,448	3,763.2	$	9,136	59,946	191,688	(12,572)	(86,049)	(429)	2,052	183,220



Net income (loss)								4,938				(35)	4,903
Other comprehensive income (loss), net of tax									(869)			1	(868)
Noncontrolling interests												(257)	(257)
Common stock issued				4.7				(50)		234			184
Common stock repurchased				(100.2)						(4,043)			(4,043)






Common stock dividends							18	(1,133)					(1,115)
Preferred stock dividends								(279)					(279)
Stock-based compensation							237						237
Net change in deferred compensation and related plans							(28)			(2)			(30)
Net change	—	—		(95.5)	—		227	3,476	(869)	(3,811)	—	(291)	(1,268)
Balance June 30, 2023	4.7	$	19,448	3,667.7	$	9,136	60,173	195,164	(13,441)	(89,860)	(429)	1,761	181,952


Balance March 31, 2022 (1)	5.3	$	20,057	3,789.9	$	9,136	59,899	182,563	(6,799)	(85,059)	(646)	2,446	181,597

Net income (loss) (1)								3,142				(166)	2,976
Other comprehensive loss, net of tax (1)									(3,769)			—	(3,769)
Noncontrolling interests												(18)	(18)
Common stock issued				3.2				(26)		162			136
Common stock repurchased				(0.1)						(4)			(4)






Common stock dividends							13	(961)					(948)
Preferred stock dividends								(279)					(279)
Stock-based compensation							152						152
Net change in deferred compensation and related plans							(40)			(5)			(45)
Net change	—	—		3.1	—		125	1,876	(3,769)	153	—	(184)	(1,799)
Balance June 30, 2022	5.3	$	20,057	3,793.0	$	9,136	60,024	184,439	(10,568)	(84,906)	(646)	2,262	179,798

The accompanying notes are an integral part of these statements.


62			Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity (Unaudited)
	Wells Fargo stockholders’ equity
	Preferred stock			Common stock
($ and shares in millions)	Shares	Amount		Shares	Amount		Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock	Unearned ESOP shares	Noncontrolling interests	Total equity
Balance December 31, 2022 (1)	4.7	$	19,448	3,833.8	$	9,136	60,319	187,968	(13,362)	(82,853)	(429)	1,986	182,213
Cumulative effect from change in accounting policy (2)								323					323
Balance January 1, 2023	4.7	19,448		3,833.8	9,136		60,319	188,291	(13,362)	(82,853)	(429)	1,986	182,536

Net income (loss)								9,929				(146)	9,783
Other comprehensive loss, net of tax									(79)			—	(79)
Noncontrolling interests												(79)	(79)
Common stock issued				20.5			—	(204)		1,064			860
Common stock repurchased				(186.6)						(8,092)			(8,092)






Common stock dividends							42	(2,295)					(2,253)
Preferred stock dividends								(557)					(557)
Stock-based compensation							711						711
Net change in deferred compensation and related plans							(899)			21			(878)
Net change	—	—		(166.1)	—		(146)	6,873	(79)	(7,007)	—	(225)	(584)
Balance June 30, 2023	4.7	$	19,448	3,667.7	$	9,136	60,173	195,164	(13,441)	(89,860)	(429)	1,761	181,952
Balance December 31, 2021	5.3	$	20,057	3,885.8	$	9,136	60,196	180,322	(1,702)	(79,757)	(646)	2,504	190,110
Cumulative effect from change in accounting policy (1)								(176)	(44)			(1)	(221)
Balance January 1, 2022	5.3	20,057		3,885.8	9,136		60,196	180,146	(1,746)	(79,757)	(646)	2,503	189,889

Net income (loss) (1)								6,930				(36)	6,894
Other comprehensive income (loss), net of tax (1)									(8,822)			1	(8,821)
Noncontrolling interests												(206)	(206)
Common stock issued				17.4			—	(143)		859			716
Common stock repurchased				(110.2)						(6,022)			(6,022)






Common stock dividends							29	(1,936)					(1,907)
Preferred stock dividends								(558)					(558)
Stock-based compensation							646						646
Net change in deferred compensation and related plans							(847)			14			(833)
Net change	—	—		(92.8)	—		(172)	4,293	(8,822)	(5,149)	—	(241)	(10,091)
Balance June 30, 2022	5.3	$	20,057	3,793.0	$	9,136	60,024	184,439	(10,568)	(84,906)	(646)	2,262	179,798

(2)Effective January 1, 2023, we adopted ASU 2022-02 – Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. For additional information, see Note 1 (Summary of Significant Accounting Policies).

The accompanying notes are an integral part of these statements.


			Wells Fargo & Company			63


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
	Six months ended June 30,
(in millions)	2023		2022
Cash flows from operating activities:
Net income before noncontrolling interests (1)	$	9,783	6,894
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	2,920		(207)
Changes in fair value of MSRs and LHFS carried at fair value	403		(1,236)
Depreciation, amortization and accretion	3,180		3,563
Deferred income tax expense (benefit) (1)	732		(244)
Other, net	3,270		(12,071)
Originations and purchases of loans held for sale	(16,312)		(43,271)
Proceeds from sales of and paydowns on loans originally classified as held for sale	13,385		41,623
Net change in:
Debt and equity securities, held for trading	(10,426)		20,943
Derivative assets and liabilities (1)	6,129		3,658
Other assets	(8,433)		(13,763)
Other accrued expenses and liabilities (1)	2,020		1,898
Net cash provided by operating activities	6,651		7,787
Cash flows from investing activities:
Net change in:
Federal funds sold and securities purchased under resale agreements	1,227		10,677
Available-for-sale debt securities:
Proceeds from sales	9,906		15,330
Paydowns and maturities	7,326		11,850
Purchases	(16,759)		(31,292)
Held-to-maturity debt securities:
Paydowns and maturities	8,712		15,966
Purchases	(4,225)		(2,360)
Equity securities, not held for trading:
Proceeds from sales and capital returns	1,269		3,090
Purchases	(1,637)		(2,744)
Loans:
Loans originated by banking subsidiaries, net of principal collected	4,169		(56,839)
Proceeds from sales of loans originally classified as held for investment	2,615		8,171
Purchases of loans	(908)		(376)
Principal collected on nonbank entities’ loans	3,240		2,705
Loans originated by nonbank entities	(1,893)		(2,244)
Other, net	(396)		597
Net cash provided (used) by investing activities	12,646		(27,469)
Cash flows from financing activities:
Net change in:
Deposits	(39,401)		(57,326)
Short-term borrowings	33,110		2,494
Long-term debt:
Proceeds from issuance	5,624		16,378
Repayment	(12,212)		(11,978)
Preferred stock:


Cash dividends paid	(557)		(558)
Common stock:
Repurchased	(8,021)		(6,022)
Cash dividends paid	(2,249)		(1,904)
Other, net	(330)		(492)
Net cash used by financing activities	(24,036)		(59,408)
Net change in cash, cash equivalents, and restricted cash	(4,739)		(79,090)
Cash, cash equivalents, and restricted cash at beginning of period (2)	159,157		234,230
Cash, cash equivalents, and restricted cash at end of period (2)	$	154,418	155,140
Supplemental cash flow disclosures:
Cash paid for interest	$	12,848	2,240
Net cash paid (refunded) for income taxes	(1,984)		3,817

(2)Includes Cash and due from banks and Interest-earning deposits with banks on our consolidated balance sheet and excludes time deposits, which are included in Interest-earning deposits with banks.

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~~)


64			Wells Fargo & Company

~~See~~

Notes to Financial Statements

-See the ~~Glossary~~“Glossary of ~~Acronyms~~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~~2022 (2022 Form 10-K). There were no material changes to these policies in the first half of 2023.

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 5 (Loans and Related Allowance for Credit Losses));

•valuations of residential mortgage servicing rights (MSRs) (Note 76 (Mortgage Banking Activities) and Note 13 (Securitizations and Variable Interest Entities) ~~and Note 8 (Mortgage Banking Activities)~~) ~~and~~;

•valuations of financial instruments (Note 1312 (Fair Values of Assets and Liabilities));

~~income taxes; and~~

•liabilities for contingent litigation losses (Note 1110 (Legal Actions));

•income taxes; and

•goodwill impairment (Note 7 (Intangible Assets and Other 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~~2022 Form 10-K.

Accounting Standards Adopted in ~~2017~~2023

In ~~first quarter 2017,~~2023, we adopted the following new accounting guidance:

•Accounting Standards Update ~~(ASU or Update) 2016-09~~(ASU) 2022-02, Financial Instruments – ~~Compensation – Stock Compensation~~Credit Losses (Topic ~~718)~~326):

Troubled Debt Restructurings and Vintage Disclosures

~~Improvements to Employee Share-Based Payment Accounting;~~

•ASU ~~2016-07 -~~ ~~Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting;~~

~~ASU 2016-06 -~~ 2022-01, Derivatives and Hedging (Topic 815): ~~Contingent Put~~Fair Value Hedging – Portfolio Layer Method

•ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and ~~Call Options~~Contract Liabilities from Contracts with Customers

•ASU 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts and subsequent related updates

ASU 2022-02 eliminates the accounting and reporting for troubled debt restructurings (TDRs) by creditors and introduces new required disclosures for loan modifications made to borrowers experiencing financial difficulty. The new required disclosures include information about modifications granted to borrowers experiencing financial difficulty in ~~Debt Instruments;~~the form of principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, or a combination of these modifications. The ASU also requires new disclosures for the financial effects of these modifications and

for loan performance in the twelve months following the modification. The Update also amends the guidance for vintage disclosures to require disclosure of current period gross charge-offs by year of origination. See Note 5 (Loans and Related Allowance for Credit Losses) for additional information related to the new disclosures for loan modifications to borrowers experiencing financial difficulty and for gross charge-offs by year of origination, which are provided on a prospective basis.

The Update eliminates the requirement to use a discounted cash flow (DCF) approach to measure the allowance for credit losses (ACL) for TDRs and instead allows for the use of a current expected credit loss approach for all loans. Under a current expected credit loss approach, the impact of loan modifications and the subsequent performance of modified loans, including defaults, is reflected in the historical loss data used to calculate expected lifetime credit losses. Upon adoption on January 1, 2023, we discontinued utilizing a DCF approach to measure credit impairment for consumer loans and certain commercial loans previously modified in a TDR and we removed the interest concession component recognized in the ACL. We elected to apply the modified-retrospective transition approach method, resulting in a cumulative effect adjustment to retained earnings upon adoption, which reflects the difference between the pre-modification and post-modification effective interest rates that would have been recognized over the remaining life of the loans as interest income. Upon adoption, we recognized a decrease in our ACL of $429 million, pre-tax, and an increase to our retained earnings of $323 million, after tax. We continue to use a DCF approach for certain non-accruing, non-collateral dependent commercial loans.

ASU ~~2016-05 -~~ ~~Derivatives and Hedging (Topic 815): Effect~~2022-01 establishes the portfolio layer method, which expands an entity's ability to achieve fair value hedge accounting for interest rate risk hedges of ~~Derivative Contract Novations~~closed portfolios of financial assets. The Update also provides guidance on ~~Existing Hedge Accounting Relationships.~~

~~ASU 2016-09Simplifies~~ the accounting for ~~share-based payment awards issued to employees.~~ hedged item basis adjustments under the portfolio layer method.


			Wells Fargo & Company			65

Note 1: Summary of Significant Accounting Policies (continued)

We ~~have income tax effects based~~adopted ASU 2022-01 on changes in our stock price from the grant date to the vesting date of the employee stock compensation. The Update requires these income tax effects to be recognized in the statement of income within income tax expense instead of within additional paid-in capital. In addition, the Update requires changes to the Statement of Cash Flows including the classification between the operating and financing section for tax 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,January 1, 2023 on a prospective basis.

~~ASU 2016-07~~ ~~eliminates~~ No cumulative effect adjustment to the ~~requirement for companies~~opening balance of stockholders’ equity was required upon adoption, as impacts to ~~retroactively apply~~us were reflected prospectively. The portfolio layer method improves our ability to use derivatives to hedge interest rate risk exposures associated with portfolios of financial assets, such as fixed-rate available-for-sale (AFS) debt securities and loans. The Update allows us to hedge a larger proportion of these portfolios by expanding the ~~equity~~number and type of derivatives permitted as eligible hedges, as well as by increasing the scope of eligible hedged items to include both prepayable and nonprepayable assets. Unlike other fair value hedging relationships where basis adjustments adjust the carrying amount of the individual hedged item, basis adjustments related to active portfolio layer method ~~of accounting for investments when increases in ownership interests or degree of influence result~~hedges are maintained at a portfolio level and not allocated to the individual assets in the portfolio.

Upon adoption, any election to designate portfolio layer method hedges is applied prospectively. Additionally, the Update permits a one-time reclassification of debt securities from held-to-maturity (HTM) to AFS classification as long as the securities are designated in a portfolio layer method hedge no later than 30 days after the adoption date.

In January 2023, we reclassified fixed-rate debt securities with an aggregate fair value of $23.2 billion and amortized cost of $23.9 billion from HTM to AFS and designated interest rate swaps with notional amounts of $20.1 billion as fair value hedges using the portfolio layer method. The transfer of debt securities was recorded at fair value and resulted in approximately $566 million of unrealized losses associated with AFS debt securities being recorded to other comprehensive income, net of deferred taxes.

See Note 3 (Available-for-Sale and Held-to-Maturity Debt Securities) for additional information about the Company's portfolio layer method hedge basis adjustments and HTM to AFS transfers in connection with adoption of the ~~equity method. Under the guidance, the equity~~Update and Note 11 (Derivatives) for disclosures regarding our portfolio layer method ~~should be applied prospectively~~hedging relationships.

ASU 2021-08 amends Accounting Standards Codification (ASC) 805 – Business Combinations to require entities to recognize and measure contract assets and contract liabilities in ~~the period~~a business combination in ~~which the ownership changes occur.~~accordance with ASC 606 – Revenue Recognition. Prior to ASU 2021-08, there was diversity in practice related to recognition treatment, and acquirers generally measured such items at acquisition date fair value. We adopted this ~~change in first quarter 2017. The~~ Update ~~did not impact our consolidated financial statements, as the standard is applied~~prospectively 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. TheJanuary 1, 2023. This Update did not have a material impact onto our consolidated financial statements.

ASU ~~2016-05~~ ~~clarifies~~2018-12 changes the accounting for long-duration insurance contracts or contract features that provide benefits to the policyholder in addition to the policyholder’s account value. These features, which the ASU defines as market risk benefits, protect the policyholder to some degree from capital markets risk and expose the insurer or reinsurer to that risk. The ASU requires all market risk benefits to be measured at fair value through earnings with changes in fair value attributable to our own credit risk recognized in other comprehensive income. We reinsure certain variable annuity products for a limited number of insurance clients with guaranteed minimum benefits which are accounted for as market risk benefits under the ASU. Our reinsurance business is no longer entering into new contracts.

We utilize a discounted cash flow model to value our market risk benefits. Market risk benefits are level 3 fair value liabilities because they are valued using significant unobservable inputs. The fair value of our market risk benefits is sensitive to changes in fixed income and equity markets, as well as policyholder behavior (e.g., withdrawals, lapses, utilization rate) and changes in mortality assumptions. Beginning first quarter 2023, we use derivative instruments, where feasible, to economically hedge the interest rate and equity markets volatility. The fair value of market risk benefits is measured at the contract level and is recognized in accrued expenses and other liabilities. We recognize changes in fair value for our market risk benefits, excluding the change in fair value related to our own credit risk, in noninterest income along with the ~~counterparty~~changes in fair value of economic hedges. Changes in fair value attributable to our own credit risk are recorded in other comprehensive income. Upon adoption on January 1, 2023, as required under the ASU, we implemented the accounting changes for market risk benefits retrospectively, to the earliest period presented, which resulted in an after-tax cumulative effect adjustment to reduce retained earnings and accumulated other comprehensive income by $176 million and $44 million, respectively, as of January 1, 2022.

The ASU also requires more frequent updates for insurance assumptions, mandates the use of a ~~derivative instrument that has been designated as an~~standardized discount rate for traditional long-duration contracts, and simplifies the amortization of deferred acquisition costs. The accounting ~~hedge does not require~~changes for the ~~hedging relationship to be dedesignated as long as all~~liability of future policyholder benefits for traditional long-duration contracts (included in accrued expenses and other ~~hedge accounting criteria continue to be met. We adopted the guidance~~liabilities) and deferred acquisition costs (included in ~~first quarter 2017. The Update~~other assets) did not have a material impact onupon adoption.

Table 1.1 presents the impact of adoption to prior period financial statement line items within our consolidated ~~financial statements.~~

~~Accounting Standards with Retrospective Application~~

~~The following accounting pronouncements have been issued by~~statement of income and consolidated balance sheet for the ~~FASB but~~three and six months ended June 30, 2022, and as of December 31, 2022. These adjustments are ~~not yet effective:~~

~~ASU 2016-15 –~~ ~~Statement~~also reflected in our consolidated statement of ~~Cash Flows (Topic 230): Classification of Certain Cash Receipts~~changes in equity 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 the objective of reducing the existing diversity in practice for reporting in the Statement of Cash Flows. The Update is effective for us in first quarter 2018 with retrospective application. Subject to completion of our assessment, we are not expecting this Update to have a material impact on our financial statements.

~~ASU 2016-18~~ ~~requires that amounts described as restricted cash and cash equivalents be included with cash and cash equivalents in the~~consolidated statement of cash flows. ~~In addition, we will be~~


66			Wells Fargo & Company

Table 1.1:Impact of Adoption of ASU 2018-12


	Quarter ended June 30, 2022				Six months ended June 30, 2022
($ in millions, except per share amounts)	As reported		Effect of adoption	As revised	As reported		Effect of adoption	As revised
Selected Income Statement Data
Noninterest income	$	6,830	12	6,842	$	15,201	148	15,349
Noninterest expense	12,883		(21)	12,862	26,753		(40)	26,713
Income tax expense	613		9	622	1,320		48	1,368
Net income	3,119		23	3,142	6,790		140	6,930
Diluted earnings per common share	0.74		0.01	0.75	1.62		0.04	1.66

					At December 31, 2022
					As reported		Effect of adoption	As revised
Selected Balance Sheet Data
Other assets					75,834		4	75,838
Derivative liabilities					20,085		(18)	20,067
Accrued expenses and other liabilities					69,056		(316)	68,740
Retained earnings					187,649		319	187,968
Accumulated other comprehensive income (loss)					(13,381)		19	(13,362)

Table 1.2 presents the transition adjustments required ~~to disclose information in our footnotes about~~upon the ~~nature~~adoption of ~~the restriction on cash and cash equivalents. The Update is effective for us in first quarter 2018 with retrospective application. Subject to completion~~ASU 2018-12 as of ~~our assessment, we are not expecting this Update to have a material impact on our 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 ourJanuary 1, 2021.

~~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~~Table 1.2:Transition Adjustment 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.ASU 2018-12

~~We had no unsettled private share repurchase contracts at both September 30, 2017 and September 30, 2016.~~


	Dec 31, 2020		Transition adjustment upon adoption	Jan 1, 2021
Selected Balance Sheet Data
Other assets	$	87,337	159	87,496
Derivative liabilities	16,509		(27)	16,482
Accrued expenses and other liabilities	74,360		903	75,263
Retained earnings	162,683		(738)	161,945
Accumulated other comprehensive income	194		20	214

Supplemental Cash Flow Information

Significant noncash activities are presented ~~below.~~

in Table 1.3.

Table ~~1.1:~~1.3:Supplemental Cash Flow Information


	Six months ended June 30,
(in millions)	2023		2022
Available-for-sale debt securities purchased from securitization of LHFS	$	—	1,506
Held-to-maturity debt securities purchased from securitization of LHFS	48		693
Transfers from loans to LHFS	850		4,970
Transfers from available-for-sale debt securities to held-to-maturity debt securities	3,687		43,041
Transfers from held-to-maturity debt securities to available-for-sale debt securities (1)	23,919		��

(1)In first quarter 2023, we reclassified HTM debt securities to AFS debt securities in connection with the adoption of ASU 2022-01.

Subsequent Events

Nine months ended September 30,
(in millions) 2017
2016
Trading assets retained from securitization of MHFS $ 43,394
47,291
Transfers from loans to MHFS 4,015
5,257
Transfers from available-for-sale to held-to-maturity securities 50,405
816

~~Subsequent Events~~

We have evaluated the effects of events that have occurred subsequent to ~~September~~June 30, ~~2017,~~2023, and except as disclosed in Note 9 (Preferred Stock), there have been no material events that would require recognition in our ~~third~~second quarter ~~2017~~2023 consolidated financial statements or disclosure in the Notes to the consolidated financial statements.



~~Note 2:~~ ~~Business Combinations~~	Wells Fargo & Company	67

We regularly explore opportunities to acquire financial services companies and businesses. Generally, we do not make a public announcement about an acquisition opportunity until a definitive agreement has been signed. For information on additional contingent consideration related to acquisitions, which is considered to be a guarantee, see Note 10 (Guarantees, Pledged Assets and Collateral).

~~On July 1, 2017, we completed a step acquisition involving an investment management firm with approximately $10 billion of~~

~~assets under management. We had previously been the majority owner.~~

~~At September 30, 2017, we had no pending business combinations.~~



Note 3: ~~Federal Funds Sold, Securities Purchased under Resale Agreements and OtherShort-Term Investments~~2: Trading Activities

~~Table 3.1 provides the detail of federal funds sold, securities purchased under short-term resale agreements(generally less than one year) and other short-term investments. Substantially all of the interest-earning deposits at September 30, 2017, and December 31, 2016, were held at Federal Reserve Banks.~~

~~Table 3.1:Fed Funds Sold and Other Short-Term Investments~~

(in millions) Sep 30,
2017
Dec 31,
2016
Federal funds sold and securities purchased under resale agreements $ 66,156
58,215
Interest-earning deposits 205,648
200,671
Other short-term investments 1,301
7,152
Total $ 273,105
266,038

As part of maintaining our memberships in certain clearing organizations, we are required to stand ready to provide liquidity meant to sustain market clearing activity in the event unforeseen events occur or are deemed likely to occur. This includes commitments we have entered into to purchase securities under resale agreements from a central clearing organization that, at its option, require us to provide funding under such agreements. We do not have any outstanding amounts funded, and the amount of our unfunded contractual commitment was $1.5 billion and $2.9 billion as of September 30, 2017, and December 31, 2016, respectively.

We have classified securities purchased under long-term resale agreements (generally one year or more), which totaled $20.6 billion and $21.3 billion in loans at September 30, 2017, and December 31, 2016, respectively. For additional information on the collateral we receive from other entities under resale agreements and securities borrowings, see the “Offsetting of Resale and Repurchase Agreements and Securities Borrowing and Lending Agreements” section in Note 10 (Guarantees, Pledged Assets and Collateral).

~~Note 4: Investment Securities~~

Table ~~4.1~~2.1 presents a summary of our trading assets and liabilities measured at fair value through earnings.

Table 2.1:Trading Assets and Liabilities


(in millions)	Jun 30, 2023		Dec 31, 2022
Trading assets:
Debt securities	$	96,857	86,155
Equity securities	30,327		26,910
Loans held for sale	1,402		1,466
Gross trading derivative assets	67,120		77,148
Netting (1)	(49,435)		(54,922)
Total trading derivative assets	17,685		22,226
Total trading assets	146,271		136,757
Trading liabilities:
Short sale and other liabilities	27,705		20,304
Long-term debt	1,600		1,346
Gross trading derivative liabilities	73,667		77,698
Netting (1)	(53,292)		(59,232)
Total trading derivative liabilities	20,375		18,466
Total trading liabilities	$	49,680	40,116

(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) from Trading Activities


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Interest income:
Debt securities	$	894	549	$	1,691	1,097
Equity securities	111		139	205		259
Loans held for sale	22		9	41		20
Total interest income	1,027		697	1,937		1,376
Less: Interest expense	161		158	304		290
Net interest income	866		539	1,633		1,086
Net gains (losses) from trading activities (1):
Debt securities	(569)		(3,103)	902		(6,751)
Equity securities	1,650		(3,606)	3,339		(4,430)
Loans held for sale	13		1	25		10

Long-term debt	9		11	(21)		23
Derivatives (2)	19		7,143	(1,781)		11,812
Total net gains from trading activities	1,122		446	2,464		664
Total trading-related net interest and noninterest income	$	1,988	985	$	4,097	1,750

(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.


68			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.~~accumulated other comprehensive income (AOCI), 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 (Intangible Assets and Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. The interest income reversed in the second quarter and first half of both 2023 and 2022 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	Net unrealized gains (losses)	Fair value
June 30, 2023
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	49,200	7	(2,311)	(2,304)	46,896
Non-U.S. government securities	163		—	(1)	(1)	162
Securities of U.S. states and political subdivisions (2)	22,163		30	(819)	(789)	21,374
Federal agency mortgage-backed securities	61,974		3	(4,996)	(4,993)	56,981
Non-agency mortgage-backed securities (3)	3,183		—	(134)	(134)	3,049
Collateralized loan obligations	3,778		—	(53)	(53)	3,725
Other debt securities	2,046		54	(36)	18	2,064
Total available-for-sale debt securities, excluding portfolio level basis adjustments	142,507		94	(8,350)	(8,256)	134,251
Portfolio level basis adjustments (4)	(224)				224	—
Total available-for-sale debt securities	142,283		94	(8,350)	(8,032)	134,251
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	3,789		—	(1,418)	(1,418)	2,371
Securities of U.S. states and political subdivisions	18,986		2	(3,351)	(3,349)	15,637
Federal agency mortgage-backed securities	217,322		71	(33,124)	(33,053)	184,269
Non-agency mortgage-backed securities (3)	1,266		2	(154)	(152)	1,114
Collateralized loan obligations	29,272		5	(435)	(430)	28,842
Other debt securities	1,725		—	(122)	(122)	1,603
Total held-to-maturity debt securities	272,360		80	(38,604)	(38,524)	233,836
Total	$	414,643	174	(46,954)	(46,556)	368,087
December 31, 2022
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	47,536	9	(2,260)	(2,251)	45,285
Non-U.S. government securities	162		—	—	—	162
Securities of U.S. states and political subdivisions (2)	10,958		20	(533)	(513)	10,445
Federal agency mortgage-backed securities	53,302		2	(5,167)	(5,165)	48,137
Non-agency mortgage-backed securities (3)	3,423		1	(140)	(139)	3,284
Collateralized loan obligations	4,071		—	(90)	(90)	3,981
Other debt securities	2,273		75	(48)	27	2,300
Total available-for-sale debt securities	121,725		107	(8,238)	(8,131)	113,594
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	16,202		—	(1,917)	(1,917)	14,285
Securities of U.S. states and political subdivisions	30,985		8	(4,385)	(4,377)	26,608
Federal agency mortgage-backed securities	216,966		30	(34,252)	(34,222)	182,744
Non-agency mortgage-backed securities (3)	1,253		—	(147)	(147)	1,106
Collateralized loan obligations	29,926		1	(727)	(726)	29,200
Other debt securities	1,727		—	(149)	(149)	1,578
Total held-to-maturity debt securities	297,059		39	(41,577)	(41,538)	255,521
Total	$	418,784	146	(49,815)	(49,669)	369,115

(1)Represents amortized cost of the securities, net of the ACL of $7 million and $6 million related to AFS debt securities at June 30, 2023, and December 31, 2022, respectively, and $76 million and $85 million related to HTM debt securities at June 30, 2023, and December 31, 2022, 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 $4.9 billion at June 30, 2023, and $5.1 billion at December 31, 2022.

(3)Predominantly consists of commercial mortgage-backed securities at both June 30, 2023, and December 31, 2022.

(4)Represents fair value hedge basis adjustments related to active portfolio layer method hedges of AFS debt securities, which are not allocated to individual securities in the portfolio. For additional information, see Note 11 (Derivatives).

(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			69

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. The table excludes the transfer of HTM debt securitieswith a fair value of $23.2 billion to AFS debt securities in first quarter 2023 in

connection with the adoption of ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. For additional information, see Note 1 (Summary of Significant Accounting Policies).

Table 3.2:Held-to-Maturity Debt Securities Purchases and Transfers


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Purchases of held-to-maturity debt securities (1):

Securities of U.S. states and political subdivisions	$	—	9	$	—	843
Federal agency mortgage-backed securities	—		—	4,225		2,051
Non-agency mortgage-backed securities	22		55	48		159


Total purchases of held-to-maturity debt securities	22		64	4,273		3,053
Transfers from available-for-sale debt securities to held-to-maturity debt securities (2):


Federal agency mortgage-backed securities	—		28,390	3,687		43,041



Total transfers from available-for-sale debt securities to held-to-maturity debt securities	$	—	28,390	$	3,687	43,041

(1)Inclusive of securities purchased but not yet settled and noncash purchases from securitization of loans held for sale (LHFS).

(2)Represents fair value as of the date of the transfers. Debt securities transferred from available-for-sale to held-to-maturity had pre-tax unrealized losses recorded in AOCI of $0 and $320 million in the second quarter and first half of 2023, respectively, and $3.5 billion and $3.9 billion in the second quarter and first half of 2022, respectively, at the time of the transfers.

Table 3.3 shows the composition of interest income, provision for credit losses, and gross realized gains and losses

from sales and impairment write-downs included in earnings related to AFS and HTM debt securities (pre-tax).

Table 3.3:Income Statement Impacts for Available-for-Sale and Held-to-Maturity Debt Securities


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Interest income (1):
Available-for-sale	$	1,346	683	$	2,586	1,385
Held-to-maturity	1,797		1,470	3,543		2,783
Total interest income	3,143		2,153	6,129		4,168
Provision for credit losses:
Available-for-sale	—		3	(39)		4
Held-to-maturity	(1)		(1)	(9)		(14)
Total provision for credit losses	(1)		2	(48)		(10)
Realized gains and losses (2):
Gross realized gains	6		247	6		249
Gross realized losses	(2)		(104)	(2)		(104)



Net realized gains	$	4	143	$	4	145

(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 June 30, 2023, and December 31, 2022.

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)~~70			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
June 30, 2023
Total portfolio (1)	$	134,251	99	%	$	272,436	99	%
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)	$	103,877	100	%	$	221,110	100	%
Securities of U.S. states and political subdivisions	21,374		99		18,997		100
Collateralized loan obligations (3)	3,725		100		29,307		100
All other debt securities (4)	5,275		90		3,022		61
December 31, 2022
Total portfolio (1)	$	113,594	99	%	$	297,144	99	%
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)	$	93,422	100	%	$	233,169	100	%
Securities of U.S. states and political subdivisions	10,445		99		31,000		100
Collateralized loan obligations (3)	3,981		100		29,972		100
All other debt securities (4)	5,746		89		3,003		63

(1)99% were rated AA- and above at both June 30, 2023, and December 31, 2022.

(2)Includes federal agency mortgage-backed securities.

(3)100% were rated AA- and above at both June 30, 2023, and December 31, 2022.

(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 or in nonaccrual status were insignificant at both June 30, 2023, and December 31, 2022. Net charge-offs on debt securities were insignificant in the second quarter and first half of both 2023 and 2022.

Purchased debt securities with credit deterioration (PCD) are not considered to be in nonaccrual status, as payments from issuers of these securities remain current. PCD securities were insignificant in the second quarter and first half of both 2023 and 2022.


~~(3)~~			~~Predominantly consists of federal agency mortgage-backed securities at both~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~. Wells Fargo & Company			71

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 (1)		Fair value	Gross unrealized losses (1)	Fair value	Gross unrealized losses (1)	Fair value
June 30, 2023
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	(449)	13,243	(1,862)	32,037	(2,311)	45,280
Non-U.S. government securities	—		—	(1)	83	(1)	83
Securities of U.S. states and political subdivisions	(368)		10,972	(451)	3,117	(819)	14,089
Federal agency mortgage-backed securities	(667)		22,760	(4,329)	33,923	(4,996)	56,683
Non-agency mortgage-backed securities	(4)		166	(130)	2,862	(134)	3,028
Collateralized loan obligations	—		—	(53)	3,699	(53)	3,699
Other debt securities	(2)		155	(34)	1,310	(36)	1,465
Total available-for-sale debt securities	$	(1,490)	47,296	(6,860)	77,031	(8,350)	124,327
December 31, 2022
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	(291)	9,870	(1,969)	27,899	(2,260)	37,769

Securities of U.S. states and political subdivisions	(72)		2,154	(461)	2,382	(533)	4,536
Federal agency mortgage-backed securities	(3,580)		39,563	(1,587)	8,481	(5,167)	48,044
Non-agency mortgage-backed securities	(43)		1,194	(97)	2,068	(140)	3,262
Collateralized loan obligations	(65)		3,195	(25)	786	(90)	3,981
Other debt securities	(31)		1,591	(17)	471	(48)	2,062
Total available-for-sale debt securities	$	(4,082)	57,567	(4,156)	42,087	(8,238)	99,654

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

(1)Excludes portfolio level basis adjustments.

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~~2022 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


72			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
June 30, 2023
Available-for-sale debt securities (1)(2):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	49,200		9,180	28,345	10,168	1,507
Fair value	46,896			8,935	27,075	9,421	1,465
Weighted average yield	1.61		%	1.47	1.67	1.58	1.44
Non-U.S. government securities
Amortized cost, net	$	163		2	137	24	—
Fair value	162			2	136	24	—
Weighted average yield	4.48		%	5.15	4.39	4.91	—
Securities of U.S. states and political subdivisions
Amortized cost, net	$	22,163		2,473	4,838	5,066	9,786
Fair value	21,374			2,467	4,798	4,727	9,382
Weighted average yield	2.89		%	2.94	3.46	2.99	2.55
Federal agency mortgage-backed securities
Amortized cost, net	$	61,974		—	218	808	60,948
Fair value	56,981			—	208	748	56,025
Weighted average yield	3.62		%	—	1.96	2.55	3.64
Non-agency mortgage-backed securities
Amortized cost, net	$	3,183		—	—	58	3,125
Fair value	3,049			—	—	43	3,006
Weighted average yield	5.11		%	—	—	3.38	5.14
Collateralized loan obligations
Amortized cost, net	$	3,778		—	4	3,349	425
Fair value	3,725			—	4	3,306	415
Weighted average yield	6.57		%	—	6.70	6.57	6.59
Other debt securities
Amortized cost, net	$	2,046		37	183	789	1,037
Fair value	2,064			36	178	788	1,062
Weighted average yield	6.20		%	6.42	6.77	5.54	6.59
Total available-for-sale debt securities
Amortized cost, net	$	142,507		11,692	33,725	20,262	76,828
Fair value	134,251			11,440	32,399	19,057	71,355
Weighted average yield	2.96		%	1.80	1.95	2.95	3.58

(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.

(2)Amortized cost, net excludes portfolio level basis adjustments of $(224) million.

~~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 yields displayed by maturity bucket are weighted based on fair value and predominantly represent contractual coupon rates without effect for any related hedging derivatives.~~Wells Fargo & Company			73

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
June 30, 2023
Held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	3,789		—	—	—	3,789
Fair value	2,371			—	—	—	2,371
Weighted average yield	1.58		%	—	—	—	1.58
Securities of U.S. states and political subdivisions
Amortized cost, net	$	18,986		128	551	802	17,505
Fair value	15,637			127	532	785	14,193
Weighted average yield	2.36		%	0.36	1.73	2.96	2.37
Federal agency mortgage-backed securities
Amortized cost, net	$	217,322		—	—	—	217,322
Fair value	184,269			—	—	—	184,269
Weighted average yield	2.36		%	—	—	—	2.36
Non-agency mortgage-backed securities
Amortized cost, net	$	1,266		4	22	54	1,186
Fair value	1,114			5	22	51	1,036
Weighted average yield	3.19		%	3.01	3.99	4.19	3.13
Collateralized loan obligations
Amortized cost, net	$	29,272		—	53	14,947	14,272
Fair value	28,842			—	54	14,807	13,981
Weighted average yield	6.67		%	—	6.94	6.77	6.57
Other debt securities
Amortized cost, net	$	1,725		—	755	970	—
Fair value	1,603			—	719	884	—
Weighted average yield	4.47		%	—	4.10	4.75	—
Total held-to-maturity debt securities
Amortized cost, net	$	272,360		132	1,381	16,773	254,074
Fair value	233,836			132	1,327	16,527	215,850
Weighted average yield	2.83		%	0.45	3.27	6.46	2.59

(1)Weighted average yields displayed by maturity bucket are weighted based on amortized cost, excluding unamortized basis adjustments related to the transfer of certain debt securities from AFS to HTM, and are shown pre-tax.

~~Table 4.5 shows the amortized cost and weighted-average yields of held-to-maturity debt securities by contractual maturity.~~

~~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)~~74			~~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~~ ~~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.~~Note 4: Equity Securities

~~Other-Than-Temporarily Impaired Debt~~Table 4.1 provides a summary of our equity securities by business purpose and accounting method.

Table 4.1: Equity Securities


(in millions)	Jun 30, 2023		Dec 31, 2022
Held for trading at fair value:
Marketable equity securities	$	19,253	17,180
Nonmarketable equity securities (1)	11,074		9,730
Total equity securities held for trading (2)	30,327		26,910
Not held for trading:
Fair value:
Marketable equity securities	1,259		1,436
Nonmarketable equity securities	23		37
Total equity securities not held for trading at fair value	1,282		1,473
Equity method:
Private equity	3,144		2,836
Tax-advantaged renewable energy (3)	6,133		6,535
New market tax credit and other	300		298
Total equity method	9,577		9,669
Other methods:
Low-income housing tax credit (LIHTC) investments (3)	12,821		12,186
Private equity (4)	8,912		9,276
Federal Reserve Bank stock and other at cost (5)	4,552		4,900
Total equity securities not held for trading	37,144		37,504
Total equity securities	$	67,471	64,414

(1)Represents securities economically hedged with equity derivatives.

(2)Represents securities held as part of our customer accommodation trading activities. For additional information on these activities, see Note 2 (Trading Activities).

(3)See Note 13 (Securitizations and Variable Interest Entities) for information about tax credit investments.

(4)Represents nonmarketable equity securities accounted for under the measurement alternative, which were predominantly securities associated with our affiliated venture capital business.

(5)Includes $3.5 billion of investments in Federal Reserve Bank stock at both June 30, 2023, and December 31, 2022, and $1.0 billion and $1.4 billion of investments in Federal Home Loan Bank stock at June 30, 2023, and December 31, 2022, respectively.

Net Gains and Losses Not Held for Trading

Table ~~4.9 shows~~4.2 provides a summary of the ~~detail~~net gains and losses from equity securities not held for trading, which excludes equity method adjustments for our share of ~~OTTI write-downs on available-for-sale debt~~the investee’s earnings or

losses that are recognized in other noninterest income. Gains and losses for securities ~~included~~held for trading are reported in ~~earnings~~net gains from trading and ~~the related changes in OCI for the same~~ securities.

Table ~~4.9:OTTI Write-downs Included~~4.2:Net Gains (Losses) from Equity Securities Not Held for Trading



	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Net gains (losses) from equity securities carried at fair value:
Marketable equity securities	$	63	(226)	$	26	(228)
Nonmarketable equity securities	(15)		(16)	(16)		(38)
Total equity securities carried at fair value	48		(242)	10		(266)
Net gains (losses) from nonmarketable equity securities not carried at fair value (1):
Impairment write-downs	(175)		(576)	(665)		(1,014)
Net unrealized gains (losses) (2)	(12)		144	139		834
Net realized gains from sale	45		59	65		407

Total nonmarketable equity securities not carried at fair value	(142)		(373)	(461)		227

Total net losses from equity securities not held for trading	$	(94)	(615)	$	(451)	(39)

(1)Includes amounts related to private equity and venture capital investments in ~~Earnings~~consolidated portfolio companies, which are not reported in equity securities on our consolidated balance sheet.

(2)Includes unrealized gains (losses) due to observable price changes from equity securities accounted for under the measurement alternative.

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.Wells Fargo & Company			75

Note 4: Equity Securities (continued)

Measurement Alternative

Table 4.3 provides additional information about the impairment write-downs and observable price changes from nonmarketable

equity securities accounted for under the measurement alternative. Gains and losses related to these adjustments are also included in Table 4.2.

