0000072971 us-gaap:FirstMortgageMember us-gaap:FinancialAssetOtherThanFinancialAssetAcquiredWithCreditDeteriorationMember wfc:NoFICOavailableMember wfc:LoansExcludingGovernmentInsuredOrGuaranteedLoansMember 2019-12-31 0000072971 wfc:LoansDebtSecuritiesandEquityInterestsMember us-gaap:CarryingReportedAmountFairValueDisclosureMember us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember us-gaap:CommercialMortgageBackedSecuritiesMember 2019-12-31 0000072971 us-gaap:InterestRateContractMember us-gaap:FairValueHedgingMember us-gaap:LongTermDebtMember 2020-01-01 2020-06-30 0000072971 srt:WeightedAverageMember us-gaap:InterestRateContractMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MeasurementInputDefaultRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2020-06-30 0000072971 wfc:InvestmentManagementFeeMember wfc:CommunityBankingMember 2019-01-01 2019-06-30WELLS FARGO & COMPANY/MN0000072971false2021Q212/31NYSE5.85% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series Q6.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series R1.66661.6666The Parent fully and unconditionally guarantees the payment of principal, interest, and any other amounts that may be due on securities that its 100% owned finance subsidiary, Wells Fargo Finance LLC, may issue.0.1080.6591.5100.8990.5162.6800.6550.412.16.57.212.18.02.03.32.80.110.95.00If issued, preference shares would be limited to one vote per shareNaNNaN0000072971us-gaap:CustomerRelationshipsMember2021-06-300000072971us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2021-06-300000072971wfc:TrailingCommissionMember2020-04-012020-06-30






UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20202021
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 001-2979
WELLS FARGO & COMPANY
(Exact name of registrant as specified in its charter)
DelawareNo.41-0449260
(State of incorporation)(I.R.S. Employer Identification No.)

420 Montgomery Street,, San Francisco,, California 94104
(Address of principal executive offices) (Zip Code) code)
Registrant’s telephone number, including area code: 1-1-866-249-3302866-249-3302 
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange
on Which Registered
Common Stock, par value $1-2/3WFCNYSE
New York Stock
Exchange
(NYSE)
7.5% Non-Cumulative Perpetual Convertible Class A Preferred Stock, Series LWFC.PRLNYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series NWFC.PRNNYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series OWFC.PRONYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series PWFC.PRPNYSE
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 QWFC.PRQNYSE
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 RWFC.PRRNYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series TWFC.PRTNYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series VWFC.PRVNYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series WWFC.PRWNYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series XWFC.PRXNYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series YWFC.PRYNYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series ZWFC.PRZNYSE
GuaranteeDepositary Shares, each representing a 1/1000th interest in a share of 5.80% Fixed-to-Floating Rate Normal Wachovia Income Trust SecuritiesNon-Cumulative Perpetual Class A Preferred Stock, Series AAWFC.PRANYSE
Depositary Shares, each representing a 1/1000th interest in a share of Wachovia Capital Trust IIINon-Cumulative Perpetual Class A Preferred Stock, Series CCWFC/TPWFC.PRCNYSE
Guarantee of Medium-Term Notes, Series A, due October 30, 2028 of Wells Fargo Finance LLCWFC/28ANYSE
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
July 24, 202019, 2021
Common stock, $1-2/3 par value4,120,047,1054,106,410,513



FORM 10-Q 
CROSS-REFERENCE INDEX 
PART IFinancial Information 
Item 1.Financial StatementsPage
 Consolidated Statement of Income
63
 Consolidated Statement of Comprehensive Income
64
 Consolidated Balance Sheet
65
 Consolidated Statement of Changes in Equity
66
 Consolidated Statement of Cash Flows
70
 Notes to Financial Statements  
 1
—Summary of Significant Accounting Policies  
71
 2
—Business Combinations
76
 3
—Cash, Loan and Dividend Restrictions
77
 4
—Trading Activities
78
 5
—Available-for-Sale and Held-to-Maturity Debt Securities
79
 6
—Loans and Related Allowance for Credit Losses
86
 7
—Leasing Activity
104
 8
—Equity Securities
105
 9
—Other Assets
107
 10
—Securitizations and Variable Interest Entities
108
 11
—Mortgage Banking Activities
115
 12
—Intangible Assets
117
 13
—Guarantees, Pledged Assets and Collateral, and Other Commitments
118
 14
—Legal Actions
122
 15
—Derivatives
127
 16
—Fair Values of Assets and Liabilities
138
 17
—Preferred Stock
155
 18
—Revenue from Contracts with Customers
158
 19
—Employee Benefits and Other Expenses
162
 20
—Earnings and Dividends Per Common Share
163
 21
—Other Comprehensive Income
164
 22
—Operating Segments
166
 23
—Regulatory and Agency Capital Requirements
167
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review) 
 Summary Financial Data  
2
 Overview
3
 Earnings Performance
6
 Balance Sheet Analysis
20
 Off-Balance Sheet Arrangements  
23
 Risk Management
24
 Capital Management
48
 Regulatory Matters
55
 Critical Accounting Policies  
56
 Current Accounting Developments
58
 Forward-Looking Statements  
59
 Risk Factors 
61
 Glossary of Acronyms
169
Item 3.Quantitative and Qualitative Disclosures About Market Risk
41
Item 4.Controls and Procedures
62
   
PART IIOther Information 
Item 1.Legal Proceedings
170
Item 1A.Risk Factors
170
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
170
Item 6.Exhibits
171
     
Signature
172






FORM 10-Q
CROSS-REFERENCE INDEX
PART IFinancial Information
Item 1.Financial StatementsPage
Consolidated Statement of Income
64
Consolidated Statement of Comprehensive Income
65
Consolidated Balance Sheet
66
Consolidated Statement of Changes in Equity
67
Consolidated Statement of Cash Flows
69
Notes to Financial Statements  
1 —Summary of Significant Accounting Policies
70
2 —Trading Activities
73
3 —Available-for-Sale and Held-to-Maturity Debt Securities
74
4 —Loans and Related Allowance for Credit Losses
80
5 —Leasing Activity
96
6 —Equity Securities
97
7 —Other Assets
99
8 —Securitizations and Variable Interest Entities
100
9 —Mortgage Banking Activities
105
10 —Intangible Assets
107
11 ��Guarantees and Other Commitments
108
12 —Pledged Assets and Collateral
110
13 —Legal Actions
113
14 —Derivatives
117
15 —Fair Values of Assets and Liabilities
126
16 —Preferred Stock
133
17 —Revenue from Contracts with Customers
136
18 —Employee Benefits and Other Expenses
138
19 —Restructuring Charges
139
20 —Earnings and Dividends Per Common Share
140
21 —Other Comprehensive Income
141
22 —Operating Segments
143
23 —Regulatory Capital Requirements and Other Restrictions
146
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)
Summary Financial Data
2
Overview
3
Earnings Performance
6
Balance Sheet Analysis
28
Off-Balance Sheet Arrangements
29
Risk Management
30
Capital Management
51
Regulatory Matters
57
Critical Accounting Policies
59
Current Accounting Developments
59
Forward-Looking Statements
60
Risk Factors 
62
Glossary of Acronyms
148
Item 3.Quantitative and Qualitative Disclosures About Market Risk
45
Item 4.Controls and Procedures
63
PART IIOther Information
Item 1.Legal Proceedings
149
Item 1A.Risk Factors
149
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
149
Item 6.Exhibits
150
Signature
151


Wells Fargo & Company1
PART I - FINANCIAL INFORMATION






FINANCIAL REVIEW
Summary Financial Data (1)      
Quarter endedJun 30, 2021
% Change from		Six months ended  
($ in millions, except per share amounts)Jun 30,
2021		Mar 31,
2021		Jun 30,
2020		Mar 31,
2021		Jun 30,
2020		Jun 30,
2021		Jun 30,
2020		%
Change
Selected Income Statement Data      
Total revenue$20,270 18,532 18,286 9 %11 $38,802 36,459 6 %
Noninterest expense13,341 13,989 14,551 (5)(8)27,330 27,599 (1)
Pre-tax pre-provision profit (PTPP) (2)6,929 4,543 3,735 53 86 11,472 8,860 29 
Provision for credit losses(1,260)(1,048)9,534 (20)NM(2,308)13,539 NM
Wells Fargo net income (loss)6,040 4,636 (3,846)30 NM10,676 (2,930)NM
Wells Fargo net income (loss) applicable to common stock5,743 4,256 (4,160)35 NM9,999 (3,856)NM
Common Share Data
Diluted earnings (loss) per common share1.38 1.02 (1.01)35 NM2.40 (0.94)NM
Dividends declared per common share0.10 0.10 0.51 — (80)0.20 1.02 (80)
Common shares outstanding4,108.0 4,141.1 4,119.6 (1)— 
Average common shares outstanding4,124.6 4,141.3 4,105.5 — — 4,132.9 4,105.2 1 
Diluted average common shares outstanding (3)4,156.1 4,171.0 4,105.5 — 1 4,164.6 4,105.2 1 
Book value per common share (4)$41.74 40.27 38.31 4 9 
Tangible book value per common share (4)(5)34.95 33.49 31.52 4 11 
Selected Equity Data (period-end)
Total equity193,127 188,034 178,635 3 8 
Common stockholders' equity171,453 166,748 157,835 3 9 
Tangible common equity (5)143,577 138,702 129,842 4 11 
Performance Ratios
Return on average assets (ROA) (6)1.25 %0.97 (0.79)1.11 %(0.30)
Return on average equity (ROE) (7)13.6 10.3 (10.2)12.0 (4.7)
Return on average tangible common equity (ROTCE) (5)16.3 12.4 (12.3)14.4 (5.7)
Efficiency ratio (8)66 75 80 70 76 
Net interest margin on a taxable-equivalent basis2.02 2.05 2.25 2.04 2.42 
Selected Balance Sheet Data (average)
Loans$854,747 873,439 971,266 (2)(12)$864,041 968,156 (11)
Assets1,939,879 1,934,425 1,947,180 — — 1,937,167 1,948,025 (1)
Deposits1,435,824 1,393,472 1,386,656 3 4 1,414,765 1,362,309 4 
Selected Balance Sheet Data (period-end)
Debt securities533,565 505,826 472,580 5 13 
Loans852,300 861,572 935,155 (1)(9)
Allowance for credit losses for loans16,391 18,043 20,436 (9)(20)
Equity securities64,547 57,702 50,776 12 27 
Assets1,945,996 1,957,264 1,967,048 (1)(1)
Deposits1,440,472 1,437,119 1,410,711 — 2 
Headcount (#) (period-end)259,196 264,513 276,013 (2)(6)
Capital and other metrics
Risk-based capital ratios and components (9):
Standardized Approach:
Common equity tier 1 (CET1)12.07 %11.85 10.97 
Tier 1 capital13.71 13.54 12.60 
Total capital16.84 16.75 15.88 
Risk-weighted assets (RWAs) (in billions)1,188.7 1,179.0 1,213.1 1 (2)
Advanced Approach:
Common equity tier 1 (CET1)12.73 %12.60 11.13 
Tier 1 capital14.47 14.39 12.79 
Total capital16.88 16.92 15.29 
Risk-weighted assets (RWAs) (in billions)$1,126.5 1,109.4 1,195.4 2 (6)
Tier 1 leverage ratio8.53 %8.36 7.95 
Supplementary Leverage Ratio (SLR)7.09 7.91 7.52 
Total Loss Absorbing Capacity (TLAC) Ratio (10)25.11 25.18 25.33 
Liquidity Coverage Ratio (LCR) (11)123 127 129 
NM – Not meaningful
(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period financial statement line items have been revised to conform with the current period presentation. Prior period risk-based capital and certain other regulatory related metrics were not revised. For additional information, see the “Recent Developments” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.
(2)Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.
(3)In second quarter 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.
(4)Book value per common share is common stockholders' equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares outstanding.
(5)Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, goodwill, certain identifiable intangible assets (other than mortgage servicing rights) and goodwill and other intangibles on nonmarketable equity securities, net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity and tangible book value per common share, which utilize tangible common equity, are useful financial measures because they enable management, investors, and others to assess the Company’s use of equity. For additional information, including a corresponding reconciliation to generally accepted accounting principles (GAAP) financial measures, see the “Capital Management – Tangible Common Equity” section in this Report.
(6)Represents Wells Fargo net income (loss) divided by average assets.
(7)Represents Wells Fargo net income (loss) applicable to common stock divided by average common stockholders’ equity.
(8)The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
(9)The information presented reflects fully phased-in CET1, tier 1 capital, and RWAs, but reflects total capital in accordance with transition requirements. For additional information, see the “Capital Management” section and Note 23 (Regulatory Capital Requirements and Other Restrictions) to Financial Statements in this Report.
(10)Represents TLAC divided by the greater of RWAs determined under the Standardized and Advanced Approaches, which is our binding TLAC ratio.
(11)Represents high-quality liquid assets divided by projected net cash outflows, as each is defined under the LCR rule.
Summary Financial Data                  
       % Change          
 Quarter ended  Jun 30, 2020 from  Six months ended    
($ in millions, except per share amounts)Jun 30,
2020
 Mar 31,
2020
 Jun 30,
2019
 Mar 31,
2020
 Jun 30,
2019
 Jun 30,
2020

Jun 30,
2019
 
%
Change

For the Period                  
Wells Fargo net income (loss)$(2,379) 653
 6,206
 NM
 NM
 $(1,726) 12,066
 NM
Wells Fargo net income (loss) applicable to common stock(2,694) 42
 5,848
 NM
 NM
 (2,652) 11,355
 NM
Diluted earnings (loss) per common share(0.66) 0.01
 1.30
 NM
 NM
 (0.65) 2.50
 NM
Profitability ratios (annualized):               
Wells Fargo net income (loss) to average assets (ROA)(0.49)% 0.13
 1.31
 NM
 NM
 (0.18)% 1.29
 NM
Wells Fargo net income (loss) applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)(6.63) 0.10
 13.26
 NM
 NM
 (3.23) 12.99
 NM
Return on average tangible common equity (ROTCE) (1)(8.00) 0.12
 15.78
 NM
 NM
 (3.89) 15.47
 NM
Efficiency ratio (2)81.6
 73.6
 62.3
 11
 31
 77.6
 63.4
 22
Total revenue$17,836
 17,717
 21,584
 1
 (17) $35,553
 43,193
 (18)
Pre-tax pre-provision profit (PTPP) (3)3,285
 4,669
 8,135
 (30) (60) 7,954
 15,828
 (50)
Dividends declared per common share0.51
 0.51
 0.45
 —
 13
 1.02
 0.90
 13
Average common shares outstanding4,105.5
 4,104.8
 4,469.4
 —
 (8) 4,105.2
 4,510.2
 (9)
Diluted average common shares outstanding (4)4,105.5
 4,135.3
 4,495.0
 (1) (9) 4,105.2
 4,540.1
 (10)
Average loans$971,266
 965,046
 947,460
 1
 3
 $968,156
 948,728
 2
Average assets1,948,939
 1,950,659
 1,900,627
 —
 3
 1,949,799
 1,891,907
 3
Average total deposits1,386,656
 1,337,963
 1,268,979
 4
 9
 1,362,309
 1,265,539
 8
Average consumer and small business banking deposits (5)857,943
 779,521
 742,671
 10
 16
 819,791
 741,171
 11
Net interest margin2.25 % 2.58
 2.82
 (13) (20) 2.42 % 2.86
 (15)
At Period End                  
Debt securities$472,580
 501,563
 482,067
 (6) (2) $472,580
 482,067
 (2)
Loans935,155
 1,009,843
 949,878
 (7) (2) 935,155
 949,878
 (2)
Allowance for loan losses18,926
 11,263
 9,692
 68
 95
 18,926
 9,692
 95
Goodwill26,385
 26,381
 26,415
 —
 —
 26,385
 26,415
 —
Equity securities52,494
 54,047
 61,537
 (3) (15) 52,494
 61,537
 (15)
Assets1,968,766
 1,981,349
 1,923,388
 (1) 2
 1,968,766
 1,923,388
 2
Deposits1,410,711
 1,376,532
 1,288,426
 2
 9
 1,410,711
 1,288,426
 9
Common stockholders’ equity159,322
 162,654
 177,235
 (2) (10) 159,322
 177,235
 (10)
Wells Fargo stockholders’ equity179,386
 182,718
 199,042
 (2) (10) 179,386
 199,042
 (10)
Total equity180,122
 183,330
 200,037
 (2) (10) 180,122
 200,037
 (10)
Tangible common equity (1)131,329
 134,787
 148,864
 (3) (12) 131,329
 148,864
 (12)
Capital ratios (6):                  
Total equity to assets9.15 % 9.25
 10.40
 (1) (12) 9.15 % 10.40
 (12)
Risk-based capital:        

       

Common Equity Tier 110.97
 10.67
 11.97
 3
 (8) 10.97
 11.97
 (8)
Tier 1 capital12.60
 12.22
 13.69
 3
 (8) 12.60
 13.69
 (8)
Total capital15.29
 15.21
 16.75
 1
 (9) 15.29
 16.75
 (9)
Tier 1 leverage7.95
 8.03
 9.12
 (1) (13) 7.95
 9.12
 (13)
Common shares outstanding4,119.6
 4,096.4
 4,419.6
 1
 (7) 4,119.6
 4,419.6
 (7)
Book value per common share (7)$38.67
 39.71
 40.10
 (3) (4) $38.67
 40.10
 (4)
Tangible book value per common share (1)(7)31.88
 32.90
 33.68
 (3) (5) 31.88
 33.68
 (5)
Team members (active, full-time equivalent)266,300
 262,800
 262,800
 1
 1
 266,300
 262,800
 1
(1)2Tangible 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)In second quarter 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.
(5)Consumer and small business banking deposits are total deposits excluding mortgage escrow and wholesale deposits.
(6)The risk-based capital ratios were calculated under the lower of the Standardized or Advanced Approach determined pursuant to Basel III. Beginning January 1, 2018, the requirements for calculating common equity tier 1 and tier 1 capital, along with risk-weighted assets, became fully phased-in. Accordingly, the information presented reflects fully phased-in common equity tier 1 capital, tier 1 capital and risk-weighted assets, but reflects total capital still in accordance with Transition Requirements. See the “Capital Management” section and Note 23 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report for additional information.
(7)Book value per common share is common stockholders’ equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares outstanding.
Overview (continued)

This Quarterly Report, including the Financial Review and the Financial Statements and related Notes, contains forward-looking statements, which may include forecasts of our financial results and condition, expectations for our operations and business, and our assumptions for those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results may differ materially from our forward-looking statements due to several factors. Factors that could cause our actual results to differ materially from our forward-looking statements are described in this Report, including in the “Forward-Looking Statements” section, and in the “Risk Factors” and “Regulation and Supervision” sections of our Annual Report on Form 10-K for the year ended December 31, 2019 (20192020 (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.
Financial Review


Overview
Wells Fargo & Company is a diversified, community-basedleading financial services company with $1.97that has approximately $1.9 trillion in assets. Foundedassets, proudly serves one in 1852three U.S. households and headquarteredmore than 10% of small businesses in San Francisco, wethe U.S., and is the leading middle market banking provider in the U.S. We provide a diversified set of banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,300 locations, more than 13,000 ATMs, digital (online, mobileour four reportable operating segments: Consumer Banking and social),Lending, Commercial Banking, Corporate and contact centers (phone, emailInvestment 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 266,000 active, full-time equivalent team members, we serve one in three households in the United States andInvestment Management. Wells Fargo ranked No. 3037 on Fortune’s 20202021 rankings of America’s largest corporations. We ranked fourth in both assets and third in the market value of our common stock among all U.S. banks at June 30, 2020.2021. 
Wells Fargo’s top priority remains meeting its regulatory requirements 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 committingcommitted to devoting the resources necessary to ensure that we operate with the strongeststrong 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 have also rapidly expanded digital access and deployed new tools, including changes to our ATMs and mobile technology for the convenience of our customers.
For our employees, we have enabled approximately 200,000 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, requiring employees to wear facial coverings, and implementing an enhanced cleaning program.
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 also committed to donating the gross processing fees received from the Paycheck Protection Program to help small businesses impacted by the COVID-19 pandemic and will work with nonprofit organizations to provide capital, technical support, and long-term resiliency programs to small businesses with an emphasis on serving minority-owned businesses.
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. 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 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 June 30, 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 believe regulators may impose additional penalties or take other enforcement actions.
Wells Fargo & Company3

Overview (continued)
Retail Sales Practices Matters
In September 2016, we announced settlements with the CFPB, the OCC, and the Office of the Los Angeles City Attorney, and entered into related consent orders with the CFPB and the OCC, in connection with allegations that some of our retail customers received products and services they did not request. As a result, it remains 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 20192020 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 reasonablyprobable 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 moreadditional information, including related legal and regulatory risk, see the “Risk Factors” section in our 20192020 Form 10-K and Note 1413 (Legal Actions) to Financial Statements in this Report.

Financial PerformanceRecent Developments
Wells FargoChange in Accounting Policies
In second quarter 2021, we retroactively changed the accounting for certain tax-advantaged investments to better align the financial statement presentation with the economic impact of these investments.
Specifically, we elected to change our accounting for low-income housing tax credit investments from the equity method of accounting to the proportional amortization method. Under the proportional amortization method, the amortization of the investments and the related tax impacts are recognized in income tax expense. Previously, we recognized the amortization of the investments in other noninterest income and the related tax impacts were recognized in income tax expense.
Also, we elected to change the presentation of investment tax credits related to solar energy investments. We reclassified the investment tax credits on our consolidated balance sheet from accrued expenses and other liabilities to a reduction of the carrying value of the investment balances. We also reclassified the investment tax credits from income tax expense to interest income for solar energy leases or noninterest income for solar energy equity investments.
These changes had a net loss of $2.4 billion in second quarter 2020 with diluted loss per common share of $0.66, compared withnominal impact on net income of $6.2 billion and diluted income per common share (EPS)retained earnings on an annual basis; however, our quarterly results were affected in both the second and third quarters of $1.30 a year ago. Financial performance items for second quarter 2020 compared with the same period a year ago included:
•
revenue of $17.8 billion, down$3.7 billion, with net interest income of $9.9 billion, down$2.2 billion, or 18%, and noninterest income of $8.0 billion, down$1.5 billion, or 16%;
•
a net interest margin of 2.25%, down 57 basis points;
•
provision for credit losses of $9.5 billion, up $9.0 billion;
•
noninterest expense of $14.6 billion, up $1.1 billion, or 8%;
•
an efficiency ratio of 81.6%, compared with 62.3%;
•
average loans of $971.3 billion, up$23.8 billion;
•
average deposits of $1.39 trillion, up$117.7 billion;
•
net loan charge-off rate of 0.46% (annualized) of average loans, compared with 0.28% (annualized);
•
nonaccrual loans of $7.6 billion, up$1.7 billion, or 28%; and
•
return on assets (ROA) of (0.49)% and return on equity (ROE) of (6.63)%, down from 1.31% and 13.26%, respectively.

Balance Sheet and Liquidity
Our balance sheet remained strong during second quarter 2020 with solid levels of liquidity and capital. Our total assets were $1.97 trillion at June 30, 2020. Cash and other short-term investments increased $98.4 billion from December 31, 2019, reflecting an increase in cash balances, partially offset by lower federal funds sold and securities purchased under resale agreements. Debt securities decreased $24.5 billion from December 31, 2019, predominantly due to a decrease in available-for-sale debt securities, partially offset by an increase in held-to-maturity debt securities. Loans decreased $27.1 billion from December 31, 2019, due to paydowns in real estate 1-4 family mortgage loans, credit card loans, and commercial and industrial loans, as well as the designation in second quarter 2020 of real estate 1-4 family mortgage loans as mortgage loans held for sale (MLHFS). The decrease in loans was partially offset by an increase in commercial real estate loans driven by new originations and draws on construction loans.
Average deposits in second quarter 2020 were $1.39 trillion, up $117.7 billion from second quarter 2019, on growth across the deposit gathering businesses reflecting customers’ preferences for liquidity due to the impact of these changes on the estimated annual effective income tax rate applied to each quarter. These changes also improved our efficiency ratio and generally increased our effective income tax rate from what was previously reported.
Prior period financial statement line items have been revised to conform with the current period presentation. Prior period risk-based capital and certain other regulatory related metrics were not revised. For additional information, including the financial statement line items impacted by these changes, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

COVID-19 pandemic.Pandemic

Credit Quality
Credit quality declined dueIn response to the economic impact that the COVID-19 pandemic, hadwe 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 customer base.
Net loan charge-offs were $1.1 billion, or 0.46% (annualized) of average loans, in second quarter 2020, compared with $653 million a year ago (0.28%)(annualized). Our commercial portfolio net loan charge-offs were $602 million, or 44 basis points (annualized) of average commercial loans, in second quarter 2020, compared with net loan charge-offs of $165 million, or 13 basis points (annualized), a year ago, predominantly driven by increased losses in our commercialcustomers and industrial and commercial real estate loan portfolios. The increased losses in our commercial and industrial portfolio were primarily relatedcommunities to higher net loan charge-offs in our oil and gas portfolio. Our consumer portfolio net loan charge-offs were $511 million, or 48 basis points (annualized) of average consumer loans, in second quarter 2020, compared with net loan charge-offs of $488 million, or 45 basis points (annualized), a year ago, predominantly driven by increased losses in our residential real estate and automobile loan portfolios, partially offset by lower losses in our credit card and other revolving credit and installment loan portfolios.get through these unprecedented times.

PAYCHECK PROTECTION PROGRAMThe allowanceCoronavirus Aid, Relief, and Economic Security Act (CARES Act) created funding for credit losses (ACL) forthe Small Business Administration’s (SBA) loan program providing forgiveness of up to the full principal amount of qualifying loans guaranteed under a program called the Paycheck Protection Program (PPP). Since its inception, we have funded approximately 282,000 loans under the PPP totaling approximately $14.0 billion, and more than $5.8 billion of $20.4 billion atprincipal forgiveness has been provided on qualifying PPP loans. We deferred approximately $420 million of SBA processing fees in 2020 that will be recognized as interest income over the terms of the loans. We voluntarily committed to donate all of the gross processing fees received from PPP loans funded in 2020. Through June 30, 2020, increased $9.82021, we donated approximately $260 million of these processing fees. We funded approximately $3.5 billion compared with a year ago, and increased $10.0 billion from December 31, 2019. We had a $11.4 billion increase in the allowance for credit losses forof PPP loans in the first half of 2021 and deferred approximately $270 million of related SBA processing fees that will be recognized as interest income over the terms of the loans. We have committed to donate any net profits from processing fees received from PPP loans funded in 2021. For additional information on the CARES Act and the PPP, see the “Overview – Recent Developments – COVID-19 Pandemic” section in our 2020 partially offset byForm 10-K.

LIBOR Transition
The London Interbank Offered Rate (LIBOR) is a $1.3 billion decreasewidely-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 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
Overview (continued)

Instruments (CECL). The allowance coverage for total loans was 2.19% at June 30, 2020, compared with 1.12% a year agoreference rate in new contracts as soon as practicable and 1.09% atin any event by December 31, 2019. The allowance covered 4.6 times annualized net loan charge-offs in second quarter 2020, compared with 4.0 times in second quarter 2019. Our provision for credit losses for loans was $9.6 billion in second quarter 2020, up from $503 million a year ago. The increase in the allowance for credit losses for loans and the provision for credit losses reflected current and forecasted economic conditions due to the COVID-19 pandemic.2021.
Nonperforming assets (NPAs) at June 30, 2020, of $7.8 billion, increased $1.4 billion, or 22%, from March 31, 2020, and $2.2 billion, or 38%, from December 31, 2019, and represented 0.83% of total loans at June 30, 2020. Nonaccrual loans increased $1.4 billion from March 31, 2020, due to increases in commercial loans driven by the oil and gas portfolio and increases in real estate mortgage loans, as the economic impact of the COVID-19 pandemic continued to impact our customer base. Foreclosed assets decreased $57 million from March 31, 2020. For information on how we are assistingthe amount of our customersLIBOR-linked assets and liabilities, as well as initiatives created by our LIBOR Transition Office in responsean effort to mitigate the COVID-19 pandemic,risks associated with
4Wells Fargo & Company

a transition away from LIBOR, see the “Overview – Recent Developments – LIBOR Transition” section in our 2020 Form
10-K. For information regarding the risks and potential impact of LIBOR or any other referenced financial metric being significantly changed, replaced or discontinued, see the “Risk Management – Credit Risk Management”Factors” section in this Report.our 2020 Form 10-K.

Capital Actions and Restrictions
In June 2021, the Company completed the 2021 Comprehensive Capital Analysis and Review (CCAR) stress test process. We maintained a solidexpect our stress capital position inbuffer (SCB) for the first half of 2020, with total equity of $180.1 billion at Juneperiod October 1, 2021, through September 30, 2020, compared with $188.0 billion at December2022, to be 3.10%. The FRB has indicated it will publish our final SCB by August 31, 2019. We reduced2021.
On July 27, 2021, the Board approved an increase to the Company's third quarter 2021 common stock dividend to $0.20 per share. Additionally, our capital plan includes gross common shares outstanding by 14.9 million shares from December 31, 2019, through share repurchases partially offset by issuances and conversions of preferred shares. 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 repurchasesapproximately $18 billion for the remainder of the firstfour-quarter period beginning third quarter and for2021 through second quarter 2020. On June 25, 2020, the FRB announced that it was prohibiting large bank holding companies (BHCs) subject to the FRB’s2022.
For additional information about capital plan rule, 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. Through the end of third quarter 2020, the FRB authorized certain limited exceptions to this prohibition, which are described inplanning, see the “Capital Management – Capital Planning and Stress Testing” section in this Report.
In first quarter 2020, we issued $2.0 billion of Non-Cumulative Perpetual Class A Preferred Stock, Series Z. Additionally,June 2021, 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$350 million of our Non-Cumulative Perpetual Class A Preferred Stock, Series T.N. In July 2021, we issued $1.25 billion of our Preferred Stock, Series DD.

Business and Portfolio Divestitures
On July 28, 2020,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 Companytransaction, we will own a 9.9% equity interest and continue to serve as a client and distribution partner. On March 23, 2021, we announced an agreement to sell our Corporate Trust Services business for a purchase price of $750 million. Both transactions are expected to close in the second half of 2021, subject to customary closing conditions.
In the first half of 2021, we completed substantially all of the previously announced sale of our student loan portfolio, which resulted in gains in other noninterest income of $208 million and $147 million in first and second quarter 2021, respectively, and goodwill write-downs in other noninterest expense of $104 million and $79 million in first and second quarter 2021, respectively.
Financial Performance
Consolidated Financial Highlights
Quarter ended Jun 30,Six months ended Jun 30,
($ in millions)20212020$ Change% Change20212020$ Change% Change
Selected income statement data
Net interest income$8,800 9,892 (1,092)(11)%$17,608 21,222 (3,614)(17)%
Noninterest income11,470 8,394 3,076 37 21,194 15,237 5,957 39 
Total revenue20,270 18,286 1,984 11 38,802 36,459 2,343 6 
Net charge-offs379 1,114 (735)(66)902 2,055 (1,153)(56)
Change in the allowance for credit losses(1,639)8,420 (10,059)NM(3,210)11,484 (14,694)NM
Provision for credit losses(1,260)9,534 (10,794)NM(2,308)13,539 (15,847)NM
Noninterest expense13,341 14,551 (1,210)(8)27,330 27,599 (269)(1)
Income tax expense1,445 (2,001)3,446 NM2,346 (1,648)3,994 NM
Wells Fargo net income6,040 (3,846)9,886 NM10,676 (2,930)13,606 NM
Wells Fargo net income applicable to common stock5,743 (4,160)9,903 NM9,999 (3,856)13,855 NM
NM – Not meaningful

In second quarter 2021, we generated $6.0 billion of net income and diluted earnings per common share (EPS) of $1.38, compared with a net loss of $3.8 billion and diluted loss per common share of $1.01 in the same period a year ago. Financial performance for second quarter 2021, compared with the same period a year ago, included the following:
•total revenue increased due to higher net gains from equity securities and mortgage banking income, partially offset by lower net interest income;
•provision for credit losses decreased reflecting lower net charge-offs and improvements in the economic environment;
•noninterest expense decreased due to lower operating losses and lower professional and outside services expense;
•average loans decreased due to paydowns exceeding originations in the residential mortgage and credit card portfolios, weak demand for commercial loans, and the reclassification of student loans, included in other consumer loans, to loans held for sale after the announced sale of the portfolio in fourth quarter 2020; and
•average deposits increased driven by growth in consumer deposits in the Consumer Banking and Lending and Wealth
and Investment Management (WIM) operating segments due to higher levels of liquidity and savings for consumer customers reflecting government stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the COVID-19 pandemic, partially offset by actions taken to manage under the asset cap which reduced its thirddeposits in the Corporate and Investment Banking operating segment and Corporate.

In the first half of 2021, we generated $10.7 billion of net income and diluted EPS of $2.40, compared with a net loss of $2.9 billion and diluted loss per common share of $0.94 in the same period a year ago. Financial performance for the first half of 2021, compared with the same period a year ago, included the following:
•total revenue increased due to higher net gains from equity securities and mortgage banking income, partially offset by lower net interest income;
•provision for credit losses decreased reflecting lower net charge-offs due to better portfolio credit quality driven by improvements in the economic environment;
Wells Fargo & Company5

Overview (continued)
•noninterest expense decreased due to lower operating losses and lower professional and outside services expense, partially offset by higher personnel expense;
•average loans decreased due to paydowns exceeding originations in the residential mortgage and credit card portfolios, weak demand for commercial loans, and the reclassification of student loans, included in other consumer loans, to loans held for sale after the announced sale of the portfolio in fourth quarter 2020 common stock dividend2020; and
•average deposits increased driven by growth in consumer deposits in the Consumer Banking and Lending and Wealth and Investment Management (WIM) operating segments due to $0.10 per share.higher levels of liquidity and savings for consumer customers reflecting government stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the COVID-19 pandemic, partially offset by actions taken to manage under the asset cap which reduced deposits in the Corporate and Investment Banking operating segment and Corporate.

Capital and Liquidity
We believe an important measuremaintained a strong capital position in the first half of 2021, with total equity of $193.1 billion at June 30, 2021, compared with $185.7 billion at December 31, 2020. Our liquidity and regulatory capital ratios remained strong at June 30, 2021, including:
•our capital strength isliquidity coverage ratio (LCR) was 123%, which continued to exceed the regulatory minimum of 100%;
•our Common Equity Tier 1 (CET1) ratio was 12.07%, which was 10.97% at June 30, 2020, down from 11.14% at December 31, 2019, but still above our internal target of 10% andcontinued to exceed both the regulatory minimumrequirement of 9%. As of June 30, 2020, and our current internal target; and
•our eligible external total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets was 25.33%25.11%, compared with the required minimumregulatory requirement of 22.0%21.50%. Likewise, our other regulatory capital ratios remained strong.
See the “Capital Management” sectionand the “Risk Management – Asset/Liability Management – Liquidity Risk and Funding” sections in this Report for moreadditional information regarding our capital and liquidity, including the calculation of our regulatory capital and liquidity amounts.

Credit Quality
Credit quality reflected the improving economic environment.
•The allowance for credit losses (ACL) for loans of $16.4 billion at June 30, 2021, decreased $3.3 billion from December 31, 2020.
•Our provision for credit losses for loans was $(2.4) billion in the first half of 2021, down from $13.4 billion in the same period a year ago. The decrease in the ACL for loans and the provision for credit losses in the first half of 2021, compared with the same period a year ago, reflected improvements in current and forecasted economic conditions.
•The allowance coverage for total loans was 1.92% at June 30, 2021, compared with 2.22% at December 31, 2020.
•Commercial portfolio net loan charge-offs were $80 million, or 7 basis points of average commercial loans, in second quarter 2021, compared with net loan charge-offs of $602 million, or 44 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, and in the real estate mortgage portfolio.
•Consumer portfolio net loan charge-offs were $301 million, or 32 basis points of average consumer loans, in second quarter 2021, compared with net loan charge-offs of $511 million, or 48 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, government stimulus programs instituted in response to the COVID-19 pandemic, and the sale of a portion of our student loan portfolio.
•Nonperforming assets (NPAs) of $7.5 billion at June 30, 2021, decreased $1.4 billion, or 16%, from December 31, 2020, predominantly driven by decreases in our commercial and industrial portfolio reflecting improvements in the economic environment, and decreases in our residential mortgage portfolios reflecting loan sales and payment deferral activities. NPAs represented 0.88% of total loans at June 30, 2021.
Earnings Performance
Wells Fargo net lossincome for second quarter 20202021 was $2.4$6.0 billion ($0.661.38 diluted loss per common share)EPS), compared with a net incomeloss of $6.2$3.8 billion ($1.301.01 diluted incomeloss per common share) in the same period a year ago. Net income decreased to a net lossincreased in second quarter 2020,2021, compared with the same period a year ago, predominantly due to a $2.2$10.8 billion decrease in net interest income, a $9.0 billion increase in our provision for credit losses, a $1.5$3.1 billion decreaseincrease in noninterest income, and a $1.1$1.2 billion increasedecrease in noninterest expense, partially offset by a $5.2$3.4 billion increase in income tax expense and a $1.1 billion decrease in income tax expense. net interest income.
Net lossincome for the first half of 20202021 was $1.7$10.7 billion ($2.40 diluted EPS), compared with a net incomeloss of $12.1$2.9 billion ($0.94 diluted loss per common share) in the same period a year ago. Net income decreased to a net lossincreased in the first half of 2020,2021, compared with the same period a year ago, predominantly due to a $3.2$15.8 billion decrease in provision for credit losses and a $6.0 billion increase in noninterest income, partially offset by a $4.0 billion increase in income tax expense and a $3.6 billion decrease in net interest income, a $12.2 billion increase in our provision for credit losses, a $4.4 billion decrease in noninterest income, and a $234 million increase in noninterest expense, partially offset by a $5.9 billion decrease in income tax expense.income.
Revenue, the sum of net interest income and noninterest income, was $17.8 billion in second quarter 2020, compared with $21.6 billion in the same period a year ago. Revenue for the first half of 2020 was $35.6 billion, compared with $43.2 billion in the same period a year ago. Net interest income represented 55% of revenue in second quarter 2020, compared with 56% in the same period a year ago, and 60% of revenue in the first half of 2020, compared with 57% in the same period a year ago. Noninterest income represented 45% of revenue in second quarter 2020, compared with 44% in the same period a year ago, and 40% of revenue in the first half of 2020, compared with 43% in the same period a year ago.

Earnings Performance (continued)




Net Interest Income
Net interest income is the interest earned on debt securities, loans (including yield-related loan fees) and other interest-earning assets minus the interest paid on deposits, short-term borrowings and long-term debt. The net interest margin is the average yield on earning assets minus the average interest rate paid for deposits and our other sources of funding. Net interest income and net interest margin decreased in both the second quarter and first half of 2021, compared with the same periods a year ago, due to the impact of lower interest rates and lower loan balances reflecting soft demand and elevated prepayments, as well as higher mortgage-backed securities premium amortization, partially offset by a reduction in long-term debt. The first half of 2021 was also impacted by unfavorable hedge ineffectiveness accounting results.
Table 1 presents the individual components of net interest income and the net interest margin. Net interest income and net interest margin are presented on a taxable-equivalent basis in Table 1 to consistently reflect income from taxable and tax-exempt loans and debt and equity securities based on a 21% federal statutory tax rate for the periods endingended June 30, 20202021 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 $10.0 billion and $21.5 billion in the second quarter and first half of 2020, respectively, compared with $12.3 billion and $24.7 billion for the same periods a year ago. Net interest margin on a taxable-equivalent basis was 2.25% and 2.42% in the second quarter and first half of 2020, respectively, compared with 2.82% and 2.86% for the same periods 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 the second quarter and first half ofour 2020 compared with the same periods 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.Form 10-K.
Average earning assets increased $40.0 billion in second quarter 2020, compared with the same period a year ago. The change was driven by increases in:
•6
average interest-earning deposits with banks of Wells Fargo & Company$35.3 billion;
•
average loans of $23.8 billion;

•
average mortgage loans held for sale of $7.5 billion; and
•
other earning assets of $3.0 billion;
partially offset by decreases in:
•
average federal funds sold and securities purchased under resale agreements of $21.7 billion; and
•
average equity securities of $7.8 billion.


Average earning assets increased $44.9 billion in the first half of 2020, compared with the same period a year ago. The change was driven by increases in:
•
average loans of $19.4 billion;
•
average interest-earning deposits with banks of $12.0 billion;
•
average mortgage loans held for sale of $7.0 billion;
•
average debt securities of $4.2 billion;
•
other earning assets of $3.0 billion; and
•
average federal funds sold and securities purchased under resale agreements of $1.1 billion;
partially offset by decreases in:
•
average equity securities of $1.7 billion.

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 non-U.S. offices. Average deposits were $1.39 trillion and $1.36 trillion in the second quarter and first half of 2020, respectively, compared with $1.27 trillion for both the second quarter and first half of 2019, and represented 143% of average loans in second quarter 2020 and 141% in the first half of 2020, compared with 134% in second quarter 2019 and 133% in the first half of 2019. Average deposits were 78% and 76% of average earning assets in the second quarter and first half of 2020, compared with 73% in both periods a year ago. The average deposit cost for second quarter 2020 was 17 basis points, down 53 basis points from a year ago, reflecting the lower interest rate environment.

Table 1: Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) (1)
Quarter ended June 30,
 20212020
(in millions)Average
balance		Interest
income/
expense		Interest
rates		Average
balance		Interest
income/
expense		Interest
rates
Assets
Interest-earning deposits with banks$255,237 70 0.11 %$176,327 51 0.12 %
Federal funds sold and securities purchased under resale agreements72,513 3 0.02 76,384 2 0.01 
Debt securities:
Trading debt securities84,612 501 2.37 96,049 663 2.76 
Available-for-sale debt securities192,418 686 1.43 232,444 1,416 2.44 
Held-to-maturity debt securities237,812 1,106 1.86 166,804 968 2.33 
Total debt securities514,842 2,293 1.78 495,297 3,047 2.46 
Loans held for sale (2)27,173 193 2.85 27,610 237 3.45 
Loans:
Commercial loans:
Commercial and industrial – U.S.248,153 1,627 2.63 310,104 1,990 2.58 
Commercial and industrial – Non-U.S.70,764 374 2.12 72,241 445 2.48 
Real estate mortgage120,526 823 2.74 123,525 930 3.03 
Real estate construction22,015 169 3.08 21,361 179 3.37 
Lease financing15,565 174 4.49 18,087 210 4.62 
Total commercial loans477,023 3,167 2.66 545,318 3,754 2.77 
Consumer loans:
Residential mortgage – first lien247,815 1,957 3.16 280,878 2,414 3.44 
Residential mortgage – junior lien20,457 211 4.13 27,700 292 4.24 
Credit card34,211 979 11.48 36,539 979 10.78 
Auto50,014 563 4.52 48,441 601 4.99 
Other consumer25,227 233 3.70 32,390 440 5.45 
Total consumer loans377,724 3,943 4.18 425,948 4,726 4.45 
Total loans (2)854,747 7,110 3.33 971,266 8,480 3.50 
Equity securities29,773 133 1.77 27,417 117 1.70 
Other9,103 1 0.04 7,715 — (0.02)
Total interest-earning assets1,763,388 9,803 2.23 1,782,016 11,934 2.69 
Cash and due from banks24,336 — 21,227 — 
Goodwill26,213 — 26,384 — 
Other (3)125,942 — 117,553 — 
Total noninterest-earning assets176,491 — 165,164 — 
Total assets$1,939,879 9,803 1,947,180 11,934 
Liabilities
Deposits:
Demand deposits$452,184 31 0.03 %$53,592 9 0.07 %
Savings deposits422,650 32 0.03 799,949 311 0.16 
Time deposits37,116 29 0.32 86,971 224 1.04 
Deposits in non-U.S offices29,796 — — 37,682 41 0.44 
Total interest-bearing deposits941,746 92 0.04 978,194 585 0.24 
Short-term borrowings48,505 (11)(0.09)63,535 (17)(0.10)
Long-term debt181,101 712 1.57 232,395 1,237 2.13 
Other liabilities27,718 101 1.47 29,947 116 1.53 
Total interest-bearing liabilities1,199,070 894 0.30 1,304,071 1,921 0.59 
Noninterest-bearing demand deposits494,078 — 408,462 — 
Other noninterest-bearing liabilities55,763 — 50,575 — 
Total noninterest-bearing liabilities549,841 — 459,037 — 
Total liabilities1,748,911 894 1,763,108 1,921 
Total equity (3)190,968 — 184,072 — 
Total liabilities and equity$1,939,879 894 1,947,180 1,921 
Interest rate spread on a taxable-equivalent basis (3)1.93 %2.10 %
Net interest income and net interest margin on a taxable-equivalent basis (3)$8,909 2.02 %$10,013 2.25 %

(continued on following page)
  Quarter ended June 30, 
     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$176,327
 0.12 % $51
 141,045
 2.33% $819
Federal funds sold and securities purchased under resale agreements76,384
 0.01
 2
 98,130
 2.44
 598
Debt securities (2):            
Trading debt securities96,049
 2.76
 663
 86,514
 3.45
 746
Available-for-sale debt securities:           
Securities of U.S. Treasury and federal agencies9,452
 0.83
 19
 15,402
 2.21
 85
Securities of U.S. states and political subdivisions35,728
 2.98
 267
 45,769
 4.02
 460
Mortgage-backed securities:           
Federal agencies143,600
 2.33
 837
 149,761
 2.99
 1,120
Residential and commercial4,433
 2.27
 25
 5,562
 4.02
 56
Total mortgage-backed securities148,033
 2.33
 862
 155,323
 3.03
 1,176
Other debt securities39,231
 2.75
 268
 45,063
 4.40
 494
Total available-for-sale debt securities232,444
 2.44
 1,416
 261,557
 3.39
 2,215
Held-to-maturity debt securities:           
Securities of U.S. Treasury and federal agencies48,574
 2.14
 258
 44,762
 2.19
 244
Securities of U.S. states and political subdivisions14,168
 3.81
 135
 6,958
 4.06
 71
Federal agency and other mortgage-backed securities104,047
 2.21
 575
 95,506
 2.64
 632
Other debt securities15
 2.58
 —
 58
 3.86
 —
Total held-to-maturity debt securities166,804
 2.33
 968
 147,284
 2.57
 947
Total debt securities495,297
 2.46
 3,047
 495,355
 3.16
 3,908
Mortgage loans held for sale (3)25,960
 3.55
 230
 18,464
 4.22
 195
Loans held for sale (3)1,650
 1.87
 7
 1,642
 4.80
 20
Loans:           
Commercial loans:           
Commercial and industrial – U.S.310,104
 2.58
 1,990
 285,084
 4.47
 3,176
Commercial and industrial – Non-U.S.72,241
 2.48
 445
 62,905
 3.90
 611
Real estate mortgage123,525
 3.03
 930
 121,869
 4.58
 1,390
Real estate construction21,361
 3.37
 179
 21,568
 5.36
 288
Lease financing18,087
 4.34
 196
 19,133
 4.71
 226
Total commercial loans545,318
 2.76
 3,740
 510,559
 4.47
 5,691
Consumer loans:           
Real estate 1-4 family first mortgage280,878
 3.44
 2,414
 286,169
 3.88
 2,776
Real estate 1-4 family junior lien mortgage27,700
 4.24
 292
 32,609
 5.75
 468
Credit card36,539
 10.78
 979
 38,154
 12.65
 1,204
Automobile48,441
 4.99
 601
 45,179
 5.23
 589
Other revolving credit and installment32,390
 5.45
 440
 34,790
 7.12
 617
Total consumer loans425,948
 4.45
 4,726
 436,901
 5.18
 5,654
Total loans (3)971,266
 3.50
 8,466
 947,460
 4.80
 11,345
Equity securities27,417
 1.70
 117
 35,215
 2.70
 237
Other7,715
 (0.02) —
 4,693
 1.76
 20
Total earning assets$1,782,016
 2.68 % $11,920
 1,742,004
 3.94% $17,142
Funding sources           
Deposits:           
Interest-bearing checking$53,592
 0.07 % $9
 57,549
 1.46% $210
Market rate and other savings799,949
 0.16
 311
 690,677
 0.59
 1,009
Savings certificates27,051
 1.11
 75
 30,620
 1.62
 124
Other time deposits59,920
 1.01
 149
 96,887
 2.61
 630
Deposits in non-U.S. offices37,682
 0.44
 41
 51,875
 1.86
 240
Total interest-bearing deposits978,194
 0.24
 585
 927,608
 0.96
 2,213
Short-term borrowings63,535
 (0.10) (17) 114,754
 2.26
 646
Long-term debt232,395
 2.13
 1,237
 236,734
 3.21
 1,900
Other liabilities29,947
 1.53
 116
 24,314
 2.18
 132
Total interest-bearing liabilities1,304,071
 0.59
 1,921
 1,303,410
 1.50
 4,891
Portion of noninterest-bearing funding sources477,945
 —
 —
 438,594
 —
 —
Total funding sources$1,782,016
 0.43
 1,921
 1,742,004
 1.12
 4,891
Net interest margin and net interest income on a taxable-equivalent basis (4)  2.25 % $9,999
   2.82% $12,251
Noninterest-earning assets           
Cash and due from banks$21,227
       19,475
      
Goodwill26,384
       26,415
      
Other119,312
     112,733
    
Total noninterest-earning assets$166,923
     158,623
    
Noninterest-bearing funding sources            
Deposits$408,462
     341,371
    
Other liabilities52,298
     56,161
    
Total equity184,108
     199,685
    
Noninterest-bearing funding sources used to fund earning assets(477,945)     (438,594)    
Net noninterest-bearing funding sources$166,923
     158,623
    
Total assets$1,948,939
     1,900,627
    
            
Average prime rate  3.25 %     5.50%  
Average three-month London Interbank Offered Rate (LIBOR)  0.60
     2.51
  
(1)Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.Wells Fargo & Company7

Earnings Performance (continued)
(continued from previous page)

Six months ended June 30,
20212020
(in millions) Average 
balance 		Interest 
income/
expense 		Interest ratesAverage 
balance 		Interest 
income/ 
expense 		Interest rates
Assets
Interest-earning deposits with banks$239,425 127 0.11 %$152,924 432 0.57 %
Federal funds sold and securities purchased under resale agreements72,332 10 0.03 91,969 382 0.84 
Debt securities:
Trading debt securities85,990 1,035 2.41 98,556 1,433 2.91 
Available-for-sale debt securities199,642 1,527 1.53 242,501 3,226 2.66 
Held-to-maturity debt securities227,377 2,133 1.88 162,348 1,977 2.44 
Total debt securities513,009 4,695 1.83 503,405 6,636 2.64 
Loans held for sale (2)30,843 524 3.41 24,728 446 3.62 
Loans:
Commercial loans:
Commercial and industrial – U.S.250,510 3,223 2.59 299,303 4,536 3.05 
Commercial and industrial – Non-U.S.68,106 712 2.11 71,451 1,001 2.82 
Real estate mortgage120,629 1,635 2.73 122,656 2,117 3.47 
Real estate construction21,886 335 3.09 20,819 408 3.94 
Lease financing15,681 358 4.55 18,687 443 4.74 
Total commercial loans476,812 6,263 2.64 532,916 8,505 3.21 
Consumer loans:
Residential mortgage – first lien256,982 4,025 3.13 287,217 5,064 3.53 
Residential mortgage – junior lien21,384 439 4.13 28,303 662 4.70 
Credit card34,705 2,012 11.69 38,147 2,186 11.53 
Auto49,351 1,123 4.59 48,350 1,197 4.98 
Other consumer24,807 466 3.79 33,223 974 5.89 
Total consumer loans387,229 8,065 4.18 435,240 10,083 4.65 
Total loans (2)864,041 14,328 3.33 968,156 18,588 3.85 
Equity securities29,604 270 1.82 32,475 325 2.00 
Other9,299 2 0.04 7,573 14 0.37 
Total interest-earning assets1,758,553 19,956 2.28 1,781,230 26,823 3.02 
Cash and due from banks24,466 — 20,899 — 
Goodwill26,297 — 26,386 — 
Other(3)127,851 — 119,510 — 
Total noninterest-earning assets178,614 — 166,795 — 
Total assets$1,937,167 19,956 1,948,025 26,823 
Liabilities
Deposits:
Demand deposits$448,495 64 0.03 %$58,339 144 0.50 %
Savings deposits417,153 64 0.03 781,044 1,289 0.33 
Time deposits40,552 76 0.38 99,524 690 1.39 
Deposits in non-U.S. offices30,260 — — 45,508 204 0.90 
Total interest-bearing deposits936,460 204 0.04 984,415 2,327 0.48 
Short-term borrowings53,764 (20)(0.08)83,256 275 0.66 
Long-term debt189,673 1,738 1.83 230,699 2,477 2.15 
Other liabilities28,294 210 1.49 30,073 258 1.71 
Total interest-bearing liabilities1,208,191 2,132 0.35 1,328,443 5,337 0.81 
Noninterest-bearing demand deposits478,305 — 377,894 — 
Other noninterest-bearing liabilities60,645 — 55,706 — 
Total noninterest-bearing liabilities538,950 — 433,600 — 
Total liabilities1,747,141 2,132 1,762,043 5,337 
Total equity (3)190,026 — 185,982 — 
Total liabilities and equity$1,937,167 2,132 1,948,025 5,337 
Interest rate spread on a taxable-equivalent basis (3)1.93 %2.21 %
Net interest margin and net interest income on a taxable-equivalent basis (3)
$17,824 2.04 %$21,486 2.42 %
(1)The average balance amounts represent amortized costs. The interest rates are based on interest income or expense amounts for the period and are annualized. Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
(2)Nonaccrual loans and any related income are included in their respective loan categories.
(3)Includes taxable-equivalent adjustments of $109 million and $121 million for the quarters ended June 30, 2021 and 2020, respectively, and $216 million and $264 million for the first half of 2021 and 2020, respectively, predominantly related to tax-exempt income on certain loans and securities.


