0000072971 us-gaap:AutomobileLoanMember wfc:A90119DaysPastDueMember wfc:LoansExcludingGovernmentInsuredOrGuaranteedLoansMember 2020-03-31 0000072971 srt:MaximumMember us-gaap:CreditDefaultSwapMember 2019-01-01 2019-12-31 0000072971 srt:MinimumMember us-gaap:EquityContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember wfc:MeasurementInputCorrelationFactorMember us-gaap:ValuationTechniqueOptionPricingModelMember 2020-03-31 0000072971 wfc:SeriesLPreferredStockMember 2019-01-01 2019-03-310000072971us-gaap:StandbyLettersOfCreditMember2020-12-310000072971us-gaap:FairValueInputsLevel3Memberus-gaap:ValuationTechniqueDiscountedCashFlowMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:MeasurementInputLossSeverityMembersrt:MaximumMember2020-12-31

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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

Delaware

No.

41-0449260

(State of incorporation)

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

420 Montgomery Street,, San Francisco,, California 94104

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

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



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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes þ 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 þ Accelerated filer ¨

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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

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~~
	April ~~24, 2020~~22, 2021
Common stock, $1-2/3 par value		~~4,099,997,545~~4,133,571,501

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
— Business Combinations
70
3
— Cash, Loan and Dividend Restrictions
71
4
— Trading Activities
72
5
— Available-for-Sale and Held-to-Maturity Debt Securities
73
6
— Loans and Related Allowance for Credit Losses
80
7
— Leasing Activity
97
8
— Equity Securities
98
9
— Other Assets
100
10
— Securitizations and Variable Interest Entities
101
11
— Mortgage Banking Activities
107
12
— Intangible Assets
109
13
— Guarantees, Pledged Assets and Collateral, and Other Commitments
110
14
— Legal Actions
114
15
— Derivatives
119
16
— Fair Values of Assets and Liabilities
127
17
— Preferred Stock
140
18
— Revenue from Contracts with Customers
143
19
— Employee Benefits and Other Expenses
146
20
— Earnings and Dividends Per Common Share
147
21
— Other Comprehensive Income
148
22
— Operating Segments
150
23
— Regulatory and Agency Capital Requirements
151
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
18
Off-Balance Sheet Arrangements
21
Risk Management
22
Capital Management
45
Regulatory Matters
51
Critical Accounting Policies
52
Current Accounting Developments
54
Forward-Looking Statements
55
Risk Factors
57
Glossary of Acronyms
152
Item 3. Quantitative and Qualitative Disclosures About Market Risk
39
Item 4. Controls and Procedures
58

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

Signature
155


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			63
	Notes to Financial Statements
	1	—	Summary of Significant Accounting Policies	64
	2	—	Trading Activities	66
	3	—	Available-for-Sale and Held-to-Maturity Debt Securities	67
	4	—	Loans and Related Allowance for Credit Losses	73
	5	—	Leasing Activity	88
	6	—	Equity Securities	89
	7	—	Other Assets	91
	8	—	Securitizations and Variable Interest Entities	92
	9	—	Mortgage Banking Activities	97
	10	—	Intangible Assets	99
	11	—	Guarantees and Other Commitments	100
	12	—	Pledged Assets and Collateral	102
	13	—	Legal Actions	105
	14	—	Derivatives	109
	15	—	Fair Values of Assets and Liabilities	115
	16	—	Preferred Stock	122
	17	—	Revenue from Contracts with Customers	125
	18	—	Employee Benefits and Other Expenses	126
	19	—	Restructuring Charges	127
	20	—	Earnings and Dividends Per Common Share	128
	21	—	Other Comprehensive Income	129
	22	—	Operating Segments	131
	23	—	Regulatory Capital Requirements and Other Restrictions	133
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			23
	Off-Balance Sheet Arrangements			25
	Risk Management			26
	Capital Management			47
	Regulatory Matters			53
	Critical Accounting Policies			54
	Current Accounting Developments			54
	Forward-Looking Statements			55
	Risk Factors			57
	Glossary of Acronyms			135
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			41
Item 4.	Controls and Procedures			58

PART II	Other Information
Item 1.	Legal Proceedings			136
Item 1A.	Risk Factors			136
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			136
Item 6.	Exhibits			137

Signature				138


			Wells Fargo & Company			1

~~PART I - FINANCIAL INFORMATION~~


Summary Financial Data
	Quarter ended					Mar 31, 2021 % Change from
($ in millions, except per share amounts)	Mar 31, 2021			Dec 31, 2020	Mar 31, 2020	Dec 31, 2020		Mar 31, 2020
Selected Income Statement Data
Total revenue	$	18,063		17,925	17,717	1	%	2
Noninterest expense	13,989			14,802	13,048	(5)		7
Pre-tax pre-provision profit (PTPP) (1)	4,074			3,123	4,669	30		(13)
Provision for credit losses	(1,048)			(179)	4,005	NM		NM
Wells Fargo net income (loss)	4,742			2,992	653	58		626
Wells Fargo net income (loss) applicable to common stock	4,363			2,642	42	65		NM
Common Share Data
Diluted earnings (loss) per common share	1.05			0.64	0.01	64		NM
Dividends declared per common share	0.10			0.10	0.51	—		(80)
Common shares outstanding	4,141.1			4,144.0	4,096.4	—		1
Average common shares outstanding	4,141.3			4,137.6	4,104.8	—		1
Diluted average common shares outstanding	4,171.0			4,151.3	4,135.3	—		1
Book value per common share (2)	$	40.34		39.76	39.71	1		2
Tangible book value per common share (2)(3)	33.57			33.04	32.90	2		2
Selected Equity Data (period-end)
Total equity	188,348			185,920	183,330	1		3
Common stockholders' equity	167,062			164,778	162,654	1		3
Tangible common equity (3)	139,016			136,935	134,787	2		3
Performance Ratios
Return on average assets (ROA)(4)	0.99		%	0.62	0.13
Return on average equity (ROE)(5)	10.6			6.4	0.1
Return on average tangible common equity (ROTCE)(3)	12.7			7.7	0.1
Efficiency ratio (6)	77			83	74
Net interest margin on a taxable-equivalent basis	2.05			2.13	2.58
Selected Balance Sheet Data (average)
Loans	$	873,439		899,704	965,046	(3)		(9)
Assets	1,936,710			1,926,872	1,950,659	1		(1)
Deposits	1,393,472			1,380,100	1,337,963	1		4
Selected Balance Sheet Data (period-end)
Debt securities	505,826			501,207	501,563	1		1
Loans	861,572			887,637	1,009,843	(3)		(15)
Allowance for credit losses for loans	18,043			19,713	12,022	(8)		50
Equity securities	59,981			62,260	54,047	(4)		11
Assets	1,959,543			1,955,163	1,981,349	—		(1)
Deposits	1,437,119			1,404,381	1,376,532	2		4

Headcount (#) (period-end)	264,513			268,531	272,267	(1)		(3)
Capital and other metrics
Risk-based capital ratios and components (7):
Standardized Approach:
Common equity tier 1 (CET1)	11.85		%	11.59	10.67
Tier 1 capital	13.54			13.25	12.22
Total capital	16.75			16.47	15.21
Risk-weighted assets (RWAs) (in billions)	1,179.0			1,193.7	1,262.8	(1)		(7)
Advanced Approach:
Common equity tier 1 (CET1)	12.60		%	11.94	11.41
Tier 1 capital	14.39			13.66	13.06
Total capital	16.92			16.14	15.58
Risk-weighted assets (RWAs) (in billions)	$	1,109.4		1,158.4	1,181.3	(4)		(6)
Tier 1 leverage ratio	8.36		%	8.32	8.03
Liquidity Coverage Ratio (LCR)	127			133	121
Supplementary Leverage Ratio (SLR)	7.91			8.05	6.84
Total Loss Absorbing Capacity (TLAC)	25.18			25.74	23.27

NM – Not meaningful

(1)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.

(2)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.

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

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

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

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

(7)Beginning January 1, 2018, the requirements for calculating common equity tier 1 (CET1) and tier 1 capital, along with risk-weighted assets (RWAs), became fully phased-in. Accordingly, the information presented reflects fully phased-in CET1, tier 1 capital, and RWAs, but reflects total capital still in accordance with transition requirements. See the “Capital Management” section and Note 23 (Regulatory Capital Requirements and Other Restrictions) to Financial Statements in this Report for additional information.

Summary Financial Data
% Change
Quarter ended Mar 31, 2020 from
($ in millions, except per share amounts) Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Dec 31,
2019
Mar 31,
2019
For the Period
Wells Fargo net income $ 653
2,873
5,860
(77 )% (89 )
Wells Fargo net income applicable to common stock 42
2,546
5,507
(98 ) (99 )
Diluted earnings per common share 0.01
0.60
1.20
(98 ) (99 )
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 0.13 % 0.59
1.26
(78 ) (90 )
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE) 0.10
5.91
12.71
(98 ) (99 )
Return on average tangible common equity (ROTCE) (1) 0.12
7.08
15.16
(98 ) (99 )
Efficiency ratio (2) 73.6
78.6
64.4
(6 ) 14
Total revenue $ 17,717
19,860
21,609
(11 ) (18 )
Pre-tax pre-provision profit (PTPP) (3) 4,669
4,246
7,693
10
(39 )
Dividends declared per common share 0.51
0.51
0.45
—
13
Average common shares outstanding 4,104.8
4,197.1
4,551.5
(2 ) (10 )
Diluted average common shares outstanding 4,135.3
4,234.6
4,584.0
(2 ) (10 )
Average loans $ 965,046
956,536
950,010
1
2
Average assets 1,950,659
1,941,843
1,883,091
—
4
Average total deposits 1,337,963
1,321,913
1,262,062
1
6
Average consumer and small business banking deposits (4) 779,521
763,169
739,654
2
5
Net interest margin 2.58 % 2.53
2.91
2
(11 )
At Period End
Debt securities $ 501,563
497,125
483,467
1
4
Loans 1,009,843
962,265
948,249
5
6
Allowance for loan losses 11,263
9,551
9,900
18
14
Goodwill 26,381
26,390
26,420
—
—
Equity securities 54,047
68,241
58,440
(21 ) (8 )
Assets 1,981,349
1,927,555
1,887,792
3
5
Deposits 1,376,532
1,322,626
1,264,013
4
9
Common stockholders’ equity 162,654
166,669
176,025
(2 ) (8 )
Wells Fargo stockholders’ equity 182,718
187,146
197,832
(2 ) (8 )
Total equity 183,330
187,984
198,733
(2 ) (8 )
Tangible common equity (1) 134,787
138,506
147,723
(3 ) (9 )
Capital ratios (5):
Total equity to assets 9.25 % 9.75
10.53
(5 ) (12 )
Risk-based capital:

Common Equity Tier 1 10.67
11.14
11.92
(4 ) (10 )
Tier 1 capital 12.22
12.76
13.64
(4 ) (10 )
Total capital (6) 15.21
15.75
16.74
(3 ) (9 )
Tier 1 leverage 8.03
8.31
9.15
(3 ) (12 )
Common shares outstanding 4,096.4
4,134.4
4,511.9
(1 ) (9 )
Book value per common share (7) $ 39.71
40.31
39.01
(1 ) 2
Tangible book value per common share (1)(7) 32.90
33.50
32.74
(2 ) —
Team members (active, full-time equivalent) 262,800
259,800
262,100
1
—

~~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, ~~2019 (2019~~2020 (2020 Form 10-K).

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

Wells Fargo & Company is a ~~diversified, community-based~~leading financial services company ~~with $1.98~~that has approximately $1.9 trillion in ~~assets. Founded~~assets and proudly serves one in ~~1852~~three U.S. households and ~~headquartered~~more than 10% of all middle market companies and small businesses in ~~San Francisco, we~~the U.S. We provide a diversified set of banking, investment and mortgage products and services, as well as consumer and commercial finance, through ~~7,400 locations, more than 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 31 countries and territories to support customers who conduct business in the global economy. With approximately 263,000 active, full-time equivalent team members, we serve one in three households in the United States andInvestment Management. Wells Fargo ranked No. 2930 on Fortune’s ~~2019~~2020 rankings of America’s largest corporations. We ranked fourth in assets and third in the market value of our common stock among all U.S. banks at March 31, ~~2020.~~2021.

Wells Fargo’s top priority remains meeting its regulatory requirements ~~in order~~ to build the right foundation for all that lies ahead. ToThe 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 practices. Addressing these regulatory actions is expected to take multiple years, and we may experience issues or delays along the way in satisfying their requirements. Issues or delays with one regulatory action could affect our progress on others, and failure to satisfy the requirements of a regulatory action on a timely basis could result in additional penalties, enforcement actions, and other negative consequences. While we still have significant work to do, ~~that,~~ the Company is ~~committing~~committed to devoting the resources necessary to ~~ensure that we~~ operate with ~~the strongest~~strong business practices and controls, maintain the highest level of integrity, and have an appropriate culture in place.

In response to the COVID-19 pandemic, we have been working diligently to protect employee safety while continuing to carry out Wells Fargo’s role as a provider of critical and essential services to the public. We have taken comprehensive steps to help customers, employees and communities.

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

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

To support our communities, we are directing $175 million in charitable donations from the Wells Fargo Foundation to help address food, shelter, small business and housing stability, as well as providing help to public health organizations fighting to contain the spread of COVID-19.

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

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

On February 2, 2018, the Company entered into a consent order with the Board of Governors of the Federal Reserve System (FRB). As required by the consent order, the Company’s Board of Directors (Board) submitted to the FRB a plan to further enhance the Board’s governance and oversight of the Company, and the Company submitted to the FRB a plan to further improve the Company’s compliance and operational risk management program. The Company continues to 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 the plans and the Company’s adoption and implementation of the plans, to complete an initial third-party review of the enhancements and improvements provided for in the plans. Until this third-party review is complete

and the plans are approved and implemented to the satisfaction of the FRB, the Company’s total consolidated assets as defined under the consent order will be limited to the level as of December 31, 2017. Compliance with this asset cap is measured on a two-quarter daily average basis to allow for management of temporary fluctuations. While our total consolidated assets of $1.98 trillion as of the end of first quarter 2020 were in excess of our total consolidated assets of $1.95 trillion as of December 31, 2017, we continued to operate in compliance with the asset cap because the two-quarter daily average for our assets of $1.943 trillion remained below the asset cap level. We are actively working to create balance sheet capacity to lend to and help our customers during these unprecedented and challenging times created by the COVID-19 pandemic. Due to the COVID-19 pandemic, on April 8, 2020, the FRB amended the consent order to allow the Company to exclude from the asset cap any ~~on- balance~~on-balance sheet exposure resulting from loans made by the Company in connection with the Small Business Administration’s Paycheck Protection Program and the FRB’s Main Street Lending Program. As required under the amendment to the consent order, to the extent the Company chooses to exclude these exposures from the asset cap, certain fees and other economic benefits received by the Company from loans made in connection with these programs shall be transferred to the U.S. Treasury or to non-profit organizations approved by the FRB that support small businesses. As of March 31, 2021, the Company had not excluded these exposures from the asset cap. After removal of the asset cap, a second third-party review must also be conducted to assess the efficacy and sustainability of the enhancements and improvements.

Consent Orders with the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency Regarding Compliance Risk Management Program, Automobile Collateral Protection Insurance Policies, and Mortgage Interest Rate Lock Extensions

On April 20, 2018, the Company entered into consent orders with the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) to pay an aggregate of $1 billion in civil money penalties to resolve matters regarding the Company’s compliance risk management program and past practices involving certain automobile collateral protection insurance (CPI) policies and certain mortgage interest rate lock extensions. As required by the consent orders, the Company submitted to the CFPB and OCC an enterprise-wide compliance risk management plan and a plan to enhance the Company’s internal audit program with respect to federal consumer financial law and the terms of the consent orders. In addition, as required by the consent orders, the Company submitted for non-objection plans to remediate customers affected by the automobile collateral protection insurance and mortgage interest rate lock matters, as well as a plan for the management of remediation activities conducted by the Company. The Company continues to work to address the provisions of the consent orders. The Company has not yet satisfied certain aspects of the consent orders, and as a result, we


			Wells Fargo & Company			3

Overview (continued)

believe regulators may impose additional penalties or take other enforcement 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 a top priority to rebuild trust through a comprehensive action plan that includes making things right for our customers, ~~team members,~~employees, and other stakeholders, and building a better Company for the future. Our priority of rebuilding trust has included numerous actions focused on identifying potential financial harm to customers resulting from these matters and providing remediation.

For additional information regarding retail sales practices matters, including related legal matters, see the “Risk Factors” section in our ~~2019~~2020 Form 10-K and Note 1413 (Legal Actions) to Financial Statements in this Report.

Other Customer Remediation Activities

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

As our ongoing reviews continue, it is possible that in the future we may identify additional items or areas of potential concern. To the extent issues are identified, we will continue to assess any customer harm and provide remediation as appropriate. For ~~more~~additional information, including related legal and regulatory risk, see the “Risk Factors” section in our ~~2019~~2020 Form 10-K and Note 1413 (Legal Actions) to Financial Statements in this Report.

Recent Developments

Efficiency Initiatives

We are pursuing various initiatives to reduce expenses and create a more efficient and streamlined organization. Actions from these initiatives may include (i) reorganizing and simplifying business processes and structures to improve internal operations and the customer experience, (ii) reducing headcount, (iii) optimizing third-party spending, including for our technology infrastructure, and (iv) rationalizing our branch and administrative locations, which may include consolidations and closures. In first quarter 2021, we recognized a limited amount of restructuring charges within noninterest expense in our consolidated statement of income as a result of these initiatives. For additional information, see Note 19 (Restructuring Charges) to Financial Statements in this Report.

COVID-19 Pandemic

In response to the COVID-19 pandemic, we have been working diligently to protect employee safety while continuing to carry out Wells Fargo’s role as a provider of essential services to the public. We have taken comprehensive steps to help customers, employees and communities.

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

PAYCHECK PROTECTION PROGRAM The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) created funding for the Small Business Administration’s (SBA) loan program providing forgiveness of up to the full principal amount of qualifying loans guaranteed under a program called the Paycheck Protection Program (PPP). Since its inception, we have funded approximately 264,000 loans under the PPP totaling $13.2 billion, and more than $1.0 billion of principal forgiveness has been provided on qualifying PPP loans. We deferred approximately $420 million of SBA processing fees in 2020 that will be recognized as interest income over the terms of the loans. We voluntarily committed to donate all of the gross processing fees received from PPP loans funded in 2020. Through March 31, 2021, we donated approximately $125 million of these processing fees to non-profit organizations that support small businesses. We funded $2.8 billion of PPP loans in first quarter 2021. For this latest round in first quarter 2021, we deferred approximately $200 million of SBA processing fees that will be recognized as interest income over the terms of the loans. We have committed to donate any net profits related to PPP loans funded in 2021. For additional information on the CARES Act and the PPP, see the “Overview – Recent Developments – COVID-19 Pandemic” section in our 2020 Form 10-K.

LIBOR Transition

The London Interbank Offered Rate (LIBOR) is a widely-referenced benchmark rate, which is published in five currencies and a range of tenors, and seeks to estimate the cost at which banks can borrow on an unsecured basis from other banks. On March 5, 2021, the Financial Conduct Authority and the administrator of LIBOR announced that LIBOR will no longer be published on a representative basis after December 31, 2021, with the exception of the most commonly used tenors of U.S. dollar (USD) LIBOR which will no longer be published on a representative basis after June 30, 2023. Federal banking agencies have issued guidance strongly encouraging banking organizations to cease using USD LIBOR as a reference rate in new contracts as soon as practicable and in any event by December 31, 2021.

For information on the amount of our LIBOR-linked assets and liabilities, as well as initiatives created by our LIBOR Transition Office in an effort to mitigate the risks associated with a transition away from LIBOR, see the “Overview – Recent Developments – LIBOR Transition” section in our 2020 Form

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

Capital Actions and Restrictions

On March 25, 2021, the FRB announced that it was extending measures it previously announced limiting capital distributions by large bank holding companies (BHCs), including Wells Fargo, subject to certain exceptions. The FRB has generally authorized, among other things, BHCs to pay common stock dividends and make share repurchases that, in the aggregate, do not exceed an amount equal to the average of the BHC’s net income for the four preceding calendar quarters, so long as the BHC does not increase the amount of its common stock dividend from the level paid in second quarter 2020. The FRB also announced that if a BHC remains above all of its minimum risk-based capital


4			Wells Fargo & Company

requirements in this year's supervisory stress test, these additional limitations on capital distributions will end for that BHC after June 30, 2021. For additional information about capital planning, including the FRB’s recent announcement on capital distributions, see the “Capital Management – Capital Planning and Stress Testing” section in this Report.

Business and Portfolio Divestitures

On February 23, 2021, we announced an agreement to sell Wells Fargo Asset Management for a purchase price of $2.1 billion. As part of the transaction, we will own a 9.9% equity interest and continue to serve as a client and distribution partner.

On March 23, 2021, we announced an agreement to sell our Corporate Trust Services business for a purchase price of $750 million. Both transactions are expected to close in the second half of 2021, subject to customary closing conditions.

In first quarter 2021, we completed the first phase of the previously announced sale of our student loan portfolio, which resulted in a $208 million gain included in other noninterest income and a $104 million goodwill write-down included in other noninterest expense. In April 2021, we completed the sale of substantially all of the remaining portfolio, which will result in a $147 million gain and a $79 million write-down of the remaining goodwill in second quarter 2021.

Financial Performance

~~Wells Fargo~~


Consolidated Financial Highlights
	Quarter ended Mar 31,
($ in millions)		2021		2020	$ Change	% Change
Selected income statement data
Net interest income		$	8,798	11,312	(2,514)	(22)	%
Noninterest income		9,265		6,405	2,860	45
Total revenue		18,063		17,717	346	2
Net charge-offs		523		941	(418)	(44)
Change in the allowance for credit losses		(1,571)		3,064	(4,635)	NM
Provision for credit losses		(1,048)		4,005	(5,053)	NM
Noninterest expense		13,989		13,048	941	7
Income tax expense		326		159	167	105
Wells Fargo net income		4,742		653	4,089	626
Wells Fargo net income applicable to common stock		4,363		42	4,321	NM

NM – Not meaningful

In first quarter 2021, we generated $4.7 billion of net income ~~was $653 million in first quarter 2020 with~~and diluted earnings per common share (EPS) of ~~$0.01,~~$1.05, compared with ~~$5.9 billion~~$653 million of net income and ~~$1.20, respectively,~~EPS of $0.01 in the same period a year ago. ~~Our results in first quarter 2020 were impacted by a $4.0 billion provision for credit losses and an impairment of debt and equity securities of $950 million driven by economic and market conditions.~~ Financial performance ~~items~~ for first quarter ~~2020~~2021, compared with the same period a year ago, ~~included:~~


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


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


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


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


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


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


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


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


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

included the following:

~~Balance Sheet~~•total revenue increased due to higher net gains from equity securities and ~~Liquidity~~

Our balance sheet remained strong during first quarter 2020 with solid levels of liquidity and capital. Our total assets were $1.98 trillion at March 31, 2020. Cash and other short-term investments decreased $6.1 billion from December 31, 2019, reflecting lower federal funds sold and securities purchased under resale agreements,mortgage banking income, partially offset by ~~an increase~~lower net interest income;

•provision for credit losses decreased reflecting lower net charge-offs and improvements in ~~cash balances. Debt securities~~the economic environment;

•noninterest expense increased ~~$4.4 billion from December 31, 2019, predominantly~~ due to ~~an increase in held-to-maturity debt securities,~~higher personnel expense, partially offset by ~~a decline in available-for-sale debt securities. Loans increased $47.6 billion from December 31, 2019, predominantly~~lower operating losses and lower professional and outside services expense;

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

•average deposits increased driven by ~~draws of revolving lines~~growth in consumer deposits in the Consumer Banking and ~~origination of new lending facilities~~Lending and Wealth and Investment Management (WIM) operating segments due to customers' preferences for liquidity given the ~~impact of~~economic uncertainty associated with the COVID-19 pandemic, ~~on economic~~government stimulus programs, and ~~market conditions. The increase in loans was~~lower consumer spending, partially offset by ~~a decrease in credit card loans primarily due~~actions taken to seasonality and fewer new account openings, and declines in consumer real estate mortgages and other revolving credit and installment loans, as originations and draws of existing lines were more than offset by paydowns.

~~Average~~manage under the asset cap which reduced deposits in ~~first quarter 2020 were $1.34 trillion, up $75.9 billion from first quarter 2019, which reflected growth from retail banking deposit campaigns, as well as~~ the ~~inflow of deposits associated with corporate~~Corporate and ~~commercial loan draws.~~Investment Banking operating segment and Corporate.

~~Credit Quality~~

~~Credit quality declined due to the COVID-19 pandemic’s effect on market conditions, which impacted our customer base.~~

Net loan charge-offs were $909 million, or 0.38% (annualized) of average loans, in first quarter 2020, compared with $695 million a year ago (0.30%) (annualized). Our commercial portfolio net loan charge-offs were $324 million, or 25 basis points (annualized) of average commercial loans, in first quarter 2020, compared with net loan charge-offs of $145 million, or 11 basis points (annualized), a year ago, predominantly driven by increased losses in our commercial and industrial loan portfolio primarily related to higher oil and gas net charge-offs reflecting significant declines in oil prices. Our consumer portfolio net loan charge-offs were $585 million, or 53 basis points (annualized) of average consumer loans, in first

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

~~quarter 2020, compared with net loan charge-offs of $550 million, or 51 basis points (annualized), a year ago, primarily driven by increased losses in our credit card portfolio.~~

The allowance for credit losses (ACL) for loans of $12.0 billion at March 31, 2020, increased $1.2 billion, compared with a year ago, and increased $1.6 billion from December 31, 2019. We had a $2.9 billion increase in the allowance for credit losses for loans in first quarter 2020, partially offset by a $1.3 billion decline as a result of our adoption on January 1, 2020, of Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326): ~~Measurement of Credit Losses on Financial Instruments~~ (CECL), compared with a $150 million increase in the allowance in the same period a year ago. The increase in the allowance for credit losses for loans reflected forecasted credit deterioration due to the COVID-19 pandemic and credit weakness in the oil and gas portfolio due to the recent sharp declines in oil prices. The allowance coverage for total loans was 1.19% at March 31, 2020, compared with 1.14% a year ago and 1.09% at December 31, 2019. The allowance covered 3.3 times annualized net loan charge-offs in first quarter 2020, compared with 3.8 times in first quarter 2019. Our provision for loan losses was $3.8 billion in first quarter 2020, up from $845 million a year ago, which reflected an increase in the allowance for credit losses for loans due to forecasted credit deterioration due to the COVID-19 pandemic, and higher net loan charge-offs primarily due to the impact of the recent sharp decline in oil prices on our oil and gas portfolio.

Nonperforming assets (NPAs) at March 31, 2020, of $6.4 billion, increased $759 million, or 13%, from December 31, 2019, and represented 0.63% of total loans at March 31, 2020. Nonaccrual loans increased $810 million from December 31, 2019, driven by increases in commercial and industrial, and commercial real estate mortgage as the effect of the COVID-19 pandemic on market conditions began to impact our customer base. In addition, real estate 1-4 family mortgage nonaccrual loans increased primarily as a result of our adoption of CECL, which required the reclassification of purchased credit-impaired loans as nonaccruing based on performance. Foreclosed assets decreased $51 million from December 31, 2019. For information on how we are assisting our customers in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management” section in this Report.

Capital and Liquidity

We maintained a ~~solid~~strong capital position in first quarter ~~2020,~~2021, with total equity of ~~$183.3~~$188.3 billion at March 31, ~~2020,~~2021, compared with ~~$188.0~~$185.9 billion at December 31, ~~2019. We reduced~~ 2020. Our liquidity and regulatory capital ratios remained strong at March 31, 2021, including:

•our ~~common shares outstanding by 38.0 million shares through~~liquidity coverage ratio (LCR) was 127%, which continued to exceed the ~~repurchase~~regulatory minimum of 75.4 million common shares, net of issuances, in the quarter. On March 15, 2020, we, along with the other members of the Financial Services Forum (which consists of the eight largest and most diversified financial institutions headquartered in the U.S.), decided to temporarily suspend share repurchases for the remainder of the first quarter and for second quarter 2020. This decision is consistent with our objective to use our significant capital and liquidity to provide support to individuals, small businesses, and the broader economy through lending and other important services.100%;

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

~~We believe an important measure of our capital strength is the~~ Common Equity Tier 1 (CET1) ratio was 11.85%, which ~~was 10.67% at March 31, 2020, down from 11.14% at December 31, 2019, but still above~~continued to exceed both the regulatory requirement of 9% and our current internal target of 10%; and ~~the regulatory minimum of 9%. As of March 31, 2020,~~

•our eligible external total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets was ~~23.27%~~25.18%, compared with the ~~required minimum~~regulatory requirement of ~~22.0%~~21.50%. ~~Likewise, our other regulatory capital ratios remained strong.~~

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

Credit Quality

Credit quality was impacted by the improving economic environment.

•The allowance for credit losses (ACL) for loans of $18.0 billion at March 31, 2021, decreased $1.7 billion from December 31, 2020.

•Our provision for credit losses for loans was $(1.1) billion in first quarter 2021, down from $3.8 billion in the same period a year ago. The decrease in the ACL for loans and the provision for credit losses in first quarter 2021, compared with the same period a year ago, reflected improvements in the economic environment.



			Wells Fargo & Company			5

Overview (continued)

•The allowance coverage for total loans was 2.09% at March 31, 2021, compared with 2.22% at December 31, 2020.

•Commercial portfolio net loan charge-offs were $149 million, or 13 basis points of average commercial loans, in first quarter 2021, compared with net loan charge-offs of $324 million, or 25 basis points, in the same period a year ago, predominantly driven by lower losses in our commercial and industrial portfolio primarily within the oil, gas and pipelines industry, partially offset by increased losses in the real estate mortgage and construction portfolios.

•Consumer portfolio net loan charge-offs were $364 million, or 37 basis points of average consumer loans, in first quarter

2021, compared with net loan charge-offs of $585 million, or 53 basis points, in the same period a year ago, driven by lower losses in all consumer loan portfolios as a result of payment deferral activities and government stimulus programs instituted in response to the COVID-19 pandemic.

•Nonperforming assets (NPAs) of $8.2 billion at March 31, 2021, decreased $692 million, or 8%, from December 31, 2020, predominantly driven by decreases in our commercial and industrial portfolio, primarily within the oil, gas and pipelines industry, commercial real estate mortgage, and residential mortgage portfolios reflecting improvements in the economic environment. NPAs represented 0.95% of total loans at March 31, 2021.


Earnings Performance

Wells Fargo net income for first quarter ~~2020~~2021 was $4.7 billion ($1.05 diluted EPS), compared with $653 million ($0.01 diluted ~~earnings per common share), compared with $5.9 billion ($1.20 diluted per share)~~EPS) for first quarter ~~2019.~~2020. Net income ~~decreased~~increased in first quarter ~~2020,~~2021, compared with the same period a year ago, predominantly due to a ~~$999 million~~$5.1 billion decrease in ~~net interest income, a $3.2 billion increase in our~~ provision for credit losses and a $2.9 billion ~~decrease~~increase in noninterest income, partially offset by a ~~$868 million~~$2.5 billion decrease in ~~noninterest expense, and a $722 million decrease in income tax expense.~~

~~Revenue, the sum of~~ net interest income and a $941 million increase in noninterest income, was $17.7 billion in first quarter 2020, compared with $21.6 billion in the same period a year ago. Net interest income represented 64% of revenue in first quarter 2020, compared with 57% in first quarter 2019. Noninterest income represented 36% of revenue in first quarter 2020, compared with 43% in first quarter 2019.expense.

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 isdecreased in first quarter 2021, compared with the ~~average yield on earning assets minus~~same period a year ago, driven by a repricing of the ~~average~~balance sheet, lower loan balances primarily due to soft demand and elevated prepayments, as well as unfavorable hedge ineffectiveness accounting results, and higher mortgage-backed securities premium amortization.

Table 1 presents the individual components of net interest ~~rate paid for deposits~~income and ~~our other sources of funding.~~the net interest margin. Net interest income and the net interest margin are presented on a taxable-equivalent basis in Table 1 to consistently reflect income from taxable and tax-exempt loans and debt and equity securities based on a 21% federal statutory tax rate for the periods ~~ending~~ended March 31, ~~2020~~2021 and ~~2019.~~2020.

Net interest income and the net interest margin in any one period can be significantly affected by a variety of factors including the mix of earning assets in our portfolio, the overall size of our earning assets portfolio, and the cost of funding those assets. In addition, variable sources of interest income, such as loan fees, periodic dividends, and collection of interest on nonaccrual loans, can fluctuate from period to period.

Net interest income on a taxable-equivalent basis was $11.5 billion in first quarter 2020, compared with $12.5 billion for the same period a year ago. Net interest margin on a taxable-equivalent basis was 2.58% in first quarter 2020, compared with 2.91% for the same period a year ago. The decrease inFor additional information about net interest income and net interest margin, see the “Earnings Performance – Net Interest Income” section in ~~first quarter~~our 2020 compared with the same period a year ago, was driven by unfavorable impacts of repricing due to lower market rates and changes in mix of earning assets and funding sources, including sales of high yielding Pick-a-Pay loans in 2019, as well as higher costs on promotional retail banking deposits.Form 10-K.

~~Average earning assets increased $49.8 billion in first quarter 2020 compared with the same period a year ago. The change was driven by increases in:~~


•6			~~average federal funds sold and securities purchased under resale agreements of~~ Wells Fargo & Company~~$24.0 billion~~;


•	~~average loans of~~ ~~$15.0 billion~~;


•	~~average debt securities of~~ ~~$8.5 billion~~;


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


•	~~average equity securities of~~ ~~$4.5 billion; and~~


•	~~other earning assets of~~ ~~$3.0 billion~~;

~~partially offset by decreases in:~~


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


•	~~average loans held for sale of~~ ~~$377 million~~.

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 were $1.34 trillion in first quarter 2020, compared with $1.26 trillion in the same period a year ago, and represented 139% of average loans in first quarter 2020, compared with 133% in first quarter 2019. Average deposits were 75% of average earning assets in first quarter 2020, compared with 73% in the same period a year ago. The average deposit cost for first quarter 2020 was 52 basis points, down 13 basis points from a year ago, reflecting the lower interest rate environment, partially offset by retail banking promotional pricing for new deposits.

~~Earnings Performance (continued~~)

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


	Quarter ended March 31,
	2021						2020
(in millions)	Average balance		Interest income/ expense		Interest rates		Average balance		Interest income/ expense		Interest rates
Assets
Interest-earning deposits with banks	$	223,437	57		0.10	%	$	129,522	381		1.18	%
Federal funds sold and securities purchased under resale agreements	72,148		7		0.04		107,555		380		1.42
Debt securities:
Trading debt securities	87,383		534		2.45		101,062		770		3.05
Available-for-sale debt securities	206,946		841		1.63		252,559		1,810		2.87
Held-to-maturity debt securities	216,826		1,027		1.90		157,891		1,009		2.56
Total debt securities	511,155		2,402		1.89		511,512		3,589		2.81
Loans held for sale (2)	34,554		331		3.85		21,846		209		3.82
Loans:
Commercial loans:
Commercial and industrial – U.S.	252,892		1,596		2.56		288,502		2,546		3.55
Commercial and industrial – Non-U.S.	65,419		338		2.10		70,659		556		3.16
Real estate mortgage	120,734		812		2.73		121,788		1,187		3.92
Real estate construction	21,755		166		3.10		20,277		229		4.54
Lease financing	15,799		172		4.33		19,288		212		4.40
Total commercial loans	476,599		3,084		2.62		520,514		4,730		3.65
Consumer loans:
Residential mortgage – first lien	266,251		2,068		3.11		293,556		2,650		3.61
Residential mortgage – junior lien	22,321		228		4.13		28,905		370		5.14
Credit card	35,205		1,033		11.90		39,756		1,207		12.21
Auto	48,680		560		4.66		48,258		596		4.96
Other consumer	24,383		233		3.87		34,057		534		6.32
Total consumer loans	396,840		4,122		4.18		444,532		5,357		4.83
Total loans (2)	873,439		7,206		3.33		965,046		10,087		4.20
Equity securities	29,434		137		1.87		37,532		208		2.22
Other	9,498		1		0.03		7,431		14		0.77
Total interest-earning assets	$	1,753,665	10,141		2.33	%	$	1,780,444	14,868		3.35	%
Cash and due from banks	24,598		—				20,571		—
Goodwill	26,383		—				26,387		—
Other	132,064		—				123,257		—
Total noninterest-earning assets	$	183,045	—				170,215		—
Total assets	$	1,936,710	10,141				1,950,659		14,868
Liabilities
Deposits:
Demand deposits	$	444,764	33		0.03	%	$	63,086	135		0.86	%
Savings deposits	411,596		32		0.03		762,138		978		0.52
Time deposits	44,025		47		0.43		112,077		466		1.67
Deposits in non-U.S offices	30,731		—		0.01		53,335		163		1.23
Total interest-bearing deposits	931,116		112		0.05		990,636		1,742		0.71
Short-term borrowings	59,082		(9)		(0.06)		102,977		292		1.14
Long-term debt	198,340		1,026		2.07		229,002		1,240		2.17
Other liabilities	28,875		109		1.50		30,199		142		1.90
Total interest-bearing liabilities	$	1,217,413	1,238		0.41		$	1,352,814	3,416		1.01
Noninterest-bearing demand deposits	462,356		—				347,327		—
Other noninterest-bearing liabilities	67,609		—				62,348		—
Total noninterest-bearing liabilities	$	529,965	—				409,675		—
Total liabilities	$	1,747,378	1,238				1,762,489		3,416
Total equity	189,332		—				188,170		—
Total liabilities and equity	$	1,936,710	1,238				1,950,659		3,416

Interest rate spread on a taxable-equivalent basis (3)					1.92	%					2.34	%
Net interest income and net interest margin on a taxable-equivalent basis (3)			$	8,903	2.05	%			$	11,452	2.58	%

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

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

(3)Includes taxable-equivalent adjustments of $105 million and $140 million for the quarters ended March 31, 2021 and 2020, respectively, predominantly related to tax-exempt income on certain loans and securities.

   Quarter ended March 31,
2020
2019
(in millions)
Average
balance

Yields/
rates

Interest
income/
expense

Average
balance

Yields/
rates

Interest
income/
expense

Earning assets
Interest-earning deposits with banks $ 129,522
1.18 % $ 381
140,784
2.33 % $ 810
Federal funds sold and securities purchased under resale agreements 107,555
1.42
380
83,539
2.40
495
Debt securities (2):
Trading debt securities 101,062
3.05
770
89,378
3.58
798
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies 10,781
1.40
38
14,070
2.14
74
Securities of U.S. states and political subdivisions 38,950
3.43
334
48,342
4.02
486
Mortgage-backed securities:
Federal agencies 158,639
2.68
1,062
151,494
3.10
1,173
Residential and commercial 4,648
2.82
33
5,984
4.31
64
Total mortgage-backed securities 163,287
2.68
1,095
157,478
3.14
1,237
Other debt securities 39,541
3.48
343
46,788
4.46
517
Total available-for-sale debt securities 252,559
2.87
1,810
266,678
3.48
2,314
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies 45,937
2.19
251
44,754
2.20
243
Securities of U.S. states and political subdivisions 13,536
3.84
130
6,158
4.03
62
Federal agency and other mortgage-backed securities 98,394
2.55
628
96,004
2.74
656
Other debt securities 24
3.10
—
61
3.96
1
Total held-to-maturity debt securities 157,891
2.56
1,009
146,977
2.63
962
Total debt securities 511,512
2.81
3,589
503,033
3.25
4,074
Mortgage loans held for sale (3) 20,361
3.87
197
13,898
4.37
152
Loans held for sale (3) 1,485
3.17
12
1,862
5.25
24
Loans:
Commercial loans:
Commercial and industrial – U.S. 288,502
3.55
2,546
286,577
4.48
3,169
Commercial and industrial – non U.S. 70,659
3.16
556
62,821
3.90
604
Real estate mortgage 121,788
3.92
1,187
121,417
4.58
1,373
Real estate construction 20,277
4.54
229
22,435
5.43
301
Lease financing 19,288
4.40
212
19,391
4.61
224
Total commercial loans 520,514
3.65
4,730
512,641
4.48
5,671
Consumer loans:
Real estate 1-4 family first mortgage 293,556
3.61
2,650
285,214
3.96
2,821
Real estate 1-4 family junior lien mortgage 28,905
5.14
370
33,791
5.75
481
Credit card 39,756
12.21
1,207
38,182
12.88
1,212
Automobile 48,258
4.96
596
44,833
5.19
574
Other revolving credit and installment 34,057
6.32
534
35,349
7.14
623
Total consumer loans 444,532
4.83
5,357
437,369
5.26
5,711
Total loans (3) 965,046
4.20
10,087
950,010
4.84
11,382
Equity securities 37,532
2.22
208
33,080
2.56
211
Other 7,431
0.77
14
4,416
1.63
18
Total earning assets $ 1,780,444
3.35 % $ 14,868
1,730,622
4.00 % $ 17,166
Funding sources
Deposits:
Interest-bearing checking $ 63,086
0.86 % $ 135
56,253
1.42 % $ 197
Market rate and other savings 762,138
0.52
978
688,568
0.50
847
Savings certificates 30,099
1.47
110
25,231
1.26
78
Other time deposits 81,978
1.74
356
97,830
2.67
645
Deposits in non-U.S. offices 53,335
1.23
163
55,443
1.89
259
Total interest-bearing deposits 990,636
0.71
1,742
923,325
0.89
2,026
Short-term borrowings 102,977
1.14
292
108,651
2.23
597
Long-term debt 229,002
2.17
1,240
233,172
3.32
1,927
Other liabilities 30,199
1.90
142
25,292
2.28
143
Total interest-bearing liabilities 1,352,814
1.01
3,416
1,290,440
1.47
4,693
Portion of noninterest-bearing funding sources 427,630
—
—
440,182
—
—
Total funding sources $ 1,780,444
0.77
3,416
1,730,622
1.09
4,693
Net interest margin and net interest income on a taxable-equivalent basis (4) 2.58 % $ 11,452
2.91 % $ 12,473
Noninterest-earning assets
Cash and due from banks $ 20,571
      19,614

Goodwill 26,387
      26,420

Other 123,257
106,435

Total noninterest-earning assets $ 170,215
152,469

Noninterest-bearing funding sources
Deposits $ 347,327
338,737

Other liabilities 62,348
55,565

Total equity 188,170
198,349

Noninterest-bearing funding sources used to fund earning assets (427,630 ) (440,182 )
Net noninterest-bearing funding sources $ 170,215
152,469

Total assets $ 1,950,659
1,883,091

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

~~Includes taxable-equivalent adjustments of~~ ~~$140 million~~ ~~and~~ ~~$162 million~~ ~~for the quarters ended~~ ~~March 31, 2020~~ ~~and~~ ~~2019, respectively, predominantly related to tax-exempt income on certain loans and securities.~~

Earnings Performance (continued)

Table 2: Noninterest Income

Quarter ended Mar 31, %
(in millions) 2020
2019
Change
Service charges on deposit accounts $ 1,209
1,094
11 %
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,482
2,193
13
Trust and investment management 701
786
(11 )
Investment banking 391
394
(1 )
Total trust and investment fees 3,574
3,373
6
Card fees 892
944
(6 )
Other fees:
Lending related charges and fees 328
347
(5 )
Cash network fees 106
109
(3 )
Commercial real estate brokerage commissions 1
81
(99 )
Wire transfer and other remittance fees 110
113
(3 )
All other fees 87
120
(28 )
Total other fees 632

770
(18 )
Mortgage banking:
Servicing income, net 271
364
(26 )
Net gains on mortgage loan origination/sales activities 108
344
(69 )
Total mortgage banking 379

708
(46 )
Insurance 95
96
(1 )
Net gains from trading activities 64
357
(82 )
Net gains on debt securities 237
125
90
Net gains (losses) from equity securities (1,401 ) 814
NM
Lease income 352
443
(21 )
Life insurance investment income 161
159
1
All other 211
415
(49 )
Total $ 6,405

9,298
(31 )



	Quarter ended March 31,
(in millions)		2021		2020	$ Change	% Change
Deposit-related fees		$	1,255	1,447	(192)	(13)	%
Lending-related fees		361		350	11	3
Investment advisory and other asset-based fees (1)		2,756		2,506	250	10
Commissions and brokerage services fees (1)		636		677	(41)	(6)
Investment banking fees		568		391	177	45
Card fees		949		892	57	6
Servicing income, net		(99)		271	(370)	NM
Net gains on mortgage loan originations/sales		1,425		108	1,317	NM
Mortgage banking		1,326		379	947	250
Net gains from trading activities		348		64	284	444
Net gains on debt securities		151		237	(86)	(36)
Net gains (losses) from equity securities		392		(1,401)	1,793	128
Lease income		315		353	(38)	(11)
Other		208		510	(302)	(59)
Total		$	9,265	6,405	2,860	45

NM – Not meaningful

~~Noninterest income was $6.4 billion, or 36% of revenue, in~~(1)In first quarter 2020, compared with $9.3 billion, or 43% of revenue, for the same period a year ago. The decrease in noninterest income in first quarter 2020, compared with the same period a year ago, was predominantly due to lower other fees, mortgage banking income, net gains from trading activities, and net losses from equity securities, partially offset by higher service charges on deposit accounts, and2021, trust and investment management fees and asset-based brokerage fees were combined into a single line item for investment advisory and other asset-based fees, and brokerage commissions and other brokerage services fees were combined into a single line item for commissions and brokerage services fees. ~~For more information on our performance obligations and~~Prior period balances have been revised to conform with the ~~nature of services performed for certain of our revenues discussed below, see Note 18 (Revenue from Contracts with Customers) to Financial Statements in this Report.~~current period presentation.

~~Service charges on deposit accounts increased to~~ ~~$1.2 billion~~ in

First quarter 2021 vs. first quarter 2020

Deposit-related fees~~, compared with $1.1 billion for the same period a year ago~~ decreased driven by:

•~~, driven by~~ higher ~~overdraft fees and higher treasury management fees~~average consumer deposit account balances due to the ~~impact of a lower earnings credit rate applied to commercial accounts given the lower interest rate environment. Overdraft fees were higher due to one additional day in first quarter 2020, compared~~economic slowdown and government stimulus programs associated with the ~~same period a year ago, as well as~~COVID-19 pandemic; and

•higher fee waivers and reversals ~~for customers affected by our data center system outage and the government shutdown in first quarter 2019. As~~as part of our actions to support customers during the COVID-19 ~~pandemic, we have provided certain fee waivers and reversals~~pandemic;

partially offset by:

•higher treasury management fees on commercial accounts driven by a lower earnings credit rate due to ~~our customers, which may negatively impact income from service charges on deposit accounts in future periods.~~the lower interest rate environment.

~~Brokerage~~Investment advisory ~~commissions~~ and other asset-based fees increased toreflecting ~~$2.5 billion~~ in ~~first quarter 2020, compared with~~ ~~$2.2 billion~~ ~~for the same period a year ago, due to~~ higher ~~asset-based fees and higher transactional revenue. Retail brokerage~~market valuations on client assets totaled $1.4 trillion at March 31, 2020, compared with $1.6 trillion at March 31, 2019. Asset-based fees are generally calculated on the market value of the assets as of the beginning of each quarter. All retail brokerage services are provided by our Wealth and Investment Management (WIM) operating segment. investment assets.

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

~~Trust~~Commissions and ~~investment management~~brokerage services fees ~~decreased to~~ ~~$701 million~~ in ~~first quarter 2020, from$786 million~~ ~~for the same period a year ago, predominantly~~decreased driven by lower ~~trust fees due to the sale of our Institutional Retirement and Trust (IRT) business in 2019.~~

~~Our assets under management (AUM) totaled $693.1 billion at~~ ~~March 31, 2020, compared with $661.1 billion at~~ ~~March 31, 2019. Substantially all of our AUM is managed by our WIM operating segment.~~ Our assets under administration (AUA) totaled $1.7 trillion at both March 31, 2020 and 2019. Management believes that AUM and AUA are useful metrics because they allow investors and others to assess how changes in asset amounts may impact the generation of certain asset-based fees.

~~Earnings Performance (continued~~)

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

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

~~Card fees decreased to $892 million~~ in ~~first quarter 2020, compared with~~ ~~$944 million~~ ~~for the same period~~ ~~a year ago,~~transactional revenue due to higher ~~rewards costs and lower interchange fees driven by decreased purchase~~customer activity ~~due to the impact of the COVID-19 pandemic on consumer spending, partially offset by strong purchase volume early in the quarter.~~

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

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

~~Net servicing income~~ ~~decreased to $271 million~~ in first quarter 2020 ~~compared~~reflecting the economic uncertainty associated with ~~$364 million for~~ the same period a year ago driven by a decrease in contractually specified fees as a result of sales of mortgage servicing rights (MSRs) in 2019 and continued prepayments, as well as higher unreimbursed servicing costs due to the expected impactonset of the COVID-19 ~~pandemic, such as extended foreclosure timelines~~pandemic.

Investment banking fees increased driven by higher advisory fees and equity and debt origination fees.

Card fees increased reflecting lower credit card rewards costs, partially offset by lower late fees due to higher ~~defaults. In addition to~~payment rates.

Servicing income, net decreased reflecting:

•lower servicing fees ~~net servicing income includes amortization~~due to a lower balance of commercial MSRs, changes in the fair value of residential MSRs, as well as changes in the fair value of derivatives (economic hedges) used to hedge the residential MSRs. The total fair value of our residential MSRs declined in first quarter 2020, compared with the same period a year ago, driven by lower mortgage interest rates and higher prepayments, which were substantially offset by hedge gains. In addition, the fair value decline in first quarter 2020 included assumption updates attributable to higher prepayment estimates. Table 2a presents the components of the market-related valuation changes to our residential MSRs, net of hedge results.

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

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

~~Our portfolio of~~ loans serviced for others ~~was $1.6 trillion at both March 31, 2020,~~resulting from continued prepayments; and ~~December 31, 2019. At March 31, 2020, the ratio of combined residential~~

•lower income from mortgage servicing right (MSR) valuation changes and ~~commercial MSRs to~~ related ~~loans serviced for others was 0.60%, compared with 0.79% at December 31, 2019. See the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section in this Report for additional information~~hedges, which reflected a favorable

~~regarding our MSRs risks and hedging approach.~~impact from changes in interest rates, more than offset by less favorable hedge results.

Net gains on mortgage loan ~~origination/~~originations/sales ~~activities decreased to $108 million~~ increased

driven by:

•higher margins in our retail production channel;

•~~first quarter 2020, compared with $344 million for the same period a year ago, as gains from~~ higher residential real estate held for sale (HFS) origination volumes in our retail production channel;

•higher gains related to the re-securitization of loans we purchased from Government National Mortgage Association (GNMA) loan securitization pools in 2020; and ~~margins~~

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

~~The production margin~~

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

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

Quarter ended March 31,
2020
2019
Net gains on mortgage loan origination/sales activities (in millions):
Residential (A) $ 360
232
Commercial 23
47
Residential pipeline and unsold/repurchased loan management (1) (275 ) 65
Total $ 108
344
Residential real estate originations (in billions):
Held-for-sale (B) $ 33
22
Held-for-investment 15
11
Total $ 48
33
Production margin on residential held-for-sale mortgage loan originations (A)/(B) 1.08 % 1.05 %


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

~~The production margin was 1.08% for~~ ~~first quarter 2020, compared with 1.05% for the same period a year ago. The increase in production margin in~~ ~~first quarter 2020,compared with the same period a year ago,~~ ~~was~~ ~~due to~~ ~~higher margins~~ ~~in both our retail and correspondent production channel, as well as a shift to more retail origination volume, which has a higher margin. The higher production margin was reduced by~~ ~~valuation~~ ~~losses on residential mortgage loans held for sale, particularly non-agency loans.~~

~~Mortgage applications increased to $108 billion in~~ ~~first quarter 2020, compared with $64 billion for the same period a year ago~~. The 1-4 family first mortgage unclosed application pipeline was $62 billion at March 31, 2020, compared with $32 billion at March 31, 2019. For additional information about our mortgage banking activities and results, see the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section andee Note 119 (Mortgage Banking Activities) ~~and Note 16 (Fair Values of Assets and Liabilities)~~ to Financial Statements in this Report.

Net gains from trading activities ~~which reflect unrealized changes in fair value of our trading positions and realized gains and losses, decreased to $64 million in~~ ~~first quarter 2020, compared with $357 million in the same period a year ago.~~ increased reflecting:

•~~The decrease in~~ ~~first quarter 2020, compared with the same period a year ago,~~ ~~reflected trading volatility created by the COVID-19 pandemic. We had lower income in first quarter 2020 from wider~~

~~credit spreads~~higher client demand for asset-backed ~~securities~~finance products, other credit products, and ~~credit trading, as well as lower trading volumes on asset-backed securities,~~ municipal bonds;

partially offset ~~by increased~~by:

•lower client demand for interest rate products and lower revenue in equities and commodities.

Net gains on debt securities decreased due to lower ~~interest rates.~~ gains from the sales of agency mortgage-backed securities (MBS) and municipal bonds as a result of decreased sales volumes.

Net gains (losses) from ~~trading activities exclude interest and dividend income and expense on trading securities, which are reported within interest income from debt and~~ equity securities increased driven by:

•lower impairment of $920 million on equity securities due to the market impact of the COVID-19 pandemic in first quarter 2020;

•losses in first quarter 2020 on deferred compensation plan investments (largely offset in personnel expense). Refer to


8			Wells Fargo & Company

Table 3a for the results for our deferred compensation plan and ~~other interest income.~~ related hedges; and

•higher realized gains on marketable equity securities.

Lease income decreased due to a reduction in the size of the operating lease asset portfolio.

Other income decreased due to:

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

•higher valuation losses related to the retained litigation risk, including the timing and amount of final settlement,

associated with shares of Visa Class B common stock that we sold. For additional information, ~~about trading activities,~~ see the “Risk Management – Asset/Liability Management – Market ~~Risk-Trading Activities”~~Risk – Equity Securities” section ~~and Note 4 (Trading Activities) to Financial Statements~~ in ~~this Report.~~our 2020 Form 10-K;

partially offset by:

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

~~Lease~~ ~~income decreased to $352 million in~~ ~~first quarter 2020, compared with $443 million for the same period~~ a ~~year ago, driven by reductions in the size of the equipment leasing portfolio.~~

~~All~~ ~~other income decreased to $211 million in~~ ~~first quarter 2020~~, compared with $415 million for the same period a year ago. All other income includes income or losses from equity method investments, including low-income housing tax credit investments (excluding related tax credits recorded in income tax expense), foreign currency adjustments and related hedges of foreign currency risks, and certain economic hedges. ~~The decrease in all other income was driven by higher income in first quarter 2019 from gains on the sales of purchased credit-impaired (PCI) loans and a pre-tax~~ gain on the sale of ~~our Business Payroll Services business, partially offset by transition services fees in first quarter 2020 associated with the sale~~a portion of our ~~IRT business~~student loan portfolio; and ~~gains on the sales of loans reclassified to held for sale in 2019 and sold in first quarter 2020.~~

•higher income from investments accounted for under the equity method.

~~Earnings Performance (continued~~)

Noninterest Expense

Table 3: Noninterest Expense



	Quarter ended March 31,
(in millions)		2021		2020	$ Change	% Change
Personnel		$	9,558	8,323	1,235	15	%
Technology, telecommunications and equipment		844		798	46	6
Occupancy		770		715	55	8
Operating losses		213		464	(251)	(54)
Professional and outside services		1,388		1,606	(218)	(14)
Leases (1)		226		260	(34)	(13)
Advertising and promotion		90		181	(91)	(50)
Restructuring charges		13		—	13	NM
Other		887		701	186	27
Total		$	13,989	13,048	941	7

Quarter ended Mar 31, %
(in millions) 2020
2019
Change
Salaries $ 4,721
4,425
7 %
Commission and incentive compensation 2,463
2,845
(13 )
Employee benefits 1,130
1,938
(42 )
Technology and equipment 661
661
—
Net occupancy (1) 715
717
—
Core deposit and other intangibles 23
28
(18 )
FDIC and other deposit assessments 118
159
(26 )
Operating losses 464
238
95
Outside professional services 727
678
7
Contract services 630
563
12
Leases (2) 260
286
(9 )
Advertising and promotion 181
237
(24 )
Outside data processing 165
167
(1 )
Travel and entertainment 93
147
(37 )
Postage, stationery and supplies 129
122
6
Telecommunications 92
91
1
Foreclosed assets 29
37
(22 )
Insurance 25
25
—
All other 422
552
(24 )
Total $ 13,048
13,916
(6 )
NM – Not meaningful


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


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

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

~~Noninterest expense was $13.0 billion in~~First quarter 2021 vs. first quarter 2020 ~~down 6% from $13.9 billion in the same period a year ago,~~

Personnel expense increased driven ~~by lower personnel expenses, advertising and promotions expense, travel and entertainment expense, and other expense, partially offset by~~ by:

•higher ~~operating losses, and outside professional and contract services expense.~~deferred compensation expense;

~~Personnel expenses, which include salaries, commissions,~~•higher incentive compensation ~~and employee benefits, were down $894 million, or 10%, in first quarter 2020, compared with the same period a year ago, due to lower employee benefits~~ expense, ~~from lower deferred compensation expense (largely offset in net losses from equity securities) and lower incentive compensation and commissions, partially offset by higher salaries driven by~~including the impact of ~~staffing mix changes~~higher market valuations on stock-based compensation; and ~~annual salary increases, as well as one additional payroll day in the quarter.~~

•higher revenue-related compensation expense;

partially offset by:

• lower salaries.

Table 3a presents results for our deferred compensation plan and related ~~investments.~~

The decrease in incentive compensation and commissions was due to lower stock incentive compensation expense and lower annual bonus expense, partially offset by higher revenue-related incentive compensation. We have provided various types of financial support to our employees in response to the COVID-19 pandemic, including additional cash payments for our employees who continue to serve customers, enhanced childcare, and other extended benefits. These additional benefits did not meaningfully impact our expenses in first quarter 2020, but are expected to have a greater impact beginning inhedges. In second quarter 2020, ~~and throughout the remainder~~we entered into arrangements to transition our economic hedges of the ~~year. See~~deferred compensation plan liabilities from equity securities to derivative instruments. As a result of this transition, changes in fair value of derivatives used to economically hedge the ~~“Financial Review – Overview” section~~deferred compensation plan are reported in ~~this Report for more~~personnel expense rather than in net gains (losses) from equity securities within noninterest income. For additional information on the ~~actions we have taken~~derivatives used in the economic hedges, see Note 14 (Derivatives) to ~~support our employees during the COVID-19 pandemic.~~Financial Statements in this Report.

Table 3a: Deferred Compensation ~~Plan~~ and Related ~~Investments~~Hedges



	Quarter ended March 31,
(in millions)		2021		2020
Net interest income		$	—	12
Net losses from equity securities		—		(621)
Total losses from deferred compensation plan investments		—		(609)
Decrease (increase) in deferred compensation plan liabilities		(165)		598
Net derivative gains from economic hedges of deferred compensation		160		—
Decrease (increase) in personnel expense		(5)		598
Loss before income tax expense		$	(5)	(11)

Technology, telecommunications and equipment expense increased due to higher expense for technology contracts and higher telecommunications expense related to the COVID-19 pandemic.

Occupancy expense increased due to additional cleaning fees, supplies, and equipment expenses related to the COVID-19 pandemic.

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

Professional and outside services expense decreased driven by reduced project spending due to efficiency initiatives.

Lease expense decreased due to a reduction in the size of the operating lease asset portfolio.

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


~~(1)~~			~~Represents change in deferred compensation plan liability.~~Wells Fargo & Company			9

~~Operating losses were up $226 million, or 95%, in first quarter 2020, compared with the same period a year ago, due to higher litigation and remediation accruals.~~

Earnings Performance (continued)

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

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

Advertising and promotion expense ~~was down $56 million, or 24%, in first quarter 2020, compared with the same period a year ago, due to decreases in~~ decreased driven by reduced marketing and brand campaign ~~volumes.~~volumes due to the impact of the COVID-19 pandemic.

~~Travel and entertainment was down $54 million, or 37%,~~

Restructuring charges increased related to our efficiency initiatives that began in third quarter 2020. For additional information on restructuring charges, see Note 19 (Restructuring Charges) to Financial Statements in this Report.

Other expenses increased driven by:

•a write-down of goodwill in first quarter ~~2020, compared with~~2021 related to the ~~same period~~sale of a ~~year ago,~~portion of our student loan portfolio;

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

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

partially offset by:

•a reduction in business travel and company events due to ~~ongoing expense management initiatives, as well as~~ the impact of the COVID-19 pandemic.

All other expense was down $130 million, or 24%, in first quarter 2020, compared with the same period a year ago, due to higher gains on the extinguishment of debt, lower pension benefit plan expenses, and a lower insurance claims reserve.

Income Tax Expense

Income tax expense was ~~$159~~$326 million in first quarter ~~2020, down 82% from $881~~2021, compared with $159 million in the same period a year ago, driven by ~~lower~~higher pre-tax income. ~~Our~~ Theeffective income tax rate was ~~19.5%~~6.4% for first quarter ~~2020,~~2021, compared with ~~13.1%~~19.5% for the same period a year ago. ~~The effective~~Income tax expense for first quarter 2021 included net discrete income tax ~~rate~~benefits of $154 million related mainly to the resolution of prior period matters with tax authorities. Income tax expense for first quarter 2020 ~~reflected~~included net discrete income tax expense of $141 million driven by the accounting for stock compensation activity, the net impact of accounting for uncertain tax positions, and the outcome of U.S. federal income tax examinations. The lower rate in first quarter 2019 was related to net discrete income tax benefits of $297 million related mostly to the results of U.S. federal and state income tax examinations and the accounting for stock compensation activity.

Operating Segment Results

~~As of March 31, 2020, we were organized for~~Our management reporting ~~purposes~~is organized into ~~three~~four reportable operating segments: ~~Community~~Consumer Banking and Lending; Commercial Banking; ~~Wholesale~~Corporate and Investment Banking; and Wealth and Investment ~~Management (WIM). These~~Management. All other business activities that are not included in the reportable operating segments ~~are defined~~have been included in Corporate. For additional information, see Table 4. We define our reportable operating segments by type of product ~~type~~ and customer segment, and their results are based on our management reporting process. The management reporting process measures the performance of the reportable operating segments based on the Company’s management structure, and the results are regularly reviewed by our Chief Executive Officer and Operating Committee. The management reporting process is based on U.S. GAAP ~~with~~and includes specific adjustments, such as ~~for~~ funds transfer pricing for asset/liability management, ~~for~~ shared revenues and expenses, and ~~tax-equivalent~~taxable-equivalent adjustments to consistently reflect income from taxable and tax-exempt ~~sources. On~~sources, which allows management to assess performance consistently across the operating segments.

In February ~~11, 2020,~~2021, we announced ~~a new organizational structure with five principal lines of business: Consumer~~an agreement to sell Wells Fargo Asset Management and ~~Small Business Banking; Consumer Lending; Commercial Banking; Corporate~~moved the business from the Wealth and Investment ~~Banking; and Wealth and Investment~~

~~Management.~~Management operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. This new organizational structure is intended to help drive operating, control, and business performance. The Company is currently in the process of transitioning to this new organizational structure, including identifying leadership for some of these principal business lines and aligning management reporting and allocation methodologies. These changes willchange did not impact the previously reported consolidated financial results of the ~~Company, but~~Company.

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 ~~expected~~included in net interest income. The net impact of the funding charges or credits is recognized in corporate treasury.

Revenue and Expense Sharing When lines of business jointly serve customers, the line of business that is responsible for providing the product or service recognizes revenue or expense with a referral fee paid or an allocation of cost to ~~result~~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 ~~changes~~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 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 allocate capital are periodically assessed and revised. Management believes that return on allocated capital is a useful financial measure because it enables management, investors, and others to assess a reportable operating ~~segments.~~segment’s use of capital.

Selected Metrics We ~~will update our~~present certain financial and nonfinancial metrics that management uses when evaluating reportable operating segment ~~disclosures, including comparative financial results, when~~results. Management believes that these metrics are useful to investors and others to assess the ~~Company completes its transition~~performance, customer growth, and ~~is managed in accordance with the new organizational structure.~~ trends of reportable operating segments or lines of business.


10			Wells Fargo & Company

Table 44:Management Reporting Structure

Wells Fargo & Company

Consumer Banking and Lending

Commercial Banking

Corporate and Investment Banking

Wealth and Investment Management

Corporate

• Consumer and Small Business Banking

• Home Lending

• Credit Card

• Auto

• Personal Lending

• Middle Market Banking

• Asset-Based Lending and Leasing

• Banking

• Commercial Real Estate

• Markets

• Wells Fargo Advisors

• The Private
Bank

• Corporate Treasury

• Enterprise Functions

• Investment Portfolio

• Affiliated venture capital and private equity partnerships

• Non-strategic businesses

Table 5 and the following discussion present our results by reportable operating segment. For additional ~~description of our operating segments, including additional financial~~ information, ~~and the underlying management reporting process,~~ see Note 22 (Operating Segments) to Financial Statements in this Report.

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

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

Table 4:5: Operating Segment Results – Highlights


	Quarter ended March 31,
(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate (1)	Reconciling Items (2)	Consolidated Company
2021
Net interest income	$	5,615	1,283	1,778	657	(430)	(105)	8,798
Noninterest income	3,039		925	1,845	2,887	1,319	(750)	9,265
Total revenue	8,654		2,208	3,623	3,544	889	(855)	18,063
Provision for credit losses	(419)		(399)	(284)	(43)	97	—	(1,048)
Noninterest expense	6,267		1,766	1,833	3,028	1,095	—	13,989
Income (loss) before income tax expense (benefit)	2,806		841	2,074	559	(303)	(855)	5,122
Income tax expense (benefit)	702		203	500	140	(364)	(855)	326
Net income before noncontrolling interests	2,104		638	1,574	419	61	—	4,796
Less: Net income from noncontrolling interests	—		1	—	—	53	—	54
Net income	$	2,104	637	1,574	419	8	—	4,742
2020
Net interest income	$	6,002	1,774	2,019	838	819	(140)	11,312
Noninterest income	2,647		728	1,369	2,432	(119)	(652)	6,405
Total revenue	8,649		2,502	3,388	3,270	700	(792)	17,717
Provision for credit losses	1,569		1,041	1,125	8	262	—	4,005
Noninterest expense	6,257		1,697	1,870	2,657	567	—	13,048
Income (loss) before income tax expense (benefit)	823		(236)	393	605	(129)	(792)	664
Income tax expense (benefit)	205		(61)	101	152	554	(792)	159
Net income (loss) before noncontrolling interests	618		(175)	292	453	(683)	—	505
Less: Net income (loss) from noncontrolling interests	—		1	—	—	(149)	—	(148)
Net income (loss)	$	618	(176)	292	453	(534)	—	653

(1)All other business activities that are not included in the reportable operating segments have been included in Corporate. For additional information, see the "Corporate" section below. In February 2021, we announced an agreement to sell Wells Fargo Asset Management and moved the business from the Wealth and Investment Management operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation.