Table 4.3:Net Gains (Losses) from Measurement Alternative Equity Securities



	Quarter ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Net gains (losses) recognized in earnings during the period:
Gross unrealized gains from observable price changes	$	7	144		$	168	834
Gross unrealized losses from observable price changes	(19)		—		(29)		—
Impairment write-downs	(172)		(549)		(654)		(944)
Net realized gains from sale	24		45		36		78
Total net losses recognized during the period	$	(160)	$	(360)	$	(479)	(32)

Table ~~4.10~~4.4 presents ~~a rollforward~~cumulative carrying value adjustments to nonmarketable equity securities accounted for under the measurement alternative that were still held at the end 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 losseach reporting period presented.

Table 4.4:Measurement Alternative Cumulative Gains (Losses)



(in millions)	Jun 30, 2023		Dec 31, 2022

Cumulative gains (losses):
Gross unrealized gains from observable price changes	$	7,225	7,141
Gross unrealized losses from observable price changes	(44)		(14)
Impairment write-downs	(3,435)		(2,896)

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)~~76			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.Wells Fargo & Company

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



Note 5: Loans and Related Allowance for Credit Losses

Table 5.1 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 both June 30, 2023, and December 31, 2022.

Outstanding balances exclude accrued interest receivable on loans, except for certain revolving loans, such as credit card loans.

See Note 7 (Intangible Assets and Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. During the first half of 2023, we reversed accrued interest receivable of $19 million for our commercial portfolio segment and $118 million for our consumer portfolio segment, compared with $20 million and $65 million, respectively, for the same period a year ago.

Table 5.1:Loans Outstanding

(in millions) Sep 30,
2017
Dec 31,
2016
Commercial:
Commercial and industrial $ 327,944
330,840
Real estate mortgage 128,475
132,491
Real estate construction 24,520
23,916
Lease financing 19,211
19,289
Total commercial 500,150
506,536
Consumer:
Real estate 1-4 family first mortgage 280,173
275,579
Real estate 1-4 family junior lien mortgage 41,152
46,237
Credit card 36,249
36,700
Automobile 55,455
62,286
Other revolving credit and installment 38,694
40,266
Total consumer 451,723
461,068
Total loans $ 951,873
967,604


(in millions)	Jun 30, 2023		Dec 31, 2022



Commercial and industrial	$	386,011	386,806


Commercial real estate	154,276		155,802
Lease financing	15,334		14,908
Total commercial	555,621		557,516


Residential mortgage	265,085		269,117
Credit card	47,717		46,293
Auto	51,587		53,669
Other consumer	27,950		29,276
Total consumer	392,339		398,355
Total loans	$	947,960	955,871

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 presents

total non-U.S. commercial ~~foreign~~ loans outstanding by class of financing receivable.

Table 5.2:Non-U.S. Commercial ~~Foreign~~ Loans Outstanding


(in millions)	Jun 30, 2023		Dec 31, 2022




Commercial and industrial	$	75,081	78,981


Commercial real estate	7,539		7,619
Lease financing	710		670
Total non-U.S. commercial loans	$	83,330	87,270

(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			77

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

Loan Purchases, Sales, and Transfers

Table 5.3 ~~summarizes~~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:Loan Purchases, Sales, and Transfers



	2023				2022
(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total
Quarter ended June 30,
Purchases	$	195	301	496	276	2	278
Sales and net transfers (to)/from LHFS	(568)		(99)	(667)	(751)	(14)	(765)
Six months ended June 30,
Purchases	$	611	304	915	376	2	378
Sales and net transfers (to)/from LHFS	(1,683)		(100)	(1,783)	(1,312)	(23)	(1,335)

Unfunded Credit Commitments

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~~Unfunded credit commitments are legally binding agreements to lend to customers with terms covering usage of funds, contractual interest rates, expiration dates, and any required collateral. Our commercial lending commitments include, but are not limited to, (i) commitments for working capital and general corporate purposes, (ii) financing to customers who warehouse financial assets secured by real estate, consumer, or corporate loans, (iii) financing that is ~~a legally binding agreement~~expected to ~~lend funds~~be syndicated or replaced with other forms of long-term financing, and (iv) commercial real estate lending. We also originate multipurpose lending commitments under which commercial customers have the option 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 regardingdraw on the ~~financial performance~~facility in one of several forms, including the issuance of letters of credit, which reduces the unfunded commitment amounts of the ~~customer~~facility.

The maximum credit risk for these commitments will generally be lower than the contractual amount because these commitments may expire without being used or ~~borrowing base formulas on an ongoing basis that must~~may be ~~met before we are required to fund~~cancelled at the ~~commitment.~~customer’s request. We may reduce or cancel ~~consumer commitments, including home equity~~ lines ~~and~~of credit ~~card lines,~~ in accordance with the contracts and applicable law. Our credit risk monitoring activities include managing the amount of commitments, both to individual customers and in total, and the size and maturity structure of these commitments. We do not recognize an ACL for commitments that are unconditionally cancellable at our discretion.

We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At June 30, 2023, and December 31, 2022, we had $1.2 billion and $1.8 billion, respectively, of outstanding issued commercial letters of credit. See Note 14 (Guarantees and Other Commitments) for additional information on issued standby letters of credit.

We may be a fronting bank, whereby we act as a representative for other lenders, and 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 temporary advance arrangements totaled approximately $84 billion and $77 billion at September 30, 2017 and December 31, 2016, respectively.~~

We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At September 30, 2017, and December 31, 2016, we had $1.2 billion and $1.1 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 10 (Guarantees, Pledged Assets and Collateral) for additional information on standby letters of credit.

When we make commitments, we are exposed to credit risk. The maximum credit risk for these commitments will generally be lower than the contractual amount because a significant portion of these commitments is expected to expire without being used by the customer. In addition, we manage the potential risk in commitments to lend by limiting the total amount of commitments, both by individual customer and in total, by monitoring the size and maturity structure of these commitments and by applying the same credit standards for these commitments as for all of our credit activities.

For loans and commitments to lend, we generally require collateral or a guarantee. We may require various types of collateral, including commercial and consumer real estate, automobiles, other short-term liquid assets such as accounts receivable or inventory and long-lived assets, such as equipment and other business assets. Collateral requirements for each loan or commitment may vary based on the loan product and our assessment of a customer’s credit risk according to the specific credit underwriting, including credit terms and structure.

The contractual amount of our unfunded credit commitments, including unissued ~~standby and commercial~~ letters of credit, is summarized ~~by portfolio segment and class of financing receivable~~ in Table 5.4. The table is presented net of commitments syndicated to others, including the fronting arrangements described above, and excludes ~~the~~ issued ~~standby and commercial~~ letters of credit and ~~temporary advance arrangements described above.~~discretionary amounts where our approval or consent is required prior to any loan funding or commitment increase.

Table 5.4:Unfunded Credit Commitments


(in millions)	Jun 30, 2023		Dec 31, 2022
Commercial and industrial (1)	$	385,949	388,504


Commercial real estate	25,348		29,518

Total commercial	411,297		418,022


Residential mortgage (2)	34,668		39,155
Credit card	157,271		145,526
Other consumer (3)	78,032		69,244
Total consumer	269,971		253,925
Total unfunded credit commitments	$	681,268	671,947

(1)Effective first quarter 2023, unfunded credit commitments exclude discretionary amounts where our approval or consent is required prior to any loan funding or commitment increase. Prior period balances have been revised to conform with the current period presentation.

(2)Includes lines of credit totaling $31.9 billion and $35.5 billion as of June 30, 2023, and December 31, 2022, respectively.

(3)Predominantly includes securities-based lines of credit.

(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


78			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 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 increased $1.2 billion from December 31, 2022, reflecting increases for

commercial real estate loans, primarily office loans, as well as for increases in credit card loan balances, partially offset by a decrease for residential mortgage loans related to the adoption of ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.

Table 5.5:Allowance for Credit Losses for Loans


	Quarter ended June 30,				Six months ended June 30,
($ in millions)	2023			2022	2023			2022
Balance, beginning of period	$	13,705		12,681	$	13,609		13,788
Cumulative effect from change in accounting policy (1)	—			—	(429)			—
Balance, beginning of period, adjusted	13,705			12,681	13,180			13,788
Provision for credit losses	1,839			578	2,968			(197)
Interest income on certain loans (2)	—			(27)	—			(56)
Loan charge-offs:
Commercial and industrial	(147)			(68)	(248)			(124)


Commercial real estate	(81)			(3)	(108)			(3)
Lease financing	(6)			(5)	(13)			(9)
Total commercial	(234)			(76)	(369)			(136)


Residential mortgage	(32)			(46)	(60)			(93)
Credit card	(480)			(287)	(904)			(554)
Auto	(183)			(151)	(400)			(316)
Other consumer	(110)			(94)	(215)			(202)
Total consumer	(805)			(578)	(1,579)			(1,165)
Total loan charge-offs	(1,039)			(654)	(1,948)			(1,301)
Loan recoveries:
Commercial and industrial	28			41	86			120


Commercial real estate	2			7	12			12
Lease financing	4			5	8			10
Total commercial	34			53	106			142


Residential mortgage	44			62	83			130
Credit card	84			88	164			179
Auto	94			83	190			152
Other consumer	19			24	37			49
Total consumer	241			257	474			510
Total loan recoveries	275			310	580			652
Net loan charge-offs	(764)			(344)	(1,368)			(649)
Other	6			(4)	6			(2)
Balance, end of period	$	14,786		12,884	$	14,786		12,884
Components:
Allowance for loan losses	$	14,258		11,786	$	14,258		11,786
Allowance for unfunded credit commitments	528			1,098	528			1,098
Allowance for credit losses	$	14,786		12,884	$	14,786		12,884

Net loan charge-offs (annualized) as a percentage of average total loans	0.32		%	0.15	0.29		%	0.14
Allowance for loan losses as a percentage of total loans	1.50			1.25	1.50			1.25
Allowance for credit losses for loans as a percentage of total loans	1.56			1.37	1.56			1.37

(1)Represents the change in our allowance for credit losses for loans as a result of our adoption of ASU 2022–02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, on January 1, 2023. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(2)Prior to the adoption of ASU 2022–02, loans with an allowance measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognized 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			79


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

Table 5.6 summarizes the activity in the ~~allowance for credit losses~~ACL by our commercial and consumer portfolio segments.

Table 5.6:Allowance for Credit Losses for Loans Activity by Portfolio Segment



	2023				2022
(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total
Quarter ended June 30,


Balance, beginning of period	$	7,224	6,481	13,705	7,148	5,533	12,681
Provision for credit losses	1,056		783	1,839	(32)	610	578
Interest income on certain loans (2)	—		—	—	(7)	(20)	(27)
Loan charge-offs	(234)		(805)	(1,039)	(76)	(578)	(654)
Loan recoveries	34		241	275	53	257	310
Net loan charge-offs	(200)		(564)	(764)	(23)	(321)	(344)
Other	1		5	6	(4)	—	(4)
Balance, end of period	$	8,081	6,705	14,786	7,082	5,802	12,884
Six months ended June 30,
Balance, beginning of period	$	6,956	6,653	13,609	7,791	5,997	13,788
Cumulative effect from change in accounting policy (1)	27		(456)	(429)	—	—	—
Balance, beginning of period, adjusted	6,983		6,197	13,180	7,791	5,997	13,788
Provision for credit losses	1,360		1,608	2,968	(697)	500	(197)
Interest income on certain loans (2)	—		—	—	(16)	(40)	(56)
Loan charge-offs	(369)		(1,579)	(1,948)	(136)	(1,165)	(1,301)
Loan recoveries	106		474	580	142	510	652
Net loan charge-offs	(263)		(1,105)	(1,368)	6	(655)	(649)
Other	1		5	6	(2)	—	(2)
Balance, end of period	$	8,081	6,705	14,786	7,082	5,802	12,884

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~~(1)Represents the change in our allowance for credit losses for loans as a result of our adoption of ASU 2022–02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and ~~recorded investment~~Vintage Disclosures, on January 1, 2023. For additional information, see Note 1 (Summary of Significant Accounting Policies).

allowance attributable to the passage of time as interest income.

~~Table 5.7:Allowance by Impairment Methodology~~

Allowance for credit losses Recorded investment in loans
(in millions) Commercial
Consumer
Total
Commercial
Consumer
Total
September 30, 2017
Collectively evaluated (1) $ 6,032
4,094
10,126
495,395
423,102
918,497
Individually evaluated (2) 786
1,183
1,969
4,521
15,291
19,812
PCI (3) 14
—
14
234
13,330
13,564
Total $ 6,832
5,277
12,109
500,150
451,723
951,873
December 31, 2016
Collectively evaluated (1) $ 6,392
3,553
9,945
500,487
428,009
928,496
Individually evaluated (2) 1,000
1,593
2,593
5,372
17,005
22,377
PCI (3) 2
—
2
677
16,054
16,731
Total $ 7,394
5,146
12,540
506,536
461,068
967,604


~~(1)~~	~~Represents loans collectively evaluated for impairment in accordance with Accounting Standards Codification (ASC) 450-20,~~ ~~Loss Contingencies~~ ~~(formerly FAS 5), and pursuant to amendments by ASU 2010-20 regarding allowance for non-impaired loans.~~


~~(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,~~date.

COMMERCIAL CREDIT QUALITY INDICATORS We manage a consistent process for assessing commercial loan credit quality. Commercial loans are generally subject to individual risk assessment using our internal borrower and collateral quality ratings, which is our primary credit quality indicator. Our ratings are aligned to regulatory definitions of pass and criticized categories with the ~~exception~~criticized segmented among special mention, substandard, doubtful and loss categories.

Table 5.7 provides the outstanding balances of ~~updated~~our commercial loan portfolio by risk category and credit quality information by origination year 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 for a borrower experiencing financial difficulty. At June 30, 2023, we had $526.6 billion and $29.0 billion of pass and criticized commercial loans, respectively. Gross charge-offs by loan class are included in the following table for the six months ended June 30, 2023, which we monitor as part of our credit risk management practices; however, charge-offs are not a primary credit quality indicator for our loan portfolio.


80			Wells Fargo & Company

Table 5.7:Commercial Loan Categories by Risk Categories and Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
(in millions)	2023		2022	2021	2020	2019	Prior
June 30, 2023
Commercial and industrial
Pass	$	23,104	46,411	26,818	9,572	13,184	6,280	248,358	442	374,169
Criticized	475		932	1,347	599	337	793	7,359	—	11,842
Total commercial and industrial	23,579		47,343	28,165	10,171	13,521	7,073	255,717	442	386,011
Gross charge-offs (1)	46		14	19	3	5	3	158	—	248










Commercial real estate
Pass	8,771		36,283	36,258	14,186	14,228	22,240	6,103	224	138,293
Criticized	1,298		3,223	3,773	1,623	2,672	3,056	338	—	15,983
Total commercial real estate	10,069		39,506	40,031	15,809	16,900	25,296	6,441	224	154,276
Gross charge-offs	—		32	—	—	36	40	—	—	108
Lease financing
Pass	2,439		4,390	2,851	1,523	1,071	1,878	—	—	14,152
Criticized	172		335	252	174	138	111	—	—	1,182
Total lease financing	2,611		4,725	3,103	1,697	1,209	1,989	—	—	15,334
Gross charge-offs	—		3	4	3	2	1	—	—	13
Total commercial loans	$	36,259	91,574	71,299	27,677	31,630	34,358	262,158	666	555,621
	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
	2022		2021	2020	2019	2018	Prior
December 31, 2022
Commercial and industrial
Pass	$	61,646	31,376	11,128	13,656	3,285	5,739	247,594	842	375,266
Criticized	872		1,244	478	505	665	532	7,244	—	11,540
Total commercial and industrial	62,518		32,620	11,606	14,161	3,950	6,271	254,838	842	386,806











Commercial real estate
Pass	38,022		38,709	16,564	16,409	10,587	16,159	6,765	150	143,365
Criticized	2,785		2,794	965	2,958	1,088	1,688	159	—	12,437
Total commercial real estate	40,807		41,503	17,529	19,367	11,675	17,847	6,924	150	155,802

Lease financing
Pass	4,543		3,336	1,990	1,427	765	1,752	—	—	13,813
Criticized	330		275	190	169	94	37	—	—	1,095
Total lease financing	4,873		3,611	2,180	1,596	859	1,789	—	—	14,908

Total commercial loans	$	108,198	77,734	31,315	35,124	16,484	25,907	261,762	992	557,516

(1) Includes charge-offs on overdrafts, which are generally charged-off at 60 days past due.


			Wells Fargo & Company			81

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

Table 5.8 provides days past due (DPD) information for commercial loans, which we monitor as part of our credit risk

management practices; however, delinquency is not a primary credit quality indicator for commercial loans.

Table 5.8:Commercial Loan Categories by Delinquency Status


	Still accruing				Nonaccrual loans	Total commercial loans
(in millions)	Current-29 DPD		30-89 DPD	90+ DPD
June 30, 2023
Commercial and industrial	$	384,568	489	109	845	386,011


Commercial real estate	151,314		446	9	2,507	154,276
Lease financing	15,118		139	—	77	15,334
Total commercial loans	$	551,000	1,074	118	3,429	555,621
December 31, 2022
Commercial and industrial	$	384,164	1,313	583	746	386,806


Commercial real estate	153,877		833	134	958	155,802
Lease financing	14,623		166	—	119	14,908
Total commercial loans	$	552,664	2,312	717	1,823	557,516

CONSUMER CREDIT QUALITY INDICATORSWe have various classes of consumer loans that present unique credit risks. Loan delinquency, Fair Isaac Corporation (FICO) credit scores and ~~updated~~ loan-to-value (LTV)/

for residential mortgage loans are the primary credit quality indicators that we monitor and utilize in our evaluation of the appropriateness of the ACL for the consumer loan portfolio segment. Gross charge-offs by loan class are included in the following tables for the six months ended June 30, 2023, which we monitor as part of our credit risk management practices; however, charge-offs are not a primary credit quality indicator for our loan portfolio.

Many of our loss estimation techniques used for the ACL for loans rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality in the establishment of our ACL for consumer loans. 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 for a borrower experiencing financial difficulty.

~~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.

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

~~COMMERCIAL CREDIT QUALITY INDICATORS~~ In addition to monitoring commercial loan concentration risk, we manage a consistent process for assessing commercial loan credit quality. Generally, commercial loans are subject to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to Pass and Criticized categories. The Criticized category includes Special Mention, Substandard, and Doubtful categories which are defined by bank regulatory agencies.

Table 5.8 provides a breakdown of outstanding commercial loans by risk category. Of the $18.7 billion in 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.

~~Table 5.8:Commercial Loans by Risk Category~~

(in millions)
Commercial
and
industrial

Real
estate
mortgage

Real
estate
construction

Lease
financing

Total
September 30, 2017
By risk category:
Pass $ 309,149
123,547
24,189
18,004
474,889
Criticized 18,679
4,820
321
1,207
25,027
Total commercial loans (excluding PCI) 327,828
128,367
24,510
19,211
499,916
Total commercial PCI loans (carrying value) 116
108
10
—
234
Total commercial loans $ 327,944
128,475
24,520
19,211
500,150
December 31, 2016
By risk category:
Pass $ 308,166
126,793
23,408
17,899
476,266
Criticized 22,437
5,315
451
1,390
29,593
Total commercial loans (excluding PCI) 330,603
132,108
23,859
19,289
505,859
Total commercial PCI loans (carrying value) 237
383
57
—
677
Total commercial loans $ 330,840
132,491
23,916
19,289
506,536

~~Table 5.9 provides past due information for commercial loans, which we monitor as part of our credit risk management practices.~~

~~Table 5.9:Commercial Loans by Delinquency Status~~

(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 INDICATORS~~We have various classes of consumer loans that present unique risks. Loan delinquency, FICO credit scores and LTV for loan types are common credit quality indicators that we monitor and utilize in our evaluation of the appropriateness of the allowance for credit losses for the consumer portfolio segment.

Many of our loss estimation techniques used for the allowance for credit losses rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality and the establishment of our allowance for credit losses. Table 5.10 provides the outstanding balances of our consumer portfolio by delinquency status.

~~Table 5.10:Consumer Loans by Delinquency Status~~

(in millions)
Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Credit
card

Automobile

Other
revolving
credit and
installment

Total
September 30, 2017
By delinquency status:
Current-29 DPD $ 248,896
40,242
35,297
53,684
38,316
416,435
30-59 DPD 1,895
308
282
1,287
146
3,918
60-89 DPD 687
147
195
349
102
1,480
90-119 DPD 339
86
168
127
79
799
120-179 DPD 263
94
288
7
26
678
180+ DPD 1,186
246
19
1
25
1,477
Government insured/guaranteed loans (1) 13,606
—
—
—
—
13,606
Total consumer loans (excluding PCI) 266,872
41,123
36,249
55,455
38,694
438,393
Total consumer PCI loans (carrying value) 13,301
29
—
—
—
13,330
Total consumer loans $ 280,173
41,152
36,249
55,455
38,694
451,723
December 31, 2016
By delinquency status:
Current-29 DPD $ 239,061
45,238
35,773
60,572
39,833
420,477
30-59 DPD 1,904
296
275
1,262
177
3,914
60-89 DPD 700
160
200
330
111
1,501
90-119 DPD 307
102
169
116
93
787
120-179 DPD 323
108
279
5
30
745
180+ DPD 1,661
297
4
1
22
1,985
Government insured/guaranteed loans (1) 15,605
—
—
—
—
15,605
Total consumer loans (excluding PCI) 259,561
46,201
36,700
62,286
40,266
445,014
Total consumer PCI loans (carrying value) 16,018
36
—
—
—
16,054
Total consumer loans $ 275,579
46,237
36,700
62,286
40,266
461,068


~~(1)~~	~~Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA. Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled~~ ~~$8.8 billion~~ at ~~September 30, 2017, compared with~~ ~~$10.1 billion~~ at ~~December 31, 2016~~.

Of the $3.0 billion of consumer loans not government insured/guaranteed that are 90 days or more past due at September 30, 2017, $923 million was accruing, compared with $3.5 billion past due and $908 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.

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

~~Table 5.11 provides a breakdown of our consumer portfolio by FICO. The September 30, 2017~~ FICO scores for real estate 1-4 family first and junior lien mortgages reflect a new FICO score version we adopted in first quarter 2017 to monitor and manage those portfolios. In general the impact for us is a shift to higher scores, particularly to the 800+ level, as the new FICO score version utilizes a more refined approach that better distinguishes borrower credit risk. Most of the scored consumer portfolio has

~~an updated FICO of 680 and above, reflecting a strong current borrower credit profile. FICO is~~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. ~~Substantially all~~

Table 5.9 provides the outstanding balances of our residential mortgage 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.~~

~~Table 5.11:Consumer Loans~~ by ~~FICO~~our primary credit quality indicators.

(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.~~


~~(2)~~	~~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~~outstanding balance to the property’s collateral value. ~~CLTV~~Combined LTV (CLTV) refers to the combination of first lien mortgage and junior lien mortgage (including unused line amounts for credit line products) ratios. We obtain LTVs and CLTVs ~~are updated quarterly~~ using a cascade approach which first uses values provided by automated valuation models (AVMs) for the property. If an AVM is not available, then the value is estimated using the original appraised value adjusted by the change in Home Price Index (HPI) for the property location. If an HPI is not available, the original appraised value is used. The HPI value is normally the only method considered for high value properties, generally with an original value of $1 million or more, as the AVM values have proven less accurate for these properties.

~~Table 5.12 shows the most updated LTV~~ Generally, we obtain available LTVs and CLTV distribution of the real estate 1-4 family first and junior lien mortgage loan portfolios. We consider the trends in residential real estate markets as we monitor credit risk and establish our allowance for credit losses. In the event ofCLTVs on 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.~~quarterly basis. Certain loans do not have an LTV or CLTV due to a lack of industry data availability and portfolios acquired from or serviced by other institutions.

~~Table 5.12:Consumer 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% $ 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)~~82			~~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

Table 5.9:Credit Quality Indicators for Residential Mortgage Loans by Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2023		2022	2021	2020	2019	Prior			Total
June 30, 2023
By delinquency status:
Current-29 DPD	$	7,563	47,273	64,124	36,178	20,093	64,105	9,133	6,933	255,402
30-89 DPD	5		33	47	28	24	595	44	140	916
90+ DPD	—		15	14	10	17	376	28	240	700
Government insured/guaranteed loans (1)	—		13	52	110	128	7,764	—	—	8,067
Total residential mortgage	$	7,568	47,334	64,237	36,326	20,262	72,840	9,205	7,313	265,085
By FICO:
740+	$	6,986	43,178	60,223	34,287	18,713	54,060	7,235	4,191	228,873
700-739	461		2,553	2,598	1,254	845	4,706	988	1,008	14,413
660-699	90		852	797	408	339	2,418	479	638	6,021
620-659	14		219	197	97	90	1,082	173	332	2,204
<620	2		84	74	59	47	1,206	189	452	2,113
No FICO available	15		435	296	111	100	1,604	141	692	3,394
Government insured/guaranteed loans (1)	—		13	52	110	128	7,764	—	—	8,067
Total residential mortgage	$	7,568	47,334	64,237	36,326	20,262	72,840	9,205	7,313	265,085
By LTV/CLTV:
0-80%	$	7,487	36,290	62,637	35,948	19,871	64,653	9,024	7,113	243,023
80.01-100%	70		10,770	1,462	197	193	212	140	141	13,185
>100% (2)	—		177	28	11	13	32	25	30	316
No LTV available	11		84	58	60	57	179	16	29	494
Government insured/guaranteed loans (1)	—		13	52	110	128	7,764	—	—	8,067
Total residential mortgage	$	7,568	47,334	64,237	36,326	20,262	72,840	9,205	7,313	265,085
Gross charge-offs	$	—	—	—	—	—	28	2	30	60
	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
(in millions)	2022		2021	2020	2019	2018	Prior
December 31, 2022
By delinquency status:
Current-29 DPD	$	48,581	65,705	37,289	20,851	6,190	61,680	11,031	6,913	258,240
30-89 DPD	65		66	32	33	21	683	58	159	1,117
90+ DPD	6		17	15	25	15	530	32	260	900
Government insured/guaranteed loans (1)	9		59	133	148	200	8,311	—	—	8,860
Total residential mortgage	$	48,661	65,847	37,469	21,057	6,426	71,204	11,121	7,332	269,117
By FICO:
740+	$	43,976	61,450	35,221	19,437	5,610	51,551	8,664	4,139	230,048
700-739	3,245		2,999	1,419	941	314	4,740	1,159	1,021	15,838
660-699	1,060		851	438	306	169	2,388	567	656	6,435
620-659	211		248	106	82	50	1,225	223	349	2,494
<620	59		81	44	46	28	1,323	227	466	2,274
No FICO available	101		159	108	97	55	1,666	281	701	3,168
Government insured/guaranteed loans (1)	9		59	133	148	200	8,311	—	—	8,860
Total residential mortgage	$	48,661	65,847	37,469	21,057	6,426	71,204	11,121	7,332	269,117
By LTV/CLTV:
0-80%	$	40,869	64,613	37,145	20,744	6,155	62,593	10,923	7,188	250,230
80.01-100%	7,670		1,058	112	97	30	107	109	97	9,280
>100% (2)	48		20	13	6	3	23	28	16	157
No LTV available	65		97	66	62	38	170	61	31	590
Government insured/guaranteed loans (1)	9		59	133	148	200	8,311	—	—	8,860
Total residential mortgage	$	48,661	65,847	37,469	21,057	6,426	71,204	11,121	7,332	269,117

(1)Government insured or guaranteed loans represent 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 $2.8 billion and $3.2 billion at June 30, 2023, and December 31, 2022, respectively.

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


~~(2)~~			~~Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.~~Wells Fargo & Company			83

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

Table 5.10 provides the outstanding balances of our credit card loan portfolio by primary credit quality indicators.

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.

For the six months ended June 30, 2023, we had gross charge-offs in the credit card portfolio of $861 million for revolving loans and $43 million for revolving loans converted to term loans.

Table 5.10: Credit Quality Indicators for Credit Card Loans


	June 30, 2023				December 31, 2022
	Revolving loans		Revolving loans converted to term loans		Revolving loans	Revolving loans converted to term loans
(in millions)				Total			Total
By delinquency status:
Current-29 DPD	$	46,343	285	46,628	45,131	223	45,354
30-89 DPD	524		34	558	457	27	484
90+ DPD	513		18	531	441	14	455
Total credit cards	$	47,380	337	47,717	46,029	264	46,293
By FICO:
740+	$	17,730	21	17,751	16,681	19	16,700
700-739	10,894		44	10,938	10,640	37	10,677
660-699	9,653		69	9,722	9,573	55	9,628
620-659	4,826		59	4,885	4,885	45	4,930
<620	4,168		143	4,311	4,071	107	4,178
No FICO available	109		1	110	179	1	180
Total credit cards	$	47,380	337	47,717	46,029	264	46,293

Table 5.11 provides the outstanding balances of our Auto loan portfolio by primary credit quality indicators.

Table 5.11: Credit Quality Indicators for Auto Loans by Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2023		2022	2021	2020	2019	Prior			Total
June 30, 2023
By delinquency status:

Current-29 DPD	$	8,891	15,767	15,507	5,790	3,254	979	—	—	50,188
30-89 DPD	15		297	563	217	129	67	—	—	1,288
90+ DPD	1		28	52	16	9	5	—	—	111
Total auto	$	8,907	16,092	16,122	6,023	3,392	1,051	—	—	51,587





By FICO:

740+	$	5,979	7,901	6,879	2,505	1,509	421	—	—	25,194
700-739	1,426		2,480	2,416	971	540	157	—	—	7,990
660-699	917		2,223	2,249	863	444	129	—	—	6,825
620-659	368		1,531	1,613	575	289	94	—	—	4,470
<620	217		1,953	2,935	1,084	582	229	—	—	7,000
No FICO available	—		4	30	25	28	21	—	—	108
Total auto	$	8,907	16,092	16,122	6,023	3,392	1,051	—	—	51,587











Gross charge-offs	$	1	118	195	51	29	6	—	—	400
	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2022		2021	2020	2019	2018	Prior			Total
December 31, 2022
By delinquency status:
Current-29 DPD	$	19,101	19,126	7,507	4,610	1,445	421	—	—	52,210
30-89 DPD	218		585	253	167	69	45	—	—	1,337
90+ DPD	23		56	22	13	4	4	—	—	122
Total auto	$	19,342	19,767	7,782	4,790	1,518	470	—	—	53,669
By FICO:
740+	$	9,361	8,233	3,193	2,146	664	166	—	—	23,763
700-739	3,090		3,033	1,287	788	238	64	—	—	8,500
660-699	2,789		2,926	1,163	641	192	58	—	—	7,769
620-659	2,021		2,156	796	421	130	47	—	—	5,571
<620	2,062		3,389	1,316	756	263	126	—	—	7,912
No FICO available	19		30	27	38	31	9	—	—	154
Total auto	$	19,342	19,767	7,782	4,790	1,518	470	—	—	53,669


84			Wells Fargo & Company

Table 5.12 provides the outstanding balances of our Other consumer loans portfolio by primary credit quality indicators.

Table 5.12:Credit Quality Indicators for Other Consumer Loans by Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2023		2022	2021	2020	2019	Prior			Total
June 30, 2023
By delinquency status:
Current-29 DPD	$	2,195	2,825	870	242	151	85	21,352	117	27,837
30-89 DPD	6		28	10	2	2	3	14	5	70
90+ DPD	1		10	4	1	1	1	13	12	43
Total other consumer	$	2,202	2,863	884	245	154	89	21,379	134	27,950
By FICO:
740+	$	1,317	1,354	390	117	67	38	1,347	34	4,664
700-739	440		540	154	44	26	15	510	17	1,746
660-699	262		443	126	22	20	12	401	15	1,301
620-659	64		188	60	9	9	8	154	14	506
<620	20		131	56	10	11	8	142	17	395


No FICO available (1)	99		207	98	43	21	8	18,825	37	19,338
Total other consumer	$	2,202	2,863	884	245	154	89	21,379	134	27,950
Gross charge-offs (2)	$	54	83	28	5	5	3	30	7	215
	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
(in millions)	2022		2021	2020	2019	2018	Prior
December 31, 2022
By delinquency status:
Current-29 DPD	$	3,718	1,184	341	240	63	83	23,431	117	29,177
30-89 DPD	17		12	2	3	1	2	14	8	59
90+ DPD	5		5	1	1	—	1	13	14	40
Total other consumer	$	3,740	1,201	344	244	64	86	23,458	139	29,276
By FICO:
740+	$	1,908	546	174	112	21	50	1,660	43	4,514
700-739	726		216	62	44	10	13	568	18	1,657
660-699	527		177	34	33	9	8	449	19	1,256
620-659	204		81	13	14	4	5	181	11	513
<620	89		64	14	16	5	5	154	18	365


No FICO available (1)	286		117	47	25	15	5	20,446	30	20,971
Total other consumer	$	3,740	1,201	344	244	64	86	23,458	139	29,276

(1)Substantially all loans do not require a FICO score and are revolving securities-based loans originated by the Wealth and Investment Management operating segment.

(2)Includes charge-offs on overdrafts, which are generally charged-off at 60 days past due.


			Wells Fargo & Company			85

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

NONACCRUAL LOANSTable 5.13 provides loans on nonaccrual status. ~~PCI~~Nonaccrual loans ~~are excluded~~may have an ACL or a negative

allowance for credit losses from ~~this table because they continue to earn interest fromaccretable yield, independent~~expected recoveries of ~~performance in accordance with their contractual terms.~~amounts previously written off.

Table 5.13:Nonaccrual Loans


	Amortized cost					Recognized interest income
	Nonaccrual loans			Nonaccrual loans without related allowance for credit losses (1)		Six months ended June 30,
(in millions)	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023	Dec 31, 2022	2023	2022
Commercial and industrial	$	845	746	241	174	12	41


Commercial real estate	2,507		958	97	134	14	28
Lease financing	77		119	5	5	—	—
Total commercial	3,429		1,823	343	313	26	69


Residential mortgage	3,289		3,611	2,197	2,316	98	111
Auto	135		153	—	—	10	14
Other consumer	33		39	—	—	2	2
Total consumer	3,457		3,803	2,197	2,316	110	127
Total nonaccrual loans	$	6,886	5,626	2,540	2,629	136	196

(1)Nonaccrual loans may not have an allowance for credit losses if the loss expectations are zero given the related 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~~$883 million and ~~$8.1~~$1.0 billion at ~~September~~June 30, ~~2017~~2023, and December 31, ~~2016,~~2022, respectively, which included ~~$4.1 billion~~$656 million and ~~$4.8 billion,~~$771 million, 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.

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

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUINGCertain loans 90 days or more past due ~~as to interest or principal~~ are still accruing, because they are (1) well-secured and in the process of collection or (2) ~~real estate 1-4 family~~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 shows ~~non-PCI~~ loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed.

Table 5.14:Loans 90 Days or More Past Due and Still Accruing


(in millions)	Jun 30, 2023		Dec 31, 2022
Total:	$	3,485	4,340
Less: FHA insured/VA guaranteed (1)	2,686		3,005

Total, not government insured/guaranteed	$	799	1,335
By segment and class, not government insured/guaranteed:
Commercial and industrial	$	109	583


Commercial real estate	9		134
Total commercial	118		717


Residential mortgage	25		28
Credit card	531		455
Auto	96		111
Other consumer	29		24
Total consumer	681		618
Total, not government insured/guaranteed	$	799	1,335

(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)~~86			~~Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.~~Wells Fargo & Company

LOAN MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY We may agree to modify the contractual terms of a loan to a borrower experiencing financial difficulty.

Our commercial loan modifications may include principal forgiveness, interest rate reductions, payment delays, term extensions, or a combination of these modifications. Commercial loan term extensions have terms that vary based on the borrower’s request and are evaluated by our credit teams on an individual basis.

Our consumer loan modifications vary based upon the loan product and the modification program offered to the borrower, and may include interest rate reductions, payment delays, term extensions, principal forbearance or forgiveness, or a combination of these modifications. Generally, our consumer loan modification programs modify the loan terms to achieve payment terms that are more affordable to the borrower and, as a result, increase the likelihood of full repayment of principal and interest.

Our residential mortgage loan modification programs may offer a short-term payment deferral based upon the borrower's demonstrated hardship, up to 12 months. If additional assistance is needed after 12 months, the borrower may request another loan modification. Modifications may also include a trial payment period of three months to determine if the borrower can perform in accordance with the proposed permanent loan modification terms. Loans in a trial payment period continue to advance through delinquency status and accrue interest according to their original terms. Loans in a trial payment period are excluded from our loan modification disclosures until the borrower has successfully completed the trial period and the loan modification is formally executed. Residential mortgage loans in a trial payment period totaled $132 million at June 30, 2023.

Credit card loan modifications result in a reduction in the credit card interest rate and may be offered on a short-term or long-term basis. A short-term interest rate reduction program reduces the borrower’s interest rate for 12 months. A long-term interest rate reduction program provides a reduction of the interest rate over a fixed five-year term. During the modification period, the borrower’s revolving charge privileges are revoked.

Auto loan modifications generally include insignificant (e.g., three months or less) payment deferrals over the loan term.

The following disclosures provide information on loan modifications granted to borrowers experiencing financial difficulty in the form of principal forgiveness, interest rate reductions, other-than-insignificant (e.g., greater than three months) payment delays, term extensions or a combination of these modifications, as well as the financial effects of these modifications, and loan performance in the twelve months following the modification. Loans that both modify and are paid off or charged-off during the period, resulting in an amortized cost balance of zero at the end of the period, are not included in the disclosures below. Additionally, where amortized cost balances are presented below, accrued interest receivable is excluded. See Note 7 (Intangible Assets and Other Assets) for additional information on accrued interest receivable. Borrowers experiencing financial difficulty with modified terms mandated by a bankruptcy court are considered contractually modified loans and are included in these disclosures. These disclosures do not include loans discharged by a bankruptcy court as the only concession, which were insignificant for the second quarter and first half of 2023.

Table 5.15 presents the amortized cost of modified commercial loans by class of financing receivable and by modification type.

Table 5.15:Commercial Loan Modifications


	Modification type (1)							Modifications as a % of loan class
($ in millions)	Interest rate reduction		Payment delay	Term extension	Term extension & payment delay	All other modifications and combinations	Total
Quarter ended June 30, 2023
Commercial and industrial	$	5	21	199	4	—	229	0.06	%
Commercial real estate	—		—	148	—	1	149	0.10
Total commercial	$	5	21	347	4	1	378	0.07




Six months ended June 30, 2023
Commercial and industrial	$	9	23	226	5	1	264	0.07	%
Commercial real estate	7		1	190	—	2	200	0.13
Total commercial	$	16	24	416	5	3	464	0.09

(1)There were no principal forgiveness modifications for the quarter and six months ended June 30, 2023.

Table 5.15a presents the financial effects of modifications made to commercial loans presented by class of financing receivable.

Table 5.15a:Financial Effects of Commercial Loan Modifications



	Weighted average interest rate reduction		Weighted average payments deferred (months)	Weighted average term extension (months)
Quarter ended June 30, 2023
Commercial and industrial	13.86	%	10	6
Commercial real estate	0.71		34	7

Six months ended June 30, 2023
Commercial and industrial	12.62	%	9	7
Commercial real estate	3.47		15	10


~~(2)~~			~~Includes mortgages held for sale 90 days or more past due and still accruing.~~Wells Fargo & Company			87

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

Commercial loans that received a modification during the second quarter and first half of 2023, and subsequently defaulted were insignificant. Defaults that occur on commercial modifications are reported based on a payment default definition of 90 days past due.

Table 5.15b provides past due information for modified commercial loans. For loan modifications that include a payment

deferral, payment performance is not included in the table below until the loan exits the deferral period and payments resume. The table also includes the amount of gross charge-offs that occurred during the second quarter and first half of 2023, inclusive of charge-offs to loans with no amortized cost remaining at period end.