(2)8Yields/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.
Wells Fargo & Company
(3)Nonaccrual loans and related income are included in their respective loan categories.
(4)
Includes taxable-equivalent adjustments of $119 million and $156 million for the quarters ended June 30, 2020 and 2019, respectively, and $259 million and $318 million for the first half of 2020 and 2019, respectively, predominantly related to tax-exempt income on certain loans and securities.




 Six months ended June 30, 
       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$152,924
 0.57% $432
 140,915
 2.33% $1,629
Federal funds sold and securities purchased under resale agreements91,969
 0.84
 382
 90,875
 2.42
 1,093
Debt securities (2):           
Trading debt securities98,556
 2.91
 1,433
 87,938
 3.52
 1,544
Available-for-sale debt securities:            
Securities of U.S. Treasury and federal agencies10,116
 1.14
 57
 14,740
 2.18
 159
Securities of U.S. states and political subdivisions37,340
 3.22
 601
 47,049
 4.02
 946
Mortgage-backed securities:           
Federal agencies151,119
 2.51
 1,899
 150,623
 3.04
 2,293
Residential and commercial4,540
 2.55
 58
 5,772
 4.17
 120
Total mortgage-backed securities155,659
 2.51
 1,957
 156,395
 3.09
 2,413
Other debt securities39,386
 3.11
 611
 45,920
 4.43
 1,011
Total available-for-sale debt securities242,501
 2.66
 3,226
 264,104
 3.44
 4,529
Held-to-maturity debt securities:           
Securities of U.S. Treasury and federal agencies47,255
 2.17
 509
 44,758
 2.20
 487
Securities of U.S. states and political subdivisions13,852
 3.82
 265
 6,560
 4.05
 133
Federal agency and other mortgage-backed securities101,221
 2.38
 1,203
 95,753
 2.69
 1,288
Other debt securities20
 2.90
 —
 60
 3.91
 1
Total held-to-maturity debt securities162,348
 2.44
 1,977
 147,131
 2.60
 1,909
Total debt securities503,405
 2.64
 6,636
 499,173
 3.20
 7,982
Mortgage loans held for sale (3)23,161
 3.69
 427
 16,193
 4.28
 347
Loans held for sale (3)1,567
 2.49
 19
 1,752
 5.04
 44
Loans:           
Commercial loans:               
Commercial and industrial – U.S.299,303
 3.05
 4,536
 285,827
 4.47
 6,345
Commercial and industrial – Non U.S.71,451
 2.82
 1,001
 62,863
 3.90
 1,215
Real estate mortgage122,656
 3.47
 2,117
 121,644
 4.58
 2,763
Real estate construction20,819
 3.94
 408
 21,999
 5.40
 589
Lease financing18,687
 4.37
 408
 19,261
 4.66
 450
Total commercial loans532,916
 3.19
 8,470
 511,594
 4.48
 11,362
Consumer loans:           
Real estate 1-4 family first mortgage287,217
 3.53
 5,064
 285,694
 3.92
 5,597
Real estate 1-4 family junior lien mortgage28,303
 4.70
 662
 33,197
 5.75
 949
Credit card38,147
 11.53
 2,186
 38,168
 12.76
 2,416
Automobile48,350
 4.98
 1,197
 45,007
 5.21
 1,163
Other revolving credit and installment33,223
 5.89
 974
 35,068
 7.13
 1,240
Total consumer loans435,240
 4.65
 10,083
 437,134
 5.22
 11,365
Total loans (3)968,156
 3.85
 18,553
 948,728
 4.82
 22,727
Equity securities32,475
 2.00
 325
 34,154
 2.63
 448
Other7,573
 0.37
 14
 4,555
 1.69
 38
Total earning assets$1,781,230
 3.02% $26,788
 1,736,345
 3.97% $34,308
Funding sources           
Deposits:               
Interest-bearing checking$58,339
 0.50% $144
 56,905
 1.44% $407
Market rate and other savings781,044
 0.33
 1,289
 689,628
 0.54
 1,856
Savings certificates28,575
 1.30
 185
 27,940
 1.46
 202
Other time deposits70,949
 1.43
 505
 97,356
 2.64
 1,275
Deposits in non-U.S. offices45,508
 0.90
 204
 53,649
 1.88
 499
Total interest-bearing deposits984,415
 0.48
 2,327
 925,478
 0.92
 4,239
Short-term borrowings83,256
 0.66
 275
 111,719
 2.24
 1,243
Long-term debt230,699
 2.15
 2,477
 234,963
 3.27
 3,827
Other liabilities30,073
 1.71
 258
 24,801
 2.23
 275
Total interest-bearing liabilities1,328,443
 0.81
 5,337
 1,296,961
 1.49
 9,584
Portion of noninterest-bearing funding sources452,787
 —
 —
 439,384
 —
 —
Total funding sources$1,781,230
 0.60
 5,337
 1,736,345
 1.11
 9,584
Net interest margin and net interest income on a taxable-equivalent basis (4)   2.42% $21,451
    2.86% $24,724
Noninterest-earning assets                 
Cash and due from banks$20,899
     19,544
    
Goodwill26,386
     26,417
    
Other121,284
     109,601
    
Total noninterest-earning assets$168,569
     155,562
    
Noninterest-bearing funding sources             
Deposits$377,894
     340,061
    
Other liabilities57,323
     55,864
    
Total equity186,139
     199,021
    
Noninterest-bearing funding sources used to fund earning assets(452,787)     (439,384)    
Net noninterest-bearing funding sources$168,569
     155,562
    
Total assets$1,949,799
     1,891,907
    
            
Average prime rate  3.82%     5.50%  
Average three-month London Interbank Offered Rate (LIBOR)  1.07
     2.60
  


Noninterest Income

Table 2: Noninterest Income
 Quarter ended June 30,  %
 Six months ended June 30,  %
(in millions)2020
 2019
 Change
 2020
 2019
 Change
Service charges on deposit accounts$930
 1,206
 (23)% $2,139
 2,300
 (7)%
Trust and investment fees:           
Brokerage advisory, commissions and other fees2,117
 2,318
 (9) 4,599
 4,511
 2
Trust and investment management687
 795
 (14) 1,388
 1,581
 (12)
Investment banking547
 455
 20
 938
 849
 10
Total trust and investment fees3,351
 3,568
 (6) 6,925
 6,941
 —
Card fees797
 1,025
 (22) 1,689
 1,969
 (14)
Other fees:          
Lending related charges and fees303
 349
 (13) 631
 696
 (9)
Cash network fees88
 117
 (25) 194
 226
 (14)
Commercial real estate brokerage commissions—
 105
 (100) 1
 186
 (99)
Wire transfer and other remittance fees99
 121
 (18) 209
 234
 (11)
All other fees88
 108
 (19) 175
 228
 (23)
Total other fees578
 800
 (28) 1,210

1,570
 (23)
Mortgage banking:          
Servicing income, net(689) 277
 NM
 (418) 641
 NM
Net gains on mortgage loan origination/sales activities1,006
 481
 109
 1,114
 825
 35
Total mortgage banking317
 758
 (58) 696

1,466
 (53)
Net gains from trading activities807
 229
 252
 871
 586
 49
Net gains on debt securities212
 20
 960
 449
 145
 210
Net gains (losses) from equity securities533
 622
 (14) (868) 1,436
 NM
Lease income334
 424
 (21) 686
 867
 (21)
Life insurance investment income163
 167
 (2) 324
 326
 (1)
All other (1)(66) 670
 NM
 240
 1,181
 (80)
Total$7,956
 9,489
 (16) $14,361

18,787
 (24)
Quarter ended June 30,Six months ended June 30,
(in millions)20212020$ Change% Change20212020$ Change% Change
Deposit-related fees$1,342 1,142 200 18 %$2,597 2,589 8 — %
Lending-related fees362 323 39 12 723 673 50 7 
Investment advisory and other asset-based fees2,794 2,254 540 24 5,550 4,760 790 17 
Commissions and brokerage services fees580 550 30 5 1,216 1,227 (11)(1)
Investment banking fees570 547 23 4 1,138 938 200 21 
Card fees1,077 797 280 35 2,026 1,689 337 20 
Servicing income, net(21)(689)668 97 (120)(418)298 71
Net gains on mortgage loan originations/sales1,357 1,006 351 35 2,782 1,114 1,668 150
Mortgage banking1,336 317 1,019 3212,662 696 1,966 282
Net gains from trading activities21 807 (786)(97)369 871 (502)(58)
Net gains on debt securities— 212 (212)(100)151 449 (298)(66)
Net gains (losses) from equity securities2,696 533 2,163 406 3,088 (868)3,956 NM
Lease income313 335 (22)(7)628 688 (60)(9)
Other379 577 (198)(34)1,046 1,525 (479)(31)
Total$11,470 8,394 3,076 37 $21,194 15,237 5,957 39 
NM – Not meaningful
(1)In second quarter 2020, insurance income was reclassified to all other noninterest income. Prior period balances have been revised to conform with the current period presentation.

Noninterest income decreased $1.5 billion and $4.4 billion in theSecond quarter 2021 vs. second quarter and first half of 2020 respectively, compared with the same periods a year ago, due to overall lower income

Deposit-related fees increased driven by the economic impact of the COVID-19 pandemic. For more information on 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.by:
Service charges on deposit accounts decreased $276 million• and $161 million in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, due to lower customer transaction volumes and higher average account balances. We have provided certain fee waivers and reversals compared with a second quarter 2020 that included elevated fee waivers due to our actions to support customers during the COVID-19 pandemic, which also negatively impacted income from service charges on deposit accounts.pandemic; and
Brokerage•higher treasury management fees on commercial accounts driven by an increase in transaction service volumes and repricing.

Investment advisory commissions and other asset-based fees decreased $201 million in second quarter 2020, compared with the same period a year ago, due to lower asset-based fees and lower transactional revenue. Brokerage advisory, commissions and other fees increased reflecting $88 million in the first half of 2020, compared with the same period a year ago, due to higher asset-based fees. Asset-based fees include fees from advisory accounts that are basedmarket valuations on a percentage of the market value of the assets as of the beginning of the quarter. All retail brokerage services are provided by our Wealth and Investment Management (WIM) operating segment. client investment assets.

For additional information on retail
brokeragecertain client investment assets, including asset composition, see the “Operating“Earnings Performance – Operating Segment Results – Wealth and Investment Management – Retail Brokerage ClientWIM Advisory Assets” sectionand “Earnings Performance – Operating Segment Results – Corporate – Wells Fargo Asset Management (WFAM) Assets Under Management” sections in this Report.
Trust
Card fees increased reflecting higher interchange fees, net of rewards, driven by increased purchase and investment management fees decreased $108 milliontransaction volumes.

Servicing income, net increased due to:
•higher income from mortgage servicing right (MSR) valuation changes and $193 millionrelated hedges driven by negative valuation adjustments in the second quarter 2020 for higher expected servicing costs and prepayment estimates due to changes in economic conditions;
partially offset by:
•first half of 2020, respectively, compared with the same periods a year ago, driven by lower trustservicing fees due to the salea lower balance of our Institutional Retirement and Trust (IRT) business in 2019.loans serviced for others resulting from prepayments.
Our assets under management (AUM) totaled $766.6 billion at
Net June 30, 2020gains on mortgage loan originations/sales, compared with $682.0 billion at June 30, 2019. Substantially all of our AUM is managed by our WIM operating segment. Our assets under administration (AUA) totaled $1.7 trillion at June 30, 2020 and $1.8 trillion at June 30, 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. increased
Our AUM and AUA included IRT client assets of $21 billion and $730 billion, respectively, at June 30, 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.driven by:
A•dditional information regarding our WIM operating segment AUM is providedhigher gains related to the re-securitization of loans we purchased from Government National Mortgage Association (GNMA) loan securitization pools in Table 4f2020; and the related discussion in the “Operating Segment Results – Wealth and Investment
Earnings Performance (•continued)higher residential real estate held for sale (HFS) origination volumes in our retail production channel;




Management – Trust and Investment Client Assets Under Management” section in this Report.
Card fees decreased $228 million and $280 million in the second quarter andfirst half of 2020, respectively, compared with the same periods a year ago. The decrease in the second quarter and first half of 2020, compared with the same periods a year ago, was due to lower interchange fees driven by decreased purchase volume due to the impact of the COVID-19 pandemic, and higher fee waivers as part of our actions to support customers during the COVID-19 pandemic, partially offset by by:
•lower rewards costs.HFS origination volumes in our correspondent production channel; and
Other fees decreased $222 million•lower margins in our retail and $360 million in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, driven by a decline in commission fees as a result of 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. Additionally, we waived or reversed certain lending related charges or fees as part of our actions to support customers during the COVID-19 pandemic, which also negatively impacted other fees.correspondent production channels.
Mortgage
banking noninterest income, consisting of netFor additional information on servicing income and net gains on mortgage loan origination/ originations/sales, activities, decreased $441 million and $770 million in the ssecond quarter and first half of 2020, respectively, compared with the same periods a year ago. For more information, seeee Note 119 (Mortgage Banking Activities) to Financial Statements in this Report.
Our portfolio of loans serviced for others was $1.6 trillion at both June 30, 2020, andDecember 31, 2019. At June 30, 2020, the ratio of combined residential and commercial mortgage servicing rights (MSRs) to related loans serviced for others was 0.52%, compared with 0.79% at December 31, 2019.
Net servicing income decreased $1.0 billion and $1.1 billion in the second quarter and first half of 2020, respectively, compared with the same periods a year ago. The decrease in net servicing income in the second quarter and first half of 2020, compared with the same periods a year ago, was driven by MSR valuation losses, net of hedge results, reflecting higher expected servicing costs and updates to other valuation model assumptions affecting prepayment estimates that are independent of interest rate changes, such as changes in home prices and in customer credit profiles. The decrease in net servicing income in the second quarter and first half of 2020 also reflected continued prepayments and the impacts of customer accommodations associated with the COVID-19 pandemic. See the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section in this Report for additional information regarding our MSRs risks and hedging approach.
Net gains on mortgage loan origination/sales activities increased $525 million and $289 million in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, due to higher residential real estate held for sale origination volumes and margins.
The production margin on residential held for sale mortgage loan originations, which represents net gains on residential mortgage loan origination/sales activities divided by total residential held for sale mortgage loan originations, provides a measure of the profitability of our residential mortgage origination activity. The increase in the production margin in the second quarter and first half of 2020,compared with the same periods a year ago, was due to higher margins in both our retail and correspondent production channels, as well as a shift to more
retail origination volume, which has a higher margin. Table 2a presents the information used in determining the production margin.

Table 2aSelected Mortgage Production Data
  Quarter ended June 30,  Six months ended June 30, 
  2020
2019
 2020
2019
Net gains on mortgage loan origination/sales activities (in millions):      
Residential(A)$866
322
 $1,226
554
Commercial 83
83
 106
130
Residential pipeline and unsold/repurchased loan management (1) 57
76
 (218)141
Total $1,006
481
 $1,114
825
Application data (in billions):      
Mortgage applications $84
90
 192
154
First mortgage unclosed pipeline (2) 50
44
 50
44
Residential real estate originations (in billions):      
Held for sale(B)$43
33
 $76
55
Held for investment 16
20
 31
31
Total $59
53
 $107
86
Production margin on residential held for sale mortgage loan originations(A)/(B)2.04%0.98
 1.61%1.01%
(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.
(2)
Balances presented are as of June 30, 2020 and 2019.
Net gains from trading activities which reflect unrealized changes decreased driven by fewer gains in fair value of our trading positionsasset-backed finance and realized gains and losses, increased $578 million and $285 million in the second quarter andfirst half of 2020, respectively,credit products due to limited credit spread movement compared with the same periods a year ago. The increase in the second quarter and first half of 2020, compared with the same periods a year ago, reflected trading volatility created by the COVID-19 pandemic. The increase in second quarter 2020 compared with the same period a year ago, alsothat reflected higher gains driven by market liquidity and improvementsvolatility in credit spreads from the energy sector, as well as increased demand for interest rate productsimpact of the COVID-19 pandemic.

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

Net gains (losses) from equity securities increased driven by:
•higher unrealized gains on nonmarketable equity securities from our affiliated venture capital and private equity businesses; and
•higher realized gains on the first halfsales of 2020, compared with the same period a year ago, also reflected higher income driven by demand for interest rate products due to lower interest rates, as well as higher equities and credit trading volume, equity securities;
partially offset by by:
•lower income from wider credit spreadsgains on deferred compensation plan investments (largely offset in personnel expense). Refer to Table 3a for the results for our deferred compensation plan and related hedges.

Other income decreased due to:
•lower trading volumesgains on the sales of residential mortgage loans which were reclassified to held for sale in asset-backed securities. Net gains from trading activities exclude interest2019; and dividend income
•higher valuation losses related to the retained litigation risk, including the timing and expense on trading securities, which are reported within interest income from debt and equity securities and other interest income.amount of final settlement, associated with shares of Visa Class B common stock that
Wells Fargo & Company9

Earnings Performance (continued)
we sold. For additional information, about trading activities, see the “Risk Management – Asset/Liability Management – Market Risk-Trading Activities”Risk – Equity Securities” section in our 2020 Form 10-K;
partially offset by:
•a gain on the sale of a portion of our student loan portfolio.

First half of 2021 vs. first half of 2020

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

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

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

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

Servicing income, net increased reflecting:
•higher income from MSR valuation changes and related hedges driven by negative valuation adjustments to the MSR in the first half of 2020 for higher expected servicing costs and prepayment estimates due to changes in economic conditions;
partially offset by:
•lower servicing fees due to a lower balance of loans serviced for others resulting from prepayments.

Net gains on mortgage loan originations/sales increased
driven by:
•higher margins in our retail production channel;
•higher HFS origination volume in our retail production channel;
•higher gains related to the re-securitization of loans we purchased from GNMA loan securitization pools in 2020; and
•higher gains due to losses in the first half of 2020 driven by the impact of interest rate volatility on hedging activities associated with our residential mortgage loans held for sale portfolio and pipeline, as well as valuation losses on certain residential and commercial loans held for sale due to market conditions.

For additional information on servicing income and net gains on mortgage loan originations/sales, see Note 4 (Trading9 (Mortgage Banking Activities) to Financial Statements in this Report.
Net gains from debt securities increased $192 milliontrading activities decreased reflecting:
•lower client trading activity for interest rate products, equities, and $304 million in the commodities;
partially offset by:
•second quarter and first half of 2020, respectively, compared with the same periods a year ago, reflecting higher gains from the sale of agency mortgage-backed securities (MBS).client trading activity for asset-backed finance products.

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

Net gains (losses) from equity securitiesdecreased $89 million increased driven by:
•higher unrealized gains on nonmarketable equity securities from our affiliated venture capital and $2.3 billionprivate equity businesses;
•lower impairment on equity securities due to the market impact of the COVID-19 pandemic in first quarter 2020;
•higher realized gains on the sales of equity securities; and
•second quarter and first half of 2020, respectively, compared with the same periods a year ago, driven

by changes in the value ofhigher gains on deferred compensation plan investments (largely offset in personnel expense) and higher unrealized losses. The decrease in the first half of 2020, compared with the same period a year ago, also included a $1.0 billion impairment on equity securities. . Refer to Table 3a presentsfor the results for our deferred compensation plan and related investments.hedges.
Lease income decreased $90 millionand $181 million in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, driven by reductions in the size of the equipment leasing portfolio.
All Ootherther income decreased $736 million and $941 million in the second quarter and first half of 2020due to:
•, respectively, compared with the same periods a year ago. All other income includes insurance income, 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 the second quarter and first half of 2020, compared with the same periods a year ago, was driven by higher income in the second quarter and first half of 2019 fromlower gains on the sales of purchased credit-impaired (PCI)residential mortgage loans as well as lower equity method investments income in thesecond quarter and first half of 2020, partially offset by gains on the sales of loanswhich were reclassified to held for sale in 20192019; and sold
•higher valuation losses related to the retained litigation risk, including the timing and amount of final settlement, associated with shares of Visa Class B common stock that we sold. For additional information, see the “Risk Management – Asset/Liability Management – Market Risk – Equity Securities” section in theour 2020 Form 10-K;
partially offset by:
•second quarter and first half of 2020. The decrease in the first half of 2020, compared with the same period a year ago, also reflected a pre-tax gain on the sale of our Business Payroll Services business in first quarter 2019, partially offset by transition services fees in the first half of 2020 associated with the salesubstantially all of our IRT business.student loan portfolio; and
•higher income from investments accounted for under the equity method.
10Wells Fargo & Company

Noninterest Expense

Table 3: Noninterest Expense
Quarter ended June 30,Six months ended June 30,
(in millions)20212020$ Change% Change20212020$ Change% Change
Personnel$8,818 8,916 (98)(1)%$18,376 17,239 1,137 7 %
Technology, telecommunications and equipment815 672 143 21 1,659 1,470 189 13 
Occupancy735 871 (136)(16)1,505 1,586 (81)(5)
Operating losses303 1,219 (916)(75)516 1,683 (1,167)(69)
Professional and outside services1,450 1,676 (226)(13)2,838 3,282 (444)(14)
Leases (1)226 244 (18)(7)452 504 (52)(10)
Advertising and promotion132 137 (5)(4)222 318 (96)(30)
Restructuring charges(4)— (4)NM9 — 9 NM
Other866 816 50 6 1,753 1,517 236 16 
Total$13,341 14,551 (1,210)(8)$27,330 27,599 (269)(1)
 Quarter ended June 30,  %
 Six months ended June 30,  %
(in millions)2020
 2019
 Change
 2020
 2019
 Change
Personnel (1)$8,911
 8,474
 5 % $17,225
 17,682
 (3)%
Technology and equipment (1)562
 641
 (12) 1,268
 1,335
 (5)
Occupancy (2)871
 719
 21
 1,586
 1,436
 10
Core deposit and other intangibles22
 27
 (19) 45
 55
 (18)
FDIC and other deposit assessments165
 144
 15
 283
 303
 (7)
Operating losses1,219
 247
 394
 1,683
 485
 247
Outside professional services758
 821
 (8) 1,485
 1,499
 (1)
Contract services (1)634
 590
 7
 1,219
 1,120
 9
Leases (3)244
 311
 (22) 504
 597
 (16)
Advertising and promotion137
 329
 (58) 318
 566
 (44)
Outside data processing142
 175
 (19) 307
 342
 (10)
Travel and entertainment15
 163
 (91) 108
 310
 (65)
Postage, stationery and supplies108
 119
 (9) 237
 241
 (2)
Telecommunications110
 93
 18
 202
 184
 10
Foreclosed assets23
 35
 (34) 52
 72
 (28)
Insurance25
 25
 —
 50
 50
 —
All other605
 536
 13
 1,027
 1,088
 (6)
Total$14,551
 13,449
 8
 $27,599
 27,365
 1
NM – Not meaningful
(1)In second quarter 2020, personnel-related expenses were combined into a single line item, and expenses for cloud computing services were reclassified from contract services expense to technology and equipment expense. Prior period balances have been revised to conform with the current period presentation.
(2)(1)Represents expenses for both leased and owned properties.assets we lease to customers.
(3)Represents expenses for assets we lease to customers.
Noninterest expense increased $1.1 billion and $234 million in theSecond quarter 2021 vs. second quarter 2020

Personnel expense decreased driven by:
•lower salaries as a result of reduced headcount; and
•lower deferred compensation expense;
partially offset by:
•higher incentive compensation expense, including the impact of higher market valuations on stock-based compensation; and
•higher revenue-related compensation expense.

Technology, telecommunications and equipment expense increased due to higher expense for technology contracts and the reversal of a software licensing liability accrual in second quarter 2020.

Occupancy expense decreased driven by:
•lower rent expense; and
•lower cleaning fees, supplies, and equipment expenses compared with a second quarter 2020 that included higher expenses due to the COVID-19 pandemic.

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

Professional and outside services expense decreased driven by efficiency initiatives to reduce our spending on consultants and contractors.
Other expenses increased driven by a write-down of goodwill in second quarter 2021 related to the sale of a portion of our student loan portfolio.

First half of 2021 vs. first half of 2020 compared with

Personnel expense increased driven by:
•higher incentive compensation expense, including the same periods a year ago, predominantly driven byimpact of higher operating lossesmarket valuations on stock-based compensation;
•higher revenue-related compensation expense; and occupancy expense.
Personnel expense increased $437 million in second quarter 2020, compared with the same period a year ago, and decreased $457 million in the first half of 2020, compared with the same period a year ago. The increase in second quarter 2020, compared with the same period a year ago, was driven by •higher deferred compensation expense (offset in net gains from equity securities), and higher salaries expense. The decrease in the first half of 2020, compared with the same period a year ago, was driven by lower deferred compensation expense (offset in net losses from equity securities), expense;
partially offset by an increase inby:
•lower salaries and employee benefits expense. The second quarter and first halfas a result of 2020 also reflected higher salaries driven by annual salary increases and higher staffing levels, as well as increased employee benefits and incentive compensation expense related to the COVID-19 pandemic, including additional payments for
reduced headcount.
certain customer-facing and support employees and back-up childcare services.
Table 3a presents results for our deferred compensation plan and related hedges. Historically, we used equity securities as economic hedges of our deferred compensation plan liabilities. Changes in the fair value of the equity securities used as economic hedges were recorded in net gains (losses) from equity securities within noninterest income. In second quarter 2020, we entered into arrangements to transition our economic hedges of the deferred compensation plan liabilities from equity securities to derivative instruments. ChangesAs a result of this transition, changes in fair value of derivatives used as economic hedges are presented within the same financial statement line as the related business activity being hedged. As a result of this transition, we presented the net gains/(losses) on derivatives from economic hedges onto economically hedge the deferred compensation plan liabilitiesare reported in personnel expense.expense rather than in net gains (losses) from equity securities within noninterest income. For additional information on the derivatives used in the economic hedges, see Note 1514 (Derivatives) to Financial Statements in this Report.
Earnings Performance (continued)




Table 3a: Deferred Compensation and Related Hedges
Quarter ended June 30,Six months ended June 30,
(in millions)2021202020212020
Net interest income$— 3 $— 15 
Net gains (losses) from equity securities1 346 1 (275)
Total revenue (losses) from deferred compensation plan investments1 349 1 (260)
Decrease (increase) in deferred compensation plan liabilities(257)(490)(422)108 
Net derivative gains from economic hedges of deferred compensation239 141 399 141
Decrease (increase) in personnel expense(18)(349)(23)249 
Loss before income tax expense$(17)— $(22)(11)
Technology, telecommunications and equipment expense increased due to higher expense for technology contracts and
the reversal of a software licensing liability accrual in second quarter 2020.

 Quarter ended June 30,  Six months ended June 30, 
(in millions)2020
 2019
 2020
 2019
Net interest income$3
 18
 $15
 31
Net gains (losses) from equity securities346
 87
 (275) 432
Total revenue (losses) from deferred compensation plan investments349
 105
 (260) 463
Change in deferred compensation plan liabilities490
 114
 (108) 471
Net derivative (gains) losses from economic hedges of deferred compensation(141) —
 (141) —
Personnel expense349
 114
 (249) 471
Income (loss) before income tax expense$—
 (9) $(11) (8)
Wells Fargo & Company11

Earnings Performance (continued)
Occupancy expense increased $152 million and $150 million in the decreased driven by:
•second quarterlower rent expense; and first half of 2020
•, respectively, compared with the same periods a year ago, due to additionallower cleaning fees, supplies, and equipment expenses relatedcompared with a first half of 2020 that included higher expenses due to the COVID-19 pandemic.

Operating losses increased $1.0 billion and $1.2 billion in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, due to higherdecreased driven by lower expense for litigation accruals and customer remediation accruals. The increase in customer remediation accruals reflected expansions of the population of affected customers, remediation payments, and/or remediation time frames for a variety of matters.
Outside professional
Professional and contractoutside services expense decreased $19 million in second quarter 2020, compared with the same period a year ago,driven by efficiency initiatives to reduce our spending on consultants and increased $85 million in the first half of 2020, compared with the same period a year ago. The decrease in second quarter 2020, compared with the same period a year ago, was due to lower legal expenses and reduced project spending. The increase in the first half of 2020, compared with the same period a year ago, was due to an increase in project spending, partially offset by lower legal expenses.contractors.

Advertising and promotion expense decreased $192 million and $248 million in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, driven by decreasesa continued reduction in marketing and brand campaign volumes due to the impact of the COVID-19 pandemic.
Travel and entertainment expense decreased $148 million and $202 million i
Restructuring chargesn 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 thesecond quarter and first half of 20202021 related to the sale of substantially all of our student loan portfolio;
•, respectively, compared with the same periods a year ago, 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 increased $69 million in second quarter 2020, compared with the same period a year ago, and decreased $61 million in the first half of 2020, compared with the same period a year ago. The increase in second quarter 2020, compared with the same period a year ago, was due to higher pension plan settlement expenses and lower gains on the extinguishment of debt, partially offset by a reduction in the insurance claims reserve and lower pension benefit plan expenses. The decrease in the first half of 2020, compared with the same period a year ago, was due to a reduction in the insurance claims reserve and lower pension benefit plan expenses, partially offset by higher pension plan settlement expenses.

Income Tax Expense
Income tax benefitexpense was $3.9 billion and $3.8$1.4 billion in the second quarter and first half of 2020, respectively,2021, compared with an income tax expensebenefit of $1.3 billion and $2.2$2.0 billion in the same periodsperiod a year ago. The decrease ineffective income tax rate was 19.3% for second quarter 2021, compared with 34.2% for the same period a year ago.
Income tax expense towas $2.3 billion in the first half of 2021, compared with an income tax benefit of $1.6 billion in the same period a year ago. Theeffective income tax rate was 18.0% for the first half of 2021, compared with 36.0% for the same period a year ago.
The increase in our income tax expense for both the second quarter and first half of 2020,2021, compared with the same periods a year ago, was driven by lower income. Our effectivehigher pre-tax income, tax rate was 62.2% and 68.5% for the second quarter and first half of 2020, respectively, compared with 17.3% and 15.3% for the same periods a year ago. The higher rate in second quarter 2020, compared with the same period a year ago, reflectedincluding the impact of annual income tax benefits, primarily tax credits, driven by the reported pre-tax loss, and included net discrete income tax benefitschanges in accounting policy for certain tax-advantaged investments. For additional information on the changes in accounting policy, see Note 1 (Summary of $98 million predominantly relatedSignificant Accounting Policies) to the resolution of prior period U.S. federal income tax matters.Financial Statements in this Report.



Operating Segment Results
As of June 30, 2020, we were organized forOur management reporting purposesis organized into threefour reportable operating segments: CommunityConsumer Banking and Lending; Commercial Banking; WholesaleCorporate and Investment Banking; and Wealth and Investment Management (WIM). TheseManagement. All other business activities that are not included in the reportable operating segments are definedhave 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 withand includes specific adjustments, such as for funds transfer pricing for asset/liability management, for shared revenues and expenses, and tax-equivalenttaxable-equivalent adjustments to consistently reflect income from taxable and tax-exempt sources. On February 11, 2020,sources, which allows management to assess performance consistently across the operating segments.
In March 2021, we announced a new organizational structurean agreement to sell our Corporate Trust Services business and, in second quarter 2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with five principal lines of business: Consumer and Small Business Banking; Consumer Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment Management.the current period presentation. This new organizational structure is intended to help drive operating, control, and business performance. In July 2020, the Company completed the transition to this new organizational structure, including finalizing leadership for 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. Accordingly,
In second quarter 2021, we will updateelected to change our accounting method for low-income housing tax credit (LIHTC) investments and elected to change the presentation of investment tax credits related to solar energy investments. These accounting policy changes had a nominal impact on reportable operating segment disclosures, including comparativeresults. Prior period financial results,statement line items for the Company, as well as for the reportable operating segments, have been revised to conform with the current period presentation. Our LIHTC investments are included in third quarter 2020. the Corporate and Investment Banking operating segment and our solar energy investments are included in the Commercial Banking operating segment. For additional information, see the “Recent Developments” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

12Wells Fargo & 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 included in net interest income. The net impact of the funding charges or credits is recognized in corporate treasury.
Revenue and Expense Sharing When lines of business jointly serve customers, the line of business that is responsible for providing the product or service recognizes revenue or expense with a referral fee paid or an allocation of cost to the other line of business based on established internal revenue-sharing agreements.
When a line of business uses a service provided by another line of business or enterprise function (included in Corporate), expense is generally allocated based on the cost and use of the service provided.
Taxable-Equivalent Adjustments Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax credits for low-income housing and renewable energy investments are included in noninterest income, in each case with corresponding impacts to income tax expense (benefit). Adjustments are included in Corporate, Commercial Banking, and Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial 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 segment’s use of capital.
Selected Metrics We present certain financial and nonfinancial metrics that management uses when evaluating reportable operating segment results. Management believes that these metrics are useful to investors and others to assess the performance, customer growth, and trends of reportable operating segments or lines of business.
Table 44:Management Reporting Structure
Wells Fargo & Company
Consumer Banking and LendingCommercial BankingCorporate and Investment BankingWealth and Investment ManagementCorporate

• Consumer and Small Business Banking

• Home Lending

• Credit Card

• Auto

• Personal Lending
• Middle Market Banking

• Asset-Based Lending and Leasing
• Banking

• Commercial Real Estate

• Markets
• Wells Fargo Advisors

• The Private
Bank
• Corporate Treasury

• Enterprise Functions

• Investment Portfolio

• Affiliated venture capital and private equity businesses

• Non-strategic businesses

Table 5 and the following discussion present our results by reportable operating segment. For additional description of our operating segments, including additional financial information, and the underlying management 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 second quarter 2020, we performed another 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.
Since our annual assessment, we have 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; however, we did not have evidence of goodwill impairment as of June 30, 2020. The fair value of each reporting unit exceeded its corresponding carrying amount by 18% or higher. The estimated fair value of our corporate and investment banking reporting unit, included within the Wholesale Banking operating segment, increased in second quarter 2020 as it reflected recent updates in price-earnings information used in our market approach valuations. The increase in fair value resulted in significant excess fair value over the carrying amount for the reporting unit compared with the prior quarter.
Wells Fargo & Company13

The aggregate fair value of our reporting units exceeded our market capitalization as of June 30, 2020. Our individual reporting unit fair values cannot be directly correlated to the Company’s market capitalization. However, we considered several factors in the comparison of aggregate fair value to market capitalization, including (i) control premiums adjusted for the current market environment, which include synergies that may not be reflected in current market pricing, (ii) degree of complexity and execution risk at the reporting unit level compared with the enterprise level, and (iii) issues or risks related to the Company level that may not be included in the fair value of the individual reporting units. Given the uncertainty of the severity or length of the current economic downturn, we will continue to monitor our performance against our internal forecasts as well as market conditions for circumstances that could have a further negative effect on the estimated fair values of 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, which could impact the results of our goodwill impairment assessment. We will reassess goodwill for impairment at the time of the realignment. For additional information about goodwill, see Note 1 (Summary of Significant Accounting Policies) in our 2019 Form 10-K.
Earnings Performance (continued)
Table 4:5: Operating Segment Results – Highlights
(in millions)Consumer Banking and LendingCommercial BankingCorporate and Investment BankingWealth and Investment ManagementCorporate (1)Reconciling Items (2)Consolidated Company
Quarter ended June 30, 2021
Net interest income$5,618 1,202 1,783 610 (304)(109)8,800 
Noninterest income3,068 906 1,555 2,926 3,327 (312)11,470 
Total revenue8,686 2,108 3,338 3,536 3,023 (421)20,270 
Provision for credit losses(367)(382)(501)24 (34)— (1,260)
Noninterest expense6,202 1,443 1,805 2,891 1,000 — 13,341 
Income (loss) before income tax expense (benefit)2,851 1,047 2,034 621 2,057 (421)8,189 
Income tax expense (benefit)713 261 513 156 223 (421)1,445 
Net income before noncontrolling interests2,138 786 1,521 465 1,834 — 6,744 
Less: Net income (loss) from noncontrolling interests— 2 (2)— 704 — 704 
Net income$2,138 784 1,523 465 1,130 — 6,040 
Quarter ended June 30, 2020
Net interest income$5,717 1,554 1,963 719 60 (121)9,892 
Noninterest income1,891 797 2,096 2,487 1,318 (195)8,394 
Total revenue7,608 2,351 4,059 3,206 1,378 (316)18,286 
Provision for credit losses3,102 2,295 3,756 255 126 — 9,534 
Noninterest expense6,933 1,580 2,044 2,743 1,251 — 14,551 
Income (loss) before income tax expense (benefit)(2,427)(1,524)(1,741)208 1 (316)(5,799)
Income tax expense (benefit)(650)(379)(408)52 (300)(316)(2,001)
Net income (loss) before noncontrolling interests(1,777)(1,145)(1,333)156 301 — (3,798)
Less: Net income from noncontrolling interests— 1 — — 47 — 48 
Net income (loss)$(1,777)(1,146)(1,333)156 254 — (3,846)
Six months ended June 30, 2021
Net interest income$11,233 2,456 3,562 1,267 (694)(216)17,608 
Noninterest income6,107 1,733 3,380 5,813 4,744 (583)21,194 
Total revenue17,340 4,189 6,942 7,080 4,050 (799)38,802 
Provision for credit losses(786)(781)(785)(19)63 — (2,308)
Noninterest expense12,469 3,073 3,638 5,919 2,231 — 27,330 
Income (loss) before income tax expense (benefit)5,657 1,897 4,089 1,180 1,756 (799)13,780 
Income tax expense (benefit)1,415 473 1,013 296 (52)(799)2,346 
Net income before noncontrolling interests4,242 1,424 3,076 884 1,808 — 11,434 
Less: Net income (loss) from noncontrolling interests— 3 (2)— 757 — 758 
Net income$4,242 1,421 3,078 884 1,051 — 10,676 
Six months ended June 30, 2020
Net interest income$11,719 3,287 3,984 1,557 939 (264)21,222 
Noninterest income4,538 1,409 3,483 4,919 1,303 (415)15,237 
Total revenue16,257 4,696 7,467 6,476 2,242 (679)36,459 
Provision for credit losses4,671 3,336 4,881 263 388 — 13,539 
Noninterest expense13,190 3,153 3,914 5,400 1,942 — 27,599 
Income (loss) before income tax expense (benefit)(1,604)(1,793)(1,328)813 (88)(679)(4,679)
Income tax expense (benefit)(445)(442)(307)204 21 (679)(1,648)
Net income (loss) before noncontrolling interests(1,159)(1,351)(1,021)609 (109)— (3,031)
Less: Net income (loss) from noncontrolling
interests
— 2 — — (103)— (101)
Net income (loss)$(1,159)(1,353)(1,021)609 (6)— (2,930)
(1)All other business activities that are not included in the reportable operating segments have been included in Corporate. For additional information, see the “Corporate” section below. In March 2021, we announced an agreement to sell our Corporate Trust Services business and, in second quarter 2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation.
(2)Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax credits for low-income housing and renewable energy investments are included in noninterest income, in each case with corresponding impacts to income tax expense (benefit). Adjustments are included in Corporate, Commercial Banking, and Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial results.
(income/expense in millions, Community
Banking 		  
Wholesale
Banking
  
Wealth and
Investment Management
  Other (1)  
Consolidated
Company
 
balance sheet data in billions) 2020
 2019
 2020
 2019
 2020
 2019
 2020
 2019
 2020
 2019
Quarter ended June 30,                    
Revenue $8,766
 11,805
 6,563
 7,065
 3,660
 4,050
 (1,153) (1,336) 17,836
 21,584
Provision (reversal of provision) for credit losses 3,378
 479
 6,028
 28
 257
 (1) (129) (3) 9,534
 503
Net income (loss) (331) 3,147
 (2,143) 2,789
 180
 602
 (85) (332) (2,379) 6,206
Average loans $449.3
 457.7
 504.3
 474.0
 78.7
 75.0
 (61.0) (59.2) 971.3
 947.5
Average deposits 848.5
 777.6
 441.2
 410.4
 171.8
 143.5
 (74.8) (62.5) 1,386.7
 1,269.0
Goodwill 16.7
 16.7
 8.4
 8.4
 1.3
 1.3
 —
 —
 26.4
 26.4
Six months ended June 30,                    
Revenue $18,262
 23,555
 12,380
 14,176
 7,375
 8,129
 (2,464) (2,667) 35,553
 43,193
Provision (reversal of provision) for credit losses 5,096
 1,189
 8,316
 162
 265
 3
 (138) (6) 13,539
 1,348
Net income (loss) (176) 5,970
 (1,832) 5,559
 643
 1,179
 (361) (642) (1,726) 12,066
Average loans $456.0
 457.9
 494.4
 475.2
 78.6
 74.7
 (60.8) (59.1) 968.2
 948.7
Average deposits 823.5
 771.6
 448.9
 410.1
 161.6
 148.3
 (71.7) (64.5) 1,362.3
 1,265.5
Goodwill 16.7
 16.7
 8.4
 8.4
 1.3
 1.3
 —
 —
 26.4
 26.4
(1)14Includes the elimination of certain items that are included in more than one business segment, most of which represents products and services for WIM customers served through Community Banking distribution channels.Wells Fargo & Company
Earnings Performance (continued)




CommunityConsumer Banking and Lending offers a complete line of diversified financial products and services for consumers and small businesses with annual sales generally up to $5 million in which the owner generally is the financial decision maker.million. These financial products and services include checking and savings accounts, credit and
debit cards, automobile, student, mortgage,as well as home, equityauto, personal, and small business lending, as well as referrals to Wholesale Banking
lending. Table 5a and WIM business partners. The Community Banking segment also includes the results of our Corporate Treasury activities net of allocations (including funds transfer pricing, capital, liquidity and certain corporate expenses) in support of other segments and results of investments in our affiliated venture capital and private equity partnerships. Table 4a provides5b provide additional financial information for Community Banking.Consumer Banking and Lending.
Table 4a:5a: Consumer Banking and Lending – Income Statement and Selected Metrics
Quarter ended June 30,Six months ended June 30,
($ in millions, unless otherwise noted)20212020$ Change% Change20212020$ Change% Change
Income Statement
Net interest income$5,618 5,717 (99)(2)%$11,233 11,719 (486)(4)%
Noninterest income:
Deposit-related fees732 575 157 27 1,393 1,454 (61)(4)
Card fees1,017 749 268 36 1,909 1,568 341 22 
Mortgage banking1,158 256 902 352 2,417 598 1,819 304 
Other161 311 (150)(48)388 918 (530)(58)
Total noninterest income3,068 1,891 1,177 62 6,107 4,538 1,569 35 
Total revenue8,686 7,608 1,078 14 17,340 16,257 1,083 7 
Net charge-offs359 553 (194)(35)729 1,174 (445)(38)
Change in the allowance for credit losses(726)2,549 (3,275)NM(1,515)3,497 (5,012)NM
Provision for credit losses(367)3,102 (3,469)NM(786)4,671 (5,457)NM
Noninterest expense6,202 6,933 (731)(11)12,469 13,190 (721)(5)
Income (loss) before income tax expense (benefit)2,851 (2,427)5,278 NM5,657 (1,604)7,261 NM
Income tax expense (benefit)713 (650)1,363 NM1,415 (445)1,860 NM
Net income (loss)$2,138 (1,777)3,915 NM$4,242 (1,159)5,401 NM
Revenue by Line of Business
Consumer and Small Business Banking$4,714 4,401 313 7 $9,264 9,262 2 — 
Consumer Lending:
Home Lending2,072 1,477 595 40 4,299 3,353 946 28 
Credit Card1,363 1,196 167 14 2,709 2,571 138 5 
Auto415 388 27 7 818 768 50 7 
Personal Lending122 146 (24)(16)250 303 (53)(17)
Total revenue$8,686 7,608 1,078 14 $17,340 16,257 1,083 7 
Selected Metrics
Consumer Banking and Lending:
Return on allocated capital (1)17.3 %(15.5)17.2 %(5.5)
Efficiency ratio (2)71 91 72 81 
Headcount (#) (period-end)116,185 133,876 (13)116,185 133,876 (13)
Retail bank branches (#)4,878 5,300 (8)4,878 5,300 (8)
Digital active customers (# in millions) (3)32.6 31.1 5 32.6 31.1 5 
Mobile active customers (# in millions) (3)26.8 25.2 6 26.8 25.2 6 
Consumer and Small Business Banking:
Deposit spread (4)1.5 %1.8 1.6 %1.9 
Debit card purchase volume ($ in billions) (5)$122.0 93.1 28.9 31 $230.5 183.7 46.8 25 
Debit card purchase transactions (# in millions) (5)2,504 2,027 24 4,770 4,222 13 
Community Banking
(continued on following page)

 Quarter ended June 30,    Six months ended June 30,   
(in millions, except average balances which are in billions)2020
 2019
 % Change 2020
 2019
 % Change
Net interest income$5,699
 7,066
 (19)% $12,486
 14,314
 (13)%
Noninterest income:           
Service charges on deposit accounts419
 704
 (40) 1,119
 1,314
 (15)
Trust and investment fees:          
Brokerage advisory, commissions and other fees (1)433
 480
 (10) 951
 929
 2
Trust and investment management (1)174
 199
 (13) 368
 409
 (10)
Investment banking (2)(67) (18) NM
 (166) (38) NM
Total trust and investment fees540
 661
 (18) 1,153
 1,300
 (11)
Card fees732
 929
 (21) 1,541
 1,787
 (14)
Other fees247
 335
 (26) 532
 667
 (20)
Mortgage banking253
 655
 (61) 593
 1,296
 (54)
Net gains (losses) from trading activities6
 (11) 155
 35
 (6) 683
Net gains on debt securities123
 15
 720
 317
 52
 510
Net gains (losses) from equity securities (3)388
 471
 (18) (640) 1,072
 NM
Other (4)359
 980
 (63) 1,126
 1,759
 (36)
Total noninterest income3,067
 4,739
 (35) 5,776
 9,241
 (37)
           
Total revenue8,766
 11,805
 (26) 18,262
 23,555
 (22)
           
Provision for credit losses3,378
 479
 605
 5,096
 1,189
 329
Noninterest expense:          
Personnel5,992
 5,436
 10
 11,447
 11,417
 —
Technology and equipment (4)648
 614
 6
 1,335
 1,283
 4
Occupancy685
 542
 26
 1,214
 1,084
 12
Core deposit and other intangibles—
 —
 —
 1
 1
 —
FDIC and other deposit assessments112
 94
 19
 180
 200
 (10)
Outside professional services460
 387
 19
 902
 703
 28
Operating losses1,037
 197
 426
 1,491
 416
 258
Other (4)(588) (58) NM
 (1,108) (203) NM
Total noninterest expense8,346
 7,212
 16
 15,462
 14,901
 4
Income (loss) before income tax expense and noncontrolling interests(2,958) 4,114
 NM
 (2,296) 7,465
 NM
Income tax expense (benefit)(2,666) 838
 NM
 (2,022) 1,262
 NM
Less: Net income (loss) from noncontrolling interests (5)39
 129
 (70) (98) 233
 NM
Net income (loss)$(331) 3,147
 NM
 $(176) 5,970
 NM
Average loans$449.3
 457.7
 (2) $456.0
 457.9
 —
Average deposits848.5
 777.6
 9
 823.5
 771.6
 7
Wells Fargo & Company15

Earnings Performance (continued)
(continued from previous page)

Quarter ended June 30,Six months ended June 30,
($ in millions, unless otherwise noted)20212020$ Change% Change20212020$ Change% Change
Home Lending:
Mortgage banking:
Servicing income, net$(76)(666)590 89%$(199)(409)210 51 %
Net gains on mortgage loan originations/sales1,234 922 312 342,616 1,007 1,609 160
Total mortgage banking$1,158 256 902 352$2,417 598 1,819 304
Originations ($ in billions):
Retail$36.9 30.5 6.4 21$70.5 53.6 16.9 32
Correspondent16.3 28.7 (12.4)(43)34.5 53.6 (19.1)(36)
Total originations$53.2 59.2 (6.0)(10)$105.0 107.2 (2.2)(2)
% of originations held for sale (HFS)65.6 %71.8 70.7 %70.7 
Third-party mortgage loans serviced (period-end) ($ in billions) (6)$769.4 989.5 (220.1)(22)$769.4 989.5 (220.1)(22)
Mortgage servicing rights (MSR) carrying value (period-end)6,717 6,819 (102)(1)6,717 6,819 (102)(1)
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) (6)0.87 %0.69 0.87 %0.69 
Home lending loans 30+ days or more delinquency rate (7)(8)0.51 0.54 0.51 0.54 
Credit Card:
Point of sale (POS) volume ($ in billions)$25.5 17.5 8.0 46$46.6 37.4 9.2 25
New accounts (# in thousands) (9)323 255 27589 570 3
Credit card loans 30+ days or more delinquency rate (8)1.46 %2.10 1.46 %2.10 
Auto:
Auto originations ($ in billions)$8.3 5.6 2.7 48$15.3 12.1 3.2 26
Auto loans 30+ days or more delinquency rate (8)1.30 %1.70 1.30 %1.70 
Personal Lending:
New funded balances$565 315 250 79$978 982(4)—
NM – Not meaningful
(1)Represents income on products and services for WIM customers served through Community Banking distribution channels which 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)In second quarter 2020, insurance income was reclassified to other noninterest income, and expenses for cloud computing services were reclassified from contract services expense (within other noninterest expense) to technology and equipment expense. Prior period balances have been revised to conform with the current period presentation.
(5)Reflects results attributable to noncontrolling interests predominantly associated with the Company’s consolidated venture capital investments.
(1)Return on allocated capital is segment net income (loss) applicable to common stock divided by segment average allocated capital. Segment net income (loss) applicable to common stock is segment net income (loss) less allocated preferred stock dividends.
(2)Efficiency ratio is segment noninterest expense divided by segment total revenue (net interest income and noninterest income).
Community Banking reported(3)Digital and mobile active customers is the number of consumer and small business customers who have logged on via a net lossdigital 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 $331 millionVeterans Affairs (VA) and loans held for sale.
(8)Beginning in second quarter 2020, customer payment deferral activities instituted in response to the COVID-19 pandemic may have delayed the recognition of delinquencies for those customers who would have otherwise moved into past due status.
(9)Excludes certain private label new account openings.
Second quarter 2021 vs. second quarter 2020
Revenue increased driven by:
•higher mortgage banking noninterest income due to higher gains related to the re-securitization of loans we purchased from GNMA loan securitization pools in 2020, as well as higher income from MSR valuation changes and related hedges;
•higher card fees reflecting higher interchange fees, net of rewards, driven by increased purchase and transaction volumes; and
•higher deposit-related fees driven by lower fee waivers and reversals compared with net income of $3.1 billion in the same period a year ago, and reported a net loss of $176 million in the first half of 2020, compared with net income of $6.0 billion in the same period a year ago.
Revenue decreased $3.0 billion and $5.3 billion in the second quarter and first half of 2020 respectively, compared withthat included elevated fee waivers due to our actions to support customers during the same periods a year ago. The decrease in the second quarter and first half of 2020, compared with the same periods a year ago, was driven by COVID-19 pandemic;
partially offset by:
•lower net interest income reflecting the lower interest rate environment and lower noninterestloan balances; and
•lower other income reflectingdriven by lower fees from reduced consumer spending and transaction activitygains on loan sales.