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

(income/expense in millions, Community
Banking
Wholesale
Banking

Wealth and
Investment
Management
Other (1)
Consolidated
Company

balance sheet data in billions) 2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Quarter ended Mar 31,
Revenue $ 9,496
11,750
5,817
7,111
3,715
4,079
(1,311 ) (1,331 ) 17,717
21,609
Provision (reversal of provision) for credit losses 1,718
710
2,288
134
8
4
(9 ) (3 ) 4,005
845
Net income (loss) 155
2,823
311
2,770
463
577
(276 ) (310 ) 653
5,860

Average loans $ 462.6
458.2
484.5
476.4
78.5
74.4
(60.6 ) (59.0 ) 965.0
950.0
Average deposits 798.6
765.6
456.6
409.8
151.4
153.2
(68.6 ) (66.5 ) 1,338.0
1,262.1
Goodwill 16.7
16.7
8.4
8.4
1.3
1.3
—
—
26.4
26.4


~~(1)~~			Includes the elimination of certain items that are included in more than one business segment, substantially all of which represents products and services for WIM customers served through Community Banking distribution channels.Wells Fargo & Company			11

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

~~Community~~Consumer Banking and Lending offers ~~a complete line of~~ diversified financial products and services for consumers and small businesses with annual sales generally up to $5 ~~million in which the owner generally is the financial decision maker.~~million. These financial products and services include checking and savings accounts, credit and

debit cards, ~~automobile, student, mortgage,~~as well as home, ~~equity~~auto, personal, and small business ~~lending, as well as referrals to Wholesale Banking~~

lending. Table 5a and WIM business partners. The Community Banking segment also includes the results of our Corporate Treasury activities net of allocations (including funds transfer pricing, capital, liquidity and certain corporate expenses) in support of other segments and results of investments in our affiliated venture capital and private equity partnerships. Table ~~4a provides~~5b provide additional ~~financial~~ information for ~~Community Banking.~~Consumer Banking and Lending.

Table ~~4a:~~5a: Consumer Banking and Lending – Income Statement and Selected Metrics


	Quarter ended March 31,
($ in millions, unless otherwise noted)	2021			2020	$ Change	% Change
Income Statement
Net interest income	$	5,615		6,002	(387)	(6)	%
Noninterest income:
Deposit-related fees	661			879	(218)	(25)
Card fees	892			819	73	9
Mortgage banking	1,259			342	917	268
Other	227			607	(380)	(63)
Total noninterest income	3,039			2,647	392	15
Total revenue	8,654			8,649	5	—
Net charge-offs	370			621	(251)	(40)
Change in the allowance for credit losses	(789)			948	(1,737)	NM
Provision for credit losses	(419)			1,569	(1,988)	NM
Noninterest expense	6,267			6,257	10	—
Income before income tax expense	2,806			823	1,983	241
Income tax expense	702			205	497	242
Net income	$	2,104		618	1,486	240
Revenue by Line of Business
Consumer and Small Business Banking	$	4,550		4,861	(311)	(6)
Consumer Lending:
Home Lending	2,227			1,876	351	19
Credit Card	1,346			1,375	(29)	(2)
Auto	403			380	23	6
Personal Lending	128			157	(29)	(18)
Total revenue	$	8,654		8,649	5	—

Selected Metrics
Consumer Banking and Lending:
Return on allocated capital (1)	17.2		%	4.6
Efficiency ratio (2)	72			72
Headcount (#) (period-end)	123,547			133,394		(7)

Retail bank branches (#)	4,944			5,329		(7)
Digital active customers (# in millions) (3)	32.9			31.1		6
Mobile active customers (# in millions) (3)	26.7			24.9		7

Consumer and Small Business Banking:
Deposit spread (4)	1.6		%	2.0
Debit card purchase volume ($ in billions) (5)	$	108.5		90.6	17.9	20
Debit card purchase transactions (# in millions) (5)	2,266			2,195	71	3

~~Community Banking~~

(continued on following page)

Quarter ended Mar 31,
(in millions, except average balances which are in billions) 2020
2019
% Change
Net interest income $ 6,787
7,248
(6 )%
Noninterest income:
Service charges on deposit accounts 700
610
15
Trust and investment fees:
Brokerage advisory, commissions and other fees (1) 518
449
15
Trust and investment management (1) 194
210
(8 )
Investment banking (2) (99 ) (20 ) NM
Total trust and investment fees 613
639
(4 )
Card fees 809
858
(6 )
Other fees 285
332
(14 )
Mortgage banking 340
641
(47 )
Insurance 11
11
—
Net gains from trading activities 29
5
480
Net gains on debt securities 194
37
424
Net gains (losses) from equity securities (3) (1,028 ) 601
NM
Other income of the segment 756
768
(2 )
Total noninterest income 2,709
4,502
(40 )

Total revenue 9,496
11,750
(19 )

Provision for credit losses 1,718
710
142
Noninterest expense:
Personnel expense 5,455
5,981
(9 )
Technology and equipment 645
641
1
Net occupancy 529
542
(2 )
Core deposit and other intangibles 1
1
—
FDIC and other deposit assessments 68
106
(36 )
Outside professional services 442
316
40
Operating losses 454
219
107
Other expense of the segment (478 ) (117 ) NM
Total noninterest expense 7,116
7,689
(7 )
Income before income tax expense and noncontrolling interests 662
3,351
(80 )
Income tax expense 644
424
52
Less: Net income (loss) from noncontrolling interests (4) (137 ) 104
NM
Net income $ 155
2,823
(95 )
Average loans $ 462.6
458.2
1
Average deposits 798.6
765.6
4


12			Wells Fargo & Company

(continued from previous page)


	Quarter ended March 31,
($ in millions, unless otherwise noted)	2021			2020	$ Change	% Change
Home Lending:
Mortgage banking:
Net servicing income	$	(123)		257	(380)	NM
Net gains on mortgage loan originations/sales	1,382			85	1,297	NM
Total mortgage banking	$	1,259		342	917	268	%

Originations ($ in billions):
Retail	$	33.6		23.1	10.5	45
Correspondent	18.2			24.9	(6.7)	(27)
Total originations	$	51.8		48.0	3.8	8

% of originations held for sale (HFS)	75.8		%	69.6
Third-party mortgage loans serviced (period-end) ($ in billions) (6)	$	801.0		1,037.5	(236.5)	(23)
Mortgage servicing rights (MSR) carrying value (period-end)	7,536			8,126	(590)	(7)
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) (6)	0.94		%	0.78
Home lending loans 30+ days or more delinquency rate (7)(8)	0.56			0.71

Credit Card:
Point of sale (POS) volume ($ in billions)	$	21.1		19.9	1.2	6
New accounts (# in thousands) (9)	266			315		(16)
Credit card loans 30+ days or more delinquency rate (8)	2.01		%	2.60

Auto:
Auto originations ($ in billions)	$	7.0		6.5	0.5	8
Auto loans 30+ days or more delinquency rate (8)	1.22		%	2.31

Personal Lending:
New funded balances	$	413		667	(254)	(38)

NM – Not meaningful


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


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


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


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

~~Community Banking reported~~ net income (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 ~~$155 million~~consumer and small business customers who have logged on via a digital or mobile device, respectively, in the prior 90 days. Digital active customers includes both online and mobile customers.

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

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

(6)Excludes residential mortgage loans subserviced for others.

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

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

(9)Excludes certain private label new account openings.

First quarter 2021 vs. first quarter 2020 ~~down $2.7 billion, or 95%, compared with the same period a year ago.~~

Revenue ~~of $9.5 billion in first quarter 2020, decreased $2.3 billion, or 19%, compared with the same period a year ago. The decrease in revenue~~ was ~~due to net losses on equity securities (including lower deferred compensation plan investment results, which were~~ largely ~~offset in employee benefits expense), lower~~unchanged reflecting:

•higher card fees driven by ~~higher~~lower credit card rewards costs, partially offset by lower late fees due to higher payment rates; and

•higher mortgage banking noninterest income driven by higher HFS origination volumes and ~~the impact~~higher margins in our retail production channel, partially offset by lower servicing income due to lower servicing fees on lower balances of ~~the COVID-19 pandemic on consumer spending,~~ loans serviced for others and lower income from MSR valuation changes and related hedges;

partially offset by:

•lower net interest income reflecting the lower interest rate environment and lower ~~mortgage banking income. These decreases were partially offset~~loan balances as paydowns exceeded originations;

•lower deposit-related fees driven by higher ~~gains on debt securities and service charges on~~average consumer deposit accounts due to one additional day in first quarter 2020, and that first quarter 2019 included a higher level of fee waivers for customers affected by our data center system outage and the government shutdown.

The provision for credit losses in first quarter 2020 increased $1.0 billion compared with the same period a year ago, predominantly due to a $1.0 billion increase in the allowance for credit losses in first quarter 2020 reflecting expected credit deterioration due to the impact of the COVID-19 pandemic.

Noninterest expense of $7.1 billion in first quarter 2020, decreased $573 million, or 7%, compared with the same period a year ago, predominantly due to lower personnel expenses driven by lower deferred compensation expense (largely offset by net losses from equity securities) and lower other expenses, partially offset by higher operating losses driven by an increase in remediation accruals and higher outside professional services expense.

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

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

Average loans of $462.6 billion in first quarter 2020, increased $4.4 billion, or 1%, compared with first quarter 2019. The increase in average loans from first quarter 2019 was due to higher real estate 1-4 family first mortgage loans and automobile loans, partially offset by lower junior lien mortgage loans.

~~Average deposits of $798.6 billion in first quarter 2020 increased $33.0 billion, or 4%, from first quarter 2019 reflecting growth from retail banking deposit campaigns.~~

~~Wholesale Banking~~ provides financial solutions to businesses with annual sales generally in excess of $5 million and to financial institutions globally. Products and businesses include Commercial Banking, Commercial Real Estate, Corporate and Investment Banking, Credit Investment Portfolio, Treasury Management, and Commercial Capital. Table 4b provides additional financial information for Wholesale Banking.

~~Table 4b:Wholesale Banking~~

Quarter ended Mar 31,
(in millions, except average balances which are in billions) 2020
2019
% Change
Net interest income $ 4,136
4,534
(9 )%
Noninterest income:
Service charges on deposit accounts 508
483
5
Trust and investment fees:
Brokerage advisory, commissions and other fees 90
78
15
Trust and investment management 131
114
15
Investment banking 490
412
19
Total trust and investment fees 711
604
18
Card fees 83
86
(3 )
Other fees 346
437
(21 )
Mortgage banking 40
68
(41 )
Insurance 75
78
(4 )
Net gains from trading activities 41
333
(88 )
Net gains on debt securities 43
88
(51 )
Net gains (losses) from equity securities (95 ) 77
NM
Other income of the segment (71 ) 323
NM
Total noninterest income 1,681
2,577
(35 )

Total revenue 5,817
7,111
(18 )

Provision for credit losses 2,288
134
NM
Noninterest expense:
Personnel expense 1,383
1,510
(8 )
Technology and equipment 9
9
—
Net occupancy 104
95
9
Core deposit and other intangibles 19
24
(21 )
FDIC and other deposit assessments 44
45
(2 )
Outside professional services 101
184
(45 )
Operating losses 4
1
300
Other expense of the segment 2,099
1,970
7
Total noninterest expense 3,763
3,838
(2 )
Income (loss) before income tax expense (benefit) and noncontrolling interests (234 ) 3,139
NM
Income tax expense (benefit) (1) (546 ) 369
NM
Less: Net income from noncontrolling interests 1
—
NM
Net income $ 311
2,770
(89 )
Average loans $ 484.5
476.4
2
Average deposits 456.6
409.8
11

~~NM – Not meaningful~~


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

~~Wholesale Banking reported net income of $311 million in first quarter 2020, down $2.5 billion, or 89%, from the same period a year ago.~~

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

Noninterest income decreased $896 million, or 35%, from first quarter 2019, predominantly due to lower market sensitive revenue (represents net gains (losses) from trading activities, debt securities, and equity securities), lower other income from higher amortization on renewable energy and community lending

~~investments and lower operating lease income, as well as lower other fees related to our sale of Eastdil in fourth quarter 2019.~~

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

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

~~Earnings Performance (continued~~)

~~Average loans of $484.5 billion in first quarter 2020 increased $8.1 billion, or 2%, from first quarter 2019, on broad-based growth across the lines of businesses driven by draws of revolving lines~~account balances due to the economic slowdown associated with the COVID-19 ~~pandemic. Average~~pandemic, as well as fee waivers and reversals as part of our actions to support customers during the COVID-19 pandemic; and

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

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

Noninterest expense was largely unchanged reflecting:

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

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

•higher expense allocated from enterprise functions, reflecting risk management and technology support; and

•higher personnel expense driven by higher revenue-related compensation in Home Lending, partially offset by lower branch staffing expense related to efficiency initiatives in Consumer and Small Business Banking;

offset by:

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

•lower advertising and promotion expense.


			Wells Fargo & Company			13

Earnings Performance (continued)

Table 5b: Consumer Banking and Lending – Balance Sheet


	Quarter ended March 31,
(in millions)	2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Loans by Line of Business:
Home Lending	$	243,036	276,827	(33,791)	(12)	%
Auto	49,518		49,493	25	—
Credit Card	35,205		39,756	(4,551)	(11)
Small Business	20,137		9,715	10,422	107
Personal Lending	5,185		6,771	(1,586)	(23)
Total loans	$	353,081	382,562	(29,481)	(8)
Total deposits	789,439		652,706	136,733	21
Allocated capital	48,000		48,000	—	—

Selected Balance Sheet Data (period-end)
Loans by Line of Business:
Home Lending	$	230,478	275,395	(44,917)	(16)
Auto	50,007		49,779	228	—
Credit Card	34,246		38,582	(4,336)	(11)
Small Business	20,820		9,753	11,067	113
Personal Lending	4,998		6,692	(1,694)	(25)
Total loans	$	340,549	380,201	(39,652)	(10)
Total deposits	837,765		672,603	165,162	25

First quarter 2021 vs. first quarter 2020

Total loans (average and period-end) decreased as growth in small business loans driven by loans funded under the PPP was more than offset by paydowns exceeding originations in the home lending, credit card, and personal lending portfolios. Home lending loan balances were also impacted by actions taken in 2020 to suspend certain non-conforming residential mortgage and home equity originations.

Total deposits (average and period-end) increased driven by government stimulus programs and lower consumer spending due to the COVID-19 pandemic.


14			Wells Fargo & Company

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. In March 2021, we

announced an agreement to sell our Corporate Trust Services business and expect to move the business from the Commercial Banking operating segment to Corporate in second quarter 2021. Table 5c and Table 5d provide additional information for Commercial Banking.

Table 5c:Commercial Banking – Income Statement and Selected Metrics


	Quarter ended March 31,
($ in millions)	2021			2020	$ Change	% Change
Income Statement
Net interest income	$	1,283		1,774	(491)	(28)	%
Noninterest income:
Deposit-related fees	317			302	15	5
Lending-related fees	136			128	8	6
Lease income	174			198	(24)	(12)
Other	298			100	198	198
Total noninterest income	925			728	197	27
Total revenue	2,208			2,502	(294)	(12)
Net charge-offs	39			170	(131)	(77)
Change in the allowance for credit losses	(438)			871	(1,309)	NM
Provision for credit losses	(399)			1,041	(1,440)	NM
Noninterest expense	1,766			1,697	69	4
Income (loss) before income tax expense (benefit)	841			(236)	1,077	456
Income tax expense (benefit)	203			(61)	264	433
Less: Net income from noncontrolling interests	1			1	—	—
Net income (loss)	$	637		(176)	813	462

Revenue by Line of Business
Middle Market Banking	$	1,159		1,455	(296)	(20)
Asset-Based Lending and Leasing	898			843	55	7
Other	151			204	(53)	(26)
Total revenue	$	2,208		2,502	(294)	(12)

Revenue by Product
Lending and leasing	$	1,193		1,411	(218)	(15)
Treasury management and payments	749			982	(233)	(24)
Other	266			109	157	144
Total revenue	$	2,208		2,502	(294)	(12)

Selected Metrics
Return on allocated capital	12.3		%	(4.7)
Efficiency ratio	80			68
Headcount (#) (period-end)	22,657			24,036		(6)

NM – Not meaningful

First quarter 2021 vs. first quarter 2020

Revenue decreased driven by:

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

•lower lease income reflecting a reduction in the size of ~~$456.6 billion~~the operating lease asset portfolio;

partially offset by:

•higher other noninterest income due to impairments on equity securities in first quarter ~~2020~~2020; and

•higher treasury management fees on commercial accounts, included in deposit-related fees, driven by a lower earnings credit rate due to the lower interest rate environment.

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

Noninterest expense increased ~~$46.8 billion, or 11%,~~driven by:

•higher expenses allocated from enterprise functions, including higher technology expenses;

partially offset by:

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

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

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


			Wells Fargo & Company			15

Earnings Performance (continued)

Table 5d:Commercial Banking – Balance Sheet


	Quarter ended March 31,
(in millions)	2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial	$	120,929	154,308	(33,379)	(22)	%
Commercial real estate	48,574		53,288	(4,714)	(9)
Lease financing and other	13,640		17,261	(3,621)	(21)
Total loans	$	183,143	224,857	(41,714)	(19)
Loans by Line of Business:
Middle Market Banking	$	104,379	116,232	(11,853)	(10)
Asset-Based Lending and Leasing and Other	78,764		108,625	(29,861)	(27)


Total loans	$	183,143	224,857	(41,714)	(19)
Total deposits	207,993		193,454	14,539	8
Allocated capital	19,500		19,500	—	—

Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial	$	119,322	170,893	(51,571)	(30)
Commercial real estate	47,832		53,531	(5,699)	(11)
Lease financing and other	13,534		17,179	(3,645)	(21)
Total loans	$	180,688	241,603	(60,915)	(25)
Loans by Line of Business:
Middle Market Banking	$	102,372	125,192	(22,820)	(18)
Asset-Based Lending and Leasing and Other	78,316		116,411	(38,095)	(33)


Total loans	$	180,688	241,603	(60,915)	(25)
Total deposits	210,088		209,495	593	—

First quarter 2021 vs. first quarter ~~2019,~~2020

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

Total deposits (average) increased due to government stimulus programs, customers’ preferences for liquidity given the economic uncertainty associated with the COVID-19 pandemic, and lower investment spending.


16			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 5e and Table 5fprovide additional information for Corporate and Investment Banking.

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


	Quarter ended March 31,
($ in millions)	2021			2020	$ Change	% Change
Income Statement
Net interest income	$	1,778		2,019	(241)	(12)	%
Noninterest income:
Deposit-related fees	266			257	9	4
Lending-related fees	183			172	11	6
Investment banking fees	611			477	134	28
Net gains from trading activities	331			35	296	846
Other	454			428	26	6
Total noninterest income	1,845			1,369	476	35
Total revenue	3,623			3,388	235	7
Net charge-offs	37			47	(10)	(21)
Change in the allowance for credit losses	(321)			1,078	(1,399)	NM
Provision for credit losses	(284)			1,125	(1,409)	NM
Noninterest expense	1,833			1,870	(37)	(2)
Income before income tax expense	2,074			393	1,681	428
Income tax expense	500			101	399	395

Net income	$	1,574		292	1,282	439

Revenue by Line of Business
Banking:
Lending	$	453		457	(4)	(1)
Treasury Management and Payments	370			498	(128)	(26)
Investment Banking	416			361	55	15
Total Banking	1,239			1,316	(77)	(6)
Commercial Real Estate	931			883	48	5
Markets:
Fixed Income, Currencies, and Commodities (FICC)	1,144			914	230	25
Equities	252			396	(144)	(36)
Credit Adjustment (CVA/DVA) and Other	36			(108)	144	133
Total Markets	1,432			1,202	230	19
Other	21			(13)	34	262
Total revenue	$	3,623		3,388	235	7

Selected Metrics
Return on allocated capital	17.8		%	2.4
Efficiency ratio	51			55
Headcount (#) (period-end)	8,249			7,965		4

NM – Not meaningful

First quarter 2021 vs. first quarter 2020

Revenue increased driven by:

•higher net gains from trading activities driven by higher client demand for asset-backed finance products, other credit products, and municipal bonds, partially offset by lower client demand for interest rate products and lower revenue in equities and commodities; and

•higher investment banking fees driven by higher advisory fees and equity and debt origination fees;

partially offset by:

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

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


			Wells Fargo & Company			17

Earnings Performance (continued)

Noninterest expense decreased driven by:

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

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

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

partially offset by:

•higher personnel expense on revenue-related incentive compensation.

Table 5f:Corporate and Investment Banking – Balance Sheet


	Quarter ended March 31,
(in millions)	2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial	$	162,290	178,254	(15,964)	(9)	%
Commercial real estate	83,858		79,988	3,870	5
Total loans	$	246,148	258,242	(12,094)	(5)
Loans by Line of Business:
Banking	$	86,536	96,844	(10,308)	(11)
Commercial Real Estate	107,609		105,194	2,415	2
Markets	52,003		56,204	(4,201)	(7)
Total loans	$	246,148	258,242	(12,094)	(5)
Trading-related assets:
Trading account securities	$	106,358	123,327	(16,969)	(14)
Reverse repurchase agreements/securities borrowed	63,965		89,132	(25,167)	(28)
Derivative assets	27,102		18,284	8,818	48
Total trading-related assets	$	197,425	230,743	(33,318)	(14)
Total assets	511,813		551,987	(40,174)	(7)
Total deposits	194,501		266,167	(71,666)	(27)
Allocated capital	34,000		34,000	—	—

Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial	$	163,808	206,620	(42,812)	(21)
Commercial real estate	84,836		81,152	3,684	5
Total loans	$	248,644	287,772	(39,128)	(14)
Loans by Line of Business:
Banking	$	88,042	118,682	(30,640)	(26)
Commercial Real Estate	108,508		109,937	(1,429)	(1)
Markets	52,094		59,153	(7,059)	(12)
Total loans	$	248,644	287,772	(39,128)	(14)
Trading-related assets:
Trading account securities	$	100,586	110,544	(9,958)	(9)
Reverse repurchase agreements/securities borrowed	71,282		79,560	(8,278)	(10)
Derivative assets	24,228		24,834	(606)	(2)
Total trading-related assets	$	196,096	214,938	(18,842)	(9)
Total assets	512,340		574,660	(62,320)	(11)
Total deposits	188,920		260,281	(71,361)	(27)

First quarter 2021 vs. first quarter 2020

Total assets (average and period-end) decreased predominantly due to a decline in trading-related assets reflecting continued actions to manage under the asset cap and a decline in loan ~~draws.~~balances driven by lower demand due to the COVID-19 pandemic and higher paydowns reflecting continued client liquidity and strength in the capital markets.

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


18			Wells Fargo & Company

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

including Wells Fargo Advisors and The Private ~~Bank, Abbot Downing,~~Bank. We serve clients’ brokerage needs, and ~~Wells Fargo Asset Management. We~~ deliver financial planning, private banking, credit, ~~investment management~~ and fiduciary services to high-net worth and ultra-high-net worth individuals and families. ~~We also serve clients’ brokerage needs and provide investment management capabilities delivered~~In February 2021, we

announced an agreement to ~~global institutional clients through separate accounts and the~~sell Wells Fargo ~~Funds. The sale of our IRT~~Asset Management and moved the business ~~closed on July 1, 2019. For~~from the Wealth and Investment Management operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. Table 5g and Table 5h provide additional information ~~on the sale of our IRT business, including its impact on our AUM~~for Wealth and ~~AUA, see the “Earnings Performance – Noninterest Income” section in this Report. Table 4c provides additional financial information for WIM.~~Investment Management.

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

Quarter ended Mar 31,
(in millions, except average balances which are in billions) 2020
2019
% Change
Net interest income $ 867
1,101
(21 )%
Noninterest income:
Service charges on deposit accounts 5
4
25
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,397
2,124
13
Trust and investment management 582
676
(14 )
Investment banking 1
5
(80 )
Total trust and investment fees 2,980
2,805
6
Card fees 1
1
—
Other fees 4
4
—
Mortgage banking (3 ) (3 ) —
Insurance 19
17
12
Net gains (losses) from trading activities (7 ) 19
NM
Net gains on debt securities —
—
NM
Net gains (losses) from equity securities (278 ) 136
NM
Other income of the segment 127
(5 ) NM
Total noninterest income 2,848
2,978
(4 )

Total revenue 3,715
4,079
(9 )

Provision for credit losses 8
4
100
Noninterest expense:
Personnel expense 1,950
2,197
(11 )
Technology and equipment 7
11
(36 )
Net occupancy 113
112
1
Core deposit and other intangibles 3
3
—
FDIC and other deposit assessments 12
14
(14 )
Outside professional services 191
184
4
Operating losses 9
21
(57 )
Other expense of the segment 818
761
7
Total noninterest expense 3,103
3,303
(6 )
Income before income tax expense and noncontrolling interests 604
772
(22 )
Income tax expense 153
192
(20 )
Less: Net income (loss) from noncontrolling interests (12 ) 3
NM
Net income $ 463
577
(20 )
Average loans $ 78.5
74.4
6
Average deposits 151.4
153.2
(1 )


	Quarter ended March 31,
($ in millions, unless otherwise noted)	2021			2020	$ Change	% Change
Income Statement
Net interest income	$	657		838	(181)	(22)	%
Noninterest income:
Investment advisory and other asset-based fees (1)	2,306			2,073	233	11
Commissions and brokerage services fees (1)	555			593	(38)	(6)
Other	26			(234)	260	111
Total noninterest income	2,887			2,432	455	19
Total revenue	3,544			3,270	274	8
Net charge-offs	—			1	(1)	(100)
Change in the allowance for credit losses	(43)			7	(50)	NM
Provision for credit losses	(43)			8	(51)	NM
Noninterest expense	3,028			2,657	371	14
Income before income tax expense	559			605	(46)	(8)
Income tax expense	140			152	(12)	(8)

Net income	$	419		453	(34)	(8)

Selected Metrics
Return on allocated capital	18.9		%	20.2
Efficiency ratio	85			81
Headcount (#) (period-end)	27,993			29,266		(4)
Advisory assets ($ in billions)	$	885		661	224	34
Other brokerage assets and deposits ($ in billions)	1,177			950	227	24
Total client assets ($ in billions)	$	2,062		1,611	451	28
Annualized revenue per advisor ($ in thousands) (2)	1,058			909	149	16
Total financial and wealth advisors (#) (period-end)	13,277			14,364		(8)

Selected Balance Sheet Data (average)
Total loans	$	80,839		77,883	2,956	4
Total deposits	173,678			145,388	28,290	19
Allocated capital	8,750			8,750	—	—

Selected Balance Sheet Data (period-end)
Total loans	$	81,175		78,182	2,993	4
Total deposits	175,999			162,370	13,629	8

NM – Not meaningful

~~WIM reported net income of $463 million in~~(1)In first quarter ~~2020, down $114 million, or 20%, from~~2021, trust and investment management fees and asset-based brokerage fees were combined into a single line item for investment advisory and other asset-based fees, and brokerage commissions and other brokerage services fees were combined into a single line item for commissions and brokerage services fees. Prior period balances have been revised to conform with the current period presentation.

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

First quarter 2021 vs. first quarter ~~2019.~~2020

~~Net interest income of $867 million in first quarter 2020 decreased $234 million, or 21%, from first quarter 2019,~~Revenue increased driven by:

•higher investment advisory and other asset-based fees driven by ~~lower interest rates.~~higher market valuations on WIM advisory assets; and

~~Noninterest income of $2.8 billion in first quarter 2020 decreased $130 million from first quarter 2019, predominantly driven by net losses from equity securities driven by a decline in~~•higher deferred compensation plan investment results included in other noninterest income (largely offset by personnel expense);

partially offset by:

•lower ~~employee benefits expense),~~net interest income reflecting the lower interest rate environment, partially offset by higher ~~retail brokerage advisory fees (priced at the beginning of the quarter) and higher brokerage transaction revenue.~~average deposit balances.

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

Noninterest expense ~~of $3.1 billion in first quarter 2020 decreased $200 million, or 6%, from first quarter 2019, predominantly~~ increased due to ~~lower~~higher personnel expense driven by ~~lower~~higher revenue-related compensation and higher deferred compensation ~~plan~~ expense (largely offset by net ~~losses~~gains from equity securities)~~, partially offset by higher broker commissions within personnel expense.~~.

~~Average loans of $78.5 billion in first quarter 2020~~

Total deposits (average and period-end) increased ~~$4.1 billion, or 6%, from first quarter 2019, driven by~~primarily due to growth in ~~nonconforming mortgage loans. Average deposits of $151.4 billion in first quarter 2020 decreased $1.8 billion, or 1%.~~brokerage clients’ cash balances.


			Wells Fargo & Company			19

Earnings Performance (continued)

~~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 from advisory accounts are based on a percentage of the market value of the 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 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 March 31, 2020 and 2019.

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

March 31,
($ in billions) 2020
2019
Retail brokerage client assets $ 1,397.9
1,600.6
Advisory account client assets 498.8
546.7
Advisory account client assets as a percentage of total client assets 36 % 34

~~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.

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

For first quarter ~~2020~~2021 and ~~2019,~~2020, the

average fee rate by account type ranged from 8050 to 120 basis points.

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


	Quarter ended
(in billions)	Balance, beginning of period		Inflows (1)	Outflows (2)	Market impact (3)	Balance, end of period
March 31, 2021
Client-directed (4)	$	186.3	10.6	(9.8)	5.6	192.7
Financial advisor-directed (5)	211.0		12.3	(9.0)	9.1	223.4
Separate accounts (6)	174.6		8.5	(7.0)	7.0	183.1
Mutual fund advisory (7)	91.4		4.0	(3.5)	2.8	94.7
Total Retail Brokerage	$	663.3	35.4	(29.3)	24.5	693.9
Total Private Wealth (8)	189.4		8.9	(12.5)	5.7	191.5
Total WIM advisory assets	$	852.7	44.3	(41.8)	30.2	885.4
March 31, 2020
Client directed (4)	$	169.4	10.1	(9.6)	(27.2)	142.7
Financial advisor directed (5)	176.3		10.7	(8.6)	(26.0)	152.4
Separate accounts (6)	160.1		6.8	(8.5)	(24.2)	134.2
Mutual fund advisory (7)	83.7		3.2	(4.5)	(12.9)	69.5
Total Retail Brokerage	$	589.5	30.8	(31.2)	(90.3)	498.8
Total Private Wealth (8)	188.0		8.5	(11.0)	(23.7)	161.8
Total WIM advisory assets	$	777.5	39.3	(42.2)	(114.0)	660.6

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

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

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

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

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

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

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

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


20			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 partnerships. In addition, Corporate includes all restructuring charges related to our efficiency initiatives. See Note 19 (Restructuring Charges) to Financial Statements in this Report for additional information on restructuring charges. Corporate also includes certain lines of business that management has determined are no longer

consistent with the long-term strategic goals of the Company, including our student loan and rail car leasing businesses, as well as results for previously divested businesses. In February 2021, we announced an agreement to sell Wells Fargo Asset Management and moved the business from the Wealth and Investment Management operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. Table 5i, Table 5j, and Table 5k provide additional information for Corporate.

Table 5i:Corporate – Income Statement and Selected Metrics


	Quarter ended March 31,
($ in millions, unless otherwise noted)	2021		2020	$ Change	% Change
Income Statement
Net interest income	$	(430)	819	(1,249)	NM
Noninterest income	1,319		(119)	1,438	NM
Total revenue	889		700	189	27	%
Net charge-offs	77		102	(25)	(25)
Change in the allowance for credit losses	20		160	(140)	(88)
Provision for credit losses	97		262	(165)	(63)
Noninterest expense	1,095		567	528	93
Loss before income tax expense (benefit)	(303)		(129)	(174)	NM
Income tax expense (benefit)	(364)		554	(918)	NM
Less: Net income (loss) from noncontrolling interests (1)	53		(149)	202	136
Net income (loss)	$	8	(534)	542	101

Selected Metrics
Headcount (#) (period-end) (2)	82,067		77,606		6
Wells Fargo Asset Management assets under management ($ in billions)	$	590	518	72	14

NM – Not meaningful

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

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

First quarter 2021 vs. first quarter 2020

Revenue increased driven by:

•higher gains on equity securities due to impairments in first quarter 2020 related to our affiliated venture capital and ~~2019.~~private equity partnerships;

•higher deferred compensation plan investment results (largely offset by personnel expense); and

•a gain on the sale of a portion of our student loan portfolio in first quarter 2021;

partially offset by:

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

•lower gains on debt securities due to decreased sales volumes.

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

Noninterest expense increased due to:

•higher stock-based compensation on higher market valuations;

•higher deferred compensation plan expense; and

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

partially offset by:

•lower professional and outside services expense driven by reduced project spending due to efficiency initiatives.

As of March 31, 2021, our rail car leasing business had long-lived operating lease assets (as a lessor) of $5.6 billion, which was net of $1.8 billion of accumulated depreciation. The average age of our rail cars is 21 years and the rail cars are typically leased under short-term leases of 3 to 5 years. Our three largest concentrations, which represented 55% of our rail car fleet as of March 31, 2021, were rail cars used for the transportation of agricultural grain, coal, and cement/sand products. Impairments may result in the future based on changing economic and market conditions affecting the long-term demand and utility of specific types of rail cars. Our assumptions for impairment are sensitive to estimated utilization and rental rates, as well as the estimated economic life of the leased asset. For more information on the accounting for impairment of operating lease assets, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

Corporate includes assets under management (AUM) and assets under administration (AUA) for Institutional Retirement and Trust (IRT) client assets of $22 billion and $668 billion, respectively, at March 31, 2021, which we continue to administer at the direction of the buyer pursuant to a transition services agreement. The transition services agreement has been extended and will now terminate no later than December 2021.

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

Quarter ended
(in billions)
Balance,
beginning of period

Inflows (1)
Outflows (2)
Market impact (3)
Balance,
end of period

March 31, 2020
Client directed (4) $ 169.4
10.1
(9.6 ) (27.2 ) 142.7
Financial advisor directed (5) 176.3
10.7
(8.6 ) (26.0 ) 152.4
Separate accounts (6) 160.1
6.8
(8.5 ) (24.2 ) 134.2
Mutual fund advisory (7) 83.7
3.2
(4.5 ) (12.9 ) 69.5
Total advisory client assets $ 589.5
30.8
(31.2 ) (90.3 ) 498.8
March 31, 2019
Client directed (4) $ 151.5
7.9
(9.3 ) 13.5
163.6
Financial advisor directed (5) 141.9
7.5
(7.7 ) 15.2
156.9
Separate accounts (6) 136.4
5.6
(6.9 ) 13.2
148.3
Mutual fund advisory (7) 71.3
2.8
(3.2 ) 7.0
77.9
Total advisory client assets $ 501.1
23.8
(27.1 ) 48.9
546.7


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


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


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


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


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


~~(6)~~	~~Professional advisory portfolios managed by~~ Wells Fargo ~~Asset Management or third-party asset managers. Fees are earned based on a percentage of certain client assets.~~& Company	21


~~(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~~)(continued)

~~Trust~~Table 5j: Corporate – Balance Sheet


	Quarter ended March 31,
(in millions)	2021		2020	$ Change	% Change
Selected Balance Sheet Data (average)
Cash, cash equivalents, and restricted cash	$	222,797	122,459	100,338	82	%
Available-for-sale debt securities	200,421		244,834	(44,413)	(18)
Held-to-maturity debt securities	217,346		157,788	59,558	38
Equity securities	10,904		13,970	(3,066)	(22)
Total loans	10,228		21,502	(11,274)	(52)
Total assets	727,440		629,210	98,230	16
Total deposits	27,861		80,248	(52,387)	(65)

Selected Balance Sheet Data (period-end)
Cash, cash equivalents, and restricted cash	$	257,887	123,943	133,944	108
Available-for-sale debt securities	188,724		239,051	(50,327)	(21)
Held-to-maturity debt securities	231,352		169,070	62,282	37
Equity securities	11,093		14,358	(3,265)	(23)
Total loans	10,516		22,085	(11,569)	(52)
Total assets	753,730		622,795	130,935	21
Total deposits	24,347		71,783	(47,436)	(66)

First quarter 2021 vs. first quarter 2020

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

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

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

partially offset by:

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

•a decline in equity securities due to the transition from equity securities to derivative instruments for economic hedges of the deferred compensation plan liabilities in second quarter 2020 and a reduction in Federal Home Loan Bank stock; and

•a decline in loans due to the sale of a portion of our student loan portfolio in first quarter 2021.

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

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

~~our wealth business manages assets for high net worth clients. Substantially all of our trust and investment management fee income is earned~~accounts. Generally, we earn fees from AUM where we have discretionary management authority over the investments and generate fees as a percentage of the market value of the AUM. ~~For additional information~~WFAM assets under management consist of equity, alternative, balanced, fixed income, money market, and stable value, and include client assets that are managed or sub-advised on ~~the sale~~behalf of ~~our IRT business, including its impact on our AUM and AUA, see the “Earnings Performance – Noninterest Income” section in this Report.~~other Wells Fargo lines of business. Table 4f5k presents WFAM AUM activity for first quarter ~~2020~~2021 and ~~2019.~~2020. Management believes that AUM is a useful metric because it allows management, investors, and others to assess how changes in asset amounts may impact the generation of certain asset-based fees.

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


	Quarter ended
(in billions)	Balance, beginning of period		Inflows (1)	Outflows (2)	Market impact (3)	Balance, end of period
March 31, 2021

Money market funds (4)	$	197.4	—	(6.2)	—	191.2
Other assets managed	405.6		23.8	(30.3)	0.1	399.2

Total WFAM assets under management	$	603.0	23.8	(36.5)	0.1	590.4
March 31, 2020

Money market funds (4)	$	130.6	35.6	—	—	166.2
Other assets managed	378.2		26.2	(28.6)	(24.2)	351.6

Total WFAM assets under management	$	508.8	61.8	(28.6)	(24.2)	517.8

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

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

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

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

Quarter ended
(in billions)
Balance,
beginning of period

Inflows (1)
Outflows (2)
Market impact (3)
Balance,
end of period

March 31, 2020
Assets managed by WFAM (4):
Money market funds (5) $ 130.6
35.6
—
—
166.2
Other assets managed 378.2
26.2
(28.6 ) (24.2 ) 351.6
Assets managed by Wealth and IRT (6) 187.4
7.8
(10.6 ) (21.8 ) 162.8
Total assets under management $ 696.2
69.6
(39.2 ) (46.0 ) 680.6
March 31, 2019
Assets managed by WFAM (4):
Money market funds (5) $ 112.4
—
(2.9 ) —
109.5
Other assets managed 353.5
19.3
(21.9 ) 16.1
367.0
Assets managed by Wealth and IRT (6) 170.7
9.2
(10.4 ) 11.9
181.4
Total assets under management $ 636.6
28.5
(35.2 ) 28.0
657.9


~~(1)~~22			~~Inflows include new managed account assets, contributions, dividends and interest.~~Wells Fargo & Company


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


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


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


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


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

Balance Sheet Analysis

At March 31, ~~2020,~~2021, our assets totaled ~~$1.98~~$1.96 trillion, up ~~$53.8~~$4.4 billion from December 31, 2019. Asset growth reflected increases in debt securities and loans of $4.4 billion and $47.6 billion, respectively, partially offset by a $15.7 billion decrease in federal funds sold and securities purchased under resale agreements, and a $14.2 billion decrease in equity securities.2020.

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

See the “Capital Management” section in this Report for information on changes in our asset mix is included in the “Earnings Performance – Net Interest Income” and “Capital Management” sections and Note 23 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report.equity.

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

Table 5:6: Available-for-Sale and Held-to-Maturity Debt Securities


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

Available-for-sale (2)	197,805		3,045	200,850	5.1	215,533	4,859	220,392	4.5
Held-to-maturity (3)	232,192		1,767	233,959	6.0	205,720	6,587	212,307	4.5
Total	$	429,997	4,812	434,809	n/a	421,253	11,446	432,699	n/a

March 31, 2020 December 31, 2019
(in millions) Amortized cost, net (1)

Net
unrealized
gain (loss)

Fair value
Amortized cost

Net
unrealized
gain (loss)

Fair value
Available-for-sale (2) 248,187
3,042
251,229
260,060
3,399
263,459
Held-to-maturity (3) 169,909
7,653
177,562
153,933
2,927
156,860
Total $ 418,096
10,695
428,791
413,993
6,326
420,319
(1)Represents amortized cost of the securities, net of the allowance for credit losses of $41 million and $28 million related to available-for-sale debt securities and $89 million and $41 million related to held-to-maturity debt securities at March 31, 2021, and December 31, 2020.

~~(1)~~

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

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

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


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


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

Table 56 presents a summary of our portfolio of investments in available-for-sale (AFS) and held-to-maturity (HTM) debt ~~securities, which increased $3.7 billion~~securities. See the “Balance Sheet Analysis – Available-for-Sale and Held-to-Maturity Debt Securities” section in ~~balance sheet carrying value from December 31, 2019, predominantly due to higher net unrealized gains.~~

~~The total net unrealized gains~~our 2020 Form 10-K for information on available-for-sale debt securities were $3.0 billion at March 31, 2020, down from net unrealized gains of $3.4 billion at December 31, 2019, driven by wider credit spreads, which were primarily offset by lower interest rates. For a discussion of our investment management objectives and practices ~~see the “Balance Sheet Analysis” section in our 2019 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.

~~After adoption~~The fair value of ~~CECL, we recorded an allowance for credit losses on available-for-sale and held-to-maturity debt securities. Total provision for credit losses on~~AFS debt securities ~~was $172 million in first quarter 2020. For a discussion of our accounting policies relating~~decreased from December 31, 2020, as purchases were more than offset by runoff, sales and transfers to ~~the allowance for credit losses on~~HTM debt securities due to actions taken to reposition the overall portfolio for capital management purposes.

The net amortized cost of HTM debt securities increased from December 31, 2020, as purchases and underlying considerations and analysis, see Note 1 (Summary of Significant Accounting Policies) and Note 5 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report.transfers from AFS debt securities were partially offset by runoff.

At March 31, ~~2020, debt securities included $52.4 billion of municipal bonds, of which 97.2% were rated “A-” or better based predominantly on external ratings. Additionally, some~~2021, 93% of the ~~debt securities in our total municipal bond portfolio are guaranteed against loss by bond insurers. These guaranteed bonds are predominantly investment grade~~combined AFS and were generally underwritten in accordance with our own investment standards prior to the determination to purchase, without relying on the bond insurer’s guarantee in making the investment decision. The credit quality of our municipal bond holdings are monitored as part of our ongoing evaluation of the appropriateness of the allowance for credit losses on debt securities.

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

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

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

Expected remaining maturity
(in years)
At March 31, 2020
Actual $ 164.6
5.5
3.5
Assuming a 200 basis point:
Increase in interest rates 150.2
(8.9 ) 5.6
Decrease in interest rates 168.2
9.1
3.2

~~The weighted-average expected remaining maturity of debt securities held-to-maturity (HTM) was 4.5 years at March 31, 2020.~~ HTM debt securities portfolio was rated AA- or above. Ratings are ~~measured at amortized cost~~based on external ratings where available and, ~~therefore, changes in the fair value of our held-to-maturity MBS resulting~~where not available, based on internal credit grades.

The total net unrealized gains on AFS and HTM debt securities decreased from ~~changes in~~December 31, 2020, driven by higher interest rates, ~~are not recognized in earnings.~~partially offset by tighter credit spreads. See Note 53 (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 debt securities by security type.

~~Balance Sheet Analysis (continued~~)

Loan Portfolios

Table 7 provides a summary of total outstanding loans by portfolio segment. ~~Total~~Commercial loans ~~increased $47.6 billion~~were relatively flat compared with December 31, 2020. Consumer loans decreased from December 31, ~~2019,~~2020, due ~~to an increase~~to:

•paydowns exceeding originations in ~~commercial loans.~~residential mortgage loans; and

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

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

~~Consumer loans were down $4.4 billion from December 31, 2019, primarily due to a decrease in the~~•seasonally lower credit card ~~portfolio due to seasonality and fewer new accounts and lower consumer spending as a result of the impact of COVID-19.~~balances.

Table 7: Loan Portfolios

(in millions) March 31, 2020
December 31, 2019
Commercial $ 567,735
515,719
Consumer 442,108
446,546
Total loans $ 1,009,843
962,265
Change from prior year-end $ 47,578
9,155


(in millions)	March 31, 2021		December 31, 2020
Commercial	$	477,520	478,417
Consumer	384,052		409,220
Total loans	$	861,572	887,637
Change from prior year-end	$	(26,065)	(74,628)

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 64 (Loans

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

See the “Balance Sheet Analysis – Loan Portfolios” section in our ~~2019~~2020 Form 10-K for additional information regarding contractual loan maturities and the distribution of loans to changes in interest rates.


			Wells Fargo & Company			23

Balance Sheet Analysis (continued)

Deposits

Deposits ~~were $1.4 trillion at March 31, 2020, up $53.9 billion~~increased from December 31, ~~2019, reflecting growth across all deposit gathering businesses driven by seasonality,~~2020, reflecting:

•consumer customers’ ~~flight to quality following~~preferences for liquidity given the ~~emergence of~~economic uncertainty associated with the COVID-19 pandemic, government stimulus programs, and lower customer spending, as well as ~~the inflow of deposits associated with corporate and commercial loan draws. The increase in deposits was~~ seasonality for items such as income tax refunds;

partially offset by by:

•actions taken to manage tounder the asset cap resulting in declines in ~~other~~

time deposits, ~~driven by lower~~such as brokered certificates of

deposit (CDs), and interest-bearing deposits in non-U.S. offices.

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

Table 8: Deposits


($ in millions)	Mar 31, 2021		% of total deposits		Dec 31, 2020		% of total deposits		% Change
Noninterest-bearing demand deposits	$	494,087	34	%	$	467,068	33	%	6
Interest-bearing demand deposits	452,484		32		447,446		32		1
Savings deposits	423,388		29		404,935		29		5
Time deposits	39,446		3		49,775		4		(21)
Interest-bearing deposits in non-U.S. offices	27,714		2		35,157		2		(21)
Total deposits	$	1,437,119	100	%	$	1,404,381	100	%	2

($ in millions)
Mar 31,
2020

% of
total
deposits

Dec 31,
2019
% of
total
deposits

% Change

Noninterest-bearing $ 379,678
28 % $ 344,496
26 % 10
Interest-bearing checking 71,668
5
62,814
5
14
Market rate and other savings 781,051
57
751,080
57
4
Savings certificates 28,431
2
31,715
2
(10 )
Other time deposits 72,928
5
78,609
6
(7 )
Deposits in non-U.S. offices (1) 42,776
3
53,912
4
(21 )
Total deposits $ 1,376,532
100 % $ 1,322,626
100 % 4


~~(1)~~24			~~Includes Eurodollar sweep balances of $22.0 billion and $34.2 billion at March 31, 2020, and December 31, 2019, 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 the “Critical Accounting Policies” section in our 2019 Form 10-K and Note 16 (Fair Values of Assets and Liabilities) to Financial Statements in this Report for a description of our critical accounting policy related to fair value of financial instruments and a discussion of our fair value measurement techniques.

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

March 31, 2020 December 31, 2019
($ in billions)
Total
balance

Level 3 (1)

Total
balance

Level 3 (1)

Assets carried
at fair value
$ 411.5
23.3
428.6
24.3
As a percentage
of total assets
21 % 1
22
1
Liabilities carried
at fair value
$ 33.2
1.3
26.5
1.8
As a percentage of
total liabilities
2 % *
2
*

* Less than 1%.


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

See Note 16 (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 $183.3 billion at March 31, 2020, compared with $188.0 billion at December 31, 2019. The decrease was predominantly driven by common stock repurchases of $3.4 billion, preferred stock redemptions of $2.5 billion, and dividends of $2.4 billion, partially offset by the issuance of preferred stock of $2.0 billion and net income of $653 million.

Off-Balance Sheet Arrangements

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

Commitments to Lend

We enter into commitments to lend to customers, which are usually at a stated interest rate, if funded, and for specific purposes and time periods. When we enter into commitments, we are exposed to credit risk. The maximum credit risk for these commitments will generally be lower than the contractual amount because a significant portion of these commitments are not funded. For ~~more~~additional information, see Note 64 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

Transactions with Unconsolidated Entities

In the normal course of business, we enter into various types of on- and off-balance sheet transactions with special purpose entities (SPEs), which are corporations, trusts, limited liability companies or partnerships that are established for a limited purpose. Generally, SPEs are formed in connection with securitization transactions and are considered variable interest entities (VIEs). For additional information, see Note 8 (Securitizations and Variable Interest Entities) to Financial Statements in this Report.

Guarantees and Other Arrangements

Guarantees are contracts that contingently require us to make payments to a guaranteed party based on an event or a change in an underlying asset, liability, rate or index. Guarantees are generally in the form of standby letters of credit, direct pay letters of credit, written options, recourse obligations, exchange and clearing house guarantees, indemnifications, and other types of similar arrangements. For additional information, see Note 11 (Guarantees and 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 ~~more~~additional information, see Note 1311 (Guarantees ~~Pledged Assets and Collateral,~~ and Other Commitments) to Financial Statements in this Report.

~~Transactions with Unconsolidated Entities~~

In the normal course of business, we enter into various types of on- and off-balance sheet transactions with special purpose entities (SPEs), which are corporations, trusts, limited liability companies or partnerships that are established for a limited purpose. Generally, SPEs are formed in connection with securitization transactions and are considered variable interest entities (VIEs). For more information, see Note 10 (Securitizations and Variable Interest Entities) to Financial Statements in this Report.

~~Guarantees and Other Arrangements~~

Guarantees are contracts that contingently require us to make payments to a guaranteed party based on an event or a change in an underlying asset, liability, rate or index. Guarantees are generally in the form of standby letters of credit, direct pay letters of credit, written options, recourse obligations, exchange and clearing house guarantees, indemnifications, and other types of similar arrangements. For more information, see Note 13 (Guarantees, Pledged Assets and Collateral, and Other Commitments) to Financial Statements in this Report.

Derivatives

We use derivatives to manage exposure to market risk, including interest rate risk, credit risk and foreign currency risk, and to assist customers with their risk management objectives. Derivatives are recorded on the consolidated balance sheet at fair value, and volume can be measured in terms of the notional amount, which is generally not exchanged, but is used only as the basis on which interest and other payments are determined. The notional amount is not recorded on the consolidated balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. For ~~more~~additional information, see Note 1514 (Derivatives) to Financial Statements in this Report.



			Wells Fargo & Company			25


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, shareholders, regulators and other stakeholders. For ~~more~~additional information about how we manage risk, see the “Risk Management” section in our ~~2019~~2020 Form 10-K. The discussion that follows supplements our discussion of the management of certain risks contained in the “Risk Management” section in our ~~2019~~2020 Form 10-K.

Credit Risk Management

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

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

~~Actions to Support Customers During the COVID-19 Pandemic~~

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

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

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

~~On April 7, 2020, federal banking regulators issued the~~

Loan Portfolio~~Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised)~~ ~~(the Interagency Statement). The~~

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

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

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

~~Loan Portfolios~~

~~The following discussion focuses on our loan portfolios, which~~ represent the largest component of assets on our consolidated balance sheet for which we have credit risk. Table 109 presents our total loans outstanding by portfolio segment and class of financing receivable.

Table ~~10:~~9: Total Loans Outstanding by Portfolio Segment and Class of Financing Receivable

(in millions) Mar 31, 2020
Dec 31, 2019
Commercial:
Commercial and industrial $ 405,020
354,125
Real estate mortgage 122,767
121,824
Real estate construction 20,812
19,939
Lease financing 19,136
19,831
Total commercial 567,735
515,719
Consumer:
Real estate 1-4 family first mortgage 292,920
293,847
Real estate 1-4 family junior lien mortgage 28,527
29,509
Credit card 38,582
41,013
Automobile 48,568
47,873
Other revolving credit and installment 33,511
34,304
Total consumer 442,108
446,546
Total loans $ 1,009,843
962,265


(in millions)	Mar 31, 2021		Dec 31, 2020
Commercial:
Commercial and industrial	$	319,055	318,805
Real estate mortgage	121,198		121,720
Real estate construction	21,533		21,805
Lease financing	15,734		16,087
Total commercial	477,520		478,417
Consumer:
Residential mortgage – first lien	254,363		276,674
Residential mortgage – junior lien	21,308		23,286
Credit card	34,246		36,664
Auto	49,210		48,187
Other consumer	24,925		24,409
Total consumer	384,052		409,220
Total loans	$	861,572	887,637

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

•Loan concentrations and related credit ~~quality~~quality;

•Counterparty credit ~~risk~~risk;

•Economic and market ~~conditions~~conditions;

•Legislative or regulatory ~~mandates~~mandates;

•Changes in interest ~~rates~~

rates;

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

Merger and acquisition ~~activities~~activities; and

•Reputation ~~risk~~risk.

Our credit risk management oversight process is governed centrally, but provides for ~~decentralized~~direct management and accountability by our lines of business. Our overall credit process includes comprehensive credit policies, disciplined credit underwriting, frequent and detailed risk measurement and modeling, extensive credit training programs, and a continual loan review and audit process.

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

Credit Quality Overview Credit quality in first quarter 2021 reflected continued improvement in the economic environment. In particular:

•Nonaccrual loans were $8.1 billion at March 31, 2021, down from $8.7 billion at December 31, 2020. Commercial nonaccrual loans decreased to $4.2 billion at March 31, 2021, compared with $4.8 billion at December 31, 2020, and consumer nonaccrual loans declined to $3.8 billion at March 31, 2021, compared with $3.9 billion at December 31, 2020. Nonaccrual loans represented 0.93% of total loans at March 31, 2021, compared with 0.98% at December 31, 2020.

•Net loan charge-offs as a percentage of our average commercial and consumer loan portfolios were 0.13% and 0.37%, respectively, in first quarter 2021, compared with 0.25% and 0.53% in first quarter 2020.

•Loans that are not government insured/guaranteed and 90 days or more past due and still accruing were $269 million and $598 million in our commercial and consumer portfolios, respectively, at March 31, 2021, compared with $78 million and $612 million at December 31, 2020.

•Our provision for credit losses for loans was $(1.1) billion in first quarter 2021, compared with $3.8 billion for the same period a year ago.

•The ACL for loans decreased to ~~the effect~~$18.0 billion, or 2.09% of ~~the COVID-19 pandemic on market conditions, which impacted our customer base. First quarter 2020 results reflected:~~total loans, at March 31, 2021, compared with $19.7 billion, or 2.22%, at December 31, 2020.

•

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


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


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

•

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


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

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


26			Wells Fargo & Company

COVID-Related Lending AccommodationsDuring 2020, we provided accommodations to customers in response to the COVID-19 pandemic, including payment deferrals, and other expanded assistance for mortgage, credit card, auto, small business, personal and commercial lending customers. With the exception of residential mortgage-related accommodation programs, the COVID-related lending accommodations instituted during 2020 were no longer offered as of December 31, 2020. Residential mortgage accommodation programs, which continued during first quarter 2021, offered payment deferrals for up to a total of 18 months. Table 10 summarizes the unpaid principal balance (UPB) of consumer loans that received accommodations under loan modification programs established to assist customers with the economic impact of the COVID-19 pandemic (COVID-related modifications) and that remained in a deferral period as of March 31, 2021.

Based on guidance in the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) issued by federal banking regulators in April 2020 (the Interagency Statement), both of which we elected to apply, loan modifications related to COVID-19 and that meet certain other criteria are exempt from troubled debt restructuring (TDR) classification. Additionally, our election to apply the TDR relief provided by the CARES Act and the Interagency Statement impacts our regulatory capital ratios as these loan modifications

related to COVID-19 are not adjusted to a higher risk-weighting normally required with TDR classification. At March 31, 2021, substantially all residential mortgage loans that were in a deferral period, excluding those that were government insured/guaranteed, met the criteria for TDR relief and were therefore not classified as TDRs. For additional information regarding the TDR relief provided by the CARES Act and the clarifying TDR accounting guidance from the Interagency Statement, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of net charge-offs, delinquencies, and nonaccrual status for those customers who would have otherwise moved into past due or nonaccrual status. Customer loans that are not further modified upon exit from the deferral period may be placed on nonaccrual status or charged-off in accordance with our policies if customers are unable to resume making payments in accordance with the contractual terms of their agreement. As of March 31, 2021, substantially all of our consumer loans were current after exiting the deferral period. For additional information about our COVID-related modifications, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

Table 10:Consumer Loan Modifications Related to COVID-19


($ in millions)	Unpaid principal balance of modified loans still in deferral period at Mar 31, 2021		% of loan class (1)		% current at Mar 31, 2021 after exit from deferral period (2)
Consumer:
Residential mortgage – first lien (3)	$	9,210	4	%	97
Residential mortgage – junior lien (3)	1,274		6		93
All other consumer (4)	221		*		92
Subtotal	10,705		3
Residential mortgage – first lien (government insured/guaranteed) (5)	14,165		6
Total consumer	$	24,870

*Less than 1%.

(1)Based on total loans outstanding at March 31, 2021.

(2)Represents the UPB of loans that exited the deferral period and had a balance that was less than 30 days past due as of March 31, 2021.

(3)For residential mortgage loans still in active COVID-related accommodation programs as of March 31, 2021, 95% of first lien and 84% of junior lien mortgage loans had a loan-to-value ratio that was 80% or lower.

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

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

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

significant portfolios. See Note 64 (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 ~~federal banking regulators’~~regulatory definitions of pass and criticized categories with ~~the~~ criticized ~~category including~~segmented among special mention, substandard, doubtful and loss categories.

The commercial and industrial loans and lease financing portfolio totaled $424.2 billion, or 42% of total loans, at March 31, 2020. The net charge-off rate (annualized) for this portfolio was 0.36% in first quarter 2020, compared with 0.16% for the same period a year ago. At March 31, 2020, and December 31, 2019, 0.45% and 0.44% of this portfolio was nonaccruing, respectively. Nonaccrual loans in this portfolio increased $270 million from December 31, 2019, due to the effect of the COVID-19 pandemic on market conditions, which impacted our customer base. Also, $20.5We had $18.0 billion of the commercial and industrial loan and lease financing portfolio ~~was~~ internally classified as criticized in accordance with regulatory guidance at March 31, ~~2020,~~2021, compared with ~~$16.6~~$19.3 billion at December 31, ~~2019,~~2020. The change was driven by decreases in the oil, gas and pipelines, technology, telecom and media, and financials except banks industries reflecting improvement in the ~~effect of the COVID-19 pandemic on market conditions, which impacted our customer base.~~economic environment.

The majority of our commercial and industrial loans and lease financing portfolio is secured by short-term assets, such as accounts receivable, inventory and debt securities, as well as long-lived assets, such as equipment and other business assets. Generally, the primary source of repayment for this portfolio is the operating cash flows of customers, with the collateral


			Wells Fargo & Company			27

Risk Management – Credit Risk Management (continued)

securing this portfolio ~~represents~~representing a secondary source of repayment.

The portfolio remained flat at March 31, 2021, compared with December 31, 2020, as a result of limited loan draws offset

by paydowns. Table 11 provides our commercial and industrial loans and lease financing by industry, and includes non-U.S. loans of $79.9 billion and $71.7 billion at March 31, 2020, and December 31, 2019, respectively. Significant industry concentrations of non-U.S. loans included $36.8 billion and $31.2 billion in the financials except banks category, and $20.2 billion and $19.9 billion in the banks category at March 31, 2020, and December 31, 2019, respectively. The oil, gas and pipelines category included $1.6 billion of non-U.S. loans at both March 31, 2020, and December 31, 2019.industry. The industry categories are based on the North American Industry Classification System.

Table 11:Commercial and Industrial Loans and Lease Financing by Industry


	March 31, 2021							December 31, 2020
($ in millions)	Nonaccrual loans		Total portfolio	% of total loans		Total commitments (1)		Nonaccrual loans		Total portfolio	% of total loans		Total commitments (1)
Financials except banks	$	130	119,793	14	%	$	212,236	$	160	117,726	13	%	$	206,999
Technology, telecom and media	90		21,582	3		55,433		144		23,061	3		56,500
Real estate and construction	146		23,867	3		53,829		133		23,113	3		51,526
Retail	84		17,129	2		40,975		94		17,393	2		41,669
Equipment, machinery and parts manufacturing	66		16,537	2		39,986		81		18,158	2		41,332
Materials and commodities	43		12,591	1		34,138		39		12,071	1		33,879
Health care and pharmaceuticals	42		15,020	2		31,610		145		15,322	2		32,154
Oil, gas and pipelines	635		9,906	1		30,124		953		10,471	1		30,055
Food and beverage manufacturing	18		12,061	1		29,160		17		12,401	1		28,908
Commercial services	85		10,322	1		25,730		107		10,284	1		24,442
Auto related	74		11,297	1		25,113		79		11,817	1		25,034
Utilities	67		6,270	*		19,012		2		5,031	*		18,564
Insurance and fiduciaries	1		3,947	*		18,050		2		3,297	*		14,334
Entertainment and recreation	255		9,483	1		17,108		263		9,884	1		17,551
Diversified or miscellaneous	28		6,304	*		16,802		7		5,437	*		14,717
Transportation services	554		8,889	1		15,372		573		9,236	1		15,531
Banks	—		13,292	2		14,209		—		12,789	1		13,842
Agribusiness	71		6,056	*		11,453		81		6,314	*		11,642
Government and education	9		5,182	*		10,792		9		5,464	*		11,065
Other (2)	74		5,261	*		19,232		68		5,623	*		23,315
Total	$	2,472	334,789	39	%	$	720,364	$	2,957	334,892	33	%	$	713,059

*Less than 1%.

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

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

Loans to financials except banks, our largest industry concentration, ~~were $126.3 billion, or 13% of total outstanding loans, at March 31, 2020, compared with $117.3 billion, or 12% of total outstanding loans, at December 31, 2019. This industry category~~ is predominantly comprised of loans to investment firms, financial vehicles, and ~~non-bank creditors, including those that invest in financial assets backed predominantly by commercial or residential real estate or consumer loan assets.~~nonbank creditors. We had ~~$83.1~~$84.5 billion and ~~$75.2~~$80.0 billion of loans originated by our Asset Backed Finance (ABF) and Financial Institution Group (FIG) lines of business at March 31, ~~2020,~~2021, and December 31, ~~2019,~~2020, respectively. These loans include: (i) loans to customers related to their subscription or capital calls, (ii) loans to nonbank lenders collateralized by commercial loans, and (iii) loans to originators or servicers of financial assets collateralized by residential real estate or other consumer loans such as credit cards, auto loans and leases, student loans and other financial assets eligible for the securitization market. These ABF and FIG loans are limited to a percentage of the value of the underlying financial assets considering underlying credit risk, asset duration, and ongoing performance. These ABF and FIG loans may also have other features to manage credit risk such as cross-collateralization, credit enhancements, and contractual re-margining of collateral supporting the loans. ~~Loans~~In addition, loans to financials except banks included

collateralized loan obligations (CLOs) in loan form, all of ~~$7.7~~which were rated AA or above, of $8.1 billion and ~~$7.0~~$7.9 billion at March 31, ~~2020,~~2021, and December 31, ~~2019,~~2020, respectively. We had a prime brokerage relationship with Archegos Capital Management, which was closed out as of March 31, 2021. We did not experience losses related to closing out our exposure.

Oil, gas and pipelines loans ~~totaled $14.3 billion, or 1% of total outstanding loans, at March 31, 2020, compared with $13.6 billion, or 1% of total outstanding loans, at December 31, 2019. Oil, gas and pipelines loans~~ included ~~$9.5~~$6.8 billion and ~~$9.2~~$7.5 billion of senior secured loans outstanding at March 31, ~~2020~~2021, and December 31, ~~2019,~~2020, respectively. Oil, gas and

pipelines nonaccrual loans decreased ~~to $549 million~~ at March 31, ~~2020,~~

2021, compared with ~~$615 million at~~ December 31, ~~2019, due~~2020, driven by loan payoffs.

We continue to ~~higher net loan charge-offs, as well as loan payments, partially offset~~perform escalated credit monitoring for certain industries that we consider to be directly and most adversely affected by ~~new downgrades to nonaccrual status~~the COVID-19 pandemic.

Our commercial and industrial loans and lease financing portfolio also includes non-U.S. loans of $70.1 billion and $63.8 billion at March 31, 2021, and December 31, 2020, respectively. Significant industry concentrations of non-U.S. loans at March 31, 2021, and December 31, 2020, respectively, included:

•$42.5 billion and $36.2 billion in ~~first quarter 2020.~~the financials except banks category;

~~In addition to~~•$13.0 billion and $12.8 billion in the banks category; and

•$1.7 billion and $1.6 billion in the oil, gas and pipelines category, industries with escalated credit monitoring include retail, entertainment and recreation, transportation services, and commercial real estate. Table 11 and Table 12 include information about our exposure to certain sectors of these industries, including those that have been significantly affected by the COVID-19 pandemic.

~~Table 11:Commercial and Industrial Loans and Lease Financing by Industry~~category.

March 31, 2020 December 31, 2019
($ in millions)
Nonaccrual
loans

Loans outstanding

% of
total
loans

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


*	~~Less than 1%.~~


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


~~(2)~~	~~Loans outstanding to the restaurant sector were $5.8 billion and $4.3 billion and included $3.9 billion and $3.1 billion of loans outstanding to limited service restaurants at~~ ~~March 31, 2020, and~~ ~~December 31, 2019, respectively.~~


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


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


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

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

COMMERCIAL REAL ESTATE (CRE) We generally subject CRE loans to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to regulatory definitions of pass and criticized categories with criticized segmented among special mention, substandard, doubtful and loss categories. We had $12.0 billion of CRE mortgage loans classified as criticized at both March 31, 2021, and December 31, 2020, and $1.9 billion of CRE construction loans classified as criticized at March 31, 2021, compared with $1.6 billion at December 31, 2020. The increase in criticized CRE construction loans was driven by the apartment, institutional, and shopping


28			Wells Fargo & Company

center property types and reflected the economic impact of the COVID-19 pandemic. Due to the significant uncertainty related to the duration and severity of the economic impact of the COVID-19 pandemic, the credit quality of certain property types within our CRE loan portfolio, such as retail, hotel/motel, office buildings, and shopping centers, could continue to be adversely affected.

The total CRE loan portfolio decreased $794 million from December 31, 2020, driven by a decrease in CRE mortgage loans predominantly related to the office, retail (excluding shopping

center), and shopping center property types. The CRE loan portfolio ~~which~~ included ~~$7.8~~$8.7 billion of non-U.S. CRE loans ~~totaled $143.6 billion, or 14% of total loans,~~ at

March 31, ~~2020, and consisted of $122.8 billion of mortgage loans and $20.8 billion of construction loans.~~

~~Table 12 summarizes CRE loans by state and property type with the related nonaccrual totals.~~2021. The portfolio is diversified both geographically and by property type. The largest geographic concentrations of CRE loans are in California, New York, Florida

and Texas, which combined represented ~~49%~~48% of the total CRE portfolio. ByThe largest property type ~~the largest~~ concentrations are office buildings at 26% and apartments at ~~18%~~20% of the portfolio.

Table 12 summarizes CRE loans by state and property type with the related nonaccrual ~~loans totaled 0.67% of the CRE outstanding balance~~totals at March 31, 2020, compared with 0.43% at December 31, 2019. The increase in CRE nonaccrual loans reflected the effect of the COVID-19 pandemic on market conditions, which impacted our customer base. At March 31, 2020, we had $4.1 billion of criticized CRE mortgage loans, compared with $3.8 billion at December 31, 2019, and $222 million of criticized CRE construction loans, compared with $187 million at December 31, 2019.2021.