Table 5.15b:Payment Performance of Commercial Loan Modifications


	By delinquency status					Gross charge-offs
(in millions)	Current-29 days past due (DPD)		30-89 DPD	90+ DPD	Total	Quarter ended	Six months ended
June 30, 2023
Commercial and industrial	$	235	3	1	239	5	15
Commercial real estate	124		76	—	200	—	—
Total commercial	$	359	79	1	439	5	15

Table 5.16 presents the amortized cost of modified consumer loans by class of financing receivable and by modification type.

Table 5.16:Consumer Loan Modifications


	Modification type
($ in millions)	Interest rate reduction		Payment delay (1)	Term extension	Interest rate reduction & term extension	Term extension & payment delay	Interest rate reduction, term extension & payment delay	All other modifications and combinations (2)	Total	Modifications as a % of loan class
Quarter ended June 30, 2023
Residential mortgage	$	3	213	17	10	25	22	1	291	0.11	%
Credit card	126		—	—	—	—	—	—	126	0.26
Auto	1		9	—	—	—	—	—	10	0.02
Other consumer	3		1	—	8	—	—	—	12	0.04
Total consumer	$	133	223	17	18	25	22	1	439	0.11






Six months ended June 30, 2023
Residential mortgage	$	7	461	41	23	54	53	3	642	0.24	%
Credit card	230		—	—	—	—	—	—	230	0.48
Auto	2		13	—	—	—	—	—	15	0.03
Other consumer	6		2	—	13	—	—	—	21	0.08
Total consumer	$	245	476	41	36	54	53	3	908	0.23

(1)Includes residential mortgage loan modifications that defer a set amount of principal to the end of the loan term.

(2)Includes principal forgiveness and other combinations of modifications.

Table 5.16a presents the financial effects of modifications made to consumer loans by class of financing receivable.

Table 5.16a:Financial Effects of Consumer Loan Modifications (1)


	Weighted average interest rate reduction		Weighted average payments deferred (months)	Weighted average term extension (years)
Quarter ended June 30, 2023
Residential mortgage (2)	1.55	%	4	9.4
Credit card	22.17		N/A	N/A
Auto	3.86		6	N/A
Other consumer	12.15		3	10.9

Six months ended June 30, 2023
Residential mortgage (2)	1.57	%	4	9.8
Credit card	21.92		N/A	N/A
Auto	3.94		6	N/A
Other consumer	11.69		4	2.7

(1)Principal forgiven was insignificant for the quarter and six months ended June 30, 2023.

(2)Excludes the financial effects of residential mortgage loans with a set amount of principal deferred to the end of the loan term. The weighted average period of principal deferred was 26.8 years for the quarter ended June 30, 2023, and 27.0 years for the six months ended June 30, 2023.


~~(3)~~88			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.Wells Fargo & Company

~~IMPAIRED LOANS~~ Consumer loans that received a modification during the second quarter and first half of 2023, and subsequently defaulted during the respective period totaled $141 million and $158 million, respectively, and predominantly related to payment delay modifications in the residential mortgage loan portfolio. Defaults that occur on consumer modifications are reported based on a payment default definition of 60 days past due.

Table ~~5.15 summarizes key~~5.16b provides past due information for ~~impaired~~modified consumer loans. ~~Our impaired~~For loan modifications that include a payment delay, payment performance is not included in the table below until the loan exits the deferral period and payments resume. The table also includes the amount of gross charge-offs that occurred during the second quarter and first half of 2023, inclusive of charge-offs to loans ~~predominantly include~~with no amortized cost remaining at period end.

Table 5.16b: Payment Performance of Consumer Loan Modifications


	By delinquency status					Gross charge-offs
(in millions)	Current-29 days past due (DPD)		30-89 DPD	90+ DPD	Total	Quarter ended	Six months ended
June 30, 2023
Residential mortgage (1)	$	283	45	139	467	2	3
Credit card (2)	167		36	27	230	16	20
Auto	14		1	—	15	—	—
Other consumer	18		2	1	21	1	1
Total	$	482	84	167	733	19	24

(1)Includes loans that were past due prior to entering a payment delay modification. Delinquency advancement is paused during the deferral period and resumes upon exit.

(2)Credit card loans that are past due at the time of the modification do not become current until they have three months of consecutive payment performance.

Commitments to lend additional funds on ~~nonaccrual status~~commercial loans that were modified during the six months ended June 30, 2023, were $82 million, substantially all of which were in the commercial ~~portfolio segment~~ and industrial portfolio. Commitments to lend additional funds on consumer loans that were modified ~~in a TDR, whether on accrual or nonaccrual status. These impaired loans generally have estimated losses~~during the six months ended June 30, 2023, were insignificant.

TROUBLED DEBT RESTRUCTURINGS (TDRs) In January 2023, we adopted ASU 2022-02, which ~~are included in~~eliminated the ~~allowance~~accounting and reporting guidance 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.

TDRs. 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~~. The following disclosures present TDR information 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~~the periods ended December 31, ~~2016, respectively.~~

~~Table 5.16 provides the average recorded investment in impaired loans~~2022, 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)~~ June 30, 2022. 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 billion and $20.8~~$9.2 billion at ~~September 30, 2017 and~~ December 31, ~~2016, respectively.~~2022. We do not consider loan resolutions such as foreclosure or short sale to be a TDR. In addition, COVID-19-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 2022 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~~classified and ~~account~~accounted for as ~~TDRs.~~TDRs through December 31, 2022, prior to the adoption of ASU 2022-02. 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 $434 million at December 31, 2022.

Table 5.17 summarizes our TDR modifications ~~for the periods presented~~ by primary modification type and includes the financial effects of these modifications. For those loans that modify more than once, the table reflects each modification that occurred during the period. Loans that both modify and ~~pay~~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			89

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

Table 5.17:TDR Modifications


	Primary modification type (1)					Financial effects of modifications
($ in millions)	Principal forgiveness		Interest rate reduction	Other concessions (2)	Total	Charge- offs (3)	Weighted average interest rate reduction		Recorded investment related to interest rate reduction (4)
















Quarter ended June 30, 2022
Commercial and industrial	$	—	8	75	83	—	7.09	%	$	8


Commercial real estate	—		5	38	43	—	0.62		5
Lease financing	—		—	1	1	—	—		—
Total commercial	—		13	114	127	—	4.38		13


Residential mortgage	—		127	350	477	2	1.54		127
Credit card	—		63	—	63	—	19.23		63
Auto	—		1	8	9	2	4.02		1
Other consumer	—		4	—	4	—	11.01		4
Trial modifications (5)	—		—	41	41	—	—		—
Total consumer	—		195	399	594	4	7.47		195
Total	$	—	208	513	721	4	7.28		$	208
Six months ended June 30, 2022
Commercial and industrial	$	—	14	148	162	—	8.37	%	$	14


Commercial real estate	—		10	65	75	—	0.99		10
Lease financing	—		—	1	1	—	—		—
Total commercial	—		24	214	238	—	5.27		24


Residential mortgage	1		195	686	882	3	1.58		195
Credit card	—		133	—	133	—	19.17		133
Auto	1		4	48	53	11	4.64		4
Other consumer	—		7	1	8	—	11.31		7
Trial modifications (5)	—		—	252	252	—	—		—
Total consumer	2		339	987	1,328	14	8.73		339
Total	$	2	363	1,201	1,566	14	8.50	%	$	363

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)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 $132 million for the quarter ended June 30, 2022, and $250 million for the first half of 2022.

~~(1)~~

Amounts represent the recorded investment in loans after recognizing the effects of the TDR, if any. TDRs may have multiple types of concessions, but are presented only once in the first modification type based on the order presented in the table above. The reported amounts include loans remodified of ~~$394 million~~ ~~and~~ ~~$484 million~~ ~~for the quarters ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016, and~~ ~~$1.7 billion~~ ~~and~~ ~~$1.1 billion, for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016, respectively.~~


~~(2)~~	Principal modifications include principal forgiveness at the time of the modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with a zero percent contractual interest rate.


~~(3)~~	Other concessions include loans discharged in bankruptcy, loan renewals, term extensions and other interest and noninterest adjustments, but exclude modifications that also forgive principal and/or reduce the contractual interest rate.

~~(4)~~

Charge-offs include write-downs of the investment in the loan in the period it is contractually modified. The amount of charge-off will differ from the modification terms if the loan has been charged down prior to the modification based on our policies. In addition, there may be cases where we have a charge-off/down with no legal principal modification. Modifications resulted in legally forgiving principal (actual, contingent or deferred) of ~~$4 million~~ ~~and~~ ~~$16 million~~ ~~for the quarters ended~~ ~~September 30~~, ~~2017~~ ~~and~~ ~~2016, and~~ ~~$23 million~~ ~~and~~ ~~$54 million~~ ~~for the~~ ~~first nine months of 2017~~ ~~and~~ ~~2016, respectively.~~


~~(5)~~	Reflects the effect of reduced interest rates on loans with an interest rate concession as one of their concession types, which includes loans reported as a principal primary modification type that also have an interest rate concession.

~~(6)~~

Trial modifications are granted a delay in payments due under the original terms during the trial payment period. However, these loans continue to advance through delinquency status and accrue interest according to their original terms. Any subsequent permanent modification generally includes interest rate related concessions; however, the exact concession type and resulting financial effect are usually not known until the loan is permanently modified. Trial modifications for the period are presented net of previously reported trial modifications that became permanent in the current period.

(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 loans that are new TDRs that may have COVID-19-related payment deferrals and exclude COVID-19-related payment deferrals on loans 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.

Table 5.18 summarizes permanent modification TDRs that ~~have~~ defaulted induring the ~~current~~ period presented within 12 months of their permanent modification date. We are reporting these defaulted TDRs based on a payment default definition of 90 days past due for the commercial portfolio segment and 60 days past due for the consumer portfolio segment.

Table 5.18:Defaulted TDRs


	Recorded investment of defaults
		June 30, 2022
(in millions)		Quarter ended		Six months ended
Commercial and industrial		$	3	52


Commercial real estate		8		10
Lease financing		—		—
Total commercial		11		62


Residential mortgage		51		58
Credit card		8		13
Auto		7		13
Other consumer		1		1
Total consumer		67		85
Total		$	78	147

~~Table 5.18:Defaulted TDRs~~


90			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 6: Mortgage Banking Activities

Mortgage banking activities consist of residential and commercial mortgage originations, sales and servicing.

We apply the amortization method to commercial MSRs and apply the fair value method to residential MSRs. The amortized

~~Purchased Credit-Impaired Loans~~

~~Substantially all~~

cost of ~~our PCI loans were acquired from Wachovia on December 31, 2008, at which time we acquired~~ commercial MSRs was $1.1 billion and ~~consumer loans~~$1.2 billion, with ~~a carrying~~an estimated fair value of ~~$18.7~~$1.9 billion and ~~$40.1~~$2.1 billion, at June 30, 2023 and 2022, respectively. ~~The unpaid principal balance on December 31, 2008 was $98.2 billion for~~Table 6.1 presents the total of commercial and consumer PCI loans. Table 5.19 presents PCI loans net of any remaining purchase accounting adjustments. Real estate 1-4 family first mortgage PCI loans are predominantly Pick-a-Pay loans.

~~Table 5.19:PCI Loans~~

(in millions) Sep 30,
2017
Dec 31,
2016
Commercial:
Commercial and industrial $ 116
237
Real estate mortgage 108
383
Real estate construction 10
57
Total commercial 234
677
Consumer:
Real estate 1-4 family first mortgage 13,301
16,018
Real estate 1-4 family junior lien mortgage 29
36
Total consumer 13,330
16,054
Total PCI loans (carrying value) $ 13,564
16,731
Total PCI loans (unpaid principal balance) $ 20,023
24,136

changes in MSRs measured using the fair value method.

Table 6.1:Analysis of Changes in Fair Value MSRs

~~Note 5: Loans~~


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Fair value, beginning of period	$	8,819	8,511	$	9,310	6,920
Originations/purchases	47		322	95		664
Sales and other (1)	(606)		(251)	(599)		(250)
Net additions	(559)		71	(504)		414
Changes in fair value:
Due to valuation inputs or assumptions:
Market interest rates (2)	318		949	137		2,648
Servicing and foreclosure costs (3)	1		(9)	2		(12)
Discount rates	—		31	(25)		86
Prepayment estimates and other (4)	(3)		(103)	(23)		(249)
Net changes in valuation inputs or assumptions	316		868	91		2,473
Changes due to collection/realization of expected cash flows (5)	(325)		(287)	(646)		(644)
Total changes in fair value	(9)		581	(555)		1,829
Fair value, end of period	$	8,251	9,163	$	8,251	9,163

(1)In second quarter 2022, MSRs decreased $244 million due to the sale of interest-only strips related to excess servicing cash flows from agency residential mortgage-backed securitizations.

(2)Includes prepayment rate changes as well as other valuation changes due to changes in market interest rates. To reduce exposure to changes in interest rates, MSRs are economically hedged with derivative instruments.

(3)Includes costs to service and ~~Allowance~~unreimbursed foreclosure costs.

(4)Represents other changes in valuation model inputs or assumptions, including prepayment rate estimation changes that are independent of mortgage interest rate changes.

(5)Represents the reduction in the MSR fair value for ~~Credit Losses (continued~~)

~~ACCRETABLE YIELDThe excess of~~the 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~~period, net of ~~2017 reflect an expectation, as a result~~income accreted due to the passage of our quarterly evaluation of PCI cash flows, that prepayment of modified Pick-a-Pay loans will increase over their estimated weighted-average life and that expected loss has decreased as a result of reduced loan to value ratios and sustained higher housing prices in addition to improved cash flow timing. Changes during the first nine months of 2017 also reflect a $309 million gain on the sale of $569 million Pick-a-Pay PCI loans in second quarter 2017.

~~Table 5.20:Change in Accretable Yield~~

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


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


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


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

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

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

(in millions)
Commercial
and
industrial

Real
estate
mortgage

Real
estate
construction

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

time.

Table ~~5.22~~6.2 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~~

~~Table 6.1 presents the components of other assets.~~

~~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 6.2 presents income (expense) related to nonmarketable equity investments.~~

~~Table 6.2:Nonmarketable Equity Investments~~

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

~~Low Income Housing Tax Credit Investments~~ We invest in affordable housing projects that qualify for the low income housing tax credit (LIHTC), which is designed to promote private development of low income housing. These investments generate a return mostly through realization of federal tax credits.

Total LIHTC investments were $9.9 billion and $9.7 billion at September 30, 2017 and December 31, 2016, respectively. In the third quarter and first nine months of 2017, we recognized pre-tax losses of $227 million and $684 million, respectively, related to our LIHTC investments, compared with $199 million and $600 million, respectively, for the same periods a year ago. We also recognized total tax benefits of $360 million and $1.1 billion in the third quarter and first nine months of 2017, which included tax credits recorded in income taxes of $275 million and$796 million for the same periods, respectively. In the third quarter and first nine months of 2016, total tax benefits were $308 million and $919 million, respectively, which included tax credits of $233 million and $693 million for the same periods, respectively. We are periodically required to provide additional financial support during the investment period. Our liability for these unfunded commitments was $3.1 billion at September 30, 2017 and $3.6 billion at December 31, 2016. Predominantly all of this liability is expected to be paid over the next three years. This liability is included in long-term debt.

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

~~Note 7: Securitizations and Variable Interest Entities~~

~~Involvement with SPEs~~

In the normal course of business, we enter into various types of on- and off-balance sheet transactions with SPEs, which are corporations, trusts, limited liability companies or partnerships that are established for a limited purpose. Generally, SPEs are formed in connection with securitization transactions and are considered variable interest entities (VIEs). For further description of our involvement with SPEs, see Note 8 (Securitizations and Variable Interest Entities) to Financial Statements in our 2016 Form 10-K.

We have segregated our involvement with VIEs between those VIEs which we consolidate, those which we do not consolidate and those for which we account for the transfers of financial assets as secured borrowings. Secured borrowings are transactions involving transfers of our financial assets to third parties that are accounted for as financings with the assets pledged as collateral. Accordingly, the transferred assets remain recognized on our balance sheet. Subsequent tables within this Note further segregate these transactions by structure type.

~~Table 7.1 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~~ no ~~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. We have various forms of involvement with VIEs, including servicing, holding senior or subordinated interests, entering into liquidity arrangements, credit default swaps and other derivative contracts. Involvements with these unconsolidated VIEs are recorded on our balance sheet in trading assets, investment 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 to be significant when it relates to third-party sponsored VIEs for which we were not the transferor (unless we are servicer and have other significant forms of involvement) or if we were the sponsor only or sponsor

~~and servicer but do not have any other forms of significant involvement.~~

Significant continuing involvement includes 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 loans and other types of financial assets in securitization and whole loan sale transactions. We typically retain the servicing rights from these sales and may continue to hold other beneficial interests in the transferred financial assets. We may also provide liquidity to investors in the beneficial interests and credit enhancements in the form of standby letters of credit. 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 million and $436 million, respectively, in the same periods of 2016. These net gains largely relate to commercial mortgage securitizations and residential mortgage securitizations where the loans were not already carried at fair value.

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

~~securitizations). During the third quarter and first nine months of 2017, we transferred $57.8 billion~~ ~~and~~ $163.0 billion, respectively, in fair value of residential mortgages to unconsolidated VIEs and third-party investors and recorded the transfers as sales, compared with $63.3 billion and $165.6 billion, respectively, in the same periods of 2016. Substantially all of these transfers did not result in a gain or loss because the loans were already carried at fair value. In connection with all of these transfers, in the first nine months of 2017, we recorded a $1.5 billion servicing asset, measured at fair value using a Level 3 measurement technique, securities of $2.2 billion, classified as Level 2, and a $20 million liability for repurchase losses which reflects management’s estimate of probable losses related to

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

various representations and warranties for the loans transferred, initially measured at fair value. In the first nine months of 2016, we recorded a $1.3 billion servicing asset, securities of $3.0 billion, and a $26 million liability.

~~Table 7.4 presents the~~ key weighted-average assumptions we used ~~to measure residential mortgage servicing rights at the date of securitization.~~

~~Table 7.4:Residential Mortgage Servicing Rights~~

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 the mix of modified government-guaranteed loans sold to GNMA.~~

~~During the third quarter and first nine months of 2017, we transferred $4.6 billion~~ ~~and~~ $11.2 billion, respectively, in carrying value of commercial mortgages to unconsolidated VIEs and third-party investors and recorded the transfers as sales, compared with $4.0 billion and $13.9 billion, respectively, in the ~~same periods~~valuation of ~~2016. These transfers resulted in gains of $89 million~~residential MSRs and$265 million in the third quarter and first nine months of 2017, respectively, because the loans were carried at lower of cost or market value (LOCOM), compared with gains of $134 million and $327 million, respectively, in the same periods of 2016. In connection with these transfers, in the first nine months of 2017, we recorded a servicing asset of $123 million, initially 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~~MSRs to immediate adverse changes in those assumptions. ~~“Other interests held” relate to~~Amounts for residential ~~and commercial mortgage loan securitizations. Residential mortgage-backed securities retained in securitizations issued through GSEs, such~~MSRs include

purchased servicing rights as ~~FNMA, FHLMC and GNMA, are excluded~~well as servicing rights resulting from the ~~table because these securities have a remote risk~~transfer 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. Theloans. See Note 12 (Fair Values of Assets and Liabilities) for additional information ~~presented excludes trading positions held in inventory.~~on key assumptions for residential MSRs.

Table ~~7.5:Retained Interests from Unconsolidated VIEs~~6.2: Assumptions and Sensitivity of Residential MSRs


($ in millions, except cost to service amounts)	Jun 30, 2023			Dec 31, 2022
Fair value of interests held	$	8,251		9,310
Expected weighted-average life (in years)	6.2			6.3

Key assumptions:
Prepayment rate assumption (1)	9.2		%	9.4
Impact on fair value from 10% adverse change	$	249		288
Impact on fair value from 25% adverse change	595			688

Discount rate assumption	9.2		%	9.1
Impact on fair value from 100 basis point increase	$	316		368
Impact on fair value from 200 basis point increase	608			707

Cost to service assumption ($ per loan)	102			102
Impact on fair value from 10% adverse change	159			171
Impact on fair value from 25% adverse change	397			427

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~~(1)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~~expected defaults. Prepayment speeds 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~~influenced by mortgage 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 sensitivityas well as our estimation 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 valuedrivers 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. The carrying amount of the loan at September 30, 2017, and December 31, 2016, was $1.3 billion and $3.2 billion, respectively. The estimated fair value of the loan is considered a Level 3 measurement that is determined using

borrower behavior.

discounted cash flows that are based on changes in the discount rate due to changes in the risk premium component (credit spreads). The primary economic assumption impacting the fair value of our loan is the discount rate. Changes in the credit loss assumption are not expected to affect the estimated fair value of the loan due to the government guarantee of the underlying collateral. The sensitivity of the current fair value to an immediate adverse increase of 200 basis points in the risk premium component of the discount rate assumption is a decrease in fair value of $23 million and $154 million at September 30, 2017, and December 31, 2016, respectively.

The sensitivities in the preceding ~~paragraphs and~~ table are hypothetical and caution should be exercised when relying on this data. Changes in value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in value may not be linear. Also, the effect of a variation in a particular assumption on the value of the other interests held is calculated independently without changing any other assumptions. In reality, changes in one factor may

result in changes in others, ~~(for example, changes in prepayment speed estimates could result in changes in the credit losses),~~ which might magnify or counteract the sensitivities.

~~Off-Balance Sheet Loans~~


			Wells Fargo & Company			91

Note 6: Mortgage Banking Activities (continued)

We present the components of our managed servicing portfolio in Table 6.3 at unpaid principal balance for loans serviced and subserviced for others and at carrying value for owned loans serviced.

Table 6.3:Managed Servicing Portfolio


(in billions)	Jun 30, 2023			Dec 31, 2022
Residential mortgage servicing:
Serviced and subserviced for others	$	637		681
Owned loans serviced	267			273
Total residential servicing	904			954
Commercial mortgage servicing:
Serviced and subserviced for others	562			577
Owned loans serviced	131			133
Total commercial servicing	693			710
Total managed servicing portfolio	$	1,597		1,664
Total serviced for others, excluding subserviced for others	$	1,162		1,246
MSRs as a percentage of loans serviced for others	0.80		%	0.84
Weighted average note rate (mortgage loans serviced for others)	4.44			4.30

At June 30, 2023, and December 31, 2022, we had servicer advances, net of an allowance for uncollectible amounts, of $2.1 billion and $2.5 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, government-sponsored entities (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 written-off when deemed uncollectible.

Table ~~7.6~~6.4 presents the components of mortgage banking noninterest income.

Table 6.4:Mortgage Banking Noninterest Income


		Quarter ended June 30,			Six months ended June 30,
(in millions)		2023		2022	2023		2022

Contractually specified servicing fees, late charges and ancillary fees		$	547	645	$	1,114	1,280
Unreimbursed servicing costs (1)		(45)		(57)	(78)		(81)

Amortization for commercial MSRs		(62)		(64)	(123)		(123)
Changes due to collection/realization of expected cash flows (2)	(A)	(325)		(287)	(646)		(644)
Net servicing fees		115		237	267		432
Changes in fair value of MSRs due to valuation inputs or assumptions (3)	(B)	316		868	91		2,473
Net derivative gains (losses) from economic hedges (4)		(331)		(980)	(146)		(2,626)
Market-related valuation changes to MSRs, net of hedge results		(15)		(112)	(55)		(153)

Total net servicing income		100		125	212		279
Net gains on mortgage loan originations/sales (5)		102		162	222		701
Total mortgage banking noninterest income		$	202	287	$	434	980
Total changes in fair value of MSRs carried at fair value	(A)+(B)	$	(9)	581	$	(555)	1,829

(1)Includes costs associated with foreclosures, unreimbursed interest advances to investors, other interest costs and transaction costs associated with sales of MSRs.

(2)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.

(3)Refer to the analysis of changes in fair value MSRs presented in Table 6.1 in this Note for more detail.

(4)See Note 11 (Derivatives) for additional information on economic hedges.

(5)Includes net gains (losses) of $89 million and $50 million in the second quarter and first half of 2023, respectively, and $710 million and $2.0 billion in the second quarter and first half of 2022, respectively, related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments.


92			Wells Fargo & Company


Note 7: Intangible Assets and Other Assets

Table 7.1 presents the gross carrying value of intangible assets and accumulated amortization.

Table 7.1:Intangible Assets


	June 30, 2023				December 31, 2022
(in millions)	Gross carrying value		Accumulated amortization	Net carrying value	Gross carrying value	Accumulated amortization	Net carrying value
Amortized intangible assets:
MSRs	$	4,989	(3,895)	1,094	4,942	(3,772)	1,170
Customer relationship and other intangibles	773		(628)	145	754	(602)	152
Total amortized intangible assets	$	5,762	(4,523)	1,239	5,696	(4,374)	1,322
Unamortized intangible assets:
MSRs (carried at fair value)	$	8,251			9,310
Goodwill	25,175				25,173

Table 7.2 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 June 30, 2023. Future amortization expense may vary from these projections.

Table 7.2:Amortization Expense for Intangible Assets


(in millions)	Amortized MSRs		Customer relationship and other intangibles	Total
Six months ended June 30, 2023 (actual)	$	123	26	149


Estimate for the remainder of 2023	$	117	26	143


Estimate for year ended December 31,
2024	213		43	256
2025	184		35	219
2026	148		29	177
2027	117		2	119
2028	97		2	99

Table 7.3 shows the allocation of goodwill to our reportable operating segments.

Table 7.3:Goodwill


(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate	Consolidated Company




December 31, 2022	$	16,418	2,931	5,375	344	105	25,173

Foreign currency translation	—		2	—	—	—	2


June 30, 2023	$	16,418	2,933	5,375	344	105	25,175

Table 7.4 presents the components of other assets.

Table 7.4:Other Assets


(in millions)	Jun 30, 2023		Dec 31, 2022
Corporate/bank-owned life insurance (1)	$	20,889	20,807
Accounts receivable (2)	30,599		23,646
Interest receivable:
AFS and HTM debt securities	1,667		1,572
Loans	3,638		3,470
Trading and other	829		767
Operating lease assets (lessor)	5,510		5,790
Operating lease ROU assets (lessee)	3,659		3,837
Other (3)(4)	16,124		15,949
Total other assets	$	82,915	75,838

(1)Corporate/bank-owned life insurance is recorded at cash surrender value.

(2)Primarily includes derivatives clearinghouse receivables, trade date receivables, and servicer advances, which are recorded at amortized cost.

(3)Primarily includes income tax receivables, prepaid expenses, foreclosed assets, and private equity and venture capital investments in consolidated portfolio companies.

(4)In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).


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Note 8: Leasing Activity

The information below provides a summary of our leasing activities as a lessor and lessee. See Note 8 (Leasing Activity) in our 2022 Form 10-K for additional information about our leasing activities.

As a Lessor

Noninterest income on leases, included in Table 8.1, 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 $180 million and $185 million for the quarters ended June 30, 2023 and 2022, respectively, and $357 million and $373 million for the first half of 2023 and 2022, respectively.

Table 8.1:Leasing Revenue


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Interest income on lease financing	$	176	152	$	345	304
Other lease revenue:
Variable revenue on lease financing	24		27	49		57
Fixed revenue on operating leases	245		242	494		487
Variable revenue on operating leases	13		14	24		29
Other lease-related revenue (1)	25		50	87		87
Noninterest income on leases	307		333	654		660
Total leasing revenue	$	483	485	$	999	964

(1) Predominantly includes net gains (losses) on disposition of assets leased under operating leases or lease financings.

As a Lessee

Substantially all of our leases are operating leases. Table 8.2 presents balances for our operating leases.

Table 8.2:Operating Lease Right-of-Use (ROU) Assets and Lease Liabilities


(in millions)	Jun 30, 2023		Dec 31, 2022
ROU assets	$	3,659	3,837
Lease liabilities	4,262		4,465

Table 8.3 provides the composition of our lease costs, which are predominantly included in net occupancy expense.

Table 8.3:Lease Costs


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Fixed lease expense – operating leases	$	248	253	$	499	506
Variable lease expense	70		70	141		143
Other (1)	(10)		(8)	(26)		(18)
Total lease costs	$	308	315	$	614	631

(1)Predominantly includes gains recognized from sale leaseback transactions and sublease rental income.


94			Wells Fargo & Company


Note 9: Preferred Stock

We are authorized to issue 20 million shares of preferred stock, without par value. Outstanding preferred shares rank senior to common shares both as to the payment of dividends and liquidation preferences but have no general voting rights. All outstanding preferred stock with a liquidation preference value, except for Series L Preferred Stock, may be redeemed for the liquidation preference value, plus any accrued but unpaid dividends, on any dividend payment date on or after the earliest redemption date for that series. Additionally, these same series of preferred stock may be redeemed following a “regulatory capital treatment event”, as described in the terms of each series.

Capital actions, including redemptions of our preferred stock, may be subject to regulatory approval or conditions.

In addition, we are authorized to issue 4 million shares of preference stock, without par value. We have not issued any preference shares under this authorization. If issued, preference shares would be limited to one vote per share.

In July 2023, we issued $1.725 billion of our Preferred Stock, Series EE.

Table 9.1 summarizes information about our preferred stock.

Table 9.1:Preferred Stock


		June 30, 2023					December 31, 2022
(in millions, except shares)	Earliest redemption date	Shares authorized and designated	Shares issued and outstanding	Liquidation preference value		Carrying value	Shares authorized and designated	Shares issued and outstanding	Liquidation preference value		Carrying value
DEP Shares
Dividend Equalization Preferred Shares (DEP)	Currently redeemable	97,000	96,546	$	—	—	97,000	96,546	$	—	—
Preferred Stock:
Series L (1)
7.50% Non-Cumulative Perpetual Convertible Class A	—	4,025,000	3,967,981	3,968		3,200	4,025,000	3,967,986	3,968		3,200
Series Q
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A	9/15/2023	69,000	69,000	1,725		1,725	69,000	69,000	1,725		1,725
Series R
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A	3/15/2024	34,500	33,600	840		840	34,500	33,600	840		840
Series S
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A	6/15/2024	80,000	80,000	2,000		2,000	80,000	80,000	2,000		2,000
Series U
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A	6/15/2025	80,000	80,000	2,000		2,000	80,000	80,000	2,000		2,000
Series Y
5.625% Non-Cumulative Perpetual Class A	Currently redeemable	27,600	27,600	690		690	27,600	27,600	690		690
Series Z
4.75% Non-Cumulative Perpetual Class A	3/15/2025	80,500	80,500	2,013		2,013	80,500	80,500	2,013		2,013
Series AA
4.70% Non-Cumulative Perpetual Class A	12/15/2025	46,800	46,800	1,170		1,170	46,800	46,800	1,170		1,170
Series BB
3.90% Fixed-Reset Non-Cumulative Perpetual Class A	3/15/2026	140,400	140,400	3,510		3,510	140,400	140,400	3,510		3,510
Series CC
4.375% Non-Cumulative Perpetual Class A	3/15/2026	46,000	42,000	1,050		1,050	46,000	42,000	1,050		1,050
Series DD
4.25% Non-Cumulative Perpetual Class A	9/15/2026	50,000	50,000	1,250		1,250	50,000	50,000	1,250		1,250
Total		4,776,800	4,714,427	$	20,216	19,448	4,776,800	4,714,432	$	20,216	19,448

(1)At the option of the holder, each share of Series L Preferred Stock may be converted at any time into 6.3814 shares of common stock, plus cash in lieu of fractional shares, subject to anti-dilution adjustments. If converted within 30 days of certain liquidation or change of control events, the holder may receive up to 16.5916 additional shares, or, at our option, receive an equivalent amount of cash in lieu of common stock. We may convert some or all of the Series L Preferred Stock into shares of common stock if the closing price of our common stock exceeds 130 percent of the conversion price of the Series L Preferred Stock for 20 trading days during any period of 30 consecutive trading days. We declared dividends of $74 million on Series L Preferred Stock for both quarters ended June 30, 2023, and June 30, 2022.


			Wells Fargo & Company			95


Note 10: 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 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 to or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

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. 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.

AUTOMOBILE LENDING MATTERS On April 20, 2018, the Company entered into consent orders with the Office of the Comptroller of the Currency (OCC) and 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. Shareholders 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 executive officer and limited the action to two alleged misstatements. On May 1, 2023, the court granted preliminary approval of an agreement pursuant to which the Company agreed to pay $300 million to resolve this action. Additionally, a number of other lawsuits were filed by non-governmental parties seeking damages or other remedies related to these CPI policies and related to the unused portion of guaranteed automobile protection (GAP) waiver or insurance agreements. As previously disclosed, the Company entered into various settlements to resolve these lawsuits, while others were dismissed. In addition, federal and state 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 collection of consumer auto loans, including related insurance products. On December 20, 2022, the Company entered into a consent order with the CFPB to resolve the CFPB’s investigations related to automobile lending, consumer deposit accounts, and mortgage lending. The consent order requires, among other things, remediation to customers and the payment of a $1.7 billion civil penalty to the CFPB. As previously disclosed, the Company entered into an agreement to resolve investigations by state attorneys general.

COMPANY 401(K) PLAN MATTERS Federal government agencies, including the United States Department of Labor (Department of Labor), have undertaken reviews of certain transactions associated with the Employee Stock Ownership Plan feature of the Company’s 401(k) plan, including the manner in which the 401(k) plan purchased certain securities used in connection with the Company’s contributions to the 401(k) plan. As previously disclosed, the Company entered into an agreement to resolve the Department of Labor’s review. On September 26, 2022, participants in the Company’s 401(k) plan filed a putative class action in the United States District Court for the District of Minnesota alleging that the Company violated the Employee Retirement Income Security Act of 1974 in connection with certain of these transactions.

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 misleading statements regarding the Company’s efforts to comply with the February 2018 consent order with the Federal Reserve Board and the April 2018 consent orders with the CFPB and OCC. On May 16, 2023, the court granted preliminary approval of an agreement pursuant to which the Company agreed to pay $1.0 billion to resolve this action. Allegations related to the Company’s efforts to comply with these three consent orders are also among the subjects of shareholder derivative lawsuits filed in California state and federal court.

HIRING PRACTICES MATTERS Government agencies, including the United States Department of Justice and the United States Securities and Exchange Commission, have undertaken formal or informal inquiries or investigations regarding the Company’s hiring practices related to diversity. A putative securities fraud class action has also been filed in the United States District Court for the Northern District of California alleging that the Company and certain of its executive officers made false or misleading statements about the Company’s hiring practices related to diversity. Allegations related to the Company’s hiring practices related to diversity are also among the subjects of shareholder derivative lawsuits filed in the United States District Court for the Northern District of California and in California state court.

INTERCHANGE LITIGATIONPlaintiffs representing a 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 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


96			Wells Fargo & Company

defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012, Visa, MasterCard, and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve the consolidated class action and reached a separate settlement in principle of the consolidated individual actions. The settlement payments to be made by all defendants in the consolidated class and individual actions totaled approximately $6.6 billion before reductions applicable to certain merchants opting out of the settlement. The class settlement also provided for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months. The district court granted final approval of the settlement, which was appealed to the United States Court of Appeals for the Second Circuit by settlement objector merchants. Other merchants opted out of the settlement and are pursuing several individual actions. On June 30, 2016, the Second Circuit vacated the settlement agreement and reversed and remanded the consolidated action to the United States District Court for the Eastern District of New York for further proceedings. On November 23, 2016, prior class counsel filed a petition to the United States Supreme Court, seeking review of the reversal of the settlement by the Second Circuit, and the Supreme Court denied the petition on March 27, 2017. On November 30, 2016, the district court appointed lead class counsel for a damages class and an equitable relief class. The parties have entered into a settlement agreement to resolve the 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 March 15, 2023, the Second Circuit affirmed the damages class settlement. Settlement objector merchants filed a petition for a rehearing by the Second Circuit en banc, which was denied. 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 have been settled while others remain pending.

RECORD-KEEPING INVESTIGATIONS The United States Securities and Exchange Commission and the United States Commodity Futures Trading Commission have undertaken investigations regarding the Company’s compliance with records retention requirements relating to business communications sent over unapproved electronic messaging channels. The Company is in resolution discussions with these agencies, although there can be no assurance as to the outcome of these discussions.

RMBS TRUSTEE LITIGATION In December 2014, Phoenix Light SF Limited (Phoenix Light) and certain related entities filed a complaint in the United States District Court for the Southern District of New York alleging claims against Wells Fargo Bank, N.A., in its capacity as trustee for a number of residential mortgage-backed securities (RMBS) trusts. Complaints raising similar allegations have been filed by Commerzbank AG in the Southern District of New York, IKB International and IKB Deutsche Industriebank in New York state court, and Park Royal I LLC and Park Royal II LLC in New York state court. In each case, the plaintiffs allege that Wells Fargo Bank, N.A., as trustee,

caused losses to investors, and plaintiffs assert causes of action based upon, among other things, the 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. In July 2022, the district court dismissed Phoenix Light’s claims and certain of the claims asserted by Commerzbank AG, and subsequently entered judgment in each case in favor of Wells Fargo Bank, N.A. In August 2022, Phoenix Light and Commerzbank AG each appealed the district court’s decision to the United States Court of Appeals for the Second Circuit. Phoenix Light dismissed its appeal in May 2023, terminating its case. The Company previously settled two class actions filed by institutional investors and an action filed by the National Credit Union Administration with similar allegations.

SEMINOLE TRIBE TRUSTEE LITIGATION The Seminole Tribe of Florida filed a complaint 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 three individual current and former beneficiaries as plaintiffs and to remove the Tribe as a party to the case.

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 losses in excess of the Company’s accrual for probable and estimable losses was approximately $1.5 billion as of June 30, 2023. 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. Based on information currently available, advice of counsel, available insurance coverage, and established reserves, Wells Fargo believes that the eventual outcome of 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.


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Note 11: 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 qualifying hedge accounting relationships (fair value or cash flow 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 additional information on our derivatives activities, see Note 14 (Derivatives) in our 2022 Form 10-K.

Table 11.1 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 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 derivative cash flows are determined.

Table 11.1:Notional or Contractual Amounts and Fair Values of Derivatives


	June 30, 2023					December 31, 2022
	Notional or contractual amount		Fair value			Notional or contractual amount	Fair value
			Derivative assets		Derivative liabilities		Derivative assets	Derivative liabilities
(in millions)
Derivatives designated as hedging instruments
Interest rate contracts	$	313,176	615		562	263,876	670	579
Commodity contracts	4,629		58		39	1,681	9	25
Foreign exchange contracts	4,875		71		485	15,544	161	1,015
Total derivatives designated as qualifying hedging instruments			744		1,086		840	1,619
Derivatives not designated as hedging instruments
Economic hedges:
Interest rate contracts	64,868		348		204	65,727	410	253
Equity contracts (1)	4,856		149		45	3,326	—	242
Foreign exchange contracts	33,940		177		410	38,139	490	968
Credit contracts	360		16		—	290	14	—
Subtotal			690		659		914	1,463
Customer accommodation trading and other derivatives:
Interest rate contracts	13,385,477		35,103		41,032	10,156,300	40,006	42,641
Commodity contracts	85,438		3,110		2,565	96,001	5,991	3,420
Equity contracts	402,439		12,632		13,288	390,427	9,573	8,012
Foreign exchange contracts	1,681,353		16,244		17,797	1,475,224	21,562	24,703
Credit contracts	53,003		63		25	45,359	52	36

Subtotal			67,152		74,707		77,184	78,812
Total derivatives not designated as hedging instruments			67,842		75,366		78,098	80,275
Total derivatives before netting			68,586		76,452		78,938	81,894
Netting			(50,596)		(55,021)		(56,164)	(61,827)
Total			$	17,990	21,431		22,774	20,067

(1) In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).

Balance Sheet Offsetting

We execute substantially all of our derivative transactions under master netting arrangements. Where legally enforceable, these master netting arrangements give the ability, in the event of default by the counterparty, to liquidate securities held as collateral and to offset receivables and payables with the same counterparty. We reflect all derivative balances and related cash collateral subject to enforceable master netting arrangements on a net basis on our consolidated balance sheet. We do not net non-cash collateral that we receive or pledge against derivative balances on our consolidated balance sheet.