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

Noninterest expense decreased driven by:
•lower operating losses due to the impact of the COVID-19 pandemic,lower expense for litigation accruals and customer remediation accruals;
•lower personnel expense driven by additional payments in second quarter 2020 for certain customer-facing and support employees and for back-up child care services, as well as lower branch staffing expense in second quarter 2021 related to efficiency initiatives in Consumer and Small Business Banking, partially offset by higher net gains on debt securities. The decreaserevenue-related compensation in Home Lending; and
•lower expense allocated from enterprise functions, reflecting risk management and technology support related expenses;
partially offset by:
•higher charitable donations expense due to the donation of PPP processing fees; and
•higher FDIC deposit assessment expense driven by a higher assessment rate.
16Wells Fargo & Company

First half of 2021 vs. first half of 2020 compared with the same period a year ago, also reflected net losses on equity securities (including lower deferred compensation plan investment results,

which were largely offset in personnel expense).Revenue increased driven by:
The provision for credit losses increased $2.9 billion and $3.9 billion in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, due to increases in the allowance for credit losses reflecting current and forecasted economic conditions due to the impact of the COVID-19 pandemic.
Noninterest expense increased $1.1 billion and $561 million in the second quarter and first half of 2020, respectively, compared with the same periods a year ago. The increase in the second quarter and first half of 2020, compared with the same periods a year ago, was•higher mortgage banking noninterest income due to higher operating losses, occupancy expense, outside professional services expense,retail HFS origination volumes and technologymargins, and equipment expense,higher income from MSR valuation changes and related hedges; and
•higher card fees reflecting higher interchange fees, net of rewards, driven by increased purchase and transaction volumes, partially offset by lower other expenses. The increase in second quarter 2020, compared with the same period a year ago, also reflectedlate fees due to higher personnel expense.
payment rates;

Average loans decreased $8.4 billion and $1.9 billion in the second quarter and first half of 2020, respectively, compared with the same periods a year ago. The decrease in second quarter 2020, compared with the same period a year ago, was driven by lower real estate 1-4 family first mortgage loans and lower junior lien mortgage loans, partially offset by higher commercial loans. The decrease in the first half of 2020, compared with the same period a year ago, was due to lower junior lien mortgage loans, partially offset by higher automobile loans.
Average deposits increased $70.9 billion and $51.9 billion, in the second quarter and first half of 2020, respectively, compared
with the same periods a year ago, driven by customers’ preferences for liquidity due to the COVID-19 pandemic.

by:
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 June 30,    Six months ended June 30,   
(in millions, except average balances which are in billions)2020
 2019
 % Change 2020
 2019
 % Change
Net interest income$3,891
 4,535
 (14)% $8,027
 9,069
 (11)%
Noninterest income:           
Service charges on deposit accounts511
 502
 2
 1,019
 985
 3
Trust and investment fees:          
Brokerage advisory, commissions and other fees79
 74
 7
 169
 152
 11
Trust and investment management130
 117
 11
 261
 231
 13
Investment banking614
 475
 29
 1,104
 887
 24
Total trust and investment fees823
 666
 24
 1,534
 1,270
 21
Card fees65
 95
 (32) 148
 181
 (18)
Other fees330
 464
 (29) 676
 901
 (25)
Mortgage banking65
 104
 (38) 105
 172
 (39)
Net gains from trading activities794
 226
 251
 835
 559
 49
Net gains on debt securities89
 5
 NM
 132
 93
 42
Net gains (losses) from equity securities(16) 116
 NM
 (111) 193
 NM
Other (1)11
 352
 (97) 15
 753
 (98)
Total noninterest income2,672
 2,530
 6
 4,353
 5,107
 (15)
           
Total revenue6,563
 7,065
 (7) 12,380
 14,176
 (13)
           
Provision for credit losses6,028
 28
 NM
 8,316
 162
 NM
Noninterest expense:          
Personnel1,311
 1,384
 (5) 2,694
 2,894
 (7)
Technology and equipment (1)8
 13
 (38) 19
 26
 (27)
Occupancy106
 96
 10
 210
 191
 10
Core deposit and other intangibles19
 23
 (17) 38
 47
 (19)
FDIC and other deposit assessments45
 44
 2
 89
 89
 —
Outside professional services124
 231
 (46) 225
 415
 (46)
Operating losses173
 10
 NM
 177
 11
 NM
Other (1)2,177
 2,081
 5
 4,274
 4,047
 6
Total noninterest expense3,963
 3,882
 2
 7,726
 7,720
 —
Income (loss) before income tax expense (benefit) and noncontrolling interests(3,428) 3,155
 NM
 (3,662) 6,294
 NM
Income tax expense (benefit) (2)(1,286) 365
 NM
 (1,832) 734
 NM
Less: Net income from noncontrolling interests1
 1
 —
 2
 1
 100
Net income (loss)$(2,143) 2,789
 NM
 $(1,832) 5,559
 NM
Average loans$504.3
 474.0
 6
 $494.4
 475.2
 4
Average deposits441.2
 410.4
 8
 448.9
 410.1
 9
NM – Not meaningful
(1)In second quarter 2020, insurance income was reclassified to other noninterest income, and expenses for cloud computing services were reclassified from contract services expense (within other noninterest expense) to technology and equipment expense. Prior period balances have been revised to conform with the current period presentation.
(2)
Income tax expense for our Wholesale Banking operating segment included income tax credits related to low-income housing and renewable energy investments of $465 million and $956 million for the second quarter and first half of 2020, respectively, and $423 million and $850 million for the second quarter and first half of 2019, respectively.
Wholesale Banking reported alower net loss of $2.1 billion in second quarter 2020, compared with net income of $2.8 billion in the same period a year ago, and reported a net loss of $1.8 billion in the first half of 2020, compared with net income of $5.6 billion in the same period a year ago.
Net interest income decreased $644 million and $1.0 billion in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, driven by the impact ofreflecting the lower interest rate environment partially offset by higher average deposit balances and higher average loan balances.
Noninterest income increased $142 million in second quarter 2020, compared with the same period a year ago, due to increased market sensitive revenue (represents net gains (losses) from trading activities, debt securities, and equity securities) and
investment banking fees, partially offset by lower other noninterest income including lower lease income, and lower commercial real estate brokerage fees within other fees related to our sale of Eastdil in fourth quarter 2019. Noninterest income decreased $754 million in the first half of 2020, compared with the same period a year ago, due to loan balances;
•lower other income from higher amortizationdriven by lower gains on renewable energyloan sales; and community lending investments and lower lease income, lower other fees related to our sale of Eastdil, and lower mortgage banking fees, partially offset by higher investment banking fees.
The provision for credit losses increased $6.0 billion and $8.2 billion in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, due to increases in the allowance for credit losses reflecting current and
Earnings Performance (continued)




forecasted economic conditions due to the impact of the COVID-19 pandemic and higher charge-offs in the oil and gas and commercial real estate portfolios.
Noninterest expense increased $81 million and $6 million in the second quarter and first half of 2020, respectively, compared with the same periods a year ago. The increase in second quarter 2020, compared with the same period a year ago, was•lower deposit-related fees driven by higher operating losses primarily due to litigation accruals, partially offset by lower personnel expense. The increase in the first half of 2020, compared with the same period a year ago, was due to higher operating lossesfee waivers and increased regulatory and risk related expense within other noninterest expense, partially offset by lower personnel expense, and lower lease and travel expenses within other noninterest expense,reversals, as well as the impact of the sale of Eastdil in fourth quarter 2019.
Average loans increased $30.3 billion and $19.2 billion in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, reflecting broad-based growth across the lines of businesses driven by draws of revolving lineshigher average consumer deposit account balances due to the economic slowdown associated with the COVID-19 pandemic.

Provision for credit losses decreased driven by an improving economic environment.
Average deposits increased $30.8 billionNoninterest expense decreased driven by:
•lower operating losses due to lower expense for litigation accruals and $38.8 billion in the second quarter andcustomer remediation accruals;
•lower personnel expense driven by a first half of 2020 respectively,that included additional payments for certain customer-facing and support employees and for back-up child care services, as well as lower branch staffing expense in the first half of 2021 related to efficiency initiatives in Consumer and Small Business Banking, partially offset by higher revenue-related compensation in Home Lending; and
•lower advertising and promotion expense;
partially offset by:
•higher charitable donations expense due to the donation of PPP processing fees;
•higher FDIC deposit assessment expense driven by a higher assessment rate; and
•higher expense allocated from enterprise functions, reflecting risk management and technology support related expenses.
Table 5b: Consumer Banking and Lending – Balance Sheet
Quarter ended June 30,Six months ended June 30,
(in millions)20212020$ Change% Change20212020$ Change% Change
Selected Balance Sheet Data (average)
Loans by Line of Business:
Home Lending$223,229 262,209 (38,980)(15)%$233,078 269,518 (36,440)(14)%
Auto50,762 49,611 1,151 2 50,143 49,552 591 1 
Credit Card34,211 36,539 (2,328)(6)34,705 38,147 (3,442)(9)
Small Business18,768 14,887 3,881 26 19,449 12,301 7,148 58 
Personal Lending4,922 6,385 (1,463)(23)5,053 6,578 (1,525)(23)
Total loans$331,892 369,631 (37,739)(10)$342,428 376,096 (33,668)(9)
Total deposits835,752 715,144 120,608 17 812,723 683,925 128,798 19 
Allocated capital48,000 48,000 — — 48,000 48,000 — — 
Selected Balance Sheet Data (period-end)
Loans by Line of Business:
Home Lending$218,626 258,582 (39,956)(15)$218,626 258,582 (39,956)(15)
Auto51,784 49,924 1,860 4 51,784 49,924 1,860 4 
Credit Card34,936 36,018 (1,082)(3)34,936 36,018 (1,082)(3)
Small Business16,494 18,116 (1,622)(9)16,494 18,116 (1,622)(9)
Personal Lending4,920 6,113 (1,193)(20)4,920 6,113 (1,193)(20)
Total loans$326,760 368,753 (41,993)(11)$326,760 368,753 (41,993)(11)
Total deposits840,434 746,602 93,832 13 840,434 746,602 93,832 13 
Second quarter 2021 vs. second quarter 2020
Total loans (average) decreased as paydowns exceeded originations. Home lending loan balances were also impacted by actions taken to suspend certain non-conforming residential mortgage and home equity originations.

Total deposits (average) increased driven by higher levels of liquidity and savings for consumer customers reflecting government stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the COVID-19 pandemic.
First half of 2021 vs. first half of 2020
Total loans (average and period-end) decreased as paydowns exceeded originations. Home lending loan balances were also impacted by actions taken to suspend certain non-conforming residential mortgage and home equity originations.

Total deposits (average and period-end) increased driven by higher levels of liquidity and savings for consumer customers reflecting government stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the COVID-19 pandemic.
Wells Fargo & Company17

Earnings Performance (continued)
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, in second quarter 2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. Table 5c and Table 5d provide additional information for Commercial Banking.
Table 5c:Commercial Banking – Income Statement and Selected Metrics
Quarter ended June 30,Six months ended June 30,
($ in millions)20212020$ Change% Change20212020$ Change% Change
Income Statement
Net interest income$1,202 1,554 (352)(23)%$2,456 3,287 (831)(25)%
Noninterest income:
Deposit-related fees325 297 28 9 642 599 43 7 
Lending-related fees135 125 10 8 271 253 18 7 
Lease income173 189 (16)(8)347 387 (40)(10)
Other273 186 87 47 473 170 303 178 
Total noninterest income906 797 109 14 1,733 1,409 324 23 
Total revenue2,108 2,351 (243)(10)4,189 4,696 (507)(11)
Net charge-offs53 120 (67)(56)92 290 (198)(68)
Change in the allowance for credit losses(435)2,175 (2,610)NM(873)3,046 (3,919)NM
Provision for credit losses(382)2,295 (2,677)NM(781)3,336 (4,117)NM
Noninterest expense1,443 1,580 (137)(9)3,073 3,153 (80)(3)
Income (loss) before income tax expense (benefit)1,047 (1,524)2,571 NM1,897 (1,793)3,690 NM
Income tax expense (benefit)261 (379)640 NM473 (442)915 NM
Less: Net income from noncontrolling interests2 1 1 1003 2 1 50 
Net income (loss)$784 (1,146)1,930 NM$1,421 (1,353)2,774 NM
Revenue by Line of Business
Middle Market Banking$1,151 1,267 (116)(9)$2,310 2,722 (412)(15)
Asset-Based Lending and Leasing957 1,084 (127)(12)1,879 1,974 (95)(5)
Total revenue$2,108 2,351 (243)(10)$4,189 4,696 (507)(11)
Revenue by Product
Lending and leasing$1,207 1,404 (197)(14)$2,409 2,835 (426)(15)
Treasury management and payments680 780 (100)(13)1,401 1,723 (322)(19)
Other221 167 54 32 379 138 241 175 
Total revenue$2,108 2,351 (243)(10)$4,189 4,696 (507)(11)
Selected Metrics
Return on allocated capital15.2 %(24.7)13.8 %(15.0)
Efficiency ratio68 67 73 67 
Headcount (#) (period-end)19,647 21,984 (11)19,647 21,984(11)
NM – Not meaningful
Second quarter 2021 vs. second quarter 2020
Revenue decreased driven by:
•lower net interest income reflecting lower loan balances and the lower interest rate environment;
partially offset by:
•higher other noninterest income due to gains on equity securities and higher income from renewable energy investments; and
•higher deposit-related fees due to higher treasury management fees, driven by an increase in transaction service volumes and repricing.

Provision for credit losses decreased driven by an improving economic environment.
Noninterest expense decreased driven by:
•lower spending related to efficiency initiatives, including lower personnel expense from reduced headcount;
•lower lease expense reflecting a reduction in the size of the operating lease asset portfolio;
•lower professional and outside services expense reflecting decreased project-related expense; and
•lower expenses allocated from enterprise functions, including lower technology expenses.
18Wells Fargo & Company

First half of 2021 vs. first half of 2020
Revenue decreased driven by:
•lower net interest income reflecting the lower interest rate environment and lower loan balances; and
•lower lease income reflecting a reduction in the size of the operating lease asset portfolio;
partially offset by:
•higher other noninterest income due to gains on equity securities, impairments on equity securities in first quarter 2020, and higher income from renewable energy investments; and
•higher deposit-related fees due to higher treasury management fees, driven by a lower earnings credit rate due to the lower interest rate environment and repricing.
Provision for credit losses decreased driven by an improving economic environment.

Noninterest expense decreased driven by:
•lower spending related to efficiency initiatives, including lower personnel expense from reduced headcount;
•lower lease expense reflecting a reduction in the size of the operating lease asset portfolio; and
•lower professional and outside services expense reflecting decreased project-related expense;
partially offset by:
•higher expenses due to lower allocations of shared expenses with other lines of business.
Table 5d:Commercial Banking – Balance Sheet
Quarter ended June 30,Six months ended June 30,
(in millions)20212020$ Change% Change20212020$ Change% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial$117,585 158,982 (41,397)(26)%$119,248 156,645 (37,397)(24)%
Commercial real estate47,203 53,157 (5,954)(11)47,885 53,223 (5,338)(10)
Lease financing and other13,784 16,284 (2,500)(15)13,712 16,773 (3,061)(18)
Total loans$178,572 228,423 (49,851)(22)$180,845 226,641 (45,796)(20)
Loans by Line of Business:
Middle Market Banking$102,054 122,319 (20,265)(17)$103,210 119,276 (16,066)(13)
Asset-Based Lending and Leasing76,518 106,104 (29,586)(28)77,635 107,365 (29,730)(28)
Total loans$178,572 228,423 (49,851)(22)$180,845 226,641 (45,796)(20)
Total deposits192,586 184,132 8,454 5 190,984 175,929 15,055 9 
Allocated capital19,500 19,500 — — 19,500 19,500— — 
Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial$117,782 142,315 (24,533)(17)$117,782 142,315 (24,533)(17)
Commercial real estate46,905 52,802 (5,897)(11)46,905 52,802 (5,897)(11)
Lease financing and other14,218 15,662 (1,444)(9)14,218 15,662 (1,444)(9)
Total loans$178,905 210,779 (31,874)(15)$178,905 210,779 (31,874)(15)
Loans by Line of Business:
Middle Market Banking$102,062 115,105 (13,043)(11)$102,062 115,105 (13,043)(11)
Asset-Based Lending and Leasing76,843 95,674 (18,831)(20)76,843 95,674 (18,831)(20)
Total loans$178,905 210,779 (31,874)(15)$178,905 210,779 (31,874)(15)
Total deposits197,461 183,085 14,376 8 197,461 183,085 14,376 8 
Second quarter 2021 vs. second quarter 2020
Total loans (average) decreased driven by lower loan demand, including lower line utilization, and higher paydowns reflecting continued high levels of client liquidity and strength in the capital markets.

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


First half of 2021 vs. first half of 2020
Total loans (average and period-end) decreased driven by lower loan demand, including lower line utilization, and higher paydowns reflecting continued high levels of client liquidity and strength in the capital markets.

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

Wells Fargo & Company19

Earnings Performance (continued)
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 June 30,Six months ended June 30,
($ in millions)20212020$ Change% Change20212020$ Change% Change
Income Statement
Net interest income$1,783 1,963 (180)(9)%$3,562 3,984 (422)(11)%
Noninterest income:
Deposit-related fees277 261 16 6 543 518 25 5 
Lending-related fees190 163 27 17 373 335 38 11 
Investment banking fees580 588 (8)(1)1,191 1,065 126 12 
Net gains from trading activities30 809 (779)(96)361 844 (483)(57)
Other478 275 203 74 912 721 191 26 
Total noninterest income1,555 2,096 (541)(26)3,380 3,483 (103)(3)
Total revenue3,338 4,059 (721)(18)6,942 7,467 (525)(7)
Net charge-offs(19)401 (420)NM18 448 (430)(96)
Change in the allowance for credit losses(482)3,355 (3,837)NM(803)4,433 (5,236)NM
Provision for credit losses(501)3,756 (4,257)NM(785)4,881 (5,666)NM
Noninterest expense1,805 2,044 (239)(12)3,638 3,914 (276)(7)
Income (loss) before income tax expense (benefit)2,034 (1,741)3,775 NM4,089 (1,328)5,417 NM
Income tax expense (benefit)513 (408)921 NM1,013 (307)1,320 NM
Less: Net loss from noncontrolling interests(2)— (2)NM(2)— (2)NM
Net income (loss)$1,523 (1,333)2,856 NM$3,078 (1,021)4,099 NM
Revenue by Line of Business
Banking:
Lending$474 464 10 2 $927 921 6 1 
Treasury Management and Payments353 403 (50)(12)723 901 (178)(20)
Investment Banking407 444 (37)(8)823 805 18 2 
Total Banking1,234 1,311 (77)(6)2,473 2,627 (154)(6)
Commercial Real Estate1,014 837 177 21 1,926 1,740 186 11 
Markets:
Fixed Income, Currencies, and Commodities (FICC)888 1,506 (618)(41)2,032 2,420 (388)(16)
Equities206 302 (96)(32)458 698 (240)(34)
Credit Adjustment (CVA/DVA) and Other(16)139 (155)NM20 31 (11)(35)
Total Markets1,078 1,947 (869)(45)2,510 3,149 (639)(20)
Other12 (36)48 NM33 (49)82 NM
Total revenue$3,338 4,059 (721)(18)$6,942 7,467 (525)(7)
Selected Metrics
Return on allocated capital17.0 %(16.8)17.3 %(7.1)
Efficiency ratio54 50 52 52 
Headcount (#) (period-end)8,673 8,213 6 8,673 8,2136 
NM – Not meaningful
Second quarter 2021 vs. second quarter 2020
Revenue decreased driven by:
•lower net gains from trading activities reflecting fewer gains in asset-backed finance and credit products due to limited credit spread movement compared with a second quarter 2020 that reflected gains driven by volatility in credit spreads from the impact of the COVID-19 pandemic; and
•lower net interest income reflecting the lower interest rate environment, lower deposit balances, and lower trading-related assets;
partially offset by:
•higher other noninterest income driven by higher mortgage banking income due to higher servicing income, reflecting a reversal of an impairment of commercial MSRs in second quarter 2021, compared with the same periodsrelated impairment recorded in second quarter 2020, as well as higher gains on the sales of mortgage loans;
•higher income from low income housing and equity investments; and
20Wells Fargo & Company

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

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

Noninterest expense decreased driven by:
•lower operating losses due to lower expense for litigation accruals and customer remediation accruals; and
•lower expenses allocated from enterprise functions reflecting lower spending due to efficiency initiatives;
partially offset by:
•higher personnel expense driven by higher incentive compensation.
First half of 2021 vs. first half of 2020
Revenue decreased driven by:
•lower net gains from trading activities driven by lower client trading activity for interest rate products, equities, and commodities, partially offset by higher client trading activity for asset-backed finance products; and
•lower net interest income reflecting the lower interest rate environment, lower deposit balances, and lower trading-related assets;
partially offset by:
•higher investment banking fees due to higher loan syndication fees, advisory fees, and equity underwriting fees;
•higher other noninterest income driven by higher mortgage banking income due to higher servicing income, reflecting a year ago,reversal of an impairment of commercial MSRs in the first half of 2021, compared with the related impairment recorded in the first half of 2020, as well as higher gains on the sales of mortgage loans; and
•higher income from low income housing and equity investments.
Provision for credit losses decreased driven by an improving economic environment.

Noninterest expense decreased driven by:
•lower operating losses due to lower expense for litigation accruals and customer remediation accruals;
•lower expenses allocated from enterprise functions reflecting customers’ preferences for liquiditylower spending due to efficiency initiatives;
•lower professional and outside services expense reflecting decreased project-related expense; and
•a reduction in business travel and company events due to the impact of the COVID-19 pandemic;
partially offset by:
•higher personnel expense driven by higher incentive compensation.
Wells Fargo & Company21

Earnings Performance (continued)
Table 5f:Corporate and Investment Banking – Balance Sheet
Quarter ended June 30,Six months ended June 30,
(in millions)20212020$ Change% Change20212020$ Change% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial$167,076 190,861 (23,785)(12)%$164,696 184,558 (19,862)(11)%
Commercial real estate85,346 82,726 2,620 3 84,606 81,357 3,249 4 
Total loans$252,422 273,587 (21,165)(8)$249,302 265,915 (16,613)(6)
Loans by Line of Business:
Banking$90,839 105,983 (15,144)(14)$88,699 101,414 (12,715)(13)
Commercial Real Estate108,893 110,594 (1,701)(2)108,255 107,894 361 — 
Markets52,690 57,010 (4,320)(8)52,348 56,607 (4,259)(8)
Total loans$252,422 273,587 (21,165)(8)$249,302 265,915 (16,613)(6)
Trading-related assets:
Trading account securities$104,743 106,836 (2,093)(2)$105,546 115,082 (9,536)(8)
Reverse repurchase agreements/securities borrowed62,066 70,335 (8,269)(12)63,010 79,734 (16,724)(21)
Derivative assets24,731 22,380 2,351 11 25,910 20,332 5,578 27 
Total trading-related assets$191,540 199,551 (8,011)(4)$194,466 215,148 (20,682)(10)
Total assets513,414 535,298 (21,884)(4)512,476 543,455 (30,979)(6)
Total deposits190,810 239,637 (48,827)(20)192,645 252,902 (60,257)(24)
Allocated capital34,000 34,000 — — 34,000 34,000 — — 
Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial$166,969 171,859 (4,890)(3)$166,969 171,859 (4,890)(3)
Commercial real estate86,290 83,715 2,575 3 86,290 83,715 2,575 3 
Total loans$253,259 255,574 (2,315)(1)$253,259 255,574 (2,315)(1)
Loans by Line of Business:
Banking$92,758 91,093 1,665 2 $92,758 91,093 1,665 2 
Commercial Real Estate108,885 109,402 (517)— 108,885 109,402 (517)— 
Markets51,616 55,079 (3,463)(6)51,616 55,079 (3,463)(6)
Total loans$253,259 255,574 (2,315)(1)$253,259 255,574 (2,315)(1)
Trading-related assets:
Trading account securities$108,291 97,708 10,583 11 $108,291 97,708 10,583 11 
Reverse repurchase agreements/securities borrowed57,351 70,949 (13,598)(19)57,351 70,949 (13,598)(19)
Derivative assets25,288 22,757 2,531 11 25,288 22,757 2,531 11 
Total trading-related assets$190,930 191,414 (484)— $190,930 191,414 (484)— 
Total assets516,518 510,205 6,313 1 516,518 510,205 6,313 1 
Total deposits188,219 236,620 (48,401)(20)188,219 236,620 (48,401)(20)
Second quarter 2021 vs. second quarter 2020
Total assets (average) decreased predominantly due to a decline in loan balances driven by lower demand due to the COVID-19 pandemic.pandemic and higher paydowns reflecting continued high levels of client liquidity and strength in the capital markets.

Total deposits (average) decreased reflecting continued actions to manage under the asset cap.
First half of 2021 vs. first half of 2020
Total assets (average) decreased predominantly due to a decline in trading-related assets reflecting continued actions to manage under the asset cap and a decline in loan balances driven by lower demand due to the COVID-19 pandemic and higher paydowns reflecting continued high levels of client liquidity and strength in the capital markets.

Total deposits (average and period-end) decreased reflecting continued actions to manage under the asset cap.
22Wells 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 needsTable 5g and Table 5h provide investment management capabilities delivered to global institutional clients through separate accounts and the Wells Fargo Funds. The sale of our IRT business closed on July 1, 2019. For additional information on the sale of our IRT business, including its impact on our AUMfor 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 June 30,    Six months ended June 30,   
(in millions, except average balances which are in billions)2020
 2019
 % Change 2020
 2019
 % Change
Net interest income$736
 1,037
 (29)% $1,603
 2,138
 (25)%
Noninterest income:           
Service charges on deposit accounts4
 4
 —
 9
 8
 13
Trust and investment fees:           
Brokerage advisory, commissions and other fees2,039
 2,248
 (9) 4,436
 4,372
 1
Trust and investment management568
 687
 (17) 1,150
 1,363
 (16)
Investment banking1
 (1) 200
 2
 4
 (50)
Total trust and investment fees2,608
 2,934
 (11) 5,588
 5,739
 (3)
Card fees1
 2
 (50) 2
 3
 (33)
Other fees4
 4
 —
 8
 8
 —
Mortgage banking(3) (3) —
 (6) (6) —
Net gains (losses) from trading activities6
 13
 (54) (1) 32
 NM
Net gains on debt securities—
 —
 —
 —
 —
 —
Net gains (losses) from equity securities161
 35
 360
 (117) 171
 NM
Other (1)143
 24
 496
 289
 36
 703
Total noninterest income2,924
 3,013
 (3) 5,772
 5,991
 (4)
            
Total revenue3,660
 4,050
 (10) 7,375
 8,129
 (9)
            
Provision (reversal of provision) for credit losses257
 (1) NM
 265
 3
 NM
Noninterest expense:           
Personnel2,021
 2,112
 (4) 3,971
 4,309
 (8)
Technology and equipment (1)(94) 15
 NM
 (86) 27
 NM
Occupancy111
 112
 (1) 224
 224
 —
Core deposit and other intangibles3
 4
 (25) 6
 7
 (14)
FDIC and other deposit assessments14
 12
 17
 26
 26
 —
Outside professional services182
 210
 (13) 373
 394
 (5)
Operating losses15
 43
 (65) 24
 64
 (63)
Other (1)901
 738
 22
 1,718
 1,498
 15
Total noninterest expense3,153
 3,246
 (3) 6,256
 6,549
 (4)
Income before income tax expense and noncontrolling interests250
 805
 (69) 854
 1,577
 (46)
Income tax expense63
 201
 (69) 216
 393
 (45)
Less: Net income (loss) from noncontrolling interests7
 2
 250
 (5) 5
 NM
Net income$180
 602
 (70) $643
 1,179
 (45)
Average loans$78.7
 75.0
 5
 $78.6
 74.7
 5
Average deposits171.8
 143.5
 20
 161.6
 148.3
 9
Quarter ended June 30,Six months ended June 30,
($ in millions, unless otherwise noted)20212020$ Change% Change20212020$ Change% Change
Income Statement
Net interest income$610 719 (109)(15)%$1,267 1,557 (290)(19)%
Noninterest income:
Investment advisory and other asset-based fees2,382 1,835 547 30 4,688 3,908 780 20 
Commissions and brokerage services fees513 470 43 9 1,068 1,063 5 — 
Other31 182 (151)(83)57 (52)109 NM
Total noninterest income2,926 2,487 439 18 5,813 4,919 894 18 
Total revenue3,536 3,206 330 10 7,080 6,476 604 9 
Net charge-offs(6)1 (7)NM(6)2 (8)NM
Change in the allowance for credit losses30 254 (224)(88)(13)261 (274)NM
Provision for credit losses24 255 (231)(91)(19)263 (282)NM
Noninterest expense2,891 2,743 148 5 5,919 5,400 519 10 
Income before income tax expense621 208 413 199 1,180 813 367 45 
Income tax expense156 52 104 200 296 204 92 45 
Net income$465 156 309 198 $884 609 275 45 
Selected Metrics
Return on allocated capital20.7 %6.6 19.8 %13.4 
Efficiency ratio82 86 84 83 
Headcount (#) (period-end)26,989 29,088 (7)26,989 29,088 (7)
Advisory assets ($ in billions)$931 743 188 25 $931 743 188 25 
Other brokerage assets and deposits ($ in billions)1,212 1,042 170 16 1,212 1,042 170 16 
Total client assets ($ in billions)$2,143 1,785 358 20 $2,143 1,785 358 20 
Annualized revenue per advisor ($ in thousands) (1)1,084 898 186 21 1,071 904 167 18 
Total financial and wealth advisors (#) (period-end)12,819 14,206 (10)12,819 14,206 (10)
Selected Balance Sheet Data (average)
Total loans$81,784 78,091 3,693 5 $81,314 77,987 3,327 4 
Total deposits174,980 165,103 9,877 6 174,333 155,246 19,087 12 
Allocated capital8,750 8,750 — — 8,750 8,750 — — 
Selected Balance Sheet Data (period-end)
Total loans$82,783 78,101 4,682 6 $82,783 78,101 4,682 6 
Total deposits174,267 168,249 6,018 4 174,267 168,249 6,018 4 
NM – Not meaningful
(1)In second quarter 2020, insurance income was reclassified to other noninterest income, and expenses for cloud computing services were reclassified from contract services expense (within other noninterest expense) to technology and equipment expense. Prior period balances have been revised to conform with the current period presentation.
(1)Represents annualized segment total revenue divided by average total financial and wealth advisors for the period.
WIM net income decreased $422 million and $536 million in theSecond quarter 2021 vs. second quarter 2020
Revenue increased driven by:
•higher investment advisory and first half of 2020, respectively, compared with the same periods a year ago.other asset-based fees due to higher market valuations on WIM advisory assets;
Net interest income decreased $301 million and $535 million in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, driven by lower
interest rates, partially offset by higher average deposit balances and higher average loan balances.by:
Noninterest income decreased $89 million and $219 million in the second quarter and first half of 2020, respectively, compared with the same periods a year ago. The decrease in second quarter 2020, compared with the same period a year ago,

was driven by •lower asset-based fees and lower brokerage transaction revenue, partially offset by net gains from equity securities driven by an increase in deferred compensation plan investment results included in other noninterest income (largely offset by lower personnel expense).; and
•lower net interest income reflecting the lower interest rate environment, partially offset by higher deposit balances.

Provision for credit losses decreased driven by an improving economic environment.
Noninterest expense increased due to:
•higher personnel expense driven by higher revenue-related compensation, partially offset by lower deferred compensation expense; and
•the reversal of a software licensing liability accrual in second quarter 2020.

Total deposits (average) increased primarily due to growth in customer balances in both The decreasePrivate Bank and Wells Fargo Advisors.
Wells Fargo & Company23

Earnings Performance (continued)
First half of 2021 vs. first half of 2020
Revenue increased driven by:
•higher investment advisory and other asset-based fees due to higher market valuations on WIM advisory assets; and
•higher deferred compensation plan investment results included in other noninterest income (largely offset by personnel expense);
partially offset by:
•lower net interest income reflecting the lower interest rate environment, partially offset by higher deposit balances.

Provision for credit losses decreased driven by an improving economic environment.
Noninterest expense increased due to:
•higher personnel expense driven by higher revenue-related compensation and higher deferred compensation expense; and
•the reversal of a software licensing liability accrual in the first half of 2020, compared with the same period a year ago, was driven by net losses from equity securities driven by a decline in deferred compensation plan investment results (largely offset by lower personnel expense) and lower trust and investment management income, 2020;
partially offset by higher retail brokerage advisory fees (priced at the beginning of the quarter).by:
The provision for credit losses increased $258 million•lower professional and $262 million in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, driven by current and forecasted economic conditions due to the impact of the COVID-19 pandemic.
Noninterest expense decreased $93 million and $293 million in the second quarter and first half of 2020, respectively, compared with the same periods a year ago. The decrease in second quarter 2020, compared with the same period a year ago, was driven by lower personnel expense from lower commissions and other incentive compensation, and lower technology and equipment expense related to the reversal of an accrual for software costs, partially offset by higher project spending on regulatory and compliance related initiatives included within other noninterest expense and higher deferred compensation plan expense within personnel expense (largely offset by net gains from equity securities). The decrease in the first half of 2020, compared with the same period a year ago, was due to lower personneloutside services expense driven by lower deferred compensation plan expense (largely offset by net losses from equity securities)efficiency initiatives to reduce our spending on consultants and incentive compensation,contractors.
Total deposits (average and lower technology and equipment expense related to the reversal of an accrual for software costs, partially offset by higher project spending on
regulatory and compliance related initiatives included within other noninterest expense and higher broker commissions within personnel expense.
Average loansperiod-end) increased $3.7 billion and $3.9 billion in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, driven by growth in real estate 1-4 first mortgage loans.
Average deposits increased $28.3 billion and $13.3 billion in the second quarter and first half of 2020, respectively, compared with the same periods a year ago, primarily due to growth in brokerage clients’ cash balances.
customer balances in both The following discussions provide additional information for client assets we oversee in our retail brokerage advisoryPrivate Bank and trust and investment management business lines.

Wells Fargo Advisors.
Retail Brokerage Client
WIM Advisory Assets Brokerage advisory, commissions and other fees are received for providing full-service and discount brokerage services predominantlyIn addition to retail brokerage clients. Offeringtransactional 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 June 30, 2020 and 2019.
Table 4d:Retail Brokerage Client Assets
 June 30, 
($ in billions)2020
 2019
Retail brokerage client assets$1,561.2
 1,620.5
Advisory account client assets569.4
 561.3
Advisory account client assets as a percentage of total client assets36% 35
Retail Brokerage advisoryAdvisory 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 the second quarter and first half of 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 second quarter 20202021 and 2019,2020, the average fee rate by account type ranged from 8050 to 120 basis points.
Table 4e presents retail brokerage5h:WIM Advisory Assets
Quarter endedSix months ended
(in billions)Balance, beginning of periodInflows (1)Outflows (2)Market impact (3)Balance, end of periodBalance, beginning of periodInflows (1)Outflows (2)Market impact (3)Balance, end of period
June 30, 2021
Client-directed (4)$192.7 11.1 (12.2)9.7 201.3 $186.3 21.7 (22.0)15.3 201.3 
Financial advisor-directed (5)223.4 12.3 (10.9)13.2 238.0 211.0 24.6 (19.9)22.3 238.0 
Separate accounts (6)183.1 8.0 (7.7)9.5 192.9 174.6 16.5 (14.7)16.5 192.9 
Mutual fund advisory (7)94.7 4.3 (3.6)4.7 100.1 91.4 8.3 (7.1)7.5 100.1 
Total Wells Fargo Advisors$693.9 35.7 (34.4)37.1 732.3 $663.3 71.1 (63.7)61.6 732.3 
The Private Bank (8)191.5 9.3 (11.1)8.7 198.4 189.4 18.2 (23.6)14.4 198.4 
Total WIM advisory assets$885.4 45.0 (45.5)45.8 930.7 $852.7 89.3 (87.3)76.0 930.7 
June 30, 2020
Client directed (4)$142.7 7.3 (7.8)20.0 162.2 $169.4 17.4 (17.4)(7.2)162.2 
Financial advisor directed (5)152.4 8.4 (6.6)22.6 176.8 176.3 19.1 (15.2)(3.4)176.8 
Separate accounts (6)134.2 5.0 (5.8)18.1 151.5 160.1 11.8 (14.3)(6.1)151.5 
Mutual fund advisory (7)69.5 2.2 (2.7)9.9 78.9 83.7 5.4 (7.2)(3.0)78.9 
Total Wells Fargo Advisors$498.8 22.9 (22.9)70.6 569.4 $589.5 53.7 (54.1)(19.7)569.4 
The Private Bank (8)161.8 7.2 (11.8)16.0 173.2 188.0 15.7 (22.8)(7.7)173.2 
Total WIM advisory assets$660.6 30.1 (34.7)86.6 742.6 $777.5 69.4 (76.9)(27.4)742.6 
(1)Inflows include new advisory account assets, contributions, dividends and interest.
(2)Outflows include closed advisory account assets, withdrawals and client management fees.
(3)Market impact reflects gains and losses on portfolio investments.
(4)Investment advice and other services are provided to client, but decisions are made by the client and the fees earned are based on a percentage of the advisory account assets, activitynot the number and size of transactions executed by account typethe 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.
24Wells Fargo & Company

Corporate includes corporate treasury and enterprise functions, net of allocations (including funds transfer pricing, capital, liquidity and certain expenses), in support of the reportable operating segments, as well as our investment portfolio and affiliated venture capital and private equity businesses. In addition, Corporate includes all restructuring charges related to our efficiency initiatives. See Note 19 (Restructuring Charges) to Financial Statements in this Report for additional information on restructuring charges. Corporate also includes certain lines of
business that management has determined are no longer consistent with the long-term strategic goals of the Company, as well as results for previously divested businesses. In March 2021, we announced an agreement to sell our Corporate Trust Services business and, in second quarter 2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. Table 5i, Table 5j, and Table 5k provide additional information for Corporate.
Table 5i:Corporate – Income Statement and Selected Metrics
Quarter ended June 30,Six months ended June 30,
($ in millions, unless otherwise noted)20212020$ Change% Change20212020$ Change% Change
Income Statement
Net interest income$(304)60 (364)NM$(694)939 (1,633)NM
Noninterest income3,327 1,318 2,009 152 %4,744 1,303 3,441 264 %
Total revenue3,023 1,378 1,645 119 4,050 2,242 1,808 81 
Net charge-offs(8)39 (47)NM69 141 (72)(51)
Change in the allowance for credit losses(26)87 (113)NM(6)247 (253)NM
Provision for credit losses(34)126 (160)NM63 388 (325)(84)
Noninterest expense1,000 1,251 (251)(20)2,231 1,942 289 15 
Income (loss) before income tax expense (benefit)2,057 1 2,056 NM1,756 (88)1,844 NM
Income tax expense (benefit)223 (300)523 NM(52)21 (73)NM
Less: Net income (loss) from noncontrolling interests (1)704 47 657 NM757 (103)860 NM
Net income (loss)$1,130 254 876 345 $1,051 (6)1,057 NM
Selected Metrics
Headcount (#) (period-end) (2)87,702 82,852 6 87,702 82,852 6 
Wells Fargo Asset Management assets under management ($ in billions)$603 578 25 4 $603 578 25 4 
NM – Not meaningful
(1)Reflects results attributable to noncontrolling interests predominantly associated with the Company’s consolidated venture capital investments.
(2)Beginning in first quarter 2021, employees who were notified of displacement remained as headcount in their respective operating segment rather than included in Corporate.
Second quarter 2021 vs. second quarter 2020
Revenue increased driven by:
•higher gains on equity securities in our affiliated venture capital and private equity businesses; and
•a gain on the sale of a portion of our student loan portfolio and a modest gain on the sale of our Canadian equipment finance business;
partially offset by:
•lower net interest income reflecting the lower interest rate environment and lower loan balances;
•lower gains on debt securities due to fewer sales; and
•lower gains on deferred compensation plan investments (largely offset by personnel expense).

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

Noninterest expense decreased due to:
•lower operating losses due to lower expense for litigation accruals and customer remediation accruals; and
•lower deferred compensation plan expense;
partially offset by:
•a write-down of goodwill in second quarter 2021 related to the sale of a portion of our student loan portfolio.
First half of 2021 vs. first half of 2020
Revenue increased driven by:
•higher gains on equity securities in our affiliated venture capital and 2019.private equity businesses, as well as impairments on equity securities in first quarter 2020 due to the market impact of the COVID-19 pandemic ;
•higher gains on deferred compensation plan investments (largely offset by personnel expense); and
•a gain on the sale of substantially all of our student loan portfolio;
partially offset by:
•lower net interest income reflecting the lower interest rate environment, unfavorable hedge ineffectiveness accounting results, and lower loan balances; and
•lower gains on debt securities due to fewer sales.

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

Noninterest expense increased due to:
•higher incentive compensation expense, including the impact of higher market valuations on stock-based compensation;
•higher deferred compensation expense; and
•a write-down of goodwill in 2021 related to the sale of substantially all of our student loan portfolio.

Earnings Performance (continued)




Table 4e:Retail Brokerage Advisory Account Client Assets
 Quarter ended  Six months ended 
(in billions)Balance, beginning of period
Inflows (1)
Outflows (2)
Market impact (3)
Balance, end of period
 
Balance,
beginning of period

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

June 30, 2020           
Client directed (4)$142.7
7.3
(7.8)20.0
162.2
 $169.4
17.4
(17.4)(7.2)162.2
Financial advisor directed (5)152.4
8.4
(6.6)22.6
176.8
 176.3
19.1
(15.2)(3.4)176.8
Separate accounts (6)134.2
5.0
(5.8)18.1
151.5
 160.1
11.8
(14.3)(6.1)151.5
Mutual fund advisory (7)69.5
2.2
(2.7)9.9
78.9
 83.7
5.4
(7.2)(3.0)78.9
Total advisory client assets$498.8
22.9
(22.9)70.6
569.4
 $589.5
53.7
(54.1)(19.7)569.4
June 30, 2019           
Client directed (4)$163.6
8.6
(9.7)3.7
166.2
 $151.5
16.5
(19.0)17.2
166.2
Financial advisor directed (5)156.9
8.6
(8.7)6.4
163.2
 141.9
16.1
(16.4)21.6
163.2
Separate accounts (6)148.3
6.2
(8.0)5.4
151.9
 136.4
11.8
(14.9)18.6
151.9
Mutual fund advisory (7)77.9
2.9
(3.5)2.7
80.0
 71.3
5.7
(6.7)9.7
80.0
Total advisory client assets$546.7
26.3
(29.9)18.2
561.3
 $501.1
50.1
(57.0)67.1
561.3
(1)Inflows include new advisory account assets, contributions, dividends and interest.Wells Fargo & Company25

Earnings Performance (continued)
Corporate includes our rail car leasing business, which had long-lived operating lease assets (as a lessor) of $5.6 billion, which was net of $1.9 billion of accumulated depreciation, as of June 30, 2021. The average age of our rail cars is 21 years and the rail cars are typically leased under short-term leases of 3 to 5 years. Our three largest concentrations, which represented 55% of our rail car fleet as of June 30, 2021, were rail cars used for the transportation of agricultural grain, coal, and cement/sand products. Impairments may result in the future based on changing economic and market conditions affecting the long-term demand and utility of specific types of rail cars. Our assumptions for impairment are sensitive to estimated
utilization and rental rates, as well as the estimated economic life of the leased asset. For additional information on the accounting for impairment of operating lease assets, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.
In addition, Corporate includes assets under management (AUM) and assets under administration (AUA) for Institutional Retirement and Trust (IRT) client assets of $20 billion and $580 billion, respectively, at June 30, 2021, which we continue to administer at the direction of the buyer pursuant to a transition services agreement. The transition services agreement terminates in December 2021, with available options to extend.
Table 5j: Corporate – Balance Sheet
Quarter ended June 30,Six months ended June 30,
(in millions)20212020$ Change% Change20212020$ Change% Change
Selected Balance Sheet Data (average)
Cash, cash equivalents, and restricted cash$255,043 173,754 81,289 47 %$239,010 148,108 90,902 61 %
Available-for-sale debt securities185,396 223,222 (37,826)(17)192,867 234,028 (41,161)(18)
Held-to-maturity debt securities237,788 166,127 71,661 43 227,623 161,958 65,665 41 
Equity securities11,499 13,604 (2,105)(15)11,203 13,787 (2,584)(19)
Total loans10,077 21,534 (11,457)(53)10,152 21,517 (11,365)(53)
Total assets754,629 655,617 99,012 15 741,203 642,513 98,690 15 
Total deposits41,696 82,640 (40,944)(50)44,080 94,307 (50,227)(53)
Selected Balance Sheet Data (period-end)
Cash, cash equivalents, and restricted cash$248,784 236,219 12,565 5 $248,784 236,219 12,565 5 
Available-for-sale debt securities177,923 217,339 (39,416)(18)177,923 217,339 (39,416)(18)
Held-to-maturity debt securities260,054 168,162 91,892 55 260,054 168,162 91,892 55 
Equity securities13,142 12,546 596 5 13,142 12,546 596 5 
Total loans10,593 21,948 (11,355)(52)10,593 21,948 (11,355)(52)
Total assets761,915 713,309 48,606 7 761,915 713,309 48,606 7 
Total deposits40,091 76,155 (36,064)(47)40,091 76,155 (36,064)(47)
Second quarter 2021 vs. second quarter 2020
Total assets (average) increased due to:
•an increase in cash, cash equivalents, and restricted cash managed by corporate treasury as a result of an increase in deposits from the reportable operating segments; and
•an increase in held-to-maturity debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;
partially offset by:
•a decline in available-for-sale debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;
•a decline in average equity securities due to the transition from equity securities to derivative instruments for economic hedges of the deferred compensation plan liabilities in second quarter 2020 and a reduction in Federal Home Loan Bank stock, partially offset by higher balances in our venture capital business; and
•a decline in loans due to the sale of a portion of our student loan portfolio.

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

First half of 2021 vs. first half of 2020
Total assets (average and period-end) increased due to:
•an increase in cash, cash equivalents, and restricted cash managed by corporate treasury as a result of an increase in deposits from the reportable operating segments; and
•an increase in held-to-maturity debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;
partially offset by:
•a decline in available-for-sale debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;
•a decline in average equity securities due to the transition from equity securities to derivative instruments for economic hedges of the deferred compensation plan liabilities in second quarter 2020 and a reduction in Federal Home Loan Bank stock, partially offset by higher balances in our venture capital business; and
•a decline in loans due to the sale of substantially all of our student loan portfolio in the first half of 2021.