Table 12: CRE Loans by State and Property Type


	March 31, 2021
	Real estate mortgage			Real estate construction		Total		% of total loans
($ in millions)	Nonaccrual loans		Total portfolio	Nonaccrual loans	Total portfolio	Nonaccrual loans	Total portfolio
By state:
California	$	238	30,892	2	4,219	240	35,111	4	%
New York	76		12,771	2	1,951	78	14,722	2
Florida	41		8,033	1	1,581	42	9,614	1
Texas	315		7,800	5	1,264	320	9,064	1
Washington	141		4,058	6	913	147	4,971	*
North Carolina	13		3,794	—	794	13	4,588	*
Georgia	48		4,129	—	365	48	4,494	*
Arizona	57		3,851	1	319	58	4,170	*
New Jersey	87		2,851	—	860	87	3,711	*
Colorado	83		3,216	—	481	83	3,697	*
Other (1)	604		39,803	38	8,786	642	48,589	6
Total	$	1,703	121,198	55	21,533	1,758	142,731	17	%
By property:
Office buildings	$	257	33,830	1	3,254	258	37,084	4	%
Apartments	30		19,940	—	8,025	30	27,965	3
Industrial/warehouse	84		15,674	1	1,494	85	17,168	2
Retail (excluding shopping center)	290		13,442	3	140	293	13,582	2
Hotel/motel	319		10,474	5	1,788	324	12,262	1
Shopping center	470		10,200	—	924	470	11,124	1
Institutional	62		4,136	20	2,562	82	6,698	*
Mixed use properties	105		5,382	—	760	105	6,142	*
Collateral pool	—		2,788	—	191	—	2,979	*
1-4 family structure	—		8	—	1,364	—	1,372	*
Other	86		5,324	25	1,031	111	6,355	*
Total	$	1,703	121,198	55	21,533	1,758	142,731	17	%

March 31, 2020
Real estate mortgage Real estate construction Total
% of
total
loans

($ in millions)
Nonaccrual
loans

Total
portfolio

Nonaccrual
loans

Total
portfolio

Nonaccrual
loans

Total
portfolio

By state:
California $ 172
31,837
1
4,446
173
36,283
4 %
New York 21
12,676
2
1,861
23
14,537
1
Florida 22
8,200
1
1,487
23
9,687
*
Texas 304
7,848
5
1,393
309
9,241
*
Washington 11
3,979
—
768
11
4,747
*
North Carolina 14
3,868
—
617
14
4,485
*
Georgia 15
3,901
—
465
15
4,366
*
Arizona 40
4,034
—
269
40
4,303
*
Colorado 16
3,298
—
546
16
3,844
*
New Jersey 18
2,962
—
682
18
3,644
*
Other 311
40,164
12
8,278
323
48,442
(1) 5
Total $ 944
122,767
21
20,812
965
143,579
14 %
By property:

Office buildings $ 140
34,547
5
2,945
145
37,492
4 %
Apartments 12
18,642
—
7,103
12
25,745
3
Industrial/warehouse 76
15,929
1
1,471
77
17,400
2
Retail (excluding shopping center) 125
14,089
2
223
127
14,312
1
Hotel/motel 79
10,637
—
1,543
79
12,180
1
Shopping Center 279
10,707
—
1,361
279
12,068
1
Mixed use properties 95
6,087
—
545
95
6,632
*
Institutional 60
3,934
1
2,041
61
5,975
*
Collateral pool —
2,514
—
200
—
2,714
*
Agriculture 70
2,144
—
9
70
2,153
*
Other 8
3,537
12
3,371
20
6,908
*
Total $ 944
122,767
21
20,812
965
143,579
14 %
* Less than 1%.

(1)Includes 40 states; no state in Other had loans in excess of ~~$3.7 billion~~.$3.6 billion.


			Wells Fargo & Company			29

Risk Management – Credit Risk Management (continued)

~~NON-U.S~~NON-U.S. LOANS Our classification of non-U.S. loans is based on whether the borrower’s primary address is outside of the United States. At March 31, ~~2020,~~2021, non-U.S. loans totaled ~~$88.0~~$79.1 billion,, representing approximately 9% of our total consolidated loans outstanding, compared with ~~$80.5~~$72.9 billion, or approximately 8% of our total consolidated loans outstanding, at December 31, ~~2019.~~2020. Non-U.S. loans were approximately 4% of our total consolidated ~~total~~ assets at both March 31, ~~2020,~~2021, and December 31, ~~2019.~~2020.

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

We evaluate our individual country risk exposure based on our assessment of the borrower’s ability to repay, which gives consideration for allowable transfers of risk, such as guarantees and collateral, and may be different from the reporting based on the borrower’s primary address.

Our largest single country exposure outside the U.S. ~~based on our assessment of risk~~ at March 31, ~~2020,~~2021, was the United Kingdom, which totaled ~~$37.6~~$36.1 billion, or approximately 2% of our total assets, and included ~~$11.2~~$8.8 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 withdrew from the European Union (Brexit) on January 31, 2020, and is currently subject to a~~

transition period during which the terms and conditions of its exit are being negotiated. As the United Kingdom exits from the European Union, our primary goal is to continue to serve our existing clients in the United Kingdom and the European Union as well as to continue to meet the needs of our domestic clients as they do business in those locations. We have an existing authorized bank in Ireland and an asset management entity in Luxembourg. Additionally, we established a broker dealer in France. We are in the process of leveraging these entities to continue to serve clients in the European Union and continue to take actions to update our business operations in the United Kingdom and European Union, including implementing new supplier contracts and staffing arrangements. For additional information on risks associated with Brexit, see the “Risk Factors” section in our 2019 Form 10-K.

Table 13 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. With respect to Table 13:

•Lending and deposits exposure includes outstanding loans, unfunded credit commitments, and deposits with non-U.S. banks. These balances are presented prior to the deduction of allowance for credit losses or collateral received under the terms of the credit agreements, if any.

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

•Derivatives and other exposure represents foreign exchange contracts, derivative contracts, securities resale agreements, and securities lending agreements.

Table 13: Select Country Exposures


	March 31, 2021
	Lending and deposits			Securities		Derivatives and other		Total exposure
(in millions)	Sovereign		Non-sovereign	Sovereign	Non-sovereign	Sovereign	Non-sovereign	Sovereign	Non- sovereign (1)	Total
Top 20 country exposures:
United Kingdom	$	8,829	24,199	—	1,027	—	2,063	8,829	27,289	36,118
Canada	2		15,494	1	121	3	373	6	15,988	15,994
Japan	19		751	14,432	418	—	27	14,451	1,196	15,647
Cayman Islands	—		6,213	—	—	—	194	—	6,407	6,407
Ireland	1,157		4,468	—	131	—	100	1,157	4,699	5,856
Luxembourg	—		4,035	—	143	—	156	—	4,334	4,334
China	—		3,634	(4)	403	145	36	141	4,073	4,214
Guernsey	—		4,013	—	2	—	49	—	4,064	4,064
Bermuda	—		3,578	—	43	—	138	—	3,759	3,759
Germany	—		3,008	(3)	91	7	38	4	3,137	3,141
Netherlands	—		2,498	—	104	—	129	—	2,731	2,731
France	130		1,976	—	167	301	4	431	2,147	2,578
South Korea	—		1,875	—	133	7	16	7	2,024	2,031
Switzerland	—		1,810	—	(62)	—	217	—	1,965	1,965
Brazil	—		1,442	—	4	8	20	8	1,466	1,474
Australia	—		1,110	—	110	—	11	—	1,231	1,231
Norway	—		1,009	—	1	—	—	—	1,010	1,010
Hong Kong	—		921	(2)	13	12	3	10	937	947
United Arab Emirates	—		906	—	—	—	3	—	909	909
Chile	—		847	—	40	—	1	—	888	888
Total top 20 country exposures	$	10,137	83,787	14,424	2,889	483	3,578	25,044	90,254	115,298

(1)Total non-sovereign exposure comprised $46.8 billion exposure to financial institutions and $43.5 billion to non-financial corporations at March 31, 2021.

March 31, 2020
Lending 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 $ 11,182
22,815
—
1,672
1
1,968
11,183
26,455
37,638
Canada 4
16,778
2
120
—
593
6
17,491
17,497
Cayman Islands —
8,952
—
—
—
328
—
9,280
9,280
Ireland 976
4,857
—
122
—
68
976
5,047
6,023
China —
4,188
(13 ) 444
37
35
24
4,667
4,691
Bermuda —
4,308
—
125
—
51
—
4,484
4,484
Luxembourg —
3,925
—
126
—
103
—
4,154
4,154
Japan 20
1,304
1,996
143
—
256
2,016
1,703
3,719
Guernsey —
3,494
—
3
—
35
—
3,532
3,532
Germany —
2,787
10
45
6
59
16
2,891
2,907
South Korea —
2,546
3
84
—
15
3
2,645
2,648
Netherlands —
1,794
—
171
14
241
14
2,206
2,220
France —
1,847
—
94
142
13
142
1,954
2,096
Brazil —
2,062
1
3
6
8
7
2,073
2,080
Chile —
1,910
—
1
—
—
—
1,911
1,911
India —
1,683
—
114
—
1
—
1,798
1,798
Switzerland —
1,608
—
38
—
90
—
1,736
1,736
Australia —
1,505
—
68
—
17
—
1,590
1,590
Singapore —
1,304
—
24
—
88
—
1,416
1,416
United Arab Emirates —
1,286
—
82
—
4
—
1,372
1,372
Total top 20 country exposures $ 12,182
90,953
1,999
3,479
206
3,973
14,387
98,405
112,792
Eurozone exposure:
Eurozone countries included in Top 20 above (2) $ 976
15,210
10
558
162
484
1,148
16,252
17,400
Spain —
385
—
121
—
9
—
515
515
Belgium —
536
—
(54 ) —
4
—
486
486
Austria —
234
—
1
—
—
—
235
235
Italy —
108
—
19
—
1
—
128
128
Other Eurozone exposure —
93
—
27
—
—
—
120
120
Total Eurozone exposure $ 976
16,566
10
672
162
498
1,148
17,736
18,884

~~For countries presented in the table, total non-sovereign exposure comprises~~ ~~$56.0 billion~~ ~~exposure to financial institutions and~~ ~~$43.9 billion~~ ~~to non-financial corporations at~~ ~~March 31, 2020~~.

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

~~REAL ESTATE 1-4 FAMILY~~RESIDENTIAL MORTGAGE LOANS Our ~~real estate 1-4 family~~residential mortgage loan portfolio is comprised of ~~both~~1-4 family first and junior lien mortgage loans. Residential mortgage – first lien loans ~~which are presented in Table 14.~~comprised 92% of the total residential mortgage loan portfolio at both March 31, 2021, and December 31, 2020.

~~Table 14:Real Estate 1-4 Family Mortgage Loans~~

March 31, 2020 December 31, 2019
(in millions) Balance

% of
portfolio

Balance

% of
portfolio

Real estate 1-4 family first mortgage $ 292,920
91 % $ 293,847
91 %
Real estate 1-4 family junior lien mortgage 28,527
9
29,509
9
Total real estate 1-4 family mortgage loans $ 321,447
100 % $ 323,356
100 %

The ~~real estate 1-4 family~~residential mortgage loan portfolio includes some loans with adjustable-rate features and some with an interest-only feature as part of the loan ~~terms and some with adjustable-rate features.~~terms. Interest-only loans were approximately 3% of total loans at both March 31, ~~2020,~~2021, and December 31, ~~2019.~~2020. We believe ~~we have manageable~~our origination process appropriately addresses our adjustable-rate mortgage (ARM) reset risk across our residential mortgage loan portfolios ~~including ARM~~and our ACL for loans ~~that have negative amortizing features that were acquired in prior business combinations.~~considers this risk. We do not offer option ARM products, nor do we offer variable-rate mortgage products with

fixed payment amounts, commonly referred to within the financial services industry as negative amortizing mortgage loans. In connection with our adoption of CECL on January 1, 2020, our real estate 1-4 family mortgage purchased credit-impaired (PCI) loans, which had a carrying value of $568 million, were reclassified as purchased credit-deteriorated (PCD) loans. PCD loans are generally accounted for in the same manner as non-PCD loans. For more information on PCD loans, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

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

2020 Form 10-K. For ~~more~~additional information on customer accommodations, including loan modifications, in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – ~~Actions to Support Customers During the COVID-19 Pandemic”~~COVID-Related Lending Accommodations” section in this Report.

Part of our credit monitoring includes tracking delinquency, current FICO scores and loan/combined loan to collateral values (LTV/CLTV) on the entire real estate 1-4 family mortgage loan portfolio. These credit risk indicators on the mortgage portfolio exclude government insured/guaranteed loans. Loans 30 days or more delinquent at March 31, 2020, totaled $3.6 billion, or 1% of total mortgages, compared with $3.0 billion, or 1%, at December 31, 2019. Loans with FICO scores lower than 640 totaled $7.5 billion, or 2% of total mortgages at March 31, 2020, compared with $7.6 billion, or 2%, at December 31, 2019. Mortgages with a LTV/CLTV greater than 100% totaled $2.5 billion at March 31, 2020, or 1% of total mortgages, compared with $2.5 billion, or 1%, at December 31, 2019. Information regarding credit quality indicators can be found in Note 6 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.


30			Wells Fargo & Company

Real estate 1-4 mortgage loans by state are presented in Table 15. Our real estate 1-4 family mortgage loans to borrowers in California represented 13% of total loans at March 31, 2020, located predominantly within the larger metropolitan areas, with no single California metropolitan area consisting of more than 4% of total loans.

We monitor changes in real estate values and underlying economic or market conditions for all geographic areas of our ~~real estate 1-4 family~~residential mortgage portfolios as part of our credit risk management process. Our underwriting and periodic review of loans and lines secured by residential real estate collateral includes original appraisals adjusted for the change in Home Price Index (HPI) or estimates from automated valuation models (AVMs) to support property values. Additional information about appraisals, ~~and~~ AVMs, and our policy for their use can be found in Note 64 (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~~Residential Mortgage Loans” section in our ~~2019~~2020 Form 10-K.

Part of our credit monitoring includes tracking delinquency, current FICO scores and loan/combined loan to collateral values (LTV/CLTV) on the entire residential mortgage loan portfolio. Excluding government insured/guaranteed loans, these credit risk indicators on the residential mortgage portfolio were:

•Loans 30 days or more delinquent at March 31, 2021, totaled $4.1 billion, or 1% of total mortgages, compared with $4.7 billion, or 2%, at December 31, 2020. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies;

•Loans with FICO scores lower than 640 totaled $4.9 billion, or 2% of total mortgages at March 31, 2021, compared with $5.6 billion, or 2%, at December 31, 2020; and

•Mortgages with a LTV/CLTV greater than 100% totaled $1.3 billion at March 31, 2021, or less than 1% of total mortgages, compared with $1.6 billion, or 1%, at December 31, 2020.

Information regarding credit quality indicators can be found in Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report. Residential mortgage loans by state are presented in Table 14.

Table ~~15:~~14: ~~Real Estate 1-4 Family~~Residential Mortgage Loans by State


	March 31, 2021
($ in millions)	Residential mortgage – first lien		Residential mortgage – junior lien	Total residential mortgage	% of total loans
Residential mortgage loans:
California (1)	$	97,322	5,646	102,968	12	%
New York	30,132		1,185	31,317	4
New Jersey	10,980		2,104	13,084	1
Florida	10,088		1,965	12,053	1
Washington	8,219		457	8,676	1
Texas	7,217		423	7,640	1
Virginia	5,990		1,244	7,234	1
North Carolina	4,589		1,006	5,595	1
Pennsylvania	4,039		1,278	5,317	1
Other (2)	50,665		6,000	56,665	6
Government insured/guaranteed loans (3)	25,122		—	25,122	3
Total	$	254,363	21,308	275,671	32	%

(1)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.

(2)Consists of 41 states; no state in Other had loans in excess of $5.3 billion.

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

March 31, 2020
(in millions)
Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Total real
estate 1-4
family
mortgage

% of
total
loans

Real estate 1-4 family loans:
California $ 118,484
7,814
126,298
13 %
New York 31,801
1,469
33,270
3
New Jersey 14,074
2,667
16,741
2
Florida 11,675
2,523
14,198
1
Washington 10,869
644
11,513
1
Virginia 8,740
1,645
10,385
1
Texas 8,954
576
9,530
1
North Carolina 5,758
1,338
7,096
1
Colorado 6,357
644
7,001
1
Other (1) 65,369
9,207
74,576
7
Government insured/
guaranteed loans (2)
10,839
—
10,839
1
Total $ 292,920
28,527
321,447
32 %


~~(1)~~			~~Consists of~~ Wells Fargo & Company41 ~~states; none of which had loans in excess of~~ ~~$6.9 billion~~.			31


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

~~First Lien Mortgage Portfolio~~Our total real estate 1-4 family first lien mortgage portfolio (first mortgage) decreased $927 million in first quarter 2020. Mortgage loan originations of $14.3 billion in first quarter 2020 were more than offset by paydowns.

Net loan charge-offs (annualized) as a percentage of average first mortgage loans was 0.00% in first quarter 2020, compared with a net recovery of 0.02% for the same period a year ago. Nonaccrual loans were $2.4 billion at March 31, 2020, up

$222 million from December 31, 2019. The increase in nonaccrual loans from December 31, 2019 was driven by the implementation of CECL, which required PCI loans to be classified as nonaccruing based on performance. For additional information, see the “RiskRisk Management – Credit Risk Management (continued)

Residential Mortgage – ~~Nonperforming Assets (Nonaccrual Loans~~First Lien Portfolio Our total residential mortgage – first lien portfolio decreased $22.3 billion from December 31, 2020, driven by loan paydowns as a result of the low interest rate environment and ~~Foreclosed Assets)” section in this Report.~~the transfer of $5.9 billion of first lien mortgage loans to loans held for sale (LHFS), partially offset by originations of $12.5 billion.

Table 1615 shows certain delinquency and loss information for the residential mortgage – first ~~mortgage~~lien portfolio and lists the top five states by outstanding balance.

Table ~~16:~~15: Residential Mortgage – First ~~Mortgage~~Lien Portfolio Performance


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




California	$	97,322	104,260	0.95	%	1.00	(0.02)	(0.03)	(0.01)	(0.01)	(0.01)
New York	30,132		31,028	1.25		1.40	(0.01)	0.01	0.02	0.02	(0.01)
New Jersey	10,980		12,073	2.03		1.92	—	(0.03)	(0.01)	0.03	—
Florida	10,088		10,623	2.47		2.56	(0.11)	0.01	0.03	(0.01)	(0.03)
Washington	8,219		9,094	0.62		0.66	0.02	(0.01)	0.01	(0.01)	(0.02)
Other	72,500		79,356	1.60		1.60	(0.09)	0.02	(0.01)	0.01	0.01
Total	229,241		246,434	1.30		1.34	(0.04)	—	—	—	—
Government insured/guaranteed loans	25,122		30,240
Total first mortgage portfolio	$	254,363	276,674

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

PCI (1) N/A
555

Total first lien mortgages $ 292,920
293,847


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

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

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

We continuously monitor the credit performance of our residential mortgage – junior lien ~~mortgage~~ portfolio for trends and factors that influence the

frequency and severity of ~~loss,~~losses, such as residential mortgage – junior lien ~~mortgage~~ performance when the residential mortgage – first ~~mortgage~~lien loan is delinquent.

The decrease in the residential mortgage – junior lien portfolio at March 31, 2021, compared with December 31, 2020, reflected loan paydowns. Beginning in second quarter 2020, we suspended the origination of residential mortgage – junior lien loans. Table 1716 shows certain delinquency and loss information for the residential mortgage – junior lien ~~mortgage~~ portfolio and lists the top five states by outstanding balance. ~~The decrease in~~

Table 16:Residential Mortgage – Junior Lien Portfolio Performance


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


California	$	5,646	6,237	2.24	%	2.20		(0.69)	(0.46)	(0.34)	(0.26)	(0.36)
New Jersey	2,104		2,258	2.69		2.84		0.32	(0.06)	(0.02)	(0.12)	0.13
Florida	1,965		2,119	2.71		3.06		(0.11)	(0.35)	(0.22)	(0.01)	—
Pennsylvania	1,278		1,377	2.19		2.30		(0.22)	(0.62)	(0.19)	0.05	0.11
Virginia	1,244		1,355	2.35		2.41		(0.29)	(0.15)	(0.34)	(0.05)	0.09
Other	9,071		9,940	2.26		2.31		(0.36)	(0.43)	(0.17)	(0.21)	0.01
Total junior lien mortgage portfolio	$	21,308	23,286	2.34		2.41		(0.35)	(0.39)	(0.22)	(0.17)	(0.07)

~~outstanding balances since December 31, 2019, predominantly reflected loan paydowns.~~

As of March 31, ~~2020, 4%~~2021, with respect to loans in the residential mortgage – junior lien portfolio that had a CLTV ratio in excess of 100%:

•such loans totaled 3% of the outstanding balance of the residential mortgage – junior lien ~~mortgage portfolio was associated with loans that had a combined loan to value (CLTV) ratio in excess of 100%. Of those junior lien mortgages with a CLTV ratio in excess of 100%, 3%~~portfolio;

•2% were 30 days or more past due. ~~CLTV means~~Customer payment deferral activities instituted in response to the ~~ratio~~COVID-19 pandemic could continue to delay the recognition of delinquencies; and

•the ~~total loan balance of first 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 1% of the residential mortgage – junior lien ~~mortgage portfolio at March 31, 2020.~~portfolio.

CLTV represents the ratio of the total loan balance of first and junior lien mortgages (including unused line amounts for credit line products) to property collateral value. For additional information on consumer loans by LTV/CLTV, see Table ~~6.12~~4.11 in Note 64 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

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

Outstanding balance
% of loans 30 days
or more past due
Loss (recovery) rate (annualized) quarter ended
(in millions) Mar 31,
2020
Dec 31,
2019
Mar 31,
2020
Dec 31,
2019 Mar 31,
2020
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
California $ 7,814
8,054
1.65 % 1.62 (0.36 ) (0.44 ) (0.51 ) (0.40 ) (0.39 )
New Jersey 2,667
2,744
2.67
2.74 0.13
0.07
0.11
(0.07 ) 0.12
Florida 2,523
2,600
2.76
2.93 —
(0.09 ) (0.11 ) (0.11 ) (0.05 )
Virginia 1,645
1,712
2.15
1.97 0.09
(0.02 ) (0.23 ) (0.17 ) 0.14
Pennsylvania 1,618
1,674
2.18
2.16 0.11
(0.10 ) (0.05 ) (0.19 ) 0.04
Other 12,260
12,712
2.06
2.05 0.01
(0.18 ) (0.29 ) (0.22 ) (0.03 )
Total 28,527
29,496
2.08
2.07 (0.07 ) (0.21 ) (0.28 ) (0.24 ) (0.11 )
PCI (1) N/A
13

Total junior lien mortgages $ 28,527
29,509

Residential Mortgage – Junior Lien Line and Loan and Residential Mortgage – First Lien Line Our junior lien, as well as first lien, lines of credit portfolios generally have draw periods of 10, 15 or 20 years with variable interest rate and payment options available during the draw period of (1) ~~interest only~~interest-only or (2) 1.5% of outstanding principal balance plus accrued interest. As of March 31, ~~2020,~~2021, lines of credit in a draw period primarily used the interest-only option.

During the draw period, the borrower has the option of converting all or a portion of the line from a variable interest rate to a fixed rate with terms including interest-only payments for a fixed period between three to seven years or a fully amortizing payment with a fixed period between five to 30 years. At the end of the draw period, a line of credit generally converts to an amortizing payment schedule with repayment terms of up to 30 years based on the balance at time of conversion. Certain lines and loans have been structured with a balloon payment, which requires full repayment of the outstanding balance at the end of the term period. The conversion of lines or loans to fully amortizing or balloon payoff may result in a significant payment

increase, which can affect some borrowers’ ability to repay the outstanding balance.

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

less than the minimum amount due. For the borrowers with an interest-only payment feature, approximately 30% paid only the minimum amount due and approximately 66% paid more than the minimum amount due.

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

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

Table 1817 reflects the outstanding balance of our portfolio of residential mortgage – junior ~~lien mortgages,~~liens, including lines and loans, and residential mortgage – first lien lines segregated into scheduled ~~end-of-draw~~end of draw or end-of-term periods and products that are currently amortizing, or in balloon repayment status. The unfunded credit commitments for residential mortgage – junior and first lien lines totaled $51.9 billion at March 31, 2021.

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


					Scheduled end of draw/term					Amortizing (2)
	Outstanding balance			Remainder of 2021					2026 and
($ in millions)	March 31, 2021				2022	2023	2024	2025	thereafter (1)


Residential mortgage – junior lien lines and loans	$	21,308		494	2,462	1,669	1,326	2,207	6,558	6,592
Residential mortgage – first lien lines	8,401			270	1,295	975	760	1,041	2,622	1,438
Total	$	29,709		764	3,757	2,644	2,086	3,248	9,180	8,030
% of portfolios	100		%	3	13	9	7	11	31	26

(1)Substantially all lines and loans are scheduled to convert to amortizing loans by the end of 2030, with annual scheduled amounts through 2030 ranging from $1.0 billion to $3.5 billion and averaging $1.8 billion per year.

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

At March 31, ~~2020, $464~~2021, $344 million, or 2%, of lines in their draw period were 30 days or more past due, compared with ~~$395~~$351 million, or 5%, of amortizing lines of credit. ~~Included~~Customer payment deferral activities instituted in response to the ~~amortizing amounts~~COVID-19 pandemic could continue to delay the recognition of delinquencies. On a monthly basis, we monitor the payment characteristics of borrowers in ~~Table 18 is $53 million~~our residential mortgage – first and junior lien lines of ~~end-of-term balloon payments which were past~~credit portfolios. In March 2021, excluding borrowers with COVID-related loan modification payment deferrals:

•Approximately 42% of these borrowers paid only the minimum amount due and approximately 53% paid more than the minimum amount due. The ~~unfunded credit commitments for junior~~rest were either delinquent or paid less than the minimum amount due.

•For the borrowers with an interest-only payment feature, approximately 27% paid only the minimum amount due and ~~first lien lines totaled $58.1 billion at March 31, 2020.~~approximately 69% paid more than the minimum amount due.

Table 18: ~~Junior Lien Mortgage Line~~Credit Card, Auto, and ~~Loan and First Lien Mortgage Line Portfolios Payment Schedule~~Other Consumer Loans


	March 31, 2021				December 31, 2020
($ in millions)	Outstanding balance		% of total loans		Outstanding balance		% of total loans
Credit card	$	34,246	3.97	%	$	36,664	4.13	%
Auto	49,210		5.71		48,187		5.43
Other consumer (1)	24,925		2.89		24,409		2.75
Total	$	108,381	12.58	%	$	109,260	12.31	%

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

Scheduled end of draw / term
(in millions) Outstanding balance March 31, 2020
Remainder of 2020
2021
2022
2023
2024

2025 and
thereafter (1)

Amortizing
Junior lien lines and loans $ 28,527
218
809
3,177
2,191
1,769
11,693
8,670
First lien lines 10,210
103
395
1,566
1,186
922
4,368
1,670
Total $ 38,737
321
1,204
4,743
3,377
2,691
16,061
10,340
% of portfolios 100 % 1
3
12
9
7
41
27


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

CREDIT ~~CARDS~~CARD Our credit card portfolio totaled ~~$38.6~~$34.2 billion at March 31, ~~2020, which represented 4% of our total outstanding loans. The net charge-off rate (annualized) for our credit card portfolio was 3.81% for first quarter 2020,~~2021, compared with ~~3.73% for first quarter 2019.~~$36.7 billion at December 31, 2020. The decrease in the outstanding balance at March 31, 2021, compared with December 31, 2020, was driven by seasonal paydowns.

~~AUTOMOBILE~~AUTO Our ~~automobile~~auto portfolio totaled ~~$48.6~~$49.2 billion at March 31, 2021, compared with $48.2 billion at December 31, 2020. The ~~net charge-off rate (annualized) for our automobile portfolio was 0.68% for first quarter 2020,~~outstanding balance at March 31, 2021, compared with ~~0.82% for first quarter 2019. The decrease in the net charge-off rate in first quarter~~December 31, 2020, ~~compared with the same period in 2019, was driven by lower early losses on higher quality originations.~~increased slightly as originations exceeded paydowns.

OTHER ~~REVOLVING CREDIT AND INSTALLMENT~~CONSUMER Other consumer loans, which include revolving credit and installment loans, totaled ~~$33.5~~$24.9 billion at March 31, ~~2020, and largely included student and securities-based loans. Our private student loan portfolio totaled $10.6~~2021, compared with $24.4 billion at ~~March~~December 31, 2020. ~~The net charge-off rate (annualized) for other revolving credit and installment loans was 1.59% for first quarter 2020, compared with 1.47% for first quarter 2019.~~


			Wells Fargo & Company			33

Risk Management -– Credit Risk Management (continued)

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

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

For information about when we generally place loans on nonaccrual status, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2019~~2020 Form 10-K. ~~As part of our actions~~Customer payment deferral activities instituted in response to ~~support customers during~~ the COVID-19 pandemic wecould continue to delay the recognition of nonaccrual loans for those customers who would have provided borrowers relief in the form of loan modifications. Loan delinquency status will not change during any payment deferral period and loans that were accruing at the time the relief was provided generally will not be placed onotherwise moved into nonaccrual ~~status during the deferral period.~~status. For ~~more~~ additional

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

~~Foreclosed~~Table 19 summarizes nonperforming assets (NPAs) for each of ~~$252 million were down $51 million from fourth quarter 2019.~~the last four quarters.

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


	March 31, 2021				December 31, 2020				September 30, 2020				June 30, 2020
($ in millions)	Balance		% of total loans		Balance		% of total loans		Balance		% of total loans		Balance		% of total loans
Nonaccrual loans:
Commercial:
Commercial and industrial	$	2,223	0.70	%	$	2,698	0.85	%	$	2,834	0.88	%	$	2,896	0.83	%
Real estate mortgage	1,703		1.41		1,774		1.46		1,343		1.10		1,217		0.98
Real estate construction	55		0.26		48		0.22		34		0.15		34		0.16
Lease financing	249		1.58		259		1.61		187		1.10		138		0.79
Total commercial	4,230		0.89		4,779		1.00		4,398		0.91		4,285		0.83
Consumer:
Residential mortgage – first lien (1)	2,859		1.12		2,957		1.07		2,641		0.90		2,393		0.86
Residential mortgage – junior lien (1)	747		3.51		754		3.24		767		3.05		753		2.81
Auto	181		0.37		202		0.42		176		0.36		129		0.26
Other consumer	38		0.15		36		0.15		40		0.12		45		0.14
Total consumer	3,825		1.00		3,949		0.97		3,624		0.83		3,320		0.79
Total nonaccrual loans	8,055		0.93		8,728		0.98		8,022		0.87		7,605		0.81
Foreclosed assets:
Government insured/guaranteed (2)	16				18				22				31
Non-government insured/guaranteed	124				141				134				164
Total foreclosed assets	140				159				156				195
Total nonperforming assets	$	8,195	0.95	%	$	8,887	1.00	%	$	8,178	0.89	%	$	7,800	0.83	%
Change in NPAs from prior quarter	$	(692)			$	709			$	378			$	1,392

(1)Residential mortgage loans predominantly insured by the FHA or guaranteed by the VA are not placed on nonaccrual status because they are 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 loans were predominantly insured by the FHA or guaranteed by the VA. Receivables related to the foreclosure of certain government guaranteed real estate mortgage loans are excluded from this table and included in Accounts Receivable in Other Assets. For additional information on foreclosed assets, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

Commercial nonaccrual loans decreased $549 million from December 31, 2020, driven by a decline in commercial and industrial nonaccrual loans in the oil, gas and pipelines industry reflecting improvement in the economic environment. For additional information on commercial and industrial nonaccrual loans, see the “Risk Management – Credit Risk Management – Commercial and Industrial Loans and Lease Financing” section in this Report.

Consumer nonaccrual loans decreased $124 million from December 31, 2020, driven by a decline in residential mortgage nonaccrual loans.

March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019
($ in millions) Balance

% of
total
loans

Balance

% of
total
loans

Balance

% of
total
loans

Balance

% of
total
loans

Nonaccrual loans:
Commercial:
Commercial and industrial $ 1,779
0.44 % $ 1,545
0.44 % $ 1,539
0.44 % $ 1,634
0.47 %
Real estate mortgage 944
0.77
573
0.47
669
0.55
737
0.60
Real estate construction 21
0.10
41
0.21
32
0.16
36
0.17
Lease financing 131
0.68
95
0.48
72
0.37
63
0.33
Total commercial 2,875
0.51
2,254
0.44
2,312
0.45
2,470
0.48
Consumer:
Real estate 1-4 family first mortgage (1) 2,372
0.81
2,150
0.73
2,261
0.78
2,425
0.85
Real estate 1-4 family junior lien mortgage (1) 769
2.70
796
2.70
819
2.66
868
2.71
Automobile 99
0.20
106
0.22
110
0.24
115
0.25
Other revolving credit and installment 41
0.12
40
0.12
43
0.12
44
0.13
Total consumer 3,281
0.74
3,092
0.69
3,233
0.73
3,452
0.79
Total nonaccrual loans 6,156
0.61
5,346
0.56
5,545
0.58
5,922
0.62
Foreclosed assets:
Government insured/guaranteed (2) 43
50
59
68

Non-government insured/guaranteed 209
253
378
309

Total foreclosed assets 252
303
437
377

Total nonperforming assets $ 6,408
0.63 % $ 5,649
0.59 % $ 5,982
0.63 % $ 6,299
0.66 %
Change in NPAs from prior quarter $ 759
(333 ) (317 ) (1,042 )


~~(1)~~34			~~Real estate 1-4 family mortgage loans~~ Wells Fargo & Company~~predominantly~~ ~~insured by the FHA or guaranteed by the VA are not placed on nonaccrual status because they are 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 loans were ~~predominantly~~ insured by the FHA or guaranteed by the VA. Receivables related to the foreclosure of certain government guaranteed residential real estate mortgage loans are excluded from this table and included in Accounts Receivable in Other Assets. For more information on foreclosed assets, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2019~~ ~~Form 10-K.~~

Table 20 provides an analysis of the changes in nonaccrual loans.

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

Quarter ended
(in millions) Mar 31,
2020
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Commercial nonaccrual loans
Balance, beginning of period $ 2,254
2,312
2,470
2,797
2,188
Inflows 1,479
652
710
621
1,238
Outflows:
Returned to accruing (56 ) (124 ) (52 ) (46 ) (43 )
Foreclosures —
—
(78 ) (2 ) (15 )
Charge-offs (360 ) (201 ) (194 ) (187 ) (158 )
Payments, sales and other (442 ) (385 ) (544 ) (713 ) (413 )
Total outflows (858 ) (710 ) (868 ) (948 ) (629 )
Balance, end of period 2,875

2,254

2,312

2,470

2,797
Consumer nonaccrual loans
Balance, beginning of period 3,092
3,233
3,452
4,108
4,308
Inflows (1) 749
473
448
437
552
Outflows:
Returned to accruing (254 ) (227 ) (274 ) (250 ) (248 )
Foreclosures (21 ) (29 ) (32 ) (34 ) (42 )
Charge-offs (48 ) (45 ) (44 ) (34 ) (49 )
Payments, sales and other (237 ) (313 ) (317 ) (775 ) (413 )
Total outflows (560 ) (614 ) (667 ) (1,093 ) (752 )
Balance, end of period 3,281

3,092

3,233

3,452

4,108
Total nonaccrual loans $ 6,156
5,346
5,545
5,922
6,905


~~(1)~~	~~In connection with our adoption of CECL on January 1, 2020, we classified $275 million of PCD loans as nonaccruing based on performance.~~

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

~~While nonaccrual loans are not free~~

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


	Quarter ended


($ in millions)	Mar 31, 2021		Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Commercial nonaccrual loans
Balance, beginning of period	$	4,779	4,398	4,285	2,875	2,254
Inflows	773		1,696	1,316	2,741	1,479
Outflows:
Returned to accruing	(177)		(99)	(166)	(64)	(56)
Foreclosures	(6)		(37)	—	—	—
Charge-offs	(202)		(367)	(382)	(560)	(360)
Payments, sales and other	(937)		(812)	(655)	(707)	(442)
Total outflows	(1,322)		(1,315)	(1,203)	(1,331)	(858)
Balance, end of period	4,230		4,779	4,398	4,285	2,875
Consumer nonaccrual loans
Balance, beginning of period	3,949		3,624	3,320	3,281	3,092
Inflows	454		792	696	379	749
Outflows:
Returned to accruing	(152)		(208)	(160)	(135)	(254)
Foreclosures	(19)		(5)	(4)	(6)	(21)
Charge-offs	(26)		(36)	(36)	(39)	(48)
Payments, sales and other	(381)		(218)	(192)	(160)	(237)
Total outflows	(578)		(467)	(392)	(340)	(560)
Balance, end of period	3,825		3,949	3,624	3,320	3,281
Total nonaccrual loans	$	8,055	8,728	8,022	7,605	6,156

We believe exposure to loss on nonaccrual loans is ~~significantly~~ mitigated by the following factors at March 31, ~~2020:~~2021:

•

•94% of total commercial nonaccrual loans and 99% of total consumer nonaccrual loans are secured. Of the consumer nonaccrual loans, 94% are secured by real estate and 91% have a combined LTV (CLTV) ratio of 80% or less.

•losses of $661 million and $1.0 billion have already been recognized on 16% of commercial nonaccrual loans and 30% of consumer nonaccrual loans, respectively, in accordance with our charge-off policies. Once we write down loans to the net realizable value (fair value of collateral less estimated costs to sell), we re-evaluate each loan regularly and record additional write-downs if needed.

•75% of commercial nonaccrual loans were current on interest and 66% of commercial nonaccrual loans were current on both principal and interest, but were on nonaccrual status because the full or timely collection of interest or principal had become uncertain. ~~of total commercial nonaccrual loans and~~ ~~99%~~ ~~of total consumer nonaccrual loans are secured. Of the consumer nonaccrual loans,~~ ~~96%~~ ~~are secured by real estate and~~ ~~88%~~ ~~have a combined LTV (CLTV) ratio of 80% or less.~~

•

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


•of the $1.1 billion of consumer loans in bankruptcy or discharged in bankruptcy, and classified as nonaccrual, $723 million were current. •	~~73%~~ ~~of commercial nonaccrual loans were current on interest and~~ ~~66%~~ ~~of commercial nonaccrual loans were current on both principal and interest, but were on nonaccrual status because the full or timely collection of interest or principal had become uncertain.~~


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

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

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


			Wells Fargo & Company			35

Risk Management -– Credit Risk Management (continued)

Table 21 provides a summary of foreclosed assets and an analysis of changes in foreclosed assets.

Table 21: Foreclosed Assets


	Quarter ended


($ in millions)	Mar 31, 2021		Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Summary by loan segment
Government insured/guaranteed	$	16	18	22	31	43
Commercial	64		70	39	45	49
Consumer	60		71	95	119	160
Total foreclosed assets	$	140	159	156	195	252
Analysis of changes in foreclosed assets
Balance, beginning of period	$	159	156	195	252	303
Net change in government insured/guaranteed (1)	(2)		(4)	(9)	(12)	(7)
Additions to foreclosed assets (2)	88		114	60	51	107
Reductions:
Sales	(107)		(104)	(88)	(98)	(154)
Write-downs and gains (losses) on sales	2		(3)	(2)	2	3
Total reductions	(105)		(107)	(90)	(96)	(151)
Balance, end of period	$	140	159	156	195	252

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

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

(in millions) Mar 31,
2020
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Summary by loan segment
Government insured/guaranteed $ 43
50
59
68
75
Commercial 49
62
180
101
124
Consumer 160
191
198
208
237
Total foreclosed assets $ 252
303
437
377
436
Analysis of changes in foreclosed assets
Balance, beginning of period $ 303
437
377
436
451
Net change in government insured/guaranteed (1) (7 ) (9 ) (9 ) (7 ) (13 )
Additions to foreclosed assets (2) 107
126
235
144
193
Reductions:
Sales (154 ) (250 ) (155 ) (199 ) (205 )
Write-downs and gains (losses) on sales 3
(1 ) (11 ) 3
10
Total reductions (151 ) (251 ) (166 ) (196 ) (195 )
Balance, end of period $ 252
303
437
377
436


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


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

Foreclosed assets at March 31, ~~2020,~~2021, included ~~$180~~$59 million of foreclosed residential real estate, of which ~~24%~~28% is predominantly FHA insured or VA guaranteed and expected to have minimal or no loss content. The remaining amount of foreclosed assets has been written down to estimated net realizable value. Of the ~~$252~~$140 million in foreclosed assets at March 31, ~~2020, 71%~~2021, 56% have been in the foreclosed assets portfolio for one year or less.

As part of our actions to support customers during the COVID-19 pandemic, we have temporarily suspended certain mortgage foreclosure activities, which ~~may affect~~has affected the amount of our foreclosed ~~assets for the remainder of the year.~~assets. For additional information on loans in process of foreclosure, see Note 64 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

TROUBLED DEBT RESTRUCTURINGS (TDRs)

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

(in millions) Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019
Commercial:
Commercial and industrial $ 1,302
1,183
1,162
1,294
1,740
Real estate mortgage 697
669
598
620
681
Real estate construction 33
36
40
43
45
Lease financing 10
13
16
31
46
Total commercial TDRs 2,042
1,901
1,816
1,988
2,512
Consumer:
Real estate 1-4 family first mortgage 7,284
7,589
7,905
8,218
10,343
Real estate 1-4 family junior lien mortgage 1,356
1,407
1,457
1,550
1,604
Credit Card 527
520
504
486
473
Automobile 76
81
82
85
85
Other revolving credit and installment 172
170
167
159
156
Trial modifications 108
115
123
127
136
Total consumer TDRs 9,523
9,882
10,238
10,625
12,797
Total TDRs $ 11,565
11,783
12,054
12,613
15,309
TDRs on nonaccrual status $ 2,846
2,833
2,775
3,058
4,037
TDRs on accrual status:
Government insured/guaranteed 1,157
1,190
1,199
1,209
1,275
Non-government insured/guaranteed 7,562
7,760
8,080
8,346
9,997
Total TDRs $ 11,565
11,783
12,054
12,613
15,309

Table 22 provides information regarding the recorded investment of loans modified in TDRs. ~~The allowance for loan losses for~~ TDRs ~~was $439 million and $1.0 billion~~ at March 31, ~~2020, and~~2021, decreased, compared with December 31, ~~2019, respectively. See Note 6 (Loans~~2020, due to paydowns primarily in the commercial and ~~Related Allowance for Credit Losses) to Financial Statements in this Report for additional information regarding TDRs.~~ industrial portfolio. The amount of our TDRs at March 31, 2021, would have otherwise been higher without the TDR relief provided by the CARES Act and Interagency Statement.

Table 22:TDR Balances


($ in millions)	Mar 31, 2021		Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Commercial:
Commercial and industrial	$	1,331	1,933	2,082	1,882	1,302
Real estate mortgage	652		774	805	717	697
Real estate construction	21		15	21	20	33
Lease financing	9		9	9	10	10
Total commercial TDRs	2,013		2,731	2,917	2,629	2,042
Consumer:
Residential mortgage – first lien	9,446		9,764	9,420	7,176	7,284
Residential mortgage – junior lien	1,174		1,237	1,298	1,309	1,356
Credit card	411		458	494	510	527
Auto	156		176	156	108	76
Other consumer	67		67	190	173	172
Trial modifications	81		90	91	91	108
Total consumer TDRs	11,335		11,792	11,649	9,367	9,523
Total TDRs	$	13,348	14,523	14,566	11,996	11,565
TDRs on nonaccrual status	$	3,800	4,456	4,163	3,475	2,846
TDRs on accrual status:
Government insured/guaranteed	3,708		3,721	3,467	1,277	1,157
Non-government insured/guaranteed	5,840		6,346	6,936	7,244	7,562
Total TDRs	$	13,348	14,523	14,566	11,996	11,565


36			Wells Fargo & Company

In those situations where principal is forgiven, the entire amount of such forgiveness is immediately charged off. When we delay the timing on the repayment of a portion of principal (principal forbearance), we charge off the amount of forbearance if that amount is not considered fully collectible. The allowance for loan losses for TDRs was $509 million and $565 million at March 31, 2021, and December 31, 2020, respectively. As part of our actions to support customers during the COVID-19 pandemic, we have provided borrowers relief in the form of loan modifications. Under the CARES Act and the Interagency Statement, loan modifications related to the COVID-19 pandemic will not be classified as TDRs if they meet certain eligibility criteria. For ~~more~~additional information on the CARES Act

and the Interagency Statement, see the “Risk Management – Credit Risk Management – ~~Actions to Support Customers During the COVID-19 Pandemic”~~Credit Quality Overview – COVID-Related Lending Accommodations” section in this Report.

For ~~more~~ information on our nonaccrual policies when a restructuring is involved, see the “Risk Management – Credit Risk Management – Troubled Debt Restructurings (TDRs)” section in our ~~2019~~2020 Form 10-K.

Table 23 provides an analysis of the changes in TDRs. Loans modified more than once as a TDR are reported as ~~TDR~~ inflows only in the period they are first modified. ~~Other than resolutions such as~~In addition to foreclosures, sales and transfers to held for sale, we may remove loans ~~held for investment~~ from TDR classification, but only if they have been refinanced or restructured at market terms and qualify as a new ~~loans.~~loan.

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

Table 23: Analysis of Changes in TDRs


						Quarter ended


($ in millions)	Mar 31, 2021		Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Commercial TDRs
Balance, beginning of period	$	2,731	2,917	2,629	2,042	1,901
Inflows (1)	155		486	866	971	452
Outflows
Charge-offs	(49)		(72)	(77)	(60)	(56)
Foreclosure	(5)		—	—	—	—
Payments, sales and other (2)	(819)		(600)	(501)	(324)	(255)
Balance, end of period	2,013		2,731	2,917	2,629	2,042
Consumer TDRs
Balance, beginning of period	11,792		11,649	9,367	9,523	9,882
Inflows (1)	633		1,226	2,805	425	312
Outflows
Charge-offs	(43)		(57)	(58)	(46)	(63)
Foreclosure	(14)		(5)	(7)	(8)	(57)
Payments, sales and other (2)	(1,024)		(1,020)	(458)	(510)	(544)
Net change in trial modifications (3)	(9)		(1)	—	(17)	(7)
Balance, end of period	11,335		11,792	11,649	9,367	9,523
Total TDRs	$	13,348	14,523	14,566	11,996	11,565

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

(2)Other outflows include normal amortization/accretion of loan basis adjustments and loans transferred to held for sale. Occasionally, loans that have been refinanced or restructured at market terms qualify as new loans, which are also included as other outflows.

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

Quarter ended
(in millions) Mar 31,
2020
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Commercial TDRs
Balance, beginning of quarter $ 1,901
1,816
1,988
2,512
2,422
Inflows (1) 452
476
293
232
539
Outflows
Charge-offs (56 ) (48 ) (66 ) (37 ) (44 )
Foreclosures —
(1 ) —
—
—
Payments, sales and other (2) (255 ) (342 ) (399 ) (719 ) (405 )
Balance, end of quarter 2,042
1,901
1,816
1,988
2,512
Consumer TDRs
Balance, beginning of quarter 9,882
10,238
10,625
12,797
13,109
Inflows (1) 312
350
360
336
439
Outflows
Charge-offs (63 ) (57 ) (56 ) (61 ) (60 )
Foreclosures (57 ) (61 ) (70 ) (74 ) (86 )
Payments, sales and other (2) (544 ) (580 ) (617 ) (2,364 ) (593 )
Net change in trial modifications (3) (7 ) (8 ) (4 ) (9 ) (12 )
Balance, end of quarter 9,523
9,882
10,238
10,625
12,797
Total TDRs $ 11,565
11,783
12,054
12,613
15,309


~~(1)~~			Inflows include loans that modify, even if they resolve within the period, as well as gross advances on term loans that modified in a prior period and net advances on revolving TDRs that modified in a prior period.Wells Fargo & Company			37


~~(2)~~	Other outflows consist of normal amortization/accretion of loan basis adjustments and loans transferred to held-for-sale. Occasionally, loans that have been refinanced or restructured at market terms qualify as new loans, which are also included as other outflows.


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

Risk Management – Credit Risk Management (continued)

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING Loans 90 days or more past due are still accruing if they are (1) well-secured and in the process of collection or (2) ~~real estate 1-4 family~~residential mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due. Prior to January 1, 2020, PCI loans were excluded from loans 90 days or more past due and still accruing because they continued to earn interest income from accretable yield, independent of performance in accordance with their contractual terms. In connection with our adoption of CECL, PCI loans were reclassified as PCD loans and classified as accruing or nonaccruing based on performance.

Loans 90 days or more past due and still accruing, excluding insured/guaranteed loans, at March 31, 2020, were down $52 million, or 6%, from December 31, 2019 due to payoffs. Also, fluctuations from quarter to quarter may be influenced by seasonality.

Loans 90 days or more past due and still accruing whose repayments are predominantly insured by the FHA or guaranteed by the VA for mortgages were $6.1 billion at March 31, 2020, down from $6.4 billion at December 31, 2019.

Table 24 reflects loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed. For additional information on delinquencies by loan class, see Note 64 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

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


($ in millions)	Mar 31, 2021		Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Total:	$	6,273	7,041	11,698	9,739	7,023
Less: FHA insured/VA guaranteed (1)	5,406		6,351	11,041	8,922	6,142

Total, not government insured/guaranteed	$	867	690	657	817	881
By segment and class, not government insured/guaranteed: Commercial:
Commercial and industrial	$	55	39	61	101	24
Real estate mortgage	128		38	47	44	28
Real estate construction	86		1	—	—	1
Total commercial	269		78	108	145	53
Consumer:
Residential mortgage – first lien	85		135	97	93	128
Residential mortgage – junior lien	15		19	28	19	25
Credit card	394		365	297	418	528
Auto	46		65	50	54	69
Other consumer	58		28	77	88	78
Total consumer	598		612	549	672	828
Total, not government insured/guaranteed	$	867	690	657	817	881

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

Loans 90 days or more past due and still accruing, excluding government insured/guaranteed loans, at March 31, 2021, were up from December 31, 2020, due to an increase in delinquent commercial real estate mortgage and construction loans. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for customers who would have otherwise moved into past due status.

Loans 90 days or more past due and still accruing whose repayments are largely insured by the FHA or guaranteed by the VA for mortgages at March 31, 2021, were down from December 31, 2020, consistent with the overall decrease in residential mortgage loans.

(in millions) Mar 31, 2020
Dec 31, 2019
Sep 30, 2019
Jun 30, 2019
Mar 31, 2019
Total: $ 7,023
7,285
7,130
7,258
7,870
Less: FHA insured/VA guaranteed (1) 6,142
6,352
6,308
6,478
6,996
Total, not government insured/guaranteed $ 881
933
822
780
874
By segment and class, not government insured/guaranteed:
Commercial:

Commercial and industrial $ 24
47
6
17
42
Real estate mortgage 28
31
28
24
20
Real estate construction 1
—
—
—
5
Total commercial 53

78

34

41

67
Consumer:
Real estate 1-4 family first mortgage 128
112
100
108
117
Real estate 1-4 family junior lien mortgage 25
32
35
27
28
Credit card 528
546
491
449
502
Automobile 69
78
75
63
68
Other revolving credit and installment 78
87
87
92
92
Total consumer 828
855

788

739

807
Total, not government insured/guaranteed $ 881
933

822

780

874


~~(1)~~38			~~Represents loans whose repayments are~~ Wells Fargo & Company~~predominantly~~ ~~insured by the FHA or guaranteed by the VA.~~

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

NET CHARGE-OFFS Table 25 presents net loan charge-offs for first quarter 2021 and the previous four quarters.

~~NET LOAN CHARGE-OFFS~~

Table 25: Net Loan Charge-offs


		Quarter ended
		Mar 31, 2021			Dec 31, 2020				Sep 30, 2020				Jun 30, 2020				Mar 31, 2020
($ in millions)			Net loan charge- offs		% of avg. loans (1)		Net loan charge- offs		% of avg. loans (1)		Net loan charge- offs		% of avg. loans (1)		Net loan charge- offs		% of avg. loans (1)		Net loan charge- offs		% of avg. loans (1)





Commercial:
	Commercial and industrial		$	88	0.11	%	$	111	0.14	%	$	274	0.33	%	$	521	0.55	%	$	333	0.37	%
	Real estate mortgage		46		0.16		162		0.53		56		0.18		67		0.22		(2)		(0.01)
	Real estate construction		—		—		—		—		(2)		(0.03)		(1)		(0.02)		(16)		(0.32)
	Lease financing		15		0.40		35		0.83		28		0.66		15		0.33		9		0.19
Total commercial			149		0.13		308		0.26		356		0.29		602		0.44		324		0.25
Consumer:
	Residential mortgage – first lien		(24)		(0.04)		(3)		—		(1)		—		2		—		(3)		—
	Residential mortgage – junior lien		(19)		(0.35)		(24)		(0.39)		(14)		(0.22)		(12)		(0.17)		(5)		(0.07)
	Credit card		236		2.71		190		2.09		245		2.71		327		3.60		377		3.81
	Auto		52		0.44		51		0.43		31		0.25		106		0.88		82		0.68
	Other consumer		119		1.97		62		0.88		66		0.80		88		1.09		134		1.59
Total consumer			364		0.37		276		0.26		327		0.30		511		0.48		585		0.53
	Total		$	513	0.24	%	$	584	0.26	%	$	683	0.29	%	$	1,113	0.46	%	$	909	0.38	%

Quarter ended
Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
($ in millions)
Net loan
charge-
offs

% of
avg.
loans(1)

Net loan
charge-
offs

% of avg. loans (1)

Net loan
charge-
offs

% of avg. loans (1)

Net loan
charge-offs

% of
avg. loans (1)

Net loan
charge-offs

% of
avg.
loans (1)

Commercial:
Commercial and industrial $ 333
0.37 % $ 168
0.19 % $ 147
0.17 % $ 159
0.18 % $ 133
0.15 %
Real estate mortgage (2 ) (0.01 ) 4
0.01
(8 ) (0.02 ) 4
0.01
6
0.02
Real estate construction (16 ) (0.32 ) —
—
(8 ) (0.14 ) (2 ) (0.04 ) (2 ) (0.04 )
Lease financing 9
0.19
31
0.63
8
0.17
4
0.09
8
0.17
Total commercial 324
0.25
203
0.16
139
0.11
165
0.13
145
0.11
Consumer:
Real estate 1-4 family first mortgage (3 ) —
(3 ) —
(5 ) (0.01 ) (30 ) (0.04 ) (12 ) (0.02 )
Real estate 1-4 family junior lien mortgage (5 ) (0.07 ) (16 ) (0.20 ) (22 ) (0.28 ) (19 ) (0.24 ) (9 ) (0.10 )
Credit card 377
3.81
350
3.48
319
3.22
349
3.68
352
3.73
Automobile 82
0.68
87
0.73
76
0.65
52
0.46
91
0.82
Other revolving credit and installment 134
1.59
148
1.71
138
1.60
136
1.56
128
1.47
Total consumer 585
0.53
566
0.51
506
0.46
488
0.45
550
0.51
Total $ 909
0.38 % $ 769
0.32 % $ 645
0.27 % $ 653
0.28 % $ 695
0.30 %

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


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

~~Table 25 presents net loan charge-offs for first quarter 2020 and the previous four quarters. Net loan charge-offs~~The decrease in ~~first quarter 2020 were $909 million (0.38% of average total loans outstanding), compared with $695 million (0.30%) in first quarter 2019.~~

~~The increase in~~ commercial ~~and industrial~~ net loan charge-offs in first quarter ~~2020~~2021, compared with the prior quarter, was driven ~~by higher~~by:

•lower commercial and industrial loan losses primarily in ~~our~~the oil, gas and ~~gas portfolio.~~ pipelines industry; and

•lower commercial real estate mortgage loan losses primarily in the shopping center property type.

The increase in consumer net loan charge-offs in first quarter ~~2020~~2021, compared with the prior quarter, was driven ~~by higher~~by:

•credit card customers who exited deferral programs; and

•additional losses in other consumer loans due to the ~~credit card~~sale of a portion of our student loan portfolio.

The COVID-19 pandemic may continue to impact the credit quality of our loan ~~portfolio, including resulting~~portfolio. Although the potential impacts were considered in ~~additional~~our allowance for credit losses for loans, payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of net loan charge-offs. For ~~more~~additional information on customer accommodations in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – ~~Actions to Support Customers During the COVID-19 Pandemic”~~COVID-Related Lending Accommodations” section in this Report.

ALLOWANCE FOR CREDIT LOSSES We maintain an allowance for credit losses (ACL) for loans, which is management’s estimate of the expected credit losses in the loan portfolio and unfunded credit commitments, at the balance sheet date, excluding loans and unfunded credit commitments carried at fair value or held for sale. Additionally, we maintain an ~~allowance for credit losses~~ACL for debt securities classified as either ~~available-for-sale~~AFS or ~~held-to-maturity,~~HTM, other financial assets measured at amortized cost, net investments in leases, and other off-balance sheet credit exposures.

We apply a disciplined process and methodology to establish our ~~allowance for credit losses~~ACL each quarter. The process for establishing the ~~allowance for credit losses~~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. 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 ~~this Report.~~our 2020 Form 10-K. For additional information on our ~~allowance for credit losses~~ACL for loans, see Note 64 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report, and for additional information on our ~~allowance for credit losses~~ACL for debt securities, see the “Balance Sheet Analysis – Available-For-Sale and Held-To-Maturity Debt Securities” section and Note 53 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report.


			Wells Fargo & Company			39

Risk Management – Credit Risk Management (continued)

Table 26 presents the allocation of the ~~allowance for credit losses~~ACL for loans by loan portfolio segment and class for the most recent quarter ~~end~~ and last four year ends. ~~The detail of the changes in the allowance for credit losses for loans by portfolio segment~~

~~(including charge-offs and recoveries by loan class) is included in Note 6 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.~~

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


	Mar 31, 2021				Dec 31, 2020				Dec 31, 2019				Dec 31, 2018				Dec 31, 2017
($ in millions)	ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans		ACL		Loans as % of total loans
Commercial:
Commercial and industrial	$	6,512	37	%	$	7,230	36	%	$	3,600	37	%	$	3,628	37	%	$	3,752	35	%
Real estate mortgage	3,156		14		3,167		14		1,236		13		1,282		13		1,374		13
Real estate construction	410		2		410		2		1,079		2		1,200		2		1,238		3
Lease financing	604		2		709		2		330		2		307		2		268		2
Total commercial	10,682		55		11,516		54		6,245		54		6,417		54		6,632		53
Consumer:
Residential mortgage – first lien	1,202		30		1,600		31		692		30		750		30		1,085		30
Residential mortgage – junior lien	428		2		653		3		247		3		431		3		608		4
Credit card	4,082		4		4,082		4		2,252		4		2,064		4		1,944		4
Auto	1,108		6		1,230		5		459		5		475		5		1,039		5
Other consumer	541		3		632		3		561		4		570		4		652		4
Total consumer	7,361		45		8,197		46		4,211		46		4,290		46		5,328		47
Total	$	18,043	100	%	$	19,713	100	%	$	10,456	100	%	$	10,707	100	%	$	11,960	100	%


Components:
Allowance for loan losses	$	16,928			18,516				9,551				9,775				11,004
Allowance for unfunded credit commitments	1,115				1,197				905				932				956
Allowance for credit losses	$	18,043			19,713				10,456				10,707				11,960
Ratio of allowance for loan losses to total net loan charge-offs (2)	8.13x				5.63				3.46				3.56				3.76
Allowance for loan losses as a percentage of total loans	1.96			%			2.09				0.99				1.03				1.15
Allowance for credit losses for loans as a percentage of total loans	2.09						2.22				1.09				1.12				1.25
Allowance for credit losses for loans as a percentage of total nonaccrual loans	224						226				196				165				156

(1)Disclosure is not comparative due to our adoption of Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses ~~(ACL)~~(Topic 326): Measurement of Credit Losses on Financial Instruments (CECL) on January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

(2)Total net loan charge-offs are annualized for ~~Loans(1)~~the quarter ended March 31, 2021.

Mar 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
($ in millions) ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

ACL

Loans
as %
of total
loans

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

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


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


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

The ~~ratio of~~ratios for the allowance for ~~credit~~loan losses and the ACL for loans ~~to total nonaccrual loans~~presented in Table 26 may fluctuate ~~significantly~~ from period to period due to such factors as the mix of loan types in the portfolio, borrower credit strength, and the value and marketability of collateral.

The ~~allowance for credit losses~~ACL for loans ~~increased $1.6~~decreased $1.7 billion, or ~~15%~~8%, from December 31, ~~2019, driven by a $2.9 billion increase~~2020, reflecting continued improvement in the allowance for credit losses for loans in first quarter 2020, partially offset by a $1.3 billion decline as a result of adopting CECL. The increase in the allowance for credit losses for loans reflected forecasted credit deterioration due to the COVID-19 pandemic and credit weakness in the oil and gas portfolio due to the recent sharp declines in oil prices.economic environment. Total provision for credit losses for loans was ~~$3.8~~$(1.1) billion in first quarter ~~2020,~~2021, compared with ~~$845 million~~$3.8 billion in ~~first quarter 2019. The increase in the provision for credit losses for loans in first quarter 2020, compared with~~ the same period a year ago, ~~reflected an~~

~~increase~~reflecting lower net charge-offs and improvement in the ~~allowance for credit losses~~economic environment. The detail of the changes in the ACL for loans ~~due~~by portfolio segment (including charge-offs and recoveries by loan class) is included in Note 4 (Loans and Related Allowance for Credit Losses) to ~~forecasted credit deterioration as a result~~Financial Statements in this Report.

We consider multiple economic scenarios to develop our estimate of the ~~impact~~ACL for loans. The scenarios generally include a base scenario, along with an optimistic (upside) and one or more pessimistic (downside) scenarios. Our estimate of the ~~COVID-19 pandemic~~ACL for loans at March 31, 2021, was based on a weighting of the base and ~~higher net loan charge-offs largely~~a downside economic scenario of 50% and 50%, respectively, with no weighting applied to an upside scenario. The base scenario assumed economic improvements in the ~~oil and gas portfolio due~~near term with a return to ~~the recent sharp declines in oil prices.~~

In determining our allowance for credit losses for loans in first quarter 2020, our analysis considered multiple factors to evaluate the rapidly evolving impacts related to the COVID-19 pandemic. We evaluated a range of expected losses based on economic forecasts that projected both a limited and a severe downturn in economic conditions. In addition, we reviewed several alternative forecasts that included relatively longer yet less severe downturns, as well as relatively shorter yet deeper downturns followed by a significant reboundnormalized levels near the end of ~~2020.~~2022. The downside scenario assumed more sustained adverse economic impacts resulting from the COVID-19 pandemic, compared with the base scenario. The downside scenario assumed U.S. real GDP growth

rates increasing in the near term followed by a decline with a return to normalized levels after 2023 and a sustained elevation in the U.S. unemployment rate until late 2022. We ~~also assessed~~considered within each scenario our expectations for the impact of ~~the federal government’s recent economic stimulus programs coupled with expectations for~~ customer accommodation activity, ~~of up to six months. Our~~

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

~~forecasted view reflected a sustained recession through 2020 with a sustained increase in unemployment and decrease in gross domestic product (GDP) for the rest of the year. We also considered~~as well as the estimated impact on certain industries that we ~~expect~~consider to be directly and most adversely affected by the COVID-19 ~~pandemic,~~pandemic.

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

The forecasted key economic variables used in our estimate of the ACL for ~~additional draws~~loans at March 31, 2021, and December 31, 2020, are presented in Table 27.


40			Wells Fargo & Company

Table 27:ForecastedKeyEconomic Variables


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


Dec 31, 2020	8.1	7.1	6.2
Mar 31, 2021	6.2	6.5	7.0

U.S. real GDP (3):


Dec 31, 2020	5.5	4.5	4.0
Mar 31, 2020	3.0	(1.1)	(0.6)

Home price index (4):


Dec 31, 2020	1.7	(0.2)	2.5
Mar 31, 2021	9.2	1.0	(5.2)

Commercial real estate asset prices (4):


Dec 31, 2020	(9.2)	(9.8)	(5.3)
Mar 31, 2021	2.3	(10.0)	(11.5)

(1)Represents a weighting of the forecasted economic variable inputs based on ~~commercial loan commitments.~~a weighting of 50% for the base and 50% for a downside scenario at both March 31, 2021, and December 31, 2020.

(2)Quarterly average.

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

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

Future amounts of the ~~allowance for credit losses~~ACL for loans will be based on a variety of factors, including loan balance changes, portfolio credit quality and mix changes, and changes in general economic conditions and expectations (including for unemployment and GDP), among other factors. ~~Based on~~We observed economic ~~conditions at the end of~~improvements in first quarter ~~2020, it was difficult~~2021; however, there remained significant uncertainty related to ~~estimate~~ the length and severity of the economic ~~downturn that may result from~~impact of the COVID-19 pandemic and the impact of other factors that may influence the level of eventual losses and corresponding requirements for future amounts of the ~~allowance for credit losses,~~ACL, including the impact of economic stimulus programs and customer accommodation activity. The ~~ultimate impact of the~~ COVID-19 pandemic will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic. The pandemic could continue to ~~result in~~impact the recognition of credit losses in our loan portfolios and may result in increases in our ~~allowance for credit losses,~~ACL, particularly if the impact on the economy worsens.

We believe the ~~allowance for credit losses~~ACL for loans of ~~$12.0~~$18.0 billion at March 31, ~~2020,~~2021, was appropriate to cover expected credit losses, including unfunded credit commitments, at that date. The entire allowance is available to absorb ~~expected~~ credit losses from the total loan portfolio. The ~~allowance for credit losses~~ACL for loans is subject to change and reflects existing factors as of the date of determination, including economic or market conditions and ongoing internal and external examination processes. Due to the sensitivity of the ~~allowance for credit losses~~ACL for loans to changes in the economic and business environment, it is possible that we will incur incremental credit losses not anticipated as of the balance sheet date. Our process for determining the 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 2020 Form 10-K.

LIABILITY FOR MORTGAGE LOAN REPURCHASE LOSSESFor information on our repurchase liability, see the “Risk Management – Credit Risk Management – Liability For Mortgage Loan Repurchase Losses” section in our ~~2019~~2020 Form 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 mortgage loans included in GSE-guaranteed mortgage securitizations, GNMA-guaranteed mortgage securitizations of FHA-insured/VA-guaranteed mortgages and

private label mortgage securitizations, as well as for unsecuritized loans owned by institutional investors. In connection with our servicing activities, we could become subject to consent orders and settlement agreements with federal and state regulators for alleged servicing issues and practices. In general, these can require us to provide customers with loan modification relief, refinancing relief, and foreclosure prevention and assistance, as well as can impose certain monetary penalties on us.

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

~~net servicing income.~~remained elevated. The amount ~~and timing of reimbursement~~ of these advances ~~varies~~may continue to increase if additional payment deferrals are provided. Payment deferrals also delay the collection of contractually specified servicing fees, resulting in lower net servicing income.

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

Repurchased loans that regain current status or are otherwise modified in accordance with applicable servicing ~~agreements~~guidelines may be included in ~~place.~~future GNMA loan securitization pools. However, in accordance with guidance issued by GNMA, certain loans repurchased after June 30, 2020, are ineligible for inclusion in future GNMA loan securitization pools until the borrower has timely made six consecutive payments. This requirement may delay our ability to resell loans into the securitization market.