For disclosure purposes, we present “Total Derivatives, net” which represents the aggregate of our net exposure to each counterparty after considering the balance sheet netting

adjustments and any non-cash collateral. We manage derivative exposure by monitoring the credit risk associated with each counterparty using counterparty-specific credit risk limits, using master netting arrangements and obtaining collateral.

Table 11.2 provides information on the fair values of derivative assets and liabilities subject to enforceable master netting arrangements, 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. 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 15 (Pledged Assets and Collateral).


98			Wells Fargo & Company

Table 11.2:Offsetting of Derivative Assets and Liabilities


	June 30, 2023			December 31, 2022
(in millions)	Derivative Assets		Derivative Liabilities	Derivative Assets	Derivative Liabilities
Interest rate contracts
Over-the-counter (OTC)	$	34,048	37,461	37,000	37,598
OTC cleared	389		497	649	845
Exchange traded	255		283	262	193
Total interest rate contracts	34,692		38,241	37,911	38,636
Commodity contracts
OTC	2,379		1,967	4,833	2,010
Exchange traded	588		501	876	1,134
Total commodity contracts	2,967		2,468	5,709	3,144
Equity contracts
OTC	6,130		8,739	4,269	4,475
Exchange traded	3,731		2,939	3,742	2,409
Total equity contracts	9,861		11,678	8,011	6,884
Foreign exchange contracts
OTC	16,316		17,756	21,537	26,127

Total foreign exchange contracts	16,316		17,756	21,537	26,127
Credit contracts
OTC	54		16	39	22

Total credit contracts	54		16	39	22
Total derivatives subject to enforceable master netting arrangements, gross	63,890		70,159	73,207	74,813
Less: Gross amounts offset
Counterparty netting (1)	(45,600)		(45,611)	(49,115)	(49,073)
Cash collateral netting	(4,996)		(9,410)	(7,049)	(12,754)
Total derivatives subject to enforceable master netting arrangements, net	13,294		15,138	17,043	12,986
Derivatives not subject to enforceable master netting arrangements (2)	4,696		6,293	5,731	7,081
Total derivatives recognized in consolidated balance sheet, net	17,990		21,431	22,774	20,067
Non-cash collateral	(2,369)		(3,502)	(3,517)	(582)
Total Derivatives, net	$	15,621	17,929	19,257	19,485

(1)Represents amounts with counterparties subject to enforceable master netting arrangements that have been offset in our consolidated balance sheet, including portfolio level counterparty valuation adjustments related to customer accommodation and other trading derivatives. Counterparty valuation adjustments related to derivative assets were $305 million and $372 million and debit valuation adjustments related to derivative liabilities were $316 million and $331 million as of June 30, 2023, and December 31, 2022, respectively, and were primarily related to interest rate contracts.

(2)In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).

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. We also enter into futures contracts, forward contracts, and swap contracts to hedge our exposure to the price risk of physical commodities included in Other Assets. In addition, we use interest rate swaps, cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge against changes in fair value of certain investments in available-for-sale (AFS) debt securities due to changes in interest rates, foreign currency rates, or both. For certain fair value hedges of interest rate risk, we use the portfolio layer method to hedge stated amounts of closed portfolios of AFS debt securities. For certain fair value hedges of foreign currency risk, changes in fair value 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

(OCI). See Note 20 (Other Comprehensive Income) for the amounts recognized in other comprehensive income.

For cash flow hedges, we use interest rate swaps to hedge the variability in interest payments received on certain interest-earning deposits with banks and certain floating-rate commercial loans, and interest paid on certain floating-rate debt due to changes in the contractually specified interest rate. 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 $947 million pre-tax of deferred net losses related to cash flow hedges in OCI at June 30, 2023, will be reclassified into net interest income during the next twelve months. For cash flow hedges as of June 30, 2023, we are hedging our interest rate and foreign currency exposure to the variability of future cash flows for all forecasted transactions for a maximum of 9 years. For additional information on our accounting hedges, see Note 1 (Summary of Significant Accounting Policies) in our 2022 Form 10-K.

Table 11.3 and Table 11.4 show the net gains (losses) related to derivatives in cash flow and fair value hedging relationships, respectively.


			Wells Fargo & Company			99

Note 11: Derivatives (continued)

Table 11.3:Gains (Losses) Recognized on Cash Flow Hedging Relationships


	Net interest income				Total recorded in net income	Total recorded in OCI
(in millions)	Loans		Other interest income	Long-term debt	Derivative gains (losses)	Derivative gains (losses)
Quarter ended June 30, 2023
Total amounts presented in the consolidated statement of income and other comprehensive income	$	14,115	2,390	(2,693)	N/A	(811)
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(68)		(115)	—	(183)	183
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	N/A	(1,000)
Total gains (losses) (pre-tax) on interest rate contracts	(68)		(115)	—	(183)	(817)
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	N/A	(1)
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(2)	(2)	1
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	(68)	(115)	(2)	(185)	(816)
Quarter ended June 30, 2022
Total amounts presented in the consolidated statement of income and other comprehensive income	$	8,116	419	(1,011)	N/A	(111)
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	11		34	—	45	(45)
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	N/A	(101)
Total gains (losses) (pre-tax) on interest rate contracts	11		34	—	45	(146)
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	N/A	(13)
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(2)	(2)	(11)
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	11	34	(2)	43	(157)

Six months ended June 30, 2023
Total amounts presented in the consolidated statement of income and other comprehensive income	$	27,433	4,378	(5,204)	N/A	(308)
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(121)		(173)	—	(294)	294
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	N/A	(617)
Total gains (losses) (pre-tax) on interest rate contracts	(121)		(173)	—	(294)	(323)
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	N/A	—
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(4)	(4)	4
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	(121)	(173)	(4)	(298)	(319)

Six months ended June 30, 2022
Total amounts presented in the consolidated statement of income and other comprehensive income	$	15,334	509	(1,772)	N/A	(84)
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(5)		38	—	33	(33)
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	N/A	(149)
Total gains (losses) (pre-tax) on interest rate contracts	(5)		38	—	33	(182)
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	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	$	(5)	38	(4)	29	(194)


100			Wells Fargo & Company

Table 11.4: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 June 30, 2023
Total amounts presented in the consolidated statement of income and other comprehensive income	$	4,037	(3,805)	(2,693)		412		N/A		(811)
Interest contracts
Amounts related to cash flows on derivatives	331		(82)	(850)		—		(601)		N/A
Recognized on derivatives	937		(276)	(2,587)		—		(1,926)		—
Recognized on hedged items	(937)		278	2,575		—		1,916		N/A
Total gains (losses) (pre-tax) on interest rate contracts	331		(80)	(862)		—		(611)		—
Foreign exchange contracts
Amounts related to cash flows on derivatives	—		—	(48)		—		(48)		N/A
Recognized on derivatives	—		—	(18)		(8)		(26)		5
Recognized on hedged items	—		—	14		8		22		N/A
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(52)		—		(52)		5
Commodity contracts
Recognized on derivatives	—		—	—		109		109		—
Recognized on hedged items	—		—	—		(90)		(90)		N/A
Total gains (losses) (pre-tax) on commodity contracts	—		—	—		19		19		—
Total gains (losses) (pre-tax) recognized on fair value hedges	$	331	(80)	(914)		19		(644)		5
Quarter ended June 30, 2022
Total amounts presented in the consolidated statement of income and other comprehensive income	$	2,702	(158)	(1,011)		566		N/A		(111)
Interest contracts
Amounts related to cash flows on derivatives	(45)		23	336		—		314		N/A
Recognized on derivatives	768		(70)	(5,202)		—		(4,504)		—
Recognized on hedged items	(753)		68	5,128		—		4,443		N/A
Total gains (losses) (pre-tax) on interest rate contracts	(30)		21	262		—		253		—
Foreign exchange contracts
Amounts related to cash flows on derivatives	—		—	(21)		—		(21)		N/A
Recognized on derivatives	—		—	(315)		(929)		(1,244)		46
Recognized on hedged items	—		—	333		898		1,231		N/A
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(3)		(31)		(34)		46
Commodity contracts
Recognized on derivatives	—		—	—		228		228		—
Recognized on hedged items	—		—	—		(217)		(217)		N/A
Total gains (losses) (pre-tax) on commodity contracts	—		—	—		11		11		—
Total gains (losses) (pre-tax) recognized on fair value hedges	$	(30)	21	259		(20)		230		46

(continued on following page)


			Wells Fargo & Company			101

Note 11: Derivatives (continued)

(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)
Six months ended June 30, 2023

Total amounts presented in the consolidated statement of income and other comprehensive income	$	7,820	(6,566)	(5,204)		992		N/A		(308)
Interest contracts
Amounts related to cash flows on derivatives	600		(112)	(1,532)		—		(1,044)		N/A
Recognized on derivatives	237		(171)	(229)		—		(163)		—
Recognized on hedged items	(245)		170	215		—		140		N/A
Total gains (losses) (pre-tax) on interest rate contracts	592		(113)	(1,546)		—		(1,067)		—
Foreign exchange contracts
Amounts related to cash flows on derivatives	—		—	(151)		—		(151)		N/A
Recognized on derivatives	—		—	34		27		61		11
Recognized on hedged items	—		—	(46)		(21)		(67)		N/A
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(163)		6		(157)		11
Commodity contracts
Recognized on derivatives	—		—	—		97		97		—
Recognized on hedged items	—		—	—		(65)		(65)		N/A
Total gains (losses) (pre-tax) on commodity contracts	—		—	—		32		32		—
Total gains (losses) (pre-tax) recognized on fair value hedges	$	592	(113)	(1,709)		38		(1,192)		11
Six months ended June 30, 2022

Total amounts presented in the consolidated statement of income and other comprehensive income	$	5,265	(241)	(1,772)		1,258		N/A		(84)
Interest contracts
Amounts related to cash flows on derivatives	(86)		64	817		—		795		N/A
Recognized on derivatives	2,030		(215)	(12,071)		—		(10,256)		—
Recognized on hedged items	(2,001)		211	11,941		—		10,151		N/A
Total gains (losses) (pre-tax) on interest rate contracts	(57)		60	687		—		690		—
Foreign exchange contracts
Amounts related to cash flows on derivatives	—		—	(17)		—		(17)		N/A
Recognized on derivatives	—		—	(771)		(1,171)		(1,942)		110
Recognized on hedged items	—		—	778		1,139		1,917		N/A
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(10)		(32)		(42)		110
Commodity contracts
Recognized on derivatives	—		—	—		136		136		—
Recognized on hedged items	—		—	—		(130)		(130)		N/A
Total gains (losses) (pre-tax) on commodity contracts	—		—	—		6		6		—
Total gains (losses) (pre-tax) recognized on fair value hedges	$	(57)	60	677		(26)		654		110


102			Wells Fargo & Company

Table 11.5 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 11.5:Hedged Items in Fair Value Hedging Relationships


	Hedged items currently designated			Hedged items no longer designated
(in millions)	Carrying amount of assets/(liabilities) (1)(2)		Hedge accounting basis adjustment assets/(liabilities) (3)	Carrying amount of assets/(liabilities) (2)	Hedge accounting basis adjustment assets/(liabilities)
June 30, 2023
Available-for-sale debt securities (4)(5)	$	52,703	(3,186)	15,113	602
Other assets	2,013		(49)	—	—
Deposits	(65,415)		374	(10)	—
Long-term debt	(129,708)		13,970	(34)	3
December 31, 2022
Available-for-sale debt securities (4)	$	39,423	(3,859)	16,100	722
Other assets	1,663		38	—	—
Deposits	(41,687)		205	(10)	—
Long-term debt	(130,997)		13,862	(5)	—

(1)Does not include the carrying amount of hedged items where only foreign currency risk is the designated hedged risk. The carrying amount excluded $673 million and $739 million for available-for-sale debt securities as of June 30, 2023, and December 31, 2022, respectively. There was no carrying amount related to long-term debt at both June 30, 2023, and December 31, 2022.

(2)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.

(3)The balance includes $35 million and $802 million of debt securities and long-term debt cumulative basis adjustments, respectively, as of June 30, 2023, and $39 million and $334 million of debt securities and long-term debt cumulative basis adjustments, respectively, as of December 31, 2022, on terminated hedges whereby the hedged items have subsequently been re-designated into existing hedges.

(4)Carrying amount represents the amortized cost.

(5)The balance includes cumulative basis adjustments of $(224) million for hedged items currently designated as of June 30, 2023, related to certain AFS debt securities designated as the hedged item in a fair value hedge using the portfolio layer method. At June 30, 2023, the aggregated designated hedged items using the portfolio layer method had a carrying amount of $23.0 billion from closed portfolios of financial assets totaling $26.1 billion.

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 hedge derivatives to manage our exposure to interest rate risk, equity price risk, foreign currency risk, and credit risk. We also use economic hedge derivatives to mitigate the periodic earnings volatility caused by mismatches between the changes in fair value of the hedged item and hedging instrument recognized on our fair value accounting hedges.

Changes in the fair values of derivatives used to economically hedge the deferred compensation plan are reported in personnel expense.

For additional information on our derivatives activities, see Note 14 (Derivatives) in our 2022 Form 10-K.


			Wells Fargo & Company			103

Note 11: Derivatives (continued)

Table 11.6 shows the net gains (losses), recognized by income statement lines, related to derivatives not designated as hedging instruments.

Table 11.6: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 June 30, 2023
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	(242)	—	(98)	(340)		—
Equity contracts	—		—	(81)	(81)		(172)
Foreign exchange contracts	—		—	(327)	(327)		—
Credit contracts	—		—	—	—		—
Subtotal	(242)		—	(506)	(748)		(172)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	(9)		499	—	490		—
Commodity contracts	—		87	—	87		—
Equity contracts	—		(1,440)	(119)	(1,559)		—
Foreign exchange contracts	—		893	—	893		—
Credit contracts	—		(20)	—	(20)		—
Subtotal	(9)		19	(119)	(109)		—
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	(251)	19	(625)	(857)		(172)
Quarter ended June 30, 2022
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	(270)	—	(26)	(296)		—
Equity contracts (2)	—		—	11	11		577
Foreign exchange contracts	—		—	838	838		—
Credit contracts	—		—	2	2		—
Subtotal	(270)		—	825	555		577
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	(314)		2,791	—	2,477		—
Commodity contracts	—		104	—	104		—
Equity contracts	—		3,901	(76)	3,825		—
Foreign exchange contracts	—		318	—	318		—
Credit contracts	—		29	—	29		—
Subtotal	(314)		7,143	(76)	6,753		—
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	(584)	7,143	749	7,308		577

(continued on following page)


104			Wells Fargo & Company

(continued from previous page)


	Noninterest income					Noninterest expense
(in millions)	Mortgage banking		Net gains (losses) from trading and securities	Other	Total		Personnel expense
Six months ended June 30, 2023

Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	(96)	—	(50)	(146)		—
Equity contracts	—		—	(161)	(161)		(363)
Foreign exchange contracts	—		—	(693)	(693)		—
Credit contracts	—		—	(1)	(1)		—
Subtotal	(96)		—	(905)	(1,001)		(363)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	(11)		163	—	152		—
Commodity contracts	—		199	—	199		—
Equity contracts	—		(2,910)	(183)	(3,093)		—
Foreign exchange contracts	—		794	—	794		—
Credit contracts	—		(27)	—	(27)		—
Subtotal	(11)		(1,781)	(183)	(1,975)		—
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	(107)	(1,781)	(1,088)	(2,976)		(363)
Six months ended June 30, 2022

Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	(638)	—	(52)	(690)		—
Equity contracts (2)	—		—	16	16		843
Foreign exchange contracts	—		—	1,069	1,069		—
Credit contracts	—		—	7	7		—
Subtotal	(638)		—	1,040	402		843
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	(812)		6,005	—	5,193		—
Commodity contracts	—		217	—	217		—
Equity contracts	—		4,904	(114)	4,790		—
Foreign exchange contracts	—		645	—	645		—
Credit contracts	—		41	—	41		—
Subtotal	(812)		11,812	(114)	10,886		—
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	(1,450)	11,812	926	11,288		843

(1)Mortgage banking amounts for the second quarter and first half of 2023 are comprised of gains (losses) of $(331) million and $(146) million, respectively, related to derivatives used as economic hedges of MSRs measured at fair value offset by gains (losses) of $89 million and $50 million, respectively, related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments. The corresponding amounts for the second quarter and first half of 2022 are comprised of gain (losses) of $(980) million and $(2.6) billion, respectively, offset by gains (losses) of $710 million and $2.0 billion, respectively.


			Wells Fargo & Company			105

Note 11: Derivatives (continued)

Credit Derivatives

Table 11.7 provides details of sold credit derivatives.

Table 11.7:Sold Credit Derivatives


	Notional amount
(in millions)	Protection sold		Protection sold – non-investment grade
June 30, 2023
Credit default swaps	$	14,273	1,677
Risk participation swaps	6,460		6,250
Total credit derivatives	$	20,733	7,927
December 31, 2022
Credit default swaps	$	12,733	1,860
Risk participation swaps	6,728		6,518
Total credit derivatives	$	19,461	8,378

Protection sold represents the estimated maximum exposure to loss that would be incurred if, upon an event of default, the value of our interests and any associated collateral declined to zero, and does not take into consideration any of recovery value from the referenced obligation or offset from collateral held or any economic hedges.

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 credit risk to be low if the underlying assets under the credit derivative have an external rating that is investment grade. If an external rating is not available, we classify the credit derivative as non-investment grade.

Our maximum exposure to sold credit derivatives is managed through posted collateral and purchased credit derivatives with identical or similar reference positions in order to achieve our desired credit risk profile. The credit risk management is designed to provide an ability to recover a significant portion of any amounts that would be paid under sold credit derivatives.

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. Table 11.8 illustrates our exposure to OTC bilateral derivative contracts with credit-risk contingent features, collateral we have posted, and the additional collateral we would be required to post if the credit rating of our debt was downgraded below investment grade.

Table 11.8:Credit-Risk Contingent Features


(in billions)	Jun 30, 2023		Dec 31, 2022
Net derivative liabilities with credit-risk contingent features	$	23.2	20.7
Collateral posted	20.0		17.4
Additional collateral to be posted upon a below investment grade credit rating (1)	3.2		3.3

(1)Any credit rating below investment grade requires us to post the maximum amount of collateral.


106			Wells Fargo & Company


Note 12: Fair Values of Assets and Liabilities

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to fulfill fair value disclosure requirements. 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 12.1 in this Note. Additionally, from time to time, we record fair value adjustments on a nonrecurring basis. These nonrecurring adjustments typically involve application of lower of cost or fair value (LOCOM) accounting, write-downs of individual assets or application of the measurement alternative for nonmarketable equity securities. Assets recorded at fair value on a nonrecurring basis are presented in Table 12.4 in this Note. We provide in Table 12.9 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) in our 2022 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, see Note 15 (Fair Values of Assets and Liabilities) in our 2022 Form 10-K.

FAIR VALUE HIERARCHY We classify our assets and liabilities recorded at fair value as either Level 1, 2, or 3 in the fair value hierarchy. The highest priority (Level 1) is assigned to valuations based on unadjusted quoted prices in active markets 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 2022 Form 10-K for a detailed description of the fair value hierarchy.

In the determination of the classification of financial instruments in Level 2 or Level 3 of the fair value hierarchy, we consider all available information, including observable market data, indications of market liquidity and orderliness, and our understanding of the valuation techniques and significant inputs used. This determination is ultimately based upon the specific facts and circumstances of each instrument or instrument category and judgments are made regarding the significance of the unobservable inputs to the instruments’ fair value measurement in its entirety. If unobservable inputs are considered significant, the instrument is classified as Level 3.

We do not classify nonmarketable equity securities in the fair value hierarchy if we use the non-published net asset value (NAV) per share (or its equivalent) as a practical expedient to measure fair value. Marketable equity securities with published NAVs are classified in the fair value hierarchy.


			Wells Fargo & Company			107

Note 12: Fair Values of Assets and Liabilities (continued)

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Table 12.1 presents the balances of assets and liabilities recorded at fair value on a recurring basis.

Table 12.1:Fair Value on a Recurring Basis


	June 30, 2023							December 31, 2022
(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	$	31,084	2,818		—	33,902		28,844	4,530	—	33,374
Collateralized loan obligations	—		624		64	688		—	540	150	690
Corporate debt securities	—		13,499		62	13,561		—	10,344	23	10,367
Federal agency mortgage-backed securities	—		39,235		—	39,235		—	34,447	—	34,447
Non-agency mortgage-backed securities	—		1,317		5	1,322		—	1,243	12	1,255
Other debt securities	—		8,148		1	8,149		—	6,022	—	6,022
Total trading debt securities	31,084		65,641		132	96,857		28,844	57,126	185	86,155
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	46,896		—		—	46,896		45,285	—	—	45,285
Non-U.S. government securities	—		162		—	162		—	162	—	162
Securities of U.S. states and political subdivisions	—		21,295		79	21,374		—	10,332	113	10,445
Federal agency mortgage-backed securities	—		56,981		—	56,981		—	48,137	—	48,137
Non-agency mortgage-backed securities	—		3,049		—	3,049		—	3,284	—	3,284
Collateralized loan obligations	—		3,725		—	3,725		—	3,981	—	3,981
Other debt securities	—		1,913		151	2,064		—	2,137	163	2,300
Total available-for-sale debt securities	46,896		87,125		230	134,251		45,285	68,033	276	113,594
Loans held for sale	—		2,488		486	2,974		—	3,427	793	4,220
Mortgage servicing rights (residential)	—		—		8,251	8,251		—	—	9,310	9,310
Derivative assets (gross):
Interest rate contracts	258		35,353		455	36,066		262	40,503	321	41,086
Commodity contracts	—		3,136		32	3,168		—	5,866	134	6,000
Equity contracts	178		12,335		268	12,781		112	9,051	410	9,573
Foreign exchange contracts	30		16,445		17	16,492		27	22,175	11	22,213
Credit contracts	—		55		24	79		—	44	22	66

Total derivative assets (gross)	466		67,324		796	68,586		401	77,639	898	78,938
Equity securities:
Marketable	20,348		159		5	20,512		18,527	86	3	18,616
Nonmarketable	—		11,075		22	11,097		—	9,750	17	9,767
Total equity securities	20,348		11,234		27	31,609		18,527	9,836	20	28,383
Total assets prior to derivative netting	$	98,794	233,812		9,922	342,528		93,057	216,061	11,482	320,600
Derivative netting (1)						(50,596)					(56,164)
Total assets after derivative netting						$	291,932				264,436
Derivative liabilities (gross):
Interest rate contracts	$	(287)	(35,418)		(6,093)	(41,798)		(193)	(40,377)	(2,903)	(43,473)
Commodity contracts	—		(2,556)		(48)	(2,604)		—	(3,325)	(120)	(3,445)
Equity contracts (2)	(161)		(11,523)		(1,649)	(13,333)		(118)	(6,502)	(1,634)	(8,254)
Foreign exchange contracts	(38)		(18,630)		(24)	(18,692)		(29)	(26,622)	(35)	(26,686)
Credit contracts	—		(23)		(2)	(25)		—	(33)	(3)	(36)

Total derivative liabilities (gross)	(486)		(68,150)		(7,816)	(76,452)		(340)	(76,859)	(4,695)	(81,894)






Short-sale and other liabilities (2)	(22,966)		(4,739)		(58)	(27,763)		(14,791)	(5,513)	(167)	(20,471)
Long-term debt	—		(1,600)		—	(1,600)		—	(1,346)	—	(1,346)
Total liabilities prior to derivative netting	$	(23,452)	$	(74,489)	(7,874)	(105,815)		(15,131)	(83,718)	(4,862)	(103,711)
Derivative netting (1)						55,021					61,827
Total liabilities after derivative netting						$	(50,794)				(41,884)

(1)Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Note 11 (Derivatives) for additional information.


108			Wells Fargo & Company

Level 3 Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Table 12.2 presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis.

Table 12.2:Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis


										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 June 30, 2023
Trading debt securities	$	132	(8)	31	(36)	(3)	55	(39)	132	(8)	(6)
Available-for-sale debt securities	505		(4)	7	—	(4)	22	(296)	230	(3)	(6)
Loans held for sale	564		(10)	94	(180)	(26)	49	(5)	486	(30)	(7)
Mortgage servicing rights (residential) (8)	8,819		(9)	47	(606)	—	—	—	8,251	316	(7)
Net derivative assets and liabilities:
Interest rate contracts	(2,752)		(2,870)	1	(1)	668	(684)	—	(5,638)	(2,258)
Equity contracts	(1,278)		(160)	—	—	49	(17)	25	(1,381)	(131)
Other derivative contracts	(10)		(8)	4	(1)	14	—	—	(1)	4
Total derivative contracts	(4,040)		(3,038)	5	(2)	731	(701)	25	(7,020)	(2,385)	(9)
Equity securities	32		(15)	4	(3)	—	9	—	27	(15)	(6)
Other liabilities	(193)		135	—	—	—	—	—	(58)	135	(10)
Quarter ended June 30, 2022
Trading debt securities	$	201	(22)	46	(78)	29	—	(7)	169	(28)	(6)
Available-for-sale debt securities	338		(5)	2	(25)	(5)	—	(138)	167	(1)	(6)
Loans held for sale	1,019		(61)	116	(27)	(57)	84	(2)	1,072	(61)	(7)
Mortgage servicing rights (residential) (8)	8,511		581	322	(251)	—	—	—	9,163	868	(7)
Net derivative assets and liabilities:
Interest rate contracts	(176)		(381)	—	—	371	(385)	—	(571)	(133)
Equity contracts	(1,416)		202	—	—	280	(516)	(34)	(1,484)	403
Other derivative contracts	27		88	—	—	28	—	(6)	137	89
Total derivative contracts	(1,565)		(91)	—	—	679	(901)	(40)	(1,918)	359	(9)
Equity securities	26		5	—	(2)	—	3	(1)	31	5	(6)
Other liabilities (11)	(638)		89	—	—	—	—	—	(549)	89	(10)
Six months ended June 30, 2023
Trading debt securities	$	185	(7)	107	(148)	(4)	55	(56)	132	(11)	(6)
Available-for-sale debt securities	276		(24)	76	—	(10)	255	(343)	230	(22)	(6)
Loans held for sale	793		—	167	(229)	(65)	65	(245)	486	(23)	(7)
Mortgage servicing rights (residential) (8)	9,310		(555)	95	(599)	—	—	—	8,251	91	(7)
Net derivative assets and liabilities:
Interest rate contracts	(2,582)		(2,575)	1	(1)	935	(1,430)	14	(5,638)	(1,755)
Equity contracts	(1,224)		(463)	—	—	334	(55)	27	(1,381)	(125)
Other derivative contracts	9		(63)	6	(2)	51	(2)	—	(1)	(36)
Total derivative contracts	(3,797)		(3,101)	7	(3)	1,320	(1,487)	41	(7,020)	(1,916)	(9)
Equity securities	20		(16)	4	(3)	—	22	—	27	(16)	(6)

Other liabilities	(167)		109	—	—	—	—	—	(58)	109	(10)
Six months ended June 30, 2022
Trading debt securities	$	241	(37)	93	(92)	(6)	5	(35)	169	(40)	(6)
Available-for-sale debt securities	186		(26)	54	(25)	(10)	126	(138)	167	(1)	(6)
Loans held for sale	1,033		(118)	179	(70)	(130)	186	(8)	1,072	(115)	(7)
Mortgage servicing rights (residential) (8)	6,920		1,829	664	(250)	—	—	—	9,163	2,473	(7)
Net derivative assets and liabilities:
Interest rate contracts	127		(959)	—	—	646	(385)	—	(571)	(241)
Equity contracts (11)	(417)		(14)	—	—	869	(596)	(1,326)	(1,484)	610
Other derivative contracts	5		66	—	—	72	—	(6)	137	110
Total derivative contracts	(285)		(907)	—	—	1,587	(981)	(1,332)	(1,918)	479	(9)
Equity securities	8,910		4	—	(2)	—	5	(8,886)	31	4	(6)
Other liabilities (11)	(791)		242	—	—	—	—	—	(549)	242	(10)

(1)All amounts represent net gains (losses) included in net income except for AFS debt securities and other liabilities which also included net gains (losses) in other comprehensive income. Net gains (losses) included in other comprehensive income for AFS debt securities were $(3) million and $(19) million for the second quarter and first half of 2023, respectively, and $(6) million and $(27) million for the second quarter and first half of 2022, respectively. Net gains (losses) included in other comprehensive income for other liabilities were $5 million for both the second quarter and first half of 2023, and $87 million and $101 million for the second quarter and first half of 2022, 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. During first quarter 2022, we transferred $8.9 billion of non-marketable equity securities and $1.4 billion of related economic hedging derivative assets (equity contracts) out of Level 3 due to our election to measure fair value of these instruments as a portfolio. Under this election, the unit of valuation is the portfolio-level, rather than each individual instrument. The unobservable inputs previously significant to the valuation of the instruments individually are no longer significant, as those unobservable inputs offset under the portfolio election.

(5)All amounts represent net unrealized gains (losses) related to assets and liabilities held at period end included in net income except for AFS debt securities and other liabilities which also included net unrealized gains (losses) related to assets and liabilities held at period end in other comprehensive income. Net unrealized gains (losses) included in other comprehensive income for AFS debt securities were $(2) million and $(17) million for the second quarter and first half of 2023, respectively, and $0 for both the second quarter and first half of 2022. Net unrealized gains (losses) included in other comprehensive income for other liabilities were $5 million for both the second quarter and first half of 2023, and $87 million and $101 million for the second quarter and first half of 2022, respectively.

(6)Included in net gains from trading and securities on our consolidated statement of income.

(7)Included in mortgage banking income on our consolidated statement of income.

(8)For additional information on the changes in mortgage servicing rights, see Note 6 (Mortgage Banking Activities).

(9)Included in mortgage banking income, net gains from trading and securities, and other noninterest income on our consolidated statement of income.

(10)Included in other noninterest income on our consolidated statement of income.

(11)In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).


			Wells Fargo & Company			109

Note 12: Fair Values of Assets and Liabilities (continued)

Table 12.3 provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of our Level 3 assets and liabilities measured at fair value on a recurring basis.

The significant unobservable inputs for Level 3 assets inherent in the fair values obtained from third-party vendors are not included in the table, as the specific inputs applied are not

provided by the vendor (for additional information on vendor-developed valuations, see Note 15 (Fair Values of Assets and Liabilities) in our 2022 Form 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 12.3: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
June 30, 2023
Trading and available-for-sale debt securities	$	125		Discounted cash flow	Discount rate	3.0		-	12.5	%	6.4

	132			Market comparable pricing	Comparability adjustment	(46.3)		-	48.3		(16.1)
	105			Market comparable pricing	Multiples	1.4x		-	7.4x		3.7x
Loans held for sale	486			Discounted cash flow	Default rate	0.0		-	28.8	%	1.0
					Discount rate	2.9		-	15.0		9.8
					Loss severity	0.0		-	54.9		17.1
					Prepayment rate	4.3		-	15.5		10.5
Mortgage servicing rights (residential)	8,251			Discounted cash flow	Cost to service per loan (1)	$	52	-	518		102
					Discount rate	8.8		-	13.8	%	9.2
					Prepayment rate (2)	7.8		-	23.4		9.2
Net derivative assets and (liabilities):
Interest rate contracts	(5,518)			Discounted cash flow	Discount rate	3.2		-	5.4		4.6
	(61)			Discounted cash flow	Default rate	0.4		-	5.0		1.6
					Loss severity	50.0		-	50.0		50.0
					Prepayment rate	2.8		-	22.0		16.0
Interest rate contracts: derivative loan commitments	(59)			Discounted cash flow	Fall-out factor	1.0		-	99.0		28.8
					Initial-value servicing	(43.9)		-	141.0	bps	(14.5)
Equity contracts	(976)			Discounted cash flow	Conversion factor	(7.4)		-	0.0	%	(6.6)
					Weighted average life	0.5		-	1.5	yrs	1.1
	(405)			Option model	Correlation factor	(77.0)		-	99.0	%	63.6
					Volatility factor	6.5		-	98.0		34.4
Insignificant Level 3 liabilities, net of assets (3)	(32)
Total Level 3 assets, net of liabilities	$	2,048	(4)
December 31, 2022
Trading and available-for-sale debt securities	$	157		Discounted cash flow	Discount rate	2.7		-	12.5	%	6.4
	185			Market comparable pricing	Comparability adjustment	(33.6)		-	14.1		(4.8)

	119			Market comparable pricing	Multiples	1.1x		-	7.4x		4.0x
Loans held for sale	793			Discounted cash flow	Default rate	0.0		-	25.0	%	0.7
					Discount rate	2.9		-	13.4		9.5
					Loss severity	0.0		-	53.6		15.7
					Prepayment rate	3.5		-	14.2		10.7
Mortgage servicing rights (residential)	9,310			Discounted cash flow	Cost to service per loan (1)	$	52	-	550		102
					Discount rate	8.7		-	14.1	%	9.1
					Prepayment rate (2)	8.1		-	21.9		9.4
Net derivative assets and (liabilities):
Interest rate contracts	(2,411)			Discounted cash flow	Discount rate	3.2		-	4.9		4.2
	(63)			Discounted cash flow	Default rate	0.4		-	5.0		2.3
					Loss severity	50.0		-	50.0		50.0
					Prepayment rate	2.8		-	22.0		18.7
Interest rate contracts: derivative loan commitments	(108)			Discounted cash flow	Fall-out factor	1.0		-	99.0		41.0
					Initial-value servicing	(9.3)		-	141.0	bps	11.5
Equity contracts (3)	(1,000)			Discounted cash flow	Conversion factor	(12.2)		-	0.0	%	(9.9)
					Weighted average life	0.5		-	1.5	yrs	0.8
	(224)			Option model	Correlation factor	(77.0)		-	99.0	%	49.5
					Volatility factor	6.5		-	96.5		37.3






Insignificant Level 3 liabilities, net of assets (3)	(138)
Total Level 3 assets, net of liabilities	$	6,620	(4)

(1)The high end of the range of inputs is for servicing modified loans. For non-modified loans, the range is $52 - $175 at June 30, 2023, and $52 - $178 at December 31, 2022.

(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)In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(4)Consists of total Level 3 assets of $9.9 billion and $11.5 billion and total Level 3 liabilities of $7.9 billion and $4.9 billion, before netting of derivative balances, at June 30, 2023, and December 31, 2022, respectively.

For additional information on the valuation techniques and significant unobservable inputs used in the valuation of ~~off-balance sheet loans~~our Level 3 assets and liabilities, including how changes in these

inputs affect fair value estimates, see Note 15 (Fair Values of Assets and Liabilities) in our 2022 Form 10-K.


110			Wells Fargo & Company

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, write-downs of individual assets, or application of the measurement alternative for certain nonmarketable equity securities.

Table 12.4 provides the fair value hierarchy and fair value at the date of the nonrecurring fair value adjustment for all assets that were ~~sold or securitized, including~~still held as of June 30, 2023, and December 31, 2022, and for which a nonrecurring fair value adjustment was recorded during the six months ended June 30, 2023, and the year ended December 31, 2022.

Table 12.4:Fair Value on a Nonrecurring Basis


	June 30, 2023				December 31, 2022
(in millions)	Level 2		Level 3	Total	Level 2	Level 3	Total
Loans held for sale (1)	$	1,268	315	1,583	838	554	1,392
Loans:
Commercial	645		—	645	285	—	285
Consumer	68		—	68	512	—	512
Total loans	713		—	713	797	—	797
Mortgage servicing rights (commercial)	—		—	—	—	75	75
Nonmarketable equity securities	606		1,483	2,089	1,926	2,818	4,744
Other assets	2,063		49	2,112	1,862	296	2,158
Total assets at fair value on a nonrecurring basis	$	4,650	1,847	6,497	5,423	3,743	9,166

(1)Consists of commercial mortgages and residential mortgage ~~loans sold~~– first lien loans.

Table 12.5 presents the gains (losses) on certain assets held at the end of the reporting periods presented for which a nonrecurring fair value adjustment was recognized in earnings during the respective periods.

Table 12.5:Gains (Losses) on Assets with Nonrecurring Fair Value Adjustment


	Six months ended June 30,
(in millions)	2023		2022
Loans held for sale	$	(40)	(66)
Loans:
Commercial	(205)		(36)
Consumer	(368)		(358)
Total loans	(573)		(394)
Mortgage servicing rights (commercial)	—		4
Nonmarketable equity securities (1)	(526)		(95)

Other assets (2)	(102)		(176)
Total	$	(1,241)	(727)

(1)Includes impairment of nonmarketable equity securities and observable price changes related to ~~FNMA, FHLMC, GNMA~~nonmarketable equity securities accounted for under the measurement alternative.

(2)Includes impairment of operating lease ROU assets, valuation of physical commodities, valuation losses on foreclosed real estate and other ~~investors,~~collateral owned, and impairment of private equity and venture capital investments in consolidated portfolio companies.

Table 12.6 provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation 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 and private equity and venture capital investments in consolidated portfolio companies.


			Wells Fargo & Company			111

Note 12: Fair Values of Assets and Liabilities (continued)

Table 12.6:Valuation Techniques – Nonrecurring Basis


($ in millions)	Fair Value Level 3		Valuation Technique (1)	Significant Unobservable Input (1)	Range of Inputs Positive (Negative)					Weighted Average
June 30, 2023
Loans held for sale	$	315	Discounted cash flow	Default rate	0.1		-	98.3	%	16.9
				Discount rate	4.4		-	14.3		5.8
				Loss severity	7.3		-	65.6		16.8
				Prepayment rate	3.2		-	32.4		12.9




Nonmarketable equity securities	429		Market comparable pricing	Comparability adjustment	(100.0)		-	(4.7)		(33.8)

	1,052		Market comparable pricing	Multiples	3.0x		-	27.1x		9.5x





Insignificant Level 3 assets	51
Total	$	1,847
December 31, 2022
Loans held for sale	$	143	Discounted cash flow	Default rate	0.1		-	86.1	%	13.8
				Discount rate	3.8		-	13.8		9.0
				Loss severity	8.1		-	43.8		18.6
				Prepayment rate	2.3		-	23.4		18.6
	411		Market comparable pricing	Comparability adjustment	(8.2)		-	(0.9)		(4.3)
Mortgage servicing rights (commercial)	75		Discounted cash flow	Cost to service per loan	$	3,775	-	3,775		3,775
				Discount rate	5.2		-	5.2	%	5.2
				Prepayment rate	0.0		-	20.6		6.7
Nonmarketable equity securities	1,461		Market comparable pricing	Comparability adjustment	(100.0)		-	(4.0)		(30.1)

	1,352		Market comparable pricing	Multiples	0.8x		-	18.7x		9.9x




Other assets (2)	234		Market comparable pricing	Multiples	6.4		-	8.0		7.1
Insignificant Level 3 assets	67
Total	$	3,743

(1)See Note 15 (Fair Values of Assets and Liabilities) in our 2022 Form 10-K for additional information on the valuation technique(s) and significant unobservable inputs used in the valuation of Level 3 assets.

(2)Represents private equity and venture capital investments in consolidated portfolio companies.


112			Wells Fargo & Company

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 additional information, including the basis for our fair value option elections, see Note 15 (Fair Values of Assets and Liabilities) in our 2022 Form 10-K.

Table 12.7 reflects differences between the fair value carrying amount of the assets and liabilities for which we have ~~some~~elected the fair value option and the contractual aggregate unpaid principal amount at maturity.

Table 12.7:Fair Value Option


	June 30, 2023				December 31, 2022
(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 (1)	$	2,974	3,238	(264)	4,220	4,614	(394)
Long-term debt (2)	(1,600)		(2,147)	547	(1,346)	(1,775)	429

(1)Nonaccrual loans and loans 90 days or more past due and still accruing included in LHFS for which we have elected the fair value option were insignificant at June 30, 2023, and December 31, 2022.

(2)Includes zero coupon notes for which the aggregate unpaid principal amount reflects the contractual principal due at maturity.

Table 12.8 reflects amounts included in earnings related to initial measurement and subsequent changes in fair value, by income statement line item, for assets and liabilities for which

the fair value option was elected. Amounts recorded in net interest income are excluded from the table below.