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

(2)26Outflows include closed advisory account assets, withdrawals, and client management fees.
Wells Fargo & Company
(3)Market impact reflects gains and losses on portfolio investments.
(4)Investment advice and other services are provided to client, but decisions are made by the client and the fees earned are based on a percentage of the advisory account assets, not the number and size of transactions executed by the client.
(5)Professionally managed portfolios with fees earned based on respective strategies and as a percentage of certain client assets.
(6)Professional advisory portfolios managed by Wells Fargo Asset Management 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.

Trust and Investment ClientWells Fargo Asset Management (WFAM) Assets Under Management We earn trustinvestment advisory and investment managementother 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, which manages assets for high net worth clients.accounts. Generally, our trust and investment management fee income is earnedwe 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 informationWFAM 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 salebehalf 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 the second quarter and first half of 20202021 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 endedSix months ended
(in billions)Balance, beginning of periodInflows (1)Outflows (2)Market impact (3)Balance, end
of period		Balance, beginning of periodInflows (1)Outflows (2)Market impact (3)Balance, end
of period
June 30, 2021
Money market funds (4)$191.2 8.5 — — 199.7 $197.4 2.3 — — 199.7 
Other assets managed399.2 22.1 (28.5)11.0 403.8 405.6 45.9 (58.8)11.1 403.8 
Total WFAM assets under management$590.4 30.6 (28.5)11.0 603.5 $603.0 48.2 (58.8)11.1 603.5 
June 30, 2020
Money market funds (4)$166.2 35.7 — — 201.9 $130.6 71.3 — — 201.9 
Other assets managed351.6 26.9 (26.5)24.4 376.4 378.2 53.1 (55.1)0.2 376.4 
Total WFAM assets under management$517.8 62.6 (26.5)24.4 578.3 $508.8 124.4 (55.1)0.2 578.3 
(1)Inflows include new managed account assets, contributions, dividends and interest.
(2)Outflows include closed managed account assets, withdrawals and client management fees.
(3)Market impact reflects gains and losses on portfolio investments.
(4)Money Market funds activity is presented on a net inflow or net outflow basis, because the gross flows are not meaningful nor used by management as an indicator of performance.
 Quarter ended 
Six months ended 
(in billions)Balance, beginning of period
Inflows (1)
Outflows (2)
Market impact (3)
Balance, end of period
 
Balance,
beginning of period

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

June 30, 2020           
Assets managed by WFAM (4):    

      
Money market funds (5)$166.2
35.7
—
—
201.9
 $130.6
71.3
—
—
201.9
Other assets managed351.6
26.9
(26.5)24.4
376.4
 378.2
53.1
(55.1)0.2
376.4
Assets managed by Wealth and IRT (6)162.8
8.5
(10.6)15.8
176.5
 187.4
16.3
(21.2)(6.0)176.5
Total assets under management$680.6
71.1
(37.1)40.2
754.8
 $696.2
140.7
(76.3)(5.8)754.8
June 30, 2019           
Assets managed by WFAM (4):
 
 
      
Money market funds (5)$109.5
10.3
—
—
119.8
 $112.4
7.4
—
—
119.8
Other assets managed367.0
22.2
(23.0)9.1
375.3
 353.5
41.5
(44.9)25.2
375.3
Assets managed by Wealth and IRT (6)181.4
8.2
(11.2)3.5
181.9
 170.7
17.4
(21.6)15.4
181.9
Total assets under management$657.9
40.7
(34.2)12.6
677.0
 $636.6
66.3
(66.5)40.6
677.0
(1)Inflows include new managed account assets, contributions, dividends and interest.Wells Fargo & Company27

(2)Outflows include closed managed account assets, withdrawals and client management fees.
(3)Market impact reflects gains and losses on portfolio investments.
(4)Assets managed by WFAM consist of equity, alternative, balanced, fixed income, money market, and stable value, and include client assets that are managed or sub-advised on behalf of other Wells Fargo lines of business.
(5)Money Market funds activity is presented on a net inflow or net outflow basis, because the gross flows are not meaningful nor used by management as an indicator of performance.
(6)
Includes $5.0 billion and $4.5 billion as of June 30, 2020 and 2019, respectively, of client assets invested in proprietary funds managed by WFAM.


Balance Sheet Analysis
At June 30, 2020,2021, our assets totaled $1.97$1.95 trillion, up $41.2down $6.9 billion from December 31, 2019. Asset growth reflected an increase in cash, cash equivalents and restricted cash of $121.3 billion, partially offset by declines in debt securities and loans of $24.5 billion and $27.1 billion, respectively, as well as a $22.9 billion decrease in federal funds sold and securities purchased under resale agreements and a $15.7 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
June 30, 2021December 31, 2020
($ in millions)Amortized
cost, net (1)		Net
 unrealized gains		Fair valueWeighted
average expected maturity (yrs)		Amortized
cost, net (1)		Net
 unrealized gains		Fair valueWeighted average expected maturity (yrs)
Available-for-sale (2)186,309 3,588 189,897 4.9 215,533 4,859 220,392 4.5 
Held-to-maturity (3)260,941 3,146 264,087 6.1 205,720 6,587 212,307 4.5 
Total$447,250 6,734 453,984 n/a421,253 11,446 432,699 n/a
 June 30, 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)224,467
 4,432
 228,899
 260,060
 3,399
 263,459
Held-to-maturity (3)169,002
 7,880
 176,882
 153,933
 2,927
 156,860
Total$393,469
 12,312
 405,781
 413,993
 6,326
 420,319
(1)Represents amortized cost of the securities, net of the allowance for credit losses of $33 million and $28 million related to available-for-sale debt securities and $77 million and $41 million related to held-to-maturity debt securities at June 30, 2021, and December 31, 2020.
(1)
Represents amortized cost of the securities, net of the allowance for credit losses, of $114 million related to available-for-sale debt securities and $20 million related to held-to-maturity debt securities at June 30, 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 decreased $19.5 billionsecurities. See the “Balance Sheet Analysis – Available-for-Sale and Held-to-Maturity Debt Securities” section in balance sheet carrying value from December 31, 2019, as purchases were more than offset by runoff and sales.
The total net unrealized gainsour 2020 Form 10-K for information on available-for-sale debt securities were $4.4 billion at June 30, 2020, up from net unrealized gains of $3.4 billion at December 31, 2019, driven by lower interest rates, partially offset by wider credit spreads. For a discussion of our investment management objectives and practices see the “Balance Sheet Analysis” section in our 2019 Form 10-K. Also, seeand 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 adoptionThe fair value of CECL, we recorded an allowance for credit losses on available-for-sale and held-to-maturity debt securities. Total provision/(reversal of provision) for credit losses onAFS debt securities was $(31) milliondecreased from December 31, 2020, as purchases were more than offset by runoff, sales and $141 million in the second quarter and first half of 2020. For a discussion of our accounting policies relatingtransfers to the allowance for credit losses onHTM 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 June 30, 2020, debt securities included $47.3 billion of municipal bonds, of which 97.7% were rated “A-” or better based predominantly on external ratings. Additionally, some2021, 94% of the debt securities in our total municipal bond portfolio are guaranteed against loss by bond insurers. These guaranteed bonds are predominantly investment gradecombined 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 4.3 years at June 30, 2020. The expected
remaining maturity is shorter than the remaining contractual maturity for the 65% 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 June 30, 2020     
Actual$148.9
 5.4
 3.6
Assuming a 200 basis point:     
Increase in interest rates136.0
 (7.5) 5.5
Decrease in interest rates151.5
 8.0
 3.2
The weighted-average expected remaining maturity of debt securities held-to-maturity (HTM) was 4.4 years at June 30, 2020. HTM debt securities portfolio was rated AA- or above. Ratings are measured at amortized costbased on external ratings where available and, therefore, changes in the fair value of our held-to-maturity MBS resultingwhere not available, based on internal credit grades.
The total net unrealized gains on AFS and HTM debt securities decreased from changes inDecember 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.
Loan Portfolios
Table 7 provides a summary of total outstanding loans by portfolio segment. TotalCommercial loans were relatively flat compared with December 31, 2020. Consumer loans decreased $27.1 billion from December 31, 2019, predominantly due to2020, driven by a decrease in consumer loans.
Commercial loans decreased $2.5 billion from December 31, 2019, driven by paydowns of commercial and industrial loans
Balance Sheet Analysis (continued)

following increased loan draws inthe residential mortgage – first quarter 2020, partially offset by growth in commercial real estate loans driven by new originations and construction loan fundings.
Consumer loans decreased $24.6 billion from December 31,
2019,lien portfolio due to paydowns exceeding originations. Also, in second quarter 2020, we designated $10.4and the transfer of $10.8 billion of real estate 1-4 family first lien mortgage loans as MLHFS.to loans held for sale (LHFS), substantially all of which related to the sales of loans purchased from GNMA loan securitization pools in prior periods, partially offset by originations of $30.8 billion.
Table 7: Loan Portfolios
(in millions)June 30, 2020
 December 31, 2019
Commercial$513,187
 515,719
Consumer421,968
 446,546
Total loans$935,155
 962,265
Change from prior year-end$(27,110) 9,155

(in millions)June 30, 2021December 31, 2020
Commercial$476,422 478,417 
Consumer375,878 409,220 
Total loans$852,300 887,637 
Change from prior year-end$(35,337)(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 20192020 Form 10-K for additional information regarding contractual loan maturities and the distribution of loans to changes in interest rates.



28Wells Fargo & Company

Deposits
Deposits were $1.4 trillion at June 30, 2020, up $88.1 billionincreased from December 31, 2019,2020, reflecting:
•higher levels of liquidity and savings for consumer customers reflecting strong growth across our deposit gathering businesses driven by impacts fromgovernment stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the COVID-19 pandemic including customers’ preferences for liquidity, loan payment deferrals, tax payment deferrals, stimulus checks, and lower consumer spending. The increase in deposits was pandemic;
partially offset by by:
•actions taken to manage tounder the asset cap resulting in
declines in other time deposits, driven by lowersuch as brokered certificates of
deposit (CDs), and declines ininterest-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)Jun 30,
2021
% of
total
deposits
Dec 31,
2020
% of
total 
deposits 
% Change
Noninterest-bearing demand deposits$504,108 35 %$467,068 33 %8 
Interest-bearing demand deposits453,277 32 447,446 32 1 
Savings deposits419,812 29 404,935 29 4 
Time deposits35,269 2 49,775 4 (29)
Interest-bearing deposits in non-U.S. offices28,006 2 35,157 2 (20)
Total deposits$1,440,472 100 %$1,404,381 100 %3 

($ in millions) 
Jun 30,
2020
 
% of
total
deposits

 Dec 31,
2019
 % of
total
deposits
 

% Change

Noninterest-bearing$432,857
 31% $344,496
 26% 26
Interest-bearing checking54,477
 4
 62,814
 5
 (13)
Market rate and other savings809,232
 57
 751,080
 57
 8
Savings certificates26,118
 2
 31,715
 2
 (18)
Other time deposits53,203
 4
 78,609
 6
 (32)
Deposits in non-U.S. offices (1)34,824
 2
 53,912
 4
 (35)
Total deposits$1,410,711
 100% $1,322,626
 100% 7
(1)Includes Eurodollar sweep balances of $21.5 billion and $34.2 billion at June 30, 2020, and December 31, 2019, respectively.

Fair Value of Financial Instruments
We use fair value measurements to record fair value adjustments to certain financial instruments and to determine fair value disclosures. See the “Critical Accounting Policies” section in our 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
 June 30, 2020  December 31, 2019 
($ in billions)
Total
balance

 
Level 3 (1)

 
Total
balance

 
Level 3 (1)

Assets carried
at fair value
$380.5
 20.4
 428.6
 24.3
As a percentage
of total assets
19% 1
 22
 1
Liabilities carried
at fair value
$31.6
 1.6
 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 $180.1 billion at June 30, 2020, compared with $188.0 billion at December 31, 2019. The decrease was driven by common stock repurchases of $3.4 billion (substantially all of which occurred in first quarter 2020), preferred stock redemptions of $2.5 billion, dividends of $4.8 billion, and a net loss of $1.8 billion, partially offset by the issuance of common and preferred stock of $4.0 billion.


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 moreadditional 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 and 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 moreadditional 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 moreadditional information, see Note 1514 (Derivatives) to Financial Statements in this Report.



Wells Fargo & Company29

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 moreadditional information about how we manage risk, see the “Risk Management” section in our 20192020 Form 10-K. The discussion that follows supplements our discussion of the management of certain risks contained in the “Risk Management” section in our 20192020 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 CreditRisk 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 providessupports periodic reports related to credit risk provided to the Board’s Risk Committee or its Credit Committee.

Coronavirus Aid, Relief, and Economic Security Act
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.

Subcommittee.
PAYCHECK PROTECTION PROGRAMThe 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 new program called the Paycheck Protection Program (PPP). The intent of the PPP is to provide loans to small businesses in order to keep their employees on the payroll and make certain other eligible payments. Loans granted under the PPP are guaranteed by the SBA and are fully forgivable if used for qualifying expenses such as payroll, mortgage interest, rent and utilities. If the loans are not forgiven, they must be repaid over a term not to exceed five years. Under the PPP, through June 30, 2020, we funded $10.1 billion in loans to more than 179,000 borrowers. As of June 30, 2020, $9.8 billion of principal remained outstanding on these PPP loans. We deferred $397 million of SBA processing fees that will be recognized as interest income over the term of the loans. We have committed to donating the gross processing fees received from funding PPP loans to non-profit organizations that support small businesses as the fees are recognized in earnings. We did not donate any processing fees during second quarter 2020.

PPP LIQUIDITY FACILITYLoan Portfolio The FRB established the Paycheck Protection Program Liquidity Facility which is intended to provide liquidity to financial institutions participating in PPP lending. Under this program, we act as a correspondent between the Federal Reserve Banks and community development financial institutions (CDFIs) to facilitate cash flows between the two entities. We do not receive any fees for our participation in this program.

SBA SIX MONTH PAYMENT ASSISTANCE Under the CARES Act, the SBA will make principal and interest payments on behalf of
certain borrowers for six months. As of June 30, 2020, over 20,000 of our lending customers were eligible for SBA payment assistance, and we had received $193 million in payments from the SBA.

MAIN STREET LENDING PROGRAM The Federal Reserve Board (FRB) established the Main Street Lending Program to provide additional financial support for small and medium sized businesses. Under the terms of the program, eligible lenders will perform underwriting and originate loans to eligible borrowers and subsequently sell 95% of theOur loan to a special purpose vehicle established by the FRB. We have registered as an eligible lender under the program and anticipate that we will begin funding customer loans in third quarter 2020.

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)Jun 30, 2020
 Dec 31, 2019
(in millions)Jun 30, 2021Dec 31, 2020
Commercial:   Commercial:
Commercial and industrial$350,116
 354,125
Commercial and industrial$317,618 318,805 
Real estate mortgage123,967
 121,824
Real estate mortgage120,678 121,720 
Real estate construction21,694
 19,939
Real estate construction22,406 21,805 
Lease financing17,410
 19,831
Lease financing15,720 16,087 
Total commercial513,187
 515,719
Total commercial476,422 478,417 
Consumer:   Consumer:
Real estate 1-4 family first mortgage277,945
 293,847
Real estate 1-4 family junior lien mortgage26,839
 29,509
Residential mortgage – first lienResidential mortgage – first lien244,371 276,674 
Residential mortgage – junior lienResidential mortgage – junior lien19,637 23,286 
Credit card36,018
 41,013
Credit card34,936 36,664 
Automobile48,808
 47,873
Other revolving credit and installment32,358
 34,304
AutoAuto51,073 48,187 
Other consumerOther consumer25,861 24,409 
Total consumer421,968
 446,546
Total consumer375,878 409,220 
Total loans$935,155
 962,265
Total loans$852,300 887,637 
We manage our credit risk by establishing what we believe are sound credit policies for underwriting new business, while monitoring and reviewing the performance of our existing loan portfolios. We employ various credit risk management and monitoring activities to mitigate risks associated with multiple risk factors affecting loans we hold could acquire or originate including:
•Loan concentrations and related credit qualityquality;
•Counterparty credit riskrisk;
•Economic and market conditionsconditions;
•Legislative or regulatory mandatesmandates;
•Changes in interest ratesrates;
•Merger and acquisition activitiesactivities; and
•Reputation riskrisk.

Our credit risk management oversight process is governed centrally, but provides for decentralizeddirect management and accountability by our lines of business. Our overall credit process
Risk Management - Credit Risk Management (continued)

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 second quarter 20202021 reflected continued to decline due toimprovement in the economic impactenvironment. In particular:
•Nonaccrual loans were $7.4 billion at June 30, 2021, down from $8.7 billion at December 31, 2020. Commercial nonaccrual loans decreased to $3.5 billion at June 30, 2021, compared with $4.8 billion at December 31, 2020, and consumer nonaccrual loans declined to $3.8 billion at June 30, 2021, compared with $3.9 billion at December 31, 2020. Nonaccrual loans represented 0.86% of total loans at June 30, 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 0.07% and 0.32% in the second quarter and 0.10% and 0.35% in the first half of 2021, respectively, compared with 0.44% and 0.48% in the second quarter and 0.35% and 0.51% in the first half of 2020.
•Loans that are not government insured/guaranteed and 90 days or more past due and still accruing were $277 million and $460 million in our commercial and consumer portfolios, respectively, at June 30, 2021, compared with $78 million and $612 million at December 31, 2020.
•Our provision for credit losses for loans was $(1.2) billion and $(2.4) billion in the COVID-19 pandemic had on our customer base. Secondsecond quarter 2020 results reflected:and first half of 2021, respectively, compared with $9.6 billion and $13.4 billion for the same periods a year ago.
•
Nonaccrual loans were $7.6 billion at June 30, 2020, up from $5.3 billion at December 31, 2019, predominantly due to a $2.0 billion increase in commercial nonaccrual loans driven by increases in the commercial and industrial and commercial real estate portfolios as the economic impact of the COVID-19 pandemic continued to impact our customer base. Commercial nonaccrual loans increased to $4.3 billion at June 30, 2020, compared with $2.3 billion at December 31, 2019, and consumer nonaccrual loans increased to $3.3 billion at June 30, 2020, compared with $3.1 billion at December 31, 2019. Nonaccrual loans represented 0.81% of total loans at June 30, 2020, compared with 0.56% at December 31, 2019.
•The ACL for loans decreased to $16.4 billion, or 1.92% of total loans, at June 30, 2021, compared with $19.7 billion, or 2.22%, at December 31, 2020.

•
Net loan charge-offs (annualized) as a percentage of our average commercial and consumer loan portfolios were 0.44% and 0.48% in the second quarter and 0.35% and 0.51% in the first half of 2020, respectively, compared with 0.13% and 0.45% in the second quarter and 0.12% and 0.48% in the first half of 2019.
•
Loans that are not government insured/guaranteed and 90 days or more past due and still accruing were $145 million and $672 million in our commercial and consumer portfolios, respectively, at June 30, 2020, compared with $78 million and $855 million at December 31, 2019.
•
Our provision for credit losses for loans was $9.6 billion and $13.4 billion in the second quarter and first half of 2020, respectively, compared with $503 million and $1.3 billion for the same periods a year ago. The increase in provision for credit losses for loans in the second quarter and first half of 2020, compared with the same periods a year ago, reflected an increase in the allowance for credit losses for loans driven by current and forecasted economic conditions due to the COVID-19 pandemic, and higher net loan charge-offs driven by higher losses in our commercial real estate portfolio and continued weakness in our oil and gas portfolio.
•
The allowance for credit losses for loans totaled $20.4 billion, or 2.19% of total loans, at June 30, 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.
30Wells Fargo & Company
TROUBLED DEBT RESTRUCTURING RELIEF
COVID-Related Lending Accommodations The CARES Act provides banks optional, temporary relief from accounting for certain loan modifications as troubled debt restructurings (TDRs). The modifications must be relatedDuring 2020, we provided accommodations to customers in response to the adverse effectsCOVID-19 pandemic, including payment deferrals, and other expanded assistance for mortgage, credit card, auto, small business, personal and commercial lending customers. With the exception of residential mortgage-related accommodation programs, the COVID-related lending accommodations instituted during 2020 were no longer offered as of December 31, 2020. Residential mortgage accommodation programs, which continued during the first half of 2021, offered payment deferrals for up to a total of 18 months. Table 10 summarizes the unpaid principal balance (UPB) of consumer loans that received accommodations under loan modification programs established to assist customers with the economic impact of the COVID-19 pandemic (COVID-related modifications) and certain other criteria are required to be metthat remained in order to apply the relief. In first quarter 2020, we elected to apply the TDR relief provided bya deferral period as of June 30, 2021.
Based on guidance in the CARES Act which expires no later than December 31, 2020.
On April 7, 2020, federal banking regulators issuedand the IInteragencynteragency 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). The Interagency Statement provides additional TDR relief as it clarifies that it is not necessary, both of which we elected to consider the impact of COVID-19 on the financial condition of a borrower in connection with short-term (e.g., six months or less)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 borrower is current atCARES Act and the dateInteragency 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 June 30, 2021, substantially all residential mortgage loans that were in a deferral period, excluding those that were government insured/guaranteed, met the modification program is implemented.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 this Report.our 2020 Form 10-K.
The TDR relief provided under the CARES Act, as well as from the Interagency Statement, does not change our processes for monitoring the credit quality of our loan portfolios or for updating our measurement of the allowance for credit losses for loans based on expected losses.
Additionally, our election to apply the TDR relief provided by the CARES Act and the Interagency Statement impacts our regulatory capital ratios as these loan modifications related to COVID-19 are not adjusted to a higher risk-weighting normally required with TDR classification.

COVID-Related Lending Accommodations
During second quarter 2020, we continued to provide accommodations to our customers in response to the COVID-19 pandemic, including fee reversals for consumer and small business banking customers, and payment deferrals, fee waivers, covenant waivers, and other expanded assistance for mortgage, credit card, automobile, small business, personal and commercial lending customers. Foreclosure, collection and credit bureau reporting activities have also been suspended. Additionally, we deferred rental payments on certain leased assets for which we are the lessor. 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.
Table 11 and Table 11a summarize Customer loans that are not further modified upon exit from the unpaid principal balance (UPB) of commercial and consumer loans at June 30, 2020, that received accommodations under loan modification programs establisheddeferral period may be placed on nonaccrual status or charged-off in accordance with our policies if customers are unable to assist customersresume making payments in accordance with the economic impactcontractual terms of the COVID-19 pandemic (COVID-related modifications), and exclude accommodations made for customers with loans that we service for others. COVID-related modifications primarily included payment deferrals of principal, interest or both as well as interest and fee waivers.their agreement. As of June 30, 2020,2021, substantially all of our consumer loans were current after exiting the unpaid principal balance of loans withdeferral period. For additional information about our COVID-related modifications, represented 7%see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section and 13%Note 1 (Summary of our total commercial and consumer loan portfolios, respectively, and included customers that continued to make payments after receiving a modification and those that were no longer in a deferral period.
If the COVID-19 pandemic continues to cause economic uncertainty, customers may request additional or extended accommodations. During second quarter 2020, we provided certain extensions of prior modifications for up to an additional 90 days. As of June 30, 2020, the unpaid principal balance of commercial and consumer loans that received extensions of prior modifications was $9.7 billion and $876 million, respectively.
Of the loans that received COVID-related modifications, $38 billion and $50 billion of unpaid principal balance of commercial and consumer loans, respectively, were not classified as TDRs as of June 30, 2020, of which 5% for both commercial and consumer loans qualified for TDR designation relief under the CARES Act or Interagency Statement. Additionally, the tables

include $241 million and $3 billion of unpaid principal balance of commercial and consumer loans, respectively, that were already classified as TDRs when the COVID-related modification was granted.
For information related to loans that are classified as TDRs, see Note 6 (Loans and Allowance for Credit Losses)Significant Accounting Policies) to Financial Statements this Report.in our 2020 Form 10-K.
Table 11:Commercial Loan Modifications Related to COVID-19
(in millions)
Unpaid
principal
balance of modified loans (1)

 % of loan class (2)
 General program description
Six months ended June 30, 2020     
Commercial:     
Commercial and industrial$20,656
 6% Initial deferral of scheduled principal and/or interest up to 90 days, with available extensions up to 90 days
Real estate mortgage and construction16,229
 11
 Initial deferral of scheduled principal and/or interest up to 90 days, with available extensions up to 90 days
Lease financing1,287
 7
 Initial deferral of lease payments up to 90 days, with available extensions up to 90 days
Total commercial$38,172
 7%  
(1)Includes all COVID-related modifications provided since the inception of the loan modification programs in first quarter 2020. COVID-related modifications are at the loan facility level.
(2)Based on total loans outstanding at June 30, 2020.
Table 11a:10: Consumer Loan Modifications Related to COVID-19
($ in millions)
Unpaid principal
balance of modified
loans still in deferral period at Jun 30, 2021
% of loan class (1)
% current at
Jun 30, 2021 after exit from deferral period (2)
Consumer:
Residential mortgage – first lien (3)$6,810 3 %96 
Residential mortgage – junior lien (3)997 5 90 
All other consumer (4)29 *92 
Subtotal7,836 2 
Residential mortgage – first lien (government insured/guaranteed) (5)11,400 5 
Total consumer$19,236 
*Less than 1%.
(1)Based on total loans outstanding at June 30, 2021.
(2)Represents the UPB of loans that exited the deferral period and had a balance that was less than 30 days past due as of June 30, 2021.
(3)For residential mortgage loans still in active COVID-related accommodation programs as of June 30, 2021, 96% of first lien and 86% of junior lien mortgage loans had a loan-to-value ratio that was 80% or lower.
(4)Includes credit card, auto, and other consumer loans (including personal lines/loans).
(5)Represents residential mortgage – first lien loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) that were primarily repurchased from GNMA loan securitization pools. For additional information on GNMA loan securitization pools, see the “Risk Management – Credit Risk Management – Risks Relating to Servicing Activities” section in this Report. FHA/VA loans are entitled to payment deferrals of scheduled principal and interest up to a total of 18 months.
(in millions)Unpaid principal balance of modified loans (1)
 % of loan class (2)
% current at time of deferral (3) % with payment during deferral (4)
 Unpaid principal balance of modified loans still in deferral period
% of loan class (2)
 General program description
Six months ended June 30, 2020           
Consumer:           
Real estate 1-4 family first mortgage (5)$38,022
 14%79 34
 $32,253
12% Initial deferral up to 90 days of scheduled principal and interest; with available extensions up to 90 days
Real estate 1-4 family junior lien mortgage3,123
 12
88 62
 2,812
10
 Initial deferral up to 90 days of scheduled principal and interest; with available extensions up to 90 days
Credit card3,173
 9
91 48
 2,616
7
 Initial 90 day deferral of minimum payment and waiver of interest and fees; modifications subsequent to June 3, 2020, including extensions, were 60 day deferral of minimum payment only
Automobile6,560
 13
87 24
 4,880
10
 Initial 90 day deferral of scheduled principal and interest, with available extensions of 90 days
Other revolving credit and installment1,968
 6
89 20
 1,673
5
 
Revolving lines: Initial 90 day deferral of minimum payment and waiver of interest and fees; with available extensions of 60 days
Installment loans: Initial 90 day deferral of scheduled principal and interest, with available extensions of 90 days
Total consumer$52,846
 13%82 35
 $44,234
10%  
(1)Includes all COVID-related modifications provided since the inception of the loan modification programs in first quarter 2020.
(2)Based on total loans outstanding at June 30, 2020.
(3)Represents loans that were less than 30 days past due at the date of the initial COVID-related modification, based on the outstanding balance of modified loans at June 30, 2020.
(4)Represents loans for which at least a partial payment was collected during the deferral period, based on the outstanding balance of modified loans at June 30, 2020.
(5)Unpaid principal balance includes approximately $7.4 billion of real estate 1-4 family first mortgage loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) that were repurchased from GNMA loan securitization pools. FHA/VA loans are entitled to payment deferrals of scheduled principal and interest up to a total of 12 months. Excluding these loans, the percentage current at time of deferral was 95%.
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 loan 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 includingsegmented among special mention, substandard, doubtful and loss categories.
The commercial and industrial loans and lease financing portfolio totaled $367.5 billion, or 39% of total loans, at June 30, 2020. The net charge-off rate (annualized) of average loans for this portfolio was 0.54% and 0.45% in the second quarter and first
Risk Management - Credit Risk Management (continued)

half of 2020, respectively, compared with 0.18% and 0.17% for the same periods a year ago. At June 30, 2020, 0.83% of this portfolio was nonaccruing, compared with 0.44% at December 31, 2019. Nonaccrual loans in this portfolio increased $1.4 billion from December 31, 2019, primarily in the oil, gas and pipelines category due to the economic impact of the COVID-19 pandemic. Also, $27.8We had $15.6 billion of the commercial and industrial loan and lease financing portfolio was internally classified as criticized in accordance with regulatory guidance at June 30, 2020,2021, compared with $16.6$19.3 billion at December 31, 2019, reflecting increases primarily2020. The change was driven by decreases in the oil, gas and pipelines, real estateretail, materials and construction,commodities, entertainment and recreation, and retail categories due totechnology, telecom and media industries reflecting improvement in the economic impact of the COVID-19 pandemic.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.
Wells Fargo & Company31
Risk Management – Credit Risk Management (continued)

Generally, the primary source of repayment for this portfolio is the operating cash flows of customers, with the collateral securing this portfolio representsrepresenting a secondary source of repayment.
The portfolio decreased slightly at June 30, 2021, compared with December 31, 2020, as a result of paydowns, partially offset
by limited loan draws. Table 1211 provides our commercial and industrial loans and lease financing by industry, and includes non-U.S. loans of $68.2 billion and $71.7 billion at June 30, 2020, and December 31, 2019, respectively. Significant industry concentrations of non-U.S. loans included $32.7 billion and $31.2 billion in the financials except banks category, and $15.5 billion and $19.9 billion in the banks category, at June 30, 2020, and December 31, 2019, respectively. The oil, gas and pipelines category included $1.6 billion of non-U.S. loans at both June 30, 2020, and December 31, 2019.industry. The industry categories are based on the North American Industry Classification System.
Table 11:Commercial and Industrial Loans and Lease Financing by Industry
June 30, 2021December 31, 2020
($ in millions)Nonaccrual loans Total portfolio% of total loans Total commitments (1)Nonaccrual loans Total portfolio% of total loans Total commitments (1)
Financials except banks$154 124,759 15 %$215,207 $160 117,726 13 %$206,999 
Technology, telecom and media65 20,669 2 59,245 144 23,061 3 56,500 
Real estate and construction136 22,488 3 54,354 133 23,113 3 51,526 
Equipment, machinery and parts manufacturing41 16,833 2 40,174 81 18,158 2 41,332 
Retail44 16,726 2 39,732 94 17,393 2 41,669 
Materials and commodities19 13,033 2 35,232 39 12,071 1 33,879 
Food and beverage manufacturing9 11,955 1 29,460 17 12,401 1 28,908 
Health care and pharmaceuticals26 13,484 2 29,259 145 15,322 2 32,154 
Oil, gas and pipelines486 9,186 1 28,785 953 10,471 1 30,055 
Auto related63 9,873 1 25,036 79 11,817 1 25,034 
Commercial services76 10,018 1 23,965 107 10,284 1 24,442 
Utilities67 7,136 *21,615 2 5,031 *18,564 
Insurance and fiduciaries1 4,371 *19,233 2 3,297 *14,334 
Diversified or miscellaneous27 6,309 *17,108 7 5,437 *14,717 
Transportation services492 8,566 116,866 573 9,236 1 15,531 
Entertainment and recreation68 7,612 *15,540 263 9,884 1 17,551 
Banks— 14,839 215,290 — 12,789 1 13,842 
Agribusiness57 5,402 *11,221 81 6,314 *11,642 
Government and education4 5,033 *10,793 9 5,464 *11,065 
Other (2)71 5,046 *19,693 68 5,623 *23,315 
Total$1,906 333,338 39 %$727,808 $2,957 334,892 33 %$713,059 
*Less than 1%.
(1)Total commitments consist of loans outstanding plus unfunded credit commitments, excluding issued letters of credit.
(2)No other single industry had total loans in excess of $3.4 billion and $3.8 billion at June 30, 2021, and December 31, 2020, respectively.
Loans to financials except banks, our largest industry concentration, were $112.1 billion, or 12% of total outstanding
loans, at June 30, 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 $72.4$88.1 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 June 30, 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. LoansIn addition, loans to financials except banks included collateralized loan obligations (CLOs) in loan form, all of $7.7which were rated AA or above, of $8.1 billion and $7.0$7.9 billion at June 30, 2020,2021, and December 31, 2019,2020, respectively.
Oil, gas and pipelines loans totaled $12.6 billion, or 1% of total outstanding loans, at June 30, 2020, compared with $13.6 billion, or 1% of total outstanding loans, at December 31, 2019. Oil, gas and pipelines loans included $8.9$6.6 billion and $9.2$7.5 billion of senior secured loans outstanding at June 30, 20202021, and December 31, 2019,2020, respectively. Oil, gas and pipelines
nonaccrual loans increaseddecreased at June 30, 2021, compared with December 31, 2020, driven by loan payoffs.
We continue to $1.4perform escalated credit monitoring for certain industries that we consider to be directly and most adversely affected by the COVID-19 pandemic.
Our commercial and industrial loans and lease financing portfolio also includes non-U.S. loans of $72.1 billion and $63.8 billion at June 30, 2020, compared with $615 million at2021, and December 31, 2019, due to new downgrades to nonaccrual status2020, respectively. Significant industry concentrations of non-U.S. loans at June 30, 2021, and December 31, 2020, respectively, included:
•$43.5 billion and $36.2 billion in second quarter 2020.the financials except banks category;
In addition to•$14.7 billion and $12.8 billion in the banks category; and
•$1.4 billion and $1.6 billion in the oil, gas and pipelines category, industries with escalated credit monitoring include retail, entertainment and recreation, transportation services, and commercial real estate.
Table 12:Commercial and Industrial Loans and Lease Financing by Industrycategory.
 June 30, 2020  December 31, 2019 
($ 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$219
 112,130
 12% $197,152
 $112
 117,312
 12% $200,848
Equipment, machinery and parts manufacturing98
 21,622
 2
 41,771
 36
 23,457
 2
 42,040
Technology, telecom and media61
 24,912
 3
 54,894
 28
 22,447
 2
 53,343
Real estate and construction290
 25,245
 3
 49,925
 47
 22,011
 2
 48,217
Banks—
 15,548
 2
 16,598
 —
 20,070
 2
 20,728
Retail216
 23,149
 2
 43,212
 105
 19,923
 2
 41,938
Materials and commodities46
 15,877
 2
 37,877
 33
 16,375
 2
 39,369
Automobile related24
 13,103
 1
 25,162
 24
 15,996
 2
 26,310
Food and beverage manufacturing12
 13,082
 1
 29,284
 9
 14,991
 2
 29,172
Health care and pharmaceuticals76
 17,144
 2
 32,481
 28
 14,920
 2
 30,168
Oil, gas and pipelines1,414
 12,598
 1
 32,679
 615
 13,562
 1
 35,445
Entertainment and recreation62
 11,820
 1
 18,134
 44
 13,462
 1
 19,854
Transportation services319
 10,849
 1
 17,040
 224
 10,957
 1
 17,660
Commercial services98
 12,095
 1
 24,548
 50
 10,455
 1
 22,713
Agribusiness54
 7,362
 *
 12,984
 35
 7,539
 *
 12,901
Utilities1
 6,486
 *
 20,615
 224
 5,995
 *
 19,390
Insurance and fiduciaries2
 6,032
 *
 17,069
 1
 5,525
 *
 15,596
Government and education6
 5,741
 *
 12,128
 6
 5,363
 *
 12,267
Other (2)36
 12,731
 1
 32,843
 19
 13,596
 *
 32,988
Total$3,034
 367,526
 39% $716,396
 $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)
No other single industry had total loans in excess of $4.4 billion and $4.7 billion at June 30, 2020, and December 31, 2019, respectively.

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 federal banking regulators'regulatory definitions of pass and criticized categories with criticized segmented among special mention, substandard, doubtful and loss categories. We had $15.6 billion of CRE mortgage loans classified as criticized at June 30, 2021, compared with $12.0 billion at December 31, 2020, and $2.6 billion of CRE construction loans classified as criticized at June 30, 2021,
32Wells Fargo & Company

compared with $1.6 billion at December 31, 2020. The increase in criticized CRE mortgage and construction loans was driven by the hotel/motel, apartment, institutional, and office property types and reflected the economic impact of the COVID-19 pandemic. Due to uncertainty in the recovery from the economic impacts of the COVID-19 pandemic, the credit quality of certain property types within our CRE loan portfolio, such as retail, hotel/motel, office buildings, and shopping centers, could continue to be adversely affected.
The total CRE loan portfolio decreased $441 million from December 31, 2020, driven by a decrease in CRE mortgage loans predominantly related to the office, retail (excluding shopping
center), and shopping center property types, partially offset by an increase in loans related to apartments. The CRE loan portfolio which included $8.2$8.4 billion of non-U.S. CRE loans totaled $145.7 billion, or 16% of total loans, at June 30, 2020, and consisted of $124.0 billion of mortgage loans and $21.7 billion of construction loans.
Table 13 summarizes CRE loans by state and property type with the related nonaccrual totals at June 30, 2020.2021. 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%25% and apartments at 19%20% of the portfolio.
Table 12 summarizes CRE loans by state and property type with the related nonaccrual loans totaled 0.86% of the CRE outstanding balancetotals at June 30, 2020, compared with 0.43% at December 31, 2019. The increase in CRE nonaccrual loans was driven by the hotel/motel, shopping center, and office buildings property types and reflected the economic impact of the COVID-19 pandemic. At June 30, 2020, we had $9.1 billion of criticized CRE mortgage loans, compared with $3.8 billion at December 31, 2019, and $1.3 billion of criticized CRE construction loans, compared with $187 million at December 31, 2019. The increase in criticized CRE mortgage and CRE construction loans was driven by the hotel/motel, shopping center, retail (excluding shopping center), and office building property types and reflected the economic impact of the COVID-19 pandemic.2021.

Table 13:12: CRE Loans by State and Property Type
June 30, 2021
Real estate mortgage Real estate construction Total % of
total
 loans
($ in millions)Nonaccrual loansTotal portfolioNonaccrual loansTotal portfolioNonaccrual loansTotal portfolio
By state:
California$218 30,684 3 4,380 221 35,064 4 %
New York58 12,618 2 1,997 60 14,615 2 
Florida111 8,617 1 1,571 112 10,188 1 
Texas308 8,253 — 1,139 308 9,392 1 
Washington139 3,839 6 1,072 145 4,911 *
Georgia51 3,820 — 585 51 4,405 *
North Carolina11 3,526 — 871 11 4,397 *
Arizona50 3,978 1 289 51 4,267 *
New Jersey72 2,637 — 1,042 72 3,679 *
Colorado12 3,146 — 440 12 3,586 *
Other (1)568 39,560 32 9,020 600 48,580 6 
Total$1,598 120,678 45 22,406 1,643 143,084 17 %
By property:
Office buildings$146 33,098 2 3,173 148 36,271 4 %
Apartments27 20,645 — 8,208 27 28,853 3 
Industrial/warehouse88 15,331 2 1,746 90 17,077 2 
Retail (excluding shopping center)230 13,091 3 142 233 13,233 2 
Hotel/motel361 10,552 — 1,719 361 12,271 1 
Shopping center509 10,002 — 911 509 10,913 1 
Institutional54 4,289 20 2,619 74 6,908 *
Mixed use properties98 5,306 — 938 98 6,244 *
Collateral pool— 2,947 — 191 — 3,138 *
1-4 family structure— 8 — 1,348 — 1,356 *
Other85 5,409 18 1,411 103 6,820 *
Total$1,598 120,678 45 22,406 1,643 143,084 17 %
 June 30, 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$149
 32,164
   2
 4,666
   151
 36,830
   4%
New York96
 12,952
   2
 2,059
   98
 15,011
   2
Florida27
 8,295
   1
 1,446
   28
 9,741
   1
Texas341
 8,047
   —
 1,226
   341
 9,273
   *
Washington13
 3,934
   —
 782
   13
 4,716
   *
Georgia15
 4,043
   —
 448
   15
 4,491
   *
North Carolina12
 3,737
   —
 648
   12
 4,385
   *
Arizona35
 3,862
   —
 318
   35
 4,180
   *
Colorado16
 3,300
   —
 587
   16
 3,887
   *
Virginia4
 3,036
   —
 664
   4
 3,700
   *
Other509
 40,597
   29
 8,850
   538
 49,447
 (1) 5
Total$1,217
 123,967
   34
 21,694
   1,251
 145,661
   16%
By property: 
                   
Office buildings$160
 35,280
   1
 3,209
   161
 38,489
   4%
Apartments11
 19,284
   —
 7,694
   11
 26,978
   3
Industrial/warehouse72
 16,149
   1
 1,674
   73
 17,823
   2
Retail (excluding shopping center)171
 14,211
   2
 181
   173
 14,392
   2
Hotel/motel170
 10,637
   —
 1,610
   170
 12,247
   1
Shopping center399
 10,878
   —
 1,055
   399
 11,933
   1
Mixed use properties90
 5,641
   —
 640
   90
 6,281
   *
Institutional77
 3,910
   20
 2,159
   97
 6,069
   *
Collateral pool—
 2,336
   —
 202
   —
 2,538
   *
Agriculture61
 2,006
   —
 9
   61
 2,015
   *
Other6
 3,635
   10
 3,261
   16
 6,896
   *
Total$1,217
 123,967
   34
 21,694
   1,251
 145,661
   16%
*    Less than 1%.
*Less than 1%.
(1)Consists of Includes 40 states, none of which states; no state in Other had loans in excess of $3.7 billion.$3.6 billion.

Wells Fargo & Company33
Risk Management -– Credit Risk Management (continued)


NON-U.SNON-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 June 30, 2020,2021, non-U.S. loans totaled $76.6$80.8 billion,, representing approximately 9% of our total consolidated loans outstanding, compared with $72.9 billion, or approximately 8% of our total consolidated loans outstanding, compared with $80.5 billion, or approximately 8% of total consolidated loans outstanding, at December 31, 2019.2020. Non-U.S. loans were approximately 4% of our total consolidated total assets at both June 30, 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 June 30, 2020,2021, was the United Kingdom, which totaled $36.3$34.4 billion, or approximately 2% of our total assets, and included $11.6$7.7 billion of sovereign claims. Our United Kingdom sovereign claims arise predominantly from deposits we have placed with the Bank of England pursuant to regulatory requirements in support of our London branch.
The United Kingdom 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 1413 provides information regarding our top 20 exposures by country (excluding the U.S.), based on our assessment of risk, which gives consideration to the country of any guarantors and/or underlying collateral. With respect to Table 13:
Table 14:
•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 14:13: Select Country Exposures
June 30, 2021
Lending and depositsSecuritiesDerivatives and otherTotal exposure
($ in millions)SovereignNon-sovereignSovereignNon-sovereignSovereignNon-sovereignSovereignNon-
sovereign (1)		Total
Top 20 country exposures:
United Kingdom$7,716 23,986 — 970 — 1,689 7,716 26,645 34,361 
Canada2 16,693 1 (19)2 456 5 17,130 17,135 
Japan19 700 11,173 161 — 46 11,192 907 12,099 
Cayman Islands— 6,757 — — — 153 — 6,910 6,910 
Ireland254 5,050 — 155 — 117 254 5,322 5,576 
Luxembourg— 4,258 — 126 — 129 — 4,513 4,513 
Guernsey— 4,157 — 3 — 39 — 4,199 4,199 
Bermuda— 3,842 — 65 — 130 — 4,037 4,037 
China— 3,353 (2)447 17 39 15 3,839 3,854 
Germany— 3,073 — 62 3 93 3 3,228 3,231 
France131 2,233 — 212 184 12 315 2,457 2,772 
Netherlands— 1,978 3 211 — 116 3 2,305 2,308 
South Korea— 1,991 — 198 2 13 2 2,202 2,204 
Brazil— 1,438 — 2 3 — 3 1,440 1,443 
Switzerland— 1,193 — (13)— 212 — 1,392 1,392 
United Arab Emirates— 1,014 — 87 — — — 1,101 1,101 
Australia— 992 — 8 — 11 — 1,011 1,011 
Singapore— 820 — 51 — 98 — 969 969 
Chile— 918 — — — — — 918 918 
India— 877 — 20 — — — 897 897 
Total top 20 country exposures$8,122 85,323 11,175 2,746 211 3,353 19,508 91,422 110,930 
(1)Total non-sovereign exposure comprised $47.6 billion exposure to financial institutions and $43.8 billion to non-financial corporations at June 30, 2021.
 June 30, 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$11,579
 21,649
 —
 1,189
 —
 1,894
 11,579
 24,732
 36,311
Canada4
 16,575
 —
 87
 —
 425
 4
 17,087
 17,091
Cayman Islands—
 6,398
 —
 —
 —
 138
 —
 6,536
 6,536
Ireland1,217
 4,873
 —
 168
 —
 117
 1,217
 5,158
 6,375
Japan19
 1,049
 4,535
 236
 —
 28
 4,554
 1,313
 5,867
Luxembourg—
 3,745
 —
 102
 —
 64
 —
 3,911
 3,911
Guernsey—
 3,522
 —
 3
 —
 16
 —
 3,541
 3,541
China—
 2,838
 (14) 327
 49
 53
 35
 3,218
 3,253
Bermuda—
 3,034
 —
 73
 —
 56
 —
 3,163
 3,163
Germany—
 2,621
 —
 179
 6
 60
 6
 2,860
 2,866
Netherlands—
 2,382
 —
 205
 —
 272
 —
 2,859
 2,859
South Korea—
 2,573
 (5) 181
 —
 16
 (5) 2,770
 2,765
Switzerland—
 1,924
 —
 (79) —
 121
 —
 1,966
 1,966
France—
 1,729
 —
 43
 20
 15
 20
 1,787
 1,807
Brazil—
 1,626
 —
 4
 5
 11
 5
 1,641
 1,646
Chile—
 1,481
 —
 150
 —
 2
 —
 1,633
 1,633
Australia—
 1,405
 —
 66
 —
 14
 —
 1,485
 1,485
Singapore—
 1,173
 —
 72
 —
 49
 —
 1,294
 1,294
India—
 1,185
 —
 94
 —
 —
 —
 1,279
 1,279
United Arab Emirates—
 1,029
 —
 3
 —
 2
 —
 1,034
 1,034
Total top 20 country exposures$12,819
 82,811
 4,516
 3,103
 80
 3,353
 17,415
 89,267
 106,682
(1)
For countries presented in the table, total non-sovereign exposure comprises $45.9 billion exposure to financial institutions and $43.3 billion to non-financial corporations at June 30, 2020.



REAL ESTATE 1-4 FAMILYRESIDENTIAL MORTGAGE LOANS Our real estate 1-4 familyresidential mortgage loan portfolio is comprised of both1-4 family first and junior lien mortgage loans. Residential mortgage – first lien loans which are presented in Table 15.comprised 93% of the total residential mortgage loan portfolio at both June 30, 2021, and December 31, 2020.
Table 15:Real Estate 1-4 Family Mortgage Loans
 June 30, 2020  December 31, 2019 
(in millions)Balance
 
% of
portfolio

 Balance
 
% of
portfolio

Real estate 1-4 family first mortgage$277,945
 91% $293,847
 91%
Real estate 1-4 family junior lien mortgage26,839
 9
 29,509
 9
Total real estate 1-4 family mortgage loans$304,784
 100% $323,356
 100%

The real estate 1-4 familyresidential 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 June 30, 2020,2021, and December 31, 2019.2020. We believe we have manageableour origination process appropriately addresses our adjustable-rate mortgage (ARM) reset risk across our residential mortgage loan portfolios including ARMand 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 familyresidential mortgage loans to assist homeowners and other borrowers experiencing financial difficulties. For moreadditional information on our modification programs, see the “Risk Management – Credit Risk Management – Real Estate 1-4 FamilyResidential Mortgage Loans” section in our 2019
2020 Form 10-K. For moreadditional information on customer accommodations, including loan modifications, in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section in this Report.
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 June 30, 2020, totaled $2.9 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 $6.8 billion, or 2% of total mortgages at June 30, 2020, compared with $7.6 billion, or 2%, at December 31, 2019. Mortgages with a LTV/CLTV greater than 100% totaled $2.3 billion at June 30, 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.
34Wells Fargo & Company

Real estate 1-4 mortgage loans by state are presented in Table 16. Our real estate 1-4 family mortgage loans to borrowers in California represented 13% of total loans at June 30, 2020, located predominantly within the larger metropolitan areas, with no single California metropolitan area consisting of more than 5% of total loans.
We monitor changes in real estate values and underlying economic or market conditions for all geographic areas of our real estate 1-4 familyresidential 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 FamilyResidential Mortgage Loans” section in our 20192020 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 June 30, 2021, totaled $3.7 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 $4.3 billion, or 2% of total mortgages at June 30, 2021, compared with $5.6 billion, or 2%, at December 31, 2020; and
•Mortgages with a LTV/CLTV greater than 100% totaled $912 million at June 30, 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 16:14: Real Estate 1-4 FamilyResidential Mortgage Loans by State
June 30, 2021
($ in millions)Residential mortgage – first lienResidential mortgage – junior lienTotal residential mortgage% of
total loans
Residential mortgage loans:
California (1)$96,679 5,155 101,834 12 %
New York29,635 1,117 30,752 4 
New Jersey10,491 1,988 12,479 1 
Florida9,839 1,804 11,643 1 
Washington8,088 414 8,502 1 
Texas6,956 388 7,344 1 
Virginia5,656 1,148 6,804 1 
North Carolina4,380 932 5,312 1 
Colorado4,668 400 5,068 1 
Other (2)47,748 6,291 54,039 6 
Government insured/guaranteed loans (3)20,231 — 20,231 2 
Total$244,371 19,637 264,008 31 %
(1)Our 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 $5.1 billion.
(3)Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA).
 June 30, 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 mortgage loans:       
California$112,828
 7,291
 120,119
 13%
New York31,163
 1,406
 32,569
 3
New Jersey13,159
 2,539
 15,698
 2
Florida11,172
 2,393
 13,565
 2
Washington10,302
 603
 10,905
 1
Virginia7,829
 1,549
 9,378
 1
Texas8,309
 546
 8,855
 1
North Carolina5,287
 1,262
 6,549
 1
Colorado5,929
 595
 6,524
 1
Other (1)59,505
 8,655
 68,160
 7
Government insured/
guaranteed loans (2)
12,462
 —
 12,462
 1
Total$277,945
 26,839
 304,784
 33%
(1)
Consists of Wells Fargo & Company41 states; none of which had loans in excess of $6.2 billion.
35
(2)
Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA).