For additional information about the risks related to our servicing activities, see the “Risk Management – Credit Risk Management – Risks Relating to Servicing Activities” section in our ~~2019~~2020 Form 10-K. For additional information on mortgage banking activities, see Note 9 (Mortgage Banking Activities) to Financial Statements in this Report.

Asset/Liability Management

Asset/liability management involves evaluating, monitoring and managing interest rate risk, market risk, liquidity and funding. ~~Primary~~For information on our oversight of ~~interest rate risk and market risk resides with~~asset/liability risks, see the ~~Finance Committee of~~“Risk Management – Asset/Liability Management” section in our Board, 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 Committee (Corporate ALCO), which consists of management from finance, risk and business groups, to oversee these risks and provide periodic reports to the Board’s Finance Committee and Risk Committee as appropriate. As discussed in more detail for market risk activities below, we employ separate management level oversight specific to market risk.2020 Form 10-K.

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

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

•assets and liabilities may reprice at the same time but by different amounts (for example, when the general level of interest rates is rising, we may increase rates paid on checking and savings deposit accounts by an amount that is less than the general rise 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 increase sharply, MBS held in the debt securities portfolio may pay down at a slower rate than anticipated, which could impact portfolio ~~income);~~income; or


			Wells Fargo & Company			41

Risk Management – Asset/Liability Management (continued)

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

Currently, our profile is such that we project net interest income will benefit from higher interest rates as our assets would reprice faster and to a greater degree than our liabilities, while in the ~~value~~case of ~~the pension liability~~lower interest rates, our assets would reprice downward and ~~other items affecting earnings.~~

to a greater degree than our liabilities resulting in lower net interest income.

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

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

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

Our most recent simulations, as presented in Table 28, estimate net interest income sensitivity over the next ~~two years under a range of~~12 months using instantaneous movements across the yield curve with both lower and higher interest ~~rates. Measured impacts from standardized ramps (gradual changes) and shocks (instantaneous changes) are summarized in Table 27, indicating net interest income sensitivity~~rates relative to ~~the Company’s~~our base ~~net interest income plan. Ramp~~scenario. Steeper and flatter scenarios ~~assume interest rates move gradually~~measure non-parallel changes in ~~parallel across~~ the yield curve, ~~relative to the base scenario in year one,~~with long-term interest rates defined as all tenors three years and ~~the full amount of the ramp is held~~longer (e.g., 10-year U.S. Treasury securities) and short-term interest rates defined as ~~a constant differential to the base scenario in year two.~~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 ~~27:~~28:

•Simulations are dynamic and reflect anticipated ~~growth across~~changes to our assets and liabilities.

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

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

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

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

Table ~~27:~~28: Net Interest Income Sensitivity ~~Over Next Two-Year Horizon Relative to Base Expectation~~

Lower Rates (1) 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 $ (1.3) - (0.8) 4.7 - 5.2 4.0 - 4.5
Key Rates at Horizon End
Fed Funds Target 0.27 % 0.00 1.27 2.27
10-year CMT (2) 0.81 0.00 1.81 2.81
Second Year of Forecasting Horizon
Net Interest Income Sensitivity to Base Scenario $ (3.5) - (3.0) 6.8 - 7.3 10.1 - 10.6
Key Rates at Horizon End
Fed Funds Target 0.42 % 0.00 1.42 2.42
10-year CMT (2) 0.89 0.00 1.89 2.89


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


~~(2)~~	~~U.S. Constant Maturity Treasury Rate~~


($ in billions)	Mar 31, 2021		Dec 31, 2020
Parallel Shift:
+100 bps shift in interest rates	$	6.8	6.7
-100 bps shift in interest rates	(3.0)		(2.7)

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

Flatter yield curve:
+50 bps shift in short-term interest rates	2.4		2.2
-50 bps shift in long-term interest rates	(1.3)		(1.4)

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

– Asset/Liability Management –

Mortgage Banking Interest Rate and Market Risk” section in ~~this Report~~our 2020 Form 10-K for ~~more~~additional information.

Interest rate sensitive noninterest income also results from changes in earnings credit for noninterest-bearing deposits that reduce treasury management deposit service fees. Additionally, for the trading portfolio, For additional information on our trading assets ~~are (before the effects of certain economic hedges) generally less sensitive~~and liabilities, see Note 2 (Trading Activities) to ~~changes~~Financial Statements in interest rates than the related funding liabilities. As a result, net interest income from the trading portfolio contracts and expands as interest rates rise and fall, respectively. The impact to net interest income does not include the fair value changes of trading securities and loans, which, along with the effects of related economic hedges, are recorded in noninterest income.this Report.

We use the 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 – Available-for-Sale~~Note 1 (Summary of Significant Accounting Policies), Note 3 (Available-for-Sale and Held-to-Maturity Debt ~~Securities” section in this Report for more information on the use of the available-for-sale~~Securities) and held-to-maturity securities portfolios. The notional or contractual amount, credit risk amount and fair value of the derivatives used to hedge our interest rate risk exposures as of March 31, 2020, and December 31, 2019, are presented in Note 1514 (Derivatives) to Financial Statements in ~~this Report. We use derivatives~~our 2020 Form 10-K for ~~asset/liability management in two main ways:~~additional information.

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

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

MORTGAGE BANKING INTEREST RATE AND MARKET RISK We originate, fund and service mortgage loans, which subjects us to various risks, including credit, liquidity and interest rate risks. For ~~more~~additional information on mortgage banking interest rate and market risk, see Note 9 (Mortgage Banking Activities) to Financial Statements in this Report and the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section in our ~~2019~~2020 Form 10-K.

Hedging the various sources of interest rate risk in mortgage banking is a complex process that requires sophisticated modeling and constant monitoring. There are several potential risks to earnings from mortgage banking related to origination volumes and mix, valuation of MSRs and associated hedging results, the relationship and degree of volatility between short-term and long-term interest rates, and changes in servicing and foreclosures costs. While ~~our hedging activities are designed~~we attempt to balance our mortgage banking interest rate and market risks, the financial instruments we use may not perfectly correlate with the values and income being hedged. For example, the change in the value of ARM production held for sale from changes in mortgage interest rates may or may not be fully offset by index-based financial instruments used as economic hedges for such ARMs. Hedge results may also be impacted as the overall level of hedges changes as interest rates change, or as there are other changes in the market for mortgage forwards that may affect the implied carry on the MSRs.

The total carrying value of our residential and commercial MSRs was $9.5 billion at March 31, 2020, and $12.9 billion at December 31, 2019. The weighted-average note rate on our portfolio of loans serviced for others was 4.20% at March 31, 2020, and 4.25% at December 31, 2019. The carrying value of our total MSRs represented 0.60% and 0.79% of mortgage loans serviced for others at March 31, 2020 and December 31, 2019, respectively.

MARKET RISKMarket 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, and the risk of possible loss due to counterparty exposure. This applies to implied volatility risk, basis

~~Asset/Liability Management (continued~~)

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

~~The Board’s Finance Committee has primary~~ For information on our oversight ~~responsibility for~~of market risk, ~~and oversees~~see the Company’s market risk exposure and market risk management strategies. In addition, the Board’s Risk Committee has certain oversight responsibilities with respect to market risk, including adjusting the Company’s market risk appetite with input from the Finance Committee. The Finance Committee also reports key market risk matters to the Risk Committee.“Risk Management – Asset/Liability Management – Market Risk” section in our 2020 Form 10-K.

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

MARKET RISK – TRADING ACTIVITIESWe engage in trading activities to accommodate the 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 ~~Wholesale Banking~~CIB businesses and to a lesser extent other ~~divisions~~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 ~~income statement.~~consolidated statement of income. Changes in fair

value of the financial instruments used in our trading activities are reflected in net gains onfrom trading ~~activities, a component of noninterest income in our income statement.~~activities. For ~~more~~additional information on the financial instruments used in our trading activities and the income from these trading activities, see Note 42 (Trading Activities) to Financial Statements in this Report.


42			Wells Fargo & Company

Value-at-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 ~~including information regarding~~on our monitoring activities, sensitivity analysis and stress testing, see the “Risk Management – Asset/Liability Management – Market Risk – Trading Activities” section in our ~~2019~~2020 Form 10-K.

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

Company calculates Trading VaR for risk management purposes to establish line of business and Company-wide risk limits.

Trading VaR is calculated based on all trading positions on our consolidated balance sheet.

Table 2829 shows the Company’s Trading General VaR by risk category. As presented in Table 28, average Company Trading General VaR was $33 million for the quarter ended March 31, 2020, compared with $31 million for the quarter ended December 31, 2019, and $15 million for the quarter ended March 31, 2019. The increase in average ~~as well as period end~~ Company Trading General VaR for the quarter ended March 31, ~~2020,~~2021, compared with the same period a year ago, was driven by a greater presence of market volatility in the 12-month historical lookback window used to calculate average Company Trading General VaR for the quarter ended March 31, ~~2019,~~2021. Market volatility was driven by ~~recent market volatility,~~the COVID-19 pandemic, in particular, changes in interest rate curves and a significant widening of credit ~~spreads entering the 12-month historical lookback window used to calculate VaR.~~spreads.

Table ~~28:~~29: Trading 1-Day 99% General VaR by Risk Category


			Quarter ended
	March 31, 2021					December 31, 2020				March 31, 2020
(in millions)	Period end		Average	Low	High	Period end	Average	Low	High	Period end	Average	Low	High
Company Trading General VaR Risk Categories
Credit	$	22	94	21	112	106	96	80	121	62	28	15	75
Interest rate	36		73	26	120	81	122	81	241	84	32	5	198
Equity	35		36	28	72	32	21	14	35	6	7	4	10
Commodity	11		5	2	12	3	4	2	6	2	2	1	6
Foreign exchange	1		1	1	1	1	1	1	1	2	1	1	6
Diversification benefit (1)	(64)		(111)			(126)	(93)			(63)	(37)
Company Trading General VaR	$	41	98			97	151			93	33

(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.

Quarter ended
March 31, 2020 December 31, 2019 March 31, 2019
(in millions)
Period
end

Average
Low
High
Period
end
Average
Low
High

Period
end

Average
Low
High
Company Trading General VaR Risk Categories
Credit $ 62
28
15
75
15
18
15
26
15
15
11
19
Interest rate 84
32
5
198
14
21
9
45
42
34
22
44
Equity 6
7
4
10
5
5
4
8
5
5
4
7
Commodity 2
2
1
6
2
2
1
4
2
2
1
4
Foreign exchange 2
1
1
6
1
1
1
1
1
1
1
1
Diversification benefit (1) (63 ) (37 )

(13 ) (16 ) (46 ) (42 )
Company Trading General VaR $ 93
33
24
31
19
15

~~(1)~~

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

MARKET RISK – EQUITY SECURITIESWe are directly and indirectly affected by changes in the equity markets. We make and manage direct 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 other-than-temporary impairment

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

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

apportioned to member banks of Visa at the time of the IPO. To manage our exposure to Visa and realize the value of the appreciated Visa shares, we incrementally sold these shares through a series of sales, 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 ~~Note 14 (Legal Actions) to Financial Statements in this Report.~~our 2020 Form 10-K.

~~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 that include investments relating to our venture capital activities. ~~We manage these marketable equity securities within capital risk limits approved by management and the Board and monitored by Corporate ALCO and the Market Risk Committee.~~ The fair value changes in these marketable equity securities are recognized in net income. For ~~more~~additional information, see Note 86 (Equity Securities) to Financial Statements in this Report.

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

LIQUIDITY RISK AND FUNDING In the ordinary course of business, we enter into contractual obligations that may require future cash payments, including funding for customer loan requests, customer deposit maturities and withdrawals, debt service, leases for premises and equipment, and other cash commitments. The objective of effective liquidity management is to ensure that we can meet ~~customer loan requests, customer deposit maturities/withdrawals~~our contractual obligations and other cash commitments efficiently under both normal operating conditions and under periods of Wells Fargo-specific and/or market stress. To help achieve this objective, the Board establishes liquidity guidelines that require sufficient asset-based liquidity to cover potential funding requirements and to avoid over-dependence on volatile, less reliable funding markets. These guidelines are monitored on a monthly basis by the Corporate ALCO and on a quarterly basis by the Board. These guidelines are established and monitored forwe monitor both the consolidated company and ~~for~~ the Parent on a stand-alone basis to ensure that the Parent is a source of strength for its regulated,

deposit-taking banking subsidiaries. The Parent acts as a source of funding for the Company through the issuance of long-term debt and equity, and WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), provides funding support for the ongoing operational requirements of the Parent and certain of its direct and indirect subsidiaries. For additional information on liquidity risk and funding management, see the “Risk Management – Liquidity Risk and Funding” section in our 2020 Form 10-K. For additional information on the IHC, see the “Regulatory Matters – ‘Living Will’ Requirements and Related Matters” section in our 2020 Form 10-K.

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

outflows during a 30-day stress period. The ~~rule is applicable~~LCR applies to the Company on a consolidated basis and to our insured depository institutions (IDIs) with total assets ~~greater than~~of $10 ~~billion.~~billion or more. In addition, rules issued by the FRB impose enhanced liquidity risk management standards on large ~~bank holding companies (BHC)~~BHCs, such as Wells Fargo.

The FRB, OCC and FDIC have ~~proposed~~also issued a rule ~~that would implement~~implementing a stable funding requirement, known as the net stable funding 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 will


			Wells Fargo & Company			43

Risk Management – Asset/Liability Management (continued)

become effective on July 1, 2021, and applies to the Company on a consolidated basis and to our IDIs with total assets of $10 billion or more. Based on our liquidity profile at March 31, 2021, we expect to be compliant with the NSFR requirement.

Liquidity Coverage Ratio As of March 31, ~~2020,~~2021, the consolidated Company, ~~and~~ Wells Fargo Bank, N.A. ~~were above~~, and Wells Fargo

National Bank West exceeded the minimum LCR requirement of 100%, which is calculated as HQLA divided by projected net cash outflows, as each is defined under the LCR rule. Table 2930 presents the Company’s quarterly average values for the daily-calculated LCR and its components calculated pursuant to the LCR rule requirements.

Table ~~29:~~ 30:Liquidity Coverage Ratio


	Average for Quarter ended
(in millions, except ratio)	Mar 31, 2021			Dec 31, 2020	Mar 31, 2020
HQLA (1):
Eligible cash	$	216,403		213,937	118,758
Eligible securities (2)	186,270			201,060	263,192
Total HQLA	402,673			414,997	381,950
Projected net cash outflows	316,116			312,697	315,980
LCR	127		%	133	121

(1)Excludes excess HQLA at certain subsidiaries that is not transferable to other Wells Fargo entities.

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

(in millions, except ratio) Average for Quarter ended March 31, 2020
HQLA (1)(2) $ 381,950
Projected net cash outflows 315,980
LCR 121 %


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


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

Liquidity Sources We maintain liquidity in the form of cash, cash equivalents and unencumbered high-quality, liquid debt securities. These assets make up our primary sources of ~~liquidity which are presented in Table 30.~~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 IDIs required under the LCR rule. Our primary sources of liquidity are presented in Table 31, which also includes encumbered securities that are not included as available HQLA in the calculation of the LCR.

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

Table ~~30:~~31: Primary Sources of Liquidity


	March 31, 2021				December 31, 2020
(in millions)	Total		Encumbered	Unencumbered	Total	Encumbered	Unencumbered
Interest-earning deposits with banks	$	258,394	—	258,394	236,376	—	236,376
Debt securities of U.S. Treasury and federal agencies	65,811		3,576	62,235	70,756	5,370	65,386
Mortgage-backed securities of federal agencies (1)	262,835		46,145	216,690	258,668	49,156	209,512
Total	$	587,040	49,721	537,319	565,800	54,526	511,274

(1)Included in encumbered securities at March 31, 2021, were securities with a fair value of $422 million, which were purchased in March 2021, but settled in April 2021.

March 31, 2020 December 31, 2019
(in millions) Total
Encumbered
Unencumbered
Total
Encumbered
Unencumbered
Interest-earning deposits with banks $ 128,071
—
128,071
119,493
—
119,493
Debt securities of U.S. Treasury and federal agencies 61,727
3,785
57,942
61,099
3,107
57,992
Mortgage-backed securities of federal agencies (1) 271,644
40,769
230,875
258,589
41,135
217,454
Total $ 461,442
44,554
416,888
439,181
44,242
394,939


~~(1)~~44			~~Included in encumbered securities at~~ Wells Fargo & Company~~March 31, 2020, were securities with a fair value of~~ ~~$1.7 billion, which were purchased in~~ ~~March 2020, but settled in April 2020.~~

~~Asset/Liability Management (continued~~)

In addition to our primary sources of liquidity shown in

Table ~~30,~~31, liquidity is also available through the sale or financing of other debt securities including trading and/or ~~available-for-sale~~AFS debt securities, as well as through the sale, securitization or financing of loans, to the extent such debt securities and loans are not encumbered. As of March 31, ~~2020,~~2021, we also maintained approximately ~~$273.5~~$227.3 billion of available borrowing capacity at various Federal Home Loan Banks and the Federal Reserve Discount Window.

Deposits have historically provided a sizable source of relatively low-cost funds. Deposits were ~~136%~~167% and 158% of total loans at March 31, ~~2020,~~2021, and ~~137% at~~ December 31, ~~2019.~~

2020, respectively. Additional funding is provided by long-term debt and short-term borrowings. Table 3132 shows selected information for short-term borrowings, which generally mature in less than 30 days. We pledge certain financial instruments that we own to collateralize repurchase agreements and other securities financings. For additional information, see the “Pledged Assets” section of

Note 12 (Pledged Assets and Collateral) to Financial Statements in this Report.

Table ~~31:~~32: Short-Term Borrowings


	Quarter ended
(in millions)	Mar 31, 2021		Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Balance, period end
Federal funds purchased and securities sold under agreements to repurchase	$	46,871	46,362	44,055	49,659	79,036

Other short-term borrowings	12,049		12,637	11,169	10,826	13,253
Total	$	58,920	58,999	55,224	60,485	92,289
Average daily balance for period
Federal funds purchased and securities sold under agreements to repurchase	$	47,358	46,069	46,504	52,868	90,722

Other short-term borrowings	11,724		11,235	10,788	10,667	12,255
Total	$	59,082	57,304	57,292	63,535	102,977
Maximum month-end balance for period
Federal funds purchased and securities sold under agreements to repurchase (1)	$	47,050	46,879	49,148	50,397	91,121

Other short-term borrowings (2)	12,049		12,637	11,169	11,220	13,253

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

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

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


~~(1)~~			~~Highest month-end balance in each of the last five quarters was in February 2020, and September, May and January 2019.~~Wells Fargo & Company			45


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

Risk Management – Asset/Liability Management (continued)

Long-Term Debt We access domestic and international capital markets for long-term funding (generally greater than one year) through issuances of registered debt securities, private placements and asset-backed secured funding. We issue long-term debt in a variety of maturities and currencies to achieve cost-efficient funding and to maintain an appropriate maturity profile. Proceeds from securities issued were used for general corporate purposes, and, unless otherwise specified in the applicable prospectus or prospectus supplement, we expect the

proceeds from securities issued in the future will be used for the

same purposes. Long-term debt of $237.3 billion at March 31, 2020, increased $9.2 billion from December 31, 2019. We issued $18.9 billion of long-term debt in first quarter 2020 and $11.8 billion in April and May 2020. Depending on market conditions, we may purchase our outstanding debt securities from time to time in privately negotiated or open market transactions, by tender offer, or otherwise. We issued $110 million of long-term debt in first quarter 2021. Table 3233 provides the aggregate carrying value of long-term debt maturities (based on contractual payment dates) for the remainder of ~~2020~~2021 and the following years thereafter, as of March 31, ~~2020.~~2021.

Table ~~32:~~33: Maturity of Long-Term Debt

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


	March 31, 2021
(in millions)	Remaining 2021		2022	2023	2024	2025	Thereafter	Total
Wells Fargo & Company (Parent Only)
Senior notes	$	11,046	13,867	8,410	12,248	14,196	69,946	129,713
Subordinated notes	—		—	3,724	757	1,114	21,517	27,112
Junior subordinated notes	—		—	—	—	—	1,356	1,356
Total long-term debt – Parent	$	11,046	13,867	12,134	13,005	15,310	92,819	158,181
Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior notes	$	3,303	4,859	2,879	3	186	230	11,460
Subordinated notes	—		—	1,100	—	169	4,032	5,301
Junior subordinated notes	—		—	—	—	—	378	378
Securitizations and other bank debt	1,905		1,304	748	228	128	1,484	5,797
Total long-term debt – Bank	$	5,208	6,163	4,727	231	483	6,124	22,936
Other consolidated subsidiaries
Senior notes	$	543	192	515	112	436	365	2,163

Securitizations and other bank debt	—		—	—	—	—	32	32
Total long-term debt – Other consolidated subsidiaries	$	543	192	515	112	436	397	2,195
Total long-term debt	$	16,797	20,222	17,376	13,348	16,229	99,340	183,312

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.

There were no actions undertaken by the ~~ratings~~rating agencies with regard to our credit ratings during first quarter 2020. On April 22, 2020, Fitch Ratings, Inc. (Fitch) affirmed the Company’s long-term and short-term issuer default ratings and revised the rating outlook to negative from stable as Fitch expects significant2021.

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

See the “Risk Factors” section in our ~~2019~~2020 Form 10-K for additional information regarding our credit ratings and the potential impact a credit rating downgrade would have on our liquidity and operations, as well as Note 1514 (Derivatives) to Financial Statements in this Report for information regarding additional collateral and funding obligations required for certain 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 March 31, ~~2020,~~2021, are presented in Table ~~33.~~34.

Table ~~33:~~34: Credit Ratings as of March 31, ~~2020~~2021

Wells Fargo & Company

Wells Fargo Bank, N.A.

Senior debt

Short-term

borrowings

Long-term

deposits

Short-term

borrowings

Moody’s

P-1

Aa1

P-1

S&P Global Ratings

A-BBB+

A-2

A+

A-1

Fitch Ratings, Inc.

A+

F1+

DBRS Morningstar

AA (low)

R-1 (middle)

R-1 (high)

FEDERAL HOME LOAN BANK MEMBERSHIP The Federal Home Loan Banks (the FHLBs) are a group of cooperatives that lending institutions use to finance housing and economic development in local communities. We are a member of the FHLBs based in Dallas, Des Moines and San Francisco. ~~Each member of the FHLBs is~~FHLB members are required to maintain a minimum investment in capital stock of the applicable FHLB. The board of directors of each FHLB can

increase the minimum investment requirements in the event it has concluded that additional capital is required to allow it to meet its own regulatory capital requirements. Any increase in the minimum investment requirements outside of specified ranges requires the approval of the Federal Housing Finance Agency. Because the extent of any obligation to increase our investment in any of the FHLBs depends entirely upon the occurrence of a


46			Wells Fargo & Company

future event, ~~potential future payments to the FHLBs are not determinable.~~

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

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

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

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

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

FHLBs is not determinable.

~~Capital Management (continued~~)



Capital Management

We have an active program for managing capital through a comprehensive process for assessing the Company’s overall capital adequacy. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, and to meet both regulatory and market expectations. We primarily fund our ~~working~~ capital needs through the retention of earnings net of both dividends and share repurchases, as well as through the issuance of preferred stock and ~~long~~long- and short-term debt. Retained earnings ~~decreased $1.4~~at March 31, 2021, increased $3.9 billion from December 31, ~~2019,~~2020, predominantly as a result of $4.7 billion of Wells Fargo net income, partially offset by $755 million of common and preferred stock ~~dividends of $2.5 billion, partially offset by $653 million of Wells Fargo net income.~~dividends. During first quarter ~~2020,~~2021, we issued ~~$1.7 billion~~$724 million of common stock, substantially all of which was issued in connection with employee compensation and benefits, excluding conversions of preferred shares. During first quarter ~~2020,~~2021, we repurchased ~~$3.4 billion~~17 million shares of common ~~stock. The amount~~stock at a cost of our repurchases are subject to various factors as discussed in the “Securities Repurchases” section below. On March 15, 2020, we suspended our share repurchase activities for the remainder of the first quarter and for second quarter 2020.$596 million. For additional information about ~~share repurchases,~~capital planning, including the FRB’s recent announcement on capital distributions, see ~~Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.~~the “Capital Planning and Stress Testing” section below.

In ~~January 2020,~~first quarter 2021, we issued ~~$2.0~~$4.6 billion of ~~our Preferred Stock, Series Z. In March 2020, we~~preferred stock and redeemed ~~the remaining $1.8~~$4.5 billion of ~~our Preferred Stock, Series K, and redeemed $669 million of our Preferred Stock, Series T.~~preferred stock. For ~~more~~additional information, see Note 1716 (Preferred Stock) to Financial Statements in this Report.

Regulatory Capital ~~Guidelines~~Requirements

The Company and each of our 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 rules issued by federal banking regulators to implement Basel III capital requirements for U.S. banking organizations. The ~~federal banking regulators’ capital rules, among other things, required on a fully phased-in basis as of March 31, 2020:~~

a minimum Common Equity Tier 1 (CET1) ratio of 9.00%, comprised of a 4.50% minimum requirement plus a capital conservation buffer of 2.50% and for us, as a global systemically important bank (G-SIB), a capital surcharge of 2.00%;

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

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

a potential countercyclical buffer of up to 2.50% to be added to the minimum capital ratios, which could be imposed by regulators at their discretion if it is determined that a period of excessive credit growth is contributing to an increase in systemic risk; and

~~a minimum tier 1 leverage ratio of 4.00%.~~

The Basel III capital requirements for calculating CET1 and tier 1 capital, along with risk-weighted assets (RWAs), are fully phased-in. However, the requirements for determining tier 2 and total capital are still in accordance with Transition Requirements and are scheduled to be fully phased-in by the end of 2021. The Basel III capital rules contain two frameworks for calculating capital requirements, a Standardized Approach and an Advanced Approach applicable to certain institutions, including Wells Fargo. ~~Accordingly, in the assessment of our~~Our capital adequacy ~~we must report~~is assessed based on the lower of our ~~CET1, tier 1 and total~~risk-based capital ratios calculated under the two approaches. The Company is required to satisfy the risk-based capital ratio requirements to avoid restrictions on capital distributions and discretionary bonus payments. Table 35 and Table 36 present the risk-based capital requirements applicable to the Company on a fully phased-in basis under the Standardized Approach and ~~under~~Advanced Approach, respectively, as of March 31, 2021.

Table 35: Risk-Based Capital Requirements – Standardized Approach

Table 36: Risk-Based Capital Requirements – Advanced Approach

In addition to the ~~Advanced Approach.~~

~~Effective October 1, 2020,~~risk-based capital requirements described in Table 35 and Table 36, if the FRB determines that a ~~stress capital~~period of excessive credit growth is contributing to an increase in systemic risk, a countercyclical buffer ~~will~~of up to 2.50% could be added to the ~~minimum~~risk-based capital ratio ~~requirements.~~ requirements under federal banking regulations.

The capital conservation buffer is applicable to certain institutions, including Wells Fargo, under the Advanced Approach and is intended to absorb losses during times of economic or financial stress.

The stress capital buffer ~~will be~~is calculated based on the decrease in a ~~financial institution’s~~BHC’s risk-based capital ratios under the ~~supervisory~~ severely adverse scenario in the FRB’s annual supervisory stress test and related Comprehensive Capital Analysis and Review (CCAR), plus four quarters of planned common stock dividends. ~~The stress capital buffer will replace the current 2.50% capital conservation buffer under the Standardized Approach.~~ Because the stress capital buffer ~~will be~~is calculated annually ~~as part of CCAR and will be~~ based on data that can differ over time, our stress capital buffer, and thus our risk-based capital ratio requirements under the ~~amount of the buffer is~~Standardized Approach, are subject to change in future ~~years.~~periods. The Company’s stress capital buffer for the period October 1, 2020, through September 30, 2021, is 2.50%.


			Wells Fargo & Company			47

Capital Management (continued)

As a ~~G-SIB,~~global systemically important bank (G-SIB), we are also subject to the FRB’s rule implementing ~~the~~an additional capital surcharge of between 1.00-4.50% on the ~~minimum~~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) considers our size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity, consistent with the methodology developed by the BCBS and the Financial Stability Board (FSB). The second method (method two) uses similar inputs, but replaces substitutability with use of short-term wholesale funding and will generally result in higher surcharges than ~~the BCBS methodology.~~under method one. Because the G-SIB capital surcharge is calculated annually based on data that can differ over time, the amount of the surcharge is subject to change in future years.

Under the risk-based capital rules, 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.

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

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

Table 3437 summarizes our CET1, tier 1 capital, total capital, RWAs and capital ratios on a fully phased-in basis at March 31, ~~2020,~~2021, and December 31, ~~2019.~~

2020. Fully phased-in total capital amounts and ratios are considered non-GAAP financial measures that are used by management, bank regulatory agencies, investors and analysts to assess and monitor the Company’s capital position. See Table 38 for information regarding the calculation and components of our CET1, tier 1 capital, total capital and RWAs, as well as a corresponding reconciliation to GAAP financial measures for our fully phased-in total capital amounts.

Table ~~34:~~37: Capital Components and Ratios (Fully Phased-In) ~~(1)~~


				March 31, 2021				December 31, 2020
(in millions, except ratios)		Required Capital Ratios (1)		Advanced Approach		Standardized Approach		Advanced Approach		Standardized Approach
Common Equity Tier 1	(A)			$	139,724	139,724		138,297		138,297
Tier 1 Capital	(B)			159,675		159,675		158,196		158,196
Total Capital	(C)			187,585		197,467		186,803		196,529
Risk-Weighted Assets	(D)			1,109,354		1,178,996		1,158,355		1,193,744
Common Equity Tier 1 Capital Ratio	(A)/(D)	9.00	%	12.60		11.85	*	11.94		11.59	*
Tier 1 Capital Ratio	(B)/(D)	10.50		14.39		13.54	*	13.66		13.25	*
Total Capital Ratio	(C)/(D)	12.50		16.91		16.75	*	16.13	*	16.46

March 31, 2020 December 31, 2019
(in millions, except ratios)
Required Minimum
Capital Ratios

Advanced Approach
Standardized Approach
Advanced Approach
Standardized Approach

Common Equity Tier 1 (A) $ 134,751
134,751
138,760
138,760

Tier 1 Capital (B) 154,277
154,277
158,949
158,949

Total Capital (2) (C) 183,932
191,985
187,813
195,703

Risk-Weighted Assets (3) (D) 1,181,271
1,262,808
1,165,079
1,245,853

Common Equity Tier 1 Capital Ratio (3) (A)/(D) 9.00 % 11.41 % 10.67
* 11.91
11.14
*
Tier 1 Capital Ratio (3) (B)/(D) 10.50
13.06
12.22
* 13.64
12.76
*
Total Capital Ratio (2)(3) (C)/(D) 12.50
15.57

15.20
* 16.12
15.71
*

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

(1)Represents the minimum ratios required to avoid restrictions on capital distributions and discretionary bonus payments. The required ratios were the same under both the Standardized and Advanced Approaches at March 31, 2021.


~~(1)~~48			~~See~~ Wells Fargo & Company~~Table 35~~ ~~for information regarding the calculation and components of CET1, tier 1 capital, total capital and RWAs.~~


~~(2)~~	Fully phased-in total capital amounts and ratios are considered non-GAAP financial measures that are used by management, bank regulatory agencies, investors and analysts to assess and monitor the Company’s capital position. See ~~Table 35~~ ~~for information regarding the calculation and components of our fully phased-in total capital amounts, including a corresponding reconciliation to GAAP financial measures.~~


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

Table 3538 provides information regarding the calculation and composition of our risk-based capital under the Advanced and

Standardized Approaches at March 31, ~~2020,~~2021, and

December 31, ~~2019.~~2020.

Table ~~35:~~38: Risk-Based Capital Calculation and Components



		March 31, 2021			December 31, 2020
(in millions)		Advanced Approach		Standardized Approach	Advanced Approach	Standardized Approach
Total equity		$	188,348	188,348	185,920	185,920
Adjustments:
Preferred stock		(21,170)		(21,170)	(21,136)	(21,136)
Additional paid-in capital on preferred stock		139		139	152	152
Unearned ESOP shares		875		875	875	875
Noncontrolling interests		(1,130)		(1,130)	(1,033)	(1,033)
Total common stockholders’ equity		167,062		167,062	164,778	164,778
Adjustments:
Goodwill		(26,290)		(26,290)	(26,392)	(26,392)
Certain identifiable intangible assets (other than MSRs)		(322)		(322)	(342)	(342)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)		(2,300)		(2,300)	(1,965)	(1,965)
Applicable deferred taxes related to goodwill and other intangible assets (1)		866		866	856	856
CECL transition provision (2)		1,298		1,298	1,720	1,720
Other		(590)		(590)	(358)	(358)
Common Equity Tier 1		$	139,724	139,724	138,297	138,297
Preferred stock		21,170		21,170	21,136	21,136
Additional paid-in capital on preferred stock		(139)		(139)	(152)	(152)
Unearned ESOP shares		(875)		(875)	(875)	(875)
Other		(205)		(205)	(210)	(210)
Total Tier 1 capital	(A)	$	159,675	159,675	158,196	158,196
Long-term debt and other instruments qualifying as Tier 2		23,840		23,840	24,387	24,387
Qualifying allowance for credit losses (3)		4,245		14,127	4,408	14,134
Other		(175)		(175)	(188)	(188)
Total Tier 2 capital (Fully Phased-In)	(B)	$	27,910	37,792	28,607	38,333
Effect of Basel III Transition Requirements		66		66	131	131
Total Tier 2 capital (Basel III Transition Requirements)		$	27,976	37,858	28,738	38,464

Total qualifying capital (Fully Phased-In)	(A)+(B)	$	187,585	197,467	186,803	196,529
Total Effect of Basel III Transition Requirements		66		66	131	131
Total qualifying capital (Basel III Transition Requirements)		$	187,651	197,533	186,934	196,660

Risk-Weighted Assets (RWAs)(4):
Credit risk (5)		$	717,744	1,126,536	752,999	1,125,813
Market risk		52,460		52,460	67,931	67,931
Operational risk		339,150		—	337,425	—
Total RWAs		$	1,109,354	1,178,996	1,158,355	1,193,744

(1)Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.

(2)At March 31, 2021, the impact of the CECL transition provision issued by federal banking regulators on our regulatory capital was an increase in capital of $1.3 billion, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $9.2 billion increase in our ACL under CECL from January 1, 2020, through March 31, 2021.

(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 0.60% of Advanced credit RWAs, and under the Standardized Approach, the allowance for credit losses is includable in tier 2 capital up to 1.25% of Standardized credit RWAs, in each case with any excess allowance for credit losses being deducted from the respective total RWAs.

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

(5)Includes an increase of $1.0 billion under the Standardized Approach and a decrease of $1.4 billion under the Advanced Approach related to the impact of the CECL transition provision on our excess allowance for credit losses as of March 31, 2021. See footnote (3) to this table.

March 31, 2020 December 31, 2019
(in millions) Advanced Approach
Standardized Approach
Advanced Approach
Standardized Approach
Total equity $ 183,330
183,330
187,984
187,984
Adjustments:

Preferred stock (21,347 ) (21,347 ) (21,549 ) (21,549 )
Additional paid-in capital on preferred stock 140
140
(71 ) (71 )
Unearned ESOP shares 1,143
1,143
1,143
1,143
Noncontrolling interests (612 ) (612 ) (838 ) (838 )
Total common stockholders’ equity
162,654
162,654
166,669
166,669
Adjustments:
Goodwill (26,381 ) (26,381 ) (26,390 ) (26,390 )
Certain identifiable intangible assets (other than MSRs) (413 ) (413 ) (437 ) (437 )
Goodwill and other intangibles on nonmarketable equity securities (included in other assets) (1,894 ) (1,894 ) (2,146 ) (2,146 )
Applicable deferred taxes related to goodwill and other intangible assets (1) 821
821
810
810
Other (37 ) (37 ) 254
254
Common Equity Tier 1
134,751
134,751
138,760
138,760

Common Equity Tier 1 $ 134,751
134,751
138,760
138,760
Preferred stock 21,347
21,347
21,549
21,549
Additional paid-in capital on preferred stock (140 ) (140 ) 71
71
Unearned ESOP shares (1,143 ) (1,143 ) (1,143 ) (1,143 )
Other (538 ) (538 ) (288 ) (288 )
Total Tier 1 capital (A) 154,277
154,277
158,949
158,949

Long-term debt and other instruments qualifying as Tier 2 25,836
25,836
26,515
26,515
Qualifying allowance for credit losses (2) 3,990
12,043
2,566
10,456
Other (171 ) (171 ) (217 ) (217 )
Total Tier 2 capital (Fully Phased-In) (B) 29,655
37,708
28,864
36,754
Effect of Transition Requirements 136
136
520
520
Total Tier 2 capital (Transition Requirements) $ 29,791
37,844
29,384
37,274

Total qualifying capital (Fully Phased-In) (A)+(B) $ 183,932
191,985
187,813
195,703
Total Effect of Transition Requirements 136
136
520
520
Total qualifying capital (Transition Requirements) $ 184,068
192,121
188,333
196,223

Risk-Weighted Assets (RWAs) (3)(4):
Credit risk $ 802,686
1,219,948
790,784
1,210,209
Market risk 42,860
42,860
35,644
35,644
Operational risk (5) 335,725
—
338,651
—
Total RWAs (5) $ 1,181,271
1,262,808
1,165,079
1,245,853


~~(1)~~			Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.Wells Fargo & Company			49

~~(2)~~

Under the Advanced Approach the allowance for credit losses that exceeds expected credit losses is eligible for inclusion in Tier 2 Capital, to the extent the excess allowance does not exceed 0.60% of Advanced credit RWAs, and under the Standardized Approach, the allowance for credit losses is includable in Tier 2 Capital up to 1.25% of Standardized credit RWAs, with any excess allowance for credit losses being deducted from total RWAs.


~~(3)~~	RWAs calculated under the Advanced Approach utilize a risk-sensitive methodology, which relies upon the use of internal credit models based upon our experience with internal rating grades. Advanced Approach also includes an operational risk component, which reflects the risk of operating loss resulting from inadequate or failed internal processes or systems.

~~(4)~~

Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWAs.


~~(5)~~	~~Amounts for December 31, 2019, have been revised as a result of a decrease in RWAs under the Advanced Approach due to the correction of duplicated operational loss amounts.~~

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

Table 3639 presents the changes in ~~Common Equity Tier 1~~CET1 under the Advanced Approach for the three months ended March 31, ~~2020.~~2021.

Table ~~36:~~39: Analysis of Changes in Common Equity Tier 1 (Advanced Approach)

(in millions)
Common Equity Tier 1 at December 31, 2019 $ 138,760
Net income applicable to common stock 42
Common stock dividends (2,096 )
Common stock issued, repurchased, and stock compensation-related items (2,882 )
Changes in cumulative other comprehensive income (253 )
Cumulative effect from change in accounting policies (1) 991
Goodwill 9
Certain identifiable intangible assets (other than MSRs) 24
Goodwill and other intangibles on nonmarketable equity securities (included in other assets) 252
Applicable deferred taxes related to goodwill and other intangible assets (2) 11
Other (107 )
Change in Common Equity Tier 1 (4,009 )
Common Equity Tier 1 at March 31, 2020 $ 134,751


~~(1)~~			~~Effective January 1, 2020, we adopted CECL. For more information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements~~ (in ~~this Report.~~millions)


~~(2)~~Common Equity Tier 1 at December 31, 2020	~~Determined by applying the combined federal statutory rate~~	$	138,297
Net income applicable to common stock		4,363
Common stock dividends		(414)
Common stock issued, repurchased, and ~~composite state~~stock compensation-related items		(222)
Changes in cumulative other comprehensive income ~~tax rates~~		(1,444)

Goodwill		102
Certain identifiable intangible assets (other than MSRs)		20
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)		(335)
Applicable deferred taxes related to ~~the difference between book and tax basis of the respective~~ goodwill and other intangible assets (1)		10
CECL transition provision (2)		(422)
Other		(231)
Change in Common Equity Tier 1		1,427
Common Equity Tier 1 at ~~period end.~~March 31, 2021		$	139,724

Table 3740 presents net changes in the components of RWAs under the Advanced and Standardized Approaches for the three months ended March 31, ~~2020.~~2021.

Table ~~37:~~40: Analysis of Changes in RWAs


(in millions)	Advanced Approach		Standardized Approach
RWAs at December 31, 2020	$	1,158,355	1,193,744
Net change in credit risk RWAs (1)	(35,255)		723
Net change in market risk RWAs	(15,471)		(15,471)
Net change in operational risk RWAs	1,725		—
Total change in RWAs	(49,001)		(14,748)
RWAs at March 31, 2021	$	1,109,354	1,178,996

(1)Includes an increase of $1.0 billion under the Standardized Approach and a decrease of $1.4 billion under the Advanced Approach related to the impact of the CECL transition provision on our excess allowance for credit losses. See Table 38 for additional information.

(in millions) Advanced Approach
Standardized Approach
RWAs at December 31, 2019 (1) $ 1,165,079
1,245,853
Net change in credit risk RWAs 11,902
9,739
Net change in market risk RWAs 7,216
7,216
Net change in operational risk RWAs (2,926 ) —
Total change in RWAs 16,192
16,955
RWAs at March 31, 2020 $ 1,181,271
1,262,808


~~(1)~~50			~~Amount for December 31, 2019, has been revised as a result of a decease in RWAs under the Advanced Approach due to the correction of duplicated operational loss amounts.~~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, goodwill, certain identifiable intangible assets (other than MSRs) and goodwill and other intangibles on nonmarketable equity securities, net of applicable deferred taxes. ~~These tangible common equity~~The ratios are ~~as follows:~~

~~Tangible~~(i) tangible book value per common share, which represents tangible common equity divided by common shares outstanding; and

~~Return~~ (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 use of equity.

Table 3841 provides a reconciliation of these non-GAAP financial measures to GAAP financial measures.

Table ~~38:~~41: Tangible Common Equity


		Balance at period end				Average balance
		Quarter ended					Quarter ended
(in millions, except ratios)		Mar 31, 2021		Dec 31, 2020	Mar 31, 2020		Mar 31, 2021			Dec 31, 2020	Mar 31, 2020
Total equity		$	188,348	185,920	183,330		189,332			185,748	188,170
Adjustments:
Preferred stock		(21,170)		(21,136)	(21,347)		(21,840)			(21,223)	(21,794)
Additional paid-in capital on preferred stock		139		152	140		145			156	135
Unearned ESOP shares		875		875	1,143		875			875	1,143
Noncontrolling interests		(1,130)		(1,033)	(612)		(1,115)			(887)	(785)
Total common stockholders’ equity	(A)	167,062		164,778	162,654		167,397			164,669	166,869
Adjustments:
Goodwill		(26,290)		(26,392)	(26,381)		(26,383)			(26,390)	(26,387)
Certain identifiable intangible assets (other than MSRs)		(322)		(342)	(413)		(330)			(354)	(426)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)		(2,300)		(1,965)	(1,894)		(2,217)			(1,889)	(2,152)
Applicable deferred taxes related to goodwill and other intangible assets (1)		866		856	821		863			852	818
Tangible common equity	(B)	$	139,016	136,935	134,787		139,330			136,888	138,722
Common shares outstanding	(C)	4,141.1		4,144.0	4,096.4		N/A			N/A	N/A
Net income applicable to common stock	(D)	N/A		N/A	N/A		$	4,363		2,642	42
Book value per common share	(A)/(C)	$	40.34	39.76	39.71		N/A			N/A	N/A
Tangible book value per common share	(B)/(C)	33.57		33.04	32.90		N/A			N/A	N/A
Return on average common stockholders’ equity (ROE) (annualized)	(D)/(A)	N/A		N/A	N/A		10.57		%	6.38	0.10
Return on average tangible common equity (ROTCE) (annualized)	(D)/(B)	N/A		N/A	N/A		12.70			7.68	0.12

Balance at period end Average balance
Quarter ended Quarter ended
(in millions, except ratios) Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Total equity $ 183,330
187,984
198,733
188,170
192,393
198,349
Adjustments:
Preferred stock (21,347 ) (21,549 ) (23,214 ) (21,794 ) (21,549 ) (23,214 )
Additional paid-in capital on preferred stock 140
(71 ) (95 ) 135
(71 ) (95 )
Unearned ESOP shares 1,143
1,143
1,502
1,143
1,143
1,502
Noncontrolling interests (612 ) (838 ) (901 ) (785 ) (945 ) (899 )
Total common stockholders’ equity (A) 162,654
166,669
176,025
166,869
170,971
175,643
Adjustments:

Goodwill (26,381 ) (26,390 ) (26,420 ) (26,387 ) (26,389 ) (26,420 )
Certain identifiable intangible assets (other than MSRs) (413 ) (437 ) (522 ) (426 ) (449 ) (543 )
Goodwill and other intangibles on nonmarketable equity securities (included in other assets) (1,894 ) (2,146 ) (2,131 ) (2,152 ) (2,223 ) (2,159 )
Applicable deferred taxes related to goodwill and other intangible assets (1) 821
810
771
818
807
784
Tangible common equity (B) $ 134,787
138,506
147,723
138,722
142,717
147,305
Common shares outstanding (C) 4,096.4
4,134.4
4,511.9
N/A
N/A
N/A
Net income applicable to common stock (D) N/A
N/A
N/A
$ 42
2,546
5,507
Book value per common share (A)/(C) $ 39.71
40.31
39.01
N/A
N/A
N/A
Tangible book value per common share (B)/(C) 32.90
33.50
32.74
N/A
N/A
N/A
Return on average common stockholders’ equity (ROE) (annualized) (D)/(A) N/A
N/A
N/A
0.10 % 5.91
12.71
Return on average tangible common equity (ROTCE) (annualized) (D)/(B) N/A
N/A
N/A
0.12
7.08
15.16


(1)	Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.

~~Capital Management (continued~~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.)

~~SUPPLEMENTARY~~ LEVERAGE ~~RATIO~~REQUIREMENTS As a BHC, we are required to maintain a supplementary leverage ratio (SLR) ~~of at least 5.00% (comprised of a 3.00% minimum requirement plus a supplementary leverage buffer of 2.00%)~~ to avoid restrictions on capital distributions and discretionary bonus ~~payments. Our~~payments and maintain a minimum tier 1 leverage ratio. Table 42 presents the leverage requirements applicable to the Company as of March 31, 2021.

Table 42:Leverage Requirements Applicable to the Company

In addition, our IDIs are required to maintain aan SLR of at least 6.00% to be considered ~~well-capitalized~~well capitalized under applicable regulatory capital adequacy ~~guidelines. In April 2018, the~~rules and maintain a minimum tier 1 leverage ratio of 4.00%.

The FRB and OCC have proposed amendments to the SLR rules. For information regarding the proposed amendments to the SLR rules, ~~(the “Proposed SLR Rules”) that would replace~~see the ~~2.00% supplementary leverage buffer with a buffer equal to one-half of~~“Capital Management – Leverage Requirements” section in our ~~G-SIB capital surcharge. The Proposed SLR Rules would similarly tailor the current 6.00% SLR requirement for our IDIs.~~ 2020 Form 10-K.

In April 2020, the FRB issued an interim final rule that temporarily ~~allows~~allowed a BHC to exclude on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of its total leverage exposure in the denominator of the SLR. ~~The~~This interim final rule became effective on April 1, 2020, and ~~expires~~expired on ~~March 31,~~April 1, 2021.

At March 31, ~~2020, our~~2021, the Company’s SLR ~~for the Company~~ was ~~6.84%~~7.91%, and ~~we also exceeded the applicable SLR requirements for~~ each of our ~~IDIs. See~~IDIs exceeded their applicable SLR requirements. In addition, the Company’s SLR at March 31, 2021, would have been 6.97% without relying on the FRB’s April 2020 interim final rule that temporarily allowed for the exclusion of specific on-balance sheet amounts. Table ~~39 for~~43 presents information regarding the calculation and components of the ~~SLR.~~Company’s SLR and tier 1 leverage ratio.

~~Table 39:Supplementary Leverage Ratio~~

(in millions, except ratio) Quarter ended March 31, 2020
Tier 1 capital (A) $ 154,277
Total average assets 1,950,659
Less: Goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities) 28,530
Total adjusted average assets 1,922,129
Plus adjustments for off-balance sheet exposures:
Derivatives (1) 75,994
Repo-style transactions (2) 4,613
Other (3) 253,578
Total off-balance sheet exposures 334,185
Total leverage exposure (B) $ 2,256,314
Supplementary leverage ratio (A)/(B) 6.84 %


~~(1)~~			~~Adjustment represents derivatives and collateral netting exposures as defined for supplementary leverage ratio determination purposes.~~Wells Fargo & Company			51

Capital Management (continued)

Table 43:Leverage Ratios for the Company


~~(2)~~(in millions, except ratio)	~~Adjustment represents counterparty credit risk~~	Quarter ended March 31, 2021
Tier 1 capital	(A)	$	159,675
Total average assets		1,938,008
Less: Goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities)		28,744
Less: Other SLR exclusions		272,860
Total adjusted average assets		1,636,404
Plus adjustments for ~~repo-style transactions where Wells Fargo & Company is the principal (i.e., principal counterparty facing the client).~~off-balance sheet exposures:


~~(3)~~Derivatives (1)	~~Adjustment represents credit equivalent amounts of other~~	66,520
Repo-style transactions (2)		3,650
Other (3)		312,815
Total off-balance sheet exposures ~~not already included as derivatives and repo-style transactions exposures.~~		382,985
Total leverage exposure	(B)	$	2,019,389
Supplementary leverage ratio	(A)/(B)	7.91		%

Tier 1 leverage ratio (4)		8.36		%

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

(2)Adjustment represents counterparty credit risk for repo-style transactions where Wells Fargo & Company is the principal counterparty facing the client.

(3)Adjustment represents credit equivalent amounts of other off-balance sheet exposures not already included as derivatives and repo-style transactions exposures.

(4)The tier 1 leverage ratio consists of tier 1 capital divided by total average assets, excluding goodwill and certain other items as determined under the rule.

TOTAL LOSS ABSORBING CAPACITY As a G-SIB, we are required to have a minimum amount of equity and unsecured long-term debt for purposes of resolvability and resiliency, often referred to as Total Loss Absorbing Capacity (TLAC). U.S. G-SIBs are required to have a minimum amount of TLAC ~~amount~~ (consisting of CET1 capital and additional tier 1 capital issued directly by the top-tier or covered BHC plus eligible external long-term debt) equal to the greater of (i) 18.00% of RWAs and (ii) 7.50% of total leverage exposure (the denominator of the SLR calculation). Additionally, U.S. G-SIBs are required to maintain (i) a TLAC buffer equal to 2.50% of RWAs plus our applicable G-SIB capital surcharge calculated under method one plus any applicable countercyclical buffer to be added to the 18.00% minimum and (ii) an external TLAC leverage buffer equal to 2.00% of total leverage exposure to be added to the 7.50% minimum, in order to avoid restrictions on capital distributions and discretionary bonus ~~payments. U.S. G-SIBs are also required to have~~payments, as well as a minimum amount of eligible unsecured long-term ~~debt equal to the greater of (i) 6.00% of RWAs plus our applicable G-SIB capital surcharge calculated under method two~~

~~and (ii) 4.50% of the total leverage exposure. Under the Proposed SLR Rules, the 2.00% external~~debt. Our minimum TLAC ~~leverage buffer would be replaced with a buffer equal to one-half of our applicable G-SIB capital surcharge,~~ and ~~the leverage component for calculating the minimum amount of~~ eligible unsecured long-term debt ~~would be modified from 4.50%~~requirements as of March 31, 2021, are presented in Table 44.

Table 44:TLAC and Eligible Unsecured Long-Term Debt Requirements

TLAC requirement

Greater of:

18.00% of RWAs

7.50% of total leverage exposure
(the denominator of the SLR calculation)

TLAC buffer (equal to 2.50% of RWAs + method one G-SIB capital surcharge + any countercyclical buffer)

External TLAC leverage buffer
(equal to 2.00% of total leverage exposure)

Minimum amount of eligible unsecured long-term debt

Greater of:

6.00% of RWAs

4.50% of total leverage exposure

Method two G-SIB capital surcharge

The FRB and OCC have proposed amendments to ~~2.50% of total leverage exposure plus one-half of~~the TLAC and eligible unsecured long-term debt requirements. For information regarding these proposed amendments, see the “Capital Management – Total Loss Absorbing Capacity” section in our ~~applicable G-SIB capital surcharge.~~ 2020 Form 10-K.

As of March 31, ~~2020,~~2021, our eligible external TLAC as a percentage of total ~~risk-weighted assets~~RWAs was ~~23.27%~~25.18%, compared with a required minimum of ~~22.00%~~21.50%. Similar to the risk-based capital

requirements, ~~we determine~~our minimum ~~required~~ TLAC requirement is assessed based on the greater of RWAs determined under the Standardized and Advanced ~~approaches.~~Approaches.

OTHER REGULATORY CAPITAL AND LIQUIDITY MATTERS ~~As discussed in the “Risk Management – Asset/ Liability Management – Liquidity and Funding – Liquidity Standards” section in this Report, federal banking regulators have issued a final rule~~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.

As a result of our adoption of CECL on January 1, 2020, our allowance for credit losses is now measured using an estimate of expected life-time credit losses methodology. Federal banking regulators issued rules permitting banking institutions whose capital levels decreased upon the adoption of CECL to phase in the adoption impact of CECL over a period of three years. Because we recognized a net reduction to our allowance for credit losses and a resulting increase to our capital levels upon the adoption of CECL, we were not eligible for this transition relief. In March 2020, federal banking regulators also issued rules that provide banking institutions an option to reduce any negative capital impact from the adoption of CECL and the difference between the allowance for credit losses under CECL and the previous incurred loss methodology. In first quarter 2020, we were not eligible for this transition relief.

Capital Planning and Stress Testing

Our planned long-term capital structure is designed to meet regulatory and market expectations. We believe that our long-term targeted capital structure enables us to invest in and grow our business, satisfy our customers’ financial needs in varying environments, access markets, and maintain flexibility to return capital to our shareholders. Our long-term targeted capital structure also considers capital levels sufficient to exceed capital requirements including the G-SIB capital surcharge. Accordingly, ~~based on the final Basel III capital rules under the lower of the Standardized or Advanced Approaches CET1 capital ratios,~~ we currently target a long-term CET1 capital ratio at or in excess of 10.00%~~, which includes a 2.00% G-SIB capital surcharge.~~. Our capital targets are subject to change based on various factors, including changes to the regulatory capital framework and expectations for large banks promulgated by bank regulatory agencies, changes to the regulatory requirements for our capital ratios, planned capital actions, changes in our risk profile and other factors. ~~As discussed above in the “Capital Management – Regulatory Capital Guidelines – Risk-Based Capital and Risk-Weighted Assets” section of this Report, the~~

The FRB has issued a final rule that will replace the current 2.50% capital conservation buffer under the Standardized Approach with a stress capital buffer. Implementation of the stress capital buffer may cause our current long-term CET1 capital ratio target of 10.00% to increase.

~~Under the FRB’s~~ capital plan rule ~~large~~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 when evaluating their capital plans. ~~The~~

We submitted our 2021 capital plan ~~rule also limits a large BHC’s ability to make capital distributions~~ to the ~~extent its actual capital issuances were less than amounts indicated in its capital plan.~~

~~Our 2020 capital plan, which was submitted~~FRB on April 3, 2020, as part of CCAR, included a comprehensive capital outlook supported by an assessment of expected sources and uses of capital over a given planning horizon under a range of expected and stress scenarios.5, 2021. As part of the ~~2020~~2021 CCAR, the FRB also generated a supervisory stress ~~test, which assumed a sharp decline in the economy and significant decline in asset pricing using the information provided by the Company to estimate performance.~~test. The FRB is expected to review the supervisory stress test results ~~both~~ as required under the Dodd-Frank Act using a common set of capital actions for all large BHCs and ~~by taking into account~~is also expected to review the Company’s proposed capital actions. The FRB has indicated ~~that~~ it will publish its supervisory stress test results ~~as required under~~by July 1, 2021.

On March 25, 2021, the ~~Dodd-Frank Act,~~FRB announced that it was extending measures it previously announced limiting large BHCs, including Wells Fargo, from making any capital distribution (excluding any capital distribution arising from the issuance of a capital instrument eligible for inclusion in the numerator of a regulatory capital ratio), unless otherwise approved by the FRB. The FRB has generally authorized BHCs to (i) provided that the BHC does not increase the amount of its common stock dividends to be larger than the level paid in second quarter 2020, pay common stock dividends and make share repurchases that, in the aggregate, do not exceed an amount equal to the average of the BHC’s net income for the four preceding calendar quarters; (ii) make share repurchases that equal the amount of share issuances related ~~CCAR results taking into account the Company’s proposed~~to expensed employee compensation; and (iii) redeem and make scheduled payments on additional tier 1 and tier 2 capital ~~actions, by~~instruments. The FRB has also announced that if a BHC remains above all of its minimum risk-based capital requirements in this year's supervisory stress test, these additional limitations on capital distributions will end for that BHC after June 30, ~~2020.~~2021. However, a BHC that falls below any of its minimum risk-based capital requirements in this year's supervisory stress test will remain subject to the additional limitations on capital distributions through September 30, 2021, and if the BHC remains below the capital required by the supervisory stress test at that time, the existing stress capital


52			Wells Fargo & Company

buffer framework will impose even stricter capital distribution limitations.

Concurrently with CCAR, federal banking regulators also require large BHCs and banks to conduct their own stress tests to evaluate whether the 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.

Securities Repurchases

From time to time the Board authorizes the Company to repurchase shares of our common stock. Although we announce when the Board authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Future stock repurchases may be private or open-market repurchases, including block transactions, accelerated or delayed block transactions, forward repurchase transactions, and similar transactions. Additionally, we may enter into plans to purchase stock that satisfy the conditions of Rule 10b5-1 of the Securities Exchange Act of 1934. Various factors determine the amount of our share repurchases, including our capital requirements, the number of shares we

expect to issue for employee benefit plans and acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations, including under the FRB’s ~~response to our~~ capital plan ~~and to changes in our risk profile.~~rule. Due to the various factors ~~impacting~~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, our share repurchases occur at various price levels. We may suspend share repurchase activity at any time. ~~On March 15, 2020, we, along with the other members of the Financial Services Forum, suspended our share repurchase activities for the remainder of the first quarter and for second quarter 2020.~~

At March 31, ~~2020~~,2021, we had remaining Board authority to repurchase approximately ~~168~~650 million shares, subject to regulatory and legal conditions. For ~~more~~additional information about share repurchases during first quarter ~~2020,~~2021, see Part II, Item 2 in this Report.

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

~~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~~For a discussion of ~~the~~ other significant regulations and regulatory oversight initiatives that have affected or may affect our business, ~~contained in~~see the “Regulatory Matters” and “Risk Factors” sections in our ~~2019~~2020 Form 10-K.

~~REGULATORY DEVELOPMENTS RELATED TO COVID-19~~In response to the COVID-19 pandemic and related events, federal banking regulators have undertaken a number of measures to help stabilize the banking sector, support the broader economy, and facilitate the ability of banking organizations like Wells Fargo to continue lending to consumers and businesses. For example, following the passage of the Coronavirus Aid, Relief and Economic Security Act (CARES Act) in March 2020, federal banking regulators issued interim final rules designed to encourage financial institutions to participate in stimulus measures, such as the Small Business Administration’s Paycheck Protection Program and the FRB’s Main Street Lending Program. Similarly, the FRB launched a number of lending facilities designed to enhance liquidity and the functioning of markets, including facilities covering money market mutual funds and term asset-backed securities loans. Federal banking regulators have also issued several joint interim final rules amending the regulatory capital and TLAC rules and other prudential regulations to ease certain restrictions on banking organizations and encourage the use of certain FRB-established facilities in order to further promote lending to consumers and businesses.

In addition, the OCC and the FRB have issued guidelines for banks and BHCs related to working with customers affected by the COVID-19 pandemic, including guidance with respect to waiving fees, offering repayment accommodations, providing payment deferrals, and increasing daily withdrawal limits at automated teller machines. In addition, the federal government has instituted a moratorium on certain mortgage foreclosure activities. Any current or future rules, regulations, and guidance related to the COVID-19 pandemic and its impacts could require us to change certain of our business practices, reduce our revenue and earnings, impose additional costs on us, or otherwise adversely affect our business operations and/or competitive position.

~~COMMUNITY REINVESTMENT ACT (CRA) RATING~~ ~~On May 4, 2020, we announced that we received an “Outstanding” rating from the OCC on our most recent CRA performance evaluation, which covers the years 2012 to 2018.~~



			Wells Fargo & Company			53


Critical Accounting Policies

Our significant accounting policies (see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our ~~2019~~2020 Form 10-K) are fundamental to understanding our results of operations and financial condition because they require that we use estimates and assumptions that may affect the value of our assets or liabilities and financial results. ~~Five~~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;

•the valuation of residential MSRs;

•the fair value of financial instruments;

•income taxes; ~~and~~

•liability for contingent litigation ~~losses.~~

losses; and

•goodwill impairment.

Management has discussed these critical accounting policies and the related estimates and judgments with the Board’s Audit ~~Committee have reviewed and approved~~Committee. For additional information on these ~~critical accounting policies. 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 ~~2019~~2020 Form 10-K.


Current Accounting Developments

The following significant accounting update has been issued by the Financial Accounting Standards Board (FASB) and is applicable to us, but is not yet effective:

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

ASU 2018-12 See the “Current Accounting Developments” section in our 2020 Form 10-K for information on the effective date and our assessment of the expected financial statement impact upon adoption.

Other Accounting Developments

The following Update is applicable to us but is not expected to have a material impact on our consolidated financial statements:

•ASU 2020-06 – Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity


54			Wells Fargo & Company


Forward-Looking Statements

This document contains forward-looking statements. In ~~connection~~addition, we may make forward-looking statements in our other documents filed or furnished with the Securities and Exchange Commission, and our management may make forward-looking statements orally to analysts, investors, representatives of the media and others. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “target,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can” and similar references to future periods. In particular, forward-looking statements include, but are not limited to, statements we make about: (i) the future operating or financial performance of the Company, including our outlook for future growth; (ii) our noninterest expense and efficiency ratio; (iii) future credit quality and performance, including our expectations regarding future loan losses, our allowance for credit losses, and the economic scenarios considered to develop the allowance; (iv) our expectations regarding net interest income and net interest margin; (v) loan growth or the reduction or mitigation of risk in our loan portfolios; (vi) future capital or liquidity levels, ratios or targets; (vii) the performance of our mortgage business and any related exposures; (viii) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (ix) future common stock dividends, common share repurchases and other uses of capital; (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 governance related goals or commitments; and (xiv) the Company’s plans, objectives and strategies.

Forward-looking statements are not based on historical facts but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:

•current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and 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;

•current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses,

including rules and regulations relating to bank products and financial services;

•developments in our mortgage banking business, including the extent of the success of our mortgage loan modification efforts, the amount of mortgage loan repurchase demands that we receive, any negative effects relating to our mortgage servicing, loan modification or foreclosure practices, and the effects of regulatory or judicial requirements or guidance impacting our mortgage banking business and any changes in industry standards;

•our ability to realize 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;

•the effect of the current 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 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 impairments of securities held in our debt securities 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 and wealth management businesses;

•negative effects from the retail banking sales practices matter and from other instances where customers may have experienced financial harm, including on our legal, operational and compliance costs, our ability to engage in certain business activities or offer certain products or services, our ability to keep and attract customers, our ability to attract and retain qualified employees, and our reputation;

•resolution of regulatory matters, litigation, or other legal actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences;

•a failure in or breach of our operational or security systems or infrastructure, or those of our 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, 2020.

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


			Wells Fargo & Company			55

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

For 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, 2020, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.1

Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.


1 We do not control this website. Wells Fargo has provided this link for your convenience, but does not endorse and is not responsible for the content, links, privacy policy, or security policy of this website.

Forward-looking Non-GAAP Financial Measures. From time to time management may discuss forward-looking non-GAAP financial measures, such as forward-looking estimates or targets for return on average tangible common equity. We are unable to provide a reconciliation of forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures because we are unable to provide, without unreasonable effort, a meaningful or accurate calculation or estimation of amounts that would be necessary for the reconciliation due to the complexity and inherent difficulty in forecasting and quantifying future amounts or when they may occur. Such unavailable information could be significant to future results.


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 2020 Form 10-K.


			Wells Fargo & Company			57


Controls and Procedures


Disclosure Controls and Procedures

The Company’s management evaluated the effectiveness, as of March 31, 2021, of the Company’s disclosure controls and procedures. The Company’s chief executive officer and chief financial officer participated in the evaluation. Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2021.


Internal Control Over Financial Reporting

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

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

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

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

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No change occurred during first quarter 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


58			Wells Fargo & Company

Financial Statements


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Income (Unaudited)
	Quarter ended March 31,
(in millions, except per share amounts)		2021		2020
Interest income
Debt securities		$	2,312	3,472
Loans held for sale		331		209
Loans		7,191		10,065
Equity securities		137		206
Other interest income		65		775
Total interest income		10,036		14,727
Interest expense
Deposits		112		1,742
Short-term borrowings		(9)		291
Long-term debt		1,026		1,240
Other interest expense		109		142
Total interest expense		1,238		3,415
Net interest income		8,798		11,312
Noninterest income
Deposit and lending-related fees		1,616		1,797
Investment advisory and other asset-based fees (1)		2,756		2,506
Commissions and brokerage services fees (1)		636		677
Investment banking fees		568		391
Card fees		949		892
Mortgage banking		1,326		379
Net gains (losses) on trading and securities		891		(1,100)
Other		523		863
Total noninterest income		9,265		6,405
Total revenue		18,063		17,717
Provision for credit losses		(1,048)		4,005

Noninterest expense
Personnel		9,558		8,323
Technology, telecommunications and equipment		844		798
Occupancy		770		715
Operating losses		213		464
Professional and outside services		1,388		1,606
Advertising and promotion		90		181
Restructuring charges		13		0
Other		1,113		961
Total noninterest expense		13,989		13,048
Income before income tax expense		5,122		664
Income tax expense		326		159
Net income before noncontrolling interests		4,796		505
Less: Net income (loss) from noncontrolling interests		54		(148)
Wells Fargo net income		$	4,742	653
Less: Preferred stock dividends and other		379		611
Wells Fargo net income applicable to common stock		$	4,363	42
Per share information
Earnings per common share		$	1.05	0.01
Diluted earnings per common share		1.05		0.01
Average common shares outstanding		4,141.3		4,104.8
Diluted average common shares outstanding		4,171.0		4,135.3

(1)In first quarter 2021, trust and investment management fees and asset-based brokerage fees were combined into a single line item for investment advisory and other asset-based fees, and brokerage commissions and other brokerage services fees were combined into a single line item for commissions and brokerage services fees. Prior period balances have been revised to conform with the current period presentation.

The accompanying notes are an integral part of these statements.


			Wells Fargo & Company			59


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Comprehensive Income (Unaudited)
	Quarter ended March 31,

(in millions)		2021		2020
Net income before noncontrolling interests		$	4,796	505
Other comprehensive income (loss), after tax:
Net change in debt securities		(1,525)		(228)
Net change in derivatives and hedging activities		36		137
Defined benefit plans adjustments		35		30

Net change in foreign currency translation adjustments		11		(193)
Other comprehensive loss, after tax		(1,443)		(254)
Total comprehensive income before noncontrolling interests		3,353		251
Less: Other comprehensive income (loss) from noncontrolling interests		1		(1)
Less: Net income (loss) from noncontrolling interests		54		(148)
Wells Fargo comprehensive income		$	3,298	400

The accompanying notes are an integral part of these statements.