Table 12.8:Gains (Losses) on Changes in Fair Value Included in Earnings



	2023				2022
(in millions)	Mortgage banking noninterest income		Net gains from trading and securities	Other noninterest income	Mortgage banking noninterest income	Net gains from trading and securities	Other noninterest income
Quarter ended June 30,
Loans held for sale	$	34	13	—	(237)	1	—
Long-term debt	—		9	—	—	11	—
Six months ended June 30,
Loans held for sale	$	131	25	(4)	(603)	10	—
Long-term debt	—		(21)	—	—	23	—

For performing loans, instrument-specific credit risk gains or losses are 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. For LHFS accounted for under the fair value option, instrument-specific credit gains or losses were insignificant during the second quarter and first half of both 2023 and 2022.

For long-term debt, instrument-specific credit risk gains or losses represent the impact of changes in fair value due to changes in our credit spread and are derived using observable secondary bond market information. These impacts are recorded within the debit valuation adjustments (DVA) in OCI. See

Note 20 (Other Comprehensive Income) for additional information.


			Wells Fargo & Company			113

Note 12: Fair Values of Assets and Liabilities (continued)

Disclosures about Fair Value of Financial Instruments

Table 12.9 presents a summary of fair value estimates for financial instruments that are not carried at fair value on a recurring basis. Some financial instruments are excluded from the scope of this table, such as certain insurance contracts, certain nonmarketable equity securities, and leases. This table also excludes assets and liabilities that are not financial instruments such as the value of the long-term relationships with our deposit, credit card and trust customers, MSRs, premises and equipment, goodwill and deferred taxes.

Loan commitments, standby letters of credit and commercial and similar letters of credit are not included in

Table 12.9. 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 $622 million and $737 million at June 30, 2023, and December 31, 2022, 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 12.9:Fair Value Estimates for Financial Instruments


			Estimated fair value
(in millions)	Carrying amount		Level 1	Level 2	Level 3	Total
June 30, 2023
Financial assets
Cash and due from banks (1)	$	31,915	31,915	—	—	31,915
Interest-earning deposits with banks (1)	123,418		123,195	223	—	123,418
Federal funds sold and securities purchased under resale agreements (1)	66,500		—	66,500	—	66,500
Held-to-maturity debt securities	272,360		2,371	228,748	2,717	233,836
Loans held for sale	3,055		—	2,641	462	3,103
Loans, net (2)	918,454		—	55,515	825,008	880,523
Nonmarketable equity securities (cost method)	4,552		—	—	4,620	4,620
Total financial assets	$	1,420,254	157,481	353,627	832,807	1,343,915
Financial liabilities
Deposits (3)	$	128,458	—	85,183	41,616	126,799
Short-term borrowings	84,054		—	84,056	—	84,056
Long-term debt (4)	169,012		—	168,245	1,969	170,214
Total financial liabilities	$	381,524	—	337,484	43,585	381,069
December 31, 2022
Financial assets
Cash and due from banks (1)	$	34,596	34,596	—	—	34,596
Interest-earning deposits with banks (1)	124,561		124,338	223	—	124,561
Federal funds sold and securities purchased under resale agreements (1)	68,036		—	68,036	—	68,036
Held-to-maturity debt securities	297,059		14,285	238,552	2,684	255,521
Loans held for sale	2,884		—	2,208	719	2,927
Loans, net (2)	928,049		—	57,532	836,831	894,363
Nonmarketable equity securities (cost method)	4,900		—	—	4,961	4,961
Total financial assets	$	1,460,085	173,219	366,551	845,195	1,384,965
Financial liabilities
Deposits (3)	$	66,887	—	46,745	18,719	65,464
Short-term borrowings	50,964		—	50,970	—	50,970
Long-term debt (4)	173,502		—	172,783	999	173,782
Total financial liabilities	$	291,353	—	270,498	19,718	290,216

(1)Amounts consist of financial instruments for which carrying value approximates fair value.

(2)Excludes lease financing with a carrying amount of $15.1 billion and $14.7 billion at June 30, 2023, and December 31, 2022, respectively.

(3)Excludes deposit liabilities with no defined or contractual maturity of $1.2 trillion and $1.3 trillion at June 30, 2023, and December 31, 2022, respectively.

(4)Excludes obligations under finance leases of $20 million and $22 million at June 30, 2023, and December 31, 2022, respectively.


114			Wells Fargo & Company


Note 13: Securitizations and Variable Interest Entities

Involvement with Variable Interest Entities (VIEs)

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. SPEs are often formed in connection with securitization transactions whereby financial assets are transferred to an SPE. SPEs formed in connection with securitization transactions are generally considered variable interest entities (VIEs). 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 consolidated balance sheet to a VIE in connection with a securitization, we typically receive cash and sometimes other interests in the VIE as proceeds for the assets we transfer. In certain transactions with VIEs, we may retain the right to service the transferred assets 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 securitization or other VIE activities, we have various forms of ongoing involvement with VIEs, 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 in VIEs;

•acting as servicer or investment manager for VIEs;

•providing administrative or trustee services to VIEs; and

•providing seller financing to VIEs.

Loan Sales and Securitization Activity

We periodically transfer consumer and 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 also transfer mortgage loans into securitization pools 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 option

to repurchase loans from GNMA loan securitization pools, which becomes exercisable when three scheduled loan payments remain unpaid by the borrower. When we do not repurchase these loans, they are recorded on our consolidated balance sheet and pledged to the GNMA securitization. We repurchased loans of $99 million and $191 million, during the second quarter and first half of 2023, respectively, and $564 million and $1.5 billion during the second quarter and first half of 2022, respectively. In 2022, these predominantly represented repurchases of government insured loans. At June 30, 2023, and December 31, 2022, we recorded assets and related liabilities of $940 million and $743 million, 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 June 30, 2023, and December 31, 2022, our liability for these repurchase and recourse arrangements was $162 million and $167 million, respectively, and the maximum exposure to loss was $13.8 billion at both June 30, 2023, and December 31, 2022.

Substantially allresidential servicing activity is related to assets transferred to GSE and GNMA securitizations. See Note 6 (Mortgage Banking Activities) for additional information about residential and commercial servicing rights, advances and servicing fees.

NONCONFORMING MORTGAGE LOAN SECURITIZATIONS In the normal course of business, we sell nonconforming residential and commercial mortgage loans in 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 and account for the transfers as sales. 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. We do not consolidate the VIE because 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 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 may also sell whole loans to VIEs where we have continuing involvement in the form of financing. We account for these transfers as sales, and do not consolidate the VIEs as we do not have the power to direct the most significant activities of the VIEs.

Table 13.1 presents information about transfers of assets during the periods presented for which we recorded the transfers as sales and have continuing involvement ~~(including servicer).~~with the transferred assets. In connection with these transfers, we received proceeds and recorded servicing assets and securities. Each of these interests are initially measured at fair value. Servicing rights are classified as Level 3 measurements, and generally securities are classified as Level 2. The majority of our transfers relate to


			Wells Fargo & Company			115

Note 13: Securitizations and Variable Interest Entities (continued)

residential mortgage securitizations with the GSEs or GNMA and generally result in no gain or loss because the loans are measured at fair value on a recurring basis. Additionally, we may transfer certain government insured loans that we previously

repurchased. These loans are carried at the lower of cost or market, and we recognize gains on such transfers when the market value is greater than the carrying value of the loan when it is sold.

Table 13.1:Transfers with Continuing Involvement



	2023			2022
(in millions)	Residential mortgages		Commercial mortgages	Residential mortgages	Commercial mortgages
Quarter ended June 30,
Assets sold	$	3,917	1,800	23,817	4,345
Proceeds from transfer (1)	3,917		1,823	23,817	4,411
Net gains (losses) on sale	—		23	—	66

Continuing involvement (2):
Servicing rights recognized	$	46	16	313	41
Securities recognized (3)	—		22	475	33

Six months ended June 30,
Assets sold	$	8,378	3,299	49,991	8,378
Proceeds from transfer (1)	8,378		3,363	50,043	8,508
Net gains (losses) on sale	—		64	52	130

Continuing involvement (2):
Servicing rights recognized	$	93	34	640	70
Securities recognized (3)	—		48	2,062	137

(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. In 2022, these predominantly related 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 $1.8 billion and $3.7 billion during the second quarter and first half of 2023, respectively, and $3.6 billion and $10.3 billion during the second quarter and first half of 2022, 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 $91 million and $141 million during the second quarter and first half of 2023, respectively, and $168 million and $304 million, during the second quarter and first half of 2022, respectively, related to principal and interest payments on these securities and loans, which exclude cash flows related to trading activities.

Table 13.2 presents the key weighted-average assumptions we used to initially measure residential MSRs recognized during the periods presented.

Table 13.2:Residential MSRs – Assumptions at Securitization Date



	2023			2022
Quarter ended June 30,
Prepayment rate (1)	16.4		%	10.9
Discount rate	9.4			8.0
Cost to service ($ per loan)	$	176		122
Six months ended June 30,
Prepayment rate (1)	17.5		%	11.0
Discount rate	9.6			7.5
Cost to service ($ per loan)	$	185		117

(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.

See Note 12 (Fair Values of Assets and Liabilities) and

Note 6 (Mortgage Banking Activities) for additional information on key assumptions for residential MSRs.

RESECURITIZATION ACTIVITIES We enter into resecuritization transactions as part of our trading activities to accommodate the investment and risk management activities of our customers. In resecuritization transactions, we transfer trading debt securities to VIEs in exchange for new beneficial interests that are 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 guaranteed by GNMA. We do not consolidate the resecuritization VIEs as we share in the decision-making power with third parties and do not hold significant economic interests in the VIEs other than for market-making activities. During the six months ended June 30, 2023 and 2022, we transferred securities of $6.1 billion and $12.6 billion, respectively, to resecuritization VIEs, and retained securities of $329 million and $525 million, respectively. These amounts are not included in Table 13.1. Related total VIE assets were $111.1 billion and $112.0 billion at June 30, 2023, and December 31, 2022, respectively. As of June 30, 2023, and December 31, 2022, we held $1.3 billion and $793 million of securities, respectively.


116			Wells Fargo & Company

Sold or Securitized Loans Serviced for Others

Table 13.3 presents information about loans that we sold or securitized in which we have ongoing involvement as servicer. Delinquent loans include loans 90 days or more past due and loans in bankruptcy, regardless of delinquency status. For loans sold or securitized where servicing is our only form of continuing involvement, we ~~would only~~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 13.3 excludes mortgage loans sold to and held or securitized by GSEs or GNMA of $637.0 billion and $704.5 billion at June 30, 2023, and December 31, 2022, respectively. Delinquent loans and foreclosed assets related to loans sold to and held or securitized by GSEs or GNMA were $3.4 billion and $4.6 billion at June 30, 2023, and December 31, 2022, respectively.

Table ~~7.6:Off-Balance Sheet Loans~~ 13.3:Sold or Securitized Loans Serviced for Others


						Net charge-offs
	Total loans			Delinquent loans and foreclosed assets (1)		Six months ended June 30,
(in millions)	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023	Dec 31, 2022	2023	2022
Commercial	$	66,082	67,029	849	912	67	22
Residential	8,789		9,201	433	501	8	7
Total off-balance sheet sold or securitized loans	$	74,871	76,230	1,282	1,413	75	29

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~~ ~~$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.

(1)Includes $213 million and $274 million of commercial foreclosed assets and $28 million and $25 million of residential foreclosed assets at June 30, 2023, and December 31, 2022, respectively.

Transactions with Unconsolidated VIEs

MORTGAGE LOAN SECURITIZATIONS Table 13.4 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 13.4 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.

COMMERCIAL REAL ESTATE LOANS We may transfer purchased industrial development bonds and GSE credit enhancements to VIEs in exchange for beneficial interests. We may also acquire such beneficial interests in transactions where we do not act as a transferor. We own all of the beneficial interests and may also service the underlying mortgages that serve as collateral to the bonds. The GSEs have the power to direct the servicing and workout activities of the VIE in the event of a default, therefore we do not have control over the key decisions of the VIEs.

OTHER VIE STRUCTURESWe engage in various forms of structured finance arrangements with other VIEs, including asset-backed finance structures and other securitizations collateralized by asset classes other than mortgages. Collateral may include rental properties, asset-backed securities, student loans and mortgage 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.

Table 13.4 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 13.4, “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 lending arrangements, liquidity agreements, and certain loss sharing obligations associated with loans originated, sold, and serviced under certain GSE programs.

“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.


			Wells Fargo & Company			117

Note 13: Securitizations and Variable Interest Entities (continued)

Table 13.4: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
June 30, 2023


Nonconforming mortgage loan securitizations	$	152,727	—		2,424	—	604	(12)	3,016
Commercial real estate loans	5,606		5,590		—	—	16	—	5,606
Other	2,063		256		—	45	17	—	318
Total	$	160,396	5,846		2,424	45	637	(12)	8,940
			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			$	—	2,424	—	604	12	3,040
Commercial real estate loans			5,590		—	—	16	702	6,308
Other			256		—	45	17	229	547
Total			$	5,846	2,424	45	637	943	9,895
			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, 2022


Nonconforming mortgage loan securitizations	$	154,464	—		2,420	—	617	(13)	3,024
Commercial real estate loans	5,627		5,611		—	—	16	—	5,627
Other	2,174		292		1	43	21	—	357
Total	$	162,265	5,903		2,421	43	654	(13)	9,008
			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			$	—	2,420	—	617	13	3,050
Commercial real estate loans			5,611		—	—	16	705	6,332
Other			292		1	43	21	228	585
Total			$	5,903	2,421	43	654	946	9,967

(1)Includes $170 million and $172 million of securities classified as trading at June 30, 2023, and December 31, 2022, respectively.

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

INVOLVEMENT WITH TAX CREDIT VIES In addition to the unconsolidated VIEs in Table 13.4, we may invest in or provide funding to affordable housing, renewable energy or similar projects that are designed to generate a return primarily through the realization of federal tax credits and other tax benefits. The projects are typically managed by third-party sponsors who have the power over the VIE’s assets, therefore, we do not consolidate the VIEs. The carrying value of our equity investments in tax credit VIEs was $19.0 billion and $18.7 billion at June 30, 2023, and December 31, 2022, respectively. We also had loans to tax credit VIEs with a carrying value of $2.0 billion at both June 30, 2023, and December 31, 2022.

Our maximum exposure to loss for tax credit VIEs at June 30, 2023, and December 31, 2022, was $29.7 billion and $28.0 billion, respectively. Our maximum exposure to loss included total unfunded equity and lending commitments of $8.8 billion and $7.3 billion at June 30, 2023, and December 31, 2022, respectively. See Note 14 (Guarantees and Other Commitments) for additional information about commitments to purchase equity securities.

Our affordable housing equity investments qualify for the low-income housing tax credit (LIHTC). For additional information on our LIHTC investments, see Note 16 (Securitizations and Variable Interest Entities) in our 2022 Form 10-K.

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 may securitize dealer floor plan loans in a revolving master trust entity. 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 13.5. In a separate transaction structure, we may 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 predominantly related to municipal tender option bond (MTOB) transactions. 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 may 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. During second quarter 2022, we purchased the outstanding mortgage loans from the VIEs and ~~Secured Borrowings~~extinguished the related debt associated with such securitizations.


118			Wells Fargo & Company

Table ~~7.7~~13.5 presents a summary of financial assets and liabilities ~~for asset transfers accounted for as secured borrowings and involvements with~~of our consolidated VIEs. ~~Carrying values of “Assets”~~The carrying value represents assets and liabilities recorded on our consolidated balance sheet. “Total VIE assets” includes affiliate balances that are ~~presented using GAAP measurement methods, which may include fair value, credit impairment or other adjustments,~~eliminated upon consolidation, and

therefore in some instances will differ from ~~“Total VIE~~the carrying value of 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:~~13.5:Transactions with Consolidated VIEs


			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans	Debt securities	All other assets (1)	Liabilities (2)
June 30, 2023
Commercial and industrial loans and leases	$	7,345	4,947	—	204	(136)
Other	72		—	71	1	(72)
Total consolidated VIEs	$	7,417	4,947	71	205	(208)
December 31, 2022
Commercial and industrial loans and leases	$	7,148	4,802	—	190	(129)
Other	72		—	71	1	(72)
Total consolidated VIEs	$	7,220	4,802	71	191	(201)

(1)All other assets includes cash and ~~Secured Borrowings~~due from banks, 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
(2)Liabilities include short-term borrowings, and accrued expenses and other liabilities.

~~INVESTMENT FUNDS~~ ~~Subsequent to adopting ASU 2015-02 (Amendments to the Consolidation Analysis) 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.~~Other Transactions

~~OTHER CONSOLIDATED VIE STRUCTURES~~In addition to the ~~structure types~~transactions included in the previous ~~table, at December 31, 2016,~~tables, we ~~had approximately $6.0 billion~~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 ~~private placement debt financing issued through a consolidated VIE. The issuance was classified as long-term debt in our consolidated financial statements. At December 31, 2016,~~the VIEs are receivables from us, we ~~pledged approximately $434 million in loans (principal~~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 ~~interest eligible~~may have the right to ~~be capitalized) and $6.1 billion in available-for-sale~~redeem the third-party securities ~~to collateralize the VIE’s borrowings. These assets were not transferred to the VIE, and accordingly we excluded the VIE from the previous table. During second quarter 2017, the private~~

~~placement debt financing was repaid, and the entity was no longer considered a VIE.~~

For complete descriptions of our accounting for transfers accounted for as secured borrowings and involvements with consolidated VIEs, see Note 8 (Securitizations and Variable Interest Entities) to Financial Statements in our 2016 Form 10-K.

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

~~Note 8: 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 and servicing.~~

~~We apply the amortization method to commercial MSRs and apply the fair value method to residential MSRs. Table 8.1 presents the changes in MSRs measured using the fair value method.~~

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

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2017
2016
2017
2016
Fair value, beginning of period $ 12,789
10,396
12,959
12,415
Purchases 541
—
541
—
Servicing from securitizations or asset transfers (1) 605
609
1,624
1,452
Sales and other (2) 64
4
9
(18 )
Net additions 1,210
613
2,174
1,434
Changes in fair value:
Due to changes in valuation model inputs or assumptions:
Mortgage interest rates (3) (171 ) 39
(324 ) (1,824 )
Servicing and foreclosure costs (4) 60
(10 ) 73
13
Prepayment estimates and other (5) (31 ) (37 ) (77 ) 22
Net changes in valuation model inputs or assumptions (142 ) (8 ) (328 ) (1,789 )
Changes due to collection/realization of expected cash flows over time (519 ) (586 ) (1,467 ) (1,645 )
Total changes in fair value (661 ) (594 ) (1,795 ) (3,434 )
Fair value, end of period $ 13,338
10,415
13,338
10,415


~~(1)~~	~~Includes impacts associated with exercising our right to repurchase delinquent loans from GNMA loan securitization pools.~~


~~(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 at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced.~~

~~Table 8.3:Managed Servicing Portfolio~~

(in billions) Sep 30, 2017
Dec 31, 2016
Residential mortgage servicing:
Serviced for others $ 1,223
1,205
Owned loans serviced 340
347
Subserviced for others 3
8
Total residential servicing 1,566
1,560
Commercial mortgage servicing:
Serviced for others 480
479
Owned loans serviced 128
132
Subserviced for others 8
8
Total commercial servicing 616
619
Total managed servicing portfolio $ 2,182
2,179
Total serviced for others $ 1,703
1,684
Ratio of MSRs to related loans serviced for others 0.87 % 0.85

~~Table 8.4 presents the components of mortgage banking noninterest income.~~

~~Table 8.4:Mortgage Banking Noninterest Income~~

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.~~


~~(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~~under certain circumstances. On our consolidated balance sheet, ~~and adjustments~~we reported the debt securities issued to the ~~repurchase liability are recorded in net gains on mortgage loan origination/sales activities in “Mortgage banking” in our consolidated income statement.~~

~~Because~~VIEs as long-term junior subordinated debt with a carrying value 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 is reasonably possible. The estimate of the range of possible loss for representations$407 million 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$401 million at ~~September~~June 30, ~~2017,~~2023, 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.December 31, 2022, respectively.

~~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.~~Wells Fargo & Company			119


~~(2)~~			~~Results from changes in investor demand~~ Note 14: Guarantees and ~~mortgage insurer practices, credit deterioration and changes in the financial stability of correspondent lenders.~~

Other Commitments

~~Note 9: Intangible Assets~~

~~Table 9.1 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 9.2 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. Future amortization expense may vary from these projections.~~

~~Table 9.2: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.~~

~~Table 9.3 shows the allocation of goodwill to our reportable operating segments.~~

~~Table 9.3:Goodwill~~

(in millions)
Community
Banking

Wholesale
Banking

Wealth and Investment Management

Consolidated
Company

December 31, 2015 $ 16,849
7,475
1,205

25,529
Reduction in goodwill related to divested businesses and other —
(84 ) (2 ) (86 )
Goodwill from business combinations —
1,245
—
1,245
September 30, 2016 $ 16,849
8,636
1,203
26,688
December 31, 2016 $ 16,849
8,585
1,259
26,693
Reclassification of goodwill held for sale to Other Assets (1) —
(116 ) —
(116 )
Reduction in goodwill related to divested businesses and other —
(20 ) —
(20 )
Goodwill from business combinations —
—
24
24
September 30, 2017 (1) $ 16,849
8,449
1,283
26,581


~~(1)~~	~~Goodwill reclassified to held-for-sale in other assets of~~ ~~$116 million~~ ~~for the nine months ended~~ ~~September 30, 2017~~ ~~relates to the sales agreement for Wells Fargo Insurance Services USA (and related businesses) and Wells Fargo Shareowner Services.~~ No ~~goodwill was classified as held-for-sale in other assets at~~ ~~December 31, 2016~~ ~~and~~ ~~2015~~.

~~We assess goodwill for impairment at a reporting unit level, which is one level below the operating segments. See Note 18 (Operating Segments) for further information on management reporting.~~

~~Note 10: Guarantees, Pledged Assets and Collateral~~

Guarantees are contracts that contingently require us to make payments to a guaranteed party based on an event or a change in an underlying asset, liability, rate or index. ~~Guarantees are generally in the form of standby letters of credit, securities lending and other indemnifications, written put options, recourse obligations, and other types of arrangements.~~ For ~~complete~~additional

descriptions of our guarantees, see Note 1417 (Guarantees ~~Pledged Assets~~ and ~~Collateral) to Financial Statements~~Other Commitments) in our ~~2016~~2022 Form 10-K. Table ~~10.1~~14.1 shows carrying value and maximum exposure to loss on our ~~guarantees and the related non-investment grade amounts.~~

guarantees.

Table ~~10.1:~~14.1:Guarantees – Carrying Value and Maximum Exposure to Loss


			Maximum exposure to loss
(in millions)	Carrying value of obligation		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
June 30, 2023
Standby letters of credit (1)	$	92	14,223	4,480	3,550	12	22,265	7,528
Direct pay letters of credit (1)	11		1,137	2,855	407	5	4,404	1,122
Loans and LHFS sold with recourse (2)	20		361	2,112	3,121	8,351	13,945	11,112
Exchange and clearing house guarantees	—		6,204	—	—	—	6,204	—
Other guarantees and indemnifications (3)	—		515	—	9	216	740	469
Total guarantees	$	123	22,440	9,447	7,087	8,584	47,558	20,231
December 31, 2022
Standby letters of credit (1)	$	112	14,014	4,694	3,058	53	21,819	7,071
Direct pay letters of credit (1)	13		1,593	2,734	465	5	4,797	1,283
Loans and LHFS sold with recourse (2)	16		322	1,078	3,408	8,906	13,714	11,399
Exchange and clearing house guarantees	—		4,623	—	—	—	4,623	—
Other guarantees and indemnifications (3)	—		548	1	10	201	760	515
Total guarantees	$	141	21,100	8,507	6,941	9,165	45,713	20,268

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)Standby and direct pay letters of credit are reported net of syndications and participations.

~~(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)~~

(2)Represents recourse provided, predominantly to the GSEs, on loans sold under various programs and arrangements.

(3)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.

~~“Maximum~~ exposure to ~~loss”~~loss was $172 million and ~~“Non-investment grade” are required disclosures under GAAP. Non-investment grade represents those guarantees on which we have a higher risk~~$157 million with related collateral of ~~being required to perform under the terms~~$1.7 billion and $1.3 billion as 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 loansJune 30, 2023, and ~~other extensions of credit. Credit quality indicators we usually consider in evaluating risk of payments or performance are described in Note 5 (Loans and Allowance for Credit Losses).~~

December 31, 2022, respectively.

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 ~~10.1~~14.1 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~~these amounts are 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 representative of our current 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. In determining the ACL for guarantees, we consider the credit risk of the related contingent obligation.

For our guarantees in Table 14.1, non-investment grade represents those guarantees on which we have a higher risk of performance under the terms of the guarantee, which is determined based on an external rating or an internal credit grade that is below investment grade.

WRITTEN OPTIONS We enter into written foreign currency options and over-the-counter written equity put options that are derivative contracts that have the characteristics of a guarantee. The fair value of written options represents our view of the probability that we will be required to perform under the contract. The fair value of these written options was an asset of $449 million and a liability of $15 million at June 30, 2023, and December 31, 2022, respectively. The fair value may be an asset as a result of deferred premiums on certain option trades. The maximum exposure to loss represents the notional value of these derivative contracts. At June 30, 2023, the maximum exposure to loss was $31.8 billion, with $29.3 billion expiring in three years or less compared with $23.4 billion and $21.3 billion,

respectively, at December 31, 2022. See Note 11 (Derivatives) for additional information regarding written derivative contracts.

REPRESENTATIONS OR WARRANTIES We record a liability for mortgage loans that we expect to repurchase pursuant to various representations or warranties. See Note 13 (Securitizations and Variable Interest Entities) for further discussion and related amounts. Additionally, when we sell MSRs, we may provide indemnifications for losses incurred due to material breaches of contractual representations or warranties as well as other recourse arrangements. At June 30, 2023, our liability for these indemnification arrangements was $8 million and the maximum exposure to loss was $650 million, with $609 million expiring in three years or less.

~~Note 10: Guarantees, Pledged Assets and Collateral (continued~~)


120			Wells Fargo & Company

GUARANTEES OF SUBSIDIARIES The Parent fully and unconditionally guarantees the payment of principal, interest, and any other amounts that may be due on securities that its 100% owned finance subsidiary, Wells Fargo Finance LLC, may issue. These securities are not guaranteed by any other subsidiary of the Parent. The guaranteed liabilities were $847 million and $948 million at June 30, 2023, and December 31, 2022, respectively. These guarantees rank on parity with all of the Parent’s other unsecured and unsubordinated indebtedness.

OTHER COMMITMENTS To meet the financing needs of our customers, we may enter into commitments to purchase debt and equity securities to provide capital for their funding, liquidity or other future needs. As of both June 30, 2023, and December 31, 2022, we had commitments to purchase debt securities of $100 million and commitments to purchase equity securities of $5.0 billion and $3.8 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 14.1 in Other guarantees and indemnifications.

We have commitments to enter into resale and securities borrowing agreements as well as repurchase and securities lending agreements with certain counterparties, including central clearing organizations. The amount of our unfunded contractual commitments for resale and securities borrowing agreements was $16.6 billion and $19.9 billion as of June 30, 2023, and December 31, 2022, respectively. The amount of our unfunded contractual commitments for repurchase and securities lending agreements was $2.4 billion and $1.6 billion as of June 30, 2023, and December 31, 2022, respectively.

Given the nature of these commitments, they are excluded from Table 5.4 (Unfunded Credit Commitments) in Note 5 (Loans and Related Allowance for Credit Losses).


			Wells Fargo & Company			121


Note 15: Pledged Assets and Collateral

~~Pledged~~Fair Value Option

Table 12.7 reflects differences between the fair value carrying amount of the assets and liabilities for which we have elected the fair value option and the contractual aggregate unpaid principal amount at maturity.

Table 12.7:Fair Value Option


	June 30, 2023				December 31, 2022
(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 (1)	$	2,974	3,238	(264)	4,220	4,614	(394)
Long-term debt (2)	(1,600)		(2,147)	547	(1,346)	(1,775)	429

(1)Nonaccrual loans and loans 90 days or more past due and still accruing included in LHFS for which we have elected the fair value option were insignificant at June 30, 2023, and December 31, 2022.

(2)Includes zero coupon notes for which the aggregate unpaid principal amount reflects the contractual principal due at maturity.

~~As part~~Table 12.8 reflects amounts included in earnings related to initial measurement and subsequent changes in fair value, by income statement line item, for assets and liabilities for which

the fair value option was elected. Amounts recorded in net interest income are excluded from the table below.

Table 12.8:Gains (Losses) on Changes in Fair Value Included in Earnings



	2023				2022
(in millions)	Mortgage banking noninterest income		Net gains from trading and securities	Other noninterest income	Mortgage banking noninterest income	Net gains from trading and securities	Other noninterest income
Quarter ended June 30,
Loans held for sale	$	34	13	—	(237)	1	—
Long-term debt	—		9	—	—	11	—
Six months ended June 30,
Loans held for sale	$	131	25	(4)	(603)	10	—
Long-term debt	—		(21)	—	—	23	—

For long-term debt, instrument-specific credit risk gains or losses represent the impact of changes in fair value due to changes in our ~~liquidity management strategy, we pledge various~~credit spread and are derived using observable secondary bond market information. These impacts are recorded within the debit valuation adjustments (DVA) in OCI. See

Note 20 (Other Comprehensive Income) for additional information.


			Wells Fargo & Company			113

Note 12: Fair Values of Assets and Liabilities (continued)

Disclosures about Fair Value of Financial Instruments

Table 12.9 presents a summary of fair value estimates for financial instruments that are not carried at fair value on a recurring basis. Some financial instruments are excluded from the scope of this table, such as certain insurance contracts, certain nonmarketable equity securities, and leases. This table also excludes assets ~~to secure~~and liabilities that are not financial instruments such as the value of the long-term relationships with our deposit, credit card and trust customers, MSRs, premises and ~~public deposits, borrowings~~equipment, goodwill and deferred taxes.

Loan commitments, standby letters of credit ~~from the FHLB~~ and FRB, securities sold under agreements to repurchase (repurchase agreements), securities lending arrangements, and for other purposes as required or permitted by law or insurance statutory requirements. The 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~~similar letters of ~~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 also excludes $1.1 billion in assets pledged in transactions with VIE's accounted for as secured borrowings at both September 30, 2017, and December 31, 2016, respectively. See Note 7 (Securitizations and Variable Interest Entities) for additional information on consolidated VIE assets and secured borrowings.

~~Table 10.2: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.~~

~~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 subsidiaries and to a lesser extent through other bank entities. Most of our securities financing activities involve high quality, liquid securities such as U.S. Treasury securities and government agency securities, and to a lesser extent, less liquid securities, including equity securities, corporate bonds and asset-backed securities. We account for these transactions as collateralized financings in which we typically receive or pledge securities as collateral. We believe these financing transactions generally do not have material credit ~~risk given the collateral provided and the related monitoring processes.~~

~~OFFSETTING OF RESALE AND REPURCHASE AGREEMENTS AND SECURITIES BORROWING AND LENDING AGREEMENTS~~ Table 10.3 presents resale and repurchase agreements subject to master repurchase agreements (MRA) and securities borrowing and lending agreements subject to master securities lending agreements (MSLA). We account for

transactions subject to these agreements as collateralized financings, and those with a single counterparty are presented net on our balance sheet, provided certain criteria are met that permit balance sheet netting. Most transactions subject to these agreements do not meet those criteria and thus are not ~~eligible for balance sheet netting.~~

Collateral we pledged consists of non-cash instruments, such as securities or loans, and is not netted on the balance sheet against the related liability. Collateral we received includes securities or loans and is not recognized on our balance sheet. Collateral pledged or received may be increased or decreased over time to maintain certain contractual thresholds as the assets underlying each arrangement fluctuate in value. Generally, these agreements require collateral to exceed the asset or liability recognized on the balance sheet. The following table includes the amount of collateral pledged or received related to exposures subject to enforceable MRAs or MSLAs. While these agreements are typically over-collateralized, U.S. GAAP requires disclosure in this table to limit the reported amount of such collateral to the amount of the related recognized asset or liability for each counterparty.

~~In addition to the amounts~~ included in

Table ~~10.3, we also have balance sheet netting related to derivatives that is disclosed in Note 12 (Derivatives).~~

~~Table 10.3:Offsetting – Resale and Repurchase Agreements~~

(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~~12.9. A reasonable estimate 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.~~

~~Note 10: Guarantees, Pledged Assets and Collateral (continued~~)

~~REPURCHASE AND SECURITIES LENDING AGREEMENTS~~ Securities sold under repurchase agreements and securities lending arrangements are effectively short-term collateralized borrowings. In these transactions, we receive cash in exchange for transferring securities as collateral and recognize an obligation to reacquire the securities for cash at the transaction's maturity. These types of transactions create risks, including (1) the counterparty may fail to return the securities at maturity, (2) the fair value of these instruments is the ~~securities transferred may decline below~~carrying value of deferred fees plus the ~~amount~~allowance for unfunded credit commitments, which totaled $622 million and $737 million at June 30, 2023, and December 31, 2022, respectively.

The total 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 of our securities financing activities involve highly liquid securities, we underwrite and monitor the financial strength of our counterparties, we monitor the fair value ~~of collateral pledged relative~~calculations presented does not represent, and should not be construed 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 provides~~represent, the underlying ~~collateral types~~fair value of ~~our gross~~the Company.

Table 12.9:Fair Value Estimates for Financial Instruments


			Estimated fair value
(in millions)	Carrying amount		Level 1	Level 2	Level 3	Total
June 30, 2023
Financial assets
Cash and due from banks (1)	$	31,915	31,915	—	—	31,915
Interest-earning deposits with banks (1)	123,418		123,195	223	—	123,418
Federal funds sold and securities purchased under resale agreements (1)	66,500		—	66,500	—	66,500
Held-to-maturity debt securities	272,360		2,371	228,748	2,717	233,836
Loans held for sale	3,055		—	2,641	462	3,103
Loans, net (2)	918,454		—	55,515	825,008	880,523
Nonmarketable equity securities (cost method)	4,552		—	—	4,620	4,620
Total financial assets	$	1,420,254	157,481	353,627	832,807	1,343,915
Financial liabilities
Deposits (3)	$	128,458	—	85,183	41,616	126,799
Short-term borrowings	84,054		—	84,056	—	84,056
Long-term debt (4)	169,012		—	168,245	1,969	170,214
Total financial liabilities	$	381,524	—	337,484	43,585	381,069
December 31, 2022
Financial assets
Cash and due from banks (1)	$	34,596	34,596	—	—	34,596
Interest-earning deposits with banks (1)	124,561		124,338	223	—	124,561
Federal funds sold and securities purchased under resale agreements (1)	68,036		—	68,036	—	68,036
Held-to-maturity debt securities	297,059		14,285	238,552	2,684	255,521
Loans held for sale	2,884		—	2,208	719	2,927
Loans, net (2)	928,049		—	57,532	836,831	894,363
Nonmarketable equity securities (cost method)	4,900		—	—	4,961	4,961
Total financial assets	$	1,460,085	173,219	366,551	845,195	1,384,965
Financial liabilities
Deposits (3)	$	66,887	—	46,745	18,719	65,464
Short-term borrowings	50,964		—	50,970	—	50,970
Long-term debt (4)	173,502		—	172,783	999	173,782
Total financial liabilities	$	291,353	—	270,498	19,718	290,216

(1)Amounts consist of financial instruments for which carrying value approximates fair value.

(2)Excludes lease financing with a carrying amount of $15.1 billion and $14.7 billion at June 30, 2023, and December 31, 2022, respectively.

(3)Excludes deposit liabilities with no defined or contractual maturity of $1.2 trillion and $1.3 trillion at June 30, 2023, and December 31, 2022, respectively.

(4)Excludes obligations under ~~repurchase~~finance leases of $20 million and ~~securities lending agreements.~~$22 million at June 30, 2023, and December 31, 2022, respectively.

~~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)~~114			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 10.5 provides the contractual maturities of our gross obligations under repurchase and securities lending agreements.~~

~~Table 10.5:Contractual Maturities of Gross Obligations~~

(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.

Note ~~11: Legal Actions~~13: Securitizations and Variable Interest Entities

~~Wells Fargo~~Involvement with Variable Interest Entities (VIEs)

In the normal course of business, we enter into various types of on- and ~~certain of our subsidiaries~~off-balance sheet transactions with special purpose entities (SPEs), which are involved in a number of judicial, regulatory, arbitration, and other proceedings concerning matters arising from the conduct of our business activities, and many of those proceedings expose Wells Fargo to potential financial loss. These proceedings include actions brought against Wells Fargo and/corporations, trusts, limited liability companies 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 lossespartnerships that are both probable and estimable; however, if we cannot determine a best estimate, then we record the low end of the range of those potential losses. The actual costs of resolving legal actions may be substantially higher or lower than the amounts accrued for those actions.

~~ATM ACCESS FEE LITIGATION~~ ~~In October 2011, plaintiffs filed a putative class action,~~ ~~Mackmin, et. al. v. Visa, Inc. 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 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 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 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 cases returned to the district court for further proceedings.

~~AUTOMOBILE LENDING MATTERS~~ As the Company centralizes operations in its dealer services business and tightens controls and oversight of third-party risk management, the Company anticipates it will identify and remediate issues related to historical practices concerning the origination, servicing, and/or collection of consumer automobile loans, 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. The Company determined that certain external vendor processes and operational controls were inadequate and, as a result, customers may have been charged premiums for CPI even if they were paying for their own vehicle insurance, as required, and in some cases the CPI premiums may have contributed to a default that led to their vehicle’s repossession. The Company discontinued the practice of placing CPI in September 2016. Multiple putative class action cases alleging, among other things, unfair and deceptive practices relating to these CPI policies, have been filed against the Company and consolidated into one multi-district litigation in the United States District Court for the Central District of California. Further, a former team member has alleged retaliation for raising concerns regarding automobile lending practices. In addition, the Company has identified certain issues related to the unused portion of guaranteed automobile protection (GAP) waiver or insurance agreements between the dealer and, by assignment, the lender, which may result in refunds to customers in certain states. Allegations related to both the CPI and GAP programs are among the subjects of two shareholder derivative lawsuits filed in California state court. These and other issues related to the origination, servicing and/or collection of consumer automobile loans, including related insurance products, have also subjected the Company to formal or informal inquiries, investigations or examinations from federal and state government agencies.

~~CONSUMER DEPOSIT ACCOUNT RELATED REGULATORY INVESTIGATION~~ The Consumer Financial Protection Bureau (the “CFPB”) has commenced an investigation into whether customers were unduly harmed by the Company’s 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.

~~INADVERTENT CLIENT INFORMATION DISCLOSURE~~ In July 2017, 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 delivered to the New Jersey state court and the Company for safekeeping. The Company has made voluntary self-disclosure to various state and federal regulatory agencies. Notifications have been sent to clients whose personal identifying data was contained in the inadvertent production.

~~INTERCHANGE LITIGATION~~Plaintiffs representing a putative class of merchants have filed putative class actions, and individual merchants have filed individual actions, against Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia Corporation regarding the interchange fees associated with Visa and MasterCard payment card transactions. Visa, MasterCard and several other banks and bank holding companies are also named as defendants in these actions. These actions have been consolidated in the United States District Court for the Eastern District of New York. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard and payment card issuing banks unlawfully

~~Note 11: Legal Actions (continued~~)

colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012, Visa, MasterCard and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve the consolidated class action and reached a separate settlement in principle of the consolidated individual actions. The settlement payments to be made by all defendants in the consolidated class and individual actions totaled approximately $6.6 billion before reductions applicable to certain merchants opting out of the settlement. The class settlement also provided for the distribution to class merchants of 10 basis points of default interchange across all credit rate categoriesestablished 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 andlimited purpose. SPEs 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. Several of the opt-out litigations were settled during the pendency of the Second Circuit appeal while others remain pending. Discovery is proceeding in the opt-out litigations and the remanded class cases.