Risk Management -– Credit Risk Management (continued)


Residential Mortgage – First Lien Mortgage Portfolio Our total real estate 1-4 familyresidential mortgage – first lien portfolio decreased $32.3 billion from December 31, 2020, driven by loan paydowns as a result of the low interest rate environment and the transfer of $10.8 billion of first lien mortgage portfolio (first mortgage) decreased $15.0 billion and $15.9 billionloans to loans held for sale (LHFS) substantially all of which related to the sales of loans purchased
from GNMA loan securitization pools in the second quarter and first half of 2020, respectively. Mortgage loanprior periods, partially offset by originations of $16.4 billion and $30.7 billion in the second quarter and first half of 2020, respectively, were more than offset by paydowns. In addition, in second quarter 2020 we designated $10.4 billion of first mortgage loans as MLHFS.
Net loan charge-offs (annualized) as a percentage of average first mortgage loans were 0.00% in both the second quarter and first half of 2020, compared with a net recovery of 0.04% and
0.03% for the same periods a year ago. Nonaccrual loans were $2.4 billion at June 30, 2020, up $243 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 “Risk Management – Credit Risk Management – Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)” section in this Report.$30.8 billion.
Table 1715 shows certain delinquency and loss information for the residential mortgage – first mortgagelien portfolio and lists the top five states by outstanding balance.
Table 17:15: Residential Mortgage – First MortgageLien Portfolio Performance
Outstanding balance% of loans 30 days
or more past due		Loss (recovery) rate (annualized) quarter ended
($ in millions)Jun 30,
2021		Dec 31,
2020		Jun 30,
2021		Dec 31,
2020		Jun 30,
2021		Mar 31,
2021		Dec 31,
2020		Sep 30,
2020		Jun 30,
2020
California$96,679 104,260 0.84 %1.00 (0.02)(0.02)(0.03)(0.01)(0.01)
New York29,635 31,028 1.12 1.40 0.01 (0.01)0.01 0.02 0.02 
New Jersey10,491 12,073 1.71 1.92 (0.03)— (0.03)(0.01)0.03 
Florida9,839 10,623 2.04 2.56 (0.14)(0.11)0.01 0.03 (0.01)
Washington8,088 9,094 0.51 0.66 (0.02)0.02 (0.01)0.01 (0.01)
Other69,408 79,356 1.42 1.60 (0.06)(0.09)0.02 (0.01)0.01 
Total224,140 246,434 1.14 1.34 (0.03)(0.04)— — — 
Government insured/guaranteed loans20,231 30,240 
Total first lien mortgage portfolio$244,371 276,674 
 Outstanding balance  
% of loans 30 days
or more past due
 Loss (recovery) rate (annualized) quarter ended 
(in millions)Jun 30,
2020
Dec 31,
2019
 Jun 30,
2020
Dec 31,
2019		 Jun 30,
2020
Mar 31,
2020
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
California$112,828
118,256
 0.59%0.48 (0.01)(0.01)(0.02)(0.01)(0.04)
New York31,163
31,336
 0.95
0.83 0.02
(0.01)0.02
0.01
—
New Jersey13,159
14,113
 1.38
1.40 0.03
—
0.02
0.02
(0.06)
Florida11,172
11,804
 2.07
1.81 (0.01)(0.03)(0.06)(0.07)(0.11)
Washington10,302
10,863
 0.37
0.29 (0.01)(0.02)(0.02)—
(0.03)
Other86,859
95,750
 1.21
1.20 0.01
0.01
(0.02)—
(0.06)
Total265,483
282,122
 0.93
0.86 —
—
(0.02)(0.01)(0.04)
Government insured/guaranteed loans12,462
11,170
         
PCI (1)N/A
555
         
Total first lien mortgages$277,945
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.
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 mostlyprimarily 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 mortgagelien loan is delinquent.
The decrease in the residential mortgage – junior lien portfolio at June 30, 2021, compared with December 31, 2020, reflected loan paydowns. Table 1816 shows certain delinquency and loss information for the residential mortgage – junior lien mortgage portfolio and lists the top five states by outstanding balance. The decrease in outstanding balances since December 31, 2019, predominantly
Table 16:Residential Mortgage – Junior Lien Portfolio Performance
Outstanding balance 
% of loans 30 days
or more past due
Loss (recovery) rate (annualized) quarter ended
($ in millions)Jun 30,
2021		Dec 31,
2020		Jun 30,
2021		Dec 31,
2020		Jun 30,
2021		Mar 31,
2021		Dec 31,
2020		Sep 30,
2020		Jun 30,
2020
California$5,155 6,237 2.49 %2.20 (0.67)(0.69)(0.46)(0.34)(0.26)
New Jersey1,988 2,258 2.78 2.84 (0.33)0.32 (0.06)(0.02)(0.12)
Florida1,804 2,119 2.67 3.06 (0.78)(0.11)(0.35)(0.22)(0.01)
Pennsylvania1,196 1,377 2.22 2.30 (0.13)(0.22)(0.62)(0.19)0.05 
Virginia1,148 1,355 2.53 2.41 (0.62)(0.29)(0.15)(0.34)(0.05)
Other8,346 9,940 2.37 2.31 (0.64)(0.36)(0.43)(0.17)(0.21)
Total junior lien mortgage portfolio$19,637 23,286 2.47 %2.41 (0.60)(0.35)(0.39)(0.22)(0.17)

reflected loan paydowns. In second quarter 2020, we suspended the origination of junior lien mortgages.
As of June 30, 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 2% of the outstanding balance of the residential mortgage – junior lien mortgage portfolio was associated with loans that had a combined loan to value (CLTV) ratio in excess of 100%. Of those junior lien mortgages with a CLTV ratio in excess of 100%, portfolio;
•3% were 30 days or more past due. CLTV meansCustomer payment deferral activities instituted in response to the ratioCOVID-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 June 30, 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 6.124.11 in Note 64 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.
Table 18:Junior Lien Mortgage Portfolio Performance
 Outstanding balance  
% of loans 30 days
or more past due
 Loss (recovery) rate (annualized) quarter ended 
(in millions)Jun 30,
2020
 Dec 31,
2019
 Jun 30,
2020
 Dec 31,
2019		 Jun 30,
2020
 Mar 31,
2020
 Dec 31,
2019
 Sep 30,
2019
 Jun 30,
2019
California$7,291
 8,054
 1.55% 1.62 (0.26) (0.36) (0.44) (0.51) (0.40)
New Jersey2,539
 2,744
 2.36
 2.74 (0.12) 0.13
 0.07
 0.11
 (0.07)
Florida2,393
 2,600
 2.38
 2.93 (0.01) —
 (0.09) (0.11) (0.11)
Virginia1,549
 1,712
 1.79
 1.97 (0.05) 0.09
 (0.02) (0.23) (0.17)
Pennsylvania1,540
 1,674
 1.78
 2.16 0.05
 0.11
 (0.10) (0.05) (0.19)
Other11,527
 12,712
 1.77
 2.05 (0.21) 0.01
 (0.18) (0.29) (0.22)
Total26,839
 29,496
 1.82
 2.07 (0.17) (0.07) (0.21) (0.28) (0.24)
PCI (1)N/A
 13
              
Total junior lien mortgages$26,839
 29,509
              
(1)36In 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

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 onlyinterest-only or (2) 1.5% of outstanding principal balance plus accrued interest. As of June 30, 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 June 2020, excluding borrowers with COVID-19 related loan modification payment deferrals, approximately 44% of borrowers paid only the minimum amount due and approximately 52% paid more than the minimum amount due. The rest were either
delinquent or paid less than the minimum amount due. For the borrowers with an interest-only payment feature, approximately 28% paid only the minimum amount due and approximately 68% 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 allowanceACL for credit lossloans 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 1917 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-drawend 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 $49.8 billion at June 30, 2021.

Table 17:Residential Mortgage – Junior Lien Line and Loan and Residential Mortgage – First Lien Line Portfolios Payment Schedule
Scheduled end of draw/termAmortizing (2)
Outstanding balanceRemainder of 20212026 and
($ in millions)June 30, 20212022202320242025thereafter (1)
Residential mortgage – junior lien lines and loans$19,637 384 2,271 1,563 1,239 2,059 6,050 6,071 
Residential mortgage – first lien lines7,957 212 1,212 929 721 1,006 2,495 1,382 
Total$27,594 596 3,483 2,492 1,960 3,065 8,545 7,453 
% of portfolios100 %2 13 9 7 11 31 27 
(1)Substantially all lines and loans are scheduled to convert to amortizing loans by the end of 2030, with annual scheduled amounts through 2030 ranging from $914 million to $3.3 billion and averaging $1.7 billion per year.
(2)Includes $69 million of end-of-term balloon payments which were past due.
At June 30, 2020, $3672021, $339 million, or 1%2%, of lines in their draw period were 30 days or more past due, compared with $344$347 million, or 4%5%, of amortizing lines of credit. Included in the amortizing amounts in Table 19 is $61 million of end-of-term balloon payments which were past due. The unfunded credit commitments for junior and first lien lines totaled $57.7 billion at June 30, 2020.
Table 19:Junior Lien Mortgage Line and Loan and First Lien Mortgage Line Portfolios Payment Schedule
     Scheduled end of draw / term   
(in millions)Outstanding balance June 30, 2020
 Remainder of 2020
 2021
 2022
 2023
 2024
 
2025 and
thereafter (1)

 Amortizing
Junior lien lines and loans$26,839
 133
 739
 2,982
 2,055
 1,646
 11,101
 8,183
First lien lines9,806
 60
 367
 1,501
 1,128
 879
 4,247
 1,624
Total$36,645
 193
 1,106
 4,483
 3,183
 2,525
 15,348
 9,807
% of portfolios100% 1
 3
 12
 9
 7
 42
 26
(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 $1.7 billion to $4.3 billion and averaging $2.9 billion per year.
CREDIT CARDS  Our credit card portfolio totaled $36.0 billion at June 30, 2020, which represented 4% of our total outstanding loans. The net charge-off rate (annualized) for our credit card portfolio was 3.60% for second quarter 2020, compared with 3.68% for second quarter 2019, and 3.71% for the first half of both 2020 and 2019. The decrease in the net charge-off rate in second quarter 2020, compared with the same period a year ago, was driven by payment deferral activities in response to the COVID-19 pandemic.
AUTOMOBILEOur automobile portfolio totaled $48.8 billion at June 30, 2020. The net charge-off rate (annualized) for our automobile portfolio was 0.88% for second quarter 2020, compared with 0.46% for second quarter 2019, and 0.78% and 0.64% for the first half of 2020 and 2019, respectively. The increase in the net charge-off rate in the second quarter and first half of 2020, compared with the same periods in 2019, was driven by lower recoveries due to the temporary suspension of involuntary repossessions in response to the COVID-19 pandemic.
OTHER REVOLVING CREDIT AND INSTALLMENTOther revolving credit and installment loans totaled $32.4 billion at June 30, 2020, and largely included student and securities-based loans. Our private student loan portfolio totaled $10.3 billion at June 30, 2020. On July 1, 2020, we announced that only customers with an outstanding private student loan balance will be eligible for new loans for the upcoming academic year. The net charge-off rate (annualized) for other revolving credit and installment loans was 1.09% for second quarter 2020, compared with 1.56% for second quarter 2019, and 1.35% and 1.52% for the first half of 2020 and 2019, respectively. The decrease in the net charge-off rate in the second quarter and first half of 2020, compared with the same periods a year ago, was driven by payment deferral activities in response to the COVID-19 pandemic.
Risk Management - Credit Risk Management (continued)

NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS)Table 20 summarizes nonperforming assets (NPAs) for each of the last four quarters. Total NPAs increased $1.4 billion from first quarter 2020 to $7.8 billion. Nonaccrual loans of $7.6 billion increased $1.4 billion from first quarter 2020. The increase in nonaccrual loans was driven by an increase in commercial nonaccrual loans predominantly due to an increase in oil and gas and real estate mortgage nonaccrual loans as the economic impact of the COVID-19 pandemic continued to impact our customer base. Customer payment deferral activities instituted in response to the COVID-19 pandemic maycould continue to delay the recognition of delinquencies for customers who otherwise would have moved into nonaccrual status. Priordelinquencies. On a monthly basis, we monitor the payment characteristics of borrowers in our residential mortgage – first and junior lien lines of credit portfolios. In June 2021, excluding borrowers with COVID-related loan modification payment deferrals:
•Approximately 43% of these borrowers paid only the minimum amount due and approximately 52% paid more than the minimum amount due. The rest were either delinquent or paid less than the minimum amount due.
•For the borrowers with an interest-only payment feature, approximately 28% paid only the minimum amount due and approximately 67% paid more than the minimum amount due.
Table 18: Credit Card, Auto, and Other Consumer Loans
June 30, 2021December 31, 2020
($ in millions)Outstanding
balance		% of
total
loans		Outstanding
balance		% of
total
loans
Credit card$34,936 4.10 %$36,664 4.13 %
Auto51,073 5.99 48,187 5.43 
Other consumer (1)25,861 3.03 24,409 2.75 
Total$111,870 13.13 %$109,260 12.31 %
(1)Other consumer loans primarily include securities-based loans.

CREDIT CARDOur credit card portfolio totaled $34.9 billion at June 30, 2021, compared with $36.7 billion at December 31, 2020. The decrease in the outstanding balance at June 30, 2021, compared with December 31, 2020, was due 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,seasonal paydowns.
 
AUTOOur auto portfolio totaled $51.1 billion at June 30, 2021, compared with $48.2 billion at December 31, 2020. The outstanding balance at June 30, 2021, compared with December 31, 2020, $275 million of real estate 1-4 family mortgageincreased as originations exceeded paydowns.

OTHER CONSUMEROther consumer loans, were reclassified from PCI to PCDwhich include revolving credit and installment 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.totaled $25.9 billion at June 30, 2021, compared with $24.4 billion at December 31, 2020.
Wells Fargo & Company37
Risk Management – Credit Risk Management (continued)

NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS) For information about when we generally place loans on nonaccrual status, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 20192020 Form 10-K. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of nonaccrual loans for those customers who would have otherwise moved into nonaccrual status. For more additional
information on customer accommodations, including loan modifications, in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section in this Report.
ForeclosedTable 19 summarizes nonperforming assets (NPAs) for each of $195 million were down $57 million from first quarter 2020.the last four quarters.

Table 20:19: Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)
June 30, 2021March 31, 2021December 31, 2020September 30, 2020
($ in millions)Balance% of
total
loans		Balance% of
total
loans		Balance% of
total
loans		Balance% of
total
loans
Nonaccrual loans:
Commercial:
Commercial and industrial$1,691 0.53 %$2,223 0.70 %$2,698 0.85 %$2,834 0.88 %
Real estate mortgage1,598 1.32 1,703 1.41 1,774 1.46 1,343 1.10 
Real estate construction45 0.20 55 0.26 48 0.22 34 0.15 
Lease financing215 1.37 249 1.58 259 1.61 187 1.10 
Total commercial3,549 0.74 4,230 0.89 4,779 1.00 4,398 0.91 
Consumer:
Residential mortgage – first lien (1)2,852 1.17 2,859 1.12 2,957 1.07 2,641 0.90 
Residential mortgage – junior lien (1)713 3.63 747 3.51 754 3.24 767 3.05 
Auto221 0.43 181 0.37 202 0.42 176 0.36 
Other consumer36 0.14 38 0.15 36 0.15 40 0.12 
Total consumer3,822 1.02 3,825 1.00 3,949 0.97 3,624 0.83 
Total nonaccrual loans7,371 0.86 8,055 0.93 8,728 0.98 8,022 0.87 
Foreclosed assets:
Government insured/guaranteed (2)15 16 18 22 
Non-government insured/guaranteed114 124 141 134 
Total foreclosed assets129 140 159 156 
Total nonperforming assets$7,500 0.88 %$8,195 0.95 %$8,887 1.00 %$8,178 0.89 %
Change in NPAs from prior quarter$(695)$(692)$709 $378 
(1)Residential mortgage loans 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 $1.2 billion from December 31, 2020, predominantly due to a decline in commercial and industrial nonaccrual loans, driven by a decrease in oil, gas, and pipeline nonaccrual loans, reflecting improvement in the economic environment. For additional information on commercial and industrial nonaccrual loans, see the “Risk Management – Credit Risk Management – Commercial and Industrial Loans and Lease Financing” section in this Report.
Consumer nonaccrual loans decreased $127 million from December 31, 2020, driven by a decline in residential mortgage nonaccrual loans.
  June 30, 2020  March 31, 2020  December 31, 2019  September 30, 2019 
($ in millions) Balance
 
% of
total
loans

 Balance
 
% of
total
loans

 Balance
 
% of
total
loans

 Balance
 
% of
total
loans

Nonaccrual loans:                
Commercial:                
Commercial and industrial $2,896
 0.83% $1,779
 0.44% $1,545
 0.44% $1,539
 0.44%
Real estate mortgage 1,217
 0.98
 944
 0.77
 573
 0.47
 669
 0.55
Real estate construction 34
 0.16
 21
 0.10
 41
 0.21
 32
 0.16
Lease financing 138
 0.79
 131
 0.68
 95
 0.48
 72
 0.37
Total commercial 4,285
 0.83
 2,875
 0.51
 2,254
 0.44
 2,312
 0.45
Consumer:                
Real estate 1-4 family first mortgage (1) 2,393
 0.86
 2,372
 0.81
 2,150
 0.73
 2,261
 0.78
Real estate 1-4 family junior lien mortgage (1) 753
 2.81
 769
 2.70
 796
 2.70
 819
 2.66
Automobile 129
 0.26
 99
 0.20
 106
 0.22
 110
 0.24
Other revolving credit and installment 45
 0.14
 41
 0.12
 40
 0.12
 43
 0.12
Total consumer 3,320
 0.79
 3,281
 0.74
 3,092
 0.69
 3,233
 0.73
Total nonaccrual loans 7,605
 0.81
 6,156
 0.61
 5,346
 0.56
 5,545
 0.58
Foreclosed assets:                
Government insured/guaranteed (2) 31
   43
   50
   59
  
Non-government insured/guaranteed 164
   209
   253
   378
  
Total foreclosed assets 195
   252
   303
   437
  
Total nonperforming assets $7,800
 0.83% $6,408
 0.63% $5,649
 0.59% $5,982
 0.63%
Change in NPAs from prior quarter $1,392
   759
   (333)   (317)  
(1)38
Real estate 1-4 family mortgage loans Wells Fargo & Companypredominantly 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 2120 provides an analysis of the changes in nonaccrual loans.
Table 21:Analysis of Changes in Nonaccrual Loans
 Quarter ended 
(in millions)Jun 30,
2020
 Mar 31,
2020
 Dec 31,
2019
 Sep 30,
2019
 Jun 30,
2019
Commercial nonaccrual loans         
Balance, beginning of period$2,875
 2,254
 2,312
 2,470
 2,797
Inflows2,741
 1,479
 652
 710
 621
Outflows:         
Returned to accruing(64) (56) (124) (52) (46)
Foreclosures—
 —
 —
 (78) (2)
Charge-offs(560) (360) (201) (194) (187)
Payments, sales and other(707) (442) (385) (544) (713)
Total outflows(1,331) (858) (710) (868) (948)
Balance, end of period4,285

2,875

2,254

2,312

2,470
Consumer nonaccrual loans         
Balance, beginning of period3,281
 3,092
 3,233
 3,452
 4,108
Inflows (1)379
 749
 473
 448
 437
Outflows:         
Returned to accruing(135) (254) (227) (274) (250)
Foreclosures(6) (21) (29) (32) (34)
Charge-offs(39) (48) (45) (44) (34)
Payments, sales and other(160) (237) (313) (317) (775)
Total outflows(340) (560) (614) (667) (1,093)
Balance, end of period3,320

3,281

3,092

3,233

3,452
Total nonaccrual loans$7,605
 6,156
 5,346
 5,545
 5,922
(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, weChanges in Nonaccrual Loans
Quarter ended
(in millions)Jun 30,
2021		Mar 31,
2021		Dec 31,
2020		Sep 30,
2020		Jun 30,
2020
Commercial nonaccrual loans
Balance, beginning of period$4,230 4,779 4,398 4,285 2,875 
Inflows560 773 1,696 1,316 2,741 
Outflows:
Returned to accruing(287)(177)(99)(166)(64)
Foreclosures(3)(6)(37)— — 
Charge-offs(145)(202)(367)(382)(560)
Payments, sales and other(806)(937)(812)(655)(707)
Total outflows(1,241)(1,322)(1,315)(1,203)(1,331)
Balance, end of period3,549 4,230 4,779 4,398 4,285 
Consumer nonaccrual loans
Balance, beginning of period3,825 3,949 3,624 3,320 3,281 
Inflows563 454 792 696 379 
Outflows:
Returned to accruing(200)(152)(208)(160)(135)
Foreclosures(16)(19)(5)(4)(6)
Charge-offs(17)(26)(36)(36)(39)
Payments, sales and other(333)(381)(218)(192)(160)
Total outflows(566)(578)(467)(392)(340)
Balance, end of period3,822 3,825 3,949 3,624 3,320 
Total nonaccrual loans$7,371 8,055 8,728 8,022 7,605 

We believe exposure to loss on nonaccrual loans is significantly mitigated by the following factors at June 30, 2020:2021:
•96% of total commercial nonaccrual loans and 99% of total consumer nonaccrual loans are secured. Of the consumer nonaccrual loans, 93% are secured by real estate and 93% have a combined LTV (CLTV) ratio of 80% or less.
•71% of commercial nonaccrual loans were current on interest and 66% of commercial nonaccrual loans were current on both principal and interest, but were on nonaccrual status because the full or timely collection of interest or principal had become uncertain.
•of the $1.0 billion of consumer loans in bankruptcy or discharged in bankruptcy, and classified as nonaccrual, $691 million were current.
•
90% of total commercial nonaccrual loans and 99% of total consumer nonaccrual loans are secured. Of the consumer nonaccrual loans, 95% are secured by real estate and 89% have a combined LTV (CLTV) ratio of 80% or less.
•
losses of $708 million and $990 million have already been recognized on 16% 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.

•
80% of commercial nonaccrual loans were current on interest and 75% of commercial nonaccrual loans were current on both principal and interest, but were on nonaccrual status because the full or timely collection of interest or principal had become uncertain.
•
of the $1.3 billion of consumer loans in bankruptcy or discharged in bankruptcy, and classified as nonaccrual, $866 million were current.
the remaining risk of loss of all nonaccrual loans has been considered and we believe is adequately covered by thein 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 & Company39
Risk Management -– Credit Risk Management (continued)


Table 2221 provides a summary of foreclosed assets and an analysis of changes in foreclosed assets.



Table 22:21: Foreclosed Assets
Quarter ended
(in millions)Jun 30,
2021		Mar 31,
2021		Dec 31,
2020		Sep 30,
2020		Jun 30,
2020
Summary by loan segment
Government insured/guaranteed$15 16 18 22 31 
Commercial63 64 70 39 45 
Consumer51 60 71 95 119 
Total foreclosed assets$129 140 159 156 195 
Analysis of changes in foreclosed assets
Balance, beginning of period$140 159 156 195 252 
Net change in government insured/guaranteed (1)(1)(2)(4)(9)(12)
Additions to foreclosed assets (2)96 88 114 60 51 
Reductions:
Sales(104)(107)(104)(88)(98)
Write-downs and gains (losses) on sales(2)2 (3)(2)2 
Total reductions(106)(105)(107)(90)(96)
Balance, end of period$129 140 159 156 195 
(1)Foreclosed government insured/guaranteed loans are temporarily transferred to and held by us as servicer, until reimbursement is received from FHA or VA.
(2)Includes loans moved into foreclosed assets from nonaccrual status and repossessed autos.
(in millions)Jun 30,
2020
 Mar 31,
2020
 Dec 31,
2019
 Sep 30,
2019
 Jun 30,
2019
Summary by loan segment         
Government insured/guaranteed$31
 43
 50
 59
 68
Commercial45
 49
 62
 180
 101
Consumer119
 160
 191
 198
 208
Total foreclosed assets$195
 252
 303
 437
 377
Analysis of changes in foreclosed assets         
Balance, beginning of period$252
 303
 437
 377
 436
Net change in government insured/guaranteed (1)(12) (7) (9) (9) (7)
Additions to foreclosed assets (2)51
 107
 126
 235
 144
Reductions:         
Sales(98) (154) (250) (155) (199)
Write-downs and gains (losses) on sales2
 3
 (1) (11) 3
Total reductions(96) (151) (251) (166) (196)
Balance, end of period$195
 252
 303
 437
 377

(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 June 30, 2020,2021, included $138$49 million of foreclosed residential real estate, of which 22%30% 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 $195$129 million in foreclosed assets at June 30, 2020, 64%2021, 61% have been in the foreclosed assets portfolio for one year or less.
As part of our actions to support customers during the COVID-19 pandemic, we have temporarily suspended certain mortgage foreclosure activities, which may affecthas 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 23:Troubled Debt Restructurings (TDRs)
(in millions)Jun 30,
2020

Mar 31,
2020

Dec 31,
2019

Sep 30,
2019

Jun 30,
2019
Commercial:         
Commercial and industrial$1,882
 1,302
 1,183
 1,162
 1,294
Real estate mortgage717
 697
 669
 598
 620
Real estate construction20
 33
 36
 40
 43
Lease financing10
 10
 13
 16
 31
Total commercial TDRs2,629
 2,042
 1,901
 1,816
 1,988
Consumer:         
Real estate 1-4 family first mortgage7,176
 7,284
 7,589
 7,905
 8,218
Real estate 1-4 family junior lien mortgage1,309
 1,356
 1,407
 1,457
 1,550
Credit Card510
 527
 520
 504
 486
Automobile108
 76
 81
 82
 85
Other revolving credit and installment173
 172
 170
 167
 159
Trial modifications91
 108
 115
 123
 127
Total consumer TDRs9,367
 9,523
 9,882
 10,238
 10,625
Total TDRs$11,996
 11,565
 11,783
 12,054
 12,613
TDRs on nonaccrual status$3,475
 2,846
 2,833
 2,775
 3,058
TDRs on accrual status:         
Government insured/guaranteed1,277
 1,157
 1,190
 1,199
 1,209
Non-government insured/guaranteed7,244
 7,562
 7,760
 8,080
 8,346
Total TDRs$11,996
 11,565
 11,783
 12,054
 12,613
Table 2322 provides information regarding the recorded investment of loans modified in TDRs. TDRs decreased from December 31, 2020, due to paydowns and a $436 million transfer from residential mortgage – first lien loans to LHFS related to the sales of loans purchased from GNMA loan securitization pools in 2020. The allowance for loan losses foramount of our TDRs was $607 million and $1.0 billion at June 30, 2020,2021, would have otherwise been higher without the TDR relief provided by the CARES Act and December 31, 2019, respectively. See Note 6 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report for additional information regarding TDRs. Interagency Statement.
Table 22:TDR Balances
(in millions)Jun 30,
2021		Mar 31,
2021		Dec 31,
2020		Sep 30,
2020		Jun 30,
2020
Commercial:
Commercial and industrial$1,225 1,331 1,933 2,082 1,882 
Real estate mortgage645 652 774 805 717 
Real estate construction15 21 15 21 20 
Lease financing9 9 9 9 10 
Total commercial TDRs1,894 2,013 2,731 2,917 2,629 
Consumer:
Residential mortgage – first lien8,841 9,446 9,764 9,420 7,176 
Residential mortgage – junior lien1,097 1,174 1,237 1,298 1,309 
Credit card368 411 458 494 510 
Auto196 156 176 156 108 
Other consumer63 67 67 190 173 
Trial modifications77 81 90 91 91 
Total consumer TDRs10,642 11,335 11,792 11,649 9,367 
Total TDRs$12,536 13,348 14,523 14,566 11,996 
TDRs on nonaccrual status$3,711 3,800 4,456 4,163 3,475 
TDRs on accrual status:
Government insured/guaranteed3,431 3,708 3,721 3,467 1,277 
Non-government insured/guaranteed5,394 5,840 6,346 6,936 7,244 
Total TDRs$12,536 13,348 14,523 14,566 11,996 
40Wells 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 $360 million and $565 million at June 30, 2021, and December 31, 2020, respectively. As part of our actions to support customers during the COVID-19 pandemic, we have provided borrowers relief in the form of loan modifications. Under the CARES Act and the Interagency Statement, loan modifications related to the COVID-19 pandemic will not be classified as TDRs if they meet certain eligibility criteria. For moreadditional information on the CARES Act
and the Interagency Statement, see the “Risk Management – Credit Risk Management – Credit Quality Overview – Troubled Debt Restructuring Relief”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 20192020 Form 10-K.
Table 2423 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 asIn 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 24:23: Analysis of Changes in TDRs
Quarter ended
(in millions)Jun 30,
2021		Mar 31,
2021		Dec 31,
2020		Sep 30,
2020		Jun 30,
2020
Commercial TDRs
Balance, beginning of period$2,013 2,731 2,917 2,629 2,042 
Inflows (1)336 155 486 866 971 
Outflows
Charge-offs(45)(49)(72)(77)(60)
Foreclosure— (5)— — — 
Payments, sales and other (2)(410)(819)(600)(501)(324)
Balance, end of period1,894 2,013 2,731 2,917 2,629 
Consumer TDRs
Balance, beginning of period11,335 11,792 11,649 9,367 9,523 
Inflows (1)495 633 1,226 2,805 425 
Outflows
Charge-offs(36)(43)(57)(58)(46)
Foreclosure(15)(14)(5)(7)(8)
Payments, sales and other (2)(1,133)(1,024)(1,020)(458)(510)
Net change in trial modifications (3)(4)(9)(1)— (17)
Balance, end of period10,642 11,335 11,792 11,649 9,367 
Total TDRs$12,536 13,348 14,523 14,566 11,996 
(1)Inflows include loans that modify, even if they resolve within the period, as well as gross advances on term loans that modified in a prior period and net advances on revolving TDRs that modified in a prior period.
(2)Other outflows include normal amortization/accretion of loan basis adjustments and loans transferred to held for sale. Occasionally, loans that have been refinanced or restructured at market terms qualify as new loans, which are also included as other outflows.
(3)Net change in trial modifications includes: inflows of new TDRs entering the trial payment period, net of outflows for modifications that either (i) successfully perform and enter into a permanent modification, or (ii) did not successfully perform according to the terms of the trial period plan and are subsequently charged-off, foreclosed upon or otherwise resolved.
     Quarter ended 
(in millions)Jun 30,
2020
 Mar 31,
2020
 Dec 31,
2019
 Sep 30,
2019
 Jun 30,
2019
Commercial TDRs         
Balance, beginning of quarter$2,042
 1,901
 1,816
 1,988
 2,512
Inflows (1)971
 452
 476
 293
 232
Outflows         
Charge-offs(60) (56) (48) (66) (37)
Foreclosures—
 —
 (1) —
 —
Payments, sales and other (2)(324) (255) (342) (399) (719)
Balance, end of quarter2,629
 2,042
 1,901
 1,816
 1,988
Consumer TDRs         
Balance, beginning of quarter9,523
 9,882
 10,238
 10,625
 12,797
Inflows (1)425
 312
 350
 360
 336
Outflows         
Charge-offs(46) (63) (57) (56) (61)
Foreclosures(8) (57) (61) (70) (74)
Payments, sales and other (2)(510) (544) (580) (617) (2,364)
Net change in trial modifications (3)(17) (7) (8) (4) (9)
Balance, end of quarter9,367
 9,523
 9,882
 10,238
 10,625
Total TDRs$11,996
 11,565
 11,783
 12,054
 12,613
(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 & Company41
(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 familyresidential 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 June 30, 2020, were down $116 million, or 12%, from December 31, 2019 due to payoffs and lower delinquencies in consumer loans as payment deferral activities instituted in response to the COVID-19 pandemic
delayed recognition of delinquencies for customers who would have otherwise moved into past due status, partially offset by an increase in commercial loans 90 days or more past due and still accruing driven by credit deterioration due to the economic impact of the COVID-19 pandemic.
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 $8.9 billion at June 30, 2020, up from $6.4 billion at December 31, 2019, due to the economic slowdown related to the COVID-19 pandemic affecting our customers.
Table 2524 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 25:24: Loans 90 Days or More Past Due and Still Accruing
(in millions)Jun 30,
2021		Mar 31,
2021		Dec 31,
2020		Sep 30,
2020		Jun 30,
2020
Total:$4,703 6,273 7,041 11,698 9,739 
Less: FHA insured/VA guaranteed (1)3,966 5,406 6,351 11,041 8,922 
Total, not government insured/guaranteed$737 867 690 657 817 
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial$165 55 39 61 101 
Real estate mortgage105 128 38 47 44 
Real estate construction7 86 1 — — 
Total commercial277 269 78 108 145 
Consumer:
Residential mortgage – first lien73 85 135 97 93 
Residential mortgage – junior lien12 15 19 28 19 
Credit card271 394 365 297 418 
Auto43 46 65 50 54 
Other consumer61 58 28 77 88 
Total consumer460 598 612 549 672 
Total, not government insured/guaranteed$737 867 690 657 817 
(1)Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.
Loans 90 days or more past due and still accruing, excluding government insured/guaranteed loans, at June 30, 2021, were up from December 31, 2020, due to an increase in delinquent commercial real estate mortgage loans and commercial and industrial loans, partially offset by a decline in delinquent consumer loans in line with the decrease in our total consumer loan portfolio. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for customers who would have otherwise moved into past due status.
Loans 90 days or more past due and still accruing whose repayments are largely insured by the FHA or guaranteed by the VA for mortgages at June 30, 2021, were down from December 31, 2020, largely due to transfers to LHFS related to the sales of loans purchased from GNMA loan securitization pools in prior periods.
(in millions)Jun 30, 2020
 Mar 31, 2020
 Dec 31, 2019
 Sep 30, 2019
 Jun 30, 2019
Total:$9,739
 7,023
 7,285
 7,130
 7,258
Less: FHA insured/VA guaranteed (1)8,922
 6,142
 6,352
 6,308
 6,478
Total, not government insured/guaranteed$817
 881
 933
 822
 780
By segment and class, not government insured/guaranteed:
Commercial:
         
Commercial and industrial$101
 24
 47
 6
 17
Real estate mortgage44
 28
 31
 28
 24
Real estate construction—
 1
 —
 —
 —
Total commercial145

53

78

34

41
Consumer:         
Real estate 1-4 family first mortgage93
 128
 112
 100
 108
Real estate 1-4 family junior lien mortgage19
 25
 32
 35
 27
Credit card418
 528
 546
 491
 449
Automobile54
 69
 78
 75
 63
Other revolving credit and installment88
 78
 87
 87
 92
Total consumer672
 828

855

788

739
Total, not government insured/guaranteed$817
 881

933

822

780
(1)42
Represents loans whose repayments are Wells Fargo & Companypredominantly 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 second quarter 2021 and the previous four quarters.
NET LOAN CHARGE-OFFS

Table 26:25: Net Loan Charge-offs
Quarter ended
Jun 30, 2021Mar 31, 2021Dec 31, 2020Sep 30, 2020Jun 30, 2020
($ in millions)Net loan
charge-
offs		% of
avg.
loans (1)		Net loan
charge-
offs		% of
avg.
loans (1)		Net loan
charge-
offs		% of
avg.
loans (1)		Net loan
charge-
offs		% of
avg.
loans (1)		Net loan
charge-
offs		% of
avg.
loans (1)
Commercial:
Commercial and industrial$81 0.10 %$88 0.11 %$111 0.14 %$274 0.33 %$521 0.55 %
Real estate mortgage(5)(0.02)46 0.16 162 0.53 56 0.18 67 0.22 
Real estate construction(1)— — — — — (2)(0.03)(1)(0.02)
Lease financing5 0.12 15 0.40 35 0.83 28 0.66 15 0.33 
Total commercial80 0.07 149 0.13 308 0.26 356 0.29 602 0.44 
Consumer:
Residential mortgage – first lien(19)(0.03)(24)(0.04)(3)— (1)— 2 — 
Residential mortgage – junior lien(31)(0.60)(19)(0.35)(24)(0.39)(14)(0.22)(12)(0.17)
Credit card256 3.01 236 2.71 190 2.09 245 2.71 327 3.60 
Auto45 0.35 52 0.44 51 0.43 31 0.25 106 0.88 
Other consumer50 0.80 119 1.97 62 0.88 66 0.80 88 1.09 
Total consumer301 0.32 364 0.37 276 0.26 327 0.30 511 0.48 
Total$381 0.18 %$513 0.24 %$584 0.26 %$683 0.29 %$1,113 0.46 %
               Quarter ended  
 Jun 30, 2020  Mar 31, 2020  Dec 31, 2019  Sep 30, 2019  Jun 30, 2019 
($ 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$521
 0.55 % $333
 0.37 % $168
 0.19 % $147
 0.17 % $159
 0.18 %
Real estate mortgage67
 0.22
 (2) (0.01) 4
 0.01
 (8) (0.02) 4
 0.01
Real estate construction(1) (0.02) (16) (0.32) —
 —
 (8) (0.14) (2) (0.04)
Lease financing15
 0.33
 9
 0.19
 31
 0.63
 8
 0.17
 4
 0.09
Total commercial602
 0.44
 324
 0.25
 203
 0.16
 139
 0.11
 165
 0.13
Consumer:                   
Real estate 1-4 family first mortgage2
 —
 (3) —
 (3) —
 (5) (0.01) (30) (0.04)
Real estate 1-4 family junior lien mortgage(12) (0.17) (5) (0.07) (16) (0.20) (22) (0.28) (19) (0.24)
Credit card327
 3.60
 377
 3.81
 350
 3.48
 319
 3.22
 349
 3.68
Automobile106
 0.88
 82
 0.68
 87
 0.73
 76
 0.65
 52
 0.46
Other revolving credit and installment88
 1.09
 134
 1.59
 148
 1.71
 138
 1.60
 136
 1.56
Total consumer511
 0.48
 585
 0.53
 566
 0.51
 506
 0.46
 488
 0.45
Total$1,113
 0.46 % $909
 0.38 % $769
 0.32 % $645
 0.27 % $653
 0.28 %
                    
(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 26 presents net loan charge-offs for second quarter 2020 and the previous four quarters. Net loan charge-offs in second quarter 2020 were $1.1 billion (0.46% of average total loans outstanding), compared with $653 million (0.28%) in second quarter 2019.
The increasedecrease in commercial net loan charge-offs in second quarter 2020 from2021, compared with the prior quarter, was driven by higher commercial and industrial losses primarily in our oil and gaslower charge-offs across the entire portfolio as well as higher commercial real estate mortgage losses. recoveries in the CRE portfolio.
The decrease in consumer net loan charge-offs in second quarter 2020 from2021, compared with the prior quarter, was driven by lower losses in credit card, and other revolving credit and installmentconsumer loans driven by payment deferral activities in responsedue to the COVID-19 pandemic.sale of a portion of our student loan portfolio in first quarter 2021.
The COVID-19 pandemic may continue to impact the credit quality of our loan portfolio. Although the potential impacts were considered in our 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 moreadditional information on customer accommodations in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section in this Report.

ALLOWANCE FOR CREDIT LOSSES We maintain an allowance for credit losses (ACL) for loans, which is management’s estimate of the expected life-time 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 lossesACL for debt securities classified as either available-for-saleAFS 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 lossesACL each quarter. The process for establishing the allowance for credit lossesACL 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 lossesACL 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 lossesACL 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 & Company43
Risk Management – Credit Risk Management (continued)

Table 2726 presents the allocation of the allowance for credit lossesACL 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 27:26: Allocation of the AllowanceACL for Loans (1)
Jun 30, 2021Dec 31, 2020Dec 31, 2019Dec 31, 2018Dec 31, 2017
($ in millions)ACLLoans
as %
of total
loans		ACLLoans
as %
of total
loans		ACLLoans
as %
of total
loans		ACLLoans
as %
of total
loans		ACLLoans
as %
of total
loans
Commercial:
Commercial and industrial$5,640 37 %$7,230 36 %$3,600 37 %$3,628 37 %$3,752 35 %
Real estate mortgage2,884 14 3,167 14 1,236 13 1,282 13 1,374 13 
Real estate construction530 3 410 2 1,079 2 1,200 2 1,238 3 
Lease financing516 2 709 2 330 2 307 2 268 2 
Total commercial9,570 56 11,516 54 6,245 54 6,417 54 6,632 53 
Consumer:
Residential mortgage – first lien1,283 29 1,600 31 692 30 750 30 1,085 30 
Residential mortgage – junior lien320 2 653 3 247 3 431 3 608 4 
Credit card3,663 4 4,082 4 2,252 4 2,064 4 1,944 4 
Auto1,026 6 1,230 5 459 5 475 5 1,039 5 
Other consumer529 3 632 3 561 4 570 4 652 4 
Total consumer6,821 44 8,197 46 4,211 46 4,290 46 5,328 47 
Total$16,391 100 %$19,713 100 %$10,456 100 %$10,707 100 %$11,960 100 %
Components:
Allowance for loan losses$15,14818,5169,5519,77511,004
Allowance for unfunded credit commitments1,2431,197905932956
Allowance for credit losses$16,39119,71310,45610,70711,960
Ratio of allowance for loan losses to total net loan charge-offs (2)9.93x5.633.463.563.76
Allowance for loan losses as a percentage of total loans1.78 %2.09 0.99 1.03 1.15 
Allowance for credit losses for loans as a percentage of total loans1.92 2.22 1.09 1.12 1.25 
Allowance for credit losses for loans as a percentage of total nonaccrual loans222 226 196 165 156 
(1)Disclosure is not comparative due to our adoption of Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (ACL)(Topic 326): Measurement of Credit Losses on Financial Instruments (CECL) on January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.
(2)Total net loan charge-offs are annualized for Loans(1)the quarter ended June 30, 2021.
 Jun 30, 2020  Dec 31, 2019  Dec 31, 2018  Dec 31, 2017  Dec 31, 2016 
($ 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$8,109
 37% $3,600
 37% $3,628
 37% $3,752
 35% $4,560
 34%
Real estate mortgage2,395
 13
 1,236
 13
 1,282
 13
 1,374
 13
 1,320
 14
Real estate construction484
 2
 1,079
 2
 1,200
 2
 1,238
 3
 1,294
 2
Lease financing681
 2
 330
 2
 307
 2
 268
 2
 220
 2
Total commercial11,669
 54
 6,245
 54
 6,417
 54
 6,632
 53
 7,394
 52
Consumer:                   
Real estate 1-4 family first mortgage1,541
 30
 692
 30
 750
 30
 1,085
 30
 1,270
 29
Real estate 1-4 family
junior lien mortgage
725
 3
 247
 3
 431
 3
 608
 4
 815
 5
Credit card3,777
 4
 2,252
 4
 2,064
 4
 1,944
 4
 1,605
 4
Automobile1,174
 5
 459
 5
 475
 5
 1,039
 5
 817
 6
Other revolving credit and installment1,550
 4
 561
 4
 570
 4
 652
 4
 639
 4
Total consumer8,767
 46
 4,211
 46
 4,290
 46
 5,328
 47
 5,146
 48
Total$20,436
 100% $10,456
 100% $10,707
 100% $11,960
 100% $12,540
 100%
                    
 Jun 30, 2020  Dec 31, 2019  Dec 31, 2018  Dec 31, 2017  Dec 31, 2016 
Components:         
Allowance for loan losses$18,926  9,551  9,775  11,004  11,419 
Allowance for unfunded
credit commitments
1,510  905  932  956  1,121 
Allowance for credit losses for loans$20,436  10,456  10,707  11,960  12,540 
Allowance for loan losses as a percentage of total loans2.02% 0.99  1.03  1.15  1.18 
Allowance for loan losses as a percentage of total net loan charge-offs (2)423  346  356  376  324 
Allowance for credit losses for loans as a percentage of total loans2.19  1.09  1.12  1.25  1.30 
Allowance for credit losses for loans as a percentage of total nonaccrual loans269  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 the quarter ended June 30, 2020.
The ratios for the allowance for loan losses and the allowance for credit lossesACL for loans presented in Table 2726 may fluctuate 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 lossesACL for loans increased $10.0decreased $3.3 billion, or 95%17%, from December 31, 2019, driven by a $11.4 billion increase2020, reflecting better portfolio credit quality and improvements in the allowance for credit losses for loans in the first half of 2020, partially offset by a $1.3 billion decrease as a result of adopting CECL. The increase in the allowance for credit losses for loans reflected current and forecasted economic conditions due to the COVID-19 pandemic.conditions. Total provision for credit losses for loans was $9.6$(1.2) billion in second quarter 2020,2021, compared with $503 million$9.6 billion in second quarter 2019. The increase in the provision for credit losses for loans in second quarter 2020, compared with the same period a year ago, reflected an increasereflecting lower net charge-offs and improvements in current and forecasted economic conditions. The detail of the changes in the allowance for credit lossesACL for loans dueby portfolio segment (including charge-offs and recoveries by loan class) is included in Note 4 (Loans and Related Allowance for Credit Losses) to the economic impact of the COVID-19 pandemic.Financial Statements in this Report.
We consider multiple economic scenarios to develop our estimate of the allowance for credit lossesACL for loans. The scenarios generally include a base case considered to be the most likely economic forecast,scenario, along with an optimistic (upside) and a
one or more pessimistic (downside) economic forecast.scenarios. Our estimate of the allowance for credit lossesACL for loans at June 30, 2020,2021, was based on a weighting of the base case and a downside economic scenariosscenario of 80%50% and 20%50%, respectively, with no weighting applied to thean upside scenario. The base casescenario assumed economic forecast assumed near-term economic stress recovering into late 2021.improvements in the near term with a return to normalized levels near the end of 2022. The downside scenario assumed more sustained adverse economic impacts resulting from the
COVID-19 pandemic, compared with the base case.scenario. The downside scenario assumed U.S. real GDP increasing slowlygrowth rates decline in the first half of 2022 before returning to normalized levels after 2023 and not fully recovering during the remainder of 2020 and 2021, and a sustained elevation in the U.S. unemployment rate until mid-2022.increases through 2022 and peaks in the first half of 2023. We considered expectations for the impact of government economic stimulus programs in effect on June 30, 2020; however, we did not consider the impact of future government economic stimulus programs. In addition, we consideredwithin each scenario our expectations for the impact of customer accommodation activity, as well as the estimated impact on certain industries that we consider to be directly and most adversely affected by the COVID-19 pandemic.
In addition to quantitative estimates, we consider qualitative factors that represent risks inherent in our processes and assumptions such as economic environmental factors, modeling
Risk Management - Credit Risk Management (continued)

assumptions and performance, and other subjective factors, including industry trends and emerging risk assessments. At June 30, 2020,We also considered the qualitative portionsignificant uncertainty related to the duration and severity of our allowance for credit losses for loans included adjustments for model performance relative to management's loss expectations, including specificthe economic impacts from the COVID-19 pandemic and the incremental risks from the oil and gas, commercial real estate, and home lending portfolios due to the continued economic impact of the COVID-19 pandemic.our loan portfolio.
The forecasted key economic variables inherentused in our estimate of the allowance for credit lossesACL for loans at June 30 2020,and March 31, 2021, are presented in Table 28.27.
44Wells Fargo & Company

Table 28:27: Forecasted Key Economic Variables
4Q 20212Q 20224Q 2022
Blend of economic scenarios (1):
U.S. unemployment rate (2):
March 31, 20216.5 %7.0 7.1 
June 30, 20215.6 6.2 6.9 
U.S. real GDP (3):
March 31, 2021(1.1)(0.6)1.8 
June 30, 20211.0 (0.4)0.6 
Home price index (4):
March 31, 20211.0 (5.2)(5.7)
June 30, 20212.8 (6.5)(5.2)
Commercial real estate asset prices (4):
March 31, 2021(10.0)(11.5)(9.0)
June 30, 2021(7.8)(11.9)(10.4)
(1)Represents a weighting of the forecasted economic variable inputs based on a weighting of 50% for the base and 50% for a downside scenario at both June 30 and March 31, 2021.
(2)Quarterly average.
 4Q 2020
 2Q 2021
 4Q 2021
Blend of 80% base case and 20% downside scenario (1):     
U.S. unemployment rate (2)11.0
 9.2
 7.5
U.S. real GDP (3)4.3
 6.3
 3.5
Home price index (4)0.7
 (3.0) (0.9)
Commercial real estate asset prices (4)(2.5) (7.6) (5.1)
(3)Percent change from the preceding period, seasonally adjusted annualized rate.
(1)Represents a weighted average of the forecasted economic variable inputs.
(2)Quarterly average.
(3)Seasonally adjusted annualized rate.
(4)Percentage change year over year of national average; outlook differs by geography and property type.
(4)Percent change year over year of national average; outlook differs by geography and property type.
Future amounts of the allowance for credit lossesACL 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 onWe observed economic conditions atimprovements in the endfirst half of second quarter 2020, it was difficult2021; however, there remained significant uncertainty related to estimate the length and severity of the economic downturn that may result fromimpact 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 COVID-19 pandemic could continue to result inimpact 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 lossesACL for loans of $20.4$16.4 billion at June 30, 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 lossesACL 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 lossesACL 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 20192020 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
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 these advances of delinquent payments vary by investor and the applicable servicing agreements in place.agreements. Due to an increase in customer requests for payment deferrals provided as a result of the COVID-19 pandemic, the amount of our servicing advances of principal and interest advances we were required to make as a servicer increased in second quarter 2020.remained elevated. The amount of these advances 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.
In accordance with applicable servicing guidelines, delinquency status continues to advance for loans with COVID-related payment deferrals, which has resulted in an increase in delinquent loans serviced for others and a corresponding increase in loans eligible for repurchase from GNMA loan securitization pools. OurUpon 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 the borrower. We generally repurchase these loans for cash and as a result, our total consolidated assets do not change. In July 2020, we repurchased $14.1 billionAs a result of the COVID-19 pandemic, our repurchases of these delinquent loans and we expectwere elevated in 2020 but returned to repurchase $5.6 billionmore normalized levels in the first half of these delinquent2021.
Repurchased loans in August 2020.
Loans that regain current status or are otherwise modified in accordance with applicable servicing guidelines may be included in future GNMA loan securitization pools. However, in accordance with guidance issued by GNMA, incertain loans repurchased after June 30, 2020, repurchased loans with COVID-related payment deferrals 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 20192020 Form 10-K. For additional information on mortgage banking activities, see Note 119 (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. PrimaryFor information on our oversight of interest rate risk and market risk resides withasset/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 potentiallyis 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, iftimes. 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 (foramounts. For example, the shape of the yield curve may affect yield for new loan yieldsloans and funding costs differently);differently;
•the remaining maturity offor various assets or liabilities may shorten or lengthen as interest rates change (forchange. 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 & Company45

Risk Management – Asset/Liability Management (continued)
•interest rates may also have a direct or indirect effect on loan demand, collateral values, credit losses, mortgage origination volume, and the fair value of MSRs and other financial instruments, the value of the pension liability and other items affecting earnings.

instruments.
We assess interest rate risk by comparing outcomes under various net interest income simulations using many interest rate scenarios that differ in the direction of interest rate changes, the degree of change over time, the speed of change and the projected shape of the yield curve. These simulations require assumptions regarding drivers of earnings and balance sheet composition such as loan originations, prepayment speeds on loans and debt securities, deposit flows and mix, as well as pricing strategies.
Currently, our profile is such that we projectOur most recent simulations, as presented in Table 28, estimate net interest income willsensitivity over the next 12 months using instantaneous movements across the yield curve with both lower and higher interest rates relative to our base scenario. Steeper and flatter scenarios measure non-parallel changes in the yield curve, with long-term interest rates defined as all tenors three years and longer (e.g., 10-year U.S. Treasury securities) and short-term interest rates defined as all tenors less than three years. Where applicable, U.S. dollar interest rates are floored at 0.00%. The following describes the simulation assumptions for the scenarios presented in Table 28:
•Simulations are dynamic and reflect anticipated changes to our assets and liabilities.
•Other macroeconomic variables that could be correlated with the changes in interest rates are held constant.
•Mortgage prepayment and origination assumptions vary across scenarios and reflect only the impact of the higher or lower interest rates.
•Our base scenario deposit forecast incorporates mix changes consistent with the base interest rate trajectory. Deposit mix is modeled to be the same as in the base scenario across the alternative scenarios. In higher interest rate scenarios, customer activity that shifts balances into higher-yielding products could reduce expected net interest income.
•We hold the size of the projected debt and equity securities portfolios constant across scenarios.
Table 28:Net Interest Income Sensitivity
($ in billions)Jun 30, 2021Dec 31, 2020
Parallel Shift:
+100 bps shift in interest rates$7.0 6.7 
-100 bps shift in interest rates(2.9)(2.7)
Steeper yield curve:
+50 bps shift in long-term interest rates1.2 1.3 
Flatter yield curve:
+50 bps shift in short-term interest rates2.5 2.2 
-50 bps shift in long-term interest rates(1.2)(1.4)
The interest rate sensitivity included in Table 28 indicates that we would expect to benefit 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 estimateliabilities resulting in lower net interest income sensitivity over the next two years under a range of both lower and higher interest rates. Measured impacts from standardized ramps (gradual changes) and shocks (instantaneous changes) are summarized in Table 29, indicating net interest income sensitivity relative to the Company’s base net interest income plan. Ramp scenarios assume interest rates move gradually in parallel across the yield curve relative to the base scenario in year one, and the full amount of the ramp is held as a constant differential to the base scenario in year two. The following describes the simulation assumptions for the scenarios presented in Table 29:
Simulations are dynamic and reflect anticipated growth across assets and liabilities.
Other macroeconomic variables that could be correlated with the changes in interest rates are held constant.
Mortgage prepayment and origination assumptions vary across scenarios and reflect only the impact of the higher or lower interest rates.
Our base scenario deposit forecast incorporates mix changes consistent with the base interest rate trajectory. Deposit mix is modeled to be the same as in the base scenario across the alternative scenarios. In higher interest rate scenarios,
customer activity that shifts balances into higher-yielding products could reduce expected net interest income.
We hold the size of the projected debt and equity securities portfolios constant across scenarios.
Table 29: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 $(0.9) - (0.4) 4.6 - 5.1 4.2 - 4.7
Key Rates at Horizon End       
Fed Funds Target0.25%0.00 1.25 2.25
10-year CMT (2)0.76 0.00 1.76 2.76
Second Year of Forecasting Horizon       
Net Interest Income Sensitivity to Base Scenario $(2.3) - (1.8) 7.2 - 7.7 11.2 - 11.7
Key Rates at Horizon End       
Fed Funds Target0.25%0.00 1.25 2.25
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

The sensitivity results above do not capture interest rate sensitive noninterest income andor 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 Reportour 2020 Form 10-K for moreadditional 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 sensitiveand liabilities, see Note 2 (Trading Activities) to changesFinancial 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 hedgemanage our interest rate exposures. See the “Balance Sheet Analysis – Available-for-SaleNote 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-saleSecurities) 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 June 30, 2020, and December 31, 2019, are presented in Note 1514 (Derivatives) to Financial Statements in this Report. We use derivativesour 2020 Form 10-K for asset/liability management in two main ways:
additional information.
Asset/Liability Management (
continued)

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 moreadditional 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 20192020 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 designedwe 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 $8.2 billion at June 30, 2020, and $12.9 billion at December 31, 2019. The weighted-average note rate on our portfolio of loans serviced for others was 4.13% at June 30, 2020, and 4.25% at December 31, 2019. The carrying value of our total MSRs represented 0.52% and 0.79% of mortgage loans serviced for others at June 30, 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 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 forof market risk, and overseessee 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 BankingCIB businesses and to a lesser extent other divisionsbusinesses 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 moreadditional 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.
46Wells 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 moreadditional information including information regardingon our monitoring activities, sensitivity analysis and stress testing, see the “Risk Management – Asset/Liability Management – Market Risk – Trading Activities” section in our 20192020 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 3029 shows the Company’s Trading General VaR by risk category. As presentedThe decrease in Table 30, average Company Trading General VaR was $155 million for the quarter ended June 30, 2020,2021, compared with $33 million for the quarter ended March 31, 2020, and $20 millionsame period a year ago, was driven by a greater presence of market volatility dropping out of the 12-month historical lookback window used to calculate average Company Trading General VaR for the quarter ended June 30, 2019. The increase2021. Market volatility present in average as well as period end Company Trading General VaR for the quarter ended June 30, 2020, compared with the quarter ended June 30, 2019, was driven by recent market volatility,the introduction of 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 30:29: Trading 1-Day 99% General VaR by Risk Category
Quarter ended
June 30, 2021March 31, 2021June 30, 2020
(in millions)Period
end		AverageLowHighPeriod
end		AverageLowHighPeriod
end		AverageLowHigh
Company Trading General VaR Risk Categories
Credit$14 21 12 30 22 94 21 112 86 82 61 99 
Interest rate7 7 4 22 36 73 26 120 155 106 42 161 
Equity29 37 25 56 35 36 28 72 14 10 6 17 
Commodity28 7 2 28 11 5 2 12 4 4 2 7 
Foreign exchange0 1 0 1 1 1 1 1 1 2 1 3 
Diversification benefit (1)(38)(30)(64)(111)(51)(49)
Company Trading General VaR40 43 41 98 209 155 
(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 
 June 30, 2020  March 31, 2020  June 30, 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$86
 82
 61
 99
 62
 28
 15
 75
 15
 15
 11
 18
Interest rate155
 106
 42
 161
 84
 32
 5
 198
 29
 37
 27
 49
Equity14
 10
 6
 17
 6
 7
 4
 10
 4
 5
 4
 8
Commodity4
 4
 2
 7
 2
 2
 1
 6
 2
 2
 1
 6
Foreign exchange1
 2
 1
 3
 2
 1
 1
 6
 1
 1
 1
 1
Diversification benefit (1)(51) (49) 

   (63) (37)     (32) (40)    
Company Trading General VaR$209
 155
     93
 33
     19
 20
    
(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 partythird-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/withdrawalsour 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 this Report.