60			Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet
(in millions, except shares)	Mar 31, 2021		Dec 31, 2020
Assets	(Unaudited)
Cash and due from banks	$	28,339	28,236
Interest-earning deposits with banks	258,394		236,376
Total cash, cash equivalents, and restricted cash	286,733		264,612
Federal funds sold and securities purchased under resale agreements	79,502		65,672
Debt securities:
Trading, at fair value	72,784		75,095
Available-for-sale, at fair value (includes amortized cost of $197,805 and $215,533, net of allowance for credit losses)	200,850		220,392
Held-to-maturity, at amortized cost, net of allowance for credit losses (fair value $233,959 and $212,307)	232,192		205,720
Loans held for sale (includes $23,538 and $18,806 carried at fair value)	35,434		36,384
Loans	861,572		887,637
Allowance for loan losses	(16,928)		(18,516)
Net loans	844,644		869,121
Mortgage servicing rights (includes $7,536 and $6,125 carried at fair value)	8,832		7,437
Premises and equipment, net	8,760		8,895
Goodwill	26,290		26,392
Derivative assets	25,429		25,846
Equity securities (includes $31,401 and $34,009 carried at fair value)	59,981		62,260
Other assets	78,112		87,337
Total assets (1)	$	1,959,543	1,955,163
Liabilities
Noninterest-bearing deposits	$	494,087	467,068
Interest-bearing deposits	943,032		937,313
Total deposits	1,437,119		1,404,381
Short-term borrowings	58,920		58,999
Derivative liabilities	14,930		16,509
Accrued expenses and other liabilities (includes $22,733 and $22,441 carried at fair value)	76,914		76,404
Long-term debt	183,312		212,950
Total liabilities (2)	1,771,195		1,769,243
Equity
Wells Fargo stockholders’ equity:
Preferred stock	21,170		21,136
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares	9,136		9,136
Additional paid-in capital	59,854		60,197
Retained earnings	166,772		162,890
Cumulative other comprehensive income (loss)	(1,250)		194
Treasury stock – 1,340,691,115 shares and 1,337,799,931 shares	(67,589)		(67,791)
Unearned ESOP shares	(875)		(875)
Total Wells Fargo stockholders’ equity	187,218		184,887
Noncontrolling interests	1,130		1,033
Total equity	188,348		185,920
Total liabilities and equity	$	1,959,543	1,955,163

(1)Our consolidated assets at March 31, 2021, and December 31, 2020, included the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Debt securities, $965 million and $967 million; Loans, $5.5 billion and $10.9 billion; All other assets, $267 million and $310 million; and Total assets, $6.7 billion and $12.1 billion, respectively.

(2)Our consolidated liabilities at March 31, 2021, and December 31, 2020, include the following VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo: Long-term debt, $192 million and $203 million; All other liabilities, $890 million and $900 million; and Total liabilities, $1.1 billion and $1.1 billion, respectively.

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
	Wells Fargo stockholders’ equity
	Preferred stock			Common stock
($ and shares in millions)	Shares	Amount		Shares	Amount		Additional paid-in capital	Retained earnings	Cumulative other comprehensive income (loss)	Treasury stock	Unearned ESOP shares	Noncontrolling interests	Total equity
Balance December 31, 2020	5.5	$	21,136	4,144.0	$	9,136	60,197	162,890	194	(67,791)	(875)	1,033	185,920



Net income								4,742				54	4,796
Other comprehensive income (loss), net of tax									(1,444)			1	(1,443)
Noncontrolling interests												42	42
Common stock issued				14.3			0	(61)		785			724
Common stock repurchased				(17.2)						(596)			(596)
Preferred stock redeemed (1)	(0.1)	(4,526)					44	(44)					(4,526)




Preferred stock issued	0.2	4,560					(31)						4,529
Common stock dividends							6	(420)					(414)
Preferred stock dividends								(335)					(335)
Stock incentive compensation expense							498						498
Net change in deferred compensation and related plans							(860)			13			(847)
Net change	0.1	34		(2.9)	0		(343)	3,882	(1,444)	202	0	97	2,428
Balance March 31, 2021	5.6	$	21,170	4,141.1	$	9,136	59,854	166,772	(1,250)	(67,589)	(875)	1,130	188,348
Balance December 31, 2019	7.5	$	21,549	4,134.4	$	9,136	61,049	166,697	(1,311)	(68,831)	(1,143)	838	187,984
Cumulative effect from change in accounting policies (2)								991					991
Balance January 1, 2020	7.5	21,549		4,134.4	9,136		61,049	167,688	(1,311)	(68,831)	(1,143)	838	188,975

Net income								653				(148)	505
Other comprehensive income (loss), net of tax									(253)			(1)	(254)
Noncontrolling interests												(77)	(77)
Common stock issued				37.4			(17)	(308)		2,002			1,677
Common stock repurchased				(75.4)						(3,407)			(3,407)
Preferred stock redeemed (3)	(1.9)	(2,215)					17	(272)					(2,470)




Preferred stock issued	0.1	2,013					(45)						1,968
Common stock dividends							18	(2,114)					(2,096)
Preferred stock dividends								(339)					(339)
Stock incentive compensation expense							181						181
Net change in deferred compensation and related plans							(1,354)			21			(1,333)
Net change	(1.8)	(202)		(38.0)	0		(1,200)	(2,380)	(253)	(1,384)	0	(226)	(5,645)
Balance March 31, 2020	5.7	$	21,347	4,096.4	$	9,136	59,849	165,308	(1,564)	(70,215)	(1,143)	612	183,330

(1)Represents the impact of the redemption of Preferred Stock, Series I, Series P and Series W, and partial redemption of Preferred Stock, Series N, in first quarter 2021.

(2)We adopted Accounting Standards Update (ASU) 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL) effective January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies) in our Annual Report on Form 10-K for the year ended December 31, 2020.

(3)Represents the impact of the redemption of the remaining Preferred Stock, Series K, in first quarter 2020.

The accompanying notes are an integral part of these statements.


62			Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
	Quarter ended March 31,
(in millions)	2021		2020
Cash flows from operating activities:
Net income before noncontrolling interests	$	4,796	505
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	(1,048)		4,005
Changes in fair value of MSRs and LHFS carried at fair value	(1,368)		3,486
Depreciation, amortization and accretion	2,237		1,868
Other net (gains) losses (1)	(6,264)		7,643
Stock-based compensation	929		582
Originations and purchases of loans held for sale (1)	(45,179)		(38,001)
Proceeds from sales of and paydowns on loans originally classified as held for sale (1)	24,757		31,971
Net change in:
Debt and equity securities, held for trading	11,122		20,413

Deferred income taxes	299		(1,448)
Derivative assets and liabilities	(922)		(4,293)
Other assets	8,481		(10,391)
Other accrued expenses and liabilities	(1,310)		933
Net cash provided (used) by operating activities	(3,470)		17,273
Cash flows from investing activities:
Net change in:
Federal funds sold and securities purchased under resale agreements	(13,830)		15,675
Available-for-sale debt securities:
Proceeds from sales	13,367		11,843
Prepayments and maturities	21,840		14,135
Purchases	(36,203)		(18,658)
Held-to-maturity debt securities:
Paydowns and maturities	20,643		3,769
Purchases	(19,899)		(19,141)
Equity securities, not held for trading:
Proceeds from sales and capital returns	545		1,115
Purchases	(1,626)		(3,338)
Loans:
Loans originated by banking subsidiaries, net of principal collected	17,447		(53,400)
Proceeds from sales of loans originally classified as held for investment	11,358		1,959
Purchases of loans	(50)		(342)
Principal collected on nonbank entities’ loans	5,265		3,837
Loans originated by nonbank entities	(3,469)		(2,348)

Proceeds from sales of foreclosed assets and short sales	180		500
Other, net	(40)		91
Net cash provided (used) by investing activities	15,528		(44,303)
Cash flows from financing activities:
Net change in:
Deposits	33,222		53,903
Short-term borrowings	(79)		(12,223)
Long-term debt:
Proceeds from issuance	110		18,895
Repayment	(21,676)		(17,563)
Preferred stock:
Proceeds from issuance	4,529		1,968
Redeemed	(4,525)		(2,470)
Cash dividends paid	(276)		(280)
Common stock:
Proceeds from issuance	66		209
Stock tendered for payment of withholding taxes	(222)		(306)
Repurchased	(596)		(3,407)
Cash dividends paid	(383)		(2,032)
Net change in noncontrolling interests	(31)		(29)
Other, net	(76)		(76)
Net cash provided by financing activities	10,063		36,589
Net change in cash, cash equivalents, and restricted cash	22,121		9,559
Cash, cash equivalents, and restricted cash at beginning of period	264,612		141,250
Cash, cash equivalents, and restricted cash at end of period	$	286,733	150,809
Supplemental cash flow disclosures:
Cash paid for interest	$	1,091	3,479
Cash paid for income taxes, net (1)	358		23

(1)Prior periods have been revised to conform to the current period presentation.

The accompanying notes are an integral part of these statements. See Note 1 (Summary of Significant Accounting Policies) for noncash activities.


			Wells Fargo & Company			63

Notes to Financial Statements

-See the Glossary of Acronyms at the end of this Report for terms used throughout the Financial Statements and related Notes.


Note 1: Summary of Significant Accounting Policies

Wells Fargo & Company is a diversified financial services company. We provide banking, investment and mortgage products and services, as well as consumer and commercial finance, through banking locations and offices, the internet and other distribution channels to individuals, businesses and institutions in all 50 states, the District of Columbia, and in 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, 2020 (2020 Form 10-K). There were no material changes to these policies in first quarter 2021.

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 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 (Note 4 (Loans and Related Allowance for Credit Losses));

•valuations of residential mortgage servicing rights (MSRs) (Note 8 (Securitizations and Variable Interest Entities) and Note 9 (Mortgage Banking Activities));

•valuations of financial instruments (Note 15 (Fair Values of Assets and Liabilities));

•liabilities for contingent litigation losses (Note 13 (Legal Actions));

•income taxes; and

•goodwill impairment (Note 10 (Intangible Assets)).

Actual results could differ from those estimates.

These unaudited interim financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the periods presented. These adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q. The results of operations in the interim financial statements do not necessarily indicate the results that may be expected for the full year. The interim financial information should be read in conjunction with our ~~adoption~~2020 Form 10-K.

Accounting Standards Adopted in 2021

In first quarter 2021, we adopted the following new accounting guidance:

•Accounting Standards Update (ASU or Update) 2021-01 – Reference Rate Reform (Topic 848): Scope

•ASU 2020-08 – Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs

•ASU 2020-01 – Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Financial Accounting Standards Board (FASB) Emerging Issues Task Force)

•ASU 2019-12 – Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

ASU 2021-01 clarifies the scope of Topic 848 to include derivatives affected by changes in interest rates for margining, discounting, or contract price alignment as part of the market-wide transition to new reference rate (commonly referred to as the “discounting transition”), even if they do not reference the London Interbank Offered Rate or another rate that is expected to be discontinued as a result of reference rate reform. The guidance also clarifies other aspects of the relief provided in Accounting Standards Codification (ASC) 848. We adopted ASU 2021-01 in first quarter 2021, and the guidance will be followed until the Update terminates on December 31, 2022. This guidance is applied on a prospective basis. The Update did not have a material impact on our consolidated financial statements.

ASU 2020-08 clarifies the accounting for purchased callable debt securities carried at a premium and was issued to correct an unintended application of ASU 2017-08 – Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, ~~CECL~~which requires amortization of such premiums to the earliest call date, but was not clear for the method to be used for instruments with multiple call dates. This Update now specifies that such premiums are amortized to the next call date and requires reassessment throughout the life of the instruments with multiple call dates. The Update did not have an impact on ~~January 1, 2020,~~our consolidated financial statements, as we had interpreted the provisions of ASU 2017-08 in this manner upon our adoption in first quarter 2019.

ASU 2020-01 clarifies the accounting for equity securities upon transition between the measurement alternative and equity method. The Update also clarifies for forward contracts and options to purchase equity securities an entity need not consider whether upon settlement of the forward contract or option if the equity securities would be accounted for by the equity method or the fair value option. We adopted this Update in first quarter 2021. The Update did not have an impact on our consolidated financial statements.

ASU 2019-12 provides narrow scope simplifications and improvements to the general principles in ASC Topic 740 – Income Taxes related to intraperiod tax allocation, basis differences when there are changes in ownership of foreign investments and interim periods income tax accounting for year to date losses that exceed anticipated annual losses. The Update did not have an impact on our consolidated financial statements.


64			Wells Fargo & Company

Supplemental Cash Flow Information

Significant noncash activities are presented in Table 1.1.

Table 1.1:Supplemental Cash Flow Information


	Quarter ended March 31,
(in millions)	2021	2020

Held-to-maturity debt securities purchased from securitization of LHFS (1)	10,252	62
Transfers from loans to LHFS (2)	6,249	1,063
Transfers from available-for-sale debt securities to held-to-maturity debt securities	16,617	0

(1)For the quarter ended March 31, 2021, predominantly represents agency mortgage-backed securities purchased upon settlement of the sale and securitization of our conforming residential mortgage loans. See Note 8 (Securitizations and Variable Interest Entities) for additional information.

(2)Prior periods have been revised to conform to the current period presentation.

Subsequent Events

We have evaluated the effects of events that have occurred subsequent to March 31, 2021, and there have been no material events that would require recognition in our first quarter 2021 consolidated financial statements or disclosure in the Notes to the consolidated financial statements.


			Wells Fargo & Company			65


Note 2: Trading Activities

Table 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)	Mar 31, 2021		Dec 31, 2020
Trading assets:
Debt securities	$	72,784	75,095
Equity securities	20,254		23,032
Loans held for sale	2,303		1,015
Gross trading derivative assets	59,185		58,767
Netting (1)	(35,145)		(34,301)
Total trading derivative assets	24,040		24,466
Total trading assets	119,381		123,608
Trading liabilities:
Short sale	22,733		22,441
Gross trading derivative liabilities	49,296		53,285
Netting (1)	(37,269)		(39,444)
Total trading derivative liabilities	12,027		13,841
Total trading liabilities	$	34,760	36,282

(1)Represents balance sheet netting for trading derivative asset and liability balances, and trading portfolio level counterparty valuation adjustments.

Table 2.2 provides a summary of the net interest income earned from trading securities, and net gains and losses due to the realized and unrealized gains and losses from trading activities.

Net interest income also includes dividend income on trading securities and dividend expense on trading securities we have ~~updated~~sold, but not yet purchased.

Table 2.2: Net Interest Income and Net Gains (Losses) on Trading Activities


	Quarter ended March 31,
(in millions)		2021		2020
Interest income:
Debt securities		$	529	766
Equity securities		103		137
Loans held for sale		12		12
Total interest income		644		915
Less: Interest expense		110		141
Net interest income		534		774
Net gains (losses) from trading activities (1):
Debt securities		(2,106)		2,355
Equity securities		1,153		(4,401)
Loans held for sale		24		(12)
Derivatives (2)		1,277		2,122
Total net gains from trading activities		348		64
Total trading-related net interest and noninterest income		$	882	838

(1)Represents realized gains (losses) from our ~~critical accounting policy~~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.


66			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.~~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, net of the ACL. The net unrealized gains (losses) for AFS debt securities are reported as a component of cumulative other comprehensive income (OCI), net of the ACL and applicable income taxes. Information on debt

securities held for trading is included in Note 2 (Trading Activities).

Outstanding balances exclude accrued interest receivable on AFS and HTM debt securities, which are included in other assets. See Note 7 (Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. The interest income reversed in first quarter 2021 and 2020 was insignificant.

Table 3.1:Available-for-Sale and Held-to-Maturity Debt Securities Outstanding


(in millions)	Amortized cost, net (1)		Gross unrealized gains	Gross unrealized losses	Fair value
March 31, 2021
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	25,144	136	(63)	25,217
Non-U.S. government securities	14,458		0	0	14,458
Securities of U.S. states and political subdivisions (2)	19,288		417	(48)	19,657
Federal agency mortgage-backed securities	115,503		3,142	(988)	117,657
Non-agency mortgage-backed securities (3)	4,040		46	(28)	4,058
Collateralized loan obligations	9,858		7	(15)	9,850
Other debt securities	9,514		490	(51)	9,953
Total available-for-sale debt securities	197,805		4,238	(1,193)	200,850
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	40,251		964	(621)	40,594
Securities of U.S. states and political subdivisions	27,569		662	(171)	28,060
Federal agency mortgage-backed securities	144,484		2,986	(2,292)	145,178
Non-agency mortgage-backed securities	907		36	(15)	928
Collateralized loan obligations	18,981		218	0	19,199

Total held-to-maturity debt securities	232,192		4,866	(3,099)	233,959
Total (4)	$	429,997	9,104	(4,292)	434,809
December 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	21,954	205	0	22,159
Non-U.S. government securities	16,816		0	(3)	16,813
Securities of U.S. states and political subdivisions (2)	19,263		224	(81)	19,406
Federal agency mortgage-backed securities	134,838		4,260	(28)	139,070
Non-agency mortgage-backed securities (3)	3,745		30	(46)	3,729
Collateralized loan obligations	9,058		4	(44)	9,018
Other debt securities	9,859		399	(61)	10,197
Total available-for-sale debt securities	215,533		5,122	(263)	220,392
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	47,295		1,472	(170)	48,597
Securities of U.S. states and political subdivisions	25,860		938	(5)	26,793
Federal agency mortgage-backed securities	115,437		4,182	(21)	119,598
Non-agency mortgage-backed securities	890		51	(8)	933
Collateralized loan obligations	16,238		148	0	16,386

Total held-to-maturity debt securities	205,720		6,791	(204)	212,307
Total (4)	$	421,253	11,913	(467)	432,699

(1)Represents amortized cost of the securities, net of the ACL of $41 million and $28 million related to AFS debt securities and $89 million and $41 million related to HTM debt securities at March 31, 2021, and December 31, 2020, respectively.

(2)Includes investments in tax-exempt preferred debt securities issued by investment funds or trusts that predominantly invest in tax-exempt municipal securities. The amortized cost, net of the ACL and fair value of these types of securities, was $5.2 billion at March 31, 2021, and $5.0 billion at December 31, 2020.

(3)Predominantly consists of commercial mortgage-backed securities at both March 31, 2021, and December 31, 2020.

(4)We held AFS and HTM debt securities from Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) that each exceeded 10% of stockholders’ equity, with an amortized cost of $103.4 billion and $89.5 billion and a fair value of $104.5 billion and $90.5 billion at March 31, 2021, and an amortized cost of $99.8 billion and $88.7 billion and a fair value of $103.2 billion and $91.5 billion at December 31, 2020, respectively.


			Wells Fargo & Company			67

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

Table 3.2 details the breakout of purchases of and transfers to HTM debt securities by major category of security.

Table 3.2:Held-to-Maturity Debt Securities Purchases and Transfers


	Quarter ended March 31,
(in millions)		2021		2020
Purchases of held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies		$	0	3,016
Securities of U.S. states and political subdivisions		1,910		866
Federal agency mortgage-backed securities		24,867		15,863
Non-agency mortgage-backed securities		29		62
Collateralized loan obligations		3,953		0
Total purchases of held-to-maturity debt securities		30,759		19,807
Transfers from available-for-sale debt securities to held-to-maturity debt securities:


Federal agency mortgage-backed securities		16,617		0


Total transfers from available-for-sale debt securities to held-to-maturity debt securities		$	16,617	0

(1)Inclusive of securities purchased but not yet settled and noncash purchases from securitization of loans held for sale (LHFS).

Table 3.3 shows the composition of interest income, provision for credit losses, and gross realized gains and losses

from sales and impairment write-downs included in earnings related to AFS and HTM debt securities (pre-tax).

Table 3.3:Income Statement Impacts for Available-for-Sale and Held-to-Maturity Debt Securities


	Quarter ended March 31,
(in millions)		2021		2020
Interest income (1):
Available-for-sale		$	811	1,726
Held-to-maturity		972		980
Total interest income		1,783		2,706
Provision for credit losses:
Available-for-sale		22		168
Held-to-maturity		47		4
Total provision for credit losses		69		172
Realized gains and losses (2):
Gross realized gains		151		256
Gross realized losses		0		(4)


Impairment write-downs		0		(15)
Net realized gains		$	151	237

(1)Excludes interest income from trading debt securities, which is disclosed in Note 2 (Trading Activities).

(2)Realized gains and losses relate to AFS debt securities. There were 0 realized gains or losses from HTM debt securities in all periods presented.

Credit Quality

We monitor credit quality of debt securities by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the ACL for debt securities. The credit quality indicators that we most closely monitor include credit ratings and delinquency status and are based on information as of our financial statement date.

CREDIT RATINGS Credit ratings express opinions about the credit quality of a debt security. We determine the credit rating of a security according to the lowest credit rating made available by national recognized statistical rating organizations (NRSROs). Debt securities rated investment grade, that is those with ratings similar to BBB-/Baa3 or above, as defined by NRSROs, are generally considered by the rating agencies and market participants to be low credit risk. Conversely, debt securities rated below investment grade, labeled as “speculative grade” by the rating agencies, are considered to be distinctively higher credit risk than investment grade debt securities. For debt

securities not rated by NRSROs, we determine an internal credit grade of the debt securities (used for credit risk management purposes) equivalent to the credit ratings assigned by major credit agencies. Substantially all of our debt securities were rated by NRSROs at March 31, 2021, and December 31, 2020.

Table 3.4 shows the percentage of fair value of AFS debt securities and amortized cost of HTM debt securities determined to be rated investment grade, inclusive of securities rated based on internal credit grades.


68			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
March 31, 2021
Total portfolio (1)	$	200,850	99	%	232,281	99	%
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)	$	142,874	100	%	184,735	100	%
Securities of U.S. states and political subdivisions	19,657		99		27,587	100
Collateralized loan obligations (3)	9,850		100		19,031	100
All other debt securities (4)	28,469		92		928	5
December 31, 2020
Total portfolio (1)	$	220,392	99	%	205,761	99	%
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)	$	161,229	100	%	162,732	100	%
Securities of U.S. states and political subdivisions	19,406		99		25,870	100
Collateralized loan obligations (3)	9,018		100		16,255	100
All other debt securities (4)	30,739		93		904	6

(1)93% and 92% were rated AA- and above at March 31, 2021, and December 31, 2020, respectively.

(2)Includes federal agency mortgage-backed securities.

(3)99% and 98% were rated AA- and above at March 31, 2021, and December 31, 2020, respectively.

(4)Includes non-U.S. government, non-agency mortgage-backed, and all other debt securities.

DELINQUENCY STATUS AND NONACCRUAL DEBT SECURITIESDebt security issuers that are delinquent in payment of amounts due under contractual debt agreements have a higher probability of recognition of credit losses. As such, as part of our monitoring of the credit quality of the debt security portfolio, we consider whether debt securities we own are past due in payment of principal or interest payments and whether any securities have been placed into nonaccrual status.

Debt securities that are past due and still accruing were insignificant at both March 31, 2021, and December 31, 2020. The carrying value of debt securities in nonaccrual status was insignificant at both March 31, 2021, and December 31, 2020. Charge-offs on debt securities were insignificant for the quarters ended March 31, 2021 and 2020.

Purchased debt securities with credit deterioration (PCD) are not considered to be in nonaccrual status, as payments from issuers of these securities remain current. PCD securities were insignificant during the quarters ended March 31, 2021 and 2020.


			Wells Fargo & Company			69

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

Unrealized Losses of Available-for-Sale Debt Securities

Table 3.5 shows the gross unrealized losses and fair value of AFS debt securities by length of time those individual securities in each category have been in a continuous loss position. Debt securities on which we have 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, net of allowance for credit losses.

Table 3.5:Gross Unrealized Losses and Fair Value – Available-for-Sale Debt Securities


	Less than 12 months			12 months or more		Total
(in millions)	Gross unrealized losses		Fair value	Gross unrealized losses	Fair value	Gross unrealized losses	Fair value
March 31, 2021
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	(63)	10,584	0	0	(63)	10,584
Non-U.S. government securities	0		0	0	0	0	0
Securities of U.S. states and political subdivisions	(37)		1,097	(11)	1,088	(48)	2,185
Federal agency mortgage-backed securities	(988)		41,851	0	0	(988)	41,851
Non-agency mortgage-backed securities	(2)		777	(26)	886	(28)	1,663
Collateralized loan obligations	(2)		1,984	(13)	2,381	(15)	4,365
Other debt securities	(25)		1,102	(26)	1,091	(51)	2,193
Total available-for-sale debt securities	$	(1,117)	57,395	(76)	5,446	(1,193)	62,841
December 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	0	0	0	0	0	0
Non-U.S. government securities	(3)		16,812	0	0	(3)	16,812
Securities of U.S. states and political subdivisions	(51)		3,681	(30)	1,101	(81)	4,782
Federal agency mortgage-backed securities	(27)		11,310	(1)	316	(28)	11,626
Non-agency mortgage-backed securities	(28)		1,366	(18)	534	(46)	1,900
Collateralized loan obligations	(27)		5,082	(17)	1,798	(44)	6,880
Other debt securities	(16)		647	(45)	1,604	(61)	2,251
Total available-for-sale debt securities	$	(152)	38,898	(111)	5,353	(263)	44,251

We have assessed each debt security with gross unrealized losses included in the previous table for credit impairment. As part of that assessment we evaluated and concluded that we do not intend to sell any of the debt securities, and that it is more likely than not that we will not be required to sell, prior to recovery of the amortized cost basis. 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. Credit impairment is recorded as an ACL for 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) in our 2020 Form 10-K.


70			Wells Fargo & Company

Contractual Maturities

Table 3.6 and Table 3.7 show the remaining contractual maturities, amortized cost, net of the ACL, fair value and weighted average effective yields of AFS and HTM debt securities, respectively. The remaining contractual principal

maturities for 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
March 31, 2021
Available-for-sale debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	25,144		296	15,550	7,460	1,838
Fair value	25,217			296	15,573	7,402	1,946
Weighted average yield	0.59		%	0.15	0.33	0.95	1.44
Non-U.S. government securities
Amortized cost, net	$	14,458		14,433	25	0	0
Fair value	14,458			14,433	25	0	0
Weighted average yield	(0.11		%)	(0.12)	0.42	0	0
Securities of U.S. states and political subdivisions
Amortized cost, net	$	19,288		2,024	2,049	4,715	10,500
Fair value	19,657			2,028	2,094	4,712	10,823
Weighted average yield	2.02		%	1.35	1.74	1.22	2.56
Federal agency mortgage-backed securities
Amortized cost, net	$	115,503		8	292	3,037	112,166
Fair value	117,657			8	303	3,133	114,213
Weighted average yield	2.70		%	2.37	2.34	2.08	2.72
Non-agency mortgage-backed securities
Amortized cost, net	$	4,040		0	0	162	3,878
Fair value	4,058			0	0	162	3,896
Weighted average yield	2.04		%	0	0	1.94	2.05
Collateralized loan obligations
Amortized cost, net	$	9,858		0	201	7,359	2,298
Fair value	9,850			0	201	7,353	2,296
Weighted average yield	1.60		%	0	2.25	1.61	1.51
Other debt securities
Amortized cost, net	$	9,514		362	2,595	3,136	3,421
Fair value	9,953			359	2,771	3,171	3,652
Weighted average yield	3.22		%	3.04	4.47	3.23	2.29
Total available-for-sale debt securities
Amortized cost, net	$	197,805		17,123	20,712	25,869	134,101
Fair value	$	200,850		17,124	20,967	25,933	136,826
Weighted average yield	2.13		%	0.23	1.03	1.60	2.64

(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.


			Wells Fargo & Company			71

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
March 31, 2021
Held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	40,251		24,063	12,406	0	3,782
Fair value	40,594			24,236	13,197	0	3,161
Weighted average yield	2.12		%	2.09	2.37	0	1.57
Securities of U.S. states and political subdivisions
Amortized cost, net	$	27,569		628	2,231	2,026	22,684
Fair value	28,060			633	2,305	2,109	23,013
Weighted average yield	2.18		%	1.82	1.90	2.69	2.17
Federal agency mortgage-backed securities
Amortized cost, net	$	144,484		0	0	0	144,484
Fair value	145,178			0	0	0	145,178
Weighted average yield	2.28		%	0	0	0	2.28
Non-agency mortgage-backed securities
Amortized cost, net	$	907		0	14	0	893
Fair value	928			0	14	0	914
Weighted average yield	3.12		%	0	1.57	0	3.15
Collateralized loan obligations
Amortized cost, net	$	18,981		0	32	8,652	10,297
Fair value	19,199			0	32	8,748	10,419
Weighted average yield	1.75		%	0	2.32	1.77	1.73
Total held-to-maturity debt securities
Amortized cost, net	$	232,192		24,691	14,683	10,678	182,140
Fair value	233,959			24,869	15,548	10,857	182,685
Weighted average yield	2.20		%	2.08	2.29	1.94	2.23

(1)Weighted average yields displayed by maturity bucket are weighted based on amortized cost and are shown pre-tax.


72			Wells Fargo & Company


Note 4: Loans and Related Allowance for Credit Losses

Table 4.1 presents total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include unearned income, net deferred loan fees or costs, and unamortized discounts and premiums. These amounts were less

than 1% of our total loans outstanding at March 31, 2021, and December 31, 2020.

Outstanding balances exclude accrued interest receivable on loans, except for certain revolving loans, such as credit card loans.

See Note 7 (Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. During first quarter 2021, we reversed accrued interest receivable of $16 million for our commercial portfolio segment and $51 million for our consumer portfolio segment, compared with $9 million and $63 million, respectively, for the same period a year ago.

Table 4.1:Loans Outstanding


(in millions)	Mar 31, 2021		Dec 31, 2020



Commercial:
Commercial and industrial	$	319,055	318,805
Real estate mortgage	121,198		121,720
Real estate construction	21,533		21,805
Lease financing	15,734		16,087
Total commercial	477,520		478,417
Consumer:
Residential mortgage – first lien	254,363		276,674
Residential mortgage – junior lien	21,308		23,286
Credit card	34,246		36,664
Auto	49,210		48,187
Other consumer	24,925		24,409
Total consumer	384,052		409,220
Total loans	$	861,572	887,637

Our non-U.S. loans are reported by respective class of financing receivable in the table above. Substantially all of our non-U.S. loan portfolio is commercial loans. Table 4.2 presents total non-U.S. commercial loans outstanding by class of financing receivable.

Table 4.2:Non-U.S. Commercial Loans Outstanding


(in millions)	Mar 31, 2021		Dec 31, 2020




Non-U.S. commercial loans:
Commercial and industrial	$	69,493	63,128
Real estate mortgage	7,066		7,278
Real estate construction	1,665		1,603
Lease financing	636		629
Total non-U.S. commercial loans	$	78,860	72,638


			Wells Fargo & Company			73

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

Loan Purchases, Sales, and Transfers

Table 4.3 presents the proceeds paid or received for purchases and sales of loans and transfers from loans held for investment to mortgages/loans held for sale. The table excludes loans for

which we have elected the fair value option and government insured/guaranteed residential mortgage – first lien loans because their loan activity normally does not impact the ACL.

Table 4.3:Loan Purchases, Sales, and Transfers



	2021				2020
(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total
Quarter ended March 31,




Purchases	$	48	1	49	341	1	342
Sales	(273)		(188)	(461)	(813)	(26)	(839)
Transfers (to)/from LHFS	(435)		63	(372)	77	2	79

Commitments to Lend

A commitment to lend is a legally binding agreement to lend to a customer, usually at a stated interest rate, if funded, and for specific purposes and time periods. We generally require a fee to extend such commitments. Certain commitments are subject to loan agreements with covenants regarding the financial performance of the customer or borrowing base formulas on an ongoing basis that must be met before we are required to fund the commitment. We may reduce or cancel consumer commitments, including home equity lines and credit card lines, in accordance with the contracts and applicable law. For unconditionally cancelable commitments at our discretion, we do not recognize an ACL.

We may, as a representative for other lenders, advance funds or provide for the issuance of letters of credit under syndicated loan or letter of credit agreements. Any advances are generally repaid in less than a week and would normally require default of both the customer and another lender to expose us to loss. The unfunded amount of these temporary advance arrangements totaled approximately $81.9 billion at March 31, 2021.

We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At both March 31, 2021, and December 31, 2020, we had $1.3 billion, 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 11 (Guarantees and Other Commitments) for additional information on standby letters of credit.

When we enter into commitments, we are exposed to credit risk. The maximum credit risk for these commitments will generally be lower than the contractual amount because a significant portion of these commitments are not funded. We manage the potential risk in commitments to lend by limiting the total amount of commitments, both by individual customer and in total, by monitoring the size and maturity structure of these commitments and by applying the same credit standards for these commitments as for all of our credit activities.

For loans and commitments to lend, we generally require collateral or a guarantee. We may require various types of collateral, including commercial and consumer real estate, autos, other short-term liquid assets such as accounts receivable or inventory and long-lived assets, such as equipment and other business assets. Collateral requirements for each loan or commitment may vary based on the loan product and our assessment of a customer’s credit risk according to the specific credit underwriting, including credit terms and structure.

The contractual amount of our unfunded credit commitments, including unissued standby and commercial letters of credit, is summarized by portfolio segment and class of financing receivable in Table 4.4. The table excludes the issued standby and commercial letters of credit and temporary advance arrangements described above.

Table 4.4:Unfunded Credit Commitments


(in millions)	Mar 31, 2021		Dec 31, 2020
Commercial:
Commercial and industrial	$	385,575	378,167
Real estate mortgage	8,584		7,993
Real estate construction	15,150		15,650

Total commercial	409,309		401,810
Consumer:
Residential mortgage – first lien	37,066		31,530
Residential mortgage – junior lien	31,573		32,820
Credit card	124,077		121,096
Other consumer	51,361		49,179
Total consumer	244,077		234,625
Total unfunded credit commitments	$	653,386	636,435


74			Wells Fargo & Company

~~Allowance for Credit Losses~~

We maintain an allowance for credit losses (ACL) for loans, which is management’s estimate of the expected credit losses in the loan portfolio and unfunded credit commitments, at the balance sheet date, excluding loans and unfunded credit commitments carried at fair value or held for sale. Additionally, we maintain an allowance for credit losses for debt securities classified as either held-to-maturity (HTM) or available-for-sale (AFS), other financial assets measured at amortized cost, net investments in leases, and other off-balance sheet credit exposures. In connection with our adoption of CECL, we updated our approach for estimating expected credit losses, which includes new areas for management judgment, described more fully below, and updated our accounting policies. For more information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

For loans and HTM debt securities, the ACL is measured based on the remaining contractual term of the financial asset (including off-balance sheet credit exposures) adjusted, as appropriate, for prepayments and permitted extension options using historical experience, current conditions, and forecasted information. For AFS debt securities, the ACL is measured using a discounted cash flow approach and is limited to the difference between the fair value of the security and its amortized cost.

Changes in the ACL and, therefore, in the related provision for credit losses can materially affect net income. In applying the judgment and review required to determine the ACL, management considerations include the evaluation of past events, historical experience, changes in economic forecasts and conditions, customer behavior, collateral values, and the length of the initial loss forecast period, and other influences. From time to time, changes in economic factors or assumptions, business strategy, products or product mix, or debt security investment strategy, may result in a corresponding increase or decrease in our ACL. While our methodology attributes portions of the ACL to specific financial asset classes (loan and debt

~~security portfolios) or loan portfolio segments (commercial and consumer), the entire ACL is available to absorb credit losses of the company.~~

~~Judgment is specifically applied in:~~

•

~~Economic assumptions and the length of the initial loss forecast period.~~ Forecasted economic variables, such as gross domestic product (GDP), unemployment rate or collateral asset prices, are used to estimate expected credit losses. While many of these economic variables are evaluated at the macro-economy level, some economic variables may be forecasted at more granular levels, for example, using the metro statistical area (MSA) level for unemployment rates, home prices and commercial real estate prices. Quarterly, we assess the length of the initial loss forecast period and have currently set the period to one year.

•

~~Reversion of losses beyond the initial forecast period.~~ We use a reversion approach to connect the losses estimated for our initial loss forecast period to the period of our historical loss expectations. We give consideration to the type of portfolio, point in the credit cycle, expected length of recessions and recoveries, as well as other relevant factors. During forecasted periods of expansionary economic conditions, we revert immediately to our historical loss expectations. However, when recessionary conditions are forecasted over the initial loss forecast period, we will utilize a linear reversion to the long-term average losses. The length of reversion period varies by asset type – one year for shorter contractual term loans such as commercial loans and two years for longer contractual term loans such as 1-4 family mortgage loans. We assess the reversion approach on a quarterly basis and the length of the reversion period by asset type annually.

•

~~Historical loss expectations~~. At the end of the reversion period, we incorporate the changes in economic variables observed during representative historical time periods that include both recessions and expansions. This analysis is used to compute average losses for any given portfolio and its associated credit characteristics. Annually, we assess the historical time periods and ensure the average loss estimates are representative of our historical loss experience.

•

~~Credit risk ratings applied to individual commercial loans, unfunded credit commitments, and debt securities.~~ Individually assessed credit risk ratings are considered key credit variables in our modeled approaches to help assess probability of default and loss given default. Borrower quality ratings are aligned to the borrower’s financial strength and contribute to forecasted probability of default curves. Collateral quality ratings combined with forecasted collateral prices (as applicable) contribute to the forecasted severity of loss in the event of default. These credit risk ratings are reviewed by experienced senior credit officers and subjected to reviews by an internal team of credit risk specialists.


•	~~Usage of credit loss estimation models.~~ We use internally developed models that incorporate credit attributes and economic variables to generate estimates of credit losses. Management uses a combination of judgement and quantitative analytics in the determination of segmentation, modeling approach, and variables that are leveraged in the models. These models are validated in

~~accordance with the Company’s policies by an internal model validation group.~~We routinely assess our model performance and apply adjustments when necessary to improve the accuracy of loss estimation. We also assess our models for limitations against the company-wide risk inventory to help ensure that we appropriately capture known and emerging risks in our estimate of expected credit losses and apply overlays as needed.

•

~~Valuation of collateral~~. The current fair value of collateral is utilized to assess the expected credit losses when a financial asset is considered to be collateral dependent. We apply judgment when valuing the collateral either through appraisals, evaluation of the cash flows of the property, or other quantitative techniques. Decreases in collateral valuations support incremental charge-downs and increases in collateral valuation are included in the allowance for credit losses as a negative allowance when the financial asset has been previously written-down below current recovery value.

•

~~Contractual term considerations.~~ The remaining contractual term of a loan is adjusted for expected prepayments and certain expected extensions, renewals, or modifications. We extend the contractual term when we are not able to unconditionally cancel contractual renewals or extension options. We also incorporate into our allowance for credit losses any scenarios where we reasonably expect to provide an extension through a TDR.


•	~~Qualitative factors which may not be adequately captured in the loss models.~~ These amounts represent management’s judgment of risks inherent in the processes and assumptions used in establishing the ACL. We also consider economic environmental factors, modeling assumptions and performance, process risk, and other subjective factors, including industry trends and emerging risk assessments.

~~Sensitivity~~The ACL for loans is sensitive to changes in key assumptions which requires significant judgment to be used by management. Future amounts of the ACL for loans will be based on a variety of factors, including loan balance changes, portfolio credit quality, and general economic conditions. General economic conditions are forecasted using economic variables, which could have varying impacts on different financial assets or portfolios. Additionally, throughout numerous credit cycles, there are observed changes in economic variables such as the unemployment rate, GDP and real estate prices which may not move in a correlated manner as variables may move in opposite directions or differ across portfolios or geography.

In order to provide a sensitivity analysis, we developed two hypothetical scenarios by applying changes in economic variables to our loan portfolio, which affect the expected balances, credit quality, and mix. The outcomes of both scenarios were influenced by the length of the scenario periods, as well as the duration and timing of changes in economic variables within those scenarios. The scenarios reflect the impact of economic stress and corresponding adverse changes in economic variables for a longer period than the initial loss forecast period used to develop our current ACL for loans. Neither of the scenarios consider any benefit related to economic stimulus programs or other legislative or regulatory relief.

One hypothetical scenario represents an adverse scenario based on changes in economic variables experienced during the last credit crisis. Compared with the economic forecast used to develop our current ACL for loans, this adverse scenario reflects a more substantial and sustained increase in unemployment, a deeper and more sustained decline in GDP along with significant declines in consumer and commercial real estate prices. This adverse scenario resulted in an increase in the ACL for loans of $6.8 billion.

A second more severe scenario is similar to our annual Company-run stress test. Compared with the adverse scenario, the more severe scenario reflects a sustained but sharper increase in unemployment and a more significant and sustained decline in GDP. Declines in real estate prices are consistent with the adverse scenario, with additional stress to consumer and commercial real estate prices based on our regional and industry concentrations, as well as an idiosyncratic stress as a result of declines in oil and gas prices. The more severe scenario resulted in an increase in the ACL for loans of $11.3 billion.

The changes in economic variables in these scenarios were not contemplated in the economic forecast used to develop our current ACL for loans. In addition, these hypothetical increases in our ACL for loans represent changes to our quantitative estimate and do not incorporate the impact of management judgment for qualitative factors applied in the current ACL for loans, which may have an offsetting impact to the scenario results. Finally, if these hypothetical scenarios were to materialize, the increase in our ACL for loans may be recognized over time if actual loss expectations exceed our historical loss experience.

These sensitivity analyses are hypothetical scenarios and the results do not represent management’s view of expected credit losses at the balance sheet date. The sensitivity analyses exclude the ACL for debt securities given its size relative to the overall ACL. Management believes that the current estimate for the ACL for loans was appropriate at the balance sheet date. Because significant judgment is used, it is possible that others performing similar analyses could reach different conclusions.

~~Current Accounting Developments~~

~~Table 41 provides the significant accounting updates applicable to us that have been issued by the Financial Accounting Standards Board (FASB) but are not yet effective.~~

~~Table 41:Current Accounting Developments – Issued Standards~~



~~Description~~		~~Effective date and financial statement impact~~
~~ASU 2018-12 – Financial Services – Insurance (Topic 944):~~ ~~Targeted Improvements to the Accounting for Long-Duration Contracts~~ ~~and subsequent related updates~~
The Update requires all features in long-duration insurance contracts that meet the definition of a market risk benefit to be measured at fair value through earnings with changes in fair value attributable to our own credit risk recognized in other comprehensive income. Currently, two measurement models exist for these features, fair value and insurance accrual. The Update requires the use of a standardized discount rate and routine updates for insurance assumptions used in valuing the liability for future policy benefits for traditional long-duration contracts. The Update also simplifies the amortization of deferred acquisition costs.		The guidance becomes effective on January 1, 2022. Certain of our variable annuity reinsurance products meet the definition of market risk benefits and will require the associated insurance related reserves for these products to be measured at fair value as of the earliest period presented, with the cumulative effect on fair value for changes attributable to our own credit risk recognized in the beginning balance of accumulated other comprehensive income. The cumulative effect of the difference between fair value and carrying value, excluding the effect of our own credit, will be recognized in the opening balance of retained earnings. As of March 31, 2020, we held $1.1 billion in insurance-related reserves of which $560 million was in scope of the Update. A total of $553 million was associated with products that meet the definition of market risk benefits, and of this amount, $65 million was measured at fair value under current accounting standards. The market risk benefits are largely indexed to U.S. equity and fixed income markets. Upon adoption, we may incur periodic earnings volatility from changes in the fair value of market risk benefits generally due to the long duration of these contracts. We plan to economically hedge this volatility, where feasible. The ultimate impact of these changes will depend on the composition of our market risk benefits portfolio at the date of adoption. Changes in the accounting for the liability of future policy benefits for traditional long-duration contracts and deferred acquisition costs will be applied to all outstanding long-duration contracts on the basis of their existing carrying amounts at the beginning of the earliest period presented, and are not expected to be material.
~~ASU 2020-04 – Reference Rate Reform (Topic 848) –~~ ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~
The Update provides temporary, optional relief to ease the potential burden of accounting for reference rate reform activities that affect contractual modifications of floating-rate financial instruments indexed to IBORs and hedge accounting relationships. Contractual modifications and changes to existing hedge accounting relationships must meet specific requirements to qualify for the relief. Upon election the guidance is applied consistently to all applicable instruments, where a qualifying contractual modification is accounted for as the continuation of an existing contract rather than a new contract. The optional relief facilitates the preservation of existing fair value and cash flow hedge relationships while amending certain contractual terms of hedge accounting relationships, and changes the way the amounts excluded from the evaluation of hedge effectiveness are reported in earnings. Hedging relationships that qualify for the relief will not require discontinuation of the existing hedge accounting relationships. The election to apply the optional relief for existing fair value and cash flow hedge accounting relationships may be made on a hedge-by-hedge basis and across multiple reporting periods.		We adopted the guidance on April 1, 2020. We applied the guidance consistently to contractual amendments made to all applicable floating rate instruments indexed to IBORs. We elected to apply the guidance on an individual hedge-by-hedge basis for changes to hedge accounting relationships. The financial statement impact of the Update will change each period as contracts, existing and new, are impacted by reference rate reform activities and as our exposure changes to LIBOR and other IBORs.

~~The following Updates are applicable to us but are not expected to have a material impact on our consolidated financial statements:~~

~~ASU 2020-01 – Investments – Equity Securities (Topic 321),~~

~~Investments – Equity Method and Joint Ventures (Topic~~

~~323), and Derivatives and Hedging (Topic 815):~~ ~~Clarifying the~~

~~Interactions between Topic 321, Topic 323, and Topic 815 (a~~

~~consensus of the FASB Emerging Issues Task Force)~~


•	~~ASU 2019-12 – Income Taxes (Topic 740):~~ ~~Simplifying the Accounting for Income Taxes~~

~~Forward-Looking Statements (continued~~)

~~Forward-Looking Statements~~

This document contains forward-looking statements. In addition, we may make forward-looking statements in our other documents filed or furnished with the SEC, and our management may make forward-looking statements orally to analysts, investors, representatives of the media and others. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “target,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can” and similar references to future periods. In particular, forward-looking statements include, but are not limited to, statements we make about: (i) the future operating or financial performance of the Company, including our outlook for future growth; (ii) our noninterest expense and efficiency ratio; (iii) future credit quality and performance, including our expectations regarding future loan losses and our allowance for credit losses; (iv) the appropriateness of the allowance for credit losses; (v) our expectations regarding net interest income and net interest margin; (vi) loan growth or the reduction or mitigation of risk in our loan portfolios; (vii) future capital or liquidity levels, ratios or targets; (viii) the performance of our mortgage business and any related exposures; (ix) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (x) future common stock dividends, common share repurchases and other uses of capital; (xi) our targeted range for return on assets, return on equity, and return on tangible common equity; (xii) expectations regarding our effective income tax rate; (xiii) the outcome of contingencies, such as legal proceedings; and (xiv) the Company’s plans, objectives and strategies.

current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth;

~~the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions;~~

our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;

financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;

developments in our mortgage banking business, including the extent of the success of our mortgage loan modification efforts, the amount of mortgage loan repurchase demands that we receive, any negative effects relating to our mortgage servicing, loan modification or foreclosure practices, and the effects of regulatory or judicial requirements or guidance impacting our mortgage banking business and any changes in industry standards;

our ability to realize 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;

the effect of the current 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 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 impairments of securities held in our debt securities and equity securities portfolios;

~~the effect of a fall in stock market prices on our investment banking business and our fee income from our brokerage, asset and wealth management businesses;~~

negative effects from the retail banking sales practices matter and from other instances where customers may have experienced financial harm, including on our legal, operational and compliance costs, our ability to engage in certain business activities or offer certain products or services, our ability to keep and attract customers, our ability to attract and retain qualified team members, and our reputation;

resolution of regulatory matters, litigation, or other legal actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences;

~~a failure in or breach of our operational or security systems or infrastructure, or those of our 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, 2019, as supplemented by the “Risk Factors” section in this Report.~~

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

requirements (including under Basel capital standards), common stock issuance requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the Company’s Board of Directors, and may be subject to regulatory approval or conditions.

For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, as supplemented by the “Risk Factors” section in this Report, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.

~~Forward-looking Non-GAAP Financial Measures.~~ From time to time management may discuss forward-looking non-GAAP financial measures, such as forward-looking estimates or targets for return on average tangible common equity. We are unable to provide a reconciliation of forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures because we are unable to provide, without unreasonable effort, a meaningful or accurate calculation or estimation of amounts that would be necessary for the reconciliation due to the complexity and inherent difficulty in forecasting and quantifying future amounts or when they may occur. Such unavailable information could be significant to future results.

~~Risk Factors~~

~~The following risk factor supplements the “Risk Factors” section in our 2019 Form 10-K.~~

The COVID-19 pandemic has adversely impacted our business and financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets, and increased unemployment levels. In addition, the pandemic has resulted in temporary closures of many businesses and the institution of social distancing and sheltering in place requirements in many states and communities. As a result, the demand for our products and services may be significantly impacted, which could adversely affect our revenue. Furthermore, the pandemic could continue to result in the recognition of credit losses in our loan portfolios and increases in our allowance for credit losses, particularly if businesses remain closed, the impact on the global economy worsens, or more customers draw on their lines of credit or seek additional loans to help finance their businesses. Similarly, because of changing economic and market conditions affecting issuers, we may be required to recognize further impairments on the securities we hold as well as reductions in other comprehensive income. Our business operations may be further disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic, and we have already temporarily closed certain of our branches and offices.

Moreover, the pandemic has created additional operational and compliance risks, including the need to quickly implement and execute new programs and procedures for the products and services we offer our customers, provide enhanced safety measures for our employees and customers, comply with rapidly changing regulatory requirements, address any increased risk of fraudulent activity, and protect the integrity and functionality of our systems and networks as a larger number of our employees work remotely. The pandemic could also result in downgrades to our credit ratings or credit outlook. In response to the pandemic, we have suspended residential property foreclosure sales, evictions, and involuntary automobile repossessions, and are offering fee waivers, payment deferrals, and other expanded assistance for credit card, automobile, mortgage, small business and personal lending customers, and future governmental actions may require these and other types of customer-related responses. In addition, we have temporarily suspended share repurchases and could take other capital actions in response to the COVID-19 pandemic. The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.

~~Controls and Procedures~~

~~Disclosure Controls and Procedures~~

The Company’s management evaluated the effectiveness, as of March 31, 2020, of the Company’s disclosure controls and procedures. The Company’s chief executive officer and chief financial officer participated in the evaluation. Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2020.

~~Internal Control Over Financial Reporting~~

~~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 first quarter 2020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Income (Unaudited)
Quarter ended March 31,
(in millions, except per share amounts) 2020
2019
Interest income
Debt securities $ 3,472
3,941
Mortgage loans held for sale 197
152
Loans held for sale 12
24
Loans 10,065
11,354
Equity securities 206
210
Other interest income 775
1,322
Total interest income 14,727
17,003
Interest expense
Deposits 1,742
2,026
Short-term borrowings 291
596
Long-term debt 1,240
1,927
Other interest expense 142
143
Total interest expense 3,415
4,692
Net interest income 11,312

12,311
Provision for credit losses:
Debt securities (1) 172
—
Loans 3,833
845
Net interest income after provision for credit losses 7,307
11,466
Noninterest income
Service charges on deposit accounts 1,209
1,094
Trust and investment fees 3,574
3,373
Card fees 892
944
Other fees 632
770
Mortgage banking 379
708
Insurance 95
96
Net gains from trading activities 64
357
Net gains on debt securities 237
125
Net gains (losses) from equity securities (1,401 ) 814
Lease income 352
443
Other 372
574
Total noninterest income 6,405
9,298
Noninterest expense
Salaries 4,721
4,425
Commission and incentive compensation 2,463
2,845
Employee benefits 1,130
1,938
Technology and equipment 661
661
Net occupancy 715
717
Core deposit and other intangibles 23
28
FDIC and other deposit assessments 118
159
Other 3,217
3,143
Total noninterest expense 13,048
13,916
Income before income tax expense 664

6,848
Income tax expense 159
881
Net income before noncontrolling interests 505

5,967
Less: Net income (loss) from noncontrolling interests (148 ) 107
Wells Fargo net income $ 653

5,860
Less: Preferred stock dividends and other 611
353
Wells Fargo net income applicable to common stock $ 42
5,507
Per share information
Earnings per common share $ 0.01
1.21
Diluted earnings per common share 0.01
1.20
Average common shares outstanding 4,104.8
4,551.5
Diluted average common shares outstanding 4,135.3
4,584.0

~~(1)~~

~~Prior to our adoption of Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326):~~ ~~Measurement of Credit Losses on Financial Instruments~~ ~~(CECL)~~, ~~on January 1, 2020, provision for credit losses from debt securities was not applicable and is therefore presented as~~ $0 ~~for the prior period. For more information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.~~

~~The accompanying notes are an integral part of these statements.~~

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Comprehensive Income (Unaudited)
Quarter ended March 31,
(in millions) 2020
2019
Wells Fargo net income $ 653
5,860
Other comprehensive income (loss), before tax:
Debt securities:
Net unrealized gains (losses) arising during the period (110 ) 2,831
Reclassification of net gains to net income (172 ) (81 )
Derivative and hedging activities:
Net unrealized gains (losses) arising during the period 124
(35 )
Reclassification of net losses to net income 58
79
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period 3
(4 )
Amortization of net actuarial loss, settlements and other to net income 36
35
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period (194 ) 42
Other comprehensive income (loss), before tax (255 ) 2,867
Income tax benefit (expense) related to other comprehensive income 1
(694 )
Other comprehensive income (loss), net of tax (254 ) 2,173
Less: Other comprehensive loss from noncontrolling interests (1 ) —
Wells Fargo other comprehensive income (loss), net of tax (253 ) 2,173
Wells Fargo comprehensive income 400
8,033
Comprehensive income (loss) from noncontrolling interests (149 ) 107
Total comprehensive income $ 251
8,140

~~The accompanying notes are an integral part of these statements.~~

Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet
(in millions, except shares) Mar 31,
2020
Dec 31,
2019
Assets (Unaudited)

Cash and due from banks $ 22,738
21,757
Interest-earning deposits with banks 128,071
119,493
Total cash, cash equivalents, and restricted cash 150,809
141,250
Federal funds sold and securities purchased under resale agreements 86,465
102,140
Debt securities:
Trading, at fair value 80,425
79,733
Available-for-sale, at fair value (includes amortized cost of $248,187 and $260,060,
net of allowance for credit losses of $161 and $0) (1)
251,229
263,459
Held-to-maturity, at amortized cost, net of allowance for credit losses of $11 and $0 (fair value $177,562 and $156,860) (1) 169,909
153,933
Mortgage loans held for sale (includes $16,665 and $16,606 carried at fair value) (2) 21,795
23,342
Loans held for sale (includes $1,673 and $972 carried at fair value) (2) 1,883
977
Loans (includes $160 and $171 carried at fair value) (2) 1,009,843
962,265
Allowance for loan losses (11,263 ) (9,551 )
Net loans 998,580
952,714
Mortgage servicing rights:
Measured at fair value 8,126
11,517
Amortized 1,406
1,430
Premises and equipment, net 9,108
9,309
Goodwill 26,381
26,390
Derivative assets 25,023
14,203
Equity securities (includes $28,176 and $41,936 carried at fair value) (2) 54,047
68,241
Other assets 96,163
78,917
Total assets (3) $ 1,981,349
1,927,555
Liabilities
Noninterest-bearing deposits $ 379,678
344,496
Interest-bearing deposits 996,854
978,130
Total deposits 1,376,532
1,322,626
Short-term borrowings 92,289
104,512
Derivative liabilities 15,618
9,079
Accrued expenses and other liabilities 76,238
75,163
Long-term debt 237,342
228,191
Total liabilities (4) 1,798,019
1,739,571
Equity
Wells Fargo stockholders’ equity:
Preferred stock 21,347
21,549
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares 9,136
9,136
Additional paid-in capital 59,849
61,049
Retained earnings 165,308
166,697
Cumulative other comprehensive income (loss) (1,564 ) (1,311 )
Treasury stock – 1,385,401,170 shares and 1,347,385,537 shares (70,215 ) (68,831 )
Unearned ESOP shares (1,143 ) (1,143 )
Total Wells Fargo stockholders’ equity 182,718
187,146
Noncontrolling interests 612
838
Total equity 183,330
187,984
Total liabilities and equity $ 1,981,349
1,927,555


~~(1)~~	Prior to our adoption of CECL on January 1, 2020, the allowance for credit losses (ACL) related to available-for-sale (AFS) and held-to-maturity (HTM) debt securities was not applicable and is therefore presented as $0 ~~at December 31, 2019. For more information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.~~


~~(2)~~	~~Parenthetical amounts represent assets and liabilities that we are required to carry at fair value or have elected the fair value option.~~

~~(3)~~

~~Our consolidated assets at~~ ~~March 31, 2020, and~~ ~~December 31, 2019, include the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Cash and due from banks,~~ ~~$19 million~~ ~~and~~ ~~$16 million; Interest-earning deposits with banks,~~ ~~$0 million~~ ~~and~~ ~~$284 million; Debt securities,~~ ~~$616 million~~ ~~and~~ ~~$540 million; Net loans,~~ ~~$13.1 billion~~ ~~and~~ ~~$13.2 billion; Derivative assets,~~ ~~$6 million~~ ~~and~~ ~~$1 million; Equity securities,~~ ~~$95 million~~ ~~and~~ ~~$118 million; Other assets,~~ ~~$258 million~~ ~~and~~ ~~$239 million; and Total assets,~~ ~~$14.1 billion~~ ~~and~~ ~~$14.4 billion, respectively.~~

~~(4)~~

~~Our consolidated liabilities at~~ ~~March 31, 2020, and~~ ~~December 31, 2019, include the following VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo: Short-term borrowings,~~ ~~$300 million~~ ~~and~~ ~~$401 million; Derivative liabilities,~~ ~~$8 million~~ ~~and~~ ~~$3 million; Accrued expenses and other liabilities,~~ ~~$230 million~~ ~~and~~ ~~$235 million; Long-term debt,~~ ~~$235 million~~ ~~and~~ ~~$587 million; and Total liabilities,~~ ~~$773 million~~ ~~and~~ ~~$1.2 billion, respectively.~~

~~The accompanying notes are an integral part of these statements.~~

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity (Unaudited)

Preferred stock Common stock
(in millions, except shares) Shares
Amount
Shares
Amount
Balance December 31, 2019 7,492,169
$ 21,549
4,134,425,937
$ 9,136
Cumulative effect from change in accounting policies (1)
Balance January 1, 2020 7,492,169
$ 21,549
4,134,425,937
$ 9,136
Net income
Other comprehensive income (loss), net of tax
Noncontrolling interests
Common stock issued 37,351,887

Common stock repurchased (75,367,520 )
Preferred stock redeemed (1,828,720 ) (2,215 )
Preferred stock issued to ESOP

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

Preferred stock issued 80,500
2,013

Common stock dividends
Preferred stock dividends
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change (1,748,220 ) (202 ) (38,015,633 ) —
Balance March 31, 2020 5,743,949
$ 21,347
4,096,410,304
$ 9,136
Balance December 31, 2018 9,377,216
$ 23,214
4,581,253,608
$ 9,136
Cumulative effect from change in accounting policies (2)
Balance January 1, 2019 9,377,216
$ 23,214
4,581,253,608
$ 9,136
Net income
Other comprehensive income (loss), net of tax
Noncontrolling interests
Common stock issued 28,057,901

Common stock repurchased (97,363,710 )
Preferred stock redeemed —
—

Preferred stock issued to ESOP

Preferred stock released by ESOP

Preferred stock converted to common shares (5 ) —
31

Preferred stock issued

Common stock dividends
Preferred stock dividends
Stock incentive compensation expense
Net change in deferred compensation and related plans
Net change (5 ) —
(69,305,778 ) —
Balance March 31, 2019 9,377,211
$ 23,214
4,511,947,830
$ 9,136


~~(1)~~	~~We adopted CECL effective January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.~~


~~(2)~~	~~Effective January 1, 2019, we adopted ASU 2016-02 – Leases (Topic 842) and subsequent related Updates, ASU 2017-08 – Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20):~~ ~~Premium Amortization on Purchased Callable Debt Securities.~~

Three months ended March 31,
Wells Fargo stockholders’ equity
Additional
paid-in
capital

Retained
earnings

Cumulative
other
comprehensive
income

Treasury
stock

Unearned
ESOP
shares

Total
Wells Fargo
stockholders’
equity

Noncontrolling
interests

Total
equity

61,049
166,697
(1,311 ) (68,831 ) (1,143 ) 187,146
838
187,984
991

991
991
61,049
167,688
(1,311 ) (68,831 ) (1,143 ) 188,137
838
188,975
653
653
(148 ) 505
(253 ) (253 ) (1 ) (254 )
—

—
(77 ) (77 )
(17 ) (308 )

2,002

1,677
1,677
—

(3,407 )

(3,407 ) (3,407 )
17
(272 ) (2,470 ) (2,470 )
—

—
—
—
—

—
—
—
—

—

—
—
(45 )

1,968
1,968
18
(2,114 )

(2,096 ) (2,096 )

(339 )

(339 ) (339 )
181

181
181
(1,354 )

21

(1,333 ) (1,333 )
(1,200 ) (2,380 ) (253 ) (1,384 ) —
(5,419 ) (226 ) (5,645 )
59,849
165,308
(1,564 ) (70,215 ) (1,143 ) 182,718
612
183,330
60,685
158,163
(6,336 ) (47,194 ) (1,502 ) 196,166
900
197,066
(492 ) 481
(11 ) (11 )
60,685
157,671
(5,855 ) (47,194 ) (1,502 ) 196,155
900
197,055
   5,860

   5,860
107
5,967
      2,173
   2,173
—
2,173
—



—
(106 ) (106 )
—
(329 )
1,468
1,139
1,139
—

(4,820 ) (4,820 ) (4,820 )
—
—
—
—

—
—
—
—

—
—
—
—

—
—
—
—


—
—
19
(2,073 )

(2,054 ) (2,054 )
(353 )

(353 ) (353 )
544

544
544
(839 )

27
(812 ) (812 )
(276 ) 3,105
2,173
(3,325 ) —
1,677
1
1,678
60,409
160,776
(3,682 ) (50,519 ) (1,502 ) 197,832
901
198,733

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
Quarter ended March 31,
(in millions) 2020
2019
Cash flows from operating activities:
Net income before noncontrolling interests $ 505
5,967
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 4,005
845
Changes in fair value of MSRs, MLHFS and LHFS carried at fair value 3,486
1,144
Depreciation, amortization and accretion 1,868
1,449
Other net (gains) losses 7,638
(1,418 )
Stock-based compensation 582
902
Originations and purchases of mortgage loans held for sale (37,216 ) (25,098 )
Proceeds from sales of and paydowns on mortgage loans held for sale 31,922
17,148
Net change in:
Debt and equity securities, held for trading 20,413
6,969
Loans held for sale (731 ) 728
Deferred income taxes (1,448 ) 312
Derivative assets and liabilities (4,293 ) (1,586 )
Other assets (10,391 ) 1,130
Other accrued expenses and liabilities 933
(541 )
Net cash provided by operating activities 17,273
7,951
Cash flows from investing activities:
Net change in:
Federal funds sold and securities purchased under resale agreements 15,675
(18,414 )
Available-for-sale debt securities:
Proceeds from sales 11,843
1,680
Prepayments and maturities 14,135
6,001
Purchases (18,658 ) (4,937 )
Held-to-maturity debt securities:
Paydowns and maturities 3,769
2,123
Purchases (19,141 ) —
Equity securities, not held for trading:
Proceeds from sales and capital returns 1,115
1,180
Purchases (3,338 ) (1,352 )
Loans:
Loans originated by banking subsidiaries, net of principal collected (53,400 ) 669
Proceeds from sales (including participations) of loans held for investment 1,959
3,410
Purchases (including participations) of loans (342 ) (331 )
Principal collected on nonbank entities’ loans 3,837
899
Loans originated by nonbank entities (2,348 ) (1,318 )
Proceeds from sales of foreclosed assets and short sales 500
707
Other, net 91
657
Net cash used by investing activities (44,303 ) (9,026 )
Cash flows from financing activities:
Net change in:
Deposits 53,903
(22,161 )
Short-term borrowings (12,223 ) 810
Long-term debt:
Proceeds from issuance 18,895
17,338
Repayment (17,563 ) (11,898 )
Preferred stock:
Proceeds from issuance 1,968
—
Redeemed (2,470 ) —
Cash dividends paid (280 ) (294 )
Common stock:
Proceeds from issuance 209
181
Stock tendered for payment of withholding taxes (306 ) (264 )
Repurchased (3,407 ) (4,820 )
Cash dividends paid (2,032 ) (1,997 )
Net change in noncontrolling interests (29 ) (83 )
Other, net (76 ) (56 )
Net cash provided (used) by financing activities 36,589
(23,244 )
Net change in cash, cash equivalents, and restricted cash 9,559
(24,319 )
Cash, cash equivalents, and restricted cash at beginning of period 141,250
173,287
Cash, cash equivalents, and restricted cash at end of period $ 150,809
148,968
Supplemental cash flow disclosures:
Cash paid for interest $ 3,479
4,401
Cash paid for income taxes 207
126

~~The accompanying notes are an integral part of these statements. See Note 1 (Summary of Significant Accounting Policies) for noncash activities.~~

~~Note 1: Summary of Significant Accounting Policies (continued~~)

~~See the Glossary of Acronyms at the end of this Report for terms used throughout the Financial Statements and related Notes.~~

~~Note 1:~~ ~~Summary of Significant Accounting Policies~~

Wells Fargo & Company is a diversified financial services company. We provide banking, trust and investments, mortgage banking, investment banking, retail banking, brokerage, and consumer and commercial finance through banking locations, the internet and other distribution channels to consumers, businesses and institutions in all 50 states, the District of Columbia, and in foreign countries. When we refer to “Wells Fargo,” “the Company,” “we,” “our” or “us,” we mean Wells Fargo & Company and Subsidiaries (consolidated). Wells Fargo & Company (the Parent) is a financial holding company and a bank holding company. We also hold a majority interest in a real estate investment trust, which has publicly traded preferred stock outstanding.

~~allowance for credit losses (Note 6 (Loans and Related Allowance for Credit Losses);~~

~~valuations of residential mortgage servicing rights (MSRs) (Note 10 (Securitizations and Variable Interest Entities) and Note 11 (Mortgage Banking Activities));~~

~~valuations of financial instruments (Note 15 (Derivatives) and Note 16 (Fair Values of Assets and Liabilities));~~

~~liabilities for contingent litigation losses (Note 14 (Legal Actions)); and~~

~~income taxes.~~

~~Actual results could differ from those estimates.~~

~~Accounting Standards Adopted in 2020~~

~~In first quarter 2020, we adopted the following new accounting guidance:~~


•	~~Accounting Standards Update (ASU or Update) 2019-04 – Codification Improvements to Topic 326,~~ ~~Financial Instruments~~ – ~~Credit Losses, Topic 815,~~ ~~Derivatives and~~

~~Hedging, and Topic 825,~~ ~~Financial Instruments. This Update includes guidance on recoveries of financial assets, which is included in the discussion for ASU 2016-13 below.~~


•	~~ASU 2018-17 – Consolidation (Topic 810):~~ ~~Targeted Improvements to Related Party Guidance for Variable Interest Entities~~


•	~~ASU 2018-15 – Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40):~~ ~~Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)~~


•	~~ASU 2018-13 – Fair Value Measurement (Topic 820):Disclosure Framework~~ – ~~Changes to the Disclosure Requirements for Fair Value Measurement.~~


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


•	~~ASU 2016-13 – Financial Instruments – Credit Losses (Topic 326):~~ ~~Measurement of Credit Losses on Financial Instruments~~ ~~and related subsequent Updates~~

~~ASU 2018-17~~ updates the guidance used by decision-makers of VIEs. Indirect interests held through related parties in common control arrangements will be considered on a proportional basis for determining whether fees paid to decision-makers and service providers are variable interests. This is consistent with how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE. The Update did not have a material impact on our consolidated financial statements.