~~MORTGAGE BANKRUPTCY LOAN MODIFICATION LITIGATION~~ ~~Plaintiffs, representing a putative class of mortgage borrowers who were debtors in Chapter 13 bankruptcy cases, filed a putative class action,~~ ~~Cotton, et al. v. Wells Fargo, et al~~, against Wells Fargo & Company and Wells Fargo Bank, N.A. in the United States Bankruptcy Court for the Western District of North Carolina on June 7, 2017. The plaintiffs allege that Wells Fargo improperly and unilaterally modified the mortgages of borrowers who were debtors in Chapter 13 bankruptcy cases. The plaintiffs allege that Wells Fargo implemented these modifications by improperly filing mortgage payment change notices in Chapter 13 bankruptcy cases, in violation of bankruptcy rules and process. The amended complaint asserts claims based on, among other things, alleged fraud, violations of bankruptcy rules and laws, and unfair and deceptive trade practices. The amended complaint seeks monetary damages, 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, filed in the United States

District Courts for the Central District of California and the Northern District of California, alleging violations of federal and state consumer fraud statutes relating to mortgage rate lock extension fees. In addition, former team members have asserted claims, including in pending litigation, that they were terminated for raising concerns regarding these policies and procedures. Allegations related to mortgage interest rate lock extension fees are also among the subjects of two shareholder derivative lawsuits filed in California state court.

~~MORTGAGE RELATED REGULATORY INVESTIGATIONS~~ Federal and state government agencies, including the United States Department of Justice (the “Department of Justice”), continue investigations or examinations of certain mortgage related activities of Wells Fargo and predecessor institutions. Wells Fargo, for itself and for predecessor institutions, has responded, and continues to respond, to requests from these agencies seeking information regarding the origination, underwriting and securitization of residential mortgages, including sub-prime mortgages. These agencies have advanced theories of purported liability with respect to certain of these activities. The Department of Justice and Wells Fargo continue to discuss the matter, including potential settlement 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 penalties and remedial actions.

~~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”) of the United States Department of the Treasury. We do not believe any funds related to these transactions flowed through accounts at Wells Fargo as a result of the aforementioned conduct. The Company has made voluntary self-disclosures to OFAC and is cooperating with an inquiry from the Department of Justice.

~~ORDER OF POSTING LITIGATION~~ Plaintiffs filed a series of putative class actions against Wachovia Bank, N.A. and Wells Fargo Bank, N.A., as well as many other banks, challenging the “high to low” order in which the banks post debit card transactions to consumer deposit accounts. Most of these actions were consolidated in multi-district litigation proceedings (the “MDL proceedings”) in the United States District Court for the Southern District of Florida. The court in the MDL proceedings has certified a class of putative plaintiffs, and Wells Fargo moved to compel arbitration of the claims of unnamed class members. The court denied the motions to compel arbitration on October 17, 2016. Wells Fargo has appealed this decision to the United States Court of Appeals for the Eleventh Circuit.

~~RMBS TRUSTEE LITIGATION~~ In November 2014, a group of institutional investors (the “Institutional Investor Plaintiffs”), including funds affiliated with BlackRock, Inc., filed a putative class action in the United States District Court for the Southern District of New York against Wells Fargo Bank, N.A., alleging claims against the Company in its capacity as trustee for a number of residential mortgage-backed securities (RMBS) trusts (the “Federal Court Complaint”). Similar complaints have been filed against other trustees in various courts, including in the Southern District of New York, in New

York state court, and in other states, by RMBS investors. The Federal Court Complaint alleges that Wells Fargo Bank, N.A., as trustee, caused losses to investors and asserts causes of action based upon, among other things, the 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 in an unspecified amount, reimbursement of expenses, and equitable relief. In December 2014 and December 2015, certain other 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 orderoften formed in connection with ~~the Federal Court Complaint dismissing claims related~~securitization transactions whereby financial assets are transferred to certain of the trusts at issue (the “Dismissed Trusts”). The Company's motion to dismiss the Federal Court Complaint and the complaints for the Related Federal Cases was granted in part and denied in part in March 2017. 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 by a different plaintiff investor. In addition, the Institutional Investor Plaintiffs subsequently filed a complaint relating to the Dismissed Trusts and certain additional trusts in California state court (the “California Action”). The California Action was subsequently dismissed in September 2016. In December 2016, the Institutional Investor Plaintiffs filed a new putative class action complaint in New York state court in respect of 261 RMBS trusts, including the Dismissed Trusts, for which Wells Fargo Bank, N.A. serves or served as trustee (the “State Court Action”). The Company has moved to dismiss the State Court Action.

~~In July 2017, certain of the plaintiffs from the State Court Action filed a civil complaint relating to Wells Fargo Bank, N.A.'s setting aside reserves for legal fees and expenses~~an SPE. SPEs formed in connection with ~~the liquidation of eleven RMBS trusts at issue in the State Court Action.~~securitization transactions are generally considered variable interest entities (VIEs). 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 event that the $142 million settlement total is not enough to provide remediation, pay attorneys' fees, pay settlement fund claims administration costs, and have at least $25 million left over to distribute to all class members, the Company will contribute additional funds to the settlement. In addition, in the unlikely event that the number of unauthorized accounts identified by settlement class members in the claims process and not disputed by the claims administrator exceeds plaintiffs’ 3.5 million account estimate, the Company will proportionately increase the $25 million reserve so that the ratio of reserve to unauthorized accounts is no less than what was implied by plaintiffs’ estimate at the time of the district court’s preliminary approval of the settlement in July 2017. A final approval hearing has been scheduled for the first quarter of 2018. Second, Wells Fargo shareholders are pursuing a consolidated securities fraud class action in the United States District Court for the Northern District of California alleging certain misstatements and omissions in the Company’s disclosures related to sales practices matters. Third, Wells Fargo shareholders have brought numerous shareholder derivative lawsuits asserting breach of fiduciary duty claims, among others, against current and former directors and officers for their alleged failure to detect and prevent sales practices issues, which were consolidated into two separate actions in the United States District Court for the Northern District of California and California state court, as well as two separate actions in Delaware state court. Fourth, a range of employment litigation has been brought against Wells Fargo, including an Employee Retirement Income Security Act (ERISA) class action in the United States District Court for the District of Minnesota brought on behalf of 401(k) plan participants; class actions pending in the United States District Courts for the Northern District of California and Eastern District of New York on behalf of employees who allege that they protested sales practice misconduct and/or were terminated for not meeting sales goals; various wage and hour class actions brought in federal and state court in California, New Jersey, Florida, and Pennsylvania on behalf of non-exempt branch based employees alleging sales pressure resulted in uncompensated overtime; and multiple single plaintiff Sarbanes-Oxley Act complaints and state law whistleblower actions filed with the United States Department of Labor or in various state courts alleging adverse employment actions for raising sales practice misconduct issues.

~~OUTLOOK~~As 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 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. 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 thereVIE 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 actions against Wells Fargo and/or its subsidiaries will not, individually or in the aggregate, have a material adverse effect on Wells Fargo’s consolidated financial condition. However, it is possible that the ultimate resolution of a matter, if unfavorable, may be material to Wells Fargo’s results of operations for any particular period.

~~Note 12: 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 (fair value or cash flow hedge). Our remaining derivatives consist of economic hedges that do not qualify for hedge accounting and derivatives held for customer accommodation trading, or other purposes. For more information on our derivative activities, see Note 16 (Derivatives) to Financial Statements in our 2016 Form 10-K.

Table 12.1 presents the total notional or contractual amounts and fair values for our derivatives. Derivative transactions can be measured in terms of the notional amount, but this amount is not recorded on the balance sheet and is not, when viewed in isolation, a meaningful measure ofalter the risk profile of the ~~instruments. The notional amount is generally not exchanged but is used only~~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 consolidated balance sheet to a VIE in connection with a securitization, we typically receive cash and sometimes other interests in the VIE as proceeds for the ~~basis~~assets we transfer. In certain transactions with VIEs, we may retain the right to service the transferred assets 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 securitization or other VIE activities, we have various forms of ongoing involvement with VIEs, which may include:

•underwriting securities issued by VIEs and subsequently making markets in those securities;

•providing credit enhancement on ~~which interest~~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 in VIEs;

•acting as servicer or investment manager for VIEs;

•providing administrative or trustee services to VIEs; and

•providing seller financing to VIEs.

Loan Sales and Securitization Activity

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

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 option

to repurchase loans from GNMA loan securitization pools, which becomes exercisable when three scheduled loan payments remain unpaid by the borrower. When we do not repurchase these loans, they are ~~determined.~~recorded on our consolidated balance sheet and pledged to the GNMA securitization. We repurchased loans of $99 million and $191 million, during the second quarter and first half of 2023, respectively, and $564 million and $1.5 billion during the second quarter and first half of 2022, respectively. In 2022, these predominantly represented repurchases of government insured loans. At June 30, 2023, and December 31, 2022, we recorded assets and related liabilities of $940 million and $743 million, respectively, where we did not exercise our option to repurchase eligible loans.

Table 13.1 presents information about transfers of assets during the periods presented for which we recorded the transfers as sales and have continuing involvement with the transferred assets. In connection with these transfers, we received proceeds and recorded servicing assets and securities. Each of these interests are initially measured at fair value. Servicing rights are classified as Level 3 measurements, and generally securities are classified as Level 2. The majority of our transfers relate to

~~Table 12.1: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.~~ Wells Fargo & Company			115


~~(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~~)13: Securitizations and Variable Interest Entities (continued)

~~Table 12.2 provides information on~~residential mortgage securitizations with the ~~gross fair values of derivative assets~~GSEs or GNMA and ~~liabilities,~~generally result in no gain or loss because the ~~balance sheet netting adjustments and the resulting net~~loans are measured at fair value amount recorded on our balance sheet, as well as the non-cash collateral associated with such arrangements. We execute largely all of our derivative transactions under master netting arrangements and reflect all derivative balances and related cash collateral subject to enforceable master netting arrangements on a net basis within the balance sheet. The “Gross amounts recognized” column in the following table includes $27.2 billion and $28.8 billion of gross derivative assets and liabilities, respectively, at September 30, 2017, and $74.4 billion and $78.4 billion, respectively, at December 31, 2016, with counterparties subject to enforceable master netting arrangementsrecurring basis. Additionally, we may transfer certain government insured loans that we previously

repurchased. These loans are carried on the balance sheet net of offsetting amounts. The remaining gross derivative assets and liabilities of $8.7 billion and $4.9 billion, respectively, at September 30, 2017, and $10.7 billion and $8.7 billion, respectively, at December 31, 2016, include those with counterparties subject to master netting arrangements for which we have not assessed the enforceability because they are with counterparties where we do not currently have positions to offset, those subject to master netting arrangements where we have not been able to confirm the enforceability and those not subject to master netting arrangements. As such, we do not net derivative balances or collateral within the balance sheet for these counterparties.

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,~~lower of cost or market, and we ~~allocate these netting adjustments to~~recognize gains on such transfers when the ~~contract type for each counterparty proportionally based upon~~market value is greater than the ~~“Gross amounts recognized” by counterparty. As a result, the net amounts disclosed by contract type may not represent the actual exposure upon settlement~~carrying value of the ~~contracts.~~loan when it is sold.

Table 13.1:Transfers with Continuing Involvement



	2023			2022
(in millions)	Residential mortgages		Commercial mortgages	Residential mortgages	Commercial mortgages
Quarter ended June 30,
Assets sold	$	3,917	1,800	23,817	4,345
Proceeds from transfer (1)	3,917		1,823	23,817	4,411
Net gains (losses) on sale	—		23	—	66

Continuing involvement (2):
Servicing rights recognized	$	46	16	313	41
Securities recognized (3)	—		22	475	33

Six months ended June 30,
Assets sold	$	8,378	3,299	49,991	8,378
Proceeds from transfer (1)	8,378		3,363	50,043	8,508
Net gains (losses) on sale	—		64	52	130

Continuing involvement (2):
Servicing rights recognized	$	93	34	640	70
Securities recognized (3)	—		48	2,062	137

~~We do not net non-cash collateral that we receive~~(1)Represents cash proceeds and ~~pledge on the balance sheet. For disclosure purposes, we present~~ the fair value of ~~this~~ non-cash ~~collateral~~beneficial interests recognized at securitization settlement.

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

The “Net amounts” column within Table 12.2 represents the aggregate of our net exposure to each counterparty after considering the balance sheet and Disclosure-only netting adjustments. We manage derivative exposure by monitoring the credit risk associated with each counterparty using counterparty specific credit risk limits, using master netting arrangements and obtaining collateral. Derivative contracts executed in over-the-counter markets include bilateral contractual arrangements(3)Represents debt securities obtained at securitization settlement held for investment purposes that are not cleared through a central clearing organization but are typically subject to master netting arrangements. The percentage of our bilateral derivative transactions outstanding at period end in such markets, based on gross fair value, is provided within the following table. Other derivative contracts executed in over-the-counterclassified as available-for-sale or ~~exchange-traded markets are settled through a central clearing organization and are excluded from this percentage.~~held-to-maturity. In ~~addition to the netting amounts included in the table, we also have balance sheet netting~~2022, these predominantly related to ~~resale and repurchase agreements that are disclosed within Note 10 (Guarantees, Pledged Assets and Collateral).~~

~~Table 12.2:Gross Fair Values of Derivative Assets and Liabilities~~

(in millions)
Gross
amounts
recognized (1)

Gross amounts
offset in
consolidated
balance
sheet (1)(2)

Net amounts in
consolidated
balance
sheet

Gross amounts
not offset in
consolidated
balance sheet
(Disclosure-only
netting) (3)

Net
amounts

Percent
exchanged in
over-the-counter
market (1)(4)

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.

~~(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: Derivatives (continued~~)

~~Fair Value Hedges~~

~~We use derivatives to hedge against changes in fair value of certain financial instruments, including available-for-sale~~agency securities. Excludes trading debt securities ~~mortgages~~ held temporarily for ~~sale,~~market-marking purposes, which are sold to third parties at or shortly after securitization settlement, of $1.8 billion and ~~long-term debt.For more information on 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 in fair value hedging relationships.~~

~~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~~

We use derivatives to hedge certain financial instruments against future interest rate increases and to limit the variability of cash flows on certain financial instruments due to changes in the benchmark interest rate. For more information on 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, will be reclassified into net interest income~~$3.7 billion during the next twelve months. Future changes to interest rates may significantly change actual amounts reclassified to earnings. We are hedging our exposure to the variability of future cash flows for all forecasted transactions for a maximum of 5 years.

~~Table 12.4 shows the net gains (losses) recognized related to derivatives in cash flow hedging relationships.~~

~~Table 12.4:Derivatives in Cash Flow Hedging Relationships~~

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2017
2016
2017
2016
Gains (losses) (pre tax) recognized in OCI on derivatives $ 36
(445 ) 279
2,611
Gains (pre tax) reclassified from cumulative OCI into net income (1) 105
262
460
783
Gains (losses) (pre tax) recognized in noninterest income for hedge ineffectiveness (2) (4 ) —
(7 ) 1


~~(1)~~	~~See Note 17 (Other Comprehensive Income) for detail on components of net income.~~


~~(2)~~	~~None of the change in value of the derivatives was excluded from the assessment of hedge effectiveness.~~

~~Derivatives Not Designated as Hedging Instruments~~

We use economic hedges primarily to hedge the risk of changes in the fair value of certain residential MHFS, residential MSRs measured at fair value, loans, derivative loan commitments and other interests held. We also use economic hedge derivatives to mitigate the periodic earnings volatility caused by ineffectiveness recognized on our fair value accounting hedges. The resulting gain or loss on these economic hedge derivatives is reflected in mortgage banking noninterest income, net gains (losses) from equity investments and other noninterest income.

~~The derivatives used to hedge MSRs measured at fair value, resulted in net derivative gains of $240 million~~ ~~and~~ ~~$599 million in the third~~second quarter and first ~~nine months~~half of ~~2017,~~2023, respectively, and ~~$142 million~~$3.6 billion and ~~$2.6~~$10.3 billion induring the ~~third~~second quarter and first ~~nine months~~half of ~~2016, respectively, which are included in mortgage banking noninterest income. The aggregate fair value~~2022, respectively.

In the normal course of ~~these derivatives was a net liability of $9 million~~business, we purchase certain

non-agency securities 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~~initial securitization or subsequently in the ~~underlying~~secondary market, ~~indices~~which we hold for investment. We also provide seller financing in the form of loans. We received cash flows of $91 million and $141 million during the second quarter and first half of 2023, respectively, and $168 million and $304 million, during the second quarter and first half of 2022, respectively, related to principal and interest payments on these securities and loans, which exclude cash flows related to trading activities.

Table 13.2 presents the key weighted-average assumptions we used to initially measure residential MSRs recognized during the periods presented.

Table 13.2:Residential MSRs – Assumptions at Securitization Date



	2023			2022
Quarter ended June 30,
Prepayment rate (1)	16.4		%	10.9
Discount rate	9.4			8.0
Cost to service ($ per loan)	$	176		122
Six months ended June 30,
Prepayment rate (1)	17.5		%	11.0
Discount rate	9.6			7.5
Cost to service ($ per loan)	$	185		117

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

See Note 12 (Fair Values of Assets and ~~sale of derivative financial instruments throughout the period~~Liabilities) and

Note 6 (Mortgage Banking Activities) for additional information on key assumptions for residential MSRs.

RESECURITIZATION ACTIVITIES We enter into resecuritization transactions as part of our ~~dynamic MSR~~trading activities to accommodate the investment and risk management ~~process.~~activities of our customers. In resecuritization transactions, we transfer trading debt securities to VIEs in exchange for new beneficial interests that are 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 guaranteed by GNMA. We do not consolidate the resecuritization VIEs as we share in the decision-making power with third parties and do not hold significant economic interests in the VIEs other than for market-making activities. During the six months ended June 30, 2023 and 2022, we transferred securities of $6.1 billion and $12.6 billion, respectively, to resecuritization VIEs, and retained securities of $329 million and $525 million, respectively. These amounts are not included in Table 13.1. Related total VIE assets were $111.1 billion and $112.0 billion at June 30, 2023, and December 31, 2022, respectively. As of June 30, 2023, and December 31, 2022, we held $1.3 billion and $793 million of securities, respectively.

~~Interest rate lock commitments~~


116			Wells Fargo & Company

Sold or Securitized Loans Serviced for ~~mortgage~~Others

Table 13.3 presents information about loans that we ~~intend~~sold or securitized in which we have ongoing involvement as servicer. Delinquent loans include loans 90 days or more past due and loans in bankruptcy, regardless of delinquency status. For loans sold or securitized where servicing is our only form of continuing involvement, we generally experience a loss only if we were required to ~~sell are considered derivatives. The aggregate fair value~~repurchase a delinquent loan or foreclosed asset due

to a breach in representations and warranties associated with our loan sale or servicing contracts. Table 13.3 excludes mortgage loans sold to and held or securitized by GSEs or GNMA of ~~derivative loan commitments on the balance sheet was a net asset of $25 million~~$637.0 billion and ~~net liability of $6 million~~$704.5 billion at ~~September~~June 30, ~~2017,~~2023, and December 31, ~~2016, respectively,~~2022, respectively. Delinquent loans and foreclosed assets related to loans sold to and held or securitized by GSEs or GNMA were $3.4 billion and $4.6 billion at June 30, 2023, and December 31, 2022, respectively.

Table 13.3:Sold or Securitized Loans Serviced for Others


						Net charge-offs
	Total loans			Delinquent loans and foreclosed assets (1)		Six months ended June 30,
(in millions)	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023	Dec 31, 2022	2023	2022
Commercial	$	66,082	67,029	849	912	67	22
Residential	8,789		9,201	433	501	8	7
Total off-balance sheet sold or securitized loans	$	74,871	76,230	1,282	1,413	75	29

(1)Includes $213 million and $274 million of commercial foreclosed assets and $28 million and $25 million of residential foreclosed assets at June 30, 2023, and December 31, 2022, respectively.

Transactions with Unconsolidated VIEs

Conforming loan securitization and resecuritization transactions involving the GSEs and GNMA are excluded from Table 13.4 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 ~~included in~~limited. For additional information about conforming mortgage loan securitizations and resecuritizations, see the ~~caption “Interest rate contracts” under “Customer accommodation trading~~“Loan Sales and ~~other derivatives” in Table 12.1 in~~Securitization Activity” and “Resecuritization Activities” sections within this Note.

~~For more information on economic hedges~~

COMMERCIAL REAL ESTATE LOANS We may transfer purchased industrial development bonds and ~~other derivatives, see Note 16 (Derivatives)~~GSE credit enhancements to ~~Financial Statements~~VIEs in ~~our 2016 Form 10-K. Table 12.5 shows the net gains recognized in the income statement related to derivatives not designated as hedging instruments.~~

~~Table 12.5:Derivatives Not Designated as Hedging Instruments~~

Quarter ended Sep 30, Nine months ended Sep 30,
(in millions) 2017
2016
2017
2016
Net gains (losses) recognized on economic hedges derivatives:
Interest rate contracts
Recognized in noninterest income:

Mortgage banking (1) $ 138
4
480
1,435
Other (2) (19 ) (56 ) (64 ) (308 )
Equity contracts (3) (489 ) (372 ) (1,175 ) (84 )
Foreign exchange contracts (2) (300 ) 175
(834 ) 504
Credit contracts (2) (6 ) 12
8
12
Subtotal (4) (676 ) (237 ) (1,585 ) 1,559
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest rate contracts
Recognized in noninterest income:

Mortgage banking (5) 152
510
599
1,485
Other (6) 17
210
80
(520 )
Commodity contracts (6) 63
45
138
162
Equity contracts (6) (851 ) (982 ) (2,525 ) (1,277 )
Foreign exchange contracts (6) 155
188
356
686
Credit contracts (6) (31 ) (25 ) (59 ) (66 )
Other (2) 8
15
22
(15 )
Subtotal (487 ) (39 ) (1,389 ) 455
Net gains (losses) recognized related to derivatives not designated as hedging instruments $ (1,163 ) (276 ) (2,974 ) 2,014


~~(1)~~	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.


~~(2)~~	~~Included in other noninterest income.~~


~~(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: Derivatives (continued~~)

~~Credit Derivatives~~

Credit derivative contracts are arrangements whose value is derived from the transfer of credit risk of a reference asset or entity from one party (the purchaser of credit protection) to another party (the seller of credit protection). We use credit derivatives to assist customers with their risk management objectives.exchange for beneficial interests. We may also ~~use credit derivatives~~acquire such beneficial interests in ~~structured product~~ transactions ~~or liquidity agreements written~~where we do not act as a transferor. We own all of the beneficial interests and may also service the underlying mortgages that serve as collateral to ~~special purpose vehicles.~~the bonds. The ~~maximum exposure~~GSEs have the power to direct the servicing and workout activities of sold credit derivatives is managed through posted collateral, purchased credit derivatives and similar products in order to achieve our desired credit risk profile. This credit risk management provides an ability to recover a significant portion of any amounts that would be paid under the ~~sold credit derivatives. We would be~~

~~required to perform under sold credit derivatives~~VIE in the event of a default, therefore we do not have control over the key decisions of the VIEs.

OTHER VIE STRUCTURESWe engage in various forms of structured finance arrangements with other VIEs, including asset-backed finance structures and other securitizations collateralized by asset classes other than mortgages. Collateral may include rental properties, asset-backed securities, student loans and mortgage loans. We may participate in structuring or marketing the ~~referenced obligors. Events~~arrangements as well as provide financing, service one or more of ~~default include events such as bankruptcy, capital restructuring~~the underlying assets, or ~~lack~~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.

In Table 13.4, “Total VIE assets” represents the remaining principal ~~and/or interest payment. In certain cases, other triggers may exist, such~~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 ~~credit downgrade~~carrying value of our investment in the ~~referenced obligors~~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 ~~the inability of the special purpose vehicle~~stressed loss estimate for, ~~which we have provided~~other commitments and guarantees.

Debt, guarantees and other commitments include amounts related to lending arrangements, liquidity ~~to obtain funding.~~

~~Table 12.6 provides details of~~agreements, and certain loss sharing obligations associated with loans originated, sold, and ~~purchased credit derivatives.~~

serviced under certain GSE programs.

~~Table 12.6:Sold and Purchased Credit Derivatives~~

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~~“Maximum exposure to loss” represents estimated loss that would be incurred under ~~an assumed~~severe, hypothetical ~~circumstance,~~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. ~~We believe~~Accordingly, this ~~hypothetical circumstance to be a remote possibility and accordingly, this required~~ disclosure is not an indication of expected loss.


			Wells Fargo & Company			117

Note 13: Securitizations and Variable Interest Entities (continued)

Table 13.4: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
June 30, 2023


Nonconforming mortgage loan securitizations	$	152,727	—		2,424	—	604	(12)	3,016
Commercial real estate loans	5,606		5,590		—	—	16	—	5,606
Other	2,063		256		—	45	17	—	318
Total	$	160,396	5,846		2,424	45	637	(12)	8,940
			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			$	—	2,424	—	604	12	3,040
Commercial real estate loans			5,590		—	—	16	702	6,308
Other			256		—	45	17	229	547
Total			$	5,846	2,424	45	637	943	9,895
			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, 2022


Nonconforming mortgage loan securitizations	$	154,464	—		2,420	—	617	(13)	3,024
Commercial real estate loans	5,627		5,611		—	—	16	—	5,627
Other	2,174		292		1	43	21	—	357
Total	$	162,265	5,903		2,421	43	654	(13)	9,008
			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			$	—	2,420	—	617	13	3,050
Commercial real estate loans			5,611		—	—	16	705	6,332
Other			292		1	43	21	228	585
Total			$	5,903	2,421	43	654	946	9,967

(1)Includes $170 million and $172 million of securities classified as trading at June 30, 2023, and December 31, 2022, respectively.

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

Consolidated VIEs

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

OTHER VIE STRUCTURESOther VIEs are predominantly related to municipal tender option bond (MTOB) transactions. 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 may 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. During second quarter 2022, we purchased the outstanding mortgage loans from the VIEs and extinguished the related debt associated with such securitizations.


118			Wells Fargo & Company

Table 13.5 presents a summary of financial assets and liabilities of our consolidated VIEs. The carrying value represents assets and liabilities recorded on our consolidated balance sheet. “Total VIE assets” includes affiliate balances that are eliminated upon consolidation, and therefore in some instances will differ from the carrying value of assets.

On 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, and (2) the consolidated liabilities of certain VIEs for which the VIE creditors do not have recourse to Wells Fargo.

Table 13.5:Transactions with Consolidated VIEs


			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans	Debt securities	All other assets (1)	Liabilities (2)
June 30, 2023
Commercial and industrial loans and leases	$	7,345	4,947	—	204	(136)
Other	72		—	71	1	(72)
Total consolidated VIEs	$	7,417	4,947	71	205	(208)
December 31, 2022
Commercial and industrial loans and leases	$	7,148	4,802	—	190	(129)
Other	72		—	71	1	(72)
Total consolidated VIEs	$	7,220	4,802	71	191	(201)

(1)All other assets includes cash and due from banks, and other assets.

(2)Liabilities include short-term borrowings, and accrued expenses and other liabilities.

Other Transactions

In addition to the transactions included in the previous tables, we have used wholly-owned trust preferred security VIEs to issue debt securities or preferred equity exclusively to third-party investors. As the sole assets of the VIEs are receivables from us, we do not consolidate the VIEs even though we own all of the voting equity shares of the VIEs, have fully guaranteed the obligations of the VIEs, and may have the right to redeem the third-party securities under certain circumstances. On our consolidated balance sheet, we reported the debt securities issued to the VIEs as long-term junior subordinated debt with a carrying value of $407 million and $401 million at June 30, 2023, and December 31, 2022, respectively.


			Wells Fargo & Company			119


Note 14: Guarantees and Other Commitments

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. For additional

descriptions of our guarantees, see Note 17 (Guarantees and Other Commitments) in our 2022 Form 10-K. Table 14.1 shows carrying value and maximum exposure to loss on our guarantees.

Table 14.1:Guarantees – Carrying Value and Maximum Exposure to Loss


			Maximum exposure to loss
(in millions)	Carrying value of obligation		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
June 30, 2023
Standby letters of credit (1)	$	92	14,223	4,480	3,550	12	22,265	7,528
Direct pay letters of credit (1)	11		1,137	2,855	407	5	4,404	1,122
Loans and LHFS sold with recourse (2)	20		361	2,112	3,121	8,351	13,945	11,112
Exchange and clearing house guarantees	—		6,204	—	—	—	6,204	—
Other guarantees and indemnifications (3)	—		515	—	9	216	740	469
Total guarantees	$	123	22,440	9,447	7,087	8,584	47,558	20,231
December 31, 2022
Standby letters of credit (1)	$	112	14,014	4,694	3,058	53	21,819	7,071
Direct pay letters of credit (1)	13		1,593	2,734	465	5	4,797	1,283
Loans and LHFS sold with recourse (2)	16		322	1,078	3,408	8,906	13,714	11,399
Exchange and clearing house guarantees	—		4,623	—	—	—	4,623	—
Other guarantees and indemnifications (3)	—		548	1	10	201	760	515
Total guarantees	$	141	21,100	8,507	6,941	9,165	45,713	20,268

(1)Standby and direct pay letters of credit are reported net of syndications and participations.

(2)Represents recourse provided, predominantly 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 $172 million and $157 million with related collateral of $1.7 billion and $1.3 billion as of June 30, 2023, and December 31, 2022, respectively.

Table 14.1 do not reflect economic hedges or collateral we could use to offset or recover losses we may incur under our guarantee agreements. Accordingly, these amounts ~~under~~are not an indication of expected loss. We believe the carrying value is more representative of our current 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. In determining the ACL for guarantees, we consider the credit risk of the related contingent obligation.

For our guarantees in Table 14.1, non-investment grade ~~represent the notional amounts of~~represents those ~~credit derivatives~~guarantees on which we have a higher risk of ~~being~~performance under the terms of the guarantee, which is determined based on an external rating or an internal credit grade that is below investment grade.

~~We consider the risk~~$15 million at June 30, 2023, and December 31, 2022, respectively. The fair value may be an asset as a result 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 ourdeferred premiums on certain option trades. The maximum exposure to loss ~~than either non-investment grade or protection sold. Other protection purchased~~ represents ~~additional protection, which may offset~~ the notional value of these derivative contracts. At June 30, 2023, the maximum exposure to loss ~~for protection sold, that~~ was ~~not purchased~~$31.8 billion, with ~~an identical underlying of the protection sold.~~

$29.3 billion expiring in three years or less compared with $23.4 billion and $21.3 billion,

~~Credit-Risk Contingent Features~~

Certain of our derivative contracts contain provisions whereby if the credit rating of our debt were to be downgraded by certain major credit rating agencies, the counterparty could demand additional collateral or require termination or replacement of derivative instruments in a net liability position. The aggregate fair value of all derivative instruments with such credit-risk-related contingent features that are in a net liability position was $9.2 billion at September 30, 2017, and $12.8 billionrespectively, at December 31, ~~2016,~~2022. See Note 11 (Derivatives) for additional information regarding written derivative contracts.

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, referred to as a charge-back transaction. We estimate our potential maximum exposure to be the total merchant transaction volume processed in the preceding four months, which ~~we posted $8.0~~is generally the lifecycle for a charge-back transaction. As of June 30, 2023, our potential maximum exposure was approximately $789.5 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 if triggered requires the maximum amount of collateral to be posted. If the credit rating ofrelated losses, including those from our debt had been downgraded below investment grade, on September 30, 2017, or December 31, 2016, we would have been required to post additional collateral of $1.2 billion or $4.0 billion, respectively, or potentially settle the contract in an amount equal to its fair value. Some contracts require that we provide more collateral than the fair value of derivatives that are in a net liability position if a downgrade occurs.joint venture entity, were insignificant.

~~Counterparty Credit Risk~~

By using derivatives, we are exposed to counterparty credit risk if counterparties to the derivative contracts do not perform as expected. If a counterparty fails to perform, our counterparty credit risk is equal to the amount reported as a derivative asset on our balance sheet. The amounts reported as a derivative asset are derivative contracts in a gain position, and to the extent subject to legally enforceable master netting arrangements, net of derivatives in a loss position with the same counterparty and cash collateral received. We minimize counterparty credit risk through credit approvals, limits, monitoring procedures, executing master netting arrangements and obtaining collateral, where appropriate. To the extent the master netting arrangements and other criteria meet the applicable requirements, including determining the legal enforceability of the arrangement, it is our policy to present derivative balances and related cash collateral amounts net on the balance sheet. We incorporate credit valuation adjustments (CVA) to reflect counterparty credit risk in determining the fair value of our derivatives. Such adjustments, which consider the effects of enforceable master netting agreements and collateral arrangements, reflect market-based views of the credit quality of each counterparty. Our CVA calculation is determined based on observed credit spreads in the credit default swap market and indices indicative of the credit quality of the counterparties to our derivatives.

~~Note 13: Fair Values of Assets and Liabilities (continued~~)



~~Note 13: Fair Values of Assets and Liabilities~~120			Wells Fargo & Company

~~We use fair value measurements~~GUARANTEES OF SUBSIDIARIES The Parent fully and unconditionally guarantees the payment of principal, interest, and any other amounts that may be due on securities that its 100% owned finance subsidiary, Wells Fargo Finance LLC, may issue. These securities are not guaranteed by any other subsidiary of the Parent. The guaranteed liabilities were $847 million and $948 million at June 30, 2023, and December 31, 2022, respectively. These guarantees rank on parity with all of the Parent’s other unsecured and unsubordinated indebtedness.

OTHER COMMITMENTS To meet the financing needs of our customers, we may enter into commitments to ~~record fair value adjustments~~purchase debt and equity securities to provide capital for their funding, liquidity or other future needs. As of both June 30, 2023, and December 31, 2022, we had commitments to purchase debt securities of $100 million and commitments to purchase equity securities of $5.0 billion and $3.8 billion, respectively.

As part of maintaining our memberships in certain ~~assets~~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 ~~liabilities and to determine fair value disclosures. Assets and liabilities recorded at fair value on a recurring basis~~accordingly are ~~presented~~included in Table ~~13.2~~14.1 in ~~this Note. From time~~Other guarantees and indemnifications.

We have commitments to ~~time, we may be required to record fair value adjustments on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application~~enter into resale and securities borrowing agreements as well as repurchase and securities lending agreements with certain counterparties, including central clearing organizations. The amount of ~~LOCOM accounting or write-downs~~our unfunded contractual commitments for resale and securities borrowing agreements was $16.6 billion and $19.9 billion as of ~~individual assets. Assets recorded on a nonrecurring basis are presented in Table 13.14 in this Note.~~June 30, 2023, and December 31, 2022, respectively. The amount of our unfunded contractual commitments for repurchase and securities lending agreements was $2.4 billion and $1.6 billion as of June 30, 2023, and December 31, 2022, respectively.

~~See Note 1 (Summary~~Given the nature of Significant Accounting Policies) to Financial Statements in our 2016 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 Form 10-K.

~~FAIR VALUE HIERARCHY~~ We group our assets and liabilities measured at fair value in three levels 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 quoted prices for identical instruments traded in active markets.~~

Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

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 do not classify an investment 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 with published NAVs continue to be 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 statementsthese commitments, they are excluded from Table ~~13.1.~~5.4 (Unfunded Credit Commitments) in Note 5 (Loans and Related Allowance for Credit Losses).

~~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			121


~~(2)~~			~~Includes short sale liabilities~~ Note 15: Pledged Assets and ~~other liabilities.~~

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

~~Assets and Liabilities Recorded at Fair Value on a Recurring Basis~~

~~Table 13.2 presents the balances of assets and liabilities recorded at fair value on a recurring basis.~~

~~Table 13.2: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 )


~~(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.~~Collateral


~~(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~~ ~~$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 on a recurring basis for the quarter ended September 30, 2017, are presented in Table 13.4.~~

~~Table 13.4:Changes in Level 3 Fair Value Assets and Liabilities 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 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.

~~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:Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – Quarter 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)
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.~~


~~(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 13.7 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 quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of substantially all of our Level 3 assets and liabilities measured at fair value on a recurring basis for which we use an internal model.

The significant unobservable inputs for Level 3 assets and liabilities that are valued using fair values obtained from 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. For information on how changes in significant unobservable inputs affect the fair values of Level 3 assets and liabilities, see Note 17 (Fair Values of Assets and Liabilities) to Financial Statements in our 2016 Form 10-K.

~~Table 13.12:Valuation Techniques – Recurring Basis – September 30, 2017~~

($ 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)~~	~~Weighted averages are calculated using outstanding unpaid principal balance for cash instruments, such as loans and securities, and notional amounts for derivative instruments.~~


~~(2)~~	~~Includes~~ ~~$1.0 billion~~ ~~of collateralized debt obligations.~~


~~(3)~~	~~Securities backed by specified sources of current and future receivables generated from foreign 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 valuation techniques used for our Level 3 assets and liabilities, as presented in the previous tables, are described as follows:~~

~~Discounted cash flow~~ – Discounted cash flow valuation techniques generally consist of developing an estimate of future cash flows that are expected to occur over the life of an instrument and then discounting those cash flows at a rate of return that results in the fair value amount.

~~Market comparable pricing~~ – Market comparable pricing valuation techniques are used to determine the fair value of certain instruments by incorporating known inputs, such as recent transaction prices, pending transactions, or prices of other similar investments that require significant adjustment to reflect differences in instrument characteristics.

~~Option model~~ – Option model valuation techniques are generally used for instruments in which the holder has a contingent right or obligation based on the occurrence of a future event, such as the price of a referenced asset going above or below a predetermined strike price. Option models estimate the likelihood of the specified event occurring by incorporating assumptions such as volatility estimates, price of the underlying instrument and expected rate of return.

~~Vendor-priced~~ – Prices obtained from third party pricing vendors or brokers that are used to record the fair value of the asset or liability for which the related valuation technique and significant unobservable inputs are not provided.

Significant unobservable inputs presented in the previous tables are those we consider significant to the fair value of the Level 3 asset or liability. We consider unobservable inputs to be significant if by their exclusion the fair value of the Level 3 asset or liability would be impacted by a predetermined percentage change. We also consider qualitative factors, such as nature of the instrument, type of valuation technique used, and the significance of the unobservable inputs relative to other inputs used within the valuation. Following is a description of the significant unobservable inputs provided in the table.

~~Comparability adjustment~~ – is an adjustment made to observed market data, such as a transaction price in order to reflect dissimilarities in underlying collateral, issuer, rating, or other factors used within a market valuation approach, expressed as a percentage of an observed price.

~~Conversion Factor~~ ~~– is the risk-adjusted rate in which a particular instrument may be exchanged for another instrument upon settlement, expressed as a percentage change from a specified rate.~~

~~Correlation factor~~ ~~– is the likelihood of one instrument changing in price relative to another based on an established relationship expressed as a percentage of relative change in price over a period over time.~~

~~Cost to service~~ – is the expected cost per loan of servicing a portfolio of loans, which includes estimates for unreimbursed expenses (including delinquency and foreclosure costs) that may occur as a result of servicing such loan portfolios.

~~Credit spread~~ – is the portion of the interest rate in excess of a benchmark interest rate, such as Overnight Index Swap (OIS), LIBOR or U.S. Treasury rates, that when applied to an investment captures changes in the obligor’s creditworthiness.

~~Default rate~~ ~~– is an estimate of the likelihood of not collecting contractual amounts owed expressed as a constant default rate (CDR).~~

~~Discount rate~~ – is a rate of return used to calculate the present value of the future expected cash flow to arrive at the fair value of an instrument. The discount rate consists of a benchmark rate component and a risk premium component. The benchmark rate component, for example, OIS, LIBOR or U.S. Treasury rates, is generally observable within the market and is necessary to appropriately reflect the time value of money. The risk premium component reflects the amount of compensation market participants require due to the uncertainty inherent in the instruments’ cash flows resulting from risks such as credit and liquidity.