Liquidity Standards We are subject to a rule, issued by the FRB, OCC and Federal Deposit Insurance Corporation (FDIC),FDIC, that includesestablishes 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 aspredominantly consisting of central bank reservesdeposits, government debt securities, and government and corporate debtmortgage-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 applicableLCR applies to the Company on a consolidated basis and to our insured depository institutions (IDIs) with total assets greater thanof $10 billion.billion or more. In addition, rules issued by the FRB impose enhanced liquidity risk management standards on large BHCsbank holding companies (BHCs), such as Wells Fargo.
The FRB, OCC and FDIC have proposedalso issued a rule that would implementimplementing a stable funding requirement, known as the net stable funding ratio (NSFR), which would require large banking organizations, such as Wells Fargo, to maintain a sufficient amount of stable
Wells Fargo & Company47

Risk Management – Asset/Liability Management (continued)

ratio (NSFR), which requires a covered banking organization, such as Wells Fargo, to maintain a minimum amount of stable funding, including common equity, long-term debt and most types of deposits, in relation to theirits assets, derivative exposures and commitments over a one-year horizon period. The NSFR became 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. As of July 1, 2021, we were compliant with the NSFR requirement.
Liquidity Coverage Ratio As of June 30, 2020,2021, the consolidated Company, Wells Fargo Bank, N.A., and Wells Fargo National Bank West were aboveexceeded 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 3130 presents the Company’s quarterly average values for the daily-calculated LCR and its components calculated pursuant to the LCR rule requirements.
Table 31: 30:Liquidity Coverage Ratio
Average for Quarter ended
(in millions, except ratio)Jun 30, 2021Mar 31, 2021Jun 30, 2020
HQLA (1):
Eligible cash$248,404216,403 166,947 
Eligible securities (2)137,718186,270 242,520 
Total HQLA386,122402,673 409,467 
Projected net cash outflows314,678316,116 316,268 
LCR123 %127 129 
(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 June 30, 2020
HQLA (1)(2)$409,467
Projected net cash outflows316,268
LCR129%
(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.
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 32.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 securitiesMBS 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-maturityHTM 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 32:31: Primary Sources of Liquidity
June 30, 2021December 31, 2020
(in millions)TotalEncumberedUnencumberedTotalEncumberedUnencumbered
Interest-earning deposits with banks$248,869 — 248,869 236,376 — 236,376 
Debt securities of U.S. Treasury and federal agencies63,934 3,304 60,630 70,756 5,370 65,386 
Mortgage-backed securities of federal agencies280,984 52,700 228,284 258,668 49,156 209,512 
Total$593,787 56,004 537,783 565,800 54,526 511,274 

 June 30, 2020  December 31, 2019 
(in millions)Total
 Encumbered
 Unencumbered
 Total
 Encumbered
 Unencumbered
Interest-earning deposits with banks$237,799
 —
 237,799
 119,493
 —
 119,493
Debt securities of U.S. Treasury and federal agencies58,486
 3,181
 55,305
 61,099
 3,107
 57,992
Mortgage-backed securities of federal agencies (1)255,447
 37,215
 218,232
 258,589
 41,135
 217,454
Total$551,732
 40,396
 511,336
 439,181
 44,242
 394,939
(1)
Included in encumbered securities at June 30, 2020, were securities with a fair value of $2.0 billion, which were purchased in June 2020, but settled in July 2020.
In addition to our primary sources of liquidity shown in
Table 32,31, liquidity is also available through the sale or financing of other debt securities including trading and/or available-for-saleAFS 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 June 30, 2020,2021, we also maintained approximately $276.1$222.7 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 151%169% and 158% of total loans at June 30, 2020,2021, and 137% at December 31, 2019.
2020, respectively. Additional funding is provided by long-term debt and short-term borrowings. Table 3332 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.

48Wells Fargo & Company

Table 33:32: Short-Term Borrowings
Quarter ended
(in millions)Jun 30,
2021		Mar 31,
2021		Dec 31,
2020		Sep 30,
2020		Jun 30,
2020
Balance, period end
Federal funds purchased and securities sold under agreements to repurchase$33,708 46,871 46,362 44,055 49,659 
Other short-term borrowings11,927 12,049 12,637 11,169 10,826 
Total$45,635 58,920 58,999 55,224 60,485 
Average daily balance for period
Federal funds purchased and securities sold under agreements to repurchase$36,526 47,358 46,069 46,504 52,868 
Other short-term borrowings11,979 11,724 11,235 10,788 10,667 
Total$48,505 59,082 57,304 57,292 63,535 
Maximum month-end balance for period
Federal funds purchased and securities sold under agreements to repurchase (1)$33,708 47,050 46,879 49,148 50,397 
Other short-term borrowings (2)12,563 12,049 12,637 11,169 11,220 
(1)Maximum month-end balance in each of the last five quarters was in June and February 2021, and November, July and April 2020.
 Quarter ended 
(in millions)Jun 30,
2020
 Mar 31,
2020
 Dec 31,
2019
 Sep 30,
2019
 Jun 30,
2019
Balance, period end         
Federal funds purchased and securities sold under agreements to repurchase$49,659
 79,036
 92,403
 110,399
 102,560
Other short-term borrowings10,826
 13,253
 12,109
 13,509
 12,784
Total$60,485
 92,289
 104,512
 123,908
 115,344
Average daily balance for period         
Federal funds purchased and securities sold under agreements to repurchase$52,868
 90,722
 103,614
 109,499
 102,557
Other short-term borrowings10,667
 12,255
 12,335
 12,343
 12,197
Total$63,535
 102,977
 115,949
 121,842
 114,754
Maximum month-end balance for period         
Federal funds purchased and securities sold under agreements to repurchase (1)$50,397
 91,121
 111,727
 110,399
 105,098
Other short-term borrowings (2)11,220
 13,253
 12,708
 13,509
 12,784
(1)Highest month-end balance in each of the last five quarters was in April and February 2020, and October, September and May 2019.
(2)Highest month-end balance in each of the last five quarters was in April and March 2020, and October, September and June 2019.

(2)Maximum month-end balance in each of the last five quarters was in April and March 2021, and December, September and April 2020.
Long-Term Debt We access domestic and international capital markets for long-term funding (generally greater than one year) through issuances of registered debt securities, private placements and asset-backed secured funding. 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 $230.9 billion at June 30,
2020, increased $2.7 billion from December 31, 2019. We issued $18.8 billion and $37.7 billion of long-term debt in the second quarter and first half of 2020, respectively, and $187 million in July 2020.same purposes. Depending on market conditions, we may purchase our outstanding debt securities from time to time in privately negotiated or open market transactions, by tender offer, or otherwise. We issued $1.0 billion and $1.1 billion of long-term debt in the second quarter and first half of 2021, respectively. Table 3433 provides the aggregate carrying value of long-term debt maturities (based on contractual payment dates) for the remainder of 20202021 and the following years thereafter, as of June 30, 2020.2021.
Table 34:33: Maturity of Long-Term Debt
June 30, 2021
(in millions)Remaining 20212022202320242025ThereafterTotal
Wells Fargo & Company (Parent Only)
Senior notes$6,501 13,563 8,260 12,233 15,151 71,163 126,871 
Subordinated notes— — 3,706 753 1,124 22,752 28,335 
Junior subordinated notes— — — — — 1,388 1,388 
Total long-term debt – Parent6,501 13,563 11,966 12,986 16,275 95,303 156,594 
Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior notes3,208 2,833 2,861 3 188 231 9,324 
Subordinated notes— — 1,098 — 168 4,236 5,502 
Junior subordinated notes— — — — — 382 382 
Securitizations and other bank debt1,579 1,383 876 424 146 1,476 5,884 
Total long-term debt – Bank4,787 4,216 4,835 427 502 6,325 21,092 
Other consolidated subsidiaries
Senior notes358 190 517 107 428 338 1,938 
Securitizations and other bank debt— — — — — 32 32 
Total long-term debt – Other consolidated subsidiaries358 190 517 107 428 370 1,970 
Total long-term debt$11,646 17,969 17,318 13,520 17,205 101,998 179,656 

 June 30, 2020 
(in millions)Remaining 2020
 2021
 2022
 2023
 2024
 Thereafter
 Total
Wells Fargo & Company (Parent Only)             
Senior notes$7,665
 17,999
 18,411
 11,573
 12,346
 88,248
 156,242
Subordinated notes—
 —
 —
 3,789
 772
 26,818
 31,379
Junior subordinated notes—
 —
 —
 —
 —
 1,949
 1,949
Total long-term debt – Parent$7,665
 17,999
 18,411
 15,362
 13,118
 117,015
 189,570
Wells Fargo Bank, N.A. and other bank entities (Bank)             
Senior notes$2,109
 15,207
 4,897
 2,943
 6
 416
 25,578
Subordinated notes—
 —
 —
 1,005
 —
 4,929
 5,934
Junior subordinated notes—
 —
 —
 —
 —
 369
 369
Securitizations and other bank debt1,683
 1,296
 933
 268
 139
 1,472
 5,791
Total long-term debt – Bank$3,792
 16,503
 5,830
 4,216
 145
 7,186
 37,672
Other consolidated subsidiaries             
Senior notes$131
 1,843
 206
 508
 123
 836
 3,647
Securitizations and other bank debt—
 —
 —
 —
 —
 32
 32
Total long-term debt – Other consolidated subsidiaries$131
 1,843
 206
 508
 123
 868
 3,679
Total long-term debt$11,588
 36,345
 24,447
 20,086
 13,386
 125,069
 230,921
Wells Fargo & Company49

Risk Management – Asset/Liability Management (continued)
Credit RatingsInvestors in the long-term capital markets, as well as other market participants, generally will consider, among other factors, a company’s debt rating in making investment decisions. Rating agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix, the level and quality of earnings, and rating agency assumptions regarding the probability and extent of federal financial assistance or support for certain large financial institutions. Adverse changes in these factors could result in a reduction of our credit rating; however, our debt securities do not contain credit rating covenants.
On April 22, 2020, Fitch Ratings, Inc. (Fitch)2021, Moody's Investors Service (Moody's) affirmed the Company’s long-term and short-term issuer defaultour ratings and revisedretained the rating outlook to negative from stable as Fitch expects significant 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. global
systemically important banks (G-SIBs). On May 21, 2020, DBRS Morningstar confirmed the Company’s ratings and revised the rating trend to negative from stable, citing the economic disruption caused by the COVID-19 pandemic.outlook. On July 22, 2020, Standard & Poor's (S&P) Global Ratings lowered12, 2021, Moody's upgraded the long-termsenior debt rating of the Company to BBB+A1 from A-A2 as a result of revisions to its bank
ratings methodology. On May 24, 2021, DBRS Morningstar confirmed our ratings and revisedretained the rating outlook to stable from negative.negative ratings trend. On June 14, 2021, Fitch Ratings affirmed our ratings and retained the negative ratings outlook.
See the “Risk Factors” section in our 20192020 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 CompanyParent and Wells Fargo Bank, N.A., as of June 30, 2020,2021, are presented in Table 35.34.

Table 35:34: Credit Ratings as of June 30, 20202021
Wells Fargo & CompanyWells Fargo Bank, N.A.
Senior debt
Short-term
borrowings 
Long-term
deposits 
Short-term
borrowings 
Moody’sA2P-1Aa1P-1
S&P Global Ratings (1)A-BBB+A-2A+A-1
Fitch Ratings Inc.A+F1AAF1+
DBRS MorningstarAA (low)R-1 (middle)AAR-1 (high)
(1)On July 22, 2020, S&P Global Ratings lowered the long-term rating of the Company to BBB+ from A- and revised the rating outlook to stable from negative.
Asset/Liability Management (continued)

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 isFHLB 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 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 ARRC and 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 Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.
For additional information on the amount of our IBOR-linked assets and liabilities, as well asany future investment in the program structure and initiatives created bycapital stock of the LTO, see the “Risk Management – Asset/Liability Management – LIBOR Transition” section in our 2019 Form 10-K.FHLBs is not determinable.

50Wells Fargo & Company

Capital Management
We have an active program for managing capital through a comprehensive process for assessing the Company’s overall capital adequacy. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, and to meet both regulatory and market expectations. We primarily fund our 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 longlong- and short-term debt. Retained earnings decreased $6.7at June 30, 2021, increased $9.1 billion from December 31, 2019,2020, predominantly as a result of $10.7 billion of Wells Fargo net income, partially offset by $1.5 billion of common and preferred stock dividendsdividends. During the first half of $4.9 billion and net losses of $1.7 billion. During second quarter 2020,2021, we issued $367$819 million of common stock, excluding conversionssubstantially all of preferred shares. On March 15, 2020, we suspended our share repurchase activities for the remainder ofwhich was issued in connection with employee compensation and benefits. During the first quarter and for second quarter 2020. On June 25, 2020, the FRB announced that it was prohibiting large BHCs subject to the FRB’shalf of 2021, we repurchased 53 million shares of common stock at a cost of $2.2 billion. For additional information about capital plan rule, 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. Through the end of third quarter 2020, the FRB authorized certain limited exceptions to this prohibition, which are described inplanning, see the “Capital Planning and Stress Testing” section below. For additional information about capital distributions, see the “Capital Planning and Stress Testing” and “Securities Repurchases” sections below.
In January 2020,the first half of 2021, we issued $2.0$4.6 billion of preferred stock and redeemed $4.9 billion of preferred stock, including the redemption of the remaining $350 million of our Preferred Stock, Series N, in June 2021. In July 2021, we issued $1.25 billion of our Preferred Stock, Series Z. In March 2020, we redeemed the remaining $1.8 billion of our Preferred Stock, Series K, and redeemed $669 million of our Preferred Stock, Series T.DD. For moreadditional information, see Note 1716 (Preferred Stock) to Financial Statements in this Report.
On July 28, 2020, the Company reduced its third quarter 2020 common stock dividend to $0.10 per share.

Regulatory Capital GuidelinesRequirements
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) guidelinesrules establish a risk-adjusted ratioratios 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 June 30, 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 ourOur capital adequacy we must reportis assessed based on the lower of our CET1, tier 1 and totalrisk-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 Advanced Approach, respectively, as of June 30, 2021.
Table 35: Risk-Based Capital Requirements – Standardized Approach
wfc-20210630_g1.jpg
Table 36: Risk-Based Capital Requirements – Advanced Approach
wfc-20210630_g2.jpg
In addition to the risk-based capital requirements described in Table 35 and Table 36, if the FRB determines that a period of excessive credit growth is contributing to an increase in systemic risk, a countercyclical buffer of up to 2.50% could be added to the risk-based capital ratio requirements under federal banking regulations.
The capital conservation buffer is applicable to certain institutions, including Wells Fargo, under the Advanced Approach. The difference between RWAs under the StandardizedApproach and Advanced Approach has narrowed in recent quarters dueis intended to absorb losses during times of economic conditions from the COVID-19 pandemic impacting our calculation of Advanced Approach RWAs. In particular, downgrades of loans in our loan portfolio, which drive negative credit risk migration, increased our Advanced Approach RWAs at June 30, 2020. We expect this trend to continue if the economic impact of the COVID-19 pandemic continues to affect our customer base.or financial stress.
Effective October 1, 2020, a stress capital buffer will be included in the minimum capital ratio requirements. The stress capital buffer is calculated based on the decrease in a BHC’s risk-based capital ratios under the severely adverse scenario in the FRB’s annual supervisory stress test and related Comprehensive Capital Analysis and Review (CCAR), plus four quarters of planned common stock dividends. TheBecause the stress capital buffer will replace the current 2.50%is calculated annually based on data that can differ over time, our stress capital conservation buffer, and thus our risk-based capital ratio requirements under the Standardized Approach. On June 29,Approach, are subject to change in future periods. The Company’s stress capital buffer for the period October 1, 2020, following the FRB’s release of the results of the 2020 supervisory stress test and related CCAR, thethrough September 30, 2021, is 2.50%. The Company announced that it expects its stress capital buffer for the period October 1, 2021, through September 30, 2022, to be 2.50%, which is the lowest possible under the new framework and would keep the regulatory minimum for the Company’s CET1 ratio at 9.00%3.10%. The FRB has indicated that it will publish the final stress capital buffer for the period October 1, 2021, through September 30, 2022, for each BHC by August 31, 2020. Because the stress capital buffer is calculated annually as part of the FRB’s supervisory stress test and related CCAR and will be based on data that can differ over time, our stress capital buffer, and thus the regulatory minimums for our capital ratios, are subject to change in future years.2021.

Wells Fargo & Company51

Capital Management (continued)
As a G-SIB,global systemically important bank (G-SIB), we are also subject to the FRB’s rule implementing thean additional capital surcharge of between 1.00-4.50% on the minimumrisk-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
Capital Management (continued)

over time, the amount of the surcharge is subject to change in future years. We expect our G-SIB capital surcharge to decrease by 50 basis points to 1.50% beginning in first quarter 2022, subject to finalization in fourth quarter 2021.
In second quarter 2020,The Basel III capital requirements for calculating CET1 and tier 1 capital, along with risk-weighted assets (RWAs), are fully phased-in. However, the Company electedrequirements for determining tier 2 and total capital are still in accordance with transition requirements and are scheduled to apply a modified transition provision issuedbe fully phased-in by federal banking regulators in March 2020 relatedthe end of 2021.
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 impactobligor, or, if relevant, the guarantor or the nature of CECL on regulatory capital.any collateral. The rule permits certain banking organizations to excludeaggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from regulatory capital the initial adoption impact of CECL, plus 25%each of the cumulative changes in the ACL under CECLrisk categories are aggregated for each period until December 31, 2021, followed by a three-year phase-out of the benefits.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 report certain capital amounts and ratios in accordance with Transition Requirementstransition requirements for banking industrybank regulatory reporting purposes, we 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 3637 summarizes our CET1, tier 1 capital, total capital, RWAs and capital ratios on a fully phased-in basis at June 30, 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 36:37: Capital Components and Ratios (Fully Phased-In) (1)
June 30, 2021December 31, 2020
(in millions, except ratios)Required
Capital
Ratios (1)		Advanced ApproachStandardized ApproachAdvanced ApproachStandardized Approach
Common Equity Tier 1(A)$143,442 143,442 138,297 138,297 
Tier 1 Capital(B)162,999 162,999 158,196 158,196 
Total Capital(C)190,147 200,130 186,803 196,529 
Risk-Weighted Assets(D)1,126,535 1,188,727 1,158,355 1,193,744 
Common Equity Tier 1 Capital Ratio(A)/(D)9.00 %12.73  12.07 *11.94  11.59 *
Tier 1 Capital Ratio(B)/(D)10.50 14.47  13.71 *13.66  13.25 *
Total Capital Ratio(C)/(D)12.50 16.88  16.84 *16.14 *16.47  
    June 30, 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)  $133,055
 133,055
  138,760
 138,760
 
Tier 1 Capital(B)  152,871
 152,871
  158,949
 158,949
 
Total Capital (2)(C)  182,698
 192,486
  187,813
 195,703
 
Risk-Weighted Assets (3)(D)  1,195,423
 1,213,062
  1,165,079
 1,245,853
 
Common Equity Tier 1 Capital Ratio (3)(A)/(D)9.00% 11.13% 10.97
* 11.91
 11.14
*
Tier 1 Capital Ratio (3)(B)/(D)10.50
 12.79
 12.60
* 13.64
 12.76
*
Total Capital Ratio (2)(3)(C)/(D)12.50
 15.28
*15.87

 16.12
 15.71
*
*Denotes the lowest capitalbinding ratio as determinedbased on the lower calculation under the Advanced and Standardized Approaches.
(1)Represents the minimum ratios required to avoid restrictions on capital distributions and discretionary bonus payments. The required ratios were the same under both the Standardized and Advanced Approaches at June 30, 2021.
(1)52
See Wells Fargo & CompanyTable 37 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 37 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 3738 provides information regarding the calculation and composition of our risk-based capital under the Advanced and
Standardized Approaches at June 30, 2020,2021, and
December 31, 2019.2020.

Table 37:38: Risk-Based Capital Calculation and Components
June 30, 2021December 31, 2020
(in millions)Advanced ApproachStandardized ApproachAdvanced ApproachStandardized Approach
Total equity (1)$193,127 193,127 185,712 185,712 
Effect of accounting policy changes (1)— — 208 208 
Total equity (as reported)193,127 193,127 185,920 185,920 
Adjustments:
Preferred stock(20,820)(20,820)(21,136)(21,136)
Additional paid-in capital on preferred stock136 136 152 152 
Unearned ESOP shares875 875 875 875 
Noncontrolling interests(1,865)(1,865)(1,033)(1,033)
Total common stockholders’ equity$171,453 171,453 164,778 164,778 
Adjustments:
Goodwill(26,194)(26,194)(26,392)(26,392)
Certain identifiable intangible assets (other than MSRs)(301)(301)(342)(342)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)(2,256)(2,256)(1,965)(1,965)
Applicable deferred taxes related to goodwill and other intangible assets (2)875 875 856 856 
CECL transition provision (3)879 879 1,720 1,720 
Other(1,014)(1,014)(358)(358)
Common Equity Tier 1$143,442 143,442 138,297 138,297 
Preferred stock20,820 20,820 21,136 21,136 
Additional paid-in capital on preferred stock(136)(136)(152)(152)
Unearned ESOP shares(875)(875)(875)(875)
Other(252)(252)(210)(210)
Total Tier 1 capital(A)$162,999 162,999 158,196 158,196 
Long-term debt and other instruments qualifying as Tier 223,206 23,206 24,387 24,387 
Qualifying allowance for credit losses (4)4,304 14,287 4,408 14,134 
Other(362)(362)(188)(188)
Total Tier 2 capital (fully phased-in)(B)$27,148 37,131 28,607 38,333 
Effect of Basel III transition requirements26 26 131 131 
Total Tier 2 capital (Basel III transition requirements)$27,174 37,157 28,738 38,464 
Total qualifying capital (fully phased-in)(A)+(B)$190,147 200,130 186,803 196,529 
Total Effect of Basel III transition requirements26 26 131 131 
Total qualifying capital (Basel III transition requirements)$190,173 200,156 186,934 196,660 
Risk-Weighted Assets (RWAs)(5):
Credit risk (6)$729,917 1,140,459 752,999 1,125,813 
Market risk48,268 48,268 67,931 67,931 
Operational risk348,350 — 337,425 — 
Total RWAs$1,126,535 1,188,727 1,158,355 1,193,744 
(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period total equity was revised to conform with the current period presentation. Prior period risk-based capital and certain other regulatory related metrics were not revised.
(2)Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.
(3)At June 30, 2021, the impact of the CECL transition provision issued by federal banking regulators on our regulatory capital was an increase in capital of $879 million, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $7.5 billion increase in our ACL under CECL from January 1, 2020, through June 30, 2021.
(4)Under the Advanced Approach the allowance for credit losses that exceeds expected credit losses is eligible for inclusion in tier 2 capital, to the extent the excess allowance does not exceed 0.60% of Advanced credit RWAs, and under the Standardized Approach, the allowance for credit losses is includable in tier 2 capital up to 1.25% of Standardized credit RWAs, in each case with any excess allowance for credit losses being deducted from the respective total RWAs.
(5)RWAs calculated under the Advanced Approach utilize a risk-sensitive methodology, which relies upon the use of internal credit models based upon our experience with internal rating grades. Advanced Approach also includes an operational risk component, which reflects the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events.
(6)Includes an increase of $547 million under the Standardized Approach and a decrease of $1.4 billion under the Advanced Approach related to the impact of the CECL transition provision on our excess allowance for credit losses as of June 30, 2021. See footnote (4) to this table.


 June 30, 2020  December 31, 2019 
(in millions) Advanced Approach
 Standardized Approach
 Advanced Approach
 Standardized Approach
Total equity $180,122
 180,122
 187,984
 187,984
Adjustments: 
 
    
Preferred stock (21,098) (21,098) (21,549) (21,549)
Additional paid-in capital on preferred stock 159
 159
 (71) (71)
Unearned ESOP shares 875
 875
 1,143
 1,143
Noncontrolling interests (736) (736) (838) (838)
Total common stockholders’ equity
159,322
 159,322
 166,669
 166,669
Adjustments:        
Goodwill (26,385) (26,385) (26,390) (26,390)
Certain identifiable intangible assets (other than MSRs) (389) (389) (437) (437)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets) (2,050) (2,050) (2,146) (2,146)
Applicable deferred taxes related to goodwill and other intangible assets (1) 831
 831
 810
 810
CECL transition provision (2) 1,857
 1,857
 —
 —
Other (131) (131) 254
 254
Common Equity Tier 1
133,055
 133,055
 138,760
 138,760
         
Common Equity Tier 1 $133,055
 133,055
 138,760
 138,760
Preferred stock 21,098
 21,098
 21,549
 21,549
Additional paid-in capital on preferred stock (159) (159) 71
 71
Unearned ESOP shares (875) (875) (1,143) (1,143)
Other (248) (248) (288) (288)
Total Tier 1 capital(A)152,871
 152,871
 158,949
 158,949
         
Long-term debt and other instruments qualifying as Tier 2 25,471
 25,471
 26,515
 26,515
Qualifying allowance for credit losses (3) 4,591
 14,379
 2,566
 10,456
Other (235) (235) (217) (217)
Total Tier 2 capital (Fully Phased-In)(B)29,827
 39,615
 28,864
 36,754
Effect of Basel III Transition Requirements 133
 133
 520
 520
Total Tier 2 capital (Basel III Transition Requirements) $29,960
 39,748
 29,384
 37,274
         
Total qualifying capital (Fully Phased-In)(A)+(B)$182,698
 192,486
 187,813
 195,703
Total Effect of Basel IIII Transition Requirements 133
 133
 520
 520
Total qualifying capital (Basel III Transition Requirements) $182,831
 192,619
 188,333
 196,223
         
Risk-Weighted Assets (RWAs) (4)(5):        
Credit risk (6) $787,340
 1,145,141
 790,784
 1,210,209
Market risk 67,920
 67,921
 35,644
 35,644
Operational risk (7) 340,163
 —
 338,651
 —
Total RWAs (7) $1,195,423
 1,213,062
 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 & Company53
(2)
In second quarter 2020, the Company elected to apply a modified transition provision issued by federal banking regulators in March 2020 related to the impact of CECL on regulatory capital. The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the ACL under CECL for each period until December 31, 2021, followed by a three-year phase-out of the benefits. The impact of the CECL transition provision on our regulatory capital at June 30, 2020, was an increase in capital of $1.9 billion, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $11.4 billion increase in our ACL under CECL from January 1, 2020, through June 30, 2020.

(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 operating loss resulting from inadequate or failed internal processes or systems.
(5)Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total RWAs.
(6)
Includes an increase of $1.5 billion under both the Advanced Approach and Standardized Approach related to the impact of the CECL transition provision on our excess allowance for credit losses as of June 30, 2020. See footnote (3) to this table.
(7)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 3839 presents the changes in Common Equity Tier 1 under the Advanced ApproachCET1 for the six months ended June 30, 2020.2021.

Table 38:39: 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 (2,652)
Common stock dividends (4,189)
Common stock issued, repurchased, and stock compensation-related items (2,189)
Changes in cumulative other comprehensive income 513
Cumulative effect from change in accounting policies (1) 991
Goodwill 5
Certain identifiable intangible assets (other than MSRs) 48
Goodwill and other intangibles on nonmarketable equity securities (included in other assets) 96
Applicable deferred taxes related to goodwill and other intangible assets (2) 21
CECL transition provision (3) 1,857
Other (206)
Change in Common Equity Tier 1 (5,705)
Common Equity Tier 1 at June 30, 2020 $133,055
(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, 2020Determined by applying the combined federal statutory rate$138,297 
Net income applicable to common stock9,999 
Common stock dividends(826)
Common stock issued, repurchased, and composite statestock compensation-related items(1,539)
Changes in cumulative other comprehensive income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.(758)
(3)Goodwill
In second quarter 2020, the Company elected to apply a modified transition provision issued by federal banking regulators198 
Certain identifiable intangible assets (other than MSRs)41 
Goodwill and other intangibles on nonmarketable equity securities (included in March 2020other assets)(291)
Applicable deferred taxes related to the impact of CECL on regulatory capital. The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the ACL under CECL for each period until December 31, 2021, followed by a three-year phase-out of the benefits. The impact of the goodwill and other intangible assets (1)19 
CECL transition provision on our regulatory capital(2)(841)
Other(857)
Change in Common Equity Tier 15,145 
Common Equity Tier 1 at June 30, 20202021$143,442, was an increase in capital of $1.9 billion, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $11.4 billion increase in our ACL under CECL from January 1, 2020, through June 30, 2020.

(1)Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period end.
(2)At June 30, 2021, the impact of the CECL transition provision issued by federal banking regulators on our regulatory capital was an increase in capital of $879 million, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $7.5 billion increase in our ACL under CECL from January 1, 2020, through June 30, 2021.
Table 3940 presents net changes in the components of RWAs under the Advanced and Standardized Approaches for the six months ended June 30, 2020.2021.


Table 39:40: Analysis of Changes in RWAs
(in millions)Advanced ApproachStandardized Approach
RWAs at December 31, 2020$1,158,355 1,193,744 
Net change in credit risk RWAs (1)(23,082)14,646 
Net change in market risk RWAs(19,663)(19,663)
Net change in operational risk RWAs10,925 — 
Total change in RWAs(31,820)(5,017)
RWAs at June 30, 2021$1,126,535 1,188,727 
(1)Includes an increase of $547 million under the Standardized Approach and a decrease of $1.4 billion under the Advanced Approach related to the impact of the CECL transition provision on our excess allowance for credit losses. See Table 38 for additional information.
(in millions)Advanced Approach
Standardized Approach
RWAs at December 31, 2019 (1)$1,165,079
1,245,853
Net change in credit risk RWAs (2)(3,444)(65,068)
Net change in market risk RWAs32,276
32,277
Net change in operational risk RWAs1,512
—
Total change in RWAs30,344
(32,791)
RWAs at June 30, 2020$1,195,423
1,213,062
(1)54Amount for December 31, 2019, has been revised as a result of a decrease in RWAs under the Advanced Approach due to the correction of duplicated operational loss amounts.
Wells Fargo & Company
(2)
Includes an increase of $1.5 billion under both the Advanced Approach and Standardized Approach related to the impact of the CECL transition provision on our excess allowance for credit losses. See Table 37 for more information.


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 equityThe 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 4041 provides a reconciliation of these non-GAAP financial measures to GAAP financial measures.

Table 40:41: Tangible Common Equity
Balance at period endAverage balance
Quarter endedQuarter endedSix months ended
(in millions, except ratios)Jun 30,
2021		Mar 31,
2021		Jun 30,
2020		Jun 30,
2021		Mar 31,
2021		Jun 30,
2020		Jun 30,
2021		Jun 30,
2020
Total equity$193,127 188,034 178,635 190,968189,074 184,072 190,026185,982 
Adjustments:
Preferred stock(20,820)(21,170)(21,098)(21,108)(21,840)(21,344)(21,472)(21,569)
Additional paid-in capital on preferred stock136 139 159 138 145 140 142 138 
Unearned ESOP shares875 875 875 875 875 1,140 875 1,141 
Noncontrolling interests(1,865)(1,130)(736)(1,313)(1,115)(643)(1,215)(714)
Total common stockholders’ equity(A)171,453 166,748 157,835 169,560 167,139 163,365 168,356 164,978 
Adjustments:
Goodwill(26,194)(26,290)(26,385)(26,213)(26,383)(26,384)(26,297)(26,386)
Certain identifiable intangible assets (other than MSRs)(301)(322)(389)(310)(330)(402)(320)(414)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)(2,256)(2,300)(2,050)(2,208)(2,217)(1,922)(2,212)(2,037)
Applicable deferred taxes related to goodwill and other intangible assets (1)875 866 831 873 863 828 868 823 
Tangible common equity(B)$143,577 138,702 129,842 141,702 139,072 135,485 140,395 136,964 
Common shares outstanding(C)4,108.0 4,141.1 4,119.6 N/AN/AN/AN/AN/A
Net income applicable to common stock(D)N/AN/AN/A$5,743 4,256 (4,160)$9,999 (3,856)
Book value per common share(A)/(C)$41.74 40.27 38.31 N/AN/AN/AN/AN/A
Tangible book value per common share(B)/(C)34.95 33.49 31.52 N/AN/AN/AN/AN/A
Return on average common stockholders’ equity (ROE) (annualized)(D)/(A)N/AN/AN/A13.59 %10.33 (10.24)11.98 %(4.70)%
Return on average tangible common equity (ROTCE) (annualized)(D)/(B)N/AN/AN/A16.26 12.41 (12.35)14.36 %(5.66)%
   Balance at period end  Average balance 
   Quarter ended  Quarter ended  Six months ended 
(in millions, except ratios)  Jun 30,
2020
Mar 31,
2020
Jun 30,
2019
 Jun 30,
2020
Mar 31,
2020
Jun 30,
2019
 Jun 30,
2020
Jun 30,
2019
Total equity  $180,122
183,330
200,037
 184,108
188,170
199,685
 186,139
199,021
Adjustments:            
Preferred stock  (21,098)(21,347)(23,021) (21,344)(21,794)(23,023) (21,569)(23,118)
Additional paid-in capital on preferred stock  159
140
(78) 140
135
(78) 138
(87)
Unearned ESOP shares  875
1,143
1,292
 1,140
1,143
1,294
 1,141
1,397
Noncontrolling interests  (736)(612)(995) (643)(785)(939) (714)(919)
Total common stockholders’ equity(A) 159,322
162,654
177,235
 163,401
166,869
176,939
 165,135
176,294
Adjustments:      
 
   
Goodwill  (26,385)(26,381)(26,415) (26,384)(26,387)(26,415) (26,386)(26,417)
Certain identifiable intangible assets (other than MSRs)  (389)(413)(493) (402)(426)(505) (414)(524)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)  (2,050)(1,894)(2,251) (1,922)(2,152)(2,155) (2,037)(2,157)
Applicable deferred taxes related to goodwill and other intangible assets (1)  831
821
788
 828
818
780
 823
782
Tangible common equity(B) $131,329
134,787
148,864
 135,521
138,722
148,644
 137,121
147,978
Common shares outstanding(C) 4,119.6
4,096.4
4,419.6
 N/A
N/A
N/A
 N/A
N/A
Net income applicable to common stock(D) N/A
N/A
N/A
 $(2,694)42
5,848
 (2,652)11,355
Book value per common share(A)/(C) $38.67
39.71
40.10
 N/A
N/A
N/A
 N/A
N/A
Tangible book value per common share(B)/(C) 31.88
32.90
33.68
 N/A
N/A
N/A
 N/A
N/A
Return on average common stockholders’ equity (ROE) (annualized)(D)/(A) N/A
N/A
N/A
 (6.63)%0.10
13.26
 (3.23)12.99
Return on average tangible common equity (ROTCE) (annualized)(D)/(B) N/A
N/A
N/A
 (8.00)0.12
15.78
 (3.89)15.47
(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 (continuedDetermined 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 RATIOREQUIREMENTS 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. Ourpayments and maintain a minimum tier 1 leverage ratio. Table 42 presents the leverage requirements applicable to the Company as of June 30, 2021.
Table 42:Leverage Requirements Applicable to the Companywfc-20210630_g3.jpg
In addition, our IDIs are required to maintain aan SLR of at least 6.00% to be considered well-capitalizedwell capitalized under applicable regulatory capital adequacy guidelines. In April 2018, therules and maintain a minimum tier 1 leverage ratio of 4.00%.
The FRB and OCC have proposed rules (Proposedamendments to the SLR rules) that would replacerules. For information regarding the 2.00% supplementary leverage buffer with a buffer equalproposed amendments to one-half of our G-SIB capital surcharge. The Proposedthe SLR rules, would similarly tailorsee the current 6.00% SLR requirement for“Capital Management – Leverage Requirements” section in our IDIs. In April 2020 the FRB issued an interim final rule that temporarily allows 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. This interim final rule became effective on April 1, 2020, and expires on March 31, 2021. In May 2020, federal banking regulators issued an interim final rule that permits IDIs to choose to similarly exclude these items from the denominator of their SLRs; however, if an IDI chooses to exclude such amounts from the calculation of its SLR, it will be required to request approval from its primary federal banking regulator before making capital distributions, such as paying dividends, to its parent company. As of June 30, 2020, none of the Company’s IDIs elected to apply this exclusion.Form 10-K.
At June 30, 2020, our2021, the Company’s SLR for the Company was 7.52%7.09%, and we also exceeded the applicable SLR requirements for each of our IDIs. SeeIDIs exceeded their applicable SLR requirements. Table 41 for43 presents information regarding the calculation and components of the SLR.Company’s SLR and tier 1 leverage ratio.
Table 41:Supplementary Leverage Ratio
(in millions, except ratio) Quarter ended June 30, 2020
Tier 1 capital(A)$152,871
Total average assets 1,950,796
Less: Goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities) 28,367
Less: Other SLR exclusions 218,984
Total adjusted average assets 1,703,445
Plus adjustments for off-balance sheet exposures:  
Derivatives (1) 74,435
Repo-style transactions (2) 3,604
Other (3) 250,765
Total off-balance sheet exposures 328,804
Total leverage exposure(B)$2,032,249
Supplementary leverage ratio(A)/(B)7.52%
(1)Adjustment represents derivatives and collateral netting exposures as defined for supplementary leverage ratio determination purposes.Wells Fargo & Company55

Capital Management (continued)
Table 43:Leverage Ratios for the Company
(2)(in millions, except ratios)Adjustment represents counterparty credit riskQuarter ended June 30, 2021
Tier 1 capital(A)$162,999 
Total average assets1,940,757 
Less: Goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities)29,103 
Less: Other SLR exclusions— 
Total adjusted average assets1,911,654 
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 other68,738 
Repo-style transactions (2)3,626 
Other (3)316,398 
Total off-balance sheet exposures not already included as derivatives and repo-style transactions exposures.388,762 
Total leverage exposure(B)$2,300,416 
Supplementary leverage ratio(A)/(B)7.09 %
Tier 1 leverage ratio (4)8.53 %
(1)Adjustment represents derivatives and collateral netting exposures as defined for supplementary leverage ratio determination purposes.
(2)Adjustment represents counterparty credit risk for repo-style transactions where Wells Fargo & Company is the principal counterparty facing the client.
(3)Adjustment represents credit equivalent amounts of other off-balance sheet exposures not already included as derivatives and repo-style transactions exposures.
(4)The tier 1 leverage ratio consists of tier 1 capital divided by total average assets, excluding goodwill and certain other items as determined under the rule.
TOTAL LOSS ABSORBING 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) to avoid restrictions on capital distributions and discretionary bonus payments, as well as a minimum amount of eligible unsecured long-term debt.The components used to calculate our minimum TLAC and eligible unsecured long-term debt requirements as of June 30, 2021, are presented in Table 44.
Table 44:Components Used to Calculate TLAC and Eligible Unsecured Long-Term Debt Requirements
TLAC requirement

Greater of:
18.00% of RWAs7.50% 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 RWAs4.50% of total leverage exposure
+
Method two G-SIB capital surcharge
The FRB and OCC have proposed amendments to the greaterTLAC and eligible unsecured long-term debt requirements. For information regarding these proposed amendments, see the “Capital Management – Total Loss Absorbing Capacity” section in our 2020 Form 10-K.
Table 45 provides our TLAC and eligible unsecured long-term debt and related ratios as of (i) 18.00% of RWAsJune 30, 2021, and (ii) 7.50% of total leverage exposure (the denominator ofDecember 31, 2020.
Table 45: TLAC and Eligible Unsecured Long-Term Debt
($ in millions)TLAC (1)Regulatory Minimum (2)Eligible Unsecured Long-term DebtRegulatory Minimum
June 30, 2021
Total eligible amount$298,496129,411 
Percentage of RWAs (3)25.11 %21.50 10.89 8.00 
Percentage of total leverage exposure12.98 9.50 5.63 4.50 
December 31, 2020
Total eligible amount$307,226140,703 
Percentage of RWAs (3)25.74 %22.00 11.79 8.00 
Percentage of total leverage exposure (4)15.64 9.50 7.16 4.50 
(1)TLAC ratios are calculated using the SLR calculation). Additionally, U.S. G-SIBs areCECL transition provision issued by federal banking regulators.
(2)Represents the minimum 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 a
(3)Our minimum amount ofTLAC and eligible unsecured long-term debt equal to the greater of (i) 6.00% of RWAs plus our applicable G-SIB capital surchargerequirements are calculated under method two and (ii) 4.50% of the total leverage exposure. Under the Proposed SLR rules, the 2.00% external TLAC leverage buffer would be replaced with a buffer equal to one-half of our applicable G-SIB capital surcharge, and the leverage component for calculating the minimum amount of eligible unsecured long-term debt would be modified from 4.50% of total leverage exposure to 2.50% of total leverage exposure plus one-half of our applicable G-SIB capital surcharge. As of June 30, 2020, our eligible external TLAC as a percentage of total risk-weighted assets was 25.33% compared with a required minimum of 22.00%. Similar to the risk-based capital requirements, we determine minimum required TLAC based on the greater of RWAs determined under the Standardized and Advanced approaches.Approaches.
(4)Total leverage exposure at December 31, 2020, reflected an interim final rule issued by the FRB that temporarily allowed a bank holding company to exclude on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of its total leverage exposure.
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 ruleFor information regarding the U.S. implementation of the Basel III LCR and a proposed rule regardingNSFR, see the NSFR.“Risk Management – Asset/ Liability Management – Liquidity Risk and Funding – Liquidity Standards” section in this Report.

Capital Planning and Stress Testing
Our planned long-term capital structure is designed to meet regulatory and market expectations. We believe that our long-term targeted capital structure enables us to invest in and grow our business, satisfy our customers’ financial needs in varying environments, access markets, and maintain flexibility to return capital to our shareholders. Our long-term targeted capital structure also considers capital levels sufficient to exceed capital requirements including the G-SIB capital surcharge. Accordingly, based on the final Basel III capital rules under the lower of the Standardized or Advanced Approaches CET1 capital ratios, we currently target a long-term CET1 capital ratio at or in excessthat is 100 basis points above our regulatory requirement plus an incremental buffer of 10.00%, which includes a 2.00% G-SIB capital surcharge.25 to 50 basis points. Our capital targets are subject to change based on various factors, including changes to the regulatory capital framework and expectations for large banks promulgated by bank regulatory agencies, changes to the regulatory minimumsrequirements for our capital ratios, (including changes to our stress capital buffer), planned capital actions, changes in our risk profile and other factors.
Under the FRB’sThe FRB capital plan rule largeestablishes 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.
Our 2020 capital plan, which was submitted 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. As part ofOn March 25, 2021, the 2020 CCAR, the FRB also generated a supervisory stress test, which assumed a sharp decline in the economy and significant decline in asset pricing using the information provided by the Company to estimate

performance. The FRB reviewed the supervisory stress test results both as required under the Dodd-Frank Act using a common set of capital actions for all large BHCs and by taking into account the Company’s proposed capital actions. The FRB published its supervisory stress test results as required under the Dodd-Frank Act on June 25, 2020.
On June 25, 2020, the FRB also announced that it is requiringwas extending measures it previously announced limiting large BHCs, including Wells Fargo, to update and resubmit their capital plans within 45 days after the FRB provides updated scenarios. Requiring resubmission will prohibit each BHC 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. Through the end of third quarter 2020, theThe FRB is authorizing each BHCgenerally authorized BHCs to (i) make share repurchases relating to issuances of common stock related to employee stock ownership plans; (ii) provided that the BHC does not increase the amount of its common stock dividends to
56Wells Fargo & Company

be larger than the level paid in second quarter 2020, pay common stock dividends and make share repurchases that, in the aggregate, do not exceed an amount equal to the average of the BHC’s net income for the four preceding calendar quarters, unless otherwise specified byquarters; (ii) make share repurchases that equal the FRB;amount of share issuances related to expensed employee compensation; and (iii) redeem and make scheduled payments on additional tier 1 and tier 2 capital instruments. These provisions may be extended by the FRB quarter-by-quarter.limitations on capital distributions ended on June 30, 2021.
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
In June 2021, the timing and type ofCompany completed the 2021 CCAR stress test activities large BHCs and banks must undertake as well as rules governing stress testing controls, oversight and disclosure requirements. We submittedprocess. On July 27, 2021, the results of our stress testBoard approved an increase to the FRB and disclosed a summaryCompany's third quarter 2021 common stock dividend to $0.20 per share. Additionally, our capital plan includes gross common share repurchases of approximately $18 billion for the results in June 2020.four-quarter period beginning third quarter 2021 through second quarter 2022.