~~ASU 2018-15~~ clarifies the accounting for implementation costs related to a cloud computing arrangement that is a service contract and enhances disclosures around implementation costs for internal-use software and cloud computing arrangements. The guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). It also requires the expense related to the capitalized implementation costs be presented in the same line item in the statement of income as the fees associated with the hosting element of the arrangement and capitalized implementation costs be presented in the balance sheet in the same line item that a prepayment for the fees of the associated hosting arrangement are presented. The Update did not have a material impact on our consolidated financial statements.

~~ASU 2018-13~~ clarifies, eliminates and adds certain fair value measurement disclosure requirements for assets and liabilities, which affects our disclosures in Note 16 (Fair Values of Assets and Liabilities). Although the ASU became effective on January 1, 2020, it permitted early adoption of individual requirements without causing others to be early adopted and, as such, we partially adopted the Update during third quarter 2018 and the remainder of the requirements in first quarter 2020. The Update did not have a material impact on our consolidated financial statements.

~~ASU 2017-04~~ simplifies the goodwill impairment test by eliminating the requirement to assign the fair value of a reporting unit to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. The Update requires that a goodwill impairment loss is recognized if the fair value of the reporting unit is less than the carrying amount, including goodwill. The goodwill impairment loss is limited to the amount of goodwill allocated to the reporting unit. The guidance did not change the qualitative assessment of goodwill. This guidance is applied on a prospective basis, and accordingly, the Update did not have a material impact on our consolidated financial statements.

~~ASU 2016-13~~ changes the accounting for the measurement of credit losses on loans and debt securities. For loans and held-to-maturity (HTM) debt securities, the Update requires a current expected credit loss (CECL) measurement to estimate the allowance for credit losses (ACL) for the remaining contractual term, adjusted for prepayments, of the financial asset (including off-balance sheet credit exposures) using historical experience, current conditions, and reasonable and supportable forecasts.

Also, the Update eliminates the existing guidance for purchased credit-impaired (PCI) loans, but requires an allowance for purchased financial assets with more than an insignificant deterioration of credit since origination. In addition, the Update modifies the other-than-temporary impairment (OTTI) model for available-for-sale (AFS) debt securities to require an allowance for credit impairment instead of a direct write-down, which allows for reversal of credit impairments in future periods based on improvements in credit. Upon adoption, we recognized an overall decrease in our ACL of approximately $1.3 billion (pre-tax) as a cumulative effect adjustment from a change in accounting policies, which increased our retained earnings and regulatory capital amounts and ratios. Loans previously classified as PCI were automatically transitioned to purchased credit-deteriorated (PCD) classification. We recognized an ACL for these new PCD loans and made a corresponding adjustment to the loan balance, with no impact to net income or transition adjustment to retained earnings. For more information on the impact of CECL by type of financial asset, see Table 1.1 below.

~~Table 1.1:ASU 2016-13 Adoption Impact to Allowance for Credit Losses (1)~~

Dec 31, 2019
ASU 2016-13 Adoption Impact
Jan 1, 2020
(in billions) Balance Outstanding
ACL Balance
Coverage
ACL Balance
Coverage
Total commercial (2) $ 515.7
6.2
1.2 % $ (2.9 ) 3.4
0.7 %

Real estate 1-4 family mortgage (3) 323.4
0.9
0.3
—
0.9
0.3
Credit card (4) 41.0
2.3
5.5
0.7
2.9
7.1
Automobile (4) 47.9
0.5
1.0
0.3
0.7
1.5
Other revolving credit and installment (4) 34.3
0.6
1.6
0.6
1.2
3.5
Total consumer 446.5
4.2
0.9
1.5
5.7
1.3
Total loans 962.3
10.5
1.1
(1.3 ) 9.1
0.9
Available-for-sale and held-to-maturity debt securities and other assets (5) 420.0
0.1
NM
—
0.1
NM
Total $ 1,382.3
10.6
NM
$ (1.3 ) 9.3
NM

~~NM – Not meaningful~~


~~(1)~~	~~Amounts presented in this table may not equal the sum of its components due to rounding.~~


~~(2)~~	~~Decrease reflecting shorter contractual maturities given limitation to contractual terms.~~


~~(3)~~	Impact reflects an increase due to longer contractual terms, offset by expectation of recoveries in collateral value on mortgage loans previously written down significantly below current recovery value.


~~(4)~~	~~Increase due to longer contractual terms or indeterminate maturities.~~


~~(5)~~	~~Excludes other financial assets in the scope of CECL that do not have an allowance for credit losses based on the nature of the asset.~~

The adoption of ASU 2016-13 did not result in a change to accounting policies, except as noted herein. Our accounting policy for the ACL was updated and is now inclusive of loans, debt securities and other financing receivables. Other than the ACL and the elimination of PCI loans, there were no changes to accounting policies for loans as described in the 2019 Form 10-K. For debt securities, other than the policies with respect to the ACL, all of the current accounting policies, including those that changed as a result of CECL adoption, are included below under Debt Securities.

~~Debt Securities~~

~~Our investments in debt securities that are not held for trading purposes are classified as either debt securities available-for-sale (AFS) or held-to-maturity (HTM).~~

Investments in debt securities for which the Company does not have the positive intent and ability to hold to maturity are classified as AFS. AFS debt securities are measured at fair value, with unrealized gains and losses reported in cumulative other comprehensive income (OCI), net of the allowance for credit

losses and applicable income taxes. Investments in debt securities for which the Company has the positive intent and ability to hold to maturity are classified as HTM. HTM debt securities are measured at amortized cost, net of allowance for credit losses.

~~INTEREST INCOME AND GAIN/LOSS RECOGNITION~~Unamortized premiums and discounts are recognized in interest income over the contractual life of the security using the effective interest method, except for purchased callable debt securities carried at a premium. For purchased callable debt securities carried at a premium, the premium is amortized into interest income to the earliest call date using the effective interest method. As principal repayments are received on securities (e.g., mortgage-backed securities (MBS)), a proportionate amount of the related premium or discount is recognized in income so that the effective interest rate on the remaining portion of the security continues unchanged.

~~We recognize realized gains and losses on the sale of debt securities in net gains (losses) on debt securities within noninterest income using the specific identification method.~~

~~Note 1: Summary of Significant Accounting Policies (continued~~)

~~IMPAIRMENT AND CREDIT LOSSES~~ Unrealized losses of AFS debt securities are driven by a number of factors, including changes in interest rates and credit spreads which impact most types of debt securities with additional considerations for certain types of debt securities:

~~Debt securities of U.S. Treasury and federal agencies, including federal agency MBS, are not impacted by credit movements given the explicit or implicit guarantees provided by the U.S. government.~~

Debt securities of U.S. states and political subdivisions are most impacted by changes in the relationship between municipal and term funding credit curves rather than by changes in the credit quality of the underlying securities.

~~Structured securities, such as MBS and collateralized loan obligations (CLO), are also impacted by changes in projected collateral losses of assets underlying the security.~~

For debt securities where fair value is less than amortized cost basis, we recognize impairment in earnings if we have the intent to sell the security or if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. Impairment is recognized equal to the entire difference between the amortized cost basis and the fair value of the security and is classified as net gains (losses) from debt securities within noninterest income. Following the recognition of impairment, the security’s new amortized cost basis is the previous basis less impairment.

For debt securities where fair value is less than amortized cost basis where we did not recognize impairment in earnings, we set up an allowance for credit losses as of the balance sheet date. See “Allowance for Credit Losses” section in this Note.

~~TRANSFERS BETWEEN CATEGORIES OF DEBT SECURITIES~~ AFS debt securities transferred to the HTM classification are recorded at fair value and the unrealized gains or losses resulting from the transfer of these securities continue to be reported in cumulative OCI. The cumulative OCI balance is amortized into earnings over the same period as the unamortized premiums and discounts using the effective interest method. Any allowance for credit losses previously recorded under the AFS model on securities transferred to HTM is reversed and an allowance for credit losses is subsequently recorded under the HTM debt security model.

~~NONACCRUAL AND PAST DUE, AND CHARGE-OFF POLICIES~~ We generally place debt securities on nonaccrual status using factors similar to those described for loans. When we place a debt security on nonaccrual status, we reverse the accrued unpaid interest receivable against interest income and suspend the

amortization of premiums and accretion of discounts. If the ultimate collectability of the principal is in doubt on a nonaccrual debt security, any cash collected is first applied to reduce the security’s amortized cost basis to zero, followed by recovery of amounts previously charged off, and subsequently to interest income. Generally, we return a debt security to accrual status when all delinquent interest and principal become current under the contractual terms of the security and collectability of remaining principal and interest is no longer doubtful.

~~Our debt securities are considered past due when contractually required principal or interest payments have not been made on the due dates.~~

Our charge-off policy for debt securities are similar to those described for loans. Subsequent to charge-off, the debt security will be designated as nonaccrual and follow the process described above for any cash received.

Allowance for Credit Losses

The ACL is management’s estimate of the current expected credit losses in the loan portfolio and unfunded credit commitments, at the balance sheet date, excluding loans and unfunded credit commitments carried at fair value or held for sale. Additionally, we maintain an ACL on AFS and HTM debt securities, other financing receivables measured at amortized cost, and other off-balance sheet credit exposures. While we attribute portions of the allowance to specific financial asset classes (loan and debt security portfolios), loan portfolio segments (commercial and consumer) or major security type, the entire ACL is available to absorb credit losses of the Company.

Our ACL process involves procedures to appropriately consider the unique risk characteristics of our financial asset classes, portfolio segments, and major security types. For each loan portfolio segment and each major HTM debt security type, losses are estimated collectively for groups of loans or securities with similar risk characteristics. For loans and securities that do not share similar risk characteristics with other financial assets, the losses are estimated individually, which primarily includes our impaired large commercial loans and non-accruing HTM debt securities. For AFS debt securities, losses are estimated at the tax-lot level.

Our ACL amounts are influenced by a variety of factors, including changes in loan and debt security volumes, portfolio credit quality, and general economic conditions. General economic conditions are forecasted using economic variables which will create volatility as those variables change over time. See Table 1.2 for key economic variables used for our loan portfolios.

~~Table 1.2:Key Economic Variables~~



~~Loan Portfolio~~		~~Key economic variables~~
~~Total commercial~~		~~• Gross domestic product~~ ~~• Commercial real estate asset prices, where applicable~~ ~~• Unemployment rate~~ ~~• Corporate investment-grade bond spreads~~
~~Real estate 1-4 family mortgage~~		~~• Home price index~~ ~~• Unemployment rate~~
~~Other consumer (including credit card, automobile, and other revolving credit and installment)~~		~~• Unemployment rate~~

~~Our approach for estimating expected life-time credit losses for loans and debt securities includes the following key components:~~

~~An initial loss forecast period of one year for all portfolio segments and classes of financing receivables and off-~~

~~balance-sheet credit exposures. This period reflects management’s expectation of losses based on forward-looking economic scenarios over that time.~~

~~A historical loss forecast period covering the remaining contractual term, adjusted for expected prepayments and~~

certain expected extensions, renewals, or modifications, by portfolio segment and class of financing receivables based on the changes in key historical economic variables during representative historical expansionary and recessionary periods.

~~A reversion period of up to 2 years connecting the initial loss forecast to the historical loss forecast based on economic conditions at the measurement date.~~

Utilization of discounted cash flow (DCF) methods to measure credit impairment for loans modified in a troubled debt restructuring, unless they are collateral dependent and measured at the fair value of the collateral. The DCF methods obtain estimated life-time credit losses using the initial and historical mean loss forecast periods described above.

For AFS debt securities and certain beneficial interests classified as HTM, we utilize the DCF methods to measure the ACL, which incorporate expected credit losses using the conceptual components described above. The ACL on AFS debt securities is subject to a limitation based on the fair value of the debt securities (fair value floor).

The ACL for financial assets held at amortized cost and AFS debt securities will be reversible with immediate recognition of recovery in earnings if credit improves. The ACL for financial assets held at amortized cost is a valuation account that is deducted from, or added to, the amortized cost basis of the financial assets to present the net amount expected to be collected, which can include a negative allowance limited to the cumulative amounts previously charged off. For financial assets with an ACL estimated using DCF methods, changes in the ACL due to the passage of time are recorded in interest income. The ACL for AFS debt securities reflects the amount of unrealized loss related to expected credit losses, limited by the amount that fair value is less than the amortized cost basis, and cannot have an associated negative allowance.

For certain financial assets, such as residential real estate loans guaranteed by the Government National Mortgage Association (GNMA), an agency of the federal government, U. S. Treasury and Agency mortgage backed debt securities, as well as certain sovereign debt securities, the Company has not recognized an ACL as our expectation of nonpayment of the amortized cost basis, based on historical losses, adjusted for current conditions and reasonable and supportable forecasts, is zero.

A financial asset is collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. When a collateral-dependent financial asset is probable of foreclosure, we will measure the ACL based on the fair value of the collateral. If we intend to sell the underlying collateral, we will measure the ACL based on the collateral’s net realizable value (fair value of collateral, less estimated costs to sell). In most situations, based on our charge-off policies, we will immediately write-down the financial asset to the fair value of the collateral or net realizable value. For consumer loans, collateral-dependent financial assets may have collateral in the form of residential real estate, automobiles or other personal assets. For commercial loans, collateral-dependent financial assets may have collateral in the form of commercial real estate or other business assets.

In general, we do not record an ACL for accrued interest receivables, which are included in other assets. Uncollectible accrued interest is reversed through interest income in a timely manner in line with our non-accrual and past due policies for loans and debt securities. For consumer credit card and certain consumer lines of credit, we include an ACL for accrued interest

~~and fees since these loans are not placed on nonaccrual status and written off until the loan is 180 days past due.~~

~~COMMERCIAL LOAN PORTFOLIO SEGMENT ACL METHODOLOGY~~Generally, commercial loans, which include net investments in lease financing, are assessed for estimated losses by grading each loan using various risk factors as identified through periodic reviews. Our estimation approach for the commercial portfolio reflects the estimated probability of default in accordance with the borrower’s financial strength and the severity of loss in the event of default, considering the quality of any underlying collateral. Probability of default and severity at the time of default are statistically derived through historical observations of default and losses after default within each credit risk rating. These estimates are adjusted as appropriate based on additional analysis of long-term average loss experience compared with previously forecasted losses, external loss data or other risks identified from current economic conditions and credit quality trends. The estimated probability of default and severity at the time of default are applied to loan equivalent exposures to estimate losses for unfunded credit commitments.

~~CONSUMER LOAN PORTFOLIO SEGMENT ACL METHODOLOGY~~For consumer loans, we determine the allowance at the individual loan level. When developing historical loss experience, we pool loans, generally by product types with similar risk characteristics, such as residential real estate mortgages and credit cards. As appropriate and to achieve greater accuracy, we may further stratify selected portfolios by sub-product, origination channel, vintage, loss type, geographic location and other predictive characteristics. We use pooled loan data such as historic delinquency and default and loss severity in the development of our consumer loan models, in addition to home price trends, unemployment trends, and other economic variables that may influence the frequency and severity of losses in the consumer portfolio.

~~AFS PORTFOLIO ACL METHODOLOGY~~ We develop our ACL estimate for AFS debt securities by utilizing a security-level multi-scenario, probability-weighted discounted cash flow model based on a combination of past events, current conditions, as well as reasonable and supportable forecasts. The projected cash flows are discounted at the security’s effective interest rate, except for certain variable rate securities which are discounted using projections of future changes in interest rates, prepayable securities which are adjusted for estimated prepayments, and securities part of a fair value hedge which use hedge-adjusted assumptions. The ACL on an AFS debt security is limited to the difference between its amortized cost basis and fair value (fair value floor) and reversals of the allowance are permitted up to the amount previously recorded.

~~HTM PORTFOLIO ACL METHODOLOGY~~ For most HTM debt securities, the ACL is measured using an expected loss model, similar to the methodology used for loans. Unlike AFS debt securities, the ACL on an HTM debt security is not limited to the fair value floor.

~~Certain beneficial interests categorized as HTM debt securities utilize a similar discounted cash flow model as described for AFS debt securities, without the limitation of the fair value floor.~~

~~OTHER QUALITATIVE FACTORSThe ACL includes amounts for qualitative factors which may not be adequately reflected in our loss models. These amounts represent management’s judgment~~

~~Note 1: Summary of Significant Accounting Policies (continued~~)

of risks in the processes and assumptions used in establishing the ACL. Generally, these amounts are established at a granular level below our loan portfolio segments. We also consider economic environmental factors, modeling assumptions and performance, process risk, and other subjective factors, including industry trends and emerging risk assessments.

~~OFF-BALANCE SHEET CREDIT EXPOSURES~~ Our off-balance sheet credit exposures include unfunded loan commitments (generally in the form of revolving lines of credit), financial guarantees not accounted for as insurance contracts or derivatives, including standby letters of credit, and other similar instruments. For off-balance sheet credit exposures, we recognize an ACL associated with the unfunded amounts. We do not recognize an ACL for commitments that are unconditionally cancelable at our discretion. Additionally, we recognize an ACL for financial guarantees that create off-balance sheet credit exposure, such as loans sold with credit recourse and factoring guarantees. ACL for off-balance sheet credit exposures are reported as a liability in accrued expenses and other liabilities on our consolidated balance sheet.

~~OTHER FINANCIAL ASSETS~~ Other financial assets are evaluated for expected credit losses. These other financial assets include accounts receivable for fees, receivables from government-sponsored entities, such as Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC), and GNMA, and other accounts receivable from high-credit quality counterparties, such as central clearing counterparties. Many of these financial assets are generally not expected to have an ACL as there is a zero loss expectation (for example, government guarantee) or no historical credit losses. Some financial assets, such as loans to employees, maintain an ACL that is presented on a net basis with the related amortized cost amounts in other assets on our consolidated balance sheet. Given the nature of these financial assets, provision for credit losses is not recognized separately from the regular income or expense associated with these financial assets.

Securities purchased under resale agreements are generally over-collateralized by securities or cash and are generally short-term in nature. We have elected the practical expedient for these financial assets given collateral maintenance provisions. These provisions require that we monitor the collateral value and customers are required to replenish collateral, if needed. Accordingly, we generally do not maintain an ACL for these financial assets.

~~PURCHASED CREDIT DETERIORATED FINANCIAL ASSETS~~Financial assets acquired that are of poor credit quality and with more than an insignificant evidence of credit deterioration since their origination or issuance are PCD assets. PCD assets are recorded at their purchase price plus an ACL estimated at the time of acquisition. Under this approach, there is no provision for credit losses recognized at acquisition; rather, there is a gross-up of the purchase price of the financial asset for the estimate of expected credit losses and a corresponding ACL recorded. Changes in estimates of expected credit losses after acquisition are recognized as provision for credit losses (or reversal of provision for credit losses) in subsequent periods. In general, interest income recognition for PCD financial assets is consistent with interest income recognition for the similar non-PCD financial asset.

~~Troubled Debt Restructuring Relief~~

~~On March 25, 2020, the U.S. Senate approved the~~ ~~Coronavirus, Aid, Relief, and Economic Security Act~~ (the CARES Act) providing optional, temporary relief from accounting for certain loan modifications as troubled debt restructurings (TDRs). Under the CARES Act, TDR relief is available to banks for loan modifications related to the adverse effects of Coronavirus Disease 2019 (COVID-19) (COVID-related modifications) granted to borrowers that are current as of December 31, 2019. TDR relief applies to COVID-related modifications made from March 1, 2020, until the earlier of December 31, 2020, or 60 days following the termination of the national emergency declared by the President of the United States. In first quarter 2020, we elected to apply the TDR relief provided by the CARES Act.

~~On April 7, 2020, federal banking regulators issued the~~ ~~Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised)~~ (the Interagency Statement). The guidance in the Interagency Statement provides additional TDR relief as it clarifies that it is not necessary to consider the impact of the COVID-19 pandemic on the financial condition of a borrower in connection with a short-term (e.g., six months) COVID-related modification provided the borrower is current at the date the modification program is implemented.

For COVID-related modifications in the form of payment deferrals, delinquency status will not advance and loans that were accruing at the time the relief is provided will generally not be placed on nonaccrual status during the deferral period. COVID-related modifications that do not meet the provisions of the CARES Act or the Interagency Statement will be assessed for TDR classification.

~~Share Repurchases~~

During the first quarter of 2020 and 2019, we repurchased shares of our common stock under Rule 10b5-1 repurchase plans. On March 15, 2020, we, along with the other members of the Financial Services Forum, suspended our share repurchase activities for the remainder of the first quarter and for second quarter 2020. For more information about share repurchases, see Note 1 (Summary of Significant Accounting Policies) in our 2019 Form 10-K.

~~Supplemental Cash Flow Information~~

~~Significant noncash activities are presented in Table 1.3.~~

~~Table 1.3:Supplemental Cash Flow Information~~

Quarter ended March 31,
(in millions) 2020
2019
Trading debt securities retained from securitization of mortgage loans held for sale (MLHFS) $ 7,538
8,875
Transfers from loans to MLHFS 858
1,292
Transfers from available-for-sale debt securities to held-to-maturity debt securities —
2,407
Operating lease ROU assets acquired with operating lease liabilities (1) 197
5,127


~~(1)~~	~~Includes amounts attributable to new leases and changes from modified leases. First quarter 2019 also includes~~ ~~$4.9 billion~~ ~~from adoption of ASU 2016-02 – Leases (Topic 842).~~

~~Subsequent Events~~

~~We have evaluated the effects of events that have occurred subsequent to March 31, 2020, and there have been no material~~

~~events that would require recognition in our first quarter 2020 consolidated financial statements or disclosure in the Notes to the consolidated financial statements.~~

~~Note 2:~~ ~~Business Combinations~~

~~There were 0 acquisitions during first quarter 2020. As of March 31, 2020, we had 0 pending acquisitions.~~

~~Note 3:Cash, Loan and Dividend Restrictions~~

Cash and cash equivalents may be restricted as to usage or withdrawal. Federal Reserve Board (FRB) regulations require that each of our subsidiary banks maintain reserve balances on deposit with the Federal Reserve Banks. Table 3.1 provides a ~~summary of restrictions on cash equivalents in addition to the FRB reserve cash balance requirements~~.

~~Table 3.1:Nature of Restrictions on Cash Equivalents~~

(in millions) Mar 31,
2020
Dec 31,
2019
Average required reserve balance for FRB (1) $ 11,932
11,374
Reserve balance for non-U.S. central banks 1,133
460
Segregated for benefit of brokerage customers under federal and other brokerage regulations 970
733
Related to consolidated variable interest entities (VIEs) that can only be used to settle liabilities of VIEs 19
300


~~(1)~~	~~Represents average for~~ ~~first quarter 2020~~ ~~and for the year ended~~ ~~December 31, 2019~~.

We have a state-chartered subsidiary bank that is subject to state regulations that limit dividends. Under these provisions and regulatory limitations, our national and state-chartered subsidiary banks could have declared additional dividends of $1.9 billion at March 31, 2020, without obtaining prior regulatory approval. We have elected to retain higher capital at our national and state-chartered subsidiary banks in order to meet internal capital policy minimums and regulatory requirements. Our nonbank subsidiaries are also limited by certain federal and state statutory provisions and regulations covering the amount of dividends that may be paid in any given year. In addition, under a Support Agreement dated June 28, 2017, as amended and restated on June 26, 2019, among Wells Fargo & Company, the parent holding company (the “Parent”), WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), Wells Fargo Bank, N.A., Wells Fargo Securities, LLC, Wells Fargo Clearing Services, LLC, and certain other direct and indirect subsidiaries of the Parent designated as material entities for resolution planning purposes or identified as related support entities in our resolution plan, the IHC may be restricted from making dividend payments to the Parent if certain liquidity and/or capital metrics fall below defined triggers or if the Parent’s board of directors authorizes it to file a case under the U.S. Bankruptcy Code. Based on retained earnings at March 31, 2020, our nonbank subsidiaries could have declared additional dividends of $24.8 billion at March 31, 2020, without obtaining prior regulatory approval. For additional information see Note 3 (~~Cash, Loan and Dividend Restrictions) in our 2019 Form 10-K.~~

The FRB’s Capital Plan Rule (codified at 12 CFR 225.8 of Regulation Y) establishes capital planning and prior notice and approval requirements for capital distributions including dividends by certain large bank holding companies. The FRB has also published guidance regarding its supervisory expectations for capital planning, including capital policies regarding the process relating to common stock dividend and repurchase decisions in the FRB’s SR Letter 15-18. The effect of this guidance is to require the approval of the FRB (or specifically under the Capital Plan Rule, a notice of non-objection) for the repurchase or redemption of common or perpetual preferred stock as well as to raise the per share quarterly dividend from its current level of $0.51 per share as declared by the Company’s Board of Directors on ~~April 28, 2020, payable on~~ ~~June 1, 2020~~.

~~Note 4:~~ ~~Trading Activities~~

Table ~~4.1 presents a summary of our trading assets and liabilities measured at fair value through earnings.~~

~~Table 4.1: Trading Assets and Liabilities~~

Mar 31,
Dec 31,
(in millions) 2020
2019
Trading assets:
Debt securities $ 80,425
79,733
Equity securities 13,573
27,440
Loans held for sale 1,673
972
Gross trading derivative assets 72,527
34,825
Netting (1) (49,821 ) (21,463 )
Total trading derivative assets 22,706
13,362
Total trading assets 118,377
121,507
Trading liabilities:
Short sale 17,603
17,430
Gross trading derivative liabilities 67,891
33,861
Netting (1) (53,598 ) (26,074 )
Total trading derivative liabilities 14,293
7,787
Total trading liabilities $ 31,896
25,217


~~(1)~~	~~Represents balance sheet netting for trading derivative asset and liability balances, and trading portfolio level counterparty valuation adjustments.~~

~~Table 4.2 provides a summary of the net interest income earned from trading securities, and net gains and losses due to the realized and unrealized gains and losses from trading activities.~~

~~Net interest income also includes dividend income on trading securities and dividend expense on trading securities we have sold, but not yet purchased.~~

~~Table 4.2:Net Interest Income and Net Gains (Losses) on Trading Activities~~

Quarter ended March 31,
(in millions) 2020
2019
Interest income:
Debt securities $ 766
793
Equity securities 137
115
Loans held for sale 12
23
Total interest income 915
931
Less: Interest expense 141
136
Net interest income 774
795
Net gains (losses) from trading activities (1):
Debt securities 2,355
688
Equity securities (4,401 ) 2,067
Loans held for sale (12 ) 14
Derivatives (2) 2,122
(2,412 )
Total net gains from trading activities 64
357
Total trading-related net interest and noninterest income $ 838
1,152


~~(1)~~	~~Represents realized gains (losses) from our trading activities and unrealized gains (losses) due to changes in fair value of our trading positions.~~


~~(2)~~	~~Excludes economic hedging of mortgage banking and asset/liability management activities, for which hedge results (realized and unrealized) are reported with the respective hedged activities.~~

~~Note 5: Available-for-Sale and Held-to-Maturity Debt Securities~~

Table 5.1 provides the amortized cost, net of the allowance for credit losses, and fair value by major categories of available-for-sale debt securities, which are carried at fair value, and held-to-maturity debt securities, which are carried at amortized cost, net of allowance for credit losses. The net unrealized gains (losses) for available-for-sale debt securities are reported as a component of cumulative OCI, net of the allowance for credit losses and applicable income taxes. Information on debt securities held for trading is included in Note 4 (Trading Activities).

Outstanding balances exclude accrued interest receivable on available-for-sale and held-to-maturity debt securities which are included in other assets. During the quarter ended March 31, 2020, we reversed accrued interest receivable on our available-for-sale and held-to-maturity debt securities by reversing interest income of $6 million. See Note 9 (Other Assets) for additional information on accrued interest receivable.

~~Table 5.1:Available-for-Sale and Held-to-Maturity Debt Securities Outstanding~~

(in millions) Amortized cost, net (1)

Gross
unrealized gains

Gross
unrealized losses

Fair value
March 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies $ 10,952
88
(4 ) 11,036
Securities of U.S. states and political subdivisions (2) 38,686
206
(748 ) 38,144
Mortgage-backed securities:

Federal agencies 154,390
5,839
(15 ) 160,214
Residential 820
—
(44 ) 776
Commercial 3,897
10
(253 ) 3,654
Total mortgage-backed securities 159,107
5,849
(312 ) 164,644
Corporate debt securities 6,092
38
(275 ) 5,855
Collateralized loan and other debt obligations 26,873
63
(1,768 ) 25,168
Other (3) 6,477
19
(114 ) 6,382
Total available-for-sale debt securities 248,187
6,263
(3,221 ) 251,229
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies 48,569
2,146
(24 ) 50,691
Securities of U.S. states and political subdivisions 14,304
344
(37 ) 14,611
Federal agency and other mortgage-backed securities (4) 107,013
5,268
(43 ) 112,238
Other debt securities 23
—
(1 ) 22
Total held-to-maturity debt securities 169,909
7,758
(105 ) 177,562
Total (5) $ 418,096
14,021
(3,326 ) 428,791
December 31, 2019
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies $ 14,948
13
(1 ) 14,960
Securities of U.S. states and political subdivisions (2) 39,381
992
(36 ) 40,337
Mortgage-backed securities:
Federal agencies 160,318
2,299
(164 ) 162,453
Residential 814
14
(1 ) 827
Commercial 3,899
41
(6 ) 3,934
Total mortgage-backed securities 165,031
2,354
(171 ) 167,214
Corporate debt securities 6,343
252
(32 ) 6,563
Collateralized loan and other debt obligations 29,693
125
(123 ) 29,695
Other (3) 4,664
50
(24 ) 4,690
Total available-for-sale debt securities 260,060
3,786
(387 ) 263,459
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies 45,541
617
(19 ) 46,139
Securities of U.S. states and political subdivisions 13,486
286
(13 ) 13,759
Federal agency and other mortgage-backed securities (4) 94,869
2,093
(37 ) 96,925
Other debt securities 37
—
—
37
Total held-to-maturity debt securities 153,933
2,996
(69 ) 156,860
Total (5) $ 413,993
6,782
(456 ) 420,319

~~(1)~~

~~Represents amortized cost of the securities, net of the allowance for credit losses of~~ ~~$161 million~~ ~~related to available-for-sale debt securities and~~ ~~$11 million~~ ~~related to held-to-maturity debt securities at~~ ~~March 31, 2020. Prior to our adoption of CECL on January 1, 2020, the allowance for credit losses related to available-for-sale and held-to-maturity debt securities was not applicable and is therefore presented as~~ $0 ~~at December 31, 2019. For more information, see Note 1 (Summary of Significant Accounting Policies).~~


~~(2)~~	~~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 allowance for credit losses and fair value of these types of securities was~~ ~~$5.8 billion~~ ~~at both~~ ~~March 31, 2020, and~~ ~~December 31, 2019~~.


~~(3)~~	~~Primarily~~ ~~includes asset-backed securities collateralized by student loans.~~


~~(4)~~	~~Predominantly~~ ~~consists of federal agency mortgage-backed securities at both~~ ~~March 31, 2020~~ ~~and~~ ~~December 31, 2019~~.

~~(5)~~

We held available-for-sale and held-to-maturity debt securities from Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) that each exceeded 10% of stockholders’ equity, with an amortized cost of ~~$102.4 billion~~ ~~and~~ ~~$88.4 billion~~ ~~and a fair value of~~ ~~$107.0 billion~~ ~~and~~ ~~$92.2 billion~~ at ~~March 31, 2020~~ ~~and an amortized cost of~~ ~~$98.5 billion~~ ~~and~~ ~~$84.1 billion~~ ~~and a fair value of~~ ~~$100.3 billion~~ ~~and~~ ~~$85.5 billion~~ at ~~December 31, 2019, respectively.~~

~~Table 5.2 details the breakout of purchases of and transfers to held-to-maturity debt securities by major category of security.~~

~~Table 5.2:Held-to-Maturity Debt Securities Purchases and Transfers~~

Quarter ended March 31,
(in millions) 2020
2019
Purchases of held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies $ 3,016
—
Securities of U.S. states and political subdivisions 866
—
Federal agency and other mortgage-backed securities 15,925
16
Total purchases of held-to-maturity debt securities 19,807
16
Transfers from available-for-sale debt securities to held-to-maturity debt securities:
Federal agency and other mortgage-backed securities —
2,407
Total transfers from available-for-sale debt securities to held-to-maturity debt securities $ —
2,407

~~Table 5.3 shows the composition of interest income, provision for credit losses, and gross realized gains and losses~~

~~from sales and impairment write-downs included in earnings related to available-for-sale and held-to-maturity debt securities (pre-tax)~~.

~~Table 5.3:Income Statement Impacts for Available-for-Sale and Held-to-Maturity Debt Securities~~

Quarter ended March 31,
(in millions) 2020
2019
Interest income:
Available-for-sale $ 1,726
2,201
Held-to-maturity 980
947
Total interest income (1) 2,706
3,148
Provision for credit losses (2):
Available-for-sale 168
—
Held-to-maturity 4
—
Total provision for credit losses 172
—
Realized gains and losses (3):
Gross realized gains 256
173
Gross realized losses (4 ) (3 )
Impairment write-downs included in earnings:
Credit-related (4) —
(16 )
Intent-to-sell (15 ) (29 )
Total impairment write-downs included in earnings (15 ) (45 )
Net realized gains $ 237
125


~~(1)~~	~~Total interest income from debt securities excludes interest income from trading debt securities, which is disclosed in Note 4 (Trading Activities).~~


~~(2)~~	~~Prior to our adoption of CECL on January 1, 2020, the provision for credit losses from debt securities was not applicable and is therefore presented as~~ $0 ~~for the prior period. For more information, see Note 1 (Summary of Significant Accounting Policies).~~


~~(3)~~	~~Realized gains and losses relate to available-for-sale debt securities. There were~~ 0 ~~realized gains or losses from held-to-maturity debt securities in all periods presented.~~


~~(4)~~	~~For the~~ ~~quarter ended March 31, 2020, credit-related impairment recognized in earnings is classified as provision for credit losses due to our adoption of CECLon January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies).~~

~~Note 5: Available-for-Sale and Held-to-Maturity Debt Securities~~ ~~(continued)~~

~~Credit Quality~~

We monitor credit quality of debt securities by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the allowance for credit losses. The credit quality indicators that we most closely monitor include credit ratings and delinquency status and are based on information as of our financial statement date.

~~CREDIT RATINGS~~ Credit ratings express opinions about the credit quality of a debt security. We determine the credit rating of a security according to the lowest credit rating made available by national recognized statistical rating organizations (NRSRO). Debt securities rated investment grade, that is those with ratings similar to BBB-/Baa3 or above, as defined by NRSRO, are generally considered by the rating agencies and market participants to be low credit risk. Conversely, debt securities rated

~~below investment grade, labeled as “speculative grade” by the rating agencies, are considered to be distinctively higher credit risk than investment grade debt securities.~~

For debt securities not rated by the NRSRO, we determine an internal credit grade of the debt securities (used for credit risk management purposes) equivalent to the credit ratings assigned by major credit agencies. The fair value of available-for-sale debt securities categorized as investment grade based on internal credit grades was $1.2 billion at March 31, 2020, and $2.2 billion at December 31, 2019. Held-to-maturity debt securities categorized as investment grade based on internal credit grades are not significant. If an internal credit grade was not assigned, we categorized the debt security as non-investment grade.

Table 5.4 shows the percentage of fair value of available-for-sale debt securities and amortized cost of held-to-maturity debt securities determined by those rated investment grade, inclusive of those based on internal credit grades.

~~Table 5.4:Investment Grade Debt Securities~~

Available-for-Sale Held-to-Maturity
($ in millions) Fair value
% investment grade
Amortized cost
% investment grade
March 31, 2020
Total portfolio $ 251,229
99 % 169,920
99 %

Breakdown by category:
Securities of U.S. Treasury and federal agencies (1) $ 171,250
100 % 154,734
100 %
Securities of U.S. states and political subdivisions 38,144
99
14,313
100
Collateralized loan obligations 24,582
100
N/A
N/A
All other debt securities (2) 17,253
82
873
7
December 31, 2019
Total portfolio $ 263,459
99 % 153,933
99 %

Breakdown by category:
Securities of U.S. Treasury and federal agencies (1) $ 177,413
100 % 139,619
100 %
Securities of U.S. states and political subdivisions 40,337
99
13,486
100
Collateralized loan obligations 29,055
100
N/A
N/A
All other debt securities (2) 16,654
82
828
4


~~(1)~~	~~Includes federal agency mortgage-backed securities.~~


~~(2)~~	~~Includes non-agency mortgage-backed, corporate, and all other debt securities.~~

~~DELINQUENCY STATUS AND NONACCRUAL DEBT SECURITIES~~ Debt security issuers that are delinquent in payment of amounts due under contractual debt agreements have a higher probability of recognition of credit losses. As such, as part of our monitoring of the credit quality of the debt security portfolio, we consider whether debt securities we own are past due in payment of principal or interest payments and whether any securities have been placed into nonaccrual status.

We had 0 debt securities that were past due and still accruing at March 31, 2020 or December 31, 2019. The fair value of available-for-sale debt securities in nonaccrual status was $327 million and $110 million as of March 31, 2020 and

December 31, 2019, respectively. There were 0 held-to-maturity debt securities in nonaccrual status as of March 31, 2020 or December 31, 2019. Purchased debt securities with credit deterioration (PCD) are not considered to be in nonaccrual status, as payments from issuers of these securities remain current.

Table 5.5 presents detail of available-for-sale debt securities purchased with credit deterioration during the period. There were 0 held-to-maturity debt securities purchased with credit deterioration during the quarter ended March 31, 2020. The amounts presented are as of the date of the PCD assets were purchased.

~~Table 5.5: Debt Securities Purchased with Credit Deterioration~~

(in millions) Quarter ended March 31, 2020
Available-for-sale debt securities purchased with credit deterioration (PCD):
Par value $ 164
Allowance for credit losses at acquisition (11 )
Discount (or premiums) attributable to other factors 3
Purchase price of available-for-sale debt securities purchased with credit deterioration $ 156

~~Unrealized Losses of Available-for-Sale Debt Securities~~

Table 5.6 shows the gross unrealized losses and fair value of available-for-sale debt securities by length of time those individual securities in each category have been in a continuous loss position. Debt securities on which we have 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 (1) for the current period presented, amortized cost basis net of allowance for credit losses, or the (2) for the prior period presented, amortized cost basis.

~~Table 5.6:Gross Unrealized Losses and Fair Value – Available-for-Sale Debt Securities~~

Less than 12 months 12 months or more Total
(in millions) Gross unrealized losses
Fair value
Gross unrealized losses
Fair value
Gross unrealized losses
Fair value
March 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies $ (4 ) 615
—
—
(4 ) 615
Securities of U.S. states and political subdivisions (678 ) 22,740
(70 ) 1,490
(748 ) 24,230
Mortgage-backed securities:

Federal agencies (3 ) 594
(12 ) 737
(15 ) 1,331
Residential (44 ) 591
—
—
(44 ) 591
Commercial (228 ) 3,275
(25 ) 243
(253 ) 3,518
Total mortgage-backed securities (275 ) 4,460
(37 ) 980
(312 ) 5,440
Corporate debt securities (263 ) 3,337
(12 ) 129
(275 ) 3,466
Collateralized loan and other debt obligations (1,226 ) 18,303
(542 ) 6,442
(1,768 ) 24,745
Other (91 ) 4,085
(23 ) 618
(114 ) 4,703
Total available-for-sale debt securities $ (2,537 ) 53,540
(684 ) 9,659
(3,221 ) 63,199
December 31, 2019
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies $ —
—
(1 ) 2,423
(1 ) 2,423
Securities of U.S. states and political subdivisions (10 ) 2,776
(26 ) 2,418
(36 ) 5,194
Mortgage-backed securities:
Federal agencies (50 ) 16,807
(114 ) 10,641
(164 ) 27,448
Residential (1 ) 149
—
—
(1 ) 149
Commercial (3 ) 998
(3 ) 244
(6 ) 1,242
Total mortgage-backed securities (54 ) 17,954
(117 ) 10,885
(171 ) 28,839
Corporate debt securities (9 ) 303
(23 ) 216
(32 ) 519
Collateralized loan and other debt obligations (13 ) 5,070
(110 ) 16,789
(123 ) 21,859
Other (12 ) 1,587
(12 ) 492
(24 ) 2,079
Total available-for-sale debt securities $ (98 ) 27,690
(289 ) 33,223
(387 ) 60,913

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. 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. In prior periods, credit impairment was recorded as a write-down to the amortized cost basis of the security. In the current period, credit impairment is recorded as an allowance for credit losses.

~~Note 5: Available-for-Sale and Held-to-Maturity Debt Securities~~ ~~(continued)~~

~~Allowance for Credit Losses for Debt Securities~~

~~Table 5.7~~4.5 presents the allowance for credit losses ~~on available-for-sale and held-to-maturity debt securities.~~

~~Table 5.7:Allowance for Credit Losses for Debt Securities~~

Quarter ended March 31, 2020
(in millions) Available-for-Sale
Held-to-Maturity
Balance, beginning of period (1) $ —
—
Cumulative effect from change in accounting policies (2) 24
7
Balance, beginning of period, adjusted 24
7
Provision for credit losses 168
4
Securities purchased with credit deterioration 11
—
Reduction due to intent to sell (11 ) —
Charge-offs (32 ) —
Interest income (3) 1
—
Balance, end of period (4) $ 161
11


~~(1)~~	~~Prior to our adoption of CECL on January 1, 2020, the allowance for credit losses related to available-for-sale and held-to-maturity debt securities was not applicable and is therefore presented as~~ $0 ~~at December 31, 2019. For more information, see Note 1 (Summary of Significant Accounting Policies).~~


~~(2)~~	~~Represents the impact of adoption of CECL on January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies).~~


~~(3)~~	Certain debt securities with an allowance for credit losses calculated by discounting expected cash flows using the securities’ effective interest rate over its remaining life, recognize changes in the allowance for credit losses attributable to the passage of time as interest income.


~~(4)~~	~~Substantially all of allowance for credit losses for debt securities relates to~~ ~~corporate debt securities~~ ~~as of~~ ~~March 31, 2020~~.

~~Contractual Maturities~~

Table 5.8 shows the remaining contractual maturities, amortized cost net of allowance for credit losses, fair value and weighted-average effective yields of available-for-sale debt securities. The remaining contractual principal maturities for MBS do not consider prepayments. Remaining expected maturities will differ

~~from contractual maturities because borrowers may have the right to prepay obligations before the underlying mortgages mature.~~

~~Table 5.8: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
March 31, 2020
Available-for-sale debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net $ 10,952
8,023
28
45
2,856
Fair value 11,036
8,029
29
49
2,929
Weighted average yield 2.10 % 2.32
1.97
1.84
1.49
Securities of U.S. states and political subdivisions
Amortized cost, net 38,686
3,940
4,196
4,034
26,516
Fair value 38,144
3,963
4,244
4,039
25,898
Weighted average yield 3.15
4.58
3.20
2.78
2.98
Mortgage-backed securities:
Federal agencies
Amortized cost, net 154,390
2
123
1,944
152,321
Fair value 160,214
2
128
2,005
158,079
Weighted average yield 3.19
1.93
3.06
2.44
3.20
Residential
Amortized cost, net 820
—
—
—
820
Fair value 776
—
—
—
776
Weighted average yield 3.19
—
—
—
3.19
Commercial
Amortized cost, net 3,897
—
32
194
3,671
Fair value 3,654
—
31
187
3,436
Weighted average yield 2.62
—
2.49
2.71
2.62
Total mortgage-backed securities
Amortized cost, net 159,107
2
155
2,138
156,812
Fair value 164,644
2
159
2,192
162,291
Weighted average yield 3.18
1.93
2.94
2.46
3.19
Corporate debt securities
Amortized cost, net 6,092
373
2,048
2,847
824
Fair value 5,855
355
1,973
2,755
772
Weighted average yield 4.97
4.12
5.18
5.03
4.67
Collateralized loan and other debt obligations
Amortized cost, net 26,873
—
—
12,014
14,859
Fair value 25,168
—
—
11,362
13,806
Weighted average yield 3.21
—
—
3.29
3.15
Other
Amortized cost, net 6,477
2,021
704
1,296
2,456
Fair value 6,382
2,021
685
1,287
2,389
Weighted average yield 1.51
(0.22 ) 2.95
1.41
2.57
Total available-for-sale debt securities
Amortized cost, net $ 248,187
14,359
7,131
22,374
204,323
Fair value 251,229
14,370
7,090
21,684
208,085
Weighted average yield 3.13 % 2.63
3.75
3.24
3.14


~~(1)~~	~~Weighted-average yields displayed by maturity bucket are weighted based on amortized cost without effect for any related hedging derivatives and are shown pre-tax.~~

~~Note 5: Available-for-Sale and Held-to-Maturity Debt Securities~~ ~~(continued)~~

~~Table 5.9 shows the remaining contractual maturities, amortized cost net of allowance for credit losses, fair value, and~~

~~weighted-average effective yields of held-to-maturity debt securities.~~

~~Table 5.9: 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
March 31, 2020
Held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net $ 48,569
8,336
36,454
—
3,779
Fair value 50,691
8,494
38,170
—
4,027
Weighted average yield 2.14 % 2.24
2.18
—
1.56
Securities of U.S. states and political subdivisions
Amortized cost, net 14,304
11
713
1,724
11,856
Fair value 14,611
11
731
1,794
12,075
Weighted average yield 2.71
1.95
2.22
2.86
2.72
Federal agency and other mortgage-backed securities
Amortized cost, net 107,013
—
15
104
106,894
Fair value 112,238
—
13
111
112,114
Weighted average yield 2.96
—
2.99
1.37
2.96
Other debt securities
Amortized cost, net 23
—
—
23
—
Fair value 22
—
—
22
—
Weighted average yield 3.01
—
—
3.01
—
Total held-to-maturity debt securities
Amortized cost, net $ 169,909
8,347
37,182
1,851
122,529
Fair value 177,562
8,505
38,914
1,927
128,216
Weighted average yield 2.70 % 2.24
2.18
2.78
2.89


~~(1)~~	~~Weighted-average yields displayed by maturity bucket are weighted based on amortized cost and are shown pre-tax.~~

~~Note 6: Loans and Related Allowance for Credit Losses~~

Table 6.1 presents total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include unearned income, net deferred loan fees or costs, and unamortized discounts and premiums. These amounts were less than 1% of our total loans outstanding at March 31, 2020, and December 31, 2019.

~~Outstanding balances exclude accrued interest receivable on loans which are included in other assets. During the quarter ended~~

March 31, 2020, we reversed accrued interest receivable by reversing interest income of $9 million for our commercial portfolio segment and $63 million for our consumer portfolio segment. See Note 9 (Other Assets) for additional information on accrued interest receivable.

~~Table 6.1:Loans Outstanding~~

(in millions) Mar 31,
2020
Dec 31,
2019
Commercial:
Commercial and industrial $ 405,020
354,125
Real estate mortgage 122,767
121,824
Real estate construction 20,812
19,939
Lease financing 19,136
19,831
Total commercial 567,735
515,719
Consumer:
Real estate 1-4 family first mortgage 292,920
293,847
Real estate 1-4 family junior lien mortgage 28,527
29,509
Credit card 38,582
41,013
Automobile 48,568
47,873
Other revolving credit and installment 33,511
34,304
Total consumer 442,108
446,546
Total loans $ 1,009,843
962,265

Our non-U.S. loans are reported by respective class of financing receivable in the table above. Substantially all of our non-U.S. loan portfolio is commercial loans. Table 6.2 presents total non-U.S. commercial loans outstanding by class of financing receivable.

~~Table 6.2:Non-U.S. Commercial Loans Outstanding~~

(in millions) Mar 31,
2020
Dec 31,
2019
Non-U.S. Commercial Loans
Commercial and industrial $ 78,753
70,494
Real estate mortgage 6,309
7,004
Real estate construction 1,478
1,434
Lease financing 1,120
1,220
Total non-U.S. commercial loans $ 87,660
80,152

~~Note 6: Loans and Related Allowance for Credit Losses~~ ~~(continued)~~

~~Loan Purchases, Sales, and Transfers~~

Table 6.3 summarizes the proceeds paid or received for purchases and sales of loans and transfers from loans held for investment to mortgages/loans held for sale. The table excludes loans for which we have elected the fair value option and government insured/guaranteed real estate 1-4 family first mortgage loans because

their loan activity normally does not impact the ACL. In first quarter 2020, we sold $709 million of 1-4 family first mortgage loans for a gain of $463 million, which is included in other noninterest income on our consolidated income statement. These whole loans were reclassified to MLHFS in 2019.

~~Table 6.3:Loan Purchases, Sales, and Transfers~~

2020 2019
(in millions) Commercial
Consumer
Total
Commercial
Consumer
Total
Quarter ended March 31,
Purchases $ 341
1
342
329
3
332
Sales (813 ) (26 ) (839 ) (421 ) (179 ) (600 )
Transfers (to) from MLHFS/LHFS 77
2
79
(3 ) —
(3 )

~~Commitments to Lend~~

A commitment to lend is a legally binding agreement to lend funds to a customer, usually at a stated interest rate, if funded, and for specific purposes and time periods. We generally require a fee to extend such commitments. Certain commitments are subject to loan agreements with covenants regarding the financial performance of the customer or borrowing base formulas on an ongoing basis that must be met before we are required to fund the commitment. We may reduce or cancel consumer commitments, including home equity lines and credit card lines, in accordance with the contracts and applicable law.

We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At March 31, 2020, and December 31, 2019, we had $981.3 million and $862 million, respectively, of outstanding issued commercial letters of credit. We also originate multipurpose lending commitments under which borrowers have the option to draw on the facility for different purposes in one of several forms, including a standby letter of credit. See Note 13 (Guarantees, Pledged Assets and Collateral, and Other Commitments) for additional information on standby letters of credit.

When we make commitments, we are exposed to credit risk. The maximum credit risk for these commitments will generally be lower than the contractual amount because a significant portion of these commitments are not funded. We manage the potential risk in commitments to lend by limiting the total amount of commitments, both by individual customer and in total, by monitoring the size and maturity structure of these commitments and by applying the same credit standards for these commitments as for all of our credit activities.

For loans and commitments to lend, we generally require collateral or a guarantee. We may require various types of collateral, including commercial and consumer real estate, automobiles, other short-term liquid assets such as accounts receivable or inventory and long-lived assets, such as equipment and other business assets. Collateral requirements for each loan or commitment may vary based on the loan product and our assessment of a customer’s credit risk according to the specific credit underwriting, including credit terms and structure.

The contractual amount of our unfunded credit commitments, including unissued standby and commercial letters of credit, is summarized by portfolio segment and class of financing receivable in Table 6.4. The table excludes the issued standby and commercial letters of credit and temporary advance arrangements described above.

~~Table 6.4:Unfunded Credit Commitments~~

(in millions) Mar 31,
2020
Dec 31,
2019
Commercial:
Commercial and industrial $ 314,135
346,991
Real estate mortgage 9,360
8,206
Real estate construction 17,236
17,729
Total commercial 340,731
372,926
Consumer:
Real estate 1-4 family first mortgage 42,691
34,391
Real estate 1-4 family
junior lien mortgage
36,301
36,916
Credit card 118,339
114,933
Other revolving credit and installment 25,187
25,898
Total consumer 222,518
212,138
Total unfunded credit commitments $ 563,249
585,064

~~Allowance for Credit Losses for Loans~~

~~Table 6.5 presents the allowance for credit losses~~(ACL) for loans, which consists of the allowance for loan losses and the allowance for unfunded credit commitments. On January 1, 2020, we adopted CECL. Additional information on our adoption of CECL is included in Note 1 (Summary of Significant Accounting Policies). In first quarter 2020, after the adoption of CECL, we added a net $2.9 billion to ourThe ACL for loans ~~predominantly driven by the~~decreased

~~expected impacts~~$1.7 billion from the COVID-19 pandemic. These expected impacts were most significantly affected by anticipated changes to economic variables, as well as higher expected losses from certain industries in our commercial portfolio segment that we expect to be directly and most adversely affected by the COVID-19 pandemic. In addition, the increase included expected impacts on oil and gas loansDecember 31, 2020, due to ~~lower oil prices and deteriorating credit trends.~~continued improvement in the economic environment.

Table ~~6.5:~~4.5: Allowance for Credit Losses for Loans


	Quarter ended March 31,
($ in millions)		2021			2020
Balance, beginning of period		$	19,713		10,456

Cumulative effect from change in accounting policies (1)		0			(1,337)
Allowance for purchased credit-deteriorated (PCD) loans (2)		0			8

Balance, beginning of period, adjusted		19,713			9,127
Provision for credit losses		(1,117)			3,833
Interest income on certain impaired loans (3)		(41)			(38)
Loan charge-offs:
Commercial:
Commercial and industrial		(159)			(377)
Real estate mortgage		(52)			(3)
Real estate construction		0			0
Lease financing		(21)			(13)
Total commercial		(232)			(393)
Consumer:
Residential mortgage – first lien		(17)			(23)
Residential mortgage – junior lien		(19)			(30)
Credit card		(335)			(471)
Auto		(129)			(156)
Other consumer		(147)			(165)
Total consumer		(647)			(845)
Total loan charge-offs		(879)			(1,238)
Loan recoveries:
Commercial:
Commercial and industrial		71			44
Real estate mortgage		6			5
Real estate construction		0			16
Lease financing		6			4
Total commercial		83			69
Consumer:
Residential mortgage – first lien		41			26
Residential mortgage – junior lien		38			35
Credit card		99			94
Auto		77			74
Other consumer		28			31
Total consumer		283			260
Total loan recoveries		366			329
Net loan charge-offs		(513)			(909)
Other		1			9
Balance, end of period		$	18,043		12,022

Components:
Allowance for loan losses		$	16,928		11,263
Allowance for unfunded credit commitments		1,115			759
Allowance for credit losses		$	18,043		12,022
Net loan charge-offs (annualized) as a percentage of average total loans		0.24		%	0.38
Allowance for loan losses as a percentage of total loans		1.96			1.12
Allowance for credit losses for loans as a percentage of total loans		2.09			1.19

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

(2)Represents the allowance estimated for purchased credit-impaired (PCI) loans that automatically became PCD loans with the adoption of CECL. For additional information, see Note 1 (Summary of Significant Accounting Policies) in our 2020 Form 10-K.

(3)Loans with an allowance measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in allowance attributable to the passage of time as interest income.

Quarter ended March 31,
(in millions) 2020
2019
Balance, beginning of period 10,456
10,707
Cumulative effect from change in accounting policies (1) (1,337 ) —
Allowance for purchased credit-deteriorated (PCD) loans (2) 8
—
Balance, beginning of period, adjusted 9,127
10,707
Provision for credit losses 3,833
845
Interest income on certain loans (3) (38 ) (39 )
Loan charge-offs:
Commercial:
Commercial and industrial (377 ) (176 )
Real estate mortgage (3 ) (12 )
Real estate construction —
(1 )
Lease financing (13 ) (11 )
Total commercial (393 ) (200 )
Consumer:
Real estate 1-4 family first mortgage (23 ) (43 )
Real estate 1-4 family junior lien mortgage (30 ) (34 )
Credit card (471 ) (437 )
Automobile (156 ) (187 )
Other revolving credit and installment (165 ) (162 )
Total consumer (845 ) (863 )
Total loan charge-offs (1,238 ) (1,063 )
Loan recoveries:
Commercial:
Commercial and industrial 44
43
Real estate mortgage 5
6
Real estate construction 16
3
Lease financing 4
3
Total commercial 69
55
Consumer:
Real estate 1-4 family first mortgage 26
55
Real estate 1-4 family junior lien mortgage 35
43
Credit card 94
85
Automobile 74
96
Other revolving credit and installment 31
34
Total consumer 260
313
Total loan recoveries 329
368
Net loan charge-offs (909 ) (695 )
Other 9
3
Balance, end of period 12,022
10,821
Components:
Allowance for loan losses 11,263
9,900
Allowance for unfunded credit commitments 759
921
Allowance for credit losses for loans 12,022
10,821
Net loan charge-offs (annualized) as a percentage of average total loans 0.38
0.30
Allowance for loan losses as a percentage of total loans 1.12
1.04
Allowance for credit losses for loans as a percentage of total loans 1.19
1.14


~~(1)~~			~~Represents the overall decrease in our allowance for credit losses for loans as a result of our adoption of CECL on January 1, 2020.~~Wells Fargo & Company			75


~~(2)~~	~~Represents the allowance estimated for PCI loans that automatically became PCD loans with the adoption of CECL. For more information, see Note 1 (Summary of Significant Accounting Policies).~~


~~(3)~~	Loans with an allowance measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in allowance attributable to the passage of time as interest income.

Note 6:4: Loans and Related Allowance for Credit Losses (continued)

Table ~~6.6~~4.6 summarizes the activity in the ~~allowance for credit losses for loans~~ACL by our commercial and consumer portfolio segments.

Table ~~6.6:~~4.6: Allowance for Credit Losses for Loans Activity by Portfolio Segment



	2021				2020
(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total












Quarter ended March 31,
Balance, beginning of period	$	11,516	8,197	19,713	6,245	4,211	10,456
Cumulative effect from change in accounting policies (1)	0		0	0	(2,861)	1,524	(1,337)
Allowance for purchased credit-deteriorated (PCD) loans (2)	0		0	0	0	8	8
Balance, beginning of period, adjusted	11,516		8,197	19,713	3,384	5,743	9,127
Provision for credit losses	(667)		(450)	(1,117)	2,240	1,593	3,833
Interest income on certain loans (3)	(19)		(22)	(41)	(14)	(24)	(38)
Loan charge-offs	(232)		(647)	(879)	(393)	(845)	(1,238)
Loan recoveries	83		283	366	69	260	329
Net loan charge-offs	(149)		(364)	(513)	(324)	(585)	(909)
Other	1		0	1	(7)	16	9
Balance, end of period	$	10,682	7,361	18,043	5,279	6,743	12,022

2020
2019
(in millions) Commercial
Consumer
Total
Commercial
Consumer
Total
Quarter ended March 31,
Balance, beginning of period $ 6,245
4,211
10,456
6,417
4,290
10,707
Cumulative effect from change in accounting policies (1) (2,861 ) 1,524
(1,337 ) —
—
—
Allowance for purchased credit-deteriorated (PCD) loans (2) —
8
8
—
—
—
Balance, beginning of period, adjusted 3,384
5,743
9,127
6,417
4,290
10,707
Provision for credit losses 2,240
1,593
3,833
164
681
845
Interest income on certain loans (3) (14 ) (24 ) (38 ) (11 ) (28 ) (39 )

Loan charge-offs (393 ) (845 ) (1,238 ) (200 ) (863 ) (1,063 )
Loan recoveries 69
260
329
55
313
368
Net loan charge-offs (324 ) (585 ) (909 ) (145 ) (550 ) (695 )
Other (7 ) 16
9
3
—
3
Balance, end of period $ 5,279
$ 6,743
$ 12,022
$ 6,428
$ 4,393
$ 10,821

(1)

~~Table 6.7 disaggregates our allowance for credit losses for loans and recorded investment in loans by impairment methodology. This is no longer relevant after December 31, 2019,~~

~~given~~ our adoption of CECL on January 1, 2020.

(2)Represents the allowance estimated for PCI loans that automatically became PCD loans with the adoption of CECL. For additional information, see Note 1 (Summary of Significant Accounting Policies) in our 2020 ~~which has a single impairment methodology.~~Form 10-K.

~~Table 6.7:Allowance for Credit Losses for Loans by Impairment Methodology~~

Allowance for credit losses for loans Recorded investment in loans
(in millions) Commercial
Consumer
Total
Commercial
Consumer
Total
December 31, 2019
Collectively evaluated (1) $ 5,778
3,364
9,142
512,586
436,081
948,667
Individually evaluated (2) 467
847
1,314
3,133
9,897
13,030
PCI (3) —
—
—
—
568
568
Total $ 6,245
4,211
10,456
515,719
446,546
962,265


~~(1)~~76			~~Represents non-impaired loans evaluated collectively for impairment.~~

Wells Fargo & Company
~~(2)~~	~~Represents impaired loans evaluated individually for impairment.~~


~~(3)~~	~~Represents the allowance for loan losses and related loan carrying value for PCI loans.~~

Credit Quality

We monitor credit quality by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the ~~allowance~~ACL for ~~credit losses.~~loans. The following sections provide the credit quality indicators we most closely monitor. The credit quality indicators are generally based on information as of our financial statement date, with the exception of updated Fair Isaac Corporation (FICO) scores and updated loan-to-value (LTV)/combined LTV (CLTV). We obtain FICO scores at loan origination and the scores are generally updated at least quarterly, except in limited circumstances, including compliance with the Fair Credit Reporting Act (FCRA). Generally, the LTV and CLTV indicators are updated in the second month of each quarter, with updates no older than December 31, ~~2019. Amounts disclosed in the credit quality tables that follow are not comparative between reported periods due to our adoption of CECL on January 1,~~ 2020. ~~For more information, see Note 1 (Summary of Significant Accounting Policies).~~

COMMERCIAL CREDIT QUALITY INDICATORSWe 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, which is our primary credit quality indicator. Our ratings are aligned to ~~federal banking regulators’~~regulatory definitions of pass and criticized categories with the criticized ~~category including~~segmented among special mention, substandard, doubtful and loss categories.

Table ~~6.8~~4.7 provides ~~a breakdown~~the outstanding balances of ~~outstanding~~our commercial ~~loans~~loan portfolio by risk category. ~~In connection with our adoption of CECL, credit~~Credit quality information is provided with the year of origination for term loans. Revolving loans may convert to term loans as a result of a contractual provision in the original loan agreement or if modified in a ~~TDR.~~troubled debt restructuring (TDR). At March 31, 2021, we had $445.6 billion and $31.9 billion of pass and criticized commercial loans, respectively.

Table ~~6.8:~~4.7: Commercial ~~Loans~~Loan Categories by Risk Categories and Vintage~~(1)~~


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
(in millions)	2021		2020	2019	2018	2017	Prior
March 31, 2021
Commercial and industrial
Pass	$	23,964	34,788	32,106	13,882	6,094	9,951	181,444	250	302,479
Criticized	463		1,355	1,433	1,639	868	952	9,814	52	16,576
Total commercial and industrial	24,427		36,143	33,539	15,521	6,962	10,903	191,258	302	319,055
Real estate mortgage
Pass	6,354		21,274	24,414	17,998	10,279	24,109	4,748	1	109,177
Criticized	489		1,799	2,679	1,844	1,377	3,432	401	0	12,021
Total real estate mortgage	6,843		23,073	27,093	19,842	11,656	27,541	5,149	1	121,198
Real estate construction
Pass	1,126		4,904	6,465	4,403	1,196	416	1,165	2	19,677
Criticized	107		420	535	373	295	126	0	0	1,856
Total real estate construction	1,233		5,324	7,000	4,776	1,491	542	1,165	2	21,533
Lease financing
Pass	934		3,794	3,493	1,962	1,276	2,810	0	0	14,269
Criticized	62		319	429	312	167	176	0	0	1,465
Total lease financing	996		4,113	3,922	2,274	1,443	2,986	0	0	15,734
Total commercial loans	$	33,499	68,653	71,554	42,413	21,552	41,972	197,572	305	477,520
	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
	2020		2019	2018	2017	2016	Prior
December 31, 2020
Commercial and industrial
Pass	$	56,915	34,040	15,936	7,274	4,048	4,738	177,107	997	301,055
Criticized	1,404		1,327	1,357	972	672	333	11,534	151	17,750
Total commercial and industrial	58,319		35,367	17,293	8,246	4,720	5,071	188,641	1,148	318,805
Real estate mortgage
Pass	22,444		26,114	18,679	11,113	11,582	14,663	5,152	6	109,753
Criticized	2,133		2,544	1,817	1,287	1,625	2,082	479	0	11,967
Total real estate mortgage	24,577		28,658	20,496	12,400	13,207	16,745	5,631	6	121,720
Real estate construction
Pass	5,242		6,574	4,771	1,736	477	235	1,212	3	20,250
Criticized	449		452	527	4	113	10	0	0	1,555
Total real estate construction	5,691		7,026	5,298	1,740	590	245	1,212	3	21,805
Lease financing
Pass	3,970		3,851	2,176	1,464	1,199	1,924	0	0	14,584
Criticized	308		433	372	197	108	85	0	0	1,503
Total lease financing	4,278		4,284	2,548	1,661	1,307	2,009	0	0	16,087
Total commercial loans	$	92,865	75,335	45,635	24,047	19,824	24,070	195,484	1,157	478,417

Term loans by origination year Revolving loans
Revolving loans converted to term loans
Total
(in millions) 2020
2019
2018
2017
2016
Prior

March 31, 2020
Commercial and industrial
Pass $ 32,531
53,904
23,788
11,603
7,815
5,061
250,893
209
385,804
Criticized 885
1,053
948
721
433
458
14,718
—
19,216
Total commercial and industrial 33,416
54,957
24,736
12,324
8,248
5,519
265,611
209
405,020
Real estate mortgage
Pass 7,336
31,320
23,268
14,577
15,376
21,087
5,563
128
118,655
Criticized 60
452
515
741
546
1,525
273
—
4,112
Total real estate mortgage 7,396
31,772
23,783
15,318
15,922
22,612
5,836
128
122,767
Real estate construction
Pass 1,293
7,226
5,528
3,024
1,290
472
1,750
7
20,590
Criticized 2
98
93
6
8
14
1
—
222
Total real estate construction 1,295
7,324
5,621
3,030
1,298
486
1,751
7
20,812
Lease financing
Pass 1,439
5,566
3,769
2,447
1,844
2,739
—
—
17,804
Criticized 83
422
365
196
139
127
—
—
1,332
Total lease financing 1,522
5,988
4,134
2,643
1,983
2,866
—
—
19,136
Total commercial loans $ 43,629
100,041
58,274
33,315
27,451
31,483
273,198
344
567,735
Commercial
and
industrial
Real
estate
mortgage
Real
estate
construction
Lease
financing
Total
December 31, 2019
By risk category:
Pass $ 338,740
118,054
19,752
18,655
495,201
Criticized 15,385
3,770
187
1,176
20,518
Total commercial loans $ 354,125
121,824
19,939
19,831
515,719


~~(1)~~			~~Disclosure is not comparative due to our adoption of CECL on January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies).~~Wells Fargo & Company			77

Note 6:4: Loans and Related Allowance for Credit Losses (continued)

Table ~~6.9~~4.8 provides past due 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. Payment deferral activities

instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for customers who otherwise would have moved into past due status.