~~Fall-out factor~~ ~~– is the expected percentage of loans associated with our interest rate lock commitment portfolio that are likely of not funding.~~

~~Initial-value servicing~~ ~~– is the estimated value of the underlying loan, including the value attributable to the embedded servicing right, expressed in basis points of outstanding unpaid principal balance.~~

~~Loss severity~~ ~~– is the estimated percentage of contractual cash flows lost in the event of a default.~~

~~Prepayment rate~~ ~~– is the estimated rate at which forecasted prepayments of principal of the related loan or debt instrument are expected to occur, expressed as a constant prepayment rate (CPR).~~

~~Utilization rate~~ ~~– is the estimated rate in which incremental portions of existing reverse mortgage credit lines are expected to be drawn by borrowers, expressed as an annualized rate.~~

~~Volatility factor~~ ~~– is the extent of change in price an item is estimated to fluctuate over a specified period of time expressed as a percentage of relative change in price over a period over time.~~

~~Weighted average life~~ – is the weighted average number of years an investment is expected to remain outstanding based on its expected cash flows reflecting the estimated date the issuer will call or extend the maturity of the instrument or otherwise reflecting an estimate of the timing of an instrument’s cash flows whose timing is not contractually fixed.

~~Note 13: Fair Values of Assets and Liabilities (continued~~)

~~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. Table 13.14 provides the fair value hierarchy and carrying amount of all assets that were still held as of September 30, 2017, and December 31, 2016,~~and for which a nonrecurring fair value adjustment was recorded during the periods presented.~~

~~Table 13.14:Fair Value on a Nonrecurring Basis~~

September 30, 2017 December 31, 2016
(in millions) Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Mortgages held for sale (LOCOM) (1) $ —
1,652
1,340
2,992
—
2,312
1,350
3,662
Loans held for sale —
18
—
18
—
8
—
8
Loans:
Commercial —
386
—
386
—
464
—
464
Consumer —
460
10
470
—
822
7
829
Total loans (2) —
846
10
856
—
1,286
7
1,293
Other assets - excluding nonmarketable equity investments at NAV (3) —
198
146
344
—
233
412
645
Total included in the fair value hierarchy $ —
2,714
1,496
4,210
—
3,839
1,769
5,608
Other assets - nonmarketable equity investments at NAV (4)

5

13
Total assets at fair value on a nonrecurring basis

$ 4,215

5,621


~~(1)~~	~~Consists of commercial mortgages and residential real estate 1-4 family first mortgage loans.~~


~~(2)~~	~~Represents the carrying value of loans for which nonrecurring adjustments are based on the appraised value of the collateral.~~


~~(3)~~	~~Includes the fair value of foreclosed real estate, other collateral owned, operating lease assets and nonmarketable equity investments.~~


~~(4)~~	Consists of certain nonmarketable equity investments that are measured at fair value on a nonrecurring basis using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.

Table 13.15 presents the increase (decrease) in value of certain assets held at the end of the respective reporting periods presented for which a nonrecurring fair value adjustment was recognized during the periods presented.

~~Table 13.15:Change in Value of Assets with Nonrecurring Fair Value Adjustment~~

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.~~


~~(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.

Table 13.16 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 using an internal model. The table is limited to financial instruments that had nonrecurring fair value adjustments during the periods presented.

~~We have excluded from the table valuation techniques and significant unobservable inputs for certain classes of Level 3~~

assets measured using an internal model that we consider, both individually and in the aggregate, insignificant relative to our overall Level 3 nonrecurring measurements. We made this determination based upon an evaluation of each class that considered the magnitude of the positions, nature of the unobservable inputs and potential for significant changes in fair value due to changes in those inputs.

~~Table 13.16: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)~~	~~Refer to the narrative following Table 13.13 for a definition of the valuation technique(s) and significant unobservable inputs.~~


~~(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

portfolios for which we elected the fair value option. For ~~more~~additional information, including the basis for our fair value option elections, see Note 1715 (Fair Values of Assets and Liabilities) ~~to Financial Statements~~ in our ~~2016~~2022 Form 10-K.

Table ~~13.17~~12.7 reflects differences between the fair value carrying amount of the assets and liabilities for which we have elected the fair value option and the contractual aggregate unpaid principal amount at maturity.

Table ~~13.17:~~12.7:Fair Value Option


	June 30, 2023				December 31, 2022
(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 (1)	$	2,974	3,238	(264)	4,220	4,614	(394)
Long-term debt (2)	(1,600)		(2,147)	547	(1,346)	(1,775)	429

   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~~(1)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~~June 30, 2023, and ~~losses from~~December 31, 2022.

(2)Includes zero coupon notes for which the aggregate unpaid principal amount reflects the contractual principal due at maturity.

Table 12.8 reflects amounts included in earnings related to initial measurement and subsequent changes in fair value, ~~are recognized in earnings. The changes in fair value related to initial~~

~~measurement and subsequent changes in fair value included in earnings for these assets measured at fair value are shown in Table 13.18~~ by income statement line ~~item.~~item, for assets and liabilities for which

the fair value option was elected. Amounts recorded in net interest income are excluded from the table below.

Table ~~13.18:Fair Value Option –~~12.8:Gains (Losses) on 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.~~



	2023				2022
(in millions)	Mortgage banking noninterest income		Net gains from trading and securities	Other noninterest income	Mortgage banking noninterest income	Net gains from trading and securities	Other noninterest income
Quarter ended June 30,
Loans held for sale	$	34	13	—	(237)	1	—
Long-term debt	—		9	—	—	11	—
Six months ended June 30,
Loans held for sale	$	131	25	(4)	(603)	10	—
Long-term debt	—		(21)	—	—	23	—

For performing loans, instrument-specific credit risk gains or losses ~~were~~are 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 and losses from earnings attributable to instrument-specific credit risk related to assets~~For LHFS accounted for under the fair value ~~option.~~option, instrument-specific credit gains or losses were insignificant during the second quarter and first half of both 2023 and 2022.

Note 20 (Other Comprehensive Income) for additional information.

~~Table 13.19:Fair Value Option – Gains/Losses Attributable to Instrument-Specific Credit Risk~~

   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


			Wells Fargo & Company			113

Note 12: Fair Values of Assets and Liabilities (continued)

Disclosures about Fair Value of Financial Instruments

Table ~~13.20 is~~12.9 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 12.9. A reasonable estimate of the fair value of these instruments is the carrying value of deferred fees plus the allowance for unfunded credit commitments, which totaled ~~$1.1 billion~~$622 million and ~~$1.2 billion~~$737 million at ~~September~~June 30, ~~2017,~~2023, and December 31, ~~2016,~~2022, 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 12.9:Fair Value Estimates for Financial Instruments


			Estimated fair value
(in millions)	Carrying amount		Level 1	Level 2	Level 3	Total
June 30, 2023
Financial assets
Cash and due from banks (1)	$	31,915	31,915	—	—	31,915
Interest-earning deposits with banks (1)	123,418		123,195	223	—	123,418
Federal funds sold and securities purchased under resale agreements (1)	66,500		—	66,500	—	66,500
Held-to-maturity debt securities	272,360		2,371	228,748	2,717	233,836
Loans held for sale	3,055		—	2,641	462	3,103
Loans, net (2)	918,454		—	55,515	825,008	880,523
Nonmarketable equity securities (cost method)	4,552		—	—	4,620	4,620
Total financial assets	$	1,420,254	157,481	353,627	832,807	1,343,915
Financial liabilities
Deposits (3)	$	128,458	—	85,183	41,616	126,799
Short-term borrowings	84,054		—	84,056	—	84,056
Long-term debt (4)	169,012		—	168,245	1,969	170,214
Total financial liabilities	$	381,524	—	337,484	43,585	381,069
December 31, 2022
Financial assets
Cash and due from banks (1)	$	34,596	34,596	—	—	34,596
Interest-earning deposits with banks (1)	124,561		124,338	223	—	124,561
Federal funds sold and securities purchased under resale agreements (1)	68,036		—	68,036	—	68,036
Held-to-maturity debt securities	297,059		14,285	238,552	2,684	255,521
Loans held for sale	2,884		—	2,208	719	2,927
Loans, net (2)	928,049		—	57,532	836,831	894,363
Nonmarketable equity securities (cost method)	4,900		—	—	4,961	4,961
Total financial assets	$	1,460,085	173,219	366,551	845,195	1,384,965
Financial liabilities
Deposits (3)	$	66,887	—	46,745	18,719	65,464
Short-term borrowings	50,964		—	50,970	—	50,970
Long-term debt (4)	173,502		—	172,783	999	173,782
Total financial liabilities	$	291,353	—	270,498	19,718	290,216

(1)Amounts consist of financial instruments for which carrying value approximates fair value.

(2)Excludes lease financing with a carrying amount of $15.1 billion and $14.7 billion at June 30, 2023, and December 31, 2022, respectively.

(3)Excludes deposit liabilities with no defined or contractual maturity of $1.2 trillion and $1.3 trillion at June 30, 2023, and December 31, 2022, respectively.

(4)Excludes obligations under finance leases of $20 million and $22 million at June 30, 2023, and December 31, 2022, respectively.



114			Wells Fargo & Company


Note ~~14: Preferred Stock~~13: Securitizations and Variable Interest Entities

Involvement with Variable Interest Entities (VIEs)

In connection with our securitization or other VIE activities, we have various forms of ongoing involvement with VIEs, 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 in VIEs;

•acting as servicer or investment manager for VIEs;

•providing administrative or trustee services to VIEs; and

•providing seller financing to VIEs.

Loan Sales and Securitization Activity

We periodically transfer consumer and 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 ~~authorized~~generally transferred into securitizations sponsored by the GSEs, which provide certain credit guarantees to ~~issue 20 million shares~~investors and servicers. We also transfer mortgage loans into securitization pools pursuant to Government National Mortgage Association (GNMA) guidelines which are insured by the Federal Housing Administration (FHA) or guaranteed by the Department of ~~preferred stock~~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 ~~4 million shares~~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 ~~preference stock, both without par value. Preferred shares outstanding rank senior~~loans, we typically receive securities issued by the VIEs which we sell to ~~common shares both~~third parties for cash or hold for investment purposes as ~~to dividends and liquidation preference but have no general voting rights.~~HTM or AFS securities. We ~~have not issued any preference shares under~~also retain servicing rights on the transferred loans. As a servicer, we retain the option

~~this authorization. If~~to repurchase loans from GNMA loan securitization pools, which becomes exercisable when three scheduled loan payments remain unpaid by the borrower. When we do not repurchase these loans, they are recorded on our consolidated balance sheet and pledged to the GNMA securitization. We repurchased loans of $99 million and $191 million, during the second quarter and first half of 2023, respectively, and $564 million and $1.5 billion during the second quarter and first half of 2022, respectively. In 2022, these predominantly represented repurchases of government insured loans. At June 30, 2023, and December 31, 2022, we recorded assets and related liabilities of $940 million and $743 million, respectively, where we did not exercise our option to repurchase eligible loans.

NONCONFORMING MORTGAGE LOAN SECURITIZATIONS In the normal course of business, we sell nonconforming residential and commercial mortgage loans in 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 and account for the transfers as sales. We also typically retain the right to service the loans and may hold other beneficial interests issued ~~preference shares would be~~by the VIEs, such as debt securities held for investment purposes. Our servicing role related to nonconforming commercial mortgage loan securitizations is limited to ~~one vote per share. Our total authorized, issued and outstanding preferred stock is presented~~primary or master servicer. We do not consolidate the VIE because 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 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 may also sell whole loans to VIEs where we have continuing involvement in the ~~following two tables along~~form of financing. We account for these transfers as sales, and do not consolidate the VIEs as we do not have the power to direct the most significant activities of the VIEs.

Table 13.1 presents information about transfers of assets during the periods presented for which we recorded the transfers as sales and have continuing involvement with the ~~Employee Stock Ownership Plan (ESOP) Cumulative Convertible Preferred Stock.~~transferred assets. In connection with these transfers, we received proceeds and recorded servicing assets and securities. Each of these interests are initially measured at fair value. Servicing rights are classified as Level 3 measurements, and generally securities are classified as Level 2. The majority of our transfers relate to

~~Table 14.1:Preferred Stock Shares~~

   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			115

Note 13: Securitizations and Variable Interest Entities (continued)

repurchased. These loans are carried at the lower of cost or market, and we recognize gains on such transfers when the market value is greater than the carrying value of the loan when it is sold.

Table 13.1:Transfers with Continuing Involvement



	2023			2022
(in millions)	Residential mortgages		Commercial mortgages	Residential mortgages	Commercial mortgages
Quarter ended June 30,
Assets sold	$	3,917	1,800	23,817	4,345
Proceeds from transfer (1)	3,917		1,823	23,817	4,411
Net gains (losses) on sale	—		23	—	66

Continuing involvement (2):
Servicing rights recognized	$	46	16	313	41
Securities recognized (3)	—		22	475	33

Six months ended June 30,
Assets sold	$	8,378	3,299	49,991	8,378
Proceeds from transfer (1)	8,378		3,363	50,043	8,508
Net gains (losses) on sale	—		64	52	130

Continuing involvement (2):
Servicing rights recognized	$	93	34	640	70
Securities recognized (3)	—		48	2,062	137

(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.

In the normal course of business, we purchase certain

Table 13.2 presents the key weighted-average assumptions we used to initially measure residential MSRs recognized during the periods presented.

Table 13.2:Residential MSRs – Assumptions at Securitization Date



	2023			2022
Quarter ended June 30,
Prepayment rate (1)	16.4		%	10.9
Discount rate	9.4			8.0
Cost to service ($ per loan)	$	176		122
Six months ended June 30,
Prepayment rate (1)	17.5		%	11.0
Discount rate	9.6			7.5
Cost to service ($ per loan)	$	185		117

(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.

See Note 12 (Fair Values of Assets and Liabilities) and

Note 6 (Mortgage Banking Activities) for additional information on key assumptions for residential MSRs.


~~(2)~~116			~~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.~~Wells Fargo & Company

~~Note 14: Preferred Stock (continued~~)

Sold or Securitized Loans Serviced for Others

Table ~~14.2:Preferred Stock – Shares Issued~~13.3 presents information about loans that we sold or securitized in which we have ongoing involvement as servicer. Delinquent loans include loans 90 days or more past due and ~~Carrying Value~~loans in bankruptcy, regardless of delinquency status. For loans sold or securitized where servicing is our only form of continuing involvement, we generally experience a loss only if we were required to repurchase a delinquent loan or foreclosed asset due

Table 13.3:Sold or Securitized Loans Serviced for Others


						Net charge-offs
	Total loans			Delinquent loans and foreclosed assets (1)		Six months ended June 30,
(in millions)	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023	Dec 31, 2022	2023	2022
Commercial	$	66,082	67,029	849	912	67	22
Residential	8,789		9,201	433	501	8	7
Total off-balance sheet sold or securitized loans	$	74,871	76,230	1,282	1,413	75	29

(1)Includes $213 million and $274 million of commercial foreclosed assets and $28 million and $25 million of residential foreclosed assets at June 30, 2023, and December 31, 2022, respectively.

Transactions with Unconsolidated VIEs

   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)~~			~~Preferred shares qualify as Tier 1 capital.~~Wells Fargo & Company			117

Note 13: Securitizations and Variable Interest Entities (continued)

Table 13.4: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
June 30, 2023


Nonconforming mortgage loan securitizations	$	152,727	—		2,424	—	604	(12)	3,016
Commercial real estate loans	5,606		5,590		—	—	16	—	5,606
Other	2,063		256		—	45	17	—	318
Total	$	160,396	5,846		2,424	45	637	(12)	8,940
			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			$	—	2,424	—	604	12	3,040
Commercial real estate loans			5,590		—	—	16	702	6,308
Other			256		—	45	17	229	547
Total			$	5,846	2,424	45	637	943	9,895
			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, 2022


Nonconforming mortgage loan securitizations	$	154,464	—		2,420	—	617	(13)	3,024
Commercial real estate loans	5,627		5,611		—	—	16	—	5,627
Other	2,174		292		1	43	21	—	357
Total	$	162,265	5,903		2,421	43	654	(13)	9,008
			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			$	—	2,420	—	617	13	3,050
Commercial real estate loans			5,611		—	—	16	705	6,332
Other			292		1	43	21	228	585
Total			$	5,903	2,421	43	654	946	9,967

(1)Includes $170 million and $172 million of securities classified as trading at June 30, 2023, and December 31, 2022, respectively.

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

Consolidated VIEs

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

OTHER VIE STRUCTURESOther VIEs are predominantly related to municipal tender option bond (MTOB) transactions. 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 may 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. During second quarter 2022, we purchased the outstanding mortgage loans from the VIEs and extinguished the related debt associated with such securitizations.


118			Wells Fargo & Company

Table 13.5:Transactions with Consolidated VIEs


			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans	Debt securities	All other assets (1)	Liabilities (2)
June 30, 2023
Commercial and industrial loans and leases	$	7,345	4,947	—	204	(136)
Other	72		—	71	1	(72)
Total consolidated VIEs	$	7,417	4,947	71	205	(208)
December 31, 2022
Commercial and industrial loans and leases	$	7,148	4,802	—	190	(129)
Other	72		—	71	1	(72)
Total consolidated VIEs	$	7,220	4,802	71	191	(201)

(1)All other assets includes cash and due from banks, and other assets.

(2)Liabilities include short-term borrowings, and accrued expenses and other liabilities.

Other Transactions

In ~~April 2017,~~addition to the transactions included in the previous tables, we have used wholly-owned trust preferred security VIEs to issue debt securities or preferred equity exclusively to third-party investors. As the sole assets of the VIEs are receivables from us, we do not consolidate the VIEs even though we own all of the voting equity shares of the VIEs, have fully guaranteed the obligations of the VIEs, and may have the right to redeem the third-party securities under certain circumstances. On our consolidated balance sheet, we reported the debt securities issued ~~27.6~~to the VIEs as long-term junior subordinated debt with a carrying value of $407 million ~~Depositary Shares, each representing~~and $401 million at June 30, 2023, and December 31, 2022, respectively.


			Wells Fargo & Company			119


Note 14: Guarantees and Other Commitments

Guarantees are contracts that contingently require us to make payments to a ~~1/1000th interest~~guaranteed party based on an event or a change in an underlying asset, liability, rate or index. For additional

descriptions of our guarantees, see Note 17 (Guarantees and Other Commitments) in our 2022 Form 10-K. Table 14.1 shows carrying value and maximum exposure to loss on our guarantees.

Table 14.1:Guarantees – Carrying Value and Maximum Exposure to Loss


			Maximum exposure to loss
(in millions)	Carrying value of obligation		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
June 30, 2023
Standby letters of credit (1)	$	92	14,223	4,480	3,550	12	22,265	7,528
Direct pay letters of credit (1)	11		1,137	2,855	407	5	4,404	1,122
Loans and LHFS sold with recourse (2)	20		361	2,112	3,121	8,351	13,945	11,112
Exchange and clearing house guarantees	—		6,204	—	—	—	6,204	—
Other guarantees and indemnifications (3)	—		515	—	9	216	740	469
Total guarantees	$	123	22,440	9,447	7,087	8,584	47,558	20,231
December 31, 2022
Standby letters of credit (1)	$	112	14,014	4,694	3,058	53	21,819	7,071
Direct pay letters of credit (1)	13		1,593	2,734	465	5	4,797	1,283
Loans and LHFS sold with recourse (2)	16		322	1,078	3,408	8,906	13,714	11,399
Exchange and clearing house guarantees	—		4,623	—	—	—	4,623	—
Other guarantees and indemnifications (3)	—		548	1	10	201	760	515
Total guarantees	$	141	21,100	8,507	6,941	9,165	45,713	20,268

(1)Standby and direct pay letters of credit are reported net of syndications and participations.

(2)Represents recourse provided, predominantly to the GSEs, on loans sold under various programs and arrangements.

Maximum exposure to loss represents the estimated loss that would be incurred under an assumed hypothetical circumstance, despite what we believe is a ~~share~~remote possibility, where the value of ~~Non-Cumulative Perpetual Class A Preferred Stock, Series Y,~~our interests and any associated collateral declines to zero. Maximum exposure to loss estimates in

Table 14.1 do not reflect economic hedges or collateral we could use to offset or recover losses we may incur under our guarantee agreements. Accordingly, these amounts are not an indication of expected loss. We believe the carrying value is more representative of our current 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. In determining the ACL for guarantees, we consider the credit risk of the related contingent obligation.

For our guarantees in Table 14.1, non-investment grade represents those guarantees on which we have a higher risk of performance under the terms of the guarantee, which is determined based on an ~~aggregate public offering price~~external rating or an internal credit grade that is below investment grade.

WRITTEN OPTIONS We enter into written foreign currency options and over-the-counter written equity put options that are derivative contracts that have the characteristics of ~~$690 million.~~a guarantee. The fair value of written options represents our view of the probability that we will be required to perform under the contract. The fair value of these written options was an asset of $449 million and a liability of $15 million at June 30, 2023, and December 31, 2022, respectively. The fair value may be an asset as a result of deferred premiums on certain option trades. The maximum exposure to loss represents the notional value of these derivative contracts. At June 30, 2023, the maximum exposure to loss was $31.8 billion, with $29.3 billion expiring in three years or less compared with $23.4 billion and $21.3 billion,

respectively, at December 31, 2022. See Note 711 (Derivatives) for additional information regarding written derivative contracts.


120			Wells Fargo & Company

Given the nature of these commitments, they are excluded from Table 5.4 (Unfunded Credit Commitments) in Note 5 (Loans and Related Allowance for Credit Losses).


			Wells Fargo & Company			121


Note 15: Pledged Assets and Collateral

Pledged Assets

Table 15.1 provides the carrying amount of on-balance sheet pledged assets as well as the fair value of other pledged collateral not recognized on our consolidated balance sheet, which we have received from third parties, have the right to repledge and have repledged. These amounts include assets pledged in transactions accounted for as secured borrowings, which are presented parenthetically 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 ACTIVITY As part of our liquidity management strategy, we may pledge loans, debt securities, and other financial assets to secure trust and public deposits, borrowings and letters of credit from Federal Home Loan Banks (FHLBs) and the Board of Governors of the Federal Reserve System (FRB) and for other purposes as required or permitted by law or insurance statutory requirements. 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 transactions entered into with VIEs. These pledged assets can only be used to settle the liabilities of those entities.

We also have loans recorded on our consolidated balance sheet which represent certain delinquent loans that are eligible for repurchase from GNMA loan securitizations. See Note 13 (Securitizations and Variable Interest Entities) for additional information on ~~our trust preferred securities.~~

consolidated VIE assets.

Table 15.1:Pledged Assets


(in millions)	Jun 30, 2023		Dec 31, 2022
Related to trading activities:
Off-balance sheet repledged third-party owned debt and equity securities	$	56,044	38,191
Trading debt securities and other	51,534		28,284
Equity securities	1,996		1,477
Total pledged assets related to trading activities	109,574		67,952
Related to non-trading activities:
Loans	375,115		344,000
Debt securities:

Available-for-sale	66,018		50,538
Held-to-maturity	247,754		17,477
Equity securities	178		141
Total pledged assets related to non-trading activities	689,065		412,156
Related to VIEs:
Consolidated VIE assets	5,223		5,064
Loans eligible for repurchase from GNMA securitizations	946		749
Total pledged assets related to VIEs	6,169		5,813
Total pledged assets	$	804,808	485,921

~~ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCKAll shares~~Securities and Other Collateralized 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 subsidiaries and, to a lesser extent, through other bank entities. Our securities financing activities primarily involve high-quality, liquid securities such as U.S. Treasury securities and government agency securities and, to a lesser extent, less liquid securities, including equity securities, corporate bonds and asset-backed securities. We account for these transactions as collateralized financings in which we typically receive or pledge securities as collateral. We believe these financing transactions generally do not have material credit risk given the collateral provided and the related monitoring processes. We also enter into resale agreements

involving collateral other than securities, such as loans, as part of our ~~ESOP Cumulative Convertible Preferred Stock (ESOP Preferred Stock) were issued~~commercial lending business activities.

OFFSETTING OF SECURITIES AND OTHER COLLATERALIZED FINANCING ACTIVITIES Table 15.2 presents resale and repurchase agreements subject to master repurchase agreements (MRA) and securities borrowing and lending agreements subject to master securities lending agreements (MSLA). Where legally enforceable, these master netting arrangements give the ability, in the event of default by the counterparty, to liquidate securities held as collateral and to offset receivables and payables with the same counterparty. Collateralized financings, and those with a ~~trustee acting~~single counterparty, are presented net on ~~behalf~~our consolidated balance sheet, provided certain criteria are met that permit balance sheet netting. 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 our consolidated balance sheet against the related liability. Collateral we received


122			Wells Fargo & Company

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 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 ~~Wells Fargo & Company 401(k) Plan (the 401(k) Plan)~~related recognized asset or liability for each counterparty.

In addition to the amounts included in Table 15.2, we also have balance sheet netting related to derivatives that is disclosed in Note 11 (Derivatives). ~~Dividends~~

Table 15.2:Offsetting – Securities and Other Collateralized Financing Activities


(in millions)	Jun 30, 2023		Dec 31, 2022
Assets:
Resale and securities borrowing agreements
Gross amounts recognized	$	116,017	114,729
Gross amounts offset in consolidated balance sheet (1)	(27,246)		(24,464)
Net amounts in consolidated balance sheet (2)	88,771		90,265
Collateral not recognized in consolidated balance sheet (3)	(88,285)		(89,592)
Net amount (4)	$	486	673
Liabilities:
Repurchase and securities lending agreements
Gross amounts recognized	$	94,834	55,054
Gross amounts offset in consolidated balance sheet (1)	(27,246)		(24,464)
Net amounts in consolidated balance sheet (5)	67,588		30,590
Collateral pledged but not netted in consolidated balance sheet (6)	(67,478)		(30,383)
Net amount (4)	$	110	207

(1)Represents recognized amount of resale and repurchase agreements with counterparties subject to enforceable MRAs that have been offset in our consolidated balance sheet.

(2)Includes $66.5 billion and $68.0 billion classified on our consolidated balance sheet in federal funds sold and securities purchased under resale agreements at June 30, 2023, and December 31, 2022, respectively. Also includes $22.3 billion and $22.3 billion classified on our consolidated balance sheet in loans at June 30, 2023, and December 31, 2022, respectively.

(3)Represents the ~~ESOP Preferred Stock are cumulative from~~fair value of collateral we have received under enforceable MRAs or MSLAs, limited in the ~~date of initial issuance and are payable quarterly at annual rates based upon~~table above to the ~~year of issuance. Each share of ESOP Preferred Stock released from the unallocated reserve~~amount of the ~~401(k) Plan is converted into shares~~recognized asset due from each counterparty. At June 30, 2023, and December 31, 2022, we have received total collateral with a fair value of $140.0 billion and $136.6 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 $83.4 billion and $59.1 billion at June 30, 2023, and December 31, 2022, respectively.

(4)Represents the amount of our ~~common stock~~exposure (assets) or obligation (liabilities) that is not collateralized and/or is not subject to an enforceable MRA or MSLA.

(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 June 30, 2023, and December 31, 2022, we have pledged total collateral with a fair value of $97.1 billion and $56.3 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 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 in various ways. Our collateral primarily consists of highly liquid securities. In addition, we underwrite and monitor the financial strength of our counterparties, monitor the fair value of collateral pledged relative to contractually required repurchase amounts, and monitor that our collateral is properly returned through the clearing and settlement process in advance of our cash repayment. Table 15.3 provides the gross amounts recognized on our consolidated balance sheet (before the effects of offsetting) of our liabilities for repurchase and securities lending agreements disaggregated by underlying collateral type.


			Wells Fargo & Company			123

Note 15: Pledged Assets and Collateral (continued)

Table 15.3:Gross Obligations by Underlying Collateral Type


(in millions)	Jun 30, 2023		Dec 31, 2022
Repurchase agreements:
Securities of U.S. Treasury and federal agencies	$	34,235	27,857
Securities of U.S. States and political subdivisions	79		83
Federal agency mortgage-backed securities	42,968		8,386
Non-agency mortgage-backed securities	694		682
Corporate debt securities	6,617		6,541
Asset-backed securities	2,633		1,529
Equity securities	433		711
Other	245		300
Total repurchases	87,904		46,089
Securities lending arrangements:
Securities of U.S. Treasury and federal agencies	284		278

Federal agency mortgage-backed securities	62		58

Corporate debt securities	210		206

Equity securities (1)	6,342		8,356
Other	32		67
Total securities lending	6,930		8,965
Total repurchases and securities lending	$	94,834	55,054

(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 15.4 provides the contractual maturities of our gross obligations under repurchase and securities lending agreements.

Table 15.4:Contractual Maturities of Gross Obligations


(in millions)	Overnight/continuous		Up to 30 days	30-90 days	>90 days	Total gross obligation
June 30, 2023
Repurchase agreements	$	77,293	492	3,784	6,335	87,904
Securities lending arrangements	6,830		—	—	100	6,930
Total repurchases and securities lending (1)	$	84,123	492	3,784	6,435	94,834
December 31, 2022
Repurchase agreements	$	36,251	734	2,884	6,220	46,089
Securities lending arrangements	8,965		—	—	—	8,965
Total repurchases and securities lending (1)	$	45,216	734	2,884	6,220	55,054

(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.


124			Wells Fargo & Company


Note 16: Operating Segments

Our management reporting is organized into four reportable operating segments: Consumer Banking and Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment 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 and customer segment, and their results are based on our management reporting process. The management reporting process measures the performance of the reportable operating segments based on the ~~stated~~Company’s management structure, and the results are regularly reviewed with our Chief Executive Officer and relevant senior management. The management reporting process is based on U.S. GAAP and includes specific adjustments, such as funds transfer pricing for asset/liability management, shared revenue 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 annual sales generally up to $10 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. Products and services include banking and credit products across multiple industry sectors and municipalities, secured lending and lease products, and treasury management.

Wealth and Investment Management provides personalized wealth management, brokerage, financial planning, lending, private banking, trust and fiduciary products and services to affluent, high-net worth and ultra-high-net worth clients. We operate through financial advisors in our brokerage and wealth offices, consumer bank branches, independent offices, and digitally through WellsTrade® and Intuitive Investor®.

~~value~~Corporate includes corporate treasury and enterprise functions, net of allocations (including funds transfer pricing, capital, liquidity and certain expenses), in support of the ~~ESOP Preferred Stock~~reportable operating segments as well as our investment portfolio and affiliated venture capital and private equity businesses. Corporate also includes certain lines of business that management has determined are no longer consistent with the ~~then current market price of our common stock. The ESOP Preferred Stock is also convertible at the option~~long-term strategic goals of the ~~holder at any time, unless~~Company as well as results for previously ~~redeemed. We have~~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 ~~option to redeem~~funding charges or credits is recognized in corporate treasury.

REVENUE AND EXPENSE SHARING When lines of business jointly serve customers, the ~~ESOP Preferred Stock at any time, in whole~~line of business that is responsible for providing the product or ~~in part, at~~service recognizes revenue or expense with a ~~redemption price per share equal~~referral fee paid or an allocation of cost to the ~~higher~~other line of ~~(a) $1,000 per share plus accrued~~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 ~~unpaid dividends or (b)~~use of the ~~fair market value, as defined~~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 ~~Certificates of Designation for the ESOP Preferred Stock.~~Company’s consolidated financial results.

~~Table 14.3:ESOP Preferred Stock~~

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			125

Note 16: Operating Segments (continued)

Table 16.1 presents our results by operating segment.

Table 16.1:Operating Segments


(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate (1)	Reconciling Items (2)	Consolidated Company
Quarter ended June 30, 2023
Net interest income (3)	$	7,490	2,501	2,359	1,009	(91)	(105)	13,163
Noninterest income	1,965		868	2,272	2,639	121	(495)	7,370
Total revenue	9,455		3,369	4,631	3,648	30	(600)	20,533
Provision for credit losses	874		26	933	24	(144)	—	1,713
Noninterest expense	6,027		1,630	2,087	2,974	269	—	12,987
Income (loss) before income tax expense (benefit)	2,554		1,713	1,611	650	(95)	(600)	5,833
Income tax expense (benefit)	640		429	401	163	(103)	(600)	930
Net income before noncontrolling interests	1,914		1,284	1,210	487	8	—	4,903
Less: Net income (loss) from noncontrolling interests	—		3	—	—	(38)	—	(35)
Net income	$	1,914	1,281	1,210	487	46	—	4,938
Quarter ended June 30, 2022
Net interest income (3)	$	6,372	1,580	2,057	916	(619)	(108)	10,198
Noninterest income	2,135		912	1,516	2,789	(102)	(408)	6,842
Total revenue	8,507		2,492	3,573	3,705	(721)	(516)	17,040
Provision for credit losses	613		21	(62)	(7)	15	—	580
Noninterest expense	6,036		1,478	1,840	2,911	597	—	12,862
Income (loss) before income tax expense (benefit)	1,858		993	1,795	801	(1,333)	(516)	3,598
Income tax expense (benefit)	465		249	459	198	(233)	(516)	622
Net income (loss) before noncontrolling interests	1,393		744	1,336	603	(1,100)	—	2,976
Less: Net income (loss) from noncontrolling interests	—		3	—	—	(169)	—	(166)
Net income (loss)	$	1,393	741	1,336	603	(931)	—	3,142
Six months ended June 30, 2023
Net interest income (3)	$	14,923	4,990	4,820	2,053	(75)	(212)	26,499
Noninterest income	3,896		1,686	4,713	5,276	126	(934)	14,763
Total revenue	18,819		6,676	9,533	7,329	51	(1,146)	41,262
Provision for credit losses	1,741		(17)	1,185	35	(24)	—	2,920
Noninterest expense	12,065		3,382	4,304	6,035	877	—	26,663
Income (loss) before income tax expense (benefit)	5,013		3,311	4,044	1,259	(802)	(1,146)	11,679
Income tax expense (benefit)	1,258		828	1,016	315	(375)	(1,146)	1,896
Net income (loss) before noncontrolling interests	3,755		2,483	3,028	944	(427)	—	9,783
Less: Net income (loss) from noncontrolling interests	—		6	—	—	(152)	—	(146)
Net income (loss)	$	3,755	2,477	3,028	944	(275)	—	9,929
Six months ended June 30, 2022
Net interest income (3)	$	12,368	2,941	4,047	1,715	(1,437)	(215)	19,419
Noninterest income	4,702		1,878	2,996	5,747	840	(814)	15,349
Total revenue	17,070		4,819	7,043	7,462	(597)	(1,029)	34,768
Provision for credit losses	423		(323)	(258)	(44)	(5)	—	(207)
Noninterest expense	12,431		3,009	3,823	6,086	1,364	—	26,713
Income (loss) before income tax expense (benefit)	4,216		2,133	3,478	1,420	(1,956)	(1,029)	8,262
Income tax expense (benefit)	1,053		529	884	352	(421)	(1,029)	1,368
Net income (loss) before noncontrolling interests	3,163		1,604	2,594	1,068	(1,535)	—	6,894
Less: Net income (loss) from noncontrolling interests	—		6	—	—	(42)	—	(36)
Net income (loss)	$	3,163	1,598	2,594	1,068	(1,493)	—	6,930












(continued on following page)


~~(2)~~126			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.Wells Fargo & Company


(continued from previous page)

	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate (1)	Reconciling Items (2)	Consolidated Company
Quarter ended June 30, 2023
Loans (average)	$	336,351	225,824	291,470	83,045	9,216	—	945,906
Assets (average)	378,532		249,230	550,091	89,983	610,417	—	1,878,253
Deposits (average)	823,339		166,747	160,251	112,360	84,752	—	1,347,449

Six months ended June 30, 2023
Loans (average)	$	337,325	224,333	293,097	83,331	9,185	—	947,271
Assets (average)	380,135		247,674	549,453	90,450	603,293	—	1,871,005
Deposits (average)	832,252		168,597	158,908	119,443	72,846	—	1,352,046

Loans (period-end)	336,217		228,711	291,345	82,456	9,231	—	947,960
Assets (period-end)	378,078		255,914	559,520	89,211	593,597	—	1,876,320
Deposits (period-end)	820,495		164,764	158,770	108,532	92,023	—	1,344,584
Quarter ended June 30, 2022
Loans (average)	$	330,859	202,019	298,694	85,912	9,083	—	926,567
Assets (average)	379,194		223,890	564,306	92,575	642,606	—	1,902,571
Deposits (average)	898,650		188,286	164,860	173,670	20,327	—	1,445,793

Six months ended June 30, 2022
Loans (average)	$	327,973	198,228	291,635	85,342	9,187	—	912,365
Assets (average)	377,043		219,438	557,891	91,713	664,853	—	1,910,938
Deposits (average)	890,042		194,458	167,009	179,708	23,665	—	1,454,882

Loans (period-end)	335,732		205,241	308,286	85,342	9,133	—	943,734
Assets (period-end)	380,353		229,454	567,733	91,944	611,657	—	1,881,141
Deposits (period-end)	892,373		183,145	162,439	165,633	21,563	—	1,425,153

(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.

(3)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.



			Wells Fargo & Company			127


Note ~~15: Employee Benefits~~17: Revenue and Expenses

Revenue

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 16 (Operating Segments). For a description of our revenue from contracts with customers, see Note 20 (Revenue and Expenses) in our 2022 Form 10-K.

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 June 30, 2023
Net interest income (2)	$	7,490	2,501	2,359	1,009	(91)	(105)	13,163
Noninterest income:
Deposit-related fees	666		248	247	6	(2)	—	1,165
Lending-related fees (2)	28		131	191	2	—	—	352
Investment advisory and other asset-based fees (3)	—		17	36	2,110	—	—	2,163
Commissions and brokerage services fees	—		—	76	494	—	—	570
Investment banking fees	(4)		15	390	—	(25)	—	376
Card fees:
Card interchange and network revenue (4)	929		59	15	1	1	—	1,005
Other card fees (2)	93		—	—	—	—	—	93
Total card fees	1,022		59	15	1	1	—	1,098
Mortgage banking (2)	132		—	73	(3)	—	—	202
Net gains (losses) from trading activities (2)	—		(6)	1,081	21	26	—	1,122
Net gains from debt securities (2)	—		—	—	—	4	—	4
Net gains (losses) from equity securities (2)	—		2	(16)	—	(80)	—	(94)
Lease income (2)	—		167	4	—	136	—	307
Other (2)	121		235	175	8	61	(495)	105
Total noninterest income	1,965		868	2,272	2,639	121	(495)	7,370
Total revenue	$	9,455	3,369	4,631	3,648	30	(600)	20,533
Quarter ended June 30, 2022
Net interest income (2)	$	6,372	1,580	2,057	916	(619)	(108)	10,198
Noninterest income:
Deposit-related fees	779		310	280	7	—	—	1,376
Lending-related fees (2)	34		122	195	2	—	—	353
Investment advisory and other asset-based fees (3)	—		10	30	2,306	—	—	2,346
Commissions and brokerage services fees	—		—	83	459	—	—	542
Investment banking fees	(2)		15	307	—	(34)	—	286
Card fees:
Card interchange and network revenue (4)	920		58	15	1	—	—	994
Other card fees (2)	118		—	—	—	—	—	118
Total card fees	1,038		58	15	1	—	—	1,112
Mortgage banking (2)	211		—	79	(3)	—	—	287
Net gains from trading activities (2)	—		—	378	11	57	—	446
Net gains from debt securities (2)	—		5	—	—	138	—	143
Net losses from equity securities (2)	(8)		(67)	(2)	(1)	(537)	—	(615)
Lease income (2)	—		179	11	—	143	—	333
Other (2)(5)	83		280	140	7	131	(408)	233
Total noninterest income	2,135		912	1,516	2,789	(102)	(408)	6,842
Total revenue	$	8,507	2,492	3,573	3,705	(721)	(516)	17,040
Six months ended June 30, 2023
Net interest income (2)	$	14,923	4,990	4,820	2,053	(75)	(212)	26,499
Noninterest income:
Deposit-related fees	1,338		484	483	11	(3)	—	2,313
Lending-related fees (2)	59		260	385	4	—	—	708
Investment advisory and other asset-based fees (3)	—		35	71	4,171	—	—	4,277
Commissions and brokerage services fees	—		—	154	1,035	—	—	1,189
Investment banking fees	(4)		35	704	—	(33)	—	702
Card fees:
Card interchange and network revenue (4)	1,792		115	32	2	2	—	1,943
Other card fees (2)	188		—	—	—	—	—	188
Total card fees	1,980		115	32	2	2	—	2,131
Mortgage banking (2)	292		—	148	(6)	—	—	434
Net gains (losses) from trading activities (2)	—		(7)	2,338	44	89	—	2,464
Net gains from debt securities (2)	—		—	—	—	4	—	4
Net losses from equity securities (2)	—		(10)	(17)	(2)	(422)	—	(451)
Lease income (2)	—		336	46	—	272	—	654
Other (2)	231		438	369	17	217	(934)	338
Total noninterest income	3,896		1,686	4,713	5,276	126	(934)	14,763
Total revenue	$	18,819	6,676	9,533	7,329	51	(1,146)	41,262


(continued on following page)


128			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
Six months ended June 30, 2022
Net interest income (2)	$	12,368	2,941	4,047	1,715	(1,437)	(215)	19,419
Noninterest income:
Deposit-related fees	1,624		638	573	14	—	—	2,849
Lending-related fees (2)	68		243	380	4	—	—	695
Investment advisory and other asset-based fees (3)	—		12	42	4,782	8	—	4,844
Commissions and brokerage services fees	—		—	166	913	—	—	1,079
Investment banking fees	(3)		30	769	—	(63)	—	733
Card fees:
Card interchange and network revenue (4)	1,754		111	29	2	—	—	1,896
Other card fees (2)	245		—	—	—	—	—	245
Total card fees	1,999		111	29	2	—	—	2,141
Mortgage banking (2)	865		—	121	(6)	—	—	980
Net gains from trading activities (2)	—		—	606	12	46	—	664
Net gains from debt securities (2)	—		5	—	—	140	—	145
Net gains (losses) from equity securities (2)	(17)		19	(7)	(1)	(33)	—	(39)
Lease income (2)	—		358	13	—	289	—	660
Other (2)(5)	166		462	304	27	453	(814)	598
Total noninterest income	4,702		1,878	2,996	5,747	840	(814)	15,349
Total revenue	$	17,070	4,819	7,043	7,462	(597)	(1,029)	34,768

(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 revenue types 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 $227 million and $454 million for the second quarter and first half of 2023, respectively, and $245 million and $516 million for the second quarter and first half of 2022, respectively.