Securities Repurchases
From time to time the Board authorizes the Company to repurchase shares of our common stock. Although we announce when the Board authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Future stock repurchases may be private or open-market repurchases, including block transactions, accelerated or delayed block transactions, forward 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 impactingthat 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. On June 25, 2020, the FRB announced that it was prohibiting 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. Through the end of third quarter 2020, the FRB authorized
certain limited exceptions to this prohibition, which are described in the “Capital Planning and Stress Testing” section above.
At June 30, 2020,2021, we had remaining Board authority to repurchase approximately 168615 million shares, subject to regulatory and legal conditions. For moreadditional information about share repurchases during second 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.
For additional information about share repurchases, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

Regulatory Matters (continued)

Regulatory Matters
Since the enactment of the Dodd-Frank Act in 2010, theThe U.S. financial services industry has beenis subject to a significant increase in regulation and regulatory oversight initiatives. This increased regulation and oversight has substantially changedmay continue to impact how most U.S. financial services companies conduct business and hasmay continue to result in increased their regulatory compliance costs.
For a discussion of certain consent orders applicable to the Company, see the “Overview” section in this Report. The following supplements our discussion of the other significant regulations and regulatory oversight initiatives that have affected or may affect our business contained in the “Regulatory Matters” and “Risk Factors” sections in our 20192020 Form 10-K10-K.

“Living Will” Requirements and in our 2020 First Quarter Report on Form 10-Q.Related Matters

REGULATORY DEVELOPMENTS RELATED TO COVID-19In response toRules adopted by the COVID-19 pandemicFRB and related events, federal banking regulators have undertaken a number of measures to help stabilize the banking sector, supportFDIC under the broader economy, and facilitate the ability of banking organizations likeDodd-Frank Act require large financial institutions, including Wells Fargo, to continue lendingprepare and periodically submit resolution plans, also known as “living wills,” that would facilitate their rapid and orderly resolution in the event of material financial distress or failure. Under the rules, rapid and orderly resolution means a reorganization or liquidation of the covered company under the U.S. Bankruptcy Code that can be accomplished in a reasonable period of time and in a manner that substantially mitigates the risk that failure would have serious adverse effects on the financial stability of the United States. In addition to consumersthe Company’s resolution plan, our national bank subsidiary, Wells Fargo Bank, N.A. (the “Bank”), is also required to prepare and businesses. For example,periodically submit a resolution plan. If the FRB and/or FDIC determine that our resolution plan has deficiencies, they may impose more stringent capital, leverage or liquidity requirements on us or restrict our growth, activities or operations until we adequately remedy the deficiencies. If the FRB and/or FDIC ultimately determine that we have been unable to remedy any deficiencies, they could require us to divest certain assets or operations. On June 29, 2021, we submitted our most recent resolution plan to the FRB and FDIC.
If Wells Fargo were to fail, it may be resolved in ordera bankruptcy proceeding or, if certain conditions are met, under the resolution regime created by the Dodd-Frank Act known as the “orderly liquidation authority.” The orderly liquidation authority allows for the appointment of the FDIC as receiver for a systemically
important financial institution that is in default or in danger of default if, among other things, the resolution of the institution under the U.S. Bankruptcy Code would have serious adverse effects on financial stability in the United States. If the FDIC is appointed as receiver for Wells Fargo & Company (the “Parent”), then the orderly liquidation authority, rather than the U.S. Bankruptcy Code, would determine the powers of the receiver and the rights and obligations of our security holders. The FDIC’s orderly liquidation authority requires that security holders of a company in receivership bear all losses before U.S. taxpayers are exposed to any losses, and allows the FDIC to disregard the strict priority of creditor claims under the U.S. Bankruptcy Code in certain circumstances.
The strategy described in our most recent resolution plan is a single point of entry strategy, in which the Parent would likely be the only material legal entity to enter resolution proceedings. However, we are not obligated to maintain a single point of entry strategy, and the strategy described in our resolution plan is not binding in the event of an actual resolution of Wells Fargo, whether conducted under the U.S. Bankruptcy Code or by the FDIC under the orderly liquidation authority. The FDIC has announced that a single point of entry strategy may be a desirable strategy under its implementation of the orderly liquidation authority, but not all aspects of how the FDIC might exercise this authority are known and additional rulemaking is possible.
To facilitate the Coronavirus Aid, Relief and Economic Security Act (CARES Act),orderly resolution of systemically important financial institutions in case of material distress or failure, federal banking regulators issued interim final rules designed to encourage financialregulations require that institutions, to participate in stimulus measures, such as the Small Business Administration’s Paycheck Protection ProgramWells Fargo, maintain a minimum amount of equity and the FRB’s Main Street Lending Program. Similarly, the FRB launched a number of lending facilities designedunsecured debt to enhance liquidityabsorb losses and the functioning of markets, including facilities covering money market mutual funds and term asset-backed securities loans.recapitalize operating subsidiaries. Federal banking regulators have also required measures to facilitate the continued operation of operating subsidiaries notwithstanding the failure of their parent companies, such as limitations on parent guarantees, and have issued several joint interim final rules amending the regulatoryguidance encouraging institutions to take legally binding measures to provide capital and TLAC rulesliquidity resources to certain subsidiaries to facilitate an orderly resolution. In response to the regulators’ guidance and to facilitate the orderly resolution of the Company, on June 28, 2017, the Parent entered into a support agreement, as amended
Wells Fargo & Company57

Regulatory Matters (continued)
and restated on June 26, 2019 (the “Support Agreement”), with WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), the Bank, Wells Fargo Securities, LLC (“WFS”), Wells Fargo Clearing Services, LLC (“WFCS”), and certain other subsidiaries of the Parent designated from time to time as material entities for resolution planning purposes (the “Covered Entities”) or identified from time to time as related support entities in our resolution plan (the “Related Support Entities”). Pursuant to the Support Agreement, the Parent transferred a significant amount of its assets, including the majority of its cash, deposits, liquid securities and intercompany loans (but excluding its equity interests in its subsidiaries and certain other assets), to the IHC and will continue to transfer those types of assets to the IHC from time to time. In the event of our material financial distress or failure, the IHC will be obligated to use the transferred assets to provide capital and/or liquidity to the Bank, WFS, WFCS, and the Covered Entities pursuant to the Support Agreement. Under the Support Agreement, the IHC will also provide funding and liquidity to the Parent through subordinated notes and a committed line of credit, which, together with the issuance of dividends, is expected to provide the Parent, during business as usual operating conditions, with the same access to cash necessary to service its debts, pay dividends, repurchase its shares, and perform its other obligations as it would have had if it had not entered into these arrangements and transferred any assets. If certain liquidity and/or capital metrics fall below defined triggers, or if the Parent’s board of directors authorizes it to file a case under the U.S. Bankruptcy Code, the subordinated notes would be forgiven, the committed line of credit would terminate, and the IHC’s ability to pay dividends to the Parent would be restricted, any of which could materially and adversely impact the Parent’s liquidity and its ability to satisfy its debts and other prudential regulationsobligations, and could result in the commencement of bankruptcy proceedings by the Parent at an earlier time than might have otherwise occurred if the Support Agreement were not implemented. The respective obligations under the Support Agreement of the Parent, the IHC, the Bank, and the Related Support Entities are secured pursuant 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.a related security agreement.

In addition to our resolution plans, we must also prepare and submit to the FRB a recovery plan that identifies a range of options that we may consider during times of idiosyncratic or systemic economic stress to remedy any financial weaknesses and restore market confidence without extraordinary government support. Recovery options include the possible sale, transfer or disposal of assets, securities, loan portfolios or businesses. The Bank must also prepare and submit to the OCC anda recovery plan that sets forth the Bank’s plan to remain a going concern when the Bank is experiencing considerable financial or operational stress, but has not yet deteriorated to the point where liquidation or resolution is imminent. If either the FRB have issued guidelines for banks and BHCs related to working with customers affected byor 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 moratoriumOCC determines that our recovery plan is deficient, they may impose fines, restrictions on certain mortgage foreclosure activities. Any currentour business or future rules, regulations, and guidance related to the COVID-19 pandemic and its impacts couldultimately 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.divest assets.


58Wells Fargo & Company

Critical Accounting Policies
Our significant accounting policies (see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 20192020 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. FiveSix 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 approvedCommittee. For additional information on these critical accounting policies. These policies, are described further insee the “Financial Review – Critical“Critical Accounting Policies” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 20192020 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:
•Accounting Standards Update (ASU or Update) 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 Updates are applicable to us but are 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
•ASU 2021-05 – Leases (Topic 842): Lessors – Certain Leases with Variable Lease Payments
Wells Fargo & Company59

Forward-Looking Statements
This document contains forward-looking statements. In connectionaddition, 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
60Wells Fargo & Company

financial condition of the Company, market conditions, capital requirements (including under Basel capital standards), common stock issuance requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the Company’s Board of Directors, and may be subject to regulatory approval or conditions.
For 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.
Wells Fargo & Company61


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.

62Wells Fargo & Company

Controls and Procedures
Disclosure Controls and Procedures
The Company’s management evaluated the effectiveness, as of June 30, 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 June 30, 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 second quarter 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Wells Fargo & Company63

Financial Statements
Wells Fargo & Company and Subsidiaries
Consolidated Statement of Income (Unaudited)
Quarter ended June 30,Six months ended June 30,
(in millions, except per share amounts)2021202020212020
Interest income
Debt securities$2,199 2,946 $4,511 6,418 
Loans held for sale193 237 524 446 
Loans (1)7,095 8,460 14,296 18,543 
Equity securities132 116 269 322 
Other interest income74 54 139 829 
Total interest income9,693 11,813 19,739 26,558 
Interest expense
Deposits92 585 204 2,327 
Short-term borrowings(12)(17)(21)274 
Long-term debt712 1,237 1,738 2,477 
Other interest expense101 116 210 258 
Total interest expense893 1,921 2,131 5,336 
Net interest income8,800 9,892 17,608 21,222 
Noninterest income
Deposit and lending-related fees1,704 1,465 3,320 3,262 
Investment advisory and other asset-based fees (2)2,794 2,254 5,550 4,760 
Commissions and brokerage services fees (2)580 550 1,216 1,227 
Investment banking fees570 547 1,138 938 
Card fees1,077 797 2,026 1,689 
Mortgage banking1,336 317 2,662 696 
Net gains on trading and securities2,717 1,552 3,608 452 
Other (1)692 912 1,674 2,213 
Total noninterest income11,470 8,394 21,194 15,237 
Total revenue20,270 18,286 38,802 36,459 
Provision for credit losses(1,260)9,534 (2,308)13,539 
Noninterest expense
Personnel8,818 8,916 18,376 17,239 
Technology, telecommunications and equipment815 672 1,659 1,470 
Occupancy735 871 1,505 1,586 
Operating losses303 1,219 516 1,683 
Professional and outside services1,450 1,676 2,838 3,282 
Advertising and promotion132 137 222 318 
Restructuring charges(4)0 9 0 
Other1,092 1,060 2,205 2,021 
Total noninterest expense13,341 14,551 27,330 27,599 
Income (loss) before income tax expense8,189 (5,799)13,780 (4,679)
Income tax expense (benefit) (1)1,445 (2,001)2,346 (1,648)
Net income (loss) before noncontrolling interests6,744 (3,798)11,434 (3,031)
Less: Net income (loss) from noncontrolling interests704 48 758 (101)
Wells Fargo net income (loss) (1)$6,040 (3,846)$10,676 (2,930)
Less: Preferred stock dividends and other297 314 677 926 
Wells Fargo net income (loss) applicable to common stock (1)$5,743 (4,160)$9,999 (3,856)
Per share information (1)
Earnings (loss) per common share$1.39 (1.01)$2.42 (0.94)
Diluted earnings (loss) per common share1.38 (1.01)2.40 (0.94)
Average common shares outstanding4,124.6 4,105.5 4,132.9 4,105.2 
Diluted average common shares outstanding4,156.1 4,105.5 4,164.6 4,105.2 
(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
(2)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.
64Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Comprehensive Income (Unaudited)
Quarter ended June 30,Six months ended June 30,
(in millions)2021202020212020
Net income (loss) before noncontrolling interests (1)$6,744 (3,798)11,434 (3,031)
Other comprehensive income (loss), after tax:
Net change in debt securities304 1,143 (1,221)915 
Net change in derivatives and hedging activities27 3 63 140 
Defined benefit plans adjustments334 (431)369 (401)
Net change in foreign currency translation adjustments22 51 33 (142)
Other comprehensive income (loss), after tax687 766 (756)512 
Total comprehensive income (loss) before noncontrolling interests (1)7,431 (3,032)10,678 (2,519)
Less: Other comprehensive income (loss) from noncontrolling interests1 0 2 (1)
Less: Net income (loss) from noncontrolling interests704 48 758 (101)
Wells Fargo comprehensive income (loss) (1)$6,726 (3,080)9,918 (2,417)
(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
The accompanying notes are an integral part of these statements.
Wells Fargo & Company65


Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet
(in millions, except shares)Jun 30,
2021		Dec 31,
2020
Assets(Unaudited)
Cash and due from banks$25,304 28,236 
Interest-earning deposits with banks248,869 236,376 
Total cash, cash equivalents, and restricted cash274,173 264,612 
Federal funds sold and securities purchased under resale agreements70,149 65,672 
Debt securities:
Trading, at fair value82,727 75,095 
Available-for-sale, at fair value (includes amortized cost of $186,309 and $215,533, net of allowance for credit losses)189,897 220,392 
Held-to-maturity, at amortized cost, net of allowance for credit losses (fair value $264,087 and $212,307)260,941 205,720 
Loans held for sale (includes $18,894 and $18,806 carried at fair value)25,594 36,384 
Loans852,300 887,637 
Allowance for loan losses(15,148)(18,516)
Net loans837,152 869,121 
Mortgage servicing rights (includes $6,717 and $6,125 carried at fair value)8,009 7,437 
Premises and equipment, net8,745 8,895 
Goodwill26,194 26,392 
Derivative assets25,415 25,846 
Equity securities (includes $35,331 and $34,009 carried at fair value) (1)64,547 60,008 
Other assets72,453 87,337 
Total assets (2)$1,945,996 1,952,911 
Liabilities
Noninterest-bearing deposits$504,108 467,068 
Interest-bearing deposits936,364 937,313 
Total deposits1,440,472 1,404,381 
Short-term borrowings45,635 58,999 
Derivative liabilities14,551 16,509 
Accrued expenses and other liabilities (includes $22,043 and $22,441 carried at fair value) (1)72,555 74,360 
Long-term debt179,656 212,950 
Total liabilities (3)1,752,869 1,767,199 
Equity
Wells Fargo stockholders’ equity:
Preferred stock20,820 21,136 
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares 9,136 9,136 
Additional paid-in capital60,018 60,197 
Retained earnings (1)171,765 162,683 
Cumulative other comprehensive income (loss)(564)194 
Treasury stock – 1,373,813,200 shares and 1,337,799,931 shares (69,038)(67,791)
Unearned ESOP shares(875)(875)
Total Wells Fargo stockholders’ equity191,262 184,680 
Noncontrolling interests1,865 1,032 
Total equity193,127 185,712 
Total liabilities and equity$1,945,996 1,952,911 
(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
(2)Our consolidated assets at June 30, 2021, and December 31, 2020, included the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Debt securities, $518 million and $967 million; Loans, $4.1 billion and $10.9 billion; All other assets, $334 million and $310 million; and Total assets, $4.9 billion and $12.1 billion, respectively.
(3)Our consolidated liabilities at June 30, 2021, and December 31, 2020, include the following VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo: Long-term debt, $178 million and $203 million; All other liabilities, $587 million and $900 million; and Total liabilities, $765 million and $1.1 billion, respectively.
The accompanying notes are an integral part of these statements.
66Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity – Quarter ended June 30 (Unaudited)
Wells Fargo stockholders’ equity
Preferred stockCommon stock
($ and shares in millions)SharesAmountSharesAmountAdditional
paid-in
capital		Retained
earnings		Cumulative
other
comprehensive
income (loss)		Treasury
stock		Unearned
ESOP
shares		Noncontrolling
interests		Total
equity
Balance March 31, 2021 (1)5.6 $21,170 4,141.1 $9,136 59,854 166,458 (1,250)(67,589)(875)1,130 188,034 
Net income6,040 704 6,744 
Other comprehensive income (loss),
net of tax
686 1 687 
Noncontrolling interests30 30 
Common stock issued2.2 0 (20)115 95 
Common stock repurchased(35.3)(1,565)(1,565)
Preferred stock redeemed (2)0 (350)4 (4)(350)
Preferred stock released by ESOP0 0 0 
Preferred stock converted to
common shares
0 0 0 0 0 0 
Common stock dividends4 (416)(412)
Preferred stock dividends(293)(293)
Stock incentive compensation
expense
226 226 
Net change in deferred compensation and related plans(70)1 (69)
Net change0 (350)(33.1)0 164 5,307 686 (1,449)0 735 5,093 
Balance June 30, 20215.6 $20,820 4,108.0 $9,136 60,018 171,765 (564)(69,038)(875)1,865 193,127 
Balance March 31, 2020 (1)5.7 $21,347 4,096.4 $9,136 59,849 165,288 (1,564)(70,215)(1,143)612 183,310 
Net income (loss) (1)(3,846)48 (3,798)
Other comprehensive income (loss),
net of tax
766 0 766 
Noncontrolling interests75 75 
Common stock issued13.5 224 (549)692 367 
Common stock repurchased0 (2)(2)
Preferred stock redeemed0 0 0 0 0 
Preferred stock released by ESOP(19)268 249 
Preferred stock converted to
common shares
(0.2)(249)9.7 (243)492 0 
Common stock dividends20 (2,113)(2,093)
Preferred stock dividends(314)(314)
Stock incentive compensation
expense
120 120 
Net change in deferred compensation and related plans(28)(17)(45)
Net change (1)(0.2)(249)23.2 0 74 (6,822)766 1,165 268 123 (4,675)
Balance June 30, 2020 (1)5.5 $21,098 4,119.6 $9,136 59,923 158,466 (798)(69,050)(875)735 178,635 
(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
(2)Represents the impact of the redemption of the remaining Preferred Stock, Series N, in second quarter 2021. For additional information, see Note 16 (Preferred Stock).
The accompanying notes are an integral part of these statements.
Wells Fargo & Company67


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity – Six months ended June 30 (Unaudited)
Wells Fargo stockholders’ equity
Preferred stockCommon stock
($ and shares in millions)SharesAmountSharesAmountAdditional
paid-in
capital		Retained
earnings		Cumulative
other
comprehensive
income (loss)		Treasury
stock		Unearned
ESOP
shares		Noncontrolling
interests		Total
equity
Balance December 31, 2020 (1)5.5 $21,136 4,144.0 $9,136 60,197 162,683 194 (67,791)(875)1,032 185,712 
Net income10,676 758 11,434 
Other comprehensive income (loss),
net of tax
(758)2 (756)
Noncontrolling interests73 73 
Common stock issued16.5 0 (81)900 819 
Common stock repurchased(52.5)(2,161)(2,161)
Preferred stock redeemed (2)(0.1)(4,876)48 (48)(4,876)
Preferred stock released by ESOP0 0 0 
Preferred stock converted to
common shares
0 0 0 0 0 0 
Preferred stock issued0.2 4,560 (31)4,529 
Common stock dividends10 (836)(826)
Preferred stock dividends(629)(629)
Stock incentive compensation
expense
724 724 
Net change in deferred compensation and related plans(930)14 (916)
Net change0.1 (316)(36.0)0 (179)9,082 (758)(1,247)0 833 7,415 
Balance June 30, 20215.6 $20,820 4,108.0 $9,136 60,018 171,765 (564)(69,038)(875)1,865 193,127 
Balance December 31, 20197.5 $21,549 4,134.4 $9,136 61,049 166,697 (1,311)(68,831)(1,143)838 187,984 
Cumulative effect from change in accounting policies (1)708 708 
Balance January 1, 2020 (1)7.5 21,549 4,134.4 9,136 61,049 167,405 (1,311)(68,831)(1,143)838 188,692 
Net income (loss) (1)(2,930)(101)(3,031)
Other comprehensive income (loss),
net of tax
513 (1)512 
Noncontrolling interests(1)(1)
Common stock issued50.9 207 (857)2,694 2,044 
Common stock repurchased(75.4)(3,409)(3,409)
Preferred stock redeemed (3)(1.9)(2,215)17 (272)(2,470)
Preferred stock released by ESOP(19)268 249 
Preferred stock converted to
common shares
(0.2)(249)9.7 (243)492 0 
Preferred stock issued0.1 2,013 (45)1,968 
Common stock dividends38 (4,226)(4,188)
Preferred stock dividends(654)(654)
Stock incentive compensation
expense
301 301 
Net change in deferred compensation and related plans(1,382)4 (1,378)
Net change (1)(2.0)(451)(14.8)0 (1,126)(8,939)513 (219)268 (103)(10,057)
Balance June 30, 2020 (1)5.5 $21,098 4,119.6 $9,136 59,923 158,466 (798)(69,050)(875)735 178,635 
(1)We adopted Accounting Standards Update (ASU) 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL) effective January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies) in our Annual Report on Form 10-K for the year ended December 31, 2020. In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
(2)Represents the impact of the redemption of Preferred Stock, Series I, Series P and Series W, in first quarter 2021, and Preferred Stock, Series N, in second quarter 2021. For additional information, see Note 16 (Preferred Stock).
(3)Represents the impact of the redemption of the remaining Preferred Stock, Series K, and partial redemption of Preferred Stock, Series T, in first quarter 2020.
The accompanying notes are an integral part of these statements.
68Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
Six months ended June 30,
(in millions)20212020
Cash flows from operating activities:
Net income (loss) before noncontrolling interests (1)$11,434 (3,031)
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses(2,308)13,539 
Changes in fair value of MSRs and LHFS carried at fair value(895)4,481 
Depreciation, amortization and accretion (1)4,173 3,858 
Stock-based compensation1,475 953 
Deferred income tax benefit (1)(1,495)(118)
Other net (gains) losses (2)(7,661)7,150 
Originations and purchases of loans held for sale (2)(87,673)(83,540)
Proceeds from sales of and paydowns on loans originally classified as held for sale (2)55,502 69,195 
Net change in:
Debt and equity securities, held for trading7,531 36,459 
Derivative assets and liabilities(1,299)(6,825)
Other assets11,256 (5,910)
Other accrued expenses and liabilities (1)(1,572)(2,819)
Net cash provided (used) by operating activities(11,532)33,392 
Cash flows from investing activities:
Net change in:
Federal funds sold and securities purchased under resale agreements(4,477)22,851 
Available-for-sale debt securities:
Proceeds from sales13,675 29,524 
Prepayments and maturities45,238 35,340 
Purchases(71,997)(28,310)
Held-to-maturity debt securities:
Paydowns and maturities45,833 11,566 
Purchases(43,192)(25,376)
Equity securities, not held for trading:
Proceeds from sales and capital returns2,131 5,584 
Purchases(3,033)(5,587)
Loans:
Loans originated by banking subsidiaries, net of principal collected21,926 8,871 
Proceeds from sales of loans originally classified as held for investment22,174 5,325 
Purchases of loans(186)(775)
Principal collected on nonbank entities’ loans7,007 5,505 
Loans originated by nonbank entities(5,723)(5,856)
Proceeds from sales of foreclosed assets and short sales372 753 
Other, net1,056 (31)
Net cash provided by investing activities30,804 59,384 
Cash flows from financing activities:
Net change in:
Deposits36,575 88,085 
Short-term borrowings(13,364)(44,027)
Long-term debt:
Proceeds from issuance1,125 37,664 
Repayment(29,810)(44,574)
Preferred stock:
Proceeds from issuance4,529 1,968 
Redeemed(4,875)(2,470)
Cash dividends paid(629)(654)
Common stock:
Proceeds from issuance114 454 
Stock tendered for payment of withholding taxes(250)(320)
Repurchased(2,161)(3,409)
Cash dividends paid(795)(4,055)
Net change in noncontrolling interests(13)(31)
Other, net(157)(154)
Net cash provided (used) by financing activities(9,711)28,477 
Net change in cash, cash equivalents, and restricted cash9,561 121,253 
Cash, cash equivalents, and restricted cash at beginning of period264,612 141,250 
Cash, cash equivalents, and restricted cash at end of period$274,173 262,503 
Supplemental cash flow disclosures:
Cash paid for interest$2,345 5,545 
Cash paid for income taxes, net (2)3,052 2,070 
(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
(2)Prior period balances have been revised to conform with the current period presentation.
The accompanying notes are an integral part of these statements. See Note 1 (Summary of Significant Accounting Policies) for noncash activities.
Wells Fargo & Company69

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).
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 adoption2020 Form 10-K.


Change in Accounting Policies
In second quarter 2021, we elected to change our accounting method for low-income housing tax credit (LIHTC) investments from the equity method of accounting to the proportional amortization method. Under the proportional amortization method, the investments are carried at amortized cost and amortized in proportion to the tax credits received. The amortization of the investments and the related tax impacts are recognized in income tax expense. Previously, we recognized the amortization of the investments in other noninterest income and the related tax impacts were recognized in income tax expense. We determined that the proportional amortization method is preferable because it better aligns the financial statement presentation with the economic impact of these investments, which generate tax credits over the lives of the investments. Adoption of the proportional amortization method was applied retrospectively, to the earliest period presented, which resulted in a cumulative-effect adjustment to reduce retained earnings by $283 million as of January 1, 2020.
In second quarter 2021, we also elected to change the presentation of investment tax credits related to solar energy investments, which are accounted for under the deferral method. We reclassified the investment tax credits on our consolidated balance sheet from accrued expenses and other liabilities to a reduction of the carrying value of the investment balances. We also reclassified the investment tax credits, which are recognized over time, from income tax expense to interest income for solar energy leases or noninterest income for solar energy equity investments. We determined that this presentation is preferable because it better reflects the financial statement presentation of the investment tax credits as an integral component of the investments. The change in accounting policy was adopted retrospectively to January 1, 2020.
Table 1.1 presents the impact of the accounting policy changes for LIHTC investments and solar energy investments to our consolidated statement of income and consolidated balance sheet. There was no material impact to the consolidated statement of cash flows.
70Wells Fargo & Company

Table 1.1: CECLImpact of the Accounting Policy Changes for LIHTC Investments and Solar Energy Investments
Quarter ended June 30, 2020Six months ended June 30, 2020
Effect of accounting policy changes ($)Effect of accounting policy changes ($)
($ in millions, except per share amounts)As reportedLIHTCSolarAs revisedAs reportedLIHTCSolarAs revised
Selected Income Statement Data
Interest income – loans$8,448 0 12 8,460 18,513 0 30 18,543 
Noninterest income7,956 370 68 8,394 14,361 739 137 15,237 
Income tax expense (benefit) (1)(3,917)1,434 482 (2,001)(3,758)1,584 526 (1,648)
Net income (loss)(2,379)(1,064)(403)(3,846)(1,726)(845)(359)(2,930)
Earnings (loss) per common share(0.66)(0.26)(0.09)(1.01)(0.65)(0.21)(0.08)(0.94)
Diluted earnings (loss) per common share(0.66)(0.26)(0.09)(1.01)(0.65)(0.21)(0.08)(0.94)
At December 31, 2020
Effect of accounting policy changes ($)
As reportedLIHTCSolarAs revised
Selected Balance Sheet Data
Equity securities$62,260 (275)(1,977)60,008 
Accrued expenses and other liabilities76,404 (62)(1,982)74,360 
Retained earnings162,890 (207)0 162,683 
(1)The quarterly income tax expense (benefit) varies based on January 1, 2020,the income (loss) before income tax expense (benefit) and the estimated annual effective income tax rate applied to each quarter.

Accounting Standards Adopted in 2021
In 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 rates (commonly referred to as the “discounting transition”), even if they do not reference the London Interbank Offered Rate or another rate that is expected to be discontinued as a result of reference rate reform. The Update also clarifies other aspects of the relief provided in Accounting Standards Codification (ASC) 848. We adopted this Update in first quarter 2021 on a prospective basis, and the guidance will be followed until the Update terminates on December 31, 2022. 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,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. The 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. We adopted this Update in first quarter
2021. The Update did not have a material impact on our consolidated financial statements.

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 a material 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. We adopted this Update in first quarter 2021. The Update did not have a material impact on our consolidated financial statements.
Wells Fargo & Company71

Note 1: Summary of Significant Accounting Policies (continued)
Supplemental Cash Flow Information
Significant noncash activities are presented in Table 1.2.

Table 1.2:Supplemental Cash Flow Information
Six months ended June 30,
(in millions)20212020
Held-to-maturity debt securities purchased from securitization of LHFS (1)16,462 664 
Transfers from loans to LHFS (2)11,551 12,753 
Transfers from available-for-sale debt securities to held-to-maturity debt securities41,298 0 
(1)For the six months ended June 30, 2021,predominantly represents agency mortgage-backed securities purchased upon settlement of the sale and securitization of our conforming residential mortgage loans. See Note 8 (Securitizations and Variable Interest Entities) for additional information.
(2)Prior periods have been revised to conform to the current period presentation.

Subsequent Events
We have evaluated the effects of events that have occurred subsequent to June 30, 2021, and, except as disclosed in Note 16 (Preferred Stock), there have been no material events that would require recognition in our second quarter 2021 consolidated financial statements or disclosure in the Notes to the consolidated financial statements.
72Wells Fargo & Company


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)Jun 30,
2021		Dec 31,
2020
Trading assets:
Debt securities$82,727 75,095 
Equity securities23,701 23,032 
Loans held for sale2,269 1,015 
Gross trading derivative assets54,965 58,767 
Netting (1)(31,052)(34,301)
Total trading derivative assets23,913 24,466 
Total trading assets132,610 123,608 
Trading liabilities:
Short sale22,043 22,441 
Gross trading derivative liabilities45,441 53,285 
Netting (1)(33,614)(39,444)
Total trading derivative liabilities11,827 13,841 
Total trading liabilities$33,870 36,282 
(1)Represents balance sheet netting for trading derivative asset and liability balances, and trading portfolio level counterparty valuation adjustments.
Table 2.2 provides a summary of the net interest income earned from trading securities, and net gains and losses due to the realized and unrealized gains and losses from trading activities.
Net interest income also includes dividend income on trading securities and dividend expense on trading securities we have updatedsold, but not yet purchased.
Table 2.2: Net Interest Income and Net Gains (Losses) on Trading Activities
Quarter ended June 30,Six months ended June 30,
(in millions)2021202020212020
Interest income:
Debt securities$496 $659 $1,025 1,425 
Equity securities93 68 196 205 
Loans held for sale3 6 15 18 
Total interest income592 733 1,236 1,648 
Less: Interest expense105 116 215 257 
Net interest income487 617 1,021 1,391 
Net gains (losses) from trading activities (1):
Debt securities769 329 (1,337)2,684 
Equity securities856 2,329 2,009 (2,072)
Loans held for sale15 24 39 12 
Derivatives (2)(1,619)(1,875)(342)247 
Total net gains from trading activities21 807 369 871 
Total trading-related net interest and noninterest income$508 $1,424 $1,390 2,262 
(1)Represents realized gains (losses) from our critical accounting policytrading activities and unrealized gains (losses) due to changes in fair value of our trading positions.
(2)Excludes economic hedging of mortgage banking and asset/liability management activities, for which hedge results (realized and unrealized) are reported with the respective hedged activities.

Wells Fargo & Company73

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 the second quarter and first half of both 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
June 30, 2021
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies$35,741 195 (31)35,905 
Non-U.S. government securities11,201 0 0 11,201 
Securities of U.S. states and political subdivisions (2)19,121 410 (32)19,499 
Federal agency mortgage-backed securities94,186 2,679 (331)96,534 
Non-agency mortgage-backed securities (3)4,349 51 (22)4,378 
Collateralized loan obligations12,406 8 (7)12,407 
Other debt securities9,305 699 (31)9,973 
Total available-for-sale debt securities186,309 4,042 (454)189,897 
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies27,576 862 (409)28,029 
Securities of U.S. states and political subdivisions28,243 931 (36)29,138 
Federal agency mortgage-backed securities182,891 2,908 (1,349)184,450 
Non-agency mortgage-backed securities948 46 (11)983 
Collateralized loan obligations21,283 205 (1)21,487 
Total held-to-maturity debt securities260,941 4,952 (1,806)264,087 
Total (4)$447,250 8,994 (2,260)453,984 
December 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies$21,954 205 0 22,159 
Non-U.S. government securities16,816 0 (3)16,813 
Securities of U.S. states and political subdivisions (2)19,263 224 (81)19,406 
Federal agency mortgage-backed securities134,838 4,260 (28)139,070 
Non-agency mortgage-backed securities (3)3,745 30 (46)3,729 
Collateralized loan obligations9,058 4 (44)9,018 
Other debt securities9,859 399 (61)10,197 
Total available-for-sale debt securities215,533 5,122 (263)220,392 
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies47,295 1,472 (170)48,597 
Securities of U.S. states and political subdivisions25,860 938 (5)26,793 
Federal agency mortgage-backed securities115,437 4,182 (21)119,598 
Non-agency mortgage-backed securities890 51 (8)933 
Collateralized loan obligations16,238 148 0 16,386 
Total held-to-maturity debt securities205,720 6,791 (204)212,307 
Total (4)$421,253 11,913 (467)432,699 
(1)Represents amortized cost of the securities, net of the ACL of $33 million and $28 million related to AFS debt securities and $77 million and $41 million related to HTM debt securities at June 30, 2021, and December 31, 2020, respectively.
(2)Includes investments in tax-exempt preferred debt securities issued by investment funds or trusts that predominantly invest in tax-exempt municipal securities. The amortized cost, net of the ACL and fair value of these types of securities, was $5.2 billion at June 30, 2021, and $5.0 billion at December 31, 2020.
(3)Predominantly consists of commercial mortgage-backed securities at both June 30, 2021, and December 31, 2020.
(4)We held AFS and HTM debt securities from Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) that each exceeded 10% of stockholders’ equity, with an amortized cost of $119.8 billion and $89.9 billion and a fair value of $121.5 billion and $91.3 billion at June 30, 2021, and an amortized cost of $99.8 billion and $88.7 billion and a fair value of $103.2 billion and $91.5 billion at December 31, 2020, respectively.
74Wells Fargo & Company

Table 3.2 details the breakout of purchases of and transfers to HTM debt securities by major category of security.

Table 3.2:Held-to-Maturity Debt Securities Purchases and Transfers
Quarter ended June 30,Six months ended June 30,
(in millions)2021202020212020
Purchases of held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies$0 0 $0 3,016 
Securities of U.S. states and political subdivisions1,173 15 3,083 881 
Federal agency mortgage-backed securities24,855 6,958 49,722 22,821 
Non-agency mortgage-backed securities55 12 84 74 
Collateralized loan obligations3,385 0 7,338 0 
Total purchases of held-to-maturity debt securities29,468 6,985 60,227 26,792 
Transfers from available-for-sale debt securities to held-to-maturity debt securities:
Federal agency mortgage-backed securities24,681 0 41,298 0 
Total transfers from available-for-sale debt securities to held-to-maturity debt securities$24,681 0 $41,298 0 
(1)Inclusive of securities purchased but not yet settled and noncash purchases from securitization of loans held for sale (LHFS).
Table 3.3 shows the composition of interest income, provision for credit losses, and gross realized gains and losses
from sales and impairment write-downs included in earnings related to AFS and HTM debt securities (pre-tax).


Table 3.3:Income Statement Impacts for Available-for-Sale and Held-to-Maturity Debt Securities
Quarter ended June 30,Six months ended June 30,
(in millions)2021202020212020
Interest income (1):
Available-for-sale$655 1,349 $1,466 3,075 
Held-to-maturity1,048 938 2,020 1,918 
Total interest income1,703 2,287 3,486 4,993 
Provision for credit losses:
Available-for-sale(10)(40)12 128 
Held-to-maturity(11)9 36 13 
Total provision for credit losses(21)(31)48 141 
Realized gains and losses (2):
Gross realized gains1 248 152 504 
Gross realized losses(1)(36)(1)(40)
Impairment write-downs0 0 0 (15)
Net realized gains$0 $212 $151 449 
(1)Excludes interest income from trading debt securities, which is disclosed in Note 2 (Trading Activities).
(2)Realized gains and losses relate to AFS debt securities. There were 0 realized gains or losses from HTM debt securities in all periods presented.
Credit Quality
We monitor credit quality of debt securities by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the ACL for debt securities. The credit quality indicators that we most closely monitor include credit ratings and delinquency status and are based on information as of our financial statement date.
CREDIT RATINGS Credit ratings express opinions about the credit quality of a debt security. We determine the credit rating of a security according to the lowest credit rating made available by national recognized statistical rating organizations (NRSROs). Debt securities rated investment grade, that is those with ratings similar to BBB-/Baa3 or above, as defined by NRSROs, are generally considered by the rating agencies and market participants to be low credit risk. Conversely, debt securities rated below investment grade, labeled as “speculative grade” by the rating agencies, are considered to be distinctively higher
credit risk than investment grade debt securities. For debt securities not rated by NRSROs, we determine an internal credit grade of the debt securities (used for credit risk management purposes) equivalent to the credit ratings assigned by major credit agencies. Substantially all of our debt securities were rated by NRSROs at June 30, 2021, and December 31, 2020.
Table 3.4 shows the percentage of fair value of AFS debt securities and amortized cost of HTM debt securities determined to be rated investment grade, inclusive of securities rated based on internal credit grades.
Wells Fargo & Company75

Note 3:  Available-for-Sale and Held-to-Maturity Debt Securities (continued)
Table 3.4:Investment Grade Debt Securities
Available-for-SaleHeld-to-Maturity
($ in millions)Fair value % investment gradeAmortized cost% investment grade
June 30, 2021
Total portfolio (1)$189,897 99 %261,018 99 %
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)$132,439 100 %210,467 100 %
Securities of U.S. states and political subdivisions19,499 99 28,258 100 
Collateralized loan obligations (3)12,407 100 21,329 100 
All other debt securities (4)25,552 91 964 4 
December 31, 2020
Total portfolio (1)$220,392 99 %205,761 99 %
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)$161,229 100 %162,732 100 %
Securities of U.S. states and political subdivisions19,406 99 25,870 100 
Collateralized loan obligations (3)9,018 100 16,255 100 
All other debt securities (4)30,739 93 904 6 
(1)94% and 92% were rated AA- and above at June 30, 2021, and December 31, 2020, respectively.
(2)Includes federal agency mortgage-backed securities.
(3)99% and 98% were rated AA- and above at June 30, 2021, and December 31, 2020, respectively.
(4)Includes non-U.S. government, non-agency mortgage-backed, and all other debt securities.
DELINQUENCY STATUS AND NONACCRUAL DEBT SECURITIESDebt security issuers that are delinquent in payment of amounts due under contractual debt agreements have a higher probability of recognition of credit losses. As such, as part of our monitoring of the credit quality of the debt security portfolio, we consider whether debt securities we own are past due in payment of principal or interest payments and whether any securities have been placed into nonaccrual status.
Debt securities that are past due and still accruing were insignificant at both June 30, 2021, and December 31, 2020. The carrying value of debt securities in nonaccrual status was insignificant at both June 30, 2021, and December 31, 2020. Charge-offs on debt securities were insignificant in the second quarter and first half of both 2021 and 2020.
Purchased debt securities with credit deterioration (PCD) are not considered to be in nonaccrual status, as payments from issuers of these securities remain current. PCD securities were insignificant in the second quarter and first half of both 2021 and 2020.
76Wells Fargo & Company

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 lossesFair value Gross unrealized lossesFair value Gross unrealized lossesFair value 
June 30, 2021
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies$(31)11,924 0 0 (31)11,924 
Non-U.S. government securities0 0 0 0 0 0 
Securities of U.S. states and political subdivisions(21)1,413 (11)717 (32)2,130 
Federal agency mortgage-backed securities(285)18,152 (46)2,924 (331)21,076 
Non-agency mortgage-backed securities(3)330 (19)771 (22)1,101 
Collateralized loan obligations(2)1,312 (5)1,698 (7)3,010 
Other debt securities(15)1,196 (16)807 (31)2,003 
Total available-for-sale debt securities$(357)34,327 (97)6,917 (454)41,244 
December 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies$0 0 0 0 0 0 
Non-U.S. government securities(3)16,812 0 0 (3)16,812 
Securities of U.S. states and political subdivisions(51)3,681 (30)1,101 (81)4,782 
Federal agency mortgage-backed securities(27)11,310 (1)316 (28)11,626 
Non-agency mortgage-backed securities(28)1,366 (18)534 (46)1,900 
Collateralized loan obligations(27)5,082 (17)1,798 (44)6,880 
Other debt securities(16)647 (45)1,604 (61)2,251 
Total available-for-sale debt securities$(152)38,898 (111)5,353 (263)44,251 
We have assessed each debt security with gross unrealized losses included in the previous table for credit impairment. As part of that assessment we evaluated and concluded that we do not intend to sell any of the debt securities, and that it is more likely than not that we will not be required to sell, prior to recovery of the amortized cost basis. 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.
Wells Fargo & Company77

Note 3:  Available-for-Sale and Held-to-Maturity Debt Securities (continued)
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)TotalWithin
one year		After
one year
through
five years		After
five years
through
ten years		After
ten years
June 30, 2021
Available-for-sale debt securities (1): 
Securities of U.S. Treasury and federal agencies
Amortized cost, net$35,741 5 17,965 15,777 1,994 
Fair value35,905 5 17,978 15,837 2,085 
Weighted average yield0.75 %2.00 0.33 1.13 1.44 
Non-U.S. government securities
Amortized cost, net$11,201 11,176 25 0 0 
Fair value11,201 11,176 25 0 0 
Weighted average yield(0.11 %)(0.11)0.42 0 0 
Securities of U.S. states and political subdivisions
Amortized cost, net$19,121 1,546 2,225 5,244 10,106 
Fair value19,499 1,549 2,270 5,253 10,427 
Weighted average yield2.07 %1.46 1.58 1.41 2.62 
Federal agency mortgage-backed securities
Amortized cost, net$94,186 8 171 3,359 90,648 
Fair value96,534 8 181 3,484 92,861 
Weighted average yield2.72 %2.35 3.30 2.30 2.74 
Non-agency mortgage-backed securities
Amortized cost, net$4,349 0 0 151 4,198 
Fair value4,378 0 0 150 4,228 
Weighted average yield2.00 %0 0 2.27 1.99 
Collateralized loan obligations
Amortized cost, net$12,406 0 90 7,306 5,010 
Fair value12,407 0 90 7,304 5,013 
Weighted average yield1.42 %0 2.21 1.44 1.39 
Other debt securities
Amortized cost, net$9,305 160 2,791 2,865 3,489 
Fair value9,973 160 3,152 2,910 3,751 
Weighted average yield3.17 %2.97 4.23 3.31 2.22 
Total available-for-sale debt securities
Amortized cost, net$186,309 12,895 23,267 34,702 115,445 
Fair value$189,897 12,898 23,696 34,938 118,365 
Weighted average yield2.03 %0.22 0.95 1.54 2.60 
(1)Weighted average yields displayed by maturity bucket are weighted based on amortized cost without effect for any related hedging derivatives and are shown pre-tax.
78Wells Fargo & Company

Table 3.7: Contractual Maturities – Held-to-Maturity Debt Securities
By remaining contractual maturity ($ in millions)TotalWithin
one year		After
one year
through
five years		After
five years
through
ten years		After
ten years
June 30, 2021
Held-to-maturity debt securities (1): 
Securities of U.S. Treasury and federal agencies
Amortized cost, net$27,576 11,386 12,407 0 3,783 
Fair value28,029 11,461 13,140 0 3,428 
Weighted average yield2.10 %1.98 2.37 0 1.57 
Securities of U.S. states and political subdivisions
Amortized cost, net$28,243 673 2,177 2,066 23,327 
Fair value29,138 680 2,246 2,150 24,062 
Weighted average yield2.19 %2.09 1.90 2.65 2.18 
Federal agency mortgage-backed securities
Amortized cost, net$182,891 0 0 0 182,891 
Fair value184,450 0 0 0 184,450 
Weighted average yield2.20 %0 0 0 2.20 
Non-agency mortgage-backed securities
Amortized cost, net$948 0 15 0 933 
Fair value983 0 15 0 968 
Weighted average yield3.09 %0 1.56 0 3.12 
Collateralized loan obligations
Amortized cost, net$21,283 0 0 8,155 13,128 
Fair value21,487 0 0 8,248 13,239 
Weighted average yield1.68 %0 0 1.73 1.65 
Total held-to-maturity debt securities
Amortized cost, net$260,941 12,059 14,599 10,221 224,062 
Fair value264,087 12,141 15,401 10,398 226,147 
Weighted average yield2.15 %1.98 2.30 1.91 2.16 
(1)Weighted average yields displayed by maturity bucket are weighted based on amortized cost and are shown pre-tax.
Wells Fargo & Company79

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 June 30, 2021, and December 31, 2020.
Outstanding balances exclude accrued interest receivable on loans, except for certain revolving loans, such as credit card loans.
See Note 7 (Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. During the first half of 2021, we reversed accrued interest receivable of $24 million for our commercial portfolio segment and $104 million for our consumer portfolio segment, compared with $21 million and $114 million, respectively, for the same period a year ago.

Table 4.1:Loans Outstanding
(in millions)Jun 30,
2021		Dec 31,
2020
Commercial:
Commercial and industrial$317,618 318,805 
Real estate mortgage120,678 121,720 
Real estate construction22,406 21,805 
Lease financing15,720 16,087 
Total commercial476,422 478,417 
Consumer:
Residential mortgage – first lien244,371 276,674 
Residential mortgage – junior lien19,637 23,286 
Credit card34,936 36,664 
Auto51,073 48,187 
Other consumer25,861 24,409 
Total consumer375,878 409,220 
Total loans$852,300 887,637 
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)Jun 30,
2021		Dec 31,
2020
Non-U.S. commercial loans:
Commercial and industrial$71,409 63,128 
Real estate mortgage6,619 7,278 
Real estate construction1,820 1,603 
Lease financing672 629 
Total non-U.S. commercial loans$80,520 72,638 

80Wells Fargo & Company


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
20212020
(in millions)CommercialConsumerTotalCommercialConsumerTotal
Quarter ended June 30,
Purchases$134 1 135 332 2 334 
Sales(65)0 (65)(1,957)(1)(1,958)
Transfers (to)/from LHFS(359)(99)(458)(8)(10,379)(10,387)
Six months ended June 30,
Purchases$182 2 184 673 3 676 
Sales(338)(188)(526)(2,770)(27)(2,797)
Transfers (to)/from LHFS(794)(36)(830)69 (10,377)(10,308)

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 $82.6 billion at June 30, 2021.
We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At June 30, 2021, and December 31, 2020, we had $1.4 billion and $1.3 billion, respectively, of outstanding issued commercial letters of credit. We also originate multipurpose lending commitments under which borrowers have the option to draw on the facility for different purposes in one of several forms, including a standby letter of credit. See Note 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)Jun 30,
2021		Dec 31,
2020
Commercial:
Commercial and industrial$394,370 378,167 
Real estate mortgage8,794 7,993 
Real estate construction16,260 15,650 
Total commercial419,424 401,810 
Consumer:
Residential mortgage – first lien37,920 31,530 
Residential mortgage – junior lien30,170 32,820 
Credit card124,985 121,096 
Other consumer54,724 49,179 
Total consumer247,799 234,625 
Total unfunded credit commitments$667,223 636,435 
Wells Fargo & Company81

Note 4: Loans and Related Allowance for Credit Losses (continued)
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. Management exercises judgment when assigning weight to the three economic scenarios that are used to estimate future credit losses. The three scenarios include a most likely expectation of economic variables referred to as the base case scenario, as well as an optimistic (upside) scenario and a pessimistic (downside) scenario.
•
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 forecast based on economic conditions at the measurement date. Our reversion methodology considers the type of portfolio, point in the credit cycle, expected length of recessions and recoveries, as well as other relevant factors. 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 real estate 1-4 family mortgage loans. We assess the reversion approach on a quarterly basis and the length of the reversion period by asset type annually.
•
Historical loss expectations. At the end of the reversion period, we incorporate the changes in economic variables observed during representative historical time periods that include both recessions and expansions. This analysis is used to compute average losses for any given portfolio and its associated credit characteristics. Annually, we assess the historical time periods and ensure the average loss estimates are representative of our historical loss experience.
•
Credit risk ratings applied to individual commercial loans, unfunded credit commitments, and debt securities. Individually assessed credit risk ratings are considered key credit variables in our modeled approaches to help assess probability of default and loss given default. Borrower quality ratings are aligned to the borrower’s financial strength and contribute to forecasted probability of default curves. Collateral quality ratings combined with forecasted collateral prices (as applicable) contribute to the forecasted severity of loss in the event of default. These credit risk ratings are reviewed by experienced senior credit officers and subjected to reviews by an internal team of credit risk specialists.
•
Usage of credit loss estimation models. We use internally developed models that incorporate credit attributes and economic variables to generate estimates of credit losses. Management uses a combination of judgement and quantitative analytics in the determination of segmentation, modeling approach, and variables that are leveraged in the models. These models are validated in accordance with the Company’s policies by an internal model validation group.We routinely assess our model performance and apply

adjustments when necessary to improve the accuracy of loss estimation. We also assess our models for limitations against the company-wide risk inventory to help ensure that we appropriately capture known and emerging risks in our estimate of expected credit losses and apply overlays as needed.
•
Valuation of collateral. The current fair value of collateral is utilized to assess the expected credit losses when a financial asset is considered to be collateral dependent. We apply judgment when valuing the collateral either through appraisals, evaluation of the cash flows of the property, or other quantitative techniques. Decreases in collateral valuations support incremental charge-downs and increases in collateral valuation are included in the allowance for credit losses as a negative allowance when the financial asset has been previously written-down below current recovery value.
•
Contractual term considerations. The remaining contractual term of a loan is adjusted for expected prepayments and certain expected extensions, renewals, or modifications. We extend the contractual term when we are not able to unconditionally cancel contractual renewals or extension options. We also incorporate into our allowance for credit losses any scenarios where we reasonably expect to provide an extension through a TDR.
•
Qualitative factors which may not be adequately captured in the loss models. These amounts represent management’s judgment of risks inherent in the processes and assumptions used in establishing the ACL. We also consider economic environmental factors, modeling assumptions and performance, process risk, and other subjective factors, including industry trends and emerging risk assessments.

SensitivityThe ACL for loans is sensitive to changes in key assumptions which requires significant judgment to be used by management. Future amounts of the ACL for loans will be based on a variety of factors, including loan balance changes, portfolio credit quality, and general economic conditions. General economic conditions are forecasted using economic variables, which could have 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 our sensitivity analysis, we applied 50% weight to both the base case scenario and the downside scenario to reflect the potential for further economic deterioration from a COVID-19 resurgence. The outcomes of both scenarios were influenced by the duration, severity, and timing of changes in economic variables within those scenarios. The result of the sensitivity analysis would have increased the ACL for loans by approximately $5.0 billion at June 30, 2020.
This hypothetical increase in our ACL for loans represents changes to our quantitative estimate and does not incorporate the impact of management judgment for qualitative factors applied in the current ACL for loans, which may have a positive or negative effect on the results. Also, if this hypothetical result were to actually materialize, the increase in our ACL for loans may be recognized over time if actual loss expectations exceed our historical loss experience.
This sensitivity analysis does not represent management’s view of expected credit losses at the balance sheet date. The sensitivity analysis excludes the ACL for debt securities given its size relative to the overall ACL. Management believes that the 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 42 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 42:Current Accounting Developments – Issued Standards
DescriptionEffective 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 June 30, 2020, we held $1.1 billion in insurance-related reserves of which $568 million was in scope of the Update. A total of $509 million was associated with products that meet the definition of market risk benefits, and of this amount, $52 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.
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 Securities and Exchange Commission (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, 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; and (xiii) 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;
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.gov1. 
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.

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 2019 Form 10-K.
The following risk factor supplements the “Risk Factors” section in our 2019 Form 10-K.

The COVID-19 pandemic has adversely impacted our business and financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets, and increased unemployment levels. In addition, the pandemic has resulted in temporary closures of many businesses and the institution of social distancing and sheltering in place requirements in many states and communities. As a result, the demand for our products and services may continue to 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. Moreover, the persistence of adverse economic conditions and reduced revenue may adversely affect the fair value of our operating segments and underlying reporting units which may result in goodwill impairment. 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 or contribute to additional downgrades to our credit ratings or credit outlook. In response to the pandemic, we have suspended residential property foreclosure sales and evictions, and are offering fee waivers, payment deferrals, and other expanded assistance for credit card, automobile, mortgage, small business, personal and commercial lending customers, and future governmental actions may require these and other types of customer-related responses. In addition, we have reduced our common stock dividend and temporarily suspended share repurchases, and we could take, or be required to take, other capital actions in the future. 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 June 30, 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 June 30, 2020.

Internal Control Over Financial Reporting
Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (GAAP) and includes those policies and procedures that:
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No change occurred during second 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 June 30,  Six months ended June 30, 
(in millions, except per share amounts)2020
 2019
 2020
 2019
Interest income       
Debt securities$2,946
 3,781
 $6,418
 7,722
Mortgage loans held for sale230
 195
 427
 347
Loans held for sale7
 20
 19
 44
Loans8,448
 11,316
 18,513
 22,670
Equity securities116
 236
 322
 446
Other interest income54
 1,438
 829
 2,760
Total interest income11,801
 16,986
 26,528
 33,989
Interest expense       
Deposits585
 2,213
 2,327
 4,239
Short-term borrowings(17) 646
 274
 1,242
Long-term debt1,237
 1,900
 2,477
 3,827
Other interest expense116
 132
 258
 275
Total interest expense1,921
 4,891
 5,336
 9,583
Net interest income9,880
 12,095
 21,192

24,406
Provision (reversal of provision) for credit losses:       
Debt securities (1)(31) —
 141
 —
Loans9,565
 503
 13,398
 1,348
Net interest income after provision for credit losses346
 11,592
 7,653
 23,058
Noninterest income       
Service charges on deposit accounts930
 1,206
 2,139
 2,300
Trust and investment fees3,351
 3,568
 6,925
 6,941
Card fees797
 1,025
 1,689
 1,969
Other fees578
 800
 1,210
 1,570
Mortgage banking317
 758
 696
 1,466
Net gains from trading activities807
 229
 871
 586
Net gains on debt securities212
 20
 449
 145
Net gains (losses) from equity securities533
 622
 (868) 1,436
Lease income334
 424
 686
 867
Other (2)97
 837
 564
 1,507
Total noninterest income7,956
 9,489
 14,361
 18,787
Noninterest expense       
Personnel (2)8,911
 8,474
 17,225
 17,682
Technology and equipment (2)562
 641
 1,268
 1,335
Occupancy871
 719
 1,586
 1,436
Core deposit and other intangibles22
 27
 45
 55
FDIC and other deposit assessments165
 144
 283
 303
Other (2)4,020
 3,444
 7,192
 6,554
Total noninterest expense14,551
 13,449
 27,599
 27,365
Income (loss) before income tax expense (benefit)(6,249) 7,632
 (5,585)
14,480
Income tax expense (benefit)(3,917) 1,294
 (3,758) 2,175
Net income (loss) before noncontrolling interests(2,332) 6,338
 (1,827)
12,305
Less: Net income (loss) from noncontrolling interests47
 132
 (101) 239
Wells Fargo net income (loss)$(2,379) 6,206
 $(1,726)
12,066
Less: Preferred stock dividends and other315
 358
 926
 711
Wells Fargo net income (loss) applicable to common stock$(2,694) 5,848
 $(2,652) 11,355
Per share information       
Earnings (loss) per common share$(0.66) 1.31
 $(0.65) 2.52
Diluted earnings (loss) per common share (3)(0.66) 1.30
 (0.65) 2.50
Average common shares outstanding4,105.5
 4,469.4
 4,105.2
 4,510.2
Diluted average common shares outstanding (3)4,105.5
 4,495.0
 4,105.2
 4,540.1

(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 both the second quarter and first half of 2019. For more information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.
(2)In second quarter 2020, insurance income was reclassified to other noninterest income, personnel-related expenses were combined into a single line item, and expenses for cloud computing services were reclassified from contract services expense (within other noninterest expense) to technology and equipment expense. Prior period balances have been revised to conform with the current period presentation.
(3)In second quarter 2020, diluted earnings per common share equaled earnings per common share because our securities convertible into common shares had an anti-dilutive effect.

The accompanying notes are an integral part of these statements.

Wells Fargo & Company and Subsidiaries        
Consolidated Statement of Comprehensive Income (Unaudited)    
  Quarter ended June 30,  Six months ended June 30, 
(in millions) 2020
 2019
 2020
 2019
Wells Fargo net income (loss) $(2,379) 6,206
 (1,726) 12,066
Other comprehensive income (loss), before tax:        
Debt securities:        
Net unrealized gains arising during the period 1,596
 1,709
 1,486
 4,540
Reclassification of net (gains) losses to net income (90) 39
 (262) (42)
Derivative and hedging activities:        
Net unrealized gains (losses) arising during the period (52) 57
 72
 22
Reclassification of net losses to net income 55
 79
 113
 158
Defined benefit plans adjustments:        
Net actuarial and prior service losses arising during the period (674) —
 (671) (4)
Amortization of net actuarial loss, settlements and other to net income 101
 33
 137
 68
Foreign currency translation adjustments:        
Net unrealized gains (losses) arising during the period 51
 14
 (144) 56
Other comprehensive income, before tax 987
 1,931
 731
 4,798
Income tax expense related to other comprehensive income (221) (473) (219) (1,167)
Other comprehensive income, net of tax 766
 1,458
 512
 3,631
Less: Other comprehensive loss from noncontrolling interests —
 —
 (1) —
Wells Fargo other comprehensive income, net of tax 766
 1,458
 513
 3,631
Wells Fargo comprehensive income (loss) (1,613) 7,664
 (1,213) 15,697
Comprehensive income (loss) from noncontrolling interests 47
 132
 (102) 239
Total comprehensive income (loss) $(1,566) 7,796
 (1,315) 15,936


The accompanying notes are an integral part of these statements.

Wells Fargo & Company and Subsidiaries   
Consolidated Balance Sheet   
(in millions, except shares)Jun 30,
2020
 Dec 31,
2019
Assets(Unaudited)
  
Cash and due from banks$24,704
 21,757
Interest-earning deposits with banks237,799
 119,493
Total cash, cash equivalents, and restricted cash262,503
 141,250
Federal funds sold and securities purchased under resale agreements79,289
 102,140
Debt securities:   
Trading, at fair value74,679
 79,733
Available-for-sale, at fair value (includes amortized cost of $224,467 and $260,060, net of allowance for credit losses of $114 and $0) (1)228,899
 263,459
Held-to-maturity, at amortized cost, net of allowance for credit losses of $20 and $0 (fair value $176,882 and $156,860) (1)169,002
 153,933
Mortgage loans held for sale (includes $18,644 and $16,606 carried at fair value) (2)32,355
 23,342
Loans held for sale (includes $1,201 and $972 carried at fair value) (2)1,339
 977
Loans (includes $152 and $171 carried at fair value) (2)935,155
 962,265
Allowance for loan losses (18,926) (9,551)
Net loans916,229
 952,714
Mortgage servicing rights:    
Measured at fair value6,819
 11,517
Amortized1,361
 1,430
Premises and equipment, net 9,025
 9,309
Goodwill26,385
 26,390
Derivative assets22,776
 14,203
Equity securities (includes $27,339 and $41,936 carried at fair value) (2)52,494
 68,241
Other assets85,611
 78,917
Total assets (3)$1,968,766
 1,927,555
Liabilities   
Noninterest-bearing deposits $432,857
 344,496
Interest-bearing deposits 977,854
 978,130
Total deposits 1,410,711
 1,322,626
Short-term borrowings60,485
 104,512
Derivative liabilities11,368
 9,079
Accrued expenses and other liabilities75,159
 75,163
Long-term debt 230,921
 228,191
Total liabilities (4)1,788,644
 1,739,571
Equity    
Wells Fargo stockholders’ equity:    
Preferred stock 21,098
 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 59,923
 61,049
Retained earnings 159,952
 166,697
 Cumulative other comprehensive income (loss)(798) (1,311)
Treasury stock – 1,362,252,882 shares and 1,347,385,537 shares (69,050) (68,831)
Unearned ESOP shares (875) (1,143)
Total Wells Fargo stockholders’ equity 179,386
 187,146
Noncontrolling interests 736
 838
Total equity180,122
 187,984
Total liabilities and equity$1,968,766
 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 for which we have elected the fair value option.
(3)
Our consolidated assets at June 30, 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, $26 million and $16 million; Interest-earning deposits with banks, $0 million and $284 million; Debt securities, $555 million and $540 million; Net loans, $11.6 billion and $13.2 billion; Derivative assets, $1 million and $1 million; Equity securities, $71 million and $118 million; Other assets, $215 million and $239 million; and Total assets, $12.4 billion and $14.4 billion, respectively.
(4)
Our consolidated liabilities at June 30, 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, $1 million and $3 million; Accrued expenses and other liabilities, $212 million and $235 million; Long-term debt, $225 million and $587 million; and Total liabilities, $738 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 March 31, 20205,743,949
 $21,347
 4,096,410,304
 $9,136
Net income (loss)       
Other comprehensive income (loss), net of tax       
Noncontrolling interests       
Common stock issued    13,460,720
  
Common stock repurchased    (45,866)  
Preferred stock released by ESOP       
Preferred stock converted to common shares(249,176) (249) 9,733,434
  
Common stock dividends       
Preferred stock dividends       
Stock incentive compensation expense       
Net change in deferred compensation and related plans       
Net change(249,176) (249) 23,148,288
 —
Balance June 30, 20205,494,773
 $21,098
 4,119,558,592
 $9,136
Balance March 31, 20199,377,211
 $23,214
 4,511,947,830
 $9,136
Net income       
Other comprehensive income (loss), net of tax       
Noncontrolling interests       
Common stock issued    8,491,923
  
Common stock repurchased    (104,852,744)  
Preferred stock released by ESOP       
Preferred stock converted to common shares(193,042) (193) 4,004,188
  
Common stock dividends       
Preferred stock dividends       
Stock incentive compensation expense       
Net change in deferred compensation and related plans       
Net change(193,042) (193) (92,356,633) —
Balance June 30, 20199,184,169
 $23,021
 4,419,591,197
 $9,136




               
          Quarter ended June 30, 
      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

59,849
 165,308
 (1,564) (70,215) (1,143) 182,718
 612
 183,330
  (2,379)       (2,379) 47
 (2,332)
    766
     766
 —
 766


         —
 77
 77
224
 (549)   692
   367
   367


     (2)   (2)   (2)
—
 —
       —
   —
—
       —
 —
   —
(19)       268
 249
   249
(243)     492
   —
   —
          —
   —
20
 (2,113)       (2,093)   (2,093)
—
 (315)       (315)   (315)
120
         120
   120
(28)     (17)   (45)   (45)
74
 (5,356) 766
 1,165
 268
 (3,332) 124
 (3,208)
59,923
 159,952
 (798) (69,050) (875) 179,386
 736
 180,122
60,409
 160,776
 (3,682) (50,519) (1,502) 197,832
 901
 198,733
   6,206
   
      6,206
 132
 6,338
      1,458
      1,458
 —
 1,458


   
   
   
   —
 (38) (38)
(2) (38)   
 439
   399
   399


     
 (4,898)   (4,898)   (4,898)
  —
       —
   —
—
     
   —
 —
   —
(17)     
   210
 193
   193
(15)     
 208
   —
   —
—
     
   
   —
   —
20
 (2,035)   
   
   (2,015)   (2,015)
  (358)   
   
   (358)   (358)
247
     
     247
   247
(17)   
   
 (5)   (22)   (22)
216
 3,775
 1,458
 (4,256) 210
 1,210
 94
 1,304
60,625
 164,551
 (2,224) (54,775) (1,292) 199,042
 995
 200,037



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, 20197,492,169
 $21,549
 4,134,425,937
 $9,136
Cumulative effect from change in accounting policies (1)       
Balance January 1, 20207,492,169
 $21,549
 4,134,425,937
 $9,136
Net income (loss)       
Other comprehensive income (loss), net of tax       
Noncontrolling interests       
Common stock issued    50,812,607
  
Common stock repurchased    (75,413,386)  
Preferred stock redeemed(1,828,720) (2,215)    
Preferred stock released by ESOP       
Preferred stock converted to common shares(249,176) (249) 9,733,434
  
Preferred stock issued80,500
 2,013
    
Common stock dividends       
Preferred stock dividends       
Stock incentive compensation expense       
Net change in deferred compensation and related plans       
Net change(1,997,396) (451) (14,867,345) —
Balance June 30, 20205,494,773
 $21,098
 4,119,558,592
 $9,136
Balance December 31, 20189,377,216
 $23,214
 4,581,253,608
 $9,136
Cumulative effect from change in accounting policies (2)       
Balance January 1, 20199,377,216
 $23,214
 4,581,253,608
 $9,136
Net income       
Other comprehensive income (loss), net of tax       
Noncontrolling interests       
Common stock issued    36,549,824
  
Common stock repurchased    (202,216,454)  
Preferred stock redeemed—
 —
    
Preferred stock released by ESOP  
      
Preferred stock converted to common shares(193,047) (193) 4,004,219
  
Preferred stock issued      
  
Common stock dividends       
Preferred stock dividends       
Stock incentive compensation expense       
Net change in deferred compensation and related plans       
Net change(193,047) (193) (161,662,411) —
Balance June 30, 20199,184,169
 $23,021
 4,419,591,197
 $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.



               
          Six months ended June 30, 
      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
  (1,726)       (1,726) (101) (1,827)
    513
     513
 (1) 512


         —
 —
 —
207
 (857)   2,694
   2,044
   2,044


     (3,409)   (3,409)   (3,409)
17
 (272)       (2,470)   (2,470)
—
       —
 —
   —
(19)       268
 249
   249
(243)     492
   —
   —
(45)         1,968
   1,968
38
 (4,227)       (4,189)   (4,189)
  (654)       (654)   (654)
301
         301
   301
(1,382)     4
   (1,378)   (1,378)
(1,126) (7,736) 513
 (219) 268
 (8,751) (102) (8,853)
59,923
 159,952
 (798) (69,050) (875) 179,386
 736
 180,122
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
   12,066
   
      12,066
 239
 12,305
      3,631
      3,631
 —
 3,631


   
   
   
   —
 (144) (144)
(2) (367)   
 1,907
   1,538
   1,538


     
 (9,718)   (9,718)   (9,718)
  —
       —
   —
—
     
   —
 —
   —
(17)     
   210
 193
   193
(15)     
 208
   —
   —
      
   
   —
   —
39
 (4,108)   
   
   (4,069)   (4,069)
  (711)   
   
   (711)   (711)
791
     
     791
   791
(856)   
   
 22
   (834)   (834)
(60) 6,880
 3,631
 (7,581) 210
 2,887
 95
 2,982
60,625
 164,551
 (2,224) (54,775) (1,292) 199,042
 995
 200,037



Wells Fargo & Company and Subsidiaries   
Consolidated Statement of Cash Flows (Unaudited)   
 Six months ended June 30, 
(in millions)2020
 2019
Cash flows from operating activities:   
Net income (loss) before noncontrolling interests$(1,827) 12,305
Adjustments to reconcile net income to net cash provided by operating activities:   
Provision for credit losses13,539
 1,348
Changes in fair value of MSRs, MLHFS and LHFS carried at fair value4,481
 2,408
Depreciation, amortization and accretion4,062
 3,100
Other net (gains) losses7,146
 (1,360)
Stock-based compensation953
 1,388
Originations and purchases of mortgage loans held for sale(82,713) (63,836)
Proceeds from sales of and paydowns on mortgage loans held for sale68,614
 39,741
Net change in:   
Debt and equity securities, held for trading36,459
 14,777
Loans held for sale(242) 619
Deferred income taxes(1,358) (821)
Derivative assets and liabilities(6,825) (2,461)
Other assets(5,910) 7,194
Other accrued expenses and liabilities(2,987) (7,120)
Net cash provided by operating activities33,392
 7,282
Cash flows from investing activities:   
Net change in:   
Federal funds sold and securities purchased under resale agreements22,851
 (31,912)
Available-for-sale debt securities:   
Proceeds from sales29,524
 6,682
Prepayments and maturities35,340
 17,657
Purchases(28,310) (18,306)
Held-to-maturity debt securities:   
Paydowns and maturities11,566
 5,145
Purchases(25,376) (154)
Equity securities, not held for trading:   
Proceeds from sales and capital returns5,584
 2,320
Purchases(5,587) (2,426)
Loans:   
Loans originated by banking subsidiaries, net of principal collected8,871
 (7,008)
Proceeds from sales (including participations) of loans held for investment5,325
 8,196
Purchases (including participations) of loans(775) (1,001)
Principal collected on nonbank entities’ loans5,505
 1,770
Loans originated by nonbank entities(5,856) (2,604)
Proceeds from sales of foreclosed assets and short sales753
 1,405
Other, net(31) 512
Net cash provided (used) by investing activities59,384
 (19,724)
Cash flows from financing activities:   
Net change in:   
Deposits88,085
 1,938
Short-term borrowings(44,027) 9,557
Long-term debt:   
Proceeds from issuance37,664
 33,091
Repayment(44,574) (26,357)
Preferred stock:   
Proceeds from issuance1,968
 —
Redeemed(2,470) —
Cash dividends paid(654) (711)
Common stock:   
Proceeds from issuance454
 242
Stock tendered for payment of withholding taxes(320) (272)
Repurchased(3,409) (9,718)
Cash dividends paid(4,055) (3,954)
Net change in noncontrolling interests(31) (124)
Other, net(154) (110)
Net cash provided by financing activities28,477
 3,582
Net change in cash, cash equivalents, and restricted cash121,253
 (8,860)
Cash, cash equivalents, and restricted cash at beginning of period141,250
 173,287
Cash, cash equivalents, and restricted cash at end of period$262,503
 164,427
Supplemental cash flow disclosures:   
Cash paid for interest$5,545
 9,354
Cash paid for income taxes2,254
 2,516

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.
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, 2019 (2019 Form 10-K).
To prepare the financial statements in conformity with GAAP, management must make estimates based on assumptions about future economic and market conditions (for example, unemployment, market liquidity, real estate prices, etc.) that affect the reported amounts of assets and liabilities at the date of the financial statements, income and expenses during the reporting period and the related disclosures. Although our estimates contemplate current conditions and how we expect them to change in the future, it is reasonably possible that actual conditions could be 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 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.
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 2019 Form 10-K.
Accounting Standards Adopted in 2020
In 2020, we adopted the following new accounting guidance:
•
Accounting Standards Update (ASU or Update) 2020-04 – Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
•
ASU 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 Financial Accounting Standards Board (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 2020-04 provides optional, temporary relief to ease the burden of accounting for reference rate reform activities that affect contractual modifications of floating rate financial instruments indexed to interbank offering rates (IBORs) and hedge accounting relationships. Modifications of qualifying contracts are accounted for as the continuation of an existing contract rather than as a new contract. Modifications of qualifying hedging relationships will not require discontinuation of the existing hedge accounting relationships. The application of the relief for qualifying existing hedging relationships may be made on a hedge-by-hedge basis and across multiple reporting periods.
We adopted ASU 2020-04 on April 1, 2020, 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 in second quarter 2020.

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 consumer446.5
4.2
0.9
1.5
5.7
1.3
Total loans962.3
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.
Note 1: Summary of Significant Accounting Policies (continued)

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 RECOGNITIONUnamortized 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.
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 PortfolioKey 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 two years to connect the losses estimated for our initial loss forecast period to the period of our historical loss forecast based on economic conditions at the measurement date. Our reversion methodology considers the type of portfolio, point in the credit cycle, expected length of recessions and recoveries, as well as other relevant factors.
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.
We do not generally record an ACL for accrued interest receivables because 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. Accrued interest receivables are included in other assets, except for certain revolving loans, such as credit card loans.

COMMERCIAL LOAN PORTFOLIO SEGMENT ACL METHODOLOGYGenerally, commercial loans, which include net investments in lease financing, are assessed for estimated losses by grading each loan using various risk factors as identified through periodic reviews. Our estimation approach for the commercial portfolio reflects the estimated probability of default in accordance with the borrower’s financial strength and the severity of loss in the event of default, considering the quality of any underlying collateral. Probability of default and severity at the time of default are statistically derived through historical observations of default and losses after default within each credit risk rating. These estimates are adjusted as appropriate based on additional analysis of long-term average loss experience compared with previously forecasted losses, external loss data or other risks identified from current economic conditions and credit quality trends. The estimated probability of default and severity at the time of default are applied to loan equivalent exposures to estimate losses for unfunded credit commitments.

CONSUMER LOAN PORTFOLIO SEGMENT ACL METHODOLOGYFor consumer loans, we determine the allowance at the individual loan level. When developing historical loss experience, we pool loans, generally by product types with similar risk characteristics, such as residential real estate mortgages and credit cards. As
Note 1: Summary of Significant Accounting Policies (continued)

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 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 ASSETSFinancial assets acquired that are of poor credit quality and with more than an insignificant evidence of credit deterioration since their origination or issuance are PCD assets. PCD assets are recorded at their purchase price plus an ACL estimated at the time of acquisition. Under this approach, there is 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 and Other Relief Related to COVID-19
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 or less) 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.
On April 10, 2020, the FASB Staff issued Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic, a question and answer guide. The guide provided an election for leases accounted for under Accounting Standards Codification (ASC) 842, Leases, that were modified due to COVID-19 and met certain criteria in order to not require a new lease classification test upon modification. In second quarter 2020, we elected to apply the lease modification relief provided by the guide.

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. On June 25, 2020, the Board of Governors of the Federal Reserve System (FRB) announced that it was prohibiting large bank holding companies (BHCs) subject to the FRB’s capital
plan rule, 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. Through the end of third quarter 2020, the FRB is authorizing each BHC to (i) make share repurchases relating to issuances of common stock related to employee stock ownership plans; (ii) provided that the BHC does not increase the amount of its common stock dividends, pay common stock dividends that do not exceed an amount equal to the average of the BHC’s net income for the four preceding calendar quarters, unless otherwise specified by the FRB; and (iii) make scheduled payments on additional tier 1 and tier 2 capital instruments. These provisions may be extended by the FRB quarter-by-quarter. 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
 Six months ended June 30, 
(in millions)2020
 2019
Trading debt securities retained from securitization of mortgage loans held for sale (MLHFS)$16,953
 19,131
Transfers from loans to MLHFS12,430
 4,419
Transfers from available-for-sale debt securities to held-to-maturity debt securities—
 6,071
Operating lease ROU assets acquired with operating lease liabilities (1)345
 5,302
(1)
Includes amounts attributable to new leases and changes from modified leases. The six months ended June 30, 2019, balance 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 June 30, 2020, and there have been no material
events that would require recognition in our second quarter 2020 consolidated financial statements or disclosure in the Notes to the consolidated financial statements.
Note 2: Business Combinations
There were 0 acquisitions during the first half of 2020. As of June 30, 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)Jun 30,
2020
 Dec 31,
2019
Required reserve balance for the FRB (1)$—
 11,374
Reserve balance for non-U.S. central banks200
 460
Segregated for benefit of brokerage customers under federal and other brokerage regulations703
 733
Related to consolidated variable interest entities (VIEs) that can only be used to settle liabilities of VIEs26
 300
(1)
Effective March 26, 2020, the FRB reduced reserve requirement ratios to 0%. The amount for December 31, 2019 represents an average for the year ended December 31, 2019.

Federal laws and regulations limit the dividends that a national bank may pay. Our national bank subsidiaries could have declared additional dividends of $1.0 billion at June 30, 2020, without obtaining prior regulatory approval. We have elected to retain higher capital at our national bank subsidiaries 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 June 30, 2020, our nonbank subsidiaries could have declared additional dividends of $26.5 billion at June 30, 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 other requirements that govern 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 Parent’s ability to make certain capital distributions is subject to review by the FRB as part of the Parent’s capital plan in connection with the FRB’s annual Comprehensive Capital Analysis and Review (CCAR). Once the FRB’s stress capital buffer requirement becomes effective on October 1, 2020, the Parent’s ability to take certain capital actions will be subject to the Parent meeting or exceeding certain regulatory capital minimums, which include the stress capital buffer established by the FRB as part of the FRB’s annual supervisory stress test and related CCAR.
On July 28, 2020, the Company reduced its third quarter 2020 common stock dividend to $0.10 per share.
On June 25, 2020, the FRBannounced that it is requiring large BHCs, including Wells Fargo, to update and resubmit their capital plans within 45 days after the FRB provides updated scenarios. Requiring resubmission will prohibit each BHC 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. Through the end of third quarter 2020, the FRB is authorizing each BHC to (i) make share repurchases relating to issuances of common stock related to employee stock ownership plans; (ii) provided that the BHC does not increase the amount of its common stock dividends, pay common stock dividends that do not exceed an amount equal to the average of the BHC’s net income for the four preceding calendar quarters, unless otherwise specified by the FRB; and (iii) make scheduled payments on additional tier 1 and tier 2 capital instruments. These provisions may be extended by the FRB quarter-by-quarter.


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
 Jun 30,
 Dec 31,
(in millions)2020
 2019
Trading assets:   
Debt securities$74,679
 79,733
Equity securities12,591
 27,440
Loans held for sale1,201
 972
Gross trading derivative assets60,644
 34,825
Netting (1)(39,885) (21,463)
Total trading derivative assets20,759
 13,362
Total trading assets109,230
 121,507
Trading liabilities:   
Short sale20,213
 17,430
Gross trading derivative liabilities54,985
 33,861
Netting (1)(44,901) (26,074)
Total trading derivative liabilities10,084
 7,787
Total trading liabilities$30,297
 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 June 30,  Six months ended June 30, 
(in millions)2020
 2019
 2020
 2019
Interest income:       
Debt securities$659
 740
 $1,425
 1,533
Equity securities68
 143
 205
 258
Loans held for sale6
 20
 18
 43
Total interest income733
 903
 1,648
 1,834
Less: Interest expense116
 127
 257
 263
Net interest income617
 776
 1,391
 1,571
Net gains (losses) from trading activities (1):       
Debt securities329
 401
 2,684
 1,089
Equity securities2,329
 1,236
 (2,072) 3,303
Loans held for sale24
 (4) 12
 10
Derivatives (2)(1,875) (1,404) 247
 (3,816)
Total net gains from trading activities807
 229
 871
 586
Total trading-related net interest and noninterest income$1,424
 1,005
 $2,262
 2,157
(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 (continued)

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 first half of 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
June 30, 2020       
Available-for-sale debt securities:       
Securities of U.S. Treasury and federal agencies$7,923
 69
 (9) 7,983
Securities of U.S. states and political subdivisions (2)33,259
 200
 (448) 33,011
Mortgage-backed securities:
 
 
  
Federal agencies139,326
 5,533
 (24) 144,835
Residential542
 2
 (3) 541
Commercial3,663
 9
 (113) 3,559
Total mortgage-backed securities143,531
 5,544
 (140) 148,935
Corporate debt securities4,972
 95
 (92) 4,975
Collateralized loan obligations25,727
 1
 (729) 24,999
Other9,055
 69
 (128) 8,996
Total available-for-sale debt securities224,467
 5,978
 (1,546) 228,899
Held-to-maturity debt securities:       
Securities of U.S. Treasury and federal agencies48,578
 1,972
 (47) 50,503
Securities of U.S. states and political subdivisions14,277
 622
 (7) 14,892
Federal agency and other mortgage-backed securities (3)106,133
 5,350
 (10) 111,473
Other debt securities14
 —
 —
 14
Total held-to-maturity debt securities169,002
 7,944
 (64) 176,882
Total (4)$393,469
 13,922
 (1,610) 405,781
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 agencies160,318
 2,299
 (164) 162,453
Residential814
 14
 (1) 827
Commercial3,899
 41
 (6) 3,934
Total mortgage-backed securities165,031
 2,354
 (171) 167,214
Corporate debt securities6,343
 252
 (32) 6,563
Collateralized loan obligations29,153
 25
 (123) 29,055
Other5,204
 150
 (24) 5,330
Total available-for-sale debt securities260,060
 3,786
 (387) 263,459
Held-to-maturity debt securities:       
Securities of U.S. Treasury and federal agencies45,541
 617
 (19) 46,139
Securities of U.S. states and political subdivisions13,486
 286
 (13) 13,759
Federal agency and other mortgage-backed securities (3)94,869
 2,093
 (37) 96,925
Other debt securities37
 —
 —
 37
Total held-to-maturity debt securities153,933
 2,996
 (69) 156,860
Total (4)$413,993
 6,782
 (456) 420,319
(1)
Represents amortized cost of the securities, net of the allowance for credit losses of $114 million related to available-for-sale debt securities and $20 million related to held-to-maturity debt securities at June 30, 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 June 30, 2020, and December 31, 2019.
(3)
Predominantly consists of federal agency mortgage-backed securities at both June 30, 2020 and December 31, 2019.
(4)
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 $93.6 billion and $80.1 billion and a fair value of $98.1 billion and $83.8 billion at June 30, 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 June 30,  Six months ended June 30, 
(in millions)2020
 2019
 2020
 2019
Purchases of held-to-maturity debt securities:       
Securities of U.S. Treasury and federal agencies$—
 —
 $3,016
 —
Securities of U.S. states and political subdivisions15
 243
 881
 243
Federal agency and other mortgage-backed securities6,970
 37
 22,895
 53
Total purchases of held-to-maturity debt securities6,985
 280
 26,792
 296
Transfers from available-for-sale debt securities to held-to-maturity debt securities:       
Securities of U.S. states and political subdivisions—
 1,558
 —
 1,558
Federal agency and other mortgage-backed securities—
 2,106
 —
 4,513
Total transfers from available-for-sale debt securities to held-to-maturity debt securities$—
 3,664
 $—
 6,071

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 June 30,  Six months ended June 30, 
(in millions)2020
 2019
 2020
 2019
Interest income:       
Available-for-sale$1,349
 2,110
 $3,075
 4,311
Held-to-maturity938
 931
 1,918
 1,878
Total interest income (1)2,287
 3,041
 4,993
 6,189
Provision (reversal of provision) for credit losses (2):       
Available-for-sale(40) —
 128
 —
Held-to-maturity9
 —
 13
 —
Total provision (reversal of provision) for credit losses(31) —
 141
 —
Realized gains and losses (3):       
Gross realized gains248
 29
 504
 202
Gross realized losses(36) (2) (40) (5)
Impairment write-downs included in earnings:       
Credit-related (4)—
 (7) —
 (23)
Intent-to-sell—
 —
 (15) (29)
Total impairment write-downs included in earnings—
 (7) (15) (52)
Net realized gains$212
 20
 $449
 145
(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 second quarter and first half of 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).
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 $1.3 billion at June 30, 2020, and $2.2 billion at December 31, 2019. Held-to-maturity debt securities
Note 5: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

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
June 30, 2020     
Total portfolio$228,899
99% 169,022
99%
      
Breakdown by category:     
Securities of U.S. Treasury and federal agencies (1)$152,818
100% 153,863
100%
Securities of U.S. states and political subdivisions33,011
99
 14,286
100
Collateralized loan obligations24,999
100
 N/A
N/A
All other debt securities (2)18,071
87
 873
6
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 subdivisions40,337
99
 13,486
100
Collateralized loan obligations29,055
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 June 30, 2020 or December 31, 2019. The fair value of available-for-sale debt securities in nonaccrual status was $153 million and $110 million as of June 30, 2020, and
December 31, 2019, respectively. There were 0 held-to-maturity debt securities in nonaccrual status as of June 30, 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 available-for-sale debt securities purchased with credit deterioration during second quarter 2020. There were 0 held-to-maturity debt securities purchased with credit deterioration during the second quarter and first half of 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)Six months ended June 30, 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 factors3
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 
June 30, 2020           
Available-for-sale debt securities:           
Securities of U.S. Treasury and federal agencies$(9) 608
 —
 —
 (9) 608
Securities of U.S. states and political subdivisions(372) 17,219
 (76) 2,539
 (448) 19,758
Mortgage-backed securities:        

 

Federal agencies(22) 4,129
 (2) 512
 (24) 4,641
Residential(2) 302
 (1) 58
 (3) 360
Commercial(84) 2,895
 (29) 343
 (113) 3,238
Total mortgage-backed securities(108) 7,326
 (32) 913
 (140) 8,239
Corporate debt securities(79) 1,308
 (13) 93
 (92) 1,401
Collateralized loan obligations(478) 18,215
 (251) 6,640
 (729) 24,855
Other(82) 4,185
 (46) 905
 (128) 5,090
Total available-for-sale debt securities$(1,128) 48,861
 (418) 11,090
 (1,546) 59,951
December 31, 2019           
Available-for-sale debt securities:           
Securities of U.S. Treasury and federal agencies$—
 —
 (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 obligations(13) 5,001
 (110) 16,789
 (123) 21,790
Other(12) 1,656
 (12) 492
 (24) 2,148
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.
For descriptions of the factors we consider when analyzing debt securities for impairment as well as methodology and significant inputs used to measure credit losses, see Note 1 (Summary of Significant Accounting Policies).
Note 5: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

Allowance for Credit Losses for Debt Securities
Table 5.74.5 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 June 30, 2020  Six months ended June 30, 2020 
(in millions)Available-for-Sale
Held-to-Maturity
 Available-for-Sale
Held-to-Maturity
Balance, beginning of period (1)$161
11
 $—
—
Cumulative effect from change in accounting policies (2)—
—
 24
7
Balance, beginning of period, adjusted161
11
 24
7
Provision (reversal of provision) for credit losses(40)9
 128
13
Securities purchased with credit deterioration—
—
 11
—
Reduction due to sales(8)—
 (8)—
Reduction due to intent to sell��
—
 (11)—
Charge-offs(1)—
 (33)—
Interest income (3)2
—
 3
—
Balance, end of period (4)$114
20
 $114
20
(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)
The allowance for credit losses for debt securities largely relates to corporate debt securities as of June 30, 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
June 30, 2020         
Available-for-sale debt securities (1):          
Securities of U.S. Treasury and federal agencies         
Amortized cost, net$7,923
 3,671
 1,280
 10
 2,962
Fair value7,983
 3,672
 1,283
 11
 3,017
Weighted average yield1.84% 2.66
 0.27
 2.34
 1.49
Securities of U.S. states and political subdivisions         
Amortized cost, net33,259
 2,687
 3,094
 3,990
 23,488
Fair value33,011
 2,687
 3,134
 3,996
 23,194
Weighted average yield2.37
 1.17
 2.00
 1.51
 2.70
Mortgage-backed securities:         
Federal agencies         
Amortized cost, net139,326
 2
 119
 2,418
 136,787
Fair value144,835
 2
 125
 2,505
 142,203
Weighted average yield3.18
 2.09
 3.18
 2.38
 3.20
Residential         
Amortized cost, net542
 —
 —
 —
 542
Fair value541
 —
 —
 —
 541
Weighted average yield2.26
 —
 —
 —
 2.26
Commercial         
Amortized cost, net3,663
 —
 33
 194
 3,436
Fair value3,559
 —
 30
 193
 3,336
Weighted average yield2.20
 —
 2.49
 2.50
 2.18
Total mortgage-backed securities         
Amortized cost, net143,531
 2
 152
 2,612
 140,765
Fair value148,935
 2
 155
 2,698
 146,080
Weighted average yield3.16
 2.09
 3.03
 2.39
 3.17
Corporate debt securities         
Amortized cost, net4,972
 260
 1,579
 2,332
 801
Fair value4,975
 262
 1,585
 2,360
 768
Weighted average yield4.86
 6.17
 4.79
 4.92
 4.40
Collateralized loan obligations         
Amortized cost, net25,727
 —
 193
 11,565
 13,969
Fair value24,999
 —
 191
 11,291
 13,517
Weighted average yield2.44
 —
 2.85
 2.56
 2.34
Other         
Amortized cost, net9,055
 4,690
 476
 1,116
 2,773
Fair value8,996
 4,682
 462
 1,098
 2,754
Weighted average yield0.89
 (0.14) 2.51
 1.34
 2.18
Total available-for-sale debt securities         
Amortized cost, net$224,467
 11,310
 6,774
 21,625
 184,758
Fair value228,899
 11,305
 6,810
 21,454
 189,330
Weighted average yield2.86% 1.23
 2.43
 2.54
 3.01
(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
June 30, 2020         
Held-to-maturity debt securities (1):          
Securities of U.S. Treasury and federal agencies         
Amortized cost, net$48,578
 21,011
 23,787
 —
 3,780
Fair value50,503
 21,349
 25,164
 —
 3,990
Weighted average yield2.14% 2.21
 2.18
 —
 1.56
Securities of U.S. states and political subdivisions         
Amortized cost, net14,277
 143
 640
 1,864
 11,630
Fair value14,892
 145
 669
 1,960
 12,118
Weighted average yield2.71
 1.61
 2.43
 2.88
 2.72
Federal agency and other mortgage-backed securities         
Amortized cost, net106,133
 —
 15
 703
 105,415
Fair value111,473
 —
 13
 755
 110,705
Weighted average yield2.90
 —
 1.52
 1.41
 2.91
Other debt securities         
Amortized cost, net14
 —
 —
 14
 —
Fair value14
 —
 —
 14
 —
Weighted average yield2.40
 —
 —
 2.40
 —
Total held-to-maturity debt securities         
Amortized cost, net$169,002
 21,154
 24,442
 2,581
 120,825
Fair value176,882
 21,494
 25,846
 2,729
 126,813
Weighted average yield2.66% 2.20
 2.19
 2.47
 2.85
(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 June 30, 2020, and December 31, 2019.
Outstanding balances exclude accrued interest receivable on loans, except for certain revolving loans, such as credit card loans.
During the first half of 2020, we reversed accrued interest receivable by reversing interest income of $21 million for our commercial portfolio segment and $114 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)Jun 30,
2020
 Dec 31,
2019
Commercial:   
Commercial and industrial$350,116
 354,125
Real estate mortgage123,967
 121,824
Real estate construction21,694
 19,939
Lease financing17,410
 19,831
Total commercial513,187
 515,719
Consumer:   
Real estate 1-4 family first mortgage277,945
 293,847
Real estate 1-4 family junior lien mortgage26,839
 29,509
Credit card36,018
 41,013
Automobile48,808
 47,873
Other revolving credit and installment32,358
 34,304
Total consumer421,968
 446,546
Total loans$935,155
 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)Jun 30,
2020
 Dec 31,
2019
Non-U.S. Commercial Loans   
Commercial and industrial$67,015
 70,494
Real estate mortgage6,460
 7,004
Real estate construction1,697
 1,434
Lease financing1,146
 1,220
Total non-U.S. commercial loans$76,318
 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 the first half of 2020, we sold $1.2 billion of 1-4 family first mortgage loans for a gain of $724 million, which is included in other noninterest income on our consolidated income statement. These whole loans were designated as MLHFS in 2019.
Table 6.3:Loan Purchases, Sales, and Transfers
 2020  2019 
(in millions)Commercial
 Consumer
 Total
 Commercial
 Consumer
 Total
Quarter ended June 30,           
Purchases$332
 2
 334
 670
 5
 675
Sales(1,957) (1) (1,958) (535) (153) (688)
Transfers (to) from MLHFS/LHFS(8) (10,379) (10,387) (89) (1,852) (1,941)
Six months ended June 30,           
Purchases$673
 3
 676
 999
 8
 1,007
Sales(2,770) (27) (2,797) (956) (332) (1,288)
Transfers (to) from MLHFS/LHFS69
 (10,377) (10,308) (92) (1,852) (1,944)


Commitments to Lend
A commitment to lend is a legally binding agreement to lend funds to a customer, usually at a stated interest rate, if funded, and for specific purposes and time periods. We generally require a fee to extend such commitments. Certain commitments are subject to loan agreements with covenants regarding the financial performance of the customer or borrowing base formulas on an ongoing basis that must be met before we are required to fund the commitment. We may reduce or cancel consumer commitments, including home equity lines and credit card lines, in accordance with the contracts and applicable law.
We may, as a representative for other lenders, advance funds or provide for the issuance of letters of credit under syndicated loan or letter of credit agreements. Any advances are generally repaid in less than a week and would normally require default of both the customer and another lender to expose us to loss. The unfunded amount of these temporary advance arrangements totaled approximately $77.8 billion at June 30, 2020.
We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At June 30, 2020, and December 31, 2019, we had $922.6 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)Jun 30,
2020
 Dec 31,
2019
Commercial:   
Commercial and industrial$348,870
 346,991
Real estate mortgage8,394
 8,206
Real estate construction17,316
 17,729
Total commercial374,580
 372,926
Consumer:   
Real estate 1-4 family first mortgage32,845
 34,391
Real estate 1-4 family junior lien mortgage35,932
 36,916
Credit card121,237
 114,933
Other revolving credit and installment23,357
 25,898
Total consumer213,371
 212,138
Total unfunded credit commitments$587,951
 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 second quarter 2020,The ACL for loans increased $8.4decreased $3.3 billion driven by
from December 31, 2020, due to improvements in current and forecasted economic conditions due to the COVID-19 pandemic. These expected impacts were most significantly affected by anticipated changes to economic variables, as well as higher expected losses in the commercial real estate and consumer real estate mortgage loan portfolios and expected impacts of lower oil prices and deteriorating credit trends on the oil and gas portfolio.conditions.

Table 6.5:4.5: Allowance for Credit Losses for Loans
Quarter ended June 30,Six months ended June 30,
($ in millions)2021202020212020
Balance, beginning of period$18,043 12,022 19,713 10,456 
Cumulative effect from change in accounting policies (1)0 0 0 (1,337)
Allowance for purchased credit-deteriorated (PCD) loans (2)0 0 0 8 
Balance, beginning of period, adjusted18,043 12,022 19,713 9,127 
Provision for credit losses(1,239)9,565 (2,356)13,398 
Interest income on certain impaired loans (3)(36)(38)(77)(76)
Loan charge-offs:
Commercial:
Commercial and industrial(149)(556)(308)(933)
Real estate mortgage(11)(72)(63)(75)
Real estate construction0 0 0 0 
Lease financing(10)(19)(31)(32)
Total commercial(170)(647)(402)(1,040)
Consumer:
Residential mortgage – first lien(6)(20)(23)(43)
Residential mortgage – junior lien(12)(18)(31)(48)
Credit card(357)(415)(692)(886)
Auto(128)(158)(257)(314)
Other consumer(79)(113)(226)(278)
Total consumer(582)(724)(1,229)(1,569)
Total loan charge-offs(752)(1,371)(1,631)(2,609)
Loan recoveries:
Commercial:
Commercial and industrial68 35 139 79 
Real estate mortgage16 5 22 10 
Real estate construction1 1 1 17 
Lease financing5 4 11 8 
Total commercial90 45 173 114 
Consumer:
Residential mortgage – first lien25 18 66 44 
Residential mortgage – junior lien43 30 81 65 
Credit card101 88 200 182 
Auto83 52 160 126 
Other consumer29 25 57 56 
Total consumer281 213 564 473 
Total loan recoveries371 258 737 587 
Net loan charge-offs(381)(1,113)(894)(2,022)
Other4 0 5 9 
Balance, end of period$16,391 20,436 16,391 20,436 
Components:
Allowance for loan losses$15,148 18,926 15,148 18,926 
Allowance for unfunded credit commitments1,243 1,510 1,243 1,510 
Allowance for credit losses$16,391 20,436 16,391 20,436 
Net loan charge-offs (annualized) as a percentage of average total loans0.18 %0.46 0.21 0.42 
Allowance for loan losses as a percentage of total loans1.78 2.02 1.78 2.02 
Allowance for credit losses for loans as a percentage of total loans1.92 2.19 1.92 2.19 
(1)Represents the overall decrease in our ACL for loans as a result of our adoption of CECL on January 1, 2020.
(2)Represents the allowance estimated for purchased credit-impaired (PCI) loans that automatically became PCD loans with the adoption of CECL. For additional information, see Note 1 (Summary of Significant Accounting Policies) in our 2020 Form 10-K.
(3)Loans with an allowance measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in allowance attributable to the passage of time as interest income.
 Quarter ended June 30,  Six months ended June 30, 
(in millions)2020
 2019
 2020
 2019
Balance, beginning of period$12,022
 10,821
 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, adjusted12,022
 10,821
 9,127
 10,707
Provision for credit losses9,565
 503
 13,398
 1,348
Interest income on certain loans (3)(38) (39) (76) (78)
Loan charge-offs:       
Commercial:       
Commercial and industrial(556) (205) (933) (381)
Real estate mortgage(72) (14) (75) (26)
Real estate construction—
 —
 —
 (1)
Lease financing(19) (12) (32) (23)
Total commercial(647) (231) (1,040) (431)
Consumer:       
Real estate 1-4 family first mortgage(20) (27) (43) (70)
Real estate 1-4 family junior lien mortgage(18) (29) (48) (63)
Credit card(415) (437) (886) (874)
Automobile(158) (142) (314) (329)
Other revolving credit and installment(113) (167) (278) (329)
Total consumer(724) (802) (1,569) (1,665)
Total loan charge-offs(1,371) (1,033) (2,609) (2,096)
Loan recoveries:       
Commercial:       
Commercial and industrial35
 46
 79
 89
Real estate mortgage5
 10
 10
 16
Real estate construction1
 2
 17
 5
Lease financing4
 8
 8
 11
Total commercial45
 66
 114
 121
Consumer:       
Real estate 1-4 family first mortgage18
 57
 44
 112
Real estate 1-4 family junior lien mortgage30
 48
 65
 91
Credit card88
 88
 182
 173
Automobile52
 90
 126
 186
Other revolving credit and installment25
 31
 56
 65
Total consumer213
 314
 473
 627
Total loan recoveries258
 380
 587
 748
Net loan charge-offs(1,113) (653) (2,022) (1,348)
Other—
 (29) 9
 (26)
Balance, end of period$20,436
 10,603
 20,436
 10,603
Components:       
Allowance for loan losses$18,926
 9,692
 18,926
 9,692
Allowance for unfunded credit commitments1,510
 911
 1,510
 911
Allowance for credit losses for loans$20,436
 10,603
 20,436
 10,603
Net loan charge-offs (annualized) as a percentage of average total loans0.46% 0.28
 0.42
 0.29
Allowance for loan losses as a percentage of total loans2.02
 1.02
 2.02
 1.02
Allowance for credit losses for loans as a percentage of total loans2.19
 1.12
 2.19
 1.12
(1)82Represents 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
(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: Loans and Related Allowance for Credit Losses (continued)


Table 6.64.6 summarizes the activity in the allowance for credit losses for loansACL by our commercial and consumer portfolio segments.

Table 6.6:4.6: Allowance for Credit Losses for Loans Activity by Portfolio Segment
20212020
(in millions)CommercialConsumer TotalCommercial Consumer Total
Quarter ended June 30,
Balance, beginning of period$10,682 7,361 18,043 5,279 6,743 12,022 
Provision for credit losses(1,021)(218)(1,239)6,999 2,566 9,565 
Interest income on certain loans (3)(15)(21)(36)(12)(26)(38)
Loan charge-offs(170)(582)(752)(647)(724)(1,371)
Loan recoveries90 281 371 45 213 258 
Net loan charge-offs(80)(301)(381)(602)(511)(1,113)
Other4 0 4 5 (5)0 
Balance, end of period$9,570 6,821 16,391 11,669 8,767 20,436 
Six months ended June 30,
Balance, beginning of period$11,516 8,197 19,713 6,245 4,211 10,456 
Cumulative effect from change in accounting policies (1)0 0 0 (2,861)1,524 (1,337)
Allowance for purchased credit-deteriorated (PCD) loans (2)0 0 0 0 8 8 
Balance, beginning of period, adjusted11,516 8,197 19,713 3,384 5,743 9,127 
Provision for credit losses(1,688)(668)(2,356)9,239 4,159 13,398 
Interest income on certain loans (3)(34)(43)(77)(26)(50)(76)
Loan charge-offs(402)(1,229)(1,631)(1,040)(1,569)(2,609)
Loan recoveries173 564 737 114 473 587 
Net loan charge-offs(229)(665)(894)(926)(1,096)(2,022)
Other5 0 5 (2)11 9 
Balance, end of period$9,570 6,821 16,391 11,669 8,767 20,436 
     2020
     2019
(in millions)Commercial
 Consumer