Table ~~6.9:~~4.8: Commercial Loan Categories by Delinquency Status


(in millions)	Commercial and industrial		Real estate mortgage	Real estate construction	Lease financing	Total
March 31, 2021
By delinquency status:
Current-29 days past due (DPD) and still accruing	$	316,407	118,987	21,293	15,120	471,807
30-89 DPD and still accruing	370		380	99	365	1,214
90+ DPD and still accruing	55		128	86	0	269
Nonaccrual loans	2,223		1,703	55	249	4,230
Total commercial loans	$	319,055	121,198	21,533	15,734	477,520
December 31, 2020
By delinquency status:
Current-29 DPD and still accruing	$	315,493	119,561	21,532	15,595	472,181
30-89 DPD and still accruing	575		347	224	233	1,379
90+ DPD and still accruing	39		38	1	0	78
Nonaccrual loans	2,698		1,774	48	259	4,779
Total commercial loans	$	318,805	121,720	21,805	16,087	478,417

(in millions)
Commercial
and
industrial

Real
estate
mortgage

Real
estate
construction

Lease
financing

Total
March 31, 2020
By delinquency status:
Current-29 days past due (DPD) and still accruing $ 402,706
121,621
20,696
18,793
563,816
30-89 DPD and still accruing 511
174
94
212
991
90+ DPD and still accruing 24
28
1
—
53
Nonaccrual loans 1,779
944
21
131
2,875
Total commercial loans $ 405,020
122,767
20,812
19,136
567,735
December 31, 2019
By delinquency status:
Current-29 DPD and still accruing $ 352,110
120,967
19,845
19,484
512,406
30-89 DPD and still accruing 423
253
53
252
981
90+ DPD and still accruing 47
31
—
—
78
Nonaccrual loans 1,545
573
41
95
2,254
Total commercial loans $ 354,125
121,824
19,939
19,831
515,719

CONSUMER CREDIT QUALITY INDICATORS We have various classes of consumer loans that present unique credit risks. Loan delinquency, FICO credit scores and LTV for ~~1-4 family~~residential mortgage loans are the primary credit quality indicators that we monitor and utilize in our evaluation of the appropriateness of the ~~allowance for credit losses~~ACL for the consumer loan portfolio segment.

Many of our loss estimation techniques used for the ~~allowance~~ACL for ~~credit losses~~loans rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality ~~and~~in the establishment of our ~~allowance~~ACL for ~~credit losses.~~loans.

Table ~~6.10~~4.9 provides the outstanding balances of our consumer loan portfolio by delinquency status.

Payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for customers who otherwise would have moved into past due status.

~~In connection with our adoption of CECL, credit~~Credit quality information is provided with the year of origination for term loans. Revolving loans may convert to term loans as a result of a contractual provision in the original loan agreement or if modified in a TDR. The revolving loans converted to term loans in the credit card loan category represent credit card loans with modified terms that require payment over a specific term.


78			Wells Fargo & Company

Table ~~6.10:~~4.9: Consumer Loan Categories by Delinquency Status and Vintage ~~(1)~~


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2021		2020	2019	2018	2017	Prior			Total
March 31, 2021
Residential mortgage – first lien
By delinquency status:
Current-29 DPD	$	12,509	49,978	36,683	12,122	20,679	86,286	6,352	1,654	226,263
30-59 DPD	12		28	59	25	37	675	19	35	890
60-89 DPD	0		16	3	3	10	220	13	22	287
90-119 DPD	0		31	2	2	7	85	9	21	157
120-179 DPD	0		129	13	7	5	148	68	87	457
180+ DPD	0		151	8	8	14	775	53	178	1,187
Government insured/guaranteed loans (1)	1		202	472	725	820	22,902	0	0	25,122
Total residential mortgage – first lien	12,522		50,535	37,240	12,892	21,572	111,091	6,514	1,997	254,363
Residential mortgage – junior lien
By delinquency status:
Current-29 DPD	9		22	38	38	33	1,028	13,980	5,036	20,184
30-59 DPD	0		0	0	0	0	16	35	55	106
60-89 DPD	0		0	0	1	0	8	32	41	82
90-119 DPD	0		0	0	0	0	5	25	42	72
120-179 DPD	0		0	0	0	0	9	180	316	505
180+ DPD	0		0	0	0	0	29	78	252	359
Total residential mortgage – junior lien	9		22	38	39	33	1,095	14,330	5,742	21,308
Credit cards
By delinquency status:
Current-29 DPD	0		0	0	0	0	0	33,315	243	33,558
30-59 DPD	0		0	0	0	0	0	157	9	166
60-89 DPD	0		0	0	0	0	0	121	8	129
90-119 DPD	0		0	0	0	0	0	121	8	129
120-179 DPD	0		0	0	0	0	0	262	2	264
180+ DPD	0		0	0	0	0	0	0	0	0
Total credit cards	0		0	0	0	0	0	33,976	270	34,246
Auto
By delinquency status:
Current-29 DPD	6,871		17,864	13,015	5,497	2,880	2,421	0	0	48,548
30-59 DPD	5		112	129	73	49	93	0	0	461
60-89 DPD	0		32	42	23	15	28	0	0	140
90-119 DPD	0		16	18	10	6	10	0	0	60
120-179 DPD	0		0	1	0	0	0	0	0	1
180+ DPD	0		0	0	0	0	0	0	0	0
Total auto	6,876		18,024	13,205	5,603	2,950	2,552	0	0	49,210
Other consumer
By delinquency status:
Current-29 DPD	412		1,204	1,175	472	196	208	21,018	144	24,829
30-59 DPD	0		3	5	2	1	3	9	6	29
60-89 DPD	0		1	3	1	1	1	7	1	15
90-119 DPD	0		1	3	2	1	1	6	3	17
120-179 DPD	0		0	0	0	0	0	14	7	21
180+ DPD	0		0	0	0	0	2	3	9	14
Total other consumer	412		1,209	1,186	477	199	215	21,057	170	24,925
Total consumer loans	$	19,819	69,790	51,669	19,011	24,754	114,953	75,877	8,179	384,052

Term loans by origination year Revolving loans
Revolving loans converted to term loans

(in millions) 2020
2019
2018
2017
2016
Prior
Total
March 31, 2020
Real estate 1-4 family first mortgage
By delinquency status:
Current-29 DPD $ 14,238
59,044
25,047
36,185
41,121
93,490
7,981
2,020
279,126
30-59 DPD 14
65
30
39
64
1,184
38
57
1,491
60-89 DPD 2
3
6
5
8
370
20
27
441
90-119 DPD —
—
3
—
6
190
8
17
224
120-179 DPD —
—
1
4
7
142
11
22
187
180+ DPD —
—
4
7
5
466
5
125
612
Government insured/guaranteed loans (2) 2
32
150
271
498
9,726
—
—
10,679
Loans held at fair value —
—
—
—
—
160
—
—
160
Total real estate 1-4 family first mortgage 14,256
59,144
25,241
36,511
41,709
105,728
8,063
2,268
292,920
Real estate 1-4 family junior mortgage
By delinquency status:
Current-29 DPD 8
44
51
48
39
1,491
19,178
7,058
27,917
30-59 DPD —
—
—
—
—
34
76
119
229
60-89 DPD —
—
—
1
1
15
28
58
103
90-119 DPD —
—
—
—
—
8
19
32
59
120-179 DPD —
—
—
—
—
6
17
44
67
180+ DPD —
—
—
—
1
16
10
125
152
Total real estate 1-4 family junior mortgage 8
44
51
49
41
1,570
19,328
7,436
28,527
Credit cards
By delinquency status:
Current-29 DPD —
—
—
—
—
—
37,320
259
37,579
30-59 DPD —
—
—
—
—
—
260
18
278
60-89 DPD —
—
—
—
—
—
184
13
197
90-119 DPD —
—
—
—
—
—
167
14
181
120-179 DPD —
—
—
—
—
—
335
10
345
180+ DPD —
—
—
—
—
—
2
—
2
Total credit cards —
—
—
—
—
—
38,268
314
38,582
Automobile
By delinquency status:
Current-29 DPD 6,334
19,682
9,085
5,509
4,857
2,145
—
—
47,612
30-59 DPD 8
158
134
111
168
104
—
—
683
60-89 DPD —
49
40
32
53
34
—
—
208
90-119 DPD —
18
13
9
15
10
—
—
65
120-179 DPD —
—
—
—
—
—
—
—
—
180+ DPD —
—
—
—
—
—
—
—
—
Total automobile 6,342
19,907
9,272
5,661
5,093
2,293
—
—
48,568
Other revolving credit and installment
By delinquency status:
Current-29 DPD 948
3,580
2,207
1,468
1,298
5,751
17,766
202
33,220
30-59 DPD 1
9
10
12
9
66
19
7
133
60-89 DPD —
5
6
5
5
32
9
4
66
90-119 DPD —
4
6
6
6
31
9
3
65
120-179 DPD —
—
—
—
—
—
15
2
17
180+ DPD —
—
—
—
—
1
2
7
10
Total other revolving credit and installment 949
3,598
2,229
1,491
1,318
5,881
17,820
225
33,511
Total consumer loans $ 21,555
82,693
36,793
43,712
48,161
115,472
83,479
10,243
442,108

(continued on following page)


			Wells Fargo & Company			79

Note 6:4: Loans and Related Allowance for Credit Losses (continued)

(continued from previous page)

Real estate
1-4 family
first
mortgage

Real estate
1-4 family
junior lien
mortgage

Credit
card

Automobile

Other
revolving
credit and
installment

Total
December 31, 2019
By delinquency status:
Current-29 DPD $ 279,722
28,870
39,935
46,650
33,981
429,158
30-59 DPD 1,136
216
311
882
140
2,685
60-89 DPD 404
115
221
263
81
1,084
90-119 DPD 197
69
202
77
74
619
120-179 DPD 160
71
343
1
18
593
180+ DPD 503
155
1
—
10
669
Government insured/guaranteed loans (2) 10,999
—
—
—
—
10,999
Loans held at fair value 171
—
—
—
—
171
Total consumer loans (excluding PCI) 293,292
29,496
41,013
47,873
34,304
445,978
Total consumer PCI loans (carrying value) (3) 555
13
—
—
—
568
Total consumer loans $ 293,847
29,509
41,013
47,873
34,304
446,546


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2020		2019	2018	2017	2016	Prior			Total
December 31, 2020
Residential mortgage – first lien
By delinquency status:
Current-29 DPD	$	53,298	43,297	14,761	24,619	30,533	67,960	6,762	1,719	242,949
30-59 DPD	111		76	36	67	79	750	52	66	1,237
60-89 DPD	88		10	6	12	13	305	56	68	558
90-119 DPD	232		11	5	8	7	197	26	33	519
120-179 DPD	3		4	1	3	5	151	17	29	213
180+ DPD	3		1	4	11	15	758	21	145	958
Government insured/guaranteed loans (1)	215		639	904	1,076	2,367	25,039	0	0	30,240
Total residential mortgage – first lien	53,950		44,038	15,717	25,796	33,019	95,160	6,934	2,060	276,674
Residential mortgage – junior lien
By delinquency status:
Current-29 DPD	22		39	39	37	31	1,115	15,366	5,434	22,083
30-59 DPD	0		0	1	1	0	22	113	160	297
60-89 DPD	0		0	1	0	0	11	154	271	437
90-119 DPD	0		0	0	1	0	7	45	84	137
120-179 DPD	0		0	0	0	0	9	36	77	122
180+ DPD	0		0	0	0	1	25	29	155	210
Total residential mortgage – junior lien	22		39	41	39	32	1,189	15,743	6,181	23,286
Credit cards
By delinquency status:
Current-29 DPD	0		0	0	0	0	0	35,612	255	35,867
30-59 DPD	0		0	0	0	0	0	243	12	255
60-89 DPD	0		0	0	0	0	0	167	10	177
90-119 DPD	0		0	0	0	0	0	144	10	154
120-179 DPD	0		0	0	0	0	0	208	3	211
180+ DPD	0		0	0	0	0	0	0	0	0
Total credit cards	0		0	0	0	0	0	36,374	290	36,664
Auto
By delinquency status:
Current-29 DPD	19,625		14,561	6,307	3,459	2,603	697	0	0	47,252
30-59 DPD	120		183	114	80	107	46	0	0	650
60-89 DPD	32		60	36	25	35	16	0	0	204
90-119 DPD	13		26	14	9	12	6	0	0	80
120-179 DPD	0		1	0	0	0	0	0	0	1
180+ DPD	0		0	0	—	0	0	0	0	0
Total auto	19,790		14,831	6,471	3,573	2,757	765	0	0	48,187
Other consumer
By delinquency status:
Current-29 DPD	1,406		1,383	577	261	59	193	20,246	162	24,287
30-59 DPD	2		7	5	2	1	3	19	10	49
60-89 DPD	1		5	3	1	1	1	10	6	28
90-119 DPD	1		4	2	1	0	1	8	3	20
120-179 DPD	0		0	0	0	0	0	10	4	14
180+ DPD	0		0	0	0	0	2	3	6	11
Total other consumer	1,410		1,399	587	265	61	200	20,296	191	24,409
Total consumer loans	$	75,172	60,307	22,816	29,673	35,869	97,314	79,347	8,722	409,220

(1)

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

~~(2)~~

~~Represents loans whose repayments are~~ ~~predominantly~~Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA)~~. Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled~~ ~~$6.1 billion~~ at ~~March 31, 2020, compared with~~ ~~$6.4 billion~~ at ~~December 31, 2019~~. Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled $8.1 billion and $11.1 billion at March 31, 2021, and December 31, 2020, respectively.


~~(3)~~	~~26%~~ ~~of the adjusted unpaid principal balance for consumer PCI loans was 30+ DPD at~~ ~~December 31, 2019~~.

Of the ~~$2.0~~$3.2 billion of consumer loans not government insured/guaranteed that are 90 days or more past due at March 31, ~~2020, $828~~2021, $598 million was accruing, compared with ~~$1.9~~

$2.7 billion past due and ~~$855~~$612 million accruing ~~at December~~atDecember 31, ~~2019.~~2020.


80			Wells Fargo & Company

Table ~~6.11~~4.10 provides ~~a breakdown~~the outstanding balances of our consumer loan portfolio by ~~FICO.~~FICO score. Substantially all of the scored consumer portfolio has an updated FICO score of 680 and above, reflecting a strong current borrower credit profile. FICO isscores are not available for certain loan types or may not be required if we deem it unnecessary due to strong collateral and

other borrower attributes. Loans not requiring a FICO score totaled ~~$8.9~~$14.7 billion and ~~$9.1~~$13.2 billion at March 31, ~~2020~~2021, and December 31, ~~2019,~~2020, respectively. Substantially all loans not requiring a FICO score are securities-based loans originated through retail brokerage.

Table ~~6.11:~~4.10: Consumer Loan Categories by FICO and Vintage~~(1)~~


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2021		2020	2019	2018	2017	Prior			Total
March 31, 2021
By FICO:
Residential mortgage – first lien
800+	$	5,312	31,048	24,815	8,195	14,736	54,856	3,216	475	142,653
760-799	5,485		13,403	7,869	2,299	3,532	13,522	1,247	260	47,617
720-759	1,343		4,165	2,711	951	1,500	7,969	793	255	19,687
680-719	291		1,206	923	376	609	4,653	505	216	8,779
640-679	64		313	243	152	175	2,396	231	153	3,727
600-639	5		46	55	55	45	1,330	119	99	1,754
< 600	0		8	28	47	39	1,576	155	155	2,008
No FICO available	21		144	124	92	116	1,887	248	384	3,016
Government insured/guaranteed loans (1)	1		202	472	725	820	22,902	0	0	25,122
Total residential mortgage – first lien	12,522		50,535	37,240	12,892	21,572	111,091	6,514	1,997	254,363
Residential mortgage – junior lien
800+	0		0	0	0	0	263	7,329	1,724	9,316
760-799	0		0	0	0	0	159	2,675	967	3,801
720-759	0		0	0	0	0	186	1,869	949	3,004
680-719	0		0	0	0	0	164	1,129	782	2,075
640-679	0		0	0	0	0	92	461	445	998
600-639	0		0	0	0	0	62	213	267	542
< 600	0		0	0	0	0	63	232	318	613
No FICO available	9		22	38	39	33	106	422	290	959
Total residential mortgage – junior lien	9		22	38	39	33	1,095	14,330	5,742	21,308
Credit card
800+	0		0	0	0	0	0	3,818	1	3,819
760-799	0		0	0	0	0	0	5,202	8	5,210
720-759	0		0	0	0	0	0	7,473	30	7,503
680-719	0		0	0	0	0	0	8,307	59	8,366
640-679	0		0	0	0	0	0	5,102	60	5,162
600-639	0		0	0	0	0	0	1,955	42	1,997
< 600	0		0	0	0	0	0	2,115	69	2,184
No FICO available	0		0	0	0	0	0	4	1	5
Total credit card	0		0	0	0	0	0	33,976	270	34,246
Auto
800+	1,488		2,488	2,392	1,074	614	393	0	0	8,449
760-799	1,162		2,850	2,365	965	472	304	0	0	8,118
720-759	1,093		2,890	2,223	948	473	353	0	0	7,980
680-719	1,150		3,251	2,261	919	449	371	0	0	8,401
640-679	1,084		2,997	1,694	653	328	314	0	0	7,070
600-639	646		1,907	1,007	408	225	266	0	0	4,459
< 600	253		1,620	1,219	627	377	522	0	0	4,618
No FICO available	0		21	44	9	12	29	0	0	115
Total auto	6,876		18,024	13,205	5,603	2,950	2,552	0	0	49,210
Other consumer
800+	126		304	247	76	24	72	2,072	21	2,942
760-799	121		285	228	74	22	36	1,029	14	1,809
720-759	85		207	210	83	26	32	812	24	1,479
680-719	45		135	177	80	27	24	702	24	1,214
640-679	13		58	90	43	15	15	359	24	617
600-639	2		17	30	16	7	8	133	12	225
< 600	2		14	35	23	9	10	150	17	260
No FICO available	18		189	169	82	69	18	1,146	34	1,725
FICO not required	0		0	0	0	0	0	14,654	0	14,654
Total other consumer	412		1,209	1,186	477	199	215	21,057	170	24,925
Total consumer loans	$	19,819	69,790	51,669	19,011	24,754	114,953	75,877	8,179	384,052

Term loans by origination year Revolving loans
Revolving loans converted to term loans

(in millions) 2020
2019
2018
2017
2016
Prior
Total
March 31, 2020
By FICO:
Real estate 1-4 family first mortgage
< 600 $ 2
27
43
60
92
2,643
209
229
3,305
600-639 10
105
67
68
128
1,663
148
115
2,304
640-679 80
481
297
311
368
3,075
298
171
5,081
680-719 458
1,870
905
1,181
1,301
5,847
665
264
12,491
720-759 1,896
6,104
2,198
2,901
3,147
9,491
1,024
291
27,052
760-799 6,242
16,885
5,542
7,135
7,458
15,595
1,609
298
60,764
800+ 5,522
33,344
15,917
24,461
28,544
55,278
3,824
512
167,402
No FICO available 45
296
122
123
173
2,249
286
388
3,682
Government insured/guaranteed loans (2) 1
32
150
271
498
9,887
—
—
10,839
Total real estate 1-4 family first mortgage 14,256
59,144
25,241
36,511
41,709
105,728
8,063
2,268
292,920
Real estate 1-4 family junior lien mortgage
< 600 —
—
—
—
—
133
370
611
1,114
600-639 —
—
—
—
—
82
310
361
753
640-679 —
—
—
—
—
134
686
610
1,430
680-719 —
—
—
—
—
250
1,697
1,102
3,049
720-759 —
—
—
—
—
274
2,751
1,243
4,268
760-799 —
—
—
—
—
228
3,785
1,198
5,211
800+ —
—
—
—
—
359
9,220
2,009
11,588
No FICO available 8
44
51
49
41
110
509
302
1,114
Total real estate 1-4 family junior lien mortgage 8
44
51
49
41
1,570
19,328
7,436
28,527
Credit Card
< 600 —
—
—
—
—
—
3,117
119
3,236
600-639 —
—
—
—
—
—
2,657
49
2,706
640-679 —
—
—
—
—
—
6,291
61
6,352
680-719 —
—
—
—
—
—
9,324
53
9,377
720-759 —
—
—
—
—
—
7,866
24
7,890
760-799 —
—
—
—
—
—
5,176
6
5,182
800+ —
—
—
—
—
—
3,678
1
3,679
No FICO available —
—
—
—
—
—
159
1
160
Total credit card —
—
—
—
—
—
38,268
314
38,582
Automobile
< 600 419
2,045
1,163
825
1,082
541
—
—
6,075
600-639 687
1,849
715
425
453
216
—
—
4,345
640-679 1,031
2,830
1,168
644
596
262
—
—
6,531
680-719 1,104
3,383
1,549
885
749
318
—
—
7,988
720-759 1,045
3,334
1,554
911
723
312
—
—
7,879
760-799 991
3,335
1,533
890
652
270
—
—
7,671
800+ 1,065
3,112
1,580
1,064
808
349
—
—
7,978
No FICO available —
19
10
17
30
25
—
—
101
Total automobile 6,342
19,907
9,272
5,661
5,093
2,293
—
—
48,568
Other revolving credit and installment
< 600 3
49
65
50
47
204
219
27
664
600-639 12
66
59
40
41
198
188
15
619
640-679 51
226
169
105
96
410
525
23
1,605
680-719 124
472
310
195
172
719
1,005
29
3,026
720-759 191
683
399
248
226
969
1,169
28
3,913
760-799 249
857
445
288
265
1,179
1,524
18
4,825
800+ 274
1,024
621
452
453
2,118
2,690
44
7,676
No FICO available 45
221
161
113
18
84
1,564
41
2,247
FICO not required —
—
—
—
—
—
8,936
—
8,936
Total other revolving credit and installment 949
3,598
2,229
1,491
1,318
5,881
17,820
225
33,511
Total consumer loans $ 21,555
82,693
36,793
43,712
48,161
115,472
83,479
10,243
442,108

(continued on ~~next~~following page)


			Wells Fargo & Company			81

Note 6:4: Loans and Related Allowance for Credit Losses (continued)

(continued from ~~prior~~previous page)


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2020		2019	2018	2017	2016	Prior			Total
December 31, 2020
By FICO:
Residential mortgage – first lien
800+	$	29,365	28,652	9,911	17,416	22,215	40,440	3,391	493	151,883
760-799	17,154		9,866	2,908	4,380	4,955	10,843	1,361	274	51,741
720-759	5,274		3,290	1,189	1,829	2,106	7,001	879	265	21,833
680-719	1,361		1,084	490	678	831	4,403	520	221	9,588
640-679	376		287	148	192	226	2,385	241	154	4,009
600-639	55		56	44	56	92	1,429	127	106	1,965
< 600	14		29	36	44	66	1,789	162	175	2,315
No FICO available	136		135	87	125	161	1,831	253	372	3,100
Government insured/guaranteed loans (1)	215		639	904	1,076	2,367	25,039	0	0	30,240
Total residential mortgage – first lien	53,950		44,038	15,717	25,796	33,019	95,160	6,934	2,060	276,674
Residential mortgage – junior lien
800+	0		0	0	0	0	293	7,973	1,819	10,085
760-799	0		0	0	0	0	177	3,005	1,032	4,214
720-759	0		0	0	0	0	207	2,093	1,034	3,334
680-719	0		0	0	0	0	183	1,233	854	2,270
640-679	0		0	0	0	0	103	503	493	1,099
600-639	0		0	0	0	0	67	241	299	607
< 600	0		0	0	0	0	76	254	374	704
No FICO available	22		39	41	39	32	83	441	276	973
Total residential mortgage – junior lien	22		39	41	39	32	1,189	15,743	6,181	23,286
Credit card
800+	0		0	0	0	0	0	3,860	1	3,861
760-799	0		0	0	0	0	0	5,438	7	5,445
720-759	0		0	0	0	0	0	7,897	29	7,926
680-719	0		0	0	0	0	0	8,854	60	8,914
640-679	0		0	0	0	0	0	5,657	64	5,721
600-639	0		0	0	0	0	0	2,242	46	2,288
< 600	0		0	0	0	0	0	2,416	82	2,498
No FICO available	0		0	0	0	0	0	10	1	11
Total credit card	0		0	0	0	0	0	36,374	290	36,664
Auto
800+	2,875		2,606	1,211	731	452	104	0	0	7,979
760-799	3,036		2,662	1,122	579	349	81	0	0	7,829
720-759	3,162		2,514	1,095	576	395	98	0	0	7,840
680-719	3,534		2,542	1,066	545	400	105	0	0	8,192
640-679	3,381		1,948	763	395	334	94	0	0	6,915
600-639	2,208		1,165	479	274	276	87	0	0	4,489
< 600	1,581		1,357	730	463	533	186	0	0	4,850
No FICO available	13		37	5	10	18	10	0	0	93
Total auto	19,790		14,831	6,471	3,573	2,757	765	0	0	48,187
Other consumer
800+	353		287	94	35	10	71	2,249	21	3,120
760-799	342		279	93	29	10	34	1,110	16	1,913
720-759	262		258	107	35	11	30	915	26	1,644
680-719	156		213	99	36	11	24	798	31	1,368
640-679	71		112	59	21	7	10	415	23	718
600-639	18		36	22	9	4	8	151	13	261
< 600	13		41	30	12	5	7	161	18	287
No FICO available	195		173	83	88	3	16	1,248	43	1,849
FICO not required	—		0	0	0	0	0	13,249	0	13,249
Total other consumer	1,410		1,399	587	265	61	200	20,296	191	24,409
Total consumer loans	$	75,172	60,307	22,816	29,673	35,869	97,314	79,347	8,722	409,220

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

Real estate
1-4 family
first
mortgage
Real estate
1-4 family
junior lien
mortgage
Credit
card
Automobile
Other
revolving
credit and
installment
Total
December 31, 2019
By FICO:
< 600 $ 3,264
1,164
3,373
6,041
704
14,546
600-639 2,392
782
2,853
4,230
670
10,927
640-679 5,068
1,499
6,626
6,324
1,730
21,247
680-719 12,844
3,192
9,732
7,871
3,212
36,851
720-759 27,879
4,407
8,376
7,839
4,097
52,598
760-799 61,559
5,483
5,648
7,624
4,915
85,229
800+ 165,460
11,851
4,037
7,900
7,585
196,833
No FICO available 3,656
1,118
368
44
2,316
7,502
FICO not required —
—
—
—
9,075
9,075
Government insured/guaranteed loans (2) 11,170
—
—
—
—
11,170
Total consumer loans (excluding PCI) 293,292
29,496
41,013
47,873
34,304
445,978
Total consumer PCI loans (carrying value) (3) 555
13
—
—
—
568
Total consumer loans $ 293,847
29,509
41,013
47,873
34,304
446,546


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


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


~~(3)~~	~~41%~~ ~~of the adjusted unpaid principal balance for consumer PCI loans had FICO scores less than 680 and~~ ~~19%~~ ~~where no FICO was available to us at~~ ~~December 31, 2019~~.

LTV refers to the ratio comparing the loan’s unpaid principal balance to the property’s collateral value. CLTV refers to the combination of first lien mortgage and junior lien mortgage (including unused line amounts for credit line products) ratios. LTVs and CLTVs are updated quarterly using a cascade approach which first uses values provided by automated valuation models (AVMs) for the property. If an AVM is not available, then the

value is estimated using the original appraised value adjusted by the change in Home Price Index (HPI) for the property location. If an HPI is not available, the original appraised value is used. The HPI value is normally the only method considered for high value properties, generally with an original value of $1 million or more, as the AVM values have proven less accurate for these properties.


82			Wells Fargo & Company

Table ~~6.12~~4.11 shows the most updated LTV and CLTV distribution of the ~~real estate 1-4 family~~residential mortgage – first lien and residential mortgage – junior lien ~~mortgage~~ loan portfolios. We consider the trends in residential real estate markets as we monitor credit risk and establish our ~~allowance for credit losses.~~ACL. In the event of a default, any loss should be

limited to the portion of the loan amount in excess of the net realizable value of the underlying real estate collateral value. Certain loans do not have an LTV or CLTV due to industry data availability and portfolios acquired from or serviced by other institutions.

Table ~~6.12:~~4.11: Consumer Loan Categories by LTV/CLTV and Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2021		2020	2019	2018	2017	Prior			Total
March 31, 2021
Residential mortgage – first lien
By LTV:
0-60%	$	4,267	16,832	14,542	5,555	12,104	72,786	4,755	1,574	132,415
60.01-80%	8,209		31,194	19,934	5,894	8,045	13,757	1,206	292	88,531
80.01-100%	23		2,139	2,092	625	501	1,115	365	91	6,951
100.01-120% (1)	0		40	81	26	24	153	97	21	442
> 120% (1)	0		24	35	8	15	75	38	7	202
No LTV available	22		104	84	59	63	303	53	12	700
Government insured/guaranteed loans (2)	1		202	472	725	820	22,902	0	0	25,122
Total residential mortgage – first lien	12,522		50,535	37,240	12,892	21,572	111,091	6,514	1,997	254,363
Residential mortgage – junior lien
By CLTV:
0-60%	0		0	0	0	0	520	8,203	3,646	12,369
60.01-80%	0		0	0	0	0	294	4,423	1,371	6,088
80.01-100%	0		0	0	0	0	155	1,273	527	1,955
100.01-120% (2)	0		0	0	0	0	44	302	122	468
> 120% (2)	0		0	0	0	0	12	105	41	158
No CLTV available	9		22	38	39	33	70	24	35	270
Total residential mortgage – junior lien	9		22	38	39	33	1,095	14,330	5,742	21,308
Total	$	12,531	50,557	37,278	12,931	21,605	112,186	20,844	7,739	275,671
	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
	2020		2019	2018	2017	2016	Prior			Total
December 31, 2020
Residential mortgage – first lien
By LTV:
0-60%	$	16,582	15,449	6,065	13,190	21,097	59,291	4,971	1,587	138,232
60.01-80%	34,639		24,736	7,724	10,745	8,970	9,333	1,323	326	97,796
80.01-100%	2,332		2,975	900	654	441	1,003	425	100	8,830
100.01-120% (1)	41		106	45	40	41	168	117	26	584
> 120% (1)	31		41	16	19	16	78	44	8	253
No LTV available	110		92	63	72	87	248	54	13	739
Government insured/guaranteed loans (2)	215		639	904	1,076	2,367	25,039	0	0	30,240
Total residential mortgage – first lien	53,950		44,038	15,717	25,796	33,019	95,160	6,934	2,060	276,674
Residential mortgage – junior lien
By CLTV:
0-60%	0		0	0	0	0	548	8,626	3,742	12,916
60.01-80%	0		0	0	0	0	335	5,081	1,554	6,970
80.01-100%	0		0	0	0	0	187	1,507	641	2,335
100.01-120% (2)	0		0	0	0	0	59	376	156	591
> 120% (2)	0		0	0	0	0	15	128	50	193
No CLTV available	22		39	41	39	32	45	25	38	281
Total residential mortgage – junior lien	22		39	41	39	32	1,189	15,743	6,181	23,286
Total	$	53,972	44,077	15,758	25,835	33,051	96,349	22,677	8,241	299,960

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

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

Term loans by origination year Revolving loans
Revolving loans converted to term loans

(in millions) 2020
2019
2018
2017
2016
Prior
Total
March 31, 2020
Real estate 1-4 family first mortgage
By LTV/CLTV:
0-60% $ 4,143
16,842
8,032
14,961
22,878
76,122
5,503
1,644
150,125
60.01-80% 9,526
34,239
14,133
19,674
17,326
17,228
1,672
401
114,199
80.01-100% 544
7,791
2,714
1,412
814
1,757
585
155
15,772
100.01-120% (2) —
80
96
86
72
310
169
39
852
> 120% (2) —
47
29
27
29
124
71
14
341
No LTV/CLTV available 42
113
87
80
92
300
63
15
792
Government insured/guaranteed loans (3) 1
32
150
271
498
9,887
—
—
10,839
Total real estate 1-4 family first mortgage 14,256
59,144
25,241
36,511
41,709
105,728
8,063
2,268
292,920
Real estate 1-4 family junior lien mortgage
By LTV/CLTV:
0-60% —
—
—
—
—
634
9,526
4,023
14,183
60.01-80% —
—
—
—
—
450
6,827
2,055
9,332
80.01-100% —
—
—
—
—
290
2,165
971
3,426
100.01-120% (2) —
—
—
—
—
102
566
262
930
> 120% (2) —
—
—
—
—
33
216
80
329
No LTV/CLTV available 8
44
51
49
41
61
28
45
327
Total real estate 1-4 family junior lien mortgage 8
44
51
49
41
1,570
19,328
7,436
28,527
Total $ 14,264
59,188
25,292
36,560
41,750
107,298
27,391
9,704
321,447
December 31, 2019
Real estate
1-4 family
first
mortgage
by LTV

Real estate
1-4 family
junior lien
mortgage
by CLTV

Total
By LTV/CLTV:
0-60% $ 151,478
14,603
166,081
60.01-80% 114,795
9,663
124,458
80.01-100% 13,867
3,574
17,441
100.01-120% (2) 860
978
1,838
> 120% (2) 338
336
674
No LTV/CLTV available 784
342
1,126
Government insured/guaranteed loans (3) 11,170
—
11,170
Total consumer loans (excluding PCI) 293,292
29,496
322,788
Total consumer PCI loans (carrying value) (4) 555
13
568
Total consumer loans $ 293,847
29,509
323,356


~~(1)~~			~~Disclosure is not comparative due to our adoption of CECL on January 1, 2020. For more information, see Note 1 (Summary of Significant Accounting Policies).~~Wells Fargo & Company			83


~~(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.~~


~~(3)~~	~~Represents loans whose repayments are~~ ~~predominantly~~ ~~insured by the FHA or guaranteed by the VA.~~


~~(4)~~	9% ~~of the adjusted unpaid principal balance for consumer PCI loans have LTV/CLTV amounts greater than 80% at~~ ~~December 31, 2019~~.

Note 6:4: Loans and Related Allowance for Credit Losses (continued)

NONACCRUAL LOANSTable ~~6.13~~4.12 provides loans on nonaccrual status. In connection with our adoption of CECL, nonaccrual loans may have an ~~allowance for credit losses~~ACL or a negative allowance for credit losses from expected recoveries of amounts previously written off. Payment

deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for customers who otherwise would have moved into nonaccrual status.

Table ~~6.13:~~4.12: Nonaccrual Loans


	Amortized cost					Recognized interest income
	Nonaccrual loans			Nonaccrual loans without related allowance for credit losses (1)		Quarter ended March 31,
(in millions)	Mar 31, 2021		Dec 31, 2020	Mar 31, 2021	Dec 31, 2020	2021	2020
Commercial:
Commercial and industrial	$	2,223	2,698	428	382	31	16
Real estate mortgage	1,703		1,774	78	93	11	8
Real estate construction	55		48	13	15	0	4
Lease financing	249		259	44	16	0	0
Total commercial	4,230		4,779	563	506	42	28
Consumer:
Residential mortgage- first lien	2,859		2,957	1,932	1,908	37	44
Residential mortgage- junior lien	747		754	453	461	12	16
Auto	181		202	0	0	9	3
Other consumer	38		36	0	0	1	1
Total consumer	3,825		3,949	2,385	2,369	59	64
Total nonaccrual loans	$	8,055	8,728	2,948	2,875	101	92

(1)

Amortized cost
(in millions) Nonaccrual loans
Nonaccrual loans without related allowance for credit losses (2)
Recognized interest income
March 31, 2020
Commercial:
Commercial and industrial $ 1,779
243
16
Real estate mortgage 944
194
8
Real estate construction 21
5
4
Lease financing 131
10
—
Total commercial 2,875
452
28
Consumer:
Real estate 1-4 family first mortgage 2,372
1,382
44
Real estate 1-4 family junior lien mortgage 769
431
16
Automobile 99
—
3
Other revolving credit and installment 41
—
1
Total consumer 3,281
1,813
64
Total nonaccrual loans $ 6,156
2,265
92
December 31, 2019
Commercial:
Commercial and industrial $ 1,545

Real estate mortgage 573

Real estate construction 41

Lease financing 95

Total commercial 2,254

Consumer:
Real estate 1-4 family first mortgage 2,150

Real estate 1-4 family junior lien mortgage 796

Automobile 106

Other revolving credit and installment 40

Total consumer 3,092

Total nonaccrual loans (excluding PCI) $ 5,346


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


~~(2)~~	~~Nonaccrual loans may not have an allowance for credit losses if the loss expectations are zero given solid collateral value.~~

Nonaccrual loans may not have an allowance for credit losses if the loss expectations are zero given solid collateral value.

LOANS IN PROCESS OF FORECLOSUREOur recorded investment in consumer mortgage loans collateralized by residential real estate property that are in process of foreclosure was ~~$3.4~~$1.3 billion and ~~$3.5~~$2.1 billion at March 31, ~~2020,~~2021, and December 31, ~~2019,~~2020, respectively, which included ~~$2.7 billion~~$947 million and ~~$2.8~~$1.7 billion, respectively, of loans that are government insured/guaranteed. Under the Consumer Financial Protection Bureau guidelines, we do not commence the foreclosure process on ~~real estate 1-4 family~~residential mortgage loans until after the loan is 120 days delinquent. Foreclosure procedures and timelines vary depending on whether the property address resides in a judicial or non-judicial state. Judicial states require the foreclosure to be processed through the state’s courts while non-judicial states are processed without court intervention. Foreclosure timelines vary according to state law. In connection with our actions to support customers during the COVID-19 pandemic, we have suspended certain mortgage foreclosure activities.


84			Wells Fargo & Company

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING Certain loans 90 days or more past due 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.

Table ~~6.14~~4.13 shows loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed.

Table ~~6.14:~~4.13: Loans 90 Days or More Past Due and Still Accruing

(in millions) Mar 31, 2020
Dec 31, 2019
Total: $ 7,023
7,285
Less: FHA insured/VA guaranteed (1) 6,142
6,352
Total, not government insured/guaranteed $ 881
933
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial $ 24
47
Real estate mortgage 28
31
Real estate construction 1
—
Total commercial 53
78
Consumer:
Real estate 1-4 family first mortgage 128
112
Real estate 1-4 family junior lien mortgage 25
32
Credit card 528
546
Automobile 69
78
Other revolving credit and installment 78
87
Total consumer 828
855
Total, not government insured/guaranteed $ 881
933


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

~~Note 6: Loans and Related Allowance for Credit Losses~~ ~~(continued)~~


(in millions)	Mar 31, 2021		Dec 31, 2020
Total:	$	6,273	7,041
Less: FHA insured/VA guaranteed (1)	5,406		6,351

Total, not government insured/guaranteed	$	867	690
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial	$	55	39
Real estate mortgage	128		38
Real estate construction	86		1
Total commercial	269		78
Consumer:
Residential mortgage – first lien	85		135
Residential mortgage – junior lien	15		19
Credit card	394		365
Auto	46		65
Other consumer	58		28
Total consumer	598		612
Total, not government insured/guaranteed	$	867	690

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

~~IMPAIRED LOANS~~

In connection with our adoption of CECL, we no longer provide information on impaired loans. We have retained impaired loans information for the period ended December 31, 2019. Table 6.15 summarizes key information for impaired loans. Our impaired loans at December 31, 2019, predominantly included loans on nonaccrual status in the commercial portfolio segment and loans modified in a TDR, whether on accrual or nonaccrual status. Impaired loans generally had estimated losses which are included in the allowance for credit losses. We did have impaired loans with no allowance for credit losses when the loss

content has been previously recognized through charge-offs, such as collateral dependent loans, or when loans are currently performing in accordance with their terms and no loss has been estimated. Impaired loans excluded PCI loans and loans that had been fully charged off or otherwise had zero recorded investment.

~~Table 6.15 included trial modifications that totaled $115 million at December 31, 2019.~~

~~For additional information on our legacy impaired loans and allowance for credit losses, see Note 1 (Summary of Significant Accounting Policies) in our 2019 Form 10-K.~~

~~Table 6.15:Impaired Loans Summary~~

Recorded investment
(in millions) Unpaid principal balance
Impaired loans
Impaired loans with related allowance for credit losses
Related allowance for credit losses
December 31, 2019
Commercial:
Commercial and industrial $ 2,792
2,003
1,903
311
Real estate mortgage 1,137
974
803
110
Real estate construction 81
51
41
11
Lease financing 131
105
105
35
Total commercial 4,141
3,133
2,852
467
Consumer:
Real estate 1-4 family first mortgage 8,107
7,674
4,433
437
Real estate 1-4 family junior lien mortgage 1,586
1,451
925
144
Credit card 520
520
520
209
Automobile 138
81
42
8
Other revolving credit and installment 178
171
155
49
Total consumer (1) 10,529
9,897
6,075
847
Total impaired loans (excluding PCI) $ 14,670
13,030
8,927
1,314

~~(1)~~

~~Included the recorded investment of~~ ~~$1.2 billion~~ at ~~December 31, 2019~~ of government insured/guaranteed loans that are predominantly insured by the FHA or guaranteed by the VA and generally do not have an ACL. Impaired loans may also have limited, if any, ACL when the recorded investment of the loan approximates estimated net realizable value as a result of charge-offs prior to a TDR modification.

~~Table 6.16 provides the average recorded investment in impaired loans and the amount of interest income recognized on impaired loans by portfolio segment and class.~~

~~Table 6.16:Average Recorded Investment in Impaired Loans~~

Year ended December 31,
2019
(in millions) Average recorded investment
Recognized interest income
Commercial:
Commercial and industrial $ 2,150
129
Real estate mortgage 1,067
59
Real estate construction 52
6
Lease financing 93
1
Total commercial 3,362
195
Consumer:
Real estate 1-4 family first mortgage 9,031
506
Real estate 1-4 family junior lien mortgage 1,586
99
Credit card 488
64
Automobile 84
12
Other revolving credit and installment 162
13
Total consumer 11,351
694
Total impaired loans (excluding PCI) $ 14,713
889

Interest income:
Cash basis of accounting $ 241
Other (1) 648
Total interest income $ 889


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

TROUBLED DEBT RESTRUCTURINGS (TDRs) When, for economic or legal reasons related to a borrower’s financial difficulties, we grant a concession for other than an insignificant period of time to a borrower that we would not otherwise consider, the related loan is classified as a TDR, the balance of which totaled ~~$11.6~~$13.3 billion and ~~$11.8~~$14.5 billion at March 31, ~~2020,~~2021, and December 31, ~~2019,~~2020, respectively. We do not consider loan resolutions such as foreclosure or short sale to be a TDR. In addition, COVID-related modifications are generally not classified as TDRs due to the relief under the CARES ~~Act.~~Act and the Interagency Statement. For ~~more~~additional information on the TDR relief, see Note 1 (Summary of Significant Accounting Policies). in our 2020 Form 10-K.

We may require some consumer borrowers experiencing financial difficulty to make trial payments generally for a period of three to four months, according to the terms of a planned permanent modification, to determine if they can perform according to those terms. These arrangements represent trial modifications, which we classify and account for as TDRs. While loans are in trial payment programs, their original terms are not considered modified and they continue to advance through delinquency status and accrue interest according to their original terms.

Commitments to lend additional funds on loans whose terms have been modified in a TDR amounted to ~~$403~~$506 million and ~~$500~~$489 million at March 31, ~~2020,~~2021, and December 31, ~~2019,~~2020, respectively.

~~Note 6: Loans and Related Allowance for Credit Losses~~ ~~(continued)~~

Table ~~6.17~~4.14 summarizes our TDR modifications for the periods presented by primary modification type and includes the financial effects of these modifications. For those loans that modify more than once, the table reflects each modification that

occurred during the period. Loans that both modify and ~~pay~~are paid off or written-off within the period, as well as changes in recorded investment during the period for loans modified in prior periods, are not included in the table.


			Wells Fargo & Company			85

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

Table 4.14:TDR Modifications



	Primary modification type (1)					Financial effects of modifications
($ in millions)	Principal forgiveness		Interest rate reduction	Other concessions (2)	Total	Charge- offs (3)	Weighted average interest rate reduction		Recorded investment related to interest rate reduction (4)
Quarter ended March 31, 2021
Commercial:
Commercial and industrial	$	0	1	230	231	6	0.89	%	$	1
Real estate mortgage	0		4	100	104	0	0.93		4
Real estate construction	0		0	1	1	0	0		0
Lease financing	0		0	3	3	0	0		0
Total commercial	0		5	334	339	6	0.92		5
Consumer:
Residential mortgage – first lien	0		7	532	539	0	1.87		7
Residential mortgage – junior lien	0		5	13	18	1	2.41		5
Credit card	0		32	0	32	0	18.87		32
Auto	0		1	14	15	7	3.87		1
Other consumer	0		7	1	8	0	12.20		7
Trial modifications (5)	0		0	0	0	0	0		0
Total consumer	0		52	560	612	8	14.01		52
Total	$	0	57	894	951	14	12.82	%	$	57
Quarter ended March 31, 2020
Commercial:
Commercial and industrial	$	18	15	314	347	44	0.65	%	$	15
Real estate mortgage	0		13	152	165	0	0.97		13
Real estate construction	0		0	6	6	0	2.49		0
Lease financing	0		0	0	0	0	0		0
Total commercial	18		28	472	518	44	0.82		28
Consumer:
Residential mortgage – first lien	21		3	166	190	0	1.63		17
Residential mortgage – junior lien	1		6	14	21	0	2.38		6
Credit card	0		95	0	95	0	12.33		95
Auto	2		2	10	14	6	4.69		2
Other consumer	0		12	2	14	0	8.22		12
Trial modifications (5)	0		0	2	2	0	0		0
Total consumer	24		118	194	336	6	10.00		132
Total	$	42	146	666	854	50	8.38	%	$	160

(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 $256 million and $263 million for first quarter 2021 and 2020, respectively.

(2)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.

(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. NaN modifications resulted in deferring or legally forgiving principal in first quarter 2021, while $29 million modifications resulted in deferring or legally forgiving principal for the same period in 2020.

(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 6.17: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 March 31, 2020
Commercial:
Commercial and industrial $ 18
15
314
347
44
0.65 % $ 15
Real estate mortgage —
13
152
165
—
0.97
13
Real estate construction —
—
6
6
—
2.49
—
Lease financing —
—
—
—
—
—
—
Total commercial 18
28
472
518
44
0.82
28
Consumer:
Real estate 1-4 family first mortgage 21
3
166
190
—
1.63
17
Real estate 1-4 family junior lien mortgage 1
6
14
21
—
2.38
6
Credit card —
95
—
95
—
12.33
95
Automobile 2
2
10
14
6
4.69
2
Other revolving credit and installment —
12
2
14
—
8.22
12
Trial modifications (6) —
—
2
2
—
—
—
Total consumer 24
118
194
336
6
10.00
132
Total $ 42
146
666
854
50
8.38 % $ 160
Quarter ended March 31, 2019
Commercial:
Commercial and industrial $ —
11
554
565
13
0.68 % $ 11
Real estate mortgage —
2
73
75
—
0.95
2
Real estate construction —
—
3
3
—
—
—
Lease financing —
—
—
—
—
—
—
Total commercial —
13
630
643
13
0.73
13
Consumer:
Real estate 1-4 family first mortgage 35
3
294
332
1
1.95
19
Real estate 1-4 family junior lien mortgage 2
11
25
38
1
2.29
12
Credit card —
97
—
97
—
13.20
97
Automobile 2
1
12
15
6
5.38
1
Other revolving credit and installment —
11
3
14
—
7.58
11
Trial modifications (6) —
—
—
—
—
—
—
Total consumer 39
123
334
496
8
10.27
140
Total $ 39
136
964
1,139
21
9.44 % $ 153


~~(1)~~			Amounts represent the recorded investment in loans after recognizing the effects of the TDR, if any. TDRs may have multiple types of concessions, but are presented only once in the first modification type based on the order presented in the table above. The reported amounts include loans remodified of ~~$263 million~~ ~~and~~ ~~$360 million~~ ~~for the first quarter of~~ ~~2020~~ ~~and~~ ~~2019, respectively.~~


~~(2)~~			Principal modifications include principal forgiveness at the time of the modification, contingent principal forgiveness granted over the life of the loan based on borrower performance, and principal that has been legally separated and deferred to the end of the loan, with a zero percent contractual interest rate.

~~(3)~~

Other concessions include loans discharged in bankruptcy, loan renewals, term extensions and other interest and noninterest adjustments, but exclude modifications that also forgive principal and/or reduce the contractual interest rate.

~~(4)~~

Charge-offs include write-downs of the investment in the loan in the period it is contractually modified. The amount of charge-off will differ from the modification terms if the loan has been charged down prior to the modification based on our policies. In addition, there may be cases where we have a charge-off/down with no legal principal modification. Modifications resulted in deferring or legally forgiving principal (actual or contingent) of ~~$29 million~~ ~~and~~ ~~$3 million~~ ~~for the first quarter of~~ ~~2020~~ ~~and~~ ~~2019, respectively.~~

~~(5)~~

Reflects the effect of reduced interest rates on loans with an interest rate concession as one of its concession types, which includes loans reported as a principal primary modification type that also have an interest rate concession.

~~(6)~~

Trial modifications are granted a delay in payments due under the original terms during the trial payment period. However, these loans continue to advance through delinquency status and accrue interest according to their original terms. Any subsequent permanent modification generally includes interest rate related concessions; however, the exact concession type and resulting financial effect are usually not known until the loan is permanently modified. Trial modifications for the period are presented net of previously reported trial modifications that became permanent in the current period.


86			Wells Fargo & Company

Table ~~6.18~~4.15 summarizes permanent modification TDRs that have defaulted in the current period within 12 months of their permanent modification date. We are reporting these defaulted

TDRs based on a payment default definition of 90 days past due for the commercial portfolio segment and 60 days past due for the consumer portfolio segment.

Table ~~6.18:~~4.15: Defaulted TDRs

Recorded investment of defaults
Quarter ended March 31,
(in millions) 2020
2019
Commercial:
Commercial and industrial $ 185
23
Real estate mortgage 21
28
Real estate construction —
3
Total commercial 206
54
Consumer:
Real estate 1-4 family first mortgage 10
11
Real estate 1-4 family junior lien mortgage 2
5
Credit card 26
21
Automobile 2
3
Other revolving credit and installment 1
2
Total consumer 41
42
Total $ 247
96


		Recorded investment of defaults
	Quarter ended March 31,
(in millions)		2021		2020
Commercial:
Commercial and industrial		$	41	185
Real estate mortgage		16		21
Real estate construction		0		0
Lease financing		0		0
Total commercial		57		206
Consumer:
Residential mortgage – first lien		3		10
Residential mortgage – junior lien		1		2
Credit card		10		26
Auto		11		2
Other consumer		1		1
Total consumer		26		41
Total		$	83	247

~~Note 7: Leasing Activity (continued~~)


			Wells Fargo & Company			87


Note 7:5: Leasing Activity

The information below provides a summary of our leasing activities as a lessor and lessee. See Note ~~7 (Leasing Activities)~~5

(Leasing Activity) in our ~~2019~~2020 Form 10-K for additional information about our leasing activities.

As a Lessor

Noninterest income on leases, which is presented in Table ~~7.1 presents the composition~~5.1, is included in other noninterest income on our consolidated statement of income. Lease expense, included in other noninterest expense on our ~~leasing revenue.~~consolidated statement of income, was $226 million and $260 million in first quarter 2021 and 2020, respectively.

Table ~~7.1:~~5.1: Leasing Revenue


	Quarter ended March 31,
(in millions)		2021		2020
Interest income on lease financing		$	171	211
Other lease revenues:
Variable revenues on lease financing		26		27
Fixed revenues on operating leases		260		314
Variable revenues on operating leases		18		14
Other lease-related revenues (1)		11		(2)
Noninterest income on leases		315		353
Total leasing revenue		$	486	564

(1) Predominantly includes net gains (losses) on disposition of assets leased under operating leases or lease financings.

Quarter ended March 31,
(in millions) 2020

2019
Interest income on lease financing $ 211
223
Other lease revenues:
Variable revenues on lease financing 27
24
Fixed revenues on operating leases 314
373
Variable revenues on operating leases 13
18
Other lease-related revenues (1) (2 ) 28
Lease income 352
443
Total leasing revenue $ 563
666


~~(1)~~	~~Predominantly includes net gains (losses) on disposition of assets leased under operating leases or lease financings.~~

As a Lessee

Substantially all of our leases are operating leases. Table ~~7.2~~5.2 presents balances for our operating leases.

Table ~~7.2:~~5.2: Operating Lease Right of Use (ROU) Assets and Lease Liabilities

(in millions) Mar 31, 2020
Dec 31, 2019
ROU assets $ 4,650
4,724
Lease liabilities 5,224
5,297


(in millions)	Mar 31, 2021		Dec 31, 2020
ROU assets	$	4,137	4,306
Lease liabilities	4,769		4,962

Table ~~7.3~~5.3 provides the composition of our lease costs, which are predominantly included in net occupancy expense.

Table ~~7.3:~~5.3: Lease Costs


	Quarter ended March 31,
(in millions)		2021		2020
Fixed lease expense – operating leases		$	265	291
Variable lease expense		78		66
Other (1)		(3)		(14)
Total lease costs		$	340	343

(1)Predominantly includes gains recognized from sale leaseback transactions and sublease rental income.

Quarter ended March 31,
(in millions) 2020
2019
Fixed lease expense – operating leases $ 291
297
Variable lease expense 66
73
Other (1) (14 ) (8 )
Total lease costs $ 343
362


~~(1)~~88			~~Predominantly includes gains recognized from sale leaseback transactions and sublease rental income.~~Wells Fargo & Company



Note 8:6: Equity Securities

Table ~~8.1~~6.1 provides a summary of our equity securities by business purpose and accounting method, including equity securities with readily determinable fair values (marketable) and those without readily determinable fair values (nonmarketable).

Table ~~8.1:~~6.1: Equity Securities


(in millions)	Mar 31, 2021		Dec 31, 2020
Held for trading at fair value:
Marketable equity securities	$	20,254	23,032
Not held for trading:
Fair value:
Marketable equity securities	2,102		1,564
Nonmarketable equity securities	9,045		9,413
Total equity securities at fair value	11,147		10,977
Equity method:
Low-income housing tax credit investments	11,492		11,628
Private equity	2,893		2,960
Tax-advantaged renewable energy	5,562		5,458
New market tax credit and other	405		409
Total equity method	20,352		20,455
Other:
Federal Reserve Bank stock and other at cost (1)	3,585		3,588
Private equity (2)	4,643		4,208
Total equity securities not held for trading	39,727		39,228
Total equity securities	$	59,981	62,260

(in millions) Mar 31,
2020
Dec 31,
2019
Held for trading at fair value:
Marketable equity securities $ 13,573
27,440
Not held for trading:
Fair value:
Marketable equity securities (1) 7,708
6,481
Nonmarketable equity securities 6,895
8,015
Total equity securities at fair value 14,603
14,496
Equity method:
Low-income housing tax credit investments 11,290
11,343
Private equity 3,351
3,459
Tax-advantaged renewable energy 3,991
3,811
New market tax credit and other 387
387
Total equity method 19,019

19,000
Other:
Federal Reserve Bank stock and other at cost (2) 4,512
4,790
Private equity (3) 2,340
2,515
Total equity securities not held for trading 40,474
40,801
Total equity securities $ 54,047
68,241
(1) Substantially alll relates to investments in Federal Reserve Bank stock at both March 31, 2021, and December 31, 2020.


~~(1)~~	~~Includes~~ ~~$3.1 billion~~ ~~and~~ ~~$3.8 billion~~ at ~~March 31, 2020, and~~ ~~December 31, 2019, respectively, related to securities held as economic hedges of our deferred compensation plan obligations.~~


~~(2)~~	~~Includes~~ ~~$4.5 billion~~ ~~and~~ ~~$4.8 billion~~ at ~~March 31, 2020, and~~ ~~December 31, 2019, respectively, related to investments in Federal Reserve Bank and Federal Home Loan Bank stock.~~


~~(3)~~	(2) Represents nonmarketable equity securities accounted for under the measurement alternative.

Equity Securities Held for Trading

Equity securities held for trading purposes are marketable equity securities traded on organized exchanges. These securities are held as part of our customer accommodation trading activities. For ~~more~~additional information on these activities, see Note 42 (Trading Activities).

Equity Securities Not Held for Trading

We also hold equity securities unrelated to trading activities. These securities include private equity and tax credit investments, securities held as economic hedges or to meet regulatory requirements (for example, Federal Reserve Bank and Federal Home Loan Bank stock).

FAIR VALUE Marketable equity securities held for purposes other than trading ~~partially~~ consist of holdings of publicly traded equity securities held for investment purposes and, to a lesser extent, exchange-traded equity funds held to economically hedge obligations related to our deferred compensation ~~plans and, to a lesser extent, other holdings of publicly traded equity securities held for investment purposes.~~plans. We account for certain nonmarketable equity securities under the fair value method, and substantially all of these securities are economically hedged with equity derivatives.

EQUITY METHOD Our equity method investments consist of tax credit and private equity investments, the majority of which are our low-income housing tax credit (LIHTC) investments.

We invest in affordable housing projects that qualify for the LIHTC, which are designed to promote private development of low-income housing. These investments typically generate a return ~~mostly~~ through realization of federal tax credit and other tax benefits. In first quarter ~~2020,~~2021, we recognized pre-tax losses of ~~$339~~$326 million related to our LIHTC investments, compared with ~~$273~~$339 million in first quarter ~~2019.~~2020. These losses were recognized in other noninterest income. We also recognized total tax benefits of ~~$398~~$435 million in first quarter ~~2020,~~2021, which included tax credits recorded to income taxes of ~~$314~~$354 million. In first quarter ~~2019,~~2020, total tax benefits were ~~$370~~$398 million, which included tax credits of ~~$302~~$314 million. We are periodically required to provide additional financial support during the investment period. A liability is recognized for unfunded commitments that are both legally binding and probable of funding. These commitments are predominantly funded within three years of initial investment. Our liability for these unfunded commitments was ~~$4.2~~$4.1 billion at March 31, ~~2020,~~2021, and ~~$4.3~~$4.2 billion at December 31, ~~2019.~~2020. This liability for unfunded commitments is included in long-term debt.

OTHER The remaining portion of our nonmarketable equity securities portfolio consists of securities accounted for using the cost or measurement alternative.


			Wells Fargo & Company			89

Note 8:6: Equity Securities (~~continued~~)(continued)

Realized Gains and Losses Not Held for Trading

Table ~~8.2~~6.2 provides a summary of the net gains and losses from equity securities not held for ~~trading.~~trading, which excludes equity method adjustments for our share of the investee’s earnings or

losses that are recognized in other noninterest income. Gains and losses for securities held for trading are reported in net gains ~~from~~on trading ~~activities.~~

and securities.

Table ~~8.2:~~6.2: Net Gains (Losses) from Equity Securities Not Held for Trading



	Quarter ended March 31,
(in millions)		2021		2020
Net gains (losses) from equity securities carried at fair value:
Marketable equity securities		$	60	(803)
Nonmarketable equity securities		(358)		(1,104)
Total equity securities carried at fair value		(298)		(1,907)
Net gains (losses) from nonmarketable equity securities not carried at fair value (1):
Impairment write-downs		(15)		(935)
Net unrealized gains related to measurement alternative observable transactions		225		222
Net realized gains on sale		55		0

Total nonmarketable equity securities not carried at fair value		265		(713)
Net losses from economic hedge derivatives (2)		425		1,219
Total net gains from equity securities not held for trading		$	392	(1,401)

Quarter ended March 31,
(in millions) 2020
2019
Net gains (losses) from equity securities carried at fair value:
Marketable equity securities $ (803 ) 377
Nonmarketable equity securities (1,104 ) 936
Total equity securities carried at fair value (1,907 ) 1,313
Net gains (losses) from nonmarketable equity securities not carried at fair value:
Impairment write-downs (935 ) (36 )
Net unrealized gains related to measurement alternative observable transactions 222
185
Net realized gains on sale —
237
All other —
—
Total nonmarketable equity securities not carried at fair value (713 ) 386
Net gains (losses) from economic hedge derivatives (1) 1,219
(885 )
Total net gains (losses) from equity securities not held for trading $ (1,401 ) 814
(1)Includes impairment write-downs and net realized gains on sale related to private equity and venture capital investments in consolidated portfolio companies, which are not reported in equity securities on our consolidated balance sheet.


~~(1)~~	~~Includes net gains (losses) on derivatives not designated as hedging instruments.~~

(2)Includes net gains (losses) on derivatives not designated as hedging instruments.

Measurement Alternative

Table ~~8.3~~6.3 provides additional information about the impairment write-downs and observable price adjustments related to

nonmarketable equity securities accounted for under the measurement alternative. Gains and losses related to these adjustments are also included in Table ~~8.2.~~6.2.

Table ~~8.3:~~6.3: Net Gains (Losses) from Measurement Alternative Equity Securities


	Quarter ended March 31,						Quarter ended March 31,
(in millions)	2020			2019		(in millions)		2021		2020
Net gains (losses) recognized in earnings during the period:						Net gains (losses) recognized in earnings during the period:
Gross unrealized gains due to observable price changes	$	222		185		Gross unrealized gains due to observable price changes		$	225	222
Gross unrealized losses due to observable price changes	—			—

Impairment write-downs	(354		)	(22	)	Impairment write-downs		(12)		(354)
Realized net gains from sale	2			23		Realized net gains from sale		0		2
Total net gains (losses) recognized during the period	$	(130	)	186
Total net gains recognized during the period						Total net gains recognized during the period		$	213	(130)

Table ~~8.4~~6.4 presents cumulative carrying value adjustments to nonmarketable equity securities accounted for under the measurement alternative that were still held at the end of each reporting period presented.

Table ~~8.4:~~6.4: Measurement Alternative Cumulative Gains (Losses)



(in millions)	Mar 31, 2020		Dec 31, 2020


Cumulative gains (losses):
Gross unrealized gains due to observable price changes	$	2,581	2,356
Gross unrealized losses due to observable price changes	(25)		(25)
Impairment write-downs	(981)		(969)

(in millions) Mar 31,
2020
Dec 31,
2019
Cumulative gains (losses):
Gross unrealized gains due to observable price changes $ 1,084
973
Gross unrealized losses due to observable price changes (42 ) (42 )
Impairment write-downs (473 ) (134 )


90			Wells Fargo & Company

Note 9:7: Other Assets

Table ~~9.1~~7.1 presents the components of other assets.

Table ~~9.1:~~7.1: Other Assets


(in millions)	Mar 31, 2021		Dec 31, 2020
Corporate/bank-owned life insurance	$	20,446	20,380
Accounts receivable	28,065		38,116
Interest receivable:
AFS and HTM debt securities	1,371		1,368
Loans	2,472		2,838
Trading and other	470		415
Customer relationship and other amortized intangibles	308		328
Foreclosed assets:
Residential real estate	58		73
Other	82		86
Operating lease assets (lessor)	7,098		7,391
Operating lease ROU assets (lessee)	4,137		4,306
Due from customers on acceptances	227		268
Other	13,378		11,768
Total other assets	$	78,112	87,337

(in millions) Mar 31,
2020
Dec 31,
2019
Corporate/bank-owned life insurance $ 20,128
20,070
Accounts receivable (1) 46,762
29,137
Interest receivable:
AFS and HTM debt securities 1,705
1,729
Loans 3,038
3,099
Trading and other 708
758
Customer relationship and other amortized intangibles 399
423
Foreclosed assets:
Residential real estate:
Government insured/guaranteed (1) 43
50
Non-government insured/guaranteed 137
172
Other 72
81
Operating lease assets (lessor) 8,124
8,221
Operating lease ROU assets (lessee) 4,650
4,724
Due from customers on acceptances 128
253
Other 10,269
10,200
Total other assets $ 96,163
78,917


~~(1)~~			Certain government-guaranteed residential real estate mortgage loans upon foreclosure are included in Accounts receivable. For more information, see Note 1 (Summary of Significant Accounting Policies) in our Wells Fargo & Company~~2019~~ ~~Form 10-K.~~			91

~~Note 10: Securitizations and Variable Interest Entities (~~
~~continued~~)

Note ~~10:~~8: Securitizations and Variable Interest Entities

Involvement with ~~Special Purpose~~Variable Interest Entities ~~(SPEs)~~(VIEs)

In the normal course of business, we enter into various types of on- and off-balance sheet transactions with ~~SPEs,~~special purpose entities (SPEs), which are corporations, trusts, limited liability companies or partnerships that are established for a limited purpose. ~~For further description~~

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 ~~involvement~~consolidated balance sheet to a VIE in connection with ~~SPEs, see Note 10 (Securitizations~~a securitization, we typically receive cash and ~~Variable Interest Entities)~~sometimes other interests in ~~our 2019 Form 10-K.~~

~~Table 10.1 provides~~ the ~~classifications of~~VIE as proceeds for the assets we transfer. In certain transactions with VIEs, we may retain the right to service the transferred assets and ~~liabilities in~~repurchase the transferred assets if the outstanding balance of the assets falls below the level at which the cost to service the assets exceed the benefits. In addition, we may purchase the right to service loans transferred to a VIE by a third party.

In connection with our ~~balance sheet for our transactions with VIEs.~~

(in millions)
VIEs that we
do not
consolidate

VIEs
that we
consolidate

Transfers that
we account
for as secured
borrowings
Total
March 31, 2020
Cash and due from banks $ —
19
—
19
Interest-earning deposits with banks —
—
—
—
Debt securities (1):
Trading debt securities 1,326
316
—
1,642
Available-for-sale debt securities 1,718
300
—
2,018
Held-to-maturity debt securities 1,158
—
—
1,158
Loans 2,196
13,102
77
15,375
Mortgage servicing rights 8,709
—
—
8,709
Derivative assets 269
6
—
275
Equity securities 11,337
95
—
11,432
Other assets 1,030
258
—
1,288
Total assets 27,743
14,096
77
41,916
Short-term borrowings —
500
—
500
Derivative liabilities 2
8
—
10
Accrued expenses and other liabilities
154
231
—
385
Long-term debt
4,722
235
76
5,033
Total liabilities 4,878
974
76
5,928
Noncontrolling interests —
33
—
33
Net assets $ 22,865
13,089
1
35,955
December 31, 2019
Cash and due from banks $ —
16
—
16
Interest-earning deposits with banks —
284
—
284
Debt securities (1):
Trading debt securities 792
339
—
1,131
Available-for-sale debt securities 1,696
201
—
1,897
Held-to-maturity debt securities 791
—
—
791
Loans 2,127
13,170
80
15,377
Mortgage servicing rights 11,884
—
—
11,884
Derivative assets 142
1
—
143
Equity securities 11,401
118
—
11,519
Other assets 1,268
239
—
1,507
Total assets 30,101
14,368
80
44,549
Short-term borrowings —
401
—
401
Derivative liabilities 1
3
—
4
Accrued expenses and other liabilities 189
235
—
424
Long-term debt 4,817
587
79
5,483
Total liabilities 5,007
1,226
79
6,312
Noncontrolling interests —
43
—
43
Net assets $ 25,094
13,099
1
38,194

~~Transactions with Unconsolidated VIEs~~

~~Our transactions with unconsolidated VIEs include predominantly securitizations of residential and commercial mortgage loans, and investments in tax credit structures. We~~securitization or other VIE activities, we have various forms of ongoing involvement with VIEs, ~~including servicing,~~ which may include:

•underwriting securities issued by VIEs and subsequently making markets in those securities;

•providing credit enhancement on securities issued by VIEs through the use of letters of credit or financial guarantees;

•entering into other derivative contracts with VIEs;

•holding senior or subordinated interests ~~and entering into liquidity arrangements and derivative contracts. Involvements with these unconsolidated VIEs are recorded on our balance sheet~~ in ~~debt and equity securities, loans, MSRs, derivative assets and liabilities, other assets, other liabilities, and long-term debt, as appropriate.~~

~~Table 10.2 provides a summary of our exposure to unconsolidated VIEs with which we have significant continuing involvement but for which we are not the primary beneficiary.~~

~~We include transactions where we were the sponsor or servicer and also have other significant forms of continuing~~

involvement. Sponsorship includes transactions where we solely or materially participated in the initial design or structuring of the VIE or marketed the transaction to investors. We consider investments in securities, loans, guarantees, liquidity agreements, commitments and certain derivatives to be other forms of continuing involvement that may be significant. We also include transactions where we transferred assets to a VIE, account for the transfer as a sale, and service the VIE collateral or have other forms of continuing involvement that may be significant (as described above). We exclude certain transactions with unconsolidated VIEs when our continuing involvement is temporary in nature or insignificant in size. We also exclude secured borrowing transactions with unconsolidated VIEs (for information on these transactions, see the Transactions with Consolidated VIEs and Secured Borrowings section in this Note).