(4)The cost of credit card rewards and rebates of $628 million and $1.2 billion for the second quarter and first half of 2023, respectively, and $552 million and $1.0 billion for the second quarter and first half of 2022, respectively, are presented net against the related revenue.

(5)In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).

Expenses

OPERATING LOSSES Operating losses consist of litigation, regulatory matters, customer remediation activities, and losses from other business activities, such as fraud losses. Operating losses may have significant variability given the inherent and unpredictable nature of litigation, regulatory, and customer remediation matters. The timing and determination of the amount of any associated losses for these matters depends on a variety of factors, some of which are outside of our control. Our operating losses were $232 million and $499 million for the second quarter and first half of 2023, respectively, compared with $576 million and $1.2 billion in the same periods a year ago. See Note 10 (Legal Actions) for additional information on accruals for legal actions.

OTHER EXPENSES Regulatory Charges and Assessments expense, which is included in other noninterest expense, was $301 million and $572 million in the second quarter and first half of 2023, respectively, compared with $208 million and $433 million in the same periods a year ago, and primarily consisted of Federal Deposit Insurance Corporation (FDIC) deposit assessment expense.

In May 2023, the FDIC proposed a rule to recover by special assessment losses to the FDIC deposit insurance fund as a result of recent bank failures. Under the proposed rule, the FDIC would collect a special assessment based on a calculation using an insured depository institution’s estimated amount of uninsured deposits. As currently proposed, the amount of our special assessment may be up to $1.8 billion (pre-tax), and we expect to expense the entire amount upon the FDIC’s finalization of the rule. The proposed rule may be changed prior to finalization and any changes may affect the timing or amount of the special assessment.


			Wells Fargo & Company			129


Note 18: Employee Benefits

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 1 (Summary of Significant Accounting Policies) and Note 21 (Employee Benefits) in our 2022 Form 10-K.

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 our consolidated statement of income.

Table ~~15.1:~~18.1:Net Periodic Benefit Cost


	2023				2022
	Pension benefits				Pension benefits
(in millions)	Qualified		Non- qualified	Other benefits	Qualified	Non- qualified	Other benefits
Quarter ended June 30,
Service cost	$	7	—	—	5	—	—
Interest cost	100		4	4	82	3	3
Expected return on plan assets	(126)		—	(7)	(126)	—	(6)
Amortization of net actuarial loss (gain)	35		1	(6)	33	3	(6)
Amortization of prior service credit	—		—	(2)	—	—	(2)
Settlement loss	—		—	—	62	—	—
Net periodic benefit cost	$	16	5	(11)	56	6	(11)
Six months ended June 30,
Service cost	$	13	—	—	10	—	—
Interest cost	201		9	8	149	5	5
Expected return on plan assets	(252)		—	(13)	(265)	—	(11)
Amortization of net actuarial loss (gain)	70		2	(12)	66	6	(11)
Amortization of prior service credit	—		—	(5)	—	—	(5)
Settlement loss	—		—	—	109	1	—
Net periodic benefit cost	$	32	11	(22)	69	12	(22)

   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


130			Wells Fargo & Company


Note ~~16:~~19: Earnings and Dividends Per Common Share

Table ~~16.1~~19.1 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:~~19.1:Earnings Per Common Share Calculations


		Quarter ended June 30,			Six months ended June 30,
(in millions, except per share amounts)		2023		2022	2023		2022
Wells Fargo net income (1)		$	4,938	3,142	$	9,929	6,930
Less: Preferred stock dividends and other		279		279	557		558
Wells Fargo net income applicable to common stock (numerator) (1)		$	4,659	2,863	$	9,372	6,372
Earnings per common share
Average common shares outstanding (denominator)		3,699.9		3,793.8	3,742.6		3,812.3
Per share		$	1.26	0.75	$	2.50	1.67
Diluted earnings per common share
Average common shares outstanding		3,699.9		3,793.8	3,742.6		3,812.3

Add:	Restricted share rights (2)	25.0		25.8	29.8		32.7
Diluted average common shares outstanding (denominator)		3,724.9		3,819.6	3,772.4		3,845.0
Per share		$	1.25	0.75	$	2.48	1.66

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

(2)Calculated using the treasury stock method.

Table ~~16.2~~19.2 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:~~19.2:Outstanding Anti-Dilutive ~~Options~~Securities


			Weighted-average shares
	Quarter ended June 30,		Six months ended June 30,
(in millions)	2023	2022	2023	2022
Convertible Preferred Stock, Series L (1)	25.3	25.3	25.3	25.3
Restricted share rights (2)	0.2	0.2	0.4	0.2

(1) Calculated using the if-converted method.

(2) Calculated using the treasury stock method.

Table 19.3 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 19.3:Dividends Declared Per Common Share

~~Note 17: Other Comprehensive Income (continued~~)


	Quarter ended June 30,			Six months ended June 30,
	2023		2022	2023		2022
Per common share	$	0.30	0.25	$	0.60	0.50



			Wells Fargo & Company			131


Note ~~17:~~20: Other Comprehensive Income

Table ~~17.1~~20.1 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:~~20.1:Summary of Other Comprehensive Income


	Quarter ended June 30,								Six months ended June 30,
	2023					2022			2023			2022
(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	$	(557)	138	(419)		(4,806)	1,183	(3,623)	(199)	51	(148)	(11,694)	2,880	(8,814)
Reclassification of net (gains) losses to net income	148		(37)	111		4	(1)	3	269	(67)	202	62	(16)	46
Net change	(409)		101	(308)		(4,802)	1,182	(3,620)	70	(16)	54	(11,632)	2,864	(8,768)
Derivatives and hedging activities:
Fair Value Hedges:
Change in fair value of excluded components on fair value hedges (1)	5		(1)	4		46	(11)	35	11	(3)	8	110	(27)	83
Cash Flow Hedges:
Net unrealized gains (losses) arising during the period on cash flow hedges	(1,001)		248	(753)		(114)	28	(86)	(617)	153	(464)	(165)	41	(124)
Reclassification of net (gains) losses to net income	185		(46)	139		(43)	11	(32)	298	(74)	224	(29)	7	(22)
Net change	(811)		201	(610)		(111)	28	(83)	(308)	76	(232)	(84)	21	(63)
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period	—		—	—		(120)	30	(90)	—	—	—	(101)	25	(76)
Reclassification of amounts to noninterest expense (2)	28		(7)	21		90	(22)	68	55	(13)	42	166	(40)	126
Net change	28		(7)	21		(30)	8	(22)	55	(13)	42	65	(15)	50
Debit valuation adjustments (DVA) and other:
Net unrealized gains (losses) arising during the period (3)	(13)		3	(10)		101	(21)	80	(9)	2	(7)	113	(24)	89
Reclassification of net (gains) losses to net income	—		—	—		—	—	—	—	—	—	—	—	—
Net change	(13)		3	(10)		101	(21)	80	(9)	2	(7)	113	(24)	89
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period	39		—	39		(122)	(2)	(124)	65	(1)	64	(127)	(2)	(129)
Reclassification of net (gains) losses to net income	—		—	—		—	—	—	—	—	—	—	—	—
Net change	39		—	39		(122)	(2)	(124)	65	(1)	64	(127)	(2)	(129)
Other comprehensive income (loss)	$	(1,166)	298	(868)		(4,964)	1,195	(3,769)	(127)	48	(79)	(11,665)	2,844	(8,821)
Less: Other comprehensive income from noncontrolling interests, net of tax				1				—			—			1
Wells Fargo other comprehensive loss, net of tax				$	(869)			(3,769)			(79)			(8,822)

(1)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.

(2)These items are included in the computation of net periodic benefit cost (see Note 18 (Employee Benefits) 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)~~132			~~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

Table 20.2 provides the accumulated OCI (AOCI) balance activity on an after-tax basis.

Table 20.2:Accumulated OCI Balances


(in millions)	Debt securities		Fair value hedges (1)	Cash flow hedges (2)	Defined benefit plans adjustments	Debit valuation adjustments (DVA) and other	Foreign currency translation adjustments	Accumulated other comprehensive income (loss)
Quarter ended June 30, 2023
Balance, beginning of period	$	(9,473)	(73)	(809)	(1,880)	17	(354)	(12,572)


Net unrealized gains (losses) arising during the period	(419)		4	(753)	—	(10)	39	(1,139)
Amounts reclassified from accumulated other comprehensive income	111		—	139	21	—	—	271
Net change	(308)		4	(614)	21	(10)	39	(868)
Less: Other comprehensive income from noncontrolling interests	—		—	—	—	—	1	1
Balance, end of period (3)(4)	$	(9,781)	(69)	(1,423)	(1,859)	7	(316)	(13,441)
Quarter ended June 30, 2022
Balance, beginning of period	$	(4,483)	(95)	(55)	(1,983)	(3)	(148)	(6,767)
Transition adjustment (3)	—		—	—	—	(32)	—	(32)
Balance, beginning of period (3)	(4,483)		(95)	(55)	(1,983)	(35)	(148)	(6,799)
Net unrealized gains (losses) arising during the period	(3,623)		35	(86)	(90)	80	(124)	(3,808)
Amounts reclassified from accumulated other comprehensive income	3		—	(32)	68	—	—	39
Net change	(3,620)		35	(118)	(22)	80	(124)	(3,769)
Less: Other comprehensive income (loss) from noncontrolling interests	—		—	—	—	—	—	—
Balance, end of period (3)(4)	$	(8,103)	(60)	(173)	(2,005)	45	(272)	(10,568)
Six months ended June 30, 2023
Balance, beginning of period	$	(9,835)	(77)	(1,183)	(1,901)	(6)	(380)	(13,382)
Transition adjustment (3)	—		—	—	—	20	—	20
Balance, beginning of period (3)	(9,835)		(77)	(1,183)	(1,901)	14	(380)	(13,362)
Net unrealized gains (losses) arising during the period	(148)		8	(464)	—	(7)	64	(547)
Amounts reclassified from accumulated other comprehensive income	202		—	224	42	—	—	468
Net change	54		8	(240)	42	(7)	64	(79)
Less: Other comprehensive income (loss) from noncontrolling interests	—		—	—	—	—	—	—
Balance, end of period (3)(4)	$	(9,781)	(69)	(1,423)	(1,859)	7	(316)	(13,441)
Six months ended June 30, 2022

Balance, beginning of period	$	665	(143)	(27)	(2,055)	—	(142)	(1,702)
Transition adjustment (3)	—		—	—	—	(44)	—	(44)
Balance, beginning of period (3)	665		(143)	(27)	(2,055)	(44)	(142)	(1,746)
Net unrealized gains (losses) arising during the period	(8,814)		83	(124)	(76)	89	(129)	(8,971)
Amounts reclassified from accumulated other comprehensive income	46		—	(22)	126	—	—	150
Net change	(8,768)		83	(146)	50	89	(129)	(8,821)
Less: Other comprehensive income from noncontrolling interests	—		—	—	—	—	1	1
Balance, end of period (3)(4)	$	(8,103)	(60)	(173)	(2,005)	45	(272)	(10,568)

(1)Substantially all of the amounts for fair value hedges are foreign exchange contracts.

(2)Substantially all of the amounts for cash flow hedges are interest rate contracts.

(4)AOCI related to debt securities includes after-tax unrealized gains or losses associated with the transfer of securities from AFS to HTM of $3.7 billion and $3.4 billion at June 30, 2023 and 2022, respectively. These amounts are subsequently amortized from AOCI into earnings over the same period as the related unamortized premiums and discounts.


~~(2)~~			~~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			133

~~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: Operating Segments~~21: Regulatory Capital Requirements and Other Restrictions

We have three reportable operating segments: Community Banking; Wholesale Banking; and Wealth and Investment Management (WIM). We define our operating segments by product type and customer segment and their results are based on our management accounting process, for which there is no comprehensive, authoritative guidance equivalent to GAAP for financial accounting. The management accounting process measures the performance of the operating segments based onRegulatory Capital Requirements

our management structure and is not necessarily comparable with similar information for other financial services companies. If the management structure and/or the allocation process changes, allocations, transfers and assignments may change. For a description of our operating segments, including the underlying management accounting process, see Note 24 (Operating Segments) to Financial Statements in our 2016 Form 10-K. Table 18.1 presents our results by operating segment.

~~Table 18.1:Operating Segments~~

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)~~	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.

~~(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.


~~(3)~~	~~Represents segment net income (loss) for Community Banking; Wholesale Banking; and Wealth and Investment Management segments and Wells Fargo net income for the consolidated company.~~

~~Note 19: Regulatory and Agency Capital Requirements~~

The Company and each of its subsidiary banks are subject to regulatory capital adequacy requirements promulgated by federal ~~bank regulatory agencies.~~banking regulators. The ~~Federal Reserve~~FRB establishes capital requirements for the consolidated financial holding company, and the ~~OCC~~Office of the Comptroller of the Currency (OCC) has similar requirements for the Company’s national banks, including Wells Fargo Bank, N.A. (the Bank).

Table ~~19.1~~21.1 presents regulatory capital information for ~~Wells Fargo &~~the Company and the Bank ~~using~~in accordance with Basel III ~~which increased minimum required~~capital requirements. We must calculate our risk-based capital ratios ~~and introduced a minimum Common Equity Tier 1 (CET1) ratio. We must report the lower of our CET1, tier 1 and total capital ratios calculated~~

under ~~the Standardized Approach and under the Advanced Approach in the assessment of our capital adequacy. The information presented reflects risk-weighted assets (RWAs) under~~both the Standardized and Advanced ~~Approaches with Transition Requirements.~~Approaches. 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.

At June 30, 2023, the Bank and our other insured depository institutions were considered well-capitalized under the requirements of the Federal Deposit Insurance Act.

Table 21.1:Regulatory Capital Information


	Wells Fargo & Company								Wells Fargo Bank, N.A.
	Standardized Approach						Advanced Approach		Standardized Approach			Advanced Approach
(in millions, except ratios)	June 30, 2023				December 31, 2022		June 30, 2023	December 31, 2022	June 30, 2023		December 31, 2022	June 30, 2023	December 31, 2022
Regulatory capital:
Common Equity Tier 1	$	134,221			133,527		134,221	133,527	142,300		140,644	142,300	140,644
Tier 1	153,201				152,567		153,201	152,567	142,300		140,644	142,300	140,644
Total	187,563				186,747		176,926	177,258	166,077		163,885	155,862	154,292
Assets:
Risk-weighted assets	1,250,690				1,259,889		1,118,379	1,112,307	1,153,795		1,177,300	975,072	977,713
Adjusted average assets	1,850,084				1,846,954		1,850,084	1,846,954	1,651,211		1,685,401	1,651,211	1,685,401
Regulatory capital ratios:
Common Equity Tier 1 capital	10.73		%	*	10.60		12.00	12.00	12.33	*	11.95	14.59	14.39
Tier 1 capital	12.25			*	12.11		13.70	13.72	12.33	*	11.95	14.59	14.39
Total capital	15.00			*	14.82		15.82	15.94	14.39	*	13.92	15.98	15.78
Required minimum capital ratios:
Common Equity Tier 1 capital	9.20				9.20		8.50	8.50	7.00		7.00	7.00	7.00
Tier 1 capital	10.70				10.70		10.00	10.00	8.50		8.50	8.50	8.50
Total capital	12.70				12.70		12.00	12.00	10.50		10.50	10.50	10.50
	Wells Fargo & Company								Wells Fargo Bank, N.A.
	June 30, 2023						December 31, 2022		June 30, 2023			December 31, 2022
Regulatory leverage:
Total leverage exposure (1)	$	2,217,575					2,224,789		2,005,228			2,058,568
Supplementary leverage ratio (SLR) (1)	6.91					%	6.86		7.10			6.83
Tier 1 leverage ratio (2)	8.28						8.26		8.62			8.34
Required minimum leverage:
Supplementary leverage ratio	5.00						5.00		6.00			6.00
Tier 1 leverage ratio	4.00						4.00		4.00			4.00

*Denotes the binding ratio under the Standardized and Advanced Approaches at June 30, 2023.

(1)The ~~Basel III revised definition~~SLR consists of Tier 1 capital divided by total leverage exposure. Total leverage exposure consists of total average assets, less goodwill and ~~changes are being phased-in effective January~~other permitted Tier 1 ~~2014, through~~capital deductions (net of deferred tax liabilities), plus certain off-balance sheet exposures.

(2)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 ~~end~~rule.

At June 30, 2023, the Common Equity Tier 1 (CET1), Tier 1 and total capital ratio requirements for the Company included a global systemically important bank (G-SIB) surcharge of ~~2021.~~

1.50%. The G-SIB surcharge is not applicable to the Bank. In addition, the CET1, Tier 1 and total capital ratio requirements for the Company included a stress capital buffer of 3.20% under the Standardized Approach and a capital conservation buffer of 2.50% under the Advanced Approach. The capital ratio requirements for the Bank ~~is an approved seller/servicer~~included a capital conservation buffer of ~~mortgage loans~~2.50% under both the Standardized and Advanced Approaches. The Company is required to maintain these risk-based capital ratios and to maintain an SLR of at least 5.00% (composed of a 3.00% minimum ~~levels~~requirement plus a supplementary leverage buffer of ~~shareholders’ equity, as specified~~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.

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 ~~various agencies,~~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 ~~United States Department~~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 ~~Housing~~the capital plan rule and ~~Urban Development, GNMA, FHLMC~~is also subject to the Parent meeting or exceeding certain regulatory capital minimums.


134			Wells Fargo & Company

Loan and ~~FNMA. At September 30, 2017,~~Dividend Restrictions

Federal law restricts the ~~Bank met these requirements. Other subsidiaries, including~~amount and the ~~Company’s insurance~~terms of both credit and ~~broker-dealer~~non-credit transactions between a bank and its nonbank affiliates. Additionally, federal laws and regulations limit, and regulators can impose additional limitations on, the dividends that a national bank may pay.

Our nonbank subsidiaries are also ~~subject~~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 (Parent), WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (IHC), the Bank, Wells Fargo Securities, LLC, Wells Fargo Clearing Services, LLC, and certain other subsidiaries of the Parent designated from time to ~~various minimum~~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 ~~levels,~~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 25 (Regulatory Capital Requirements and Other Restrictions) in our 2022 Form 10-K.

Cash Restrictions

Cash and cash equivalents may be restricted as ~~defined by applicable industry regulations. The minimum capital levels for these subsidiaries,~~to usage or withdrawal. Table 21.2 provides a summary of restrictions on cash and ~~related restrictions, are not significant to our consolidated operations.~~cash equivalents.

Table 21.2:Nature of Restrictions on Cash and Cash Equivalents


(in millions)	Jun 30, 2023		Dec 31, 2022
Reserve balance for non-U.S. central banks	$	229	238
Segregated for benefit of brokerage customers under federal and other brokerage regulations	690		898

~~Table 19.1:Regulatory Capital Information~~

Wells Fargo & Company Wells Fargo Bank, N.A.
September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
(in millions, except ratios) Advanced Approach

Standardized
Approach

Advanced Approach
Standardized
Approach
Advanced Approach
Standardized
Approach
Advanced Approach
Standardized
Approach

Regulatory capital:
Common equity tier 1 $ 153,548
153,548
148,785
148,785
140,021
140,021
132,225
132,225

Tier 1 176,996
176,996
171,364
171,364
140,021
140,021
132,225
132,225

Total 209,522
219,208
204,425
214,877
153,558
162,723
145,665
155,281

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

Regulatory capital ratios:
Common equity tier 1 capital 12.61 %
12.10
* 11.67
11.13
* 12.69

11.93
* 11.56

10.81
*
Tier 1 capital 14.54

13.95
* 13.44
12.82
* 12.69

11.93
* 11.56

10.81
*
Total capital 17.21
* 17.28

16.04
* 16.08
13.91

13.87
* 12.74

12.70
*
Tier 1 leverage (1) 9.27
9.27
8.95
8.95
8.17
8.17
7.71
7.71

*Denotes the lowest capital ratio as determined 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.~~Wells Fargo & Company			135

~~Table 19.2 presents the minimum required regulatory capital ratios under Transition Requirements to which the Company and the Bank were subject as of September 30, 2017 and December 31, 2016.~~

~~Table 19.2:Minimum Required Regulatory Capital Ratios – Transition Requirements (1)~~

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)~~

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~~Glossary 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~~.

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~~ AOCI			~~Accounting Standards Codification~~Accumulated other comprehensive income		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			Automated valuation model		LTV		Loan-to-value
BCBS			Basel Committee on ~~Bank~~Banking Supervision		MBS		Mortgage-backed ~~security~~securities
BHC			Bank holding company		~~MHA~~MSR		~~Making Home Affordable programs~~Mortgage servicing right
CCAR			Comprehensive Capital Analysis and Review		~~MHFS~~NAV		~~Mortgages held for sale~~Net asset value
CD			Certificate of deposit		~~MSR~~NPA		~~Mortgage servicing right~~Nonperforming asset
~~CDO~~CECL			~~Collateralized debt obligation~~		~~MTN~~	~~Medium-term note~~
~~CDS~~	~~Credit default swaps~~	~~NAV~~	~~Net asset value~~
~~CECL~~	Current expected credit loss	~~NPA~~NSFR		~~Nonperforming asset~~Net stable funding ratio
CET1			Common Equity Tier 1		OCC		Office of the Comptroller of the Currency
CFPB			Consumer Financial Protection Bureau		OCI		Other comprehensive income
CLO			Collateralized loan obligation		OTC		Over-the-counter
CLTV			Combined loan-to-value		~~OTTI~~PCD		~~Other-than-temporary impairment~~Purchased credit-deteriorated
~~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~~		~~S&P~~	~~Standard & Poor’s Ratings Services~~
~~FHLB~~	Federal Home Loan Bank	~~SLR~~S&P		~~Supplementary leverage ratio~~Standard & Poor’s Global Ratings
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


136			Wells Fargo & Company

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Information in response to this item can be found in Note 1110 (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~~June 30, ~~2017.~~2023.


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
April	29,637,759	$	41.17	134,366,515
May	70,530,974	39.46		63,835,541
June	59,638	41.51		63,775,903
Total	100,228,371

(1)All shares were repurchased under an authorization covering up to 500 million shares of common stock approved by the Board of Directors (Board) and publicly announced by the Company on January 15, 2021. The Company publicly announced on July 25, 2023, that the Board authorized a new common stock repurchase program of up to $30 billion. Unless modified or revoked by the Board, this authorization does not expire and supersedes the prior share repurchase authority approved by the Board.

Item 5. Other Information

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~~.

Trading Plans

~~The following table shows Company repurchases~~During the three months ended June 30, 2023, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the ~~warrants for~~Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each ~~calendar month~~term is defined in ~~the quarter ended September 30, 2017.~~Item 408(a) of Regulation S-K.



~~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~~	—
					137


~~(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 June 29, 2023.

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.

10(a)

Amendment to Deferred Compensation Plan, effective July 1, 2023.

Filed herewith.

10(b)

Amendment to Supplemental 401(k) Plan, effective July 1, 2023.

Filed herewith.

10(c)

Amendment to Supplemental Cash Balance Plan, effective July 1, 2023.

Filed herewith.

10(d)

Amendment to the Wachovia Savings Restoration Plan, effective July 1, 2023.

Filed herewith.

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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

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.


138			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~~ August 1, 2023 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			139



	Quarter ended September 30,
						2017						2016
(in millions)	Average balance			Yields/ rates		Interest income/ expense		Average balance		Yields/ rates		Interest income/ expense
Earning assets
Federal funds sold, securities purchased under resale agreements and other short-term investments	$	276,129		1.20	%	$	832	299,351		0.50	%	$	373
Trading assets	103,589			2.96		767		88,838		2.72		605
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	14,529			1.31		48		25,817		1.52		99
Securities of U.S. states and political subdivisions	52,500			4.16		546		55,170		4.28		590
Mortgage-backed securities:
Federal agencies	139,781			2.58		903		105,780		2.39		631
Residential and commercial	11,013			5.43		149		18,080		5.54		250
Total mortgage-backed securities	150,794			2.79		1,052		123,860		2.85		881
Other debt and equity securities	48,082			3.75		453		54,176		3.37		459
Total available-for-sale securities	265,905			3.15		2,099		259,023		3.13		2,029
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies	44,708			2.18		246		44,678		2.19		246
Securities of U.S. states and political subdivisions	6,266			5.44		85		2,507		5.24		33
Federal agency and other mortgage-backed securities	88,272			2.26		498		47,971		1.97		236
Other debt securities	1,488			3.05		12		3,909		1.98		19
Total held-to-maturity securities	140,734			2.38		841		99,065		2.15		534
Total investment securities	406,639			2.89		2,940		358,088		2.86		2,563
Mortgages held for sale (4)	22,923			3.82		219		24,060		3.44		207
Loans held for sale (4)	152			13.35		5		199		3.04		2
Loans:
Commercial:
Commercial and industrial – U.S.	270,091			3.81		2,590		271,226		3.48		2,369
Commercial and industrial – Non U.S.	57,738			2.90		421		51,261		2.40		309
Real estate mortgage	129,087			3.83		1,245		128,809		3.48		1,127
Real estate construction	24,981			4.18		263		23,212		3.50		205
Lease financing	19,155			4.59		220		18,896		4.70		223
Total commercial	501,052			3.76		4,739		493,404		3.42		4,233
Consumer:
Real estate 1-4 family first mortgage	278,371			4.03		2,809		278,509		3.97		2,764
Real estate 1-4 family junior lien mortgage	41,916			4.95		521		48,927		4.37		537
Credit card	35,657			12.41		1,114		34,578		11.60		1,008
Automobile	56,746			5.34		764		62,461		5.60		880
Other revolving credit and installment	38,601			6.31		615		39,605		5.92		590
Total consumer	451,291			5.14		5,823		464,080		4.97		5,779
Total loans (4)	952,343			4.41		10,562		957,484		4.17		10,012
Other	15,007			1.69		65		6,488		2.30		36
Total earning assets	$	1,776,782		3.45	%	$	15,390	1,734,508		3.17	%	$	13,798
Funding sources
Deposits:
Interest-bearing checking	$	48,278		0.57	%	$	69	44,056		0.15	%	$	17
Market rate and other savings	681,187			0.17		293		667,185		0.07		110
Savings certificates	21,806			0.31		16		25,185		0.30		19
Other time deposits	66,046			1.51		252		54,921		0.93		128
Deposits in foreign offices	124,746			0.76		240		107,072		0.30		82
Total interest-bearing deposits	942,063			0.37		870		898,419		0.16		356
Short-term borrowings	99,193			0.91		226		116,228		0.29		86
Long-term debt	243,137			2.26		1,377		252,400		1.59		1,006
Other liabilities	24,851			1.74		109		16,771		2.11		88
Total interest-bearing liabilities	1,309,244			0.79		2,582		1,283,818		0.48		1,536
Portion of noninterest-bearing funding sources	467,538			—		—		450,690		—		—
Total funding sources	$	1,776,782		0.58		2,582		1,734,508		0.35		1,536
Net interest margin and net interest income on a taxable-equivalent basis (5)				2.87	%	$	12,808			2.82	%	$	12,262
Noninterest-earning assets
Cash and due from banks	$	18,456						18,682
Goodwill	26,600							26,979
Other	116,685							134,417
Total noninterest-earning assets	$	161,741						180,078
Noninterest-bearing funding sources
Deposits	$	364,293						363,108
Other liabilities	57,052							63,777
Total equity	207,934							203,883
Noninterest-bearing funding sources used to fund earning assets	(467,538		)					(450,690	)
Net noninterest-bearing funding sources	$	161,741						180,078
Total assets	$	1,938,523						1,914,586



	Nine months ended September 30,
						2017						2016
(in millions)	Average balance			Yields/ rates		Interest income/ expense		Average balance		Yields/ rates		Interest income/ expense
Earning assets
Federal funds sold, securities purchased under resale agreements and other short-term investments	$	280,477		0.98	%	$	2,062	292,635		0.49	%	$	1,076
Trading assets	98,516			2.90		2,144		83,580		2.86		1,792
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies	19,182			1.48		212		30,588		1.56		358
Securities of U.S. states and political subdivisions	52,748			4.07		1,612		52,637		4.25		1,678
Mortgage-backed securities:
Federal agencies	142,748			2.60		2,782		98,099		2.57		1,889
Residential and commercial	12,671			5.44		516		19,488		5.39		787
Total mortgage-backed securities	155,419			2.83		3,298		117,587		3.03		2,676
Other debt and equity securities	49,212			3.74		1,377		53,680		3.36		1,349
Total available-for-sale securities	276,561			3.13		6,499		254,492		3.18		6,061
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies	44,701			2.19		733		44,671		2.19		733
Securities of U.S. states and political subdivisions	6,270			5.35		251		2,274		5.34		91
Federal agency and other mortgage-backed securities	74,525			2.38		1,329		37,087		2.08		577
Other debt securities	2,531			2.48		47		4,193		1.94		61
Total held-to-maturity securities	128,027			2.46		2,360		88,225		2.21		1,462
Total investment securities	404,588			2.92		8,859		342,717		2.93		7,523
Mortgages held for sale (4)	20,869			3.82		598		20,702		3.53		549
Loans held for sale (4)	158			8.44		10		240		3.71		7
Loans:
Commercial:
Commercial and industrial – U.S.	272,621			3.70		7,547		266,622		3.44		6,874
Commercial and industrial – Non U.S.	56,512			2.83		1,196		50,658		2.29		867
Real estate mortgage	130,931			3.69		3,615		125,902		3.43		3,236
Real estate construction	24,949			4.00		747		22,978		3.53		608
Lease financing	19,094			4.78		685		17,629		4.86		643
Total commercial	504,107			3.66		13,790		483,789		3.38		12,228
Consumer:
Real estate 1-4 family first mortgage	276,330			4.04		8,380		276,369		4.01		8,311
Real estate 1-4 family junior lien mortgage	43,589			4.77		1,557		50,585		4.38		1,659
Credit card	35,322			12.19		3,219		33,774		11.58		2,927
Automobile	59,105			5.41		2,392		61,246		5.64		2,588
Other revolving credit and installment	39,128			6.15		1,801		39,434		5.94		1,755
Total consumer	453,474			5.11		17,349		461,408		4.99		17,240
Total loans (4)	957,581			4.34		31,139		945,197		4.16		29,468
Other	10,892			2.06		169		6,104		2.23		101
Total earning assets	$	1,773,081		3.39	%	$	44,981	1,691,175		3.20	%	$	40,516
Funding sources
Deposits:
Interest-bearing checking	$	49,134		0.43	%	$	156	40,858		0.13	%	$	41
Market rate and other savings	682,780			0.13		664		659,257		0.07		327
Savings certificates	22,618			0.30		50		26,432		0.37		73
Other time deposits	59,414			1.42		633		58,087		0.84		364
Deposits in foreign offices	123,553			0.64		587		100,783		0.25		190
Total interest-bearing deposits	937,499			0.30		2,090		885,417		0.15		995
Short-term borrowings	97,837			0.69		505		111,993		0.28		231
Long-term debt	250,755			2.04		3,838		235,209		1.57		2,769
Other liabilities	20,910			1.97		309		16,534		2.10		260
Total interest-bearing liabilities	1,307,001			0.69		6,742		1,249,153		0.45		4,255
Portion of noninterest-bearing funding sources	466,080					—		442,022		—		—
Total funding sources	$	1,773,081		0.51		6,742		1,691,175		0.34		4,255
Net interest margin and net interest income on a taxable-equivalent basis (5)				2.88	%	$	38,239			2.86	%	$	36,261
Noninterest-earning assets
Cash and due from banks	$	18,443						18,499
Goodwill	26,645							26,696
Other	114,073							129,324
Total noninterest-earning assets	$	159,161						174,519
Noninterest-bearing funding sources
Deposits	$	364,774						353,870
Other liabilities	55,221							62,169
Total equity	205,246							200,502
Noninterest-bearing funding sources used to fund earning assets	(466,080		)					(442,022	)
Net noninterest-bearing funding sources	$	159,161						174,519
Total assets	$	1,932,242						1,865,694



	Quarter ended Sep 30,			%		Nine months ended Sep 30,			%
(in millions)	2017		2016	Change		2017		2016	Change
Service charges on deposit accounts	$	1,276	1,370	(7	)%	$	3,865	4,015	(4	)%
Trust and investment fees:
Brokerage advisory, commissions and other fees	2,304		2,344	(2	)	6,957		6,874	1
Trust and investment management	840		849	(1	)	2,506		2,499	—
Investment banking	465		420	11		1,345		1,172	15
Total trust and investment fees	3,609		3,613	—		10,808		10,545	2
Card fees	1,000		997	—		2,964		2,935	1
Other fees:
Charges and fees on loans	318		306	4		950		936	1
Cash network fees	126		138	(9	)	386		407	(5	)
Commercial real estate brokerage commissions	120		119	1		303		322	(6	)
Letters of credit fees	77		81	(5	)	227		242	(6	)
Wire transfer and other remittance fees	114		103	11		333		296	13
All other fees	122		179	(32	)	445		562	(21	)
Total other fees	877		926	(5	)	2,644		2,765	(4	)
Mortgage banking:
Servicing income, net	309		359	(14	)	1,165		1,569	(26	)
Net gains on mortgage loan origination/sales activities	737		1,308	(44	)	2,257		3,110	(27	)
Total mortgage banking	1,046		1,667	(37	)	3,422		4,679	(27	)
Insurance	269		293	(8	)	826		1,006	(18	)
Net gains from trading activities	245		415	(41	)	921		943	(2	)
Net gains on debt securities	166		106	57		322		797	(60	)
Net gains from equity investments	238		140	70		829		573	45
Lease income	475		534	(11	)	1,449		1,404	3
Life insurance investment income	152		152	—		441		455	(3	)
All other	97		163	(40	)	347		1,216	(71	)
Total	$	9,450	10,376	(9	)	$	28,838	31,333	(8	)



(income/expense in millions,	Community Banking			Wholesale Banking			Wealth and Investment Management				Other (1)				Consolidated Company
average balances in billions)	2017		2016	2017		2016	2017		2016		2017		2016		2017	2016
Quarter ended Sep 30,
Revenue	$	12,060	12,387	7,085		7,147	4,246		4,099		(1,465	)	(1,305	)	21,926	22,328
Provision (reversal of provision) for credit losses	650		651	69		157	(1	)	4		(1	)	(7	)	717	805
Noninterest expense	7,834		6,953	4,248		4,120	3,106		2,999		(837	)	(804	)	14,351	13,268
Net income (loss)	2,229		3,227	2,046		2,047	710		677		(389	)	(307	)	4,596	5,644
Average loans	$	473.5	489.2	463.8		454.3	72.4		68.4		(57.4	)	(54.4	)	952.3	957.5
Average deposits	734.5		708.0	463.4		441.2	188.1		189.2		(79.6	)	(76.9	)	1,306.4	1,261.5
Nine months ended Sep 30,
Revenue	$	36,442	37,205	21,074		21,389	12,621		11,872		(4,040	)	(3,781	)	66,097	66,685
Provision (reversal of provision) for credit losses	1,919		2,060	(39	)	905	2		(8	)	(5	)	8		1,877	2,965
Noninterest expense	22,278		20,437	12,551		12,124	9,387		9,017		(2,532	)	(2,416	)	41,684	39,162
Net income (loss)	8,231		9,702	6,549		6,041	2,015		1,773		(932	)	(852	)	15,863	16,664
Average loans	$	477.8	486.4	465.0		445.2	71.6		66.4		(56.8	)	(52.8	)	957.6	945.2
Average deposits	726.4		698.3	464.1		431.7	190.6		185.4		(78.8	)	(76.1	)	1,302.3	1,239.3



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

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

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



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



	Quarter ended							Nine months ended
(in billions)	Balance, beginning of period		Inflows (1)	Outflows (2)		Market impact (3)	Balance, end of period	Balance, beginning of period	Inflows (1)	Outflows (2)		Market impact (3)	Balance, end of period
September 30, 2017
Client directed (4)	$	163.8	8.2	(8.9	)	3.7	166.8	159.1	28.5	(30.1	)	9.3	166.8
Financial advisor directed (5)	131.7		6.7	(5.2	)	6.0	139.2	115.7	23.0	(17.4	)	17.9	139.2
Separate accounts (6)	137.7		5.6	(5.0	)	4.7	143.0	125.7	20.1	(17.2	)	14.4	143.0
Mutual fund advisory (7)	69.3		3.2	(2.3	)	2.6	72.8	63.3	9.9	(8.0	)	7.6	72.8
Total advisory client assets	$	502.5	23.7	(21.4	)	17.0	521.8	463.8	81.5	(72.7	)	49.2	521.8
September 30, 2016
Client directed (4)	$	158.5	9.2	(9.5	)	3.1	161.3	154.7	27.4	(27.7	)	6.9	161.3
Financial advisor directed (5)	104.2		6.3	(4.7	)	4.7	110.5	91.9	21.4	(13.5	)	10.7	110.5
Separate accounts (6)	118.9		6.0	(5.6	)	3.5	122.8	110.4	19.0	(15.6	)	9.0	122.8
Mutual fund advisory (7)	62.1		2.2	(2.6	)	2.0	63.7	62.9	6.1	(8.5	)	3.2	63.7
Total advisory client assets	$	443.7	23.7	(22.4	)	13.3	458.3	419.9	73.9	(65.3	)	29.8	458.3



(in billions)	Fair value		Net unrealized gain (loss)		Expected remaining maturity (in years)
At September 30, 2017
Actual	$	161.2	0.8		6.5
Assuming a 200 basis point:
Increase in interest rates	143.9		(16.5	)	8.5
Decrease in interest rates	167.4		7.0		2.6



($ 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	%	—



(in millions)	Sep 30, 2017		Dec 31, 2016
Commercial:
Commercial and industrial	$	327,944	330,840
Real estate mortgage	128,475		132,491
Real estate construction	24,520		23,916
Lease financing	19,211		19,289
Total commercial	500,150		506,536
Consumer:
Real estate 1-4 family first mortgage	280,173		275,579
Real estate 1-4 family junior lien mortgage	41,152		46,237
Credit card	36,249		36,700
Automobile	55,455		62,286
Other revolving credit and installment	38,694		40,266
Total consumer	451,723		461,068
Total loans	$	951,873	967,604



	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



		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





						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