VIEs;

~~Table 10.2:~~•~~Unconsolidated VIEs~~acting as servicer or investment manager for VIEs;

•providing administrative or trustee services to VIEs; and

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

Debt and
equity
interests (1)

Servicing
assets and advances

Derivatives

Debt, guarantees, and other
commitments

Net
assets

March 31, 2020
Residential mortgage loan securitizations:
Conforming (2) $ 1,082,170
2,103
8,607
—
(649 ) 10,061
Other/nonconforming 5,226
120
89
—
—
209
Commercial mortgage loan securitizations 174,761
2,440
1,043
196
(18 ) 3,661
Tax credit structures 39,499
12,841
—
—
(4,201 ) 8,640
Other asset-based finance structures 1,314
190
—
71
(8 ) 253
Other 1,118
41
—
—
—
41
Total $ 1,304,088
17,735
9,739
267
(4,876 ) 22,865
Maximum exposure to loss

Debt and
equity
interests (1)

Servicing
assets and advances

Derivatives

Debt, guarantees, and other
commitments

Total
exposure

Residential mortgage loan securitizations:
Conforming (2) $ 1,582
8,607
—
973
11,162
Other/nonconforming 120
89
—
—
209
Commercial mortgage loan securitizations 2,440
1,043
196
11,776
15,455
Tax credit structures 12,841
—
—
1,684
14,525
Other asset-based finance structures 190
—
76
79
345
Other 41
—
—
157
198
Total $ 17,214
9,739
272
14,669
41,894

Carrying value – asset (liability)
(in millions) Total
VIE
assets
Debt and
equity
interests (1)
Servicing
assets and advances
Derivatives
Debt, guarantees,
and other
commitments
Net
assets
December 31, 2019
Residential mortgage loan securitizations:
Conforming (2) $ 1,098,103
1,528
11,931
—
(683 ) 12,776
Other/nonconforming 5,178
6
152
—
—
158
Commercial mortgage loan securitizations 169,736
2,239
1,069
80
(43 ) 3,345
Tax credit structures 39,091
12,826
—
—
(4,260 ) 8,566
Other asset-based finance structures 1,355
157
—
61
(20 ) 198
Other 1,167
51
—
—
—
51
Total $ 1,314,630
16,807
13,152
141
(5,006 ) 25,094
Maximum exposure to loss

Debt and
equity
interests (1)

Servicing
assets and advances

Derivatives

Debt, guarantees,
and other
commitments

Total
exposure

Residential mortgage loan securitizations:
Conforming (2) $ 972
11,931
—
937
13,840
Other/nonconforming 6
152
—
—
158
Commercial mortgage loan securitizations 2,239
1,069
80
11,667
15,055
Tax credit structures 12,826
—
—
1,701
14,527
Other asset-based finance structures 157
—
63
91
311
Other 51
—
—
157
208
Total $ 16,251
13,152
143
14,553
44,099
•providing seller financing to VIEs.

~~Includes total equity interests of~~ ~~$11.3 billion~~ ~~and~~ ~~$11.4 billion~~ at ~~March 31, 2020, and~~ ~~December 31, 2019, respectively. Also includes debt interests in the form of both loans and securities. Excludes certain debt securities held related to loans serviced for FNMA, FHLMC and GNMA.~~

~~Carrying values include assets and related liabilities of~~ ~~$521 million~~ ~~and~~ ~~$556 million~~ at ~~March 31, 2020, and~~ ~~December 31, 2019~~, respectively, related to certain unexercised unconditional repurchase options. These amounts represent the carrying value of the loans and associated debt that would be payable if the option was exercised to repurchase eligible loans from GNMA loan securitizations. These amounts are excluded from maximum exposure to loss as we are not obligated to exercise the options.

~~Note 10: Securitizations and Variable Interest Entities (continued~~)

In Table 10.2, “Total VIE assets” represents the remaining principal balance of assets held by unconsolidated VIEs using the most current information available. For VIEs that obtain exposure to assets synthetically through derivative instruments, the remaining notional amount of the derivative is included in the asset balance. “Carrying value” is the amount in our consolidated balance sheet related to our involvement with the unconsolidated VIEs. “Maximum exposure to loss” 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. 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 disclosure is not an indication of expected loss.

For complete descriptions of our transactions with unconsolidated VIEs with which we have a significant continuing involvement, but we are not the primary beneficiary, see Note 10 (Securitizations and Variable Interest Entities) in our 2019 Form 10-K.

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 securitizations pursuant to Government National Mortgage Association (GNMA) guidelines which are insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Mortgage loans eligible for securitization with the GSEs or GNMA are considered conforming loans. The GSEs or GNMA design the structure of these securitizations, sponsor the involved VIEs, and have power over the activities most significant to the VIE.

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

to repurchase loans from GNMA loan securitization pools, which becomes exercisable when three scheduled loan payments remain unpaid by the borrower. During the quarters ended March 31, 2021 and 2020, we repurchased loans of $1.9 billion and $1.5 billion, respectively, which predominantly represented repurchases of government insured loans. We recorded assets and related liabilities of $133 million and $176 million at March 31, 2021, and December 31, 2020, respectively, where we did not exercise our option to repurchase eligible loans.

Upon transfers of loans, we also provide indemnification for losses incurred due to material breaches of contractual representations and warranties, as well as other recourse arrangements. At March 31, 2021, and December 31, 2020, our liability associated with these provisions was $209 million and $221 million, respectively, and the maximum exposure to loss was $13.4 billion and $13.7 billion, respectively.

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

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 , account for the transfers as sales and do not consolidate the VIE. We also typically retain the ~~servicing rights from these sales~~right to service the loans and may ~~continue to~~ hold other beneficial interests issued by the VIEs, such as debt securities held for investment purposes. Our servicing role related to nonconforming commercial mortgage loan securitizations is limited to primary or master servicer and the most significant decisions impacting the performance of the VIE are generally made by the special servicer or the controlling class security holder. For our residential nonconforming mortgage loan securitizations accounted for as sales, we either do not hold variable interests that we consider potentially significant or are not the primary servicer for a majority of the VIE assets.

WHOLE LOAN SALE TRANSACTIONS We also sell whole loans to VIEs where we have continuing involvement in the ~~transferred financial assets.~~form of financing. We ~~may also provide liquidity to investors in the beneficial interests and credit enhancements. Through~~account for these transfers as sales, and do not consolidate the VIEs as we ~~may be exposed~~do not have the power to ~~liability under limited amounts~~direct the most significant activities of ~~recourse as well as standard representations and warranties we make to purchasers and issuers.~~the VIEs.

Table ~~10.3~~8.1 presents information about transfers of assets during the period ~~of assets to unconsolidated VIEs or third-party investors~~ 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, securities, and ~~a liability for repurchase losses which reflects management’s estimate of probable losses~~loans. Substantially all transfers were related to ~~various representations~~residential mortgage securitizations with the GSEs or GNMA and ~~warranties for~~resulted in no gain or loss because the loans ~~transferred.~~were already measured at fair value on a recurring basis. Each of these interests are initially measured at fair value. Servicing rights are classified as Level 3 measurements, and generally securities are ~~initially predominantly~~ classified as Level 2.


92			Wells Fargo & Company

Table 8.1:Transfers with Continuing Involvement



	2021			2020
(in millions)	Residential mortgages		Commercial mortgages	Residential mortgages	Commercial mortgages
Quarter ended March 31,
Asset balances sold	$	40,586	3,191	38,385	2,728
Proceeds from transfer (1)	40,691		3,282	38,420	2,797
Net gains (losses) on sale	105		91	35	69

Continuing involvement (2):
Servicing rights recognized	$	407	47	446	34
Securities recognized (3)	10,223		29	0	62
Loans recognized	926		0	0	0

(1)Represents cash proceeds and the fair value of non-cash beneficial interests recognized at securitization settlement. Prior periods have been revised to conform with the current period presentation.

(2)Represents assets or liabilities recognized at securitization settlement date related to our continuing involvement ~~include securitizations of conforming residential mortgages~~in the transferred assets.

(3)Represents debt securities obtained at securitization settlement held for investment purposes that are classified as available-for-sale or held-to-maturity, which predominantly relate to agency securities. Excludes trading debt securities held temporarily for market-marking purposes, which are sold to third parties at or shortly after securitization settlement, of $6.8 billion and $7.7 billion, during the ~~GSEs or GNMA. Substantially all transfers to these entities resulted in no gain or loss because the loans were already measured at fair value on a recurring basis.~~

~~Table 10.3:Transfers With Continuing Involvement~~

Quarter ended March 31,
(in millions) 2020
2019
Residential mortgages
Commercial mortgages
Residential mortgages
Commercial mortgages
Net gains (losses) on sale $ 52
69
14
47
Asset balances sold 47,857
2,728
34,103
2,702
Servicing rights recognized 446
34
320
26
Securities recognized 2,313
62
912
—
Liability for repurchase losses recognized 3
—
3
—

quarters ended March 31, 2021 and 2020, respectively.

In the normal course of business we purchase certain non-agency securities at initial securitization or subsequently in the secondary market. We also provide seller financing in the form of loans. During the quarters ended March 31, 2021 and 2020, we received cash flows of $75 million and $73 million, respectively, predominantly related to principal and interest payments on these securities and loans.

Table ~~10.4~~8.2 presents the key weighted-average assumptions we used to initially measure residential MSRs atrecognized during the ~~date of securitization.~~periods presented.

Table ~~10.4:~~8.2: Residential Mortgage Servicing Rights



	2021			2020
Quarter ended March 31,
Prepayment speed (1)	14.4		%	12.7
Discount rate	6.0			6.5
Cost to service ($ per loan) (2)	$	82		91

Residential mortgage
servicing rights

2020
2019
Quarter ended March 31,
Prepayment speed (1) 12.7 % 13.5
Discount rate 6.5
8.1
Cost to service ($ per loan) (2) $ 91
94


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


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

~~Table 10.5 presents the proceeds related to transfers accounted for as sales in which we have continuing involvement with the transferred financial assets,~~ as well as current period cash flows from continuing involvement with previous transfers accounted for as sales. Cash flows from other interests held predominantly include principal and interest payments received on retained bonds. Repurchasesour estimation of ~~assets represents cash paid~~drivers of borrower behavior.

(2)Includes costs to repurchase loans from investors under representation and warranty obligations or in connection with the exercise of cleanup calls on securitizations. Loss reimbursements is cash paid to reimburse investors for losses on individual loans that are already liquidated. Government insured loans are delinquent loans that we service and ~~have exercised our option~~unreimbursed foreclosure costs, which can vary period to ~~purchase out of GNMA pools. These loans are insured by the FHA or guaranteed by the VA.~~

Mortgage loans
(in millions) 2020
2019
Quarter ended March 31,
Proceeds from securitizations and whole loan sales $ 50,229
36,507
Fees from servicing rights retained 756
780
Cash flows from other interests held 167
111
Repurchases of assets/loss reimbursements:
Non-agency securitizations and whole loan transactions —
—
Government insured loans (1,440 ) (1,942 )
Agency securitizations (26 ) (17 )
Servicing advances, net of recoveries (1) 33
39

~~Retained Interests from UnconsolidatedVIEs~~

~~Table 10.6 provides key economic~~period due to changes in model assumptions and the ~~sensitivity~~mix of ~~the current fair value of residential MSRs and other interests held related~~modified government-guaranteed loans sold to ~~unconsolidated VIEs to immediate adverse changes in those assumptions. Amounts for residential MSRs include purchased servicing rights as well as servicing rights resulting from the transfer of loans.~~ GNMA.

See Note 1615 (Fair Values of Assets and Liabilities) and Note 9 (Mortgage Banking Activities) for additional information on key economic assumptions for residential MSRs. ~~“Other~~

SALE OF STUDENT LOAN PORTFOLIO In first quarter 2021, we sold $5.6 billion of student loans, servicing-released. We received $5.8 billion in proceeds from the sale and recognized a $208 million gain which is included in other noninterest income on our consolidated statement of income. In connection with the sale, we provided $2.2 billion of collateralized loan financing to a third-party sponsored VIE. The loan is measured at amortized cost and is classified in loans on the consolidated balance sheet. The collateral supporting our loan includes the student loans we sold. We do not consolidate the VIE as we do not have power over the significant activities of the entity. Substantially all of the remaining portfolio was sold in second quarter 2021.

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 our resecuritization transactions, we transfer trading debt securities to VIEs in exchange for new beneficial interests ~~held” were obtained when we securitized residential and commercial mortgage loans. Residential~~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 ~~retained~~

~~in securitizations~~ issued ~~through~~by the GSEs or ~~GNMA, are excluded from~~GNMA. We do not consolidate the table because these securities have a remote risk of credit loss due to the GSE or government guarantee. These securities also have economic characteristics similar to GSE or GNMA mortgage-backed securities thatresecuritization VIEs as we ~~purchase, which are not included~~share in the ~~table. Subordinated~~decision-making power with third parties and do not hold significant economic 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. Thein the VIEs other than for market-making activities. Table 8.3 presents information ~~presented excludes trading positions held in inventory.~~about assets transferred to re-securitization VIEs and Table 8.4 presents information about our resecuritization VIEs.

Table ~~10.6:~~8.3: ~~Retained Interests from Unconsolidated~~Transfers to Resecuritization VIEs



(in millions)	2021		2020
Quarter ended March 31,
Assets transferred	$	17,429	9,472
Securities recognized	1,014		662

Other interests held

Residential
mortgage
servicing
rights

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

Senior
bonds

Fair value of interests held at March 31, 2020 $ 8,126
924
326
Expected weighted-average life (in years) 4.3
7.1
5.6
Key economic assumptions:
Prepayment speed assumption 15.7 %
Decrease in fair value from:
10% adverse change $ 475

25% adverse change 1,105

Discount rate assumption 7.1 % 5.4
3.5
Decrease in fair value from:
100 basis point increase $ 293
54
16
200 basis point increase 563
103
30
Cost to service assumption ($ per loan) 112

Decrease in fair value from:
10% adverse change 234

25% adverse change 585

Credit loss assumption 3.7 % —
Decrease in fair value from:
10% higher losses $ 28
—
25% higher losses 31
—
Fair value of interests held at December 31, 2019 $ 11,517
909
352
Expected weighted-average life (in years) 5.3
7.3
5.5
Key economic assumptions:
Prepayment speed assumption 11.9 %
Decrease in fair value from:
10% adverse change $ 537

25% adverse change 1,261

Discount rate assumption 7.2 % 4.0
2.9
Decrease in fair value from:
100 basis point increase $ 464
53
16
200 basis point increase 889
103
32
Cost to service assumption ($ per loan) 102

Decrease in fair value from:
10% adverse change 253

25% adverse change 632

Credit loss assumption 3.1 % —
Decrease in fair value from:
10% higher losses $ 1
—
25% higher losses 4
—

Table 8.4:Resecuritization VIEs


			Wells Fargo & Company			93

Note ~~10:~~8: Securitizations and Variable Interest Entities (~~continued~~)(continued)

In addition to residential MSRs included in the previous table, we have a small portfolio of commercial MSRs which are carried at lower of cost or market value (LOCOM) with a fair value of $1.5 billion and $1.9 billion at March 31, 2020, and December 31, 2019, respectively. Prepayment assumptions do not significantly impact values of commercial MSRs and commercial mortgage bonds as commercial loans generally include contractual restrictions on prepayment. Servicing costs are not a driver of our MSR value as we are typically primary or master servicer; the higher costs of servicing delinquent and foreclosed loans is generally born by the special servicer. The primary economic driver impacting the fair value of our commercial MSRs is forward interest rates, which are derived from market observable yield curves used to price capital markets instruments. Market interest rates significantly affect interest earned on custodial deposit balances. The sensitivity of the current fair value to an immediate adverse 25% change in the assumption about interest earned on deposit balances at March 31, 2020, and December 31, 2019, results in a decrease in fair value of $146 million and $205 million, respectively. See Note 11 (Mortgage Banking Activities) for further information on our commercial MSRs.

~~The sensitivities in the preceding paragraph and table are hypothetical and caution should be exercised when relying on this data. Changes in value based on variations in assumptions~~

generally cannot be extrapolated because the relationship of the change in the assumption to the change in value may not be linear. Also, the effect of a variation in a particular assumption on the value of the other interests held is calculated independently without changing any other assumptions. In reality, changes in one factor may result in changes in others (for example, changes in prepayment speed estimates could result in changes in the credit losses), which might magnify or counteract the sensitivities.

Off-Balance Sheet Loans

Table ~~10.7~~8.5 presents information about the principal balances of off-balance sheet loans that were sold or securitized, including residential mortgage loans sold to ~~FNMA, FHLMC,~~the GSEs, GNMA and other investors, for which we have some form of continuing involvement (including servicer). Delinquent loans include loans 90 days or more past due and loans in bankruptcy, regardless of delinquency status. In accordance with applicable servicing

guidelines, delinquency status continues to advance for loans with COVID-related payment deferrals. For loans sold or securitized where servicing is our only form of continuing involvement, we ~~would only~~generally experience a loss only if we were required to repurchase a delinquent loan or foreclosed asset due to a breach in representations and warranties associated with our loan sale or servicing contracts.

Table ~~10.7:~~8.5: Off-Balance Sheet Loans Sold or Securitized


						Net charge-offs (2)
	Total loans			Delinquent loans and foreclosed assets (1)		Quarter ended March 31,
(in millions)	Mar 31, 2021		Dec 31, 2020	Mar 31, 2021	Dec 31, 2020	2021	2020
Commercial	$	114,247	114,134	1,712	2,217	115	71
Residential	767,216		818,886	25,146	29,962	6	31
Total off-balance sheet sold or securitized loans (3)	$	881,463	933,020	26,858	32,179	121	102

Net charge-offs (2)
Total loans
Delinquent loans
and foreclosed assets (1)
Quarter ended Mar 31,
(in millions) Mar 31, 2020
Dec 31, 2019
Mar 31, 2020
Dec 31, 2019
2020
2019
Commercial:
Real estate mortgage $ 113,196
112,507
679
776
71
79
Total commercial 113,196
112,507
679
776
71
79
Consumer:
Real estate 1-4 family first mortgage 986,570
1,008,446
6,326
6,664
31
67
Real estate 1-4 family junior lien mortgage 12
13
2
2
—
—
Total consumer 986,582
1,008,459
6,328
6,666
31
67
Total off-balance sheet sold or securitized loans (3) $ 1,099,778
1,120,966
7,007
7,442
102
146
(1)Includes $242 million and $394 million of commercial foreclosed assets and $166 million and $204 million of residential foreclosed assets at March 31, 2021, and December 31, 2020, respectively.

~~Includes~~ ~~$365~~

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

(3) At March 31, 2021, and December 31, 2020, the table includes total loans of $813.1 billion and $864.8 billion, delinquent loans of $23.9 billion and $28.5 billion, and foreclosed assets of $121 million and $152 million, ~~and~~ ~~$492 million~~ ~~of commercial foreclosed assets and~~ ~~$354 million~~ ~~and~~ ~~$356 million~~ ~~of consumer foreclosed assets at~~ ~~March 31, 2020, and~~ ~~December 31, 2019, respectively.~~

At ~~March 31, 2020, and~~ ~~December 31, 2019, the table includes total loans of~~ ~~$1.0 trillion~~ ~~at both dates, delinquent loans of~~ ~~$5.2 billion~~ ~~at both dates, and foreclosed assets of~~ ~~$259 million~~ ~~and~~ ~~$251 million~~, respectively, for FNMA, FHLMC and GNMA.

Transactions with ~~Consolidated~~Unconsolidated VIEs

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

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

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

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

we deconsolidated the VIEs during first quarter 2021, and recognized the beneficial interests at fair value on our consolidated balance sheet.

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

Table ~~10.8~~8.6 provides a summary of our exposure to the unconsolidated VIEs described above, which includes investments in securities, loans, guarantees, liquidity agreements, commitments and certain derivatives. We exclude certain transactions with unconsolidated VIEs when our continuing involvement is temporary or administrative in nature or insignificant in size.

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

Debt, guarantees and other commitments include amounts related to loans sold that we may be required to repurchase, or otherwise indemnify or reimburse the investor or insurer for losses incurred, due to material breach of contractual


94			Wells Fargo & Company

representations and warranties as well as other retained recourse arrangements. The maximum exposure to loss for material breach of contractual representations and warranties represents a stressed case estimate we utilize for determining stressed case regulatory capital needs and is considered to be a remote scenario.

“Maximum exposure to loss” represents estimated loss that would be incurred under severe, hypothetical circumstances, for

which we believe the possibility is extremely remote, such as where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. Accordingly, this disclosure is not an indication of expected loss.

Table 8.6:Unconsolidated VIEs


			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans		Debt securities (1)	Equity securities	All other assets (2)	Debt and other liabilities	Net assets
March 31, 2021


Nonconforming mortgage loan securitizations	$	128,438	0		2,318	0	626	0	2,944
Tax credit structures	41,258		1,800		0	11,501	0	(4,109)	9,192
Commercial real estate loans	5,375		5,366		0	0	9	0	5,375

Other	9,619		3,201		0	56	49	(1)	3,305
Total	$	184,690	10,367		2,318	11,557	684	(4,110)	20,816
			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			$	0	2,318	0	626	33	2,977
Tax credit structures			1,800		0	11,501	0	2,894	16,195
Commercial real estate loans			5,366		0	0	9	0	5,375

Other			4,974		0	56	49	229	5,308
Total			$	12,140	2,318	11,557	684	3,156	29,855
			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans (3)		Debt securities (1)	Equity securities	All other assets (2)(3)	Debt and other liabilities	Net assets
December 31, 2020


Nonconforming mortgage loan securitizations	$	127,717	0		2,303	0	606	0	2,909
Tax credit structures	41,125		1,760		0	11,637	0	(4,202)	9,195
Commercial real estate loans	0		0		0	0	0	0	0

Other	1,991		89		0	51	62	(1)	201
Total	$	170,833	1,849		2,303	11,688	668	(4,203)	12,305
			Maximum exposure to loss
			Loans (3)		Debt securities (1)	Equity securities	All other assets (2)(3)	Debt, guarantees, and other commitments	Total exposure


Nonconforming mortgage loan securitizations			$	0	2,303	0	607	34	2,944
Tax credit structures			1,760		0	11,637	0	3,108	16,505
Commercial real estate loans			0		0	0	0	0	0

Other			89		0	51	62	230	432
Total			$	1,849	2,303	11,688	669	3,372	19,881

(1)Includes $267 million and $310 million of securities classified as trading at March 31, 2021, and December 31, 2020, respectively.

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

(3)Prior period has been revised to conform with the current period presentation to reflect the carrying value of loans separately from all other assets.


			Wells Fargo & Company			95

Note 8: Securitizations and Variable Interest Entities (continued)

Consolidated VIEs

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

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

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

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

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

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

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

Table ~~10.8:~~8.7: Transactions with Consolidated VIEs ~~and Secured Borrowings~~


			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans	Debt securities (1)	All other assets (2)	Long-term debt	All other liabilities (3)
March 31, 2021
Commercial and industrial loans and leases	$	6,907	5,002	0	188	0	(192)
Commercial real estate loans (4)	0		0	0	0	0	0
Other	1,597		480	965	79	(192)	(899)
Total consolidated VIEs	$	8,504	5,482	965	267	(192)	(1,091)
December 31, 2020
Commercial and industrial loans and leases	$	6,987	5,005	0	223	0	(200)
Commercial real estate loans (4)	5,369		5,357	0	12	0	0
Other	1,627		507	967	75	(203)	(900)
Total consolidated VIEs	$	13,983	10,869	967	310	(203)	(1,100)

Carrying value
(in millions)
Total
VIE assets

Assets
Liabilities

Noncontrolling
interests

Net assets
March 31, 2020
Secured borrowings:
Residential mortgage securitizations $ 77
77
(76 ) —
1
Total secured borrowings 77
77
(76 ) —
1
Consolidated VIEs:
Commercial and industrial loans and leases 7,760
7,755
(226 ) (11 ) 7,518
Nonconforming residential mortgage loan securitizations 679
567
(236 ) —
331
Commercial real estate loans 5,022
5,022
—
—
5,022
Municipal tender option bond securitizations 500
505
(502 ) —
3
Other 247
247
(10 ) (22 ) 215
Total consolidated VIEs 14,208
14,096
(974 ) (33 ) 13,089
Total secured borrowings and consolidated VIEs $ 14,285
14,173
(1,050 ) (33 ) 13,090
December 31, 2019
Secured borrowings:
Residential mortgage securitizations $ 81
80
(79 ) —
1
Total secured borrowings 81
80
(79 ) —
1
Consolidated VIEs:
Commercial and industrial loans and leases 8,054
8,042
(529 ) (16 ) 7,497
Nonconforming residential mortgage loan securitizations 935
809
(290 ) —
519
Commercial real estate loans 4,836
4,836
—
—
4,836
Municipal tender option bond securitizations 401
402
(401 ) —
1
Other 279
279
(6 ) (27 ) 246
Total consolidated VIEs 14,505
14,368
(1,226 ) (43 ) 13,099
Total secured borrowings and consolidated VIEs $ 14,586
14,448
(1,305 ) (43 ) 13,100
(1)Includes $269 million and $269 million of securities classified as trading at March 31, 2021, and December 31, 2020, respectively.

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

(3)All other liabilities includes short-term borrowings, derivative liabilities, and accrued expenses and other liabilities.

(4)For structure description, see the "Transactions with Unconsolidated VIEs" section within this Note. These consolidated VIEs were deconsolidated in first quarter 2021.

We have raised financing through the securitization of certain financial assets in transactions with VIEs accounted for as secured borrowings. We also consolidate VIEs where we are the primary beneficiary. In certain transactions, we provide contractual support in the form of limited recourse and liquidity to facilitate the remarketing of short-term securities issued to third-party investors. Other than this limited contractual support, the assets of the VIEs are the sole source of repayment of the securities held by third parties.

For complete descriptions of our accounting for transfers accounted for as secured borrowings and involvement with consolidated VIEs, see Note 10 (Securitizations and Variable Interest Entities) in our 2019 Form 10-K.

Other Transactions

In addition to the transactions included in the previous tables, we have used wholly-owned trust preferred security VIEs to issue debt securities or preferred equity exclusively to third-party investors. As the sole assets of the VIEs are receivables from us, we do not consolidate the VIEs even though we own all of the voting equity shares of the VIEs, have fully guaranteed the obligations of the VIEs, and may have the right to redeem the third-party securities under certain circumstances. In our

consolidated balance sheet we reported the debt securities issued to the VIEs as long-term junior subordinated debt with a carrying value of ~~$686~~$710 million and ~~$2.1 billion~~$704 million at March 31, ~~2020,~~2021, and December 31, ~~2019,~~2020, respectively. During first quarter 2020, we liquidated certain of our trust preferred security VIEs. As part of these liquidations, the preferred securities issued by the trusts were canceled and junior subordinated debentures with a total carrying value of $1.4 billion were distributed to the preferred security holders. Prior to the liquidations, we held $10 million of these preferred securities, which were exchanged for junior subordinated debentures upon liquidation and subsequently retired with no impact to earnings. See Note 1716 (Preferred Stock) for additional information about trust preferred securities.

Certain money market funds are also excluded from the previous tables because they are exempt from the consolidation analysis. We voluntarily waived a portion of our management fees for these money market funds to maintain a minimum level of daily net investment income. The amount of fees waived was ~~$11 million and $10 million in~~not significant for first quarter ~~2020 and 2019, respectively.~~

2021 or 2020.

~~Note 11: Mortgage Banking Activities (continued~~)



96			Wells Fargo & Company


Note ~~11:~~9: 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

cost of commercial MSRs was $1.3 billion and $1.4 billion with an estimated fair value of $1.7 billion and $1.5 billion at March 31, 2021, and March 31, 2020, respectively. Table ~~11.1~~9.1 presents the changes in MSRs measured using the fair value method.

Table ~~11.1:~~9.1: Analysis of Changes in Fair Value MSRs


	Quarter ended March 31,
(in millions)	2021		2020
Fair value, beginning of year	$	6,125	11,517
Servicing from securitizations or asset transfers (1)	406		461
Sales and other (2)	(1)		(31)
Net additions	405		430
Changes in fair value:
Due to valuation inputs or assumptions:
Mortgage interest rates (3)	1,630		(3,022)
Servicing and foreclosure costs (4)	9		(73)
Discount rates	47		27
Prepayment estimates and other (5)	(95)		(189)
Net changes in valuation inputs or assumptions	1,591		(3,257)
Changes due to collection/realization of expected cash flows (6)	(585)		(564)
Total changes in fair value	1,006		(3,821)
Fair value, end of period	$	7,536	8,126

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

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

(3)Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates.

(4)Includes costs to service and unreimbursed foreclosure costs.

(5)Represents other changes in valuation model inputs or assumptions including prepayment speed estimation changes that are independent of mortgage interest rate changes.

(6)Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.

Quarter ended March 31,
(in millions) 2020
2019
Fair value, beginning of period $ 11,517
14,649
Servicing from securitizations or asset transfers (1) 461
341
Sales and other (2) (31 ) (281 )
Net additions 430
60
Changes in fair value:
Due to changes in valuation model inputs or assumptions:
Mortgage interest rates (3) (3,022 ) (940 )
Servicing and foreclosure costs (4) (73 ) 12
Discount rates (5) 27
100
Prepayment estimates and other (6) (189 ) (63 )
Net changes in valuation model inputs or assumptions (3,257 ) (891 )
Changes due to collection/realization of expected cash flows over time (7) (564 ) (482 )
Total changes in fair value (3,821 ) (1,373 )
Fair value, end of period $ 8,126
13,336

Table 9.2 provides key economic assumptions and sensitivity of the current fair value of residential MSRs to immediate adverse changes in those assumptions. Amounts for residential MSRs include purchased servicing rights as well as servicing

rights resulting from the transfer of loans. See Note 15 (Fair Values of Assets and Liabilities) for additional information on key economic assumptions for residential MSRs.

Table 9.2: Economic Assumptions and Sensitivity of Residential MSRs


($ in millions, except cost to service amounts)	Mar 31, 2021			Dec 31, 2020
Fair value of interests held	$	7,536		6,125
Expected weighted-average life (in years)	4.5			3.7

Key economic assumptions:
Prepayment speed assumption	15.6		%	19.9
Impact on fair value from 10% adverse change	$	447		434
Impact on fair value from 25% adverse change	1,041			1,002

Discount rate assumption	6.1		%	5.8
Impact on fair value from 100 basis point increase	$	317		229
Impact on fair value from 200 basis point increase	608			440

Cost to service assumption ($ per loan)	115			130
Impact on fair value from 10% adverse change	181			181
Impact on fair value from 25% adverse change	452			454

The sensitivities in the preceding table are hypothetical and caution should be exercised when relying on this data. Changes in value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in value may not be linear. Also, the

effect of a variation in a particular assumption on the value of the other interests held is calculated independently without changing any other assumptions. In reality, changes in one factor may

result in changes in others, which might magnify or counteract the sensitivities.


~~(1)~~			Includes impacts associated with exercising cleanup calls on securitizations as well as our right to repurchase delinquent loans from GNMA loan securitization pools. Total reported MSRs may increase upon repurchase due to servicing liabilities associated with these delinquent GNMA loans.Wells Fargo & Company			97


~~(2)~~	Includes sales and transfers of MSRs, which can result in an increase of total reported MSRs if the sales or transfers are related to nonperforming loan portfolios or portfolios with servicing liabilities.


~~(3)~~	~~Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates (such as changes in estimated interest earned on custodial deposit balances).~~


~~(4)~~	~~Includes costs to service and unreimbursed foreclosure costs.~~


~~(5)~~	~~Reflects discount rate assumption change, excluding portion attributable to changes in mortgage interest rates.~~


~~(6)~~	Represents changes driven by updates to valuation model inputs or assumptions including prepayment speed estimation changes and other assumption updates. Prepayment speed estimation changes are influenced by observed changes in borrower behavior and other external factors that occur independent of interest rate changes.


~~(7)~~	~~Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.~~

~~Table 11.2 presents the changes in amortized MSRs.~~

~~Table 11.2:~~Note 9: Mortgage Banking Activities ~~Analysis of Changes in Amortized MSRs~~(continued)

Quarter ended March 31,
(in millions) 2020
2019
Balance, beginning of period $ 1,430
1,443
Purchases 8
24
Servicing from securitizations or asset transfers 34
26
Amortization (66 ) (66 )
Balance, end of period (1) $ 1,406
1,427
Fair value of amortized MSRs:
Beginning of period $ 1,872
2,288
End of period 1,490
2,149


~~(1)~~	~~Commercial amortized MSRs are evaluated for impairment purposes by the following risk strata: agency (GSEs) for multi-family properties and non-agency. There was~~ 0 ~~valuation allowance recorded for the periods presented on the commercial amortized MSRs.~~

We present the components of our managed servicing portfolio in Table ~~11.3~~9.3 at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced.

Table ~~11.3:~~9.3: Managed Servicing Portfolio


(in billions)	Mar 31, 2021			Dec 31, 2020
Residential mortgage servicing:
Serviced and subserviced for others	$	804		859
Owned loans serviced	302			323
Total residential servicing	1,106			1,182
Commercial mortgage servicing:
Serviced and subserviced for others	581			583
Owned loans serviced	122			123
Total commercial servicing	703			706
Total managed servicing portfolio	$	1,809		1,888
Total serviced for others, excluding subserviced for others	$	1,373		1,431
MSRs as a percentage of loans serviced for others	0.64		%	0.52
Weighted average note rate (mortgage loans serviced for others)	3.99			4.03

(in billions) Mar 31, 2020
Dec 31, 2019
Residential mortgage servicing:
Serviced and subserviced for others $ 1,041
1,065
Owned loans serviced 341
343
Total residential servicing 1,382
1,408
Commercial mortgage servicing:
Serviced and subserviced for others 573
575
Owned loans serviced 124
124
Total commercial servicing 697
699
Total managed servicing portfolio $ 2,079
2,107
Total serviced for others, excluding subserviced for others $ 1,602
1,629
Ratio of MSRs to related loans serviced for others 0.60 % 0.79

At March 31, 2021, and December 31, 2020, we had servicer advances, net of an allowance for uncollectible amounts, of $3.3 billion and $3.4 billion, respectively. As the servicer of loans for others, we advance certain payments of principal, interest, taxes, insurance, and default-related expenses which are generally reimbursed within a short timeframe from cash flows from the trust, GSEs, insurer or borrower. The credit risk related to these advances is limited since the reimbursement is generally senior to cash payments to investors. We also advance payments of taxes and insurance for our owned loans which are collectible

from the borrower. We maintain an allowance for uncollectible amounts for advances on loans serviced for others that may not be reimbursed if the payments were not made in accordance with applicable servicing agreements or if the insurance or servicing agreements contain limitations on reimbursements. Servicing advances on owned loans are charged-off when deemed uncollectible.

Table ~~11.4~~9.4 presents the components of mortgage banking noninterest income.

Table ~~11.4:~~9.4: Mortgage Banking Noninterest Income


		Quarter ended March 31,
(in millions)		2021		2020
Servicing fees:
Contractually specified servicing fees, late charges and ancillary fees		$	724	865
Unreimbursed direct servicing costs (1)		(124)		(107)
Servicing fees		600		758
Amortization		(65)		(66)
Changes due to collection/realization of expected cash flows (2)	(A)	(585)		(564)
Net servicing fees		(50)		128
Changes in fair value of MSRs due to valuation inputs or assumptions (3)	(B)	1,591		(3,257)
Net derivative gains (losses) from economic hedges (4)		(1,640)		3,400
Market-related valuation changes to MSRs, net of hedge results		(49)		143
Total servicing income (loss), net		(99)		271
Net gains on mortgage loan originations/sales (5)		1,425		108
Total mortgage banking noninterest income		$	1,326	379
Total changes in fair value of MSRs carried at fair value	(A)+(B)	$	1,006	(3,821)

(1)Includes costs associated with foreclosures, unreimbursed interest advances to investors, and other interest costs.

(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 9.1 in this Note for more detail.

(4)See Note 14 (Derivatives) for additional discussion and detail on economic hedges.

(5)Includes net gains (losses) of $1.3 billion and $(929) million in first quarter 2021 and 2020, respectively, related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments.

Quarter ended March 31,
(in millions) 2020
2019
Servicing income, net:
Servicing fees:
Contractually specified servicing fees $ 808
840
Late charges 27
33
Ancillary fees 30
38
Unreimbursed direct servicing costs (1) (107 ) (70 )
Net servicing fees 758
841
Changes in fair value of MSRs carried at fair value:
Due to changes in valuation model inputs or assumptions (2) (A) (3,257 ) (891 )
Changes due to collection/realization of expected cash flows over time (3) (564 ) (482 )
Total changes in fair value of MSRs carried at fair value (3,821 ) (1,373 )
Amortization (66 ) (66 )
Net derivative gains from economic hedges (4) (B) 3,400
962
Total servicing income, net 271
364
Net gains on mortgage loan origination/sales activities (5) 108
344
Total mortgage banking noninterest income $ 379
708
Market-related valuation changes to MSRs, net of hedge results (2)(4) (A)+(B) $ 143
71

Note ~~for more detail.~~

~~Includes net losses of~~ ~~$(929) million~~10: ~~and~~ ~~$(151) million~~ in ~~first quarter 2020~~ ~~and~~ ~~2019, respectively, related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments.~~

~~Note 12: Intangible Assets (continued~~)

~~Note 12:~~ Intangible Assets

Table ~~12.1~~10.1 presents the gross carrying value of intangible assets and accumulated amortization.

Table ~~12.1:~~10.1: Intangible Assets


	March 31, 2021				December 31, 2020
(in millions)	Gross carrying value		Accumulated amortization	Net carrying value	Gross carrying value	Accumulated amortization	Net carrying value
Amortized intangible assets (1):
MSRs (2)	$	4,661	(3,365)	1,296	4,612	(3,300)	1,312

Customer relationship and other intangibles	880		(572)	308	879	(551)	328
Total amortized intangible assets	$	5,541	(3,937)	1,604	5,491	(3,851)	1,640
Unamortized intangible assets:
MSRs (carried at fair value) (2)	$	7,536			6,125
Goodwill	26,290				26,392
Trademark	14				14

March 31, 2020 December 31, 2019
(in millions)
Gross
carrying
value

Accumulated
amortization

Net
carrying
value

Gross
carrying
value

Accumulated
amortization

Net
carrying
value

Amortized intangible assets (1):
MSRs (2) $ 4,465
(3,059 ) 1,406
4,422
(2,992 ) 1,430
Customer relationship and other intangibles 879
(480 ) 399
947
(524 ) 423
Total amortized intangible assets $ 5,344
(3,539 ) 1,805
5,369
(3,516 ) 1,853
Unamortized intangible assets:
MSRs (carried at fair value) (2) $ 8,126
11,517

Goodwill 26,381
26,390

Trademark 14
14

(1)Balances are excluded commencing in the period following full amortization.

(2)Includes a $37 million valuation allowance recorded for amortized MSRs at both March 31, 2020, and December 31, 2020. See Note 9 (Mortgage Banking Activities) for additional information on MSRs.

Table ~~12.2~~10.2 provides the current year and estimated future amortization expense for amortized intangible assets. We based our projections of amortization expense shown below on existing

asset balances at March 31, ~~2020.~~2021. Future amortization expense may vary from these projections.

Table ~~12.2:~~10.2: Amortization Expense for Intangible Assets

(in millions) Amortized MSRs

Customer
relationship
and other
intangibles

Total
Three months ended March 31, 2020 (actual) $ 67
24
91
Estimate for the remainder of 2020 $ 202
71
273
Estimate for year ended December 31,
2021 235
81
316
2022 210
68
278
2023 181
59
240
2024 156
48
204
2025 130
39
169

In February 2021, we announced an agreement to sell Wells Fargo Asset Management and transferred the associated goodwill from the Wealth and Investment Management operating segment to Corporate. Also in first quarter 2021, we

recognized a goodwill write-down related to the sale of a portion of the student loan portfolio. Table ~~12.3~~10.3 shows the allocation of goodwill to our reportable operating segments. ~~We assess goodwill for impairment at a~~

~~reporting unit level, which is generally one level below the operating segments.~~

Table ~~12.3:~~10.3: Goodwill

(in millions)
Community
Banking

Wholesale
Banking

Wealth and Investment Management

Consolidated
Company

December 31, 2018 $ 16,685
8,450
1,283

26,418
Foreign currency translation —
2
—
2
March 31, 2019 $ 16,685
8,452
1,283
26,420
December 31, 2019 $ 16,685
8,429
1,276
26,390
Foreign currency translation —
(9 ) —
(9 )
March 31, 2020 $ 16,685
8,420
1,276
26,381



			Wells Fargo & Company			99


Note ~~13:~~11: Guarantees ~~Pledged Assets and Collateral,~~ and Other Commitments

written options, recourse obligations, and other types of similar

arrangements. ~~For complete descriptions of our guarantees, see Note 16 (Guarantees, Pledged Assets and Collateral, and Other Commitments) in our 2019 Form 10-K.~~ Table ~~13.1~~11.1 shows carrying value, maximum exposure to loss on our guarantees and the related non-investment grade amounts.

Table ~~13.1:~~11.1: Guarantees – Carrying Value and Maximum Exposure to Loss


			Maximum exposure to loss
(in millions)	Carrying value of obligation (asset)		Expires in one year or less	Expires after one year through three years	Expires after three years through five years	Expires after five years	Total	Non-investment grade
March 31, 2021
Standby letters of credit	$	145	12,184	4,672	1,692	439	18,987	7,097
Direct pay letters of credit	14		2,394	2,565	524	54	5,537	1,093
Written options (1)	(554)		11,965	7,794	755	58	20,572	13,757
Loans and LHFS sold with recourse (2)	33		199	848	2,922	9,484	13,453	11,221
Exchange and clearing house guarantees	0		0	0	0	7,163	7,163	0
Other guarantees and indemnifications (3)	0		623	3	0	306	932	577
Total guarantees	$	(362)	27,365	15,882	5,893	17,504	66,644	33,745
December 31, 2020
Standby letters of credit	$	156	11,977	4,962	1,897	433	19,269	7,528
Direct pay letters of credit	18		2,256	2,746	531	39	5,572	1,102
Written options (1)	(538)		12,735	7,972	889	58	21,654	13,394
Loans and LHFS sold with recourse (2)	33		177	819	1,870	9,723	12,589	10,332
Exchange and clearing house guarantees	0		0	0	0	5,510	5,510	0
Other guarantees and indemnifications (3)	0		734	1	1	1,414	2,150	590
Total guarantees	$	(331)	27,879	16,500	5,188	17,177	66,744	32,946

Maximum exposure to loss
(in millions)
Carrying
value of obligation (asset)

Expires in
one year
or less

Expires after
one year
through
three years

Expires after
three years
through
five years

Expires
after five
years

Total

Non-
investment
grade

March 31, 2020
Standby letters of credit $ 83
12,016
3,839
2,756
429
19,040
7,183
Direct pay letters of credit —
1,674
3,955
836
40
6,505
1,321
Written options (1) 690
18,799
10,315
2,387
327
31,828
24,176
Loans and MLHFS sold with recourse (2) 28
111
712
1,333
10,039
12,195
10,000
Exchange and clearing house guarantees —
—
—
—
5,054
5,054
—
Other guarantees and indemnifications (3) 1
610
3
1
450
1,064
559
Total guarantees $ 802
33,210
18,824
7,313
16,339
75,686
43,239
December 31, 2019
Standby letters of credit $ 36
11,569
4,460
2,812
467
19,308
7,104
Direct pay letters of credit —
1,861
3,815
824
105
6,605
1,184
Written options (1) (345 ) 17,088
10,869
2,341
273
30,571
18,113
Loans and MLHFS sold with recourse (2) 52
114
576
1,356
10,050
12,096
9,835
Exchange and clearing house guarantees —
—
—
—
4,817
4,817
—
Other guarantees and indemnifications (3) 1
785
1
3
809
1,598
698
Total guarantees $ (256 ) 31,417
19,721
7,336
16,521
74,995
36,934
(1)Written options, which are in the form of derivatives, are also included in the derivative disclosures in Note 14 (Derivatives). Carrying value net asset position is a result of certain deferred premium option trades.

(2)Represent recourse provided, all to the GSEs, on loans sold under various programs and arrangements.

(3)Includes indemnifications provided to certain third-party clearing agents. Estimated maximum exposure to loss was $277 million and $1.4 billion with related collateral of $2.0 billion and $1.2 billion as of ~~derivatives, are also included in the derivative disclosures in Note 15 (Derivatives). Carrying value net asset position is a result of certain deferred premium option trades.~~

~~Represent recourse provided,~~ ~~predominantly~~ ~~to the GSEs, on loans sold under various programs and arrangements.~~

~~Includes indemnifications provided to certain third-party clearing agents. Outstanding customer obligations under these arrangements were~~ ~~$27 million~~ ~~and~~ ~~$80 million~~ ~~with related collateral of~~ ~~$389 million~~ ~~and~~ ~~$696 million~~ at March 31, 2021 and December 31, 2020,~~, and~~ ~~December 31, 2019~~, respectively.

“Maximum exposure to loss” and “Non-investment grade” are required disclosures under GAAP. Maximum exposure to loss represents the estimated loss that would be incurred under an assumed hypothetical circumstance, despite what we believe is a remote possibility, where the value of our interests and any associated collateral declines to zero. Maximum exposure to loss estimates in Table ~~13.1~~11.1 do not reflect economic hedges or collateral we could use to offset or recover losses we may incur under our guarantee agreements. Accordingly, this required disclosure is not an indication of expected loss. We believe the carrying value is more representative of our exposure to loss than maximum exposure to loss. The carrying value represents the fair value of the guarantee, if any, and also includes an ACL for guarantees, if applicable.

Non-investment grade represents those guarantees on which we have a higher risk of performance under the terms of the guarantee. If the underlying assets under the guarantee are non-investment grade (that is, an external rating that is below investment grade or an internal credit default grade that is equivalent to a below investment grade external rating), we consider the risk of performance to be high. Internal credit default grades are determined based upon the same credit policies that we use to evaluate the risk of payment or performance when making loans and other extensions of credit. Credit quality indicators we usually consider in evaluating risk of

payments or performance are described in Note 64 (Loans and Related Allowance for Credit Losses).

MERCHANT PROCESSING SERVICES We provide debit and credit card transaction processing services through payment networks directly for merchants and as a sponsor for merchant processing servicers, including our joint venture with a third party that is accounted for as an equity method investment. In our role as the merchant acquiring bank, we have a potential obligation in connection with payment and delivery disputes between the merchant and the cardholder that are resolved in favor of the cardholder. If we are unable to collect the amounts from the merchant, we incur a loss for the refund to the cardholder. We are secondarily obligated to make a refund for transactions involving sponsored merchant processing servicers. We generally have a low likelihood of loss in connection with our merchant processing services because most products and services are delivered when purchased and amounts are generally refunded when items are returned to the merchant. In addition, we may reduce our risk in connection with these transactions by withholding future payments and requiring cash or other collateral. For first quarter 2021, we processed card transaction volume of $372.5 billion as a merchant acquiring bank, and related losses, including those from our joint venture entity, were immaterial.


100			Wells Fargo & Company

GUARANTEES OF SUBSIDIARIES In the normal course of business, the Parent may provide counterparties with guarantees related to its subsidiaries’ obligations. These obligations are included in the Company’s consolidated balance sheet or are reflected as off-balance sheet commitments, and therefore, the Parent has not recognized a separate liability for these guarantees.

The Parent fully and unconditionally guarantees the payment of principal, interest, and any other amounts that 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 ~~$2.1~~$1.8 billion and ~~$1.6~~$2.3 billion at March 31, ~~2020~~2021, and December 31, ~~2019,~~2020, respectively. These guarantees rank on parity with all of the Parent’s other unsecured and unsubordinated indebtedness. The assets of the Parent consist primarily of equity in its subsidiaries, and the Parent is a separate and distinct legal entity from its subsidiaries. As a result, the Parent’s ability to address claims of holders of these debt securities against the Parent under the guarantee depends on the Parent’s receipt of dividends, loan payments and other funds from its subsidiaries. If any of the Parent’s subsidiaries becomes insolvent, the direct creditors of that subsidiary will have a prior claim on that subsidiary’s assets. The rights of the Parent and the rights of the Parent’s creditors will be subject to that prior claim unless the Parent is also a direct creditor of that subsidiary. For additional information regarding other restrictions on the Parent’s ability to receive dividends, loan payments and other funds from its subsidiaries, see Note 23 (Regulatory Capital Requirements and Other Restrictions).

OTHER COMMITMENTS To meet the financing needs of our 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 March 31, 2021, and December 31, 2020, we had commitments to purchase debt securities of $18 million and commitments to purchase equity securities of $3.1 billion and $3.2 billion, respectively.

As part of maintaining our memberships in certain clearing organizations, we are required to stand ready to provide liquidity to sustain market clearing activity in the event unforeseen events occur or are deemed likely to occur. Certain of these obligations are guarantees of other members’ performance and accordingly are included in Table 11.1 in Other guarantees and indemnifications.

Also, we have commitments to purchase loans and securities under resale agreements from certain counterparties, including central clearing organizations. The amount of our unfunded contractual commitments was $8.7 billion and $12.0 billion as of March 31, 2021, and December 31, 2020, respectively.

Given the nature of these commitments, they are excluded from Table 4.4 (Unfunded Credit Commitments) in Note 4 (Loans and Related Allowance for Credit Losses).


			Wells Fargo & Company			101

~~Note 13: Guarantees, Pledged Assets and Collateral, and Other Commitments (~~

~~continued~~)


Note 12: Pledged Assets and Collateral

Pledged Assets

Table ~~13.2~~12.1 provides the carrying amount of on-balance sheet pledged assets and the fair value of other pledged collateral. Other pledged collateral is collateral we have received from third parties, have the right to repledge and is not recognized on our consolidated balance sheet.

TRADING RELATED ACTIVITYOur trading businesses may pledge debt and equity securities in connection with securities sold under agreements to repurchase (repurchase agreements) and securities lending arrangements. The collateral that we pledge related to our trading activities may include our own collateral as well as collateral that we have received from third parties and have the right to repledge. ~~Substantially all~~All of the trading activity pledged collateral 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 the Federal Home Loan Bank (FHLB) and ~~FRB~~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 108 (Securitizations and Variable Interest Entities) for additional information on consolidated VIE ~~assets and VIEs accounted for as secured borrowings.~~assets.

Table ~~13.2:~~12.1: Pledged Assets ~~(1)~~

(in millions) Mar 31,
2020
Dec 31,
2019
Related to trading activities:
Repledged third-party owned debt and equity securities $ 61,479
60,083
Trading debt securities and other 39,828
51,083
Equity securities 1,122
1,379
    Total pledged assets related to trading activities 102,429
112,545
Related to non-trading activities:
Loans 400,111
406,106
Debt securities:
Available-for-sale 59,116
61,126
Held-to-maturity 3,884
3,685
Mortgage loans held for sale 1,877
2,266
    Total pledged assets related to non-trading activities 464,988
473,183
Related to VIEs:
Consolidated VIE assets 14,096
14,368
VIEs accounted for as secured borrowings 77
80
Loans eligible for repurchase from GNMA securitizations 533
568
       Total pledged assets related to VIEs 14,706
15,016
Total pledged assets $ 582,123
600,744


(in millions)	Mar 31, 2021		Dec 31, 2020
Related to trading activities:
Repledged third-party owned debt and equity securities	$	51,214	44,765
Trading debt securities and other	20,805		19,572
Equity securities	716		470
Total pledged assets related to trading activities	72,735		64,807
Related to non-trading activities:
Loans	313,479		344,220
Debt securities:

Available-for-sale	52,487		57,289
Held-to-maturity	13,318		17,290
Other financial assets	727		230
Total pledged assets related to non-trading activities	380,011		419,029
Related to VIEs:
Consolidated VIE assets	6,714		12,146
Loans eligible for repurchase from GNMA securitizations	135		179
Total pledged assets related to VIEs	6,849		12,325
Total pledged assets	$	459,595	496,161

Securities Financing Activities

We enter into resale and repurchase agreements and securities borrowing and lending agreements (collectively, “securities financing activities”) typically to finance trading positions (including securities and derivatives), acquire securities to cover short trading positions, accommodate customers’ financing needs, and settle other securities obligations. These activities are conducted through our broker-dealer subsidiaries and, to a lesser extent, through other bank entities. ~~Most of our~~Our securities financing activities primarily involve ~~high quality,~~high-quality, liquid securities such as U.S. Treasury securities and government agency securities and, to a lesser extent, less liquid securities, including equity securities, corporate bonds and asset-backed securities. We account for these transactions as collateralized financings in which we typically receive or pledge securities as collateral. We believe these financing transactions generally do not have material credit risk given the collateral provided and the related monitoring processes.

OFFSETTING OF SECURITIES FINANCING ACTIVITIES Table ~~13.3~~12.2 presents resale and repurchase agreements subject to master repurchase agreements (MRA) and securities borrowing and lending agreements subject to master securities lending agreements (MSLA). ~~We account for transactions subject to these agreements as collateralized~~Collateralized financings, and those with a single counterparty, are presented net on our consolidated balance sheet, provided certain criteria are met that permit balance sheet netting. ~~Most~~Substantially all transactions subject to these agreements do not meet those criteria and thus are not eligible for balance sheet netting.

Collateral we pledged consists of non-cash instruments, such as securities or loans, and is not netted on the consolidated balance sheet against the related liability. Collateral we received includes securities or loans and is not recognized on our consolidated balance sheet. Collateral pledged or received may be increased or decreased over time to maintain certain contractual thresholds, as the assets underlying each arrangement fluctuate in value. Generally, these agreements require collateral to exceed the asset or liability

recognized on the balance sheet. The following table includes the amount of



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


~~(1)~~2			Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, goodwill, certain identifiable intangible assets (other than mortgage servicing rights) and goodwill and other intangibles on nonmarketable equity securities, net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity and tangible book value per common share, which utilize tangible common equity, are useful financial measures because they enable 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.

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.~~


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


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


~~(1)~~			~~Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.~~Wells Fargo & Company			7


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


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



(income/expense in millions,	Community Banking			Wholesale Banking		Wealth and Investment Management		Other (1)				Consolidated Company
balance sheet data in billions)	2020		2019	2020	2019	2020	2019	2020		2019		2020	2019
Quarter ended Mar 31,
Revenue	$	9,496	11,750	5,817	7,111	3,715	4,079	(1,311	)	(1,331	)	17,717	21,609
Provision (reversal of provision) for credit losses	1,718		710	2,288	134	8	4	(9	)	(3	)	4,005	845
Net income (loss)	155		2,823	311	2,770	463	577	(276	)	(310	)	653	5,860

Average loans	$	462.6	458.2	484.5	476.4	78.5	74.4	(60.6	)	(59.0	)	965.0	950.0
Average deposits	798.6		765.6	456.6	409.8	151.4	153.2	(68.6	)	(66.5	)	1,338.0	1,262.1
Goodwill	16.7		16.7	8.4	8.4	1.3	1.3	—		—		26.4	26.4



	Quarter ended Mar 31,
(in millions, except average balances which are in billions)	2020			2019		% Change
Net interest income	$	6,787		7,248		(6	)%
Noninterest income:
Service charges on deposit accounts	700			610		15
Trust and investment fees:
Brokerage advisory, commissions and other fees (1)	518			449		15
Trust and investment management (1)	194			210		(8	)
Investment banking (2)	(99		)	(20	)	NM
Total trust and investment fees	613			639		(4	)
Card fees	809			858		(6	)
Other fees	285			332		(14	)
Mortgage banking	340			641		(47	)
Insurance	11			11		—
Net gains from trading activities	29			5		480
Net gains on debt securities	194			37		424
Net gains (losses) from equity securities (3)	(1,028		)	601		NM
Other income of the segment	756			768		(2	)
Total noninterest income	2,709			4,502		(40	)

Total revenue	9,496			11,750		(19	)

Provision for credit losses	1,718			710		142
Noninterest expense:
Personnel expense	5,455			5,981		(9	)
Technology and equipment	645			641		1
Net occupancy	529			542		(2	)
Core deposit and other intangibles	1			1		—
FDIC and other deposit assessments	68			106		(36	)
Outside professional services	442			316		40
Operating losses	454			219		107
Other expense of the segment	(478		)	(117	)	NM
Total noninterest expense	7,116			7,689		(7	)
Income before income tax expense and noncontrolling interests	662			3,351		(80	)
Income tax expense	644			424		52
Less: Net income (loss) from noncontrolling interests (4)	(137		)	104		NM
Net income	$	155		2,823		(95	)
Average loans	$	462.6		458.2		1
Average deposits	798.6			765.6		4



	March 31,
($ in billions)	2020			2019
Retail brokerage client assets	$	1,397.9		1,600.6
Advisory account client assets	498.8			546.7
Advisory account client assets as a percentage of total client assets	36		%	34



	Quarter ended
(in billions)	Balance, beginning of period		Inflows (1)	Outflows (2)		Market impact (3)		Balance, end of period
March 31, 2020
Client directed (4)	$	169.4	10.1	(9.6	)	(27.2	)	142.7
Financial advisor directed (5)	176.3		10.7	(8.6	)	(26.0	)	152.4
Separate accounts (6)	160.1		6.8	(8.5	)	(24.2	)	134.2
Mutual fund advisory (7)	83.7		3.2	(4.5	)	(12.9	)	69.5
Total advisory client assets	$	589.5	30.8	(31.2	)	(90.3	)	498.8
March 31, 2019
Client directed (4)	$	151.5	7.9	(9.3	)	13.5		163.6
Financial advisor directed (5)	141.9		7.5	(7.7	)	15.2		156.9
Separate accounts (6)	136.4		5.6	(6.9	)	13.2		148.3
Mutual fund advisory (7)	71.3		2.8	(3.2	)	7.0		77.9
Total advisory client assets	$	501.1	23.8	(27.1	)	48.9		546.7



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



(in billions)	Fair value		Net unrealized gain (loss)		Expected remaining maturity (in years)
At March 31, 2020
Actual	$	164.6	5.5		3.5
Assuming a 200 basis point:
Increase in interest rates	150.2		(8.9	)	5.6
Decrease in interest rates	168.2		9.1		3.2


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



	March 31, 2020
(in millions)	Real estate 1-4 family first mortgage		Real estate 1-4 family junior lien mortgage	Total real estate 1-4 family mortgage	% of total loans
Real estate 1-4 family loans:
California	$	118,484	7,814	126,298	13	%
New York	31,801		1,469	33,270	3
New Jersey	14,074		2,667	16,741	2
Florida	11,675		2,523	14,198	1
Washington	10,869		644	11,513	1
Virginia	8,740		1,645	10,385	1
Texas	8,954		576	9,530	1
North Carolina	5,758		1,338	7,096	1
Colorado	6,357		644	7,001	1
Other (1)	65,369		9,207	74,576	7
Government insured/ guaranteed loans (2)	10,839		—	10,839	1
Total	$	292,920	28,527	321,447	32	%



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


~~(1)~~32			In connection with our adoption of CECL on January 1, 2020, PCI loans were reclassified as PCD loans and are therefore included with other non-PCD loans in this table. For more information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.Wells Fargo & Company



					Scheduled end of draw / term
(in millions)	Outstanding balance March 31, 2020			Remainder of 2020	2021	2022	2023	2024	2025 and thereafter (1)	Amortizing
Junior lien lines and loans	$	28,527		218	809	3,177	2,191	1,769	11,693	8,670
First lien lines	10,210			103	395	1,566	1,186	922	4,368	1,670
Total	$	38,737		321	1,204	4,743	3,377	2,691	16,061	10,340
% of portfolios	100		%	1	3	12	9	7	41	27



	March 31, 2020				December 31, 2019					September 30, 2019					June 30, 2019
($ in millions)	Balance		% of total loans		Balance			% of total loans		Balance			% of total loans		Balance			% of total loans
Nonaccrual loans:
Commercial:
Commercial and industrial	$	1,779	0.44	%	$	1,545		0.44	%	$	1,539		0.44	%	$	1,634		0.47	%
Real estate mortgage	944		0.77		573			0.47		669			0.55		737			0.60
Real estate construction	21		0.10		41			0.21		32			0.16		36			0.17
Lease financing	131		0.68		95			0.48		72			0.37		63			0.33
Total commercial	2,875		0.51		2,254			0.44		2,312			0.45		2,470			0.48
Consumer:
Real estate 1-4 family first mortgage (1)	2,372		0.81		2,150			0.73		2,261			0.78		2,425			0.85
Real estate 1-4 family junior lien mortgage (1)	769		2.70		796			2.70		819			2.66		868			2.71
Automobile	99		0.20		106			0.22		110			0.24		115			0.25
Other revolving credit and installment	41		0.12		40			0.12		43			0.12		44			0.13
Total consumer	3,281		0.74		3,092			0.69		3,233			0.73		3,452			0.79
Total nonaccrual loans	6,156		0.61		5,346			0.56		5,545			0.58		5,922			0.62
Foreclosed assets:
Government insured/guaranteed (2)	43				50					59					68
Non-government insured/guaranteed	209				253					378					309
Total foreclosed assets	252				303					437					377
Total nonperforming assets	$	6,408	0.63	%	$	5,649		0.59	%	$	5,982		0.63	%	$	6,299		0.66	%
Change in NPAs from prior quarter	$	759			(333		)			(317		)			(1,042		)



			Lower Rates (1)	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		$	(1.3) - (0.8)	4.7 - 5.2	4.0 - 4.5
Key Rates at Horizon End
Fed Funds Target	0.27	%	0.00	1.27	2.27
10-year CMT (2)	0.81		0.00	1.81	2.81
Second Year of Forecasting Horizon
Net Interest Income Sensitivity to Base Scenario		$	(3.5) - (3.0)	6.8 - 7.3	10.1 - 10.6
Key Rates at Horizon End
Fed Funds Target	0.42	%	0.00	1.42	2.42
10-year CMT (2)	0.89		0.00	1.89	2.89



(in millions, except ratio)	Average for Quarter ended March 31, 2020
HQLA (1)(2)	$	381,950
Projected net cash outflows	315,980
LCR	121		%



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



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



(in millions)
Common Equity Tier 1 at December 31, 2019	$	138,760
Net income applicable to common stock	42
Common stock dividends	(2,096		)
Common stock issued, repurchased, and stock compensation-related items	(2,882		)
Changes in cumulative other comprehensive income	(253		)
Cumulative effect from change in accounting policies (1)	991
Goodwill	9
Certain identifiable intangible assets (other than MSRs)	24
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)	252
Applicable deferred taxes related to goodwill and other intangible assets (2)	11
Other	(107		)
Change in Common Equity Tier 1	(4,009		)
Common Equity Tier 1 at March 31, 2020	$	134,751




										Three months ended March 31,
						Wells Fargo stockholders’ equity
Additional paid-in capital		Retained earnings		Cumulative other comprehensive income		Treasury stock		Unearned ESOP shares		Total Wells Fargo stockholders’ equity		Noncontrolling interests		Total equity
61,049		166,697		(1,311	)	(68,831	)	(1,143	)	187,146		838		187,984
		991								991				991
61,049		167,688		(1,311	)	(68,831	)	(1,143	)	188,137		838		188,975
		653								653		(148	)	505
				(253	)					(253	)	(1	)	(254	)
—										—		(77	)	(77	)
(17	)	(308	)			2,002				1,677				1,677
—						(3,407	)			(3,407	)			(3,407	)
17		(272	)							(2,470	)			(2,470	)
—								—		—				—
—								—		—				—
—						—				—				—
(45	)									1,968				1,968
18		(2,114	)							(2,096	)			(2,096	)
		(339	)							(339	)			(339	)
181										181				181
(1,354	)					21				(1,333	)			(1,333	)
(1,200	)	(2,380	)	(253	)	(1,384	)	—		(5,419	)	(226	)	(5,645	)
59,849		165,308		(1,564	)	(70,215	)	(1,143	)	182,718		612		183,330
60,685		158,163		(6,336	)	(47,194	)	(1,502	)	196,166		900		197,066
		(492	)	481						(11	)			(11	)
60,685		157,671		(5,855	)	(47,194	)	(1,502	)	196,155		900		197,055
		5,860								5,860		107		5,967
				2,173						2,173		—		2,173
—										—		(106	)	(106	)
—		(329	)			1,468				1,139				1,139
—						(4,820	)			(4,820	)			(4,820	)
		—								—				—
—								—		—				—
—								—		—				—
—						—				—				—
—										—				—
19		(2,073	)							(2,054	)			(2,054	)
		(353	)							(353	)			(353	)
544										544				544
(839	)					27				(812	)			(812	)
(276	)	3,105		2,173		(3,325	)	—		1,677		1		1,678
60,409		160,776		(3,682	)	(50,519	)	(1,502	)	197,832		901		198,733



				Dec 31, 2019		ASU 2016-13 Adoption Impact				Jan 1, 2020
(in billions)	Balance Outstanding		ACL Balance	Coverage		ASU 2016-13 Adoption Impact			ACL Balance	Coverage
Total commercial (2)	$	515.7	6.2	1.2	%	$	(2.9	)	3.4	0.7	%

Real estate 1-4 family mortgage (3)	323.4		0.9	0.3		—			0.9	0.3
Credit card (4)	41.0		2.3	5.5		0.7			2.9	7.1
Automobile (4)	47.9		0.5	1.0		0.3			0.7	1.5
Other revolving credit and installment (4)	34.3		0.6	1.6		0.6			1.2	3.5
Total consumer	446.5		4.2	0.9		1.5			5.7	1.3
Total loans	962.3		10.5	1.1		(1.3		)	9.1	0.9
Available-for-sale and held-to-maturity debt securities and other assets (5)	420.0		0.1	NM		—			0.1	NM
Total	$	1,382.3	10.6	NM		$	(1.3	)	9.3	NM



	Mar 31,			Dec 31,
(in millions)	2020			2019
Trading assets:
Debt securities	$	80,425		79,733
Equity securities	13,573			27,440
Loans held for sale	1,673			972
Gross trading derivative assets	72,527			34,825
Netting (1)	(49,821		)	(21,463	)
Total trading derivative assets	22,706			13,362
Total trading assets	118,377			121,507
Trading liabilities:
Short sale	17,603			17,430
Gross trading derivative liabilities	67,891			33,861
Netting (1)	(53,598		)	(26,074	)
Total trading derivative liabilities	14,293			7,787
Total trading liabilities	$	31,896		25,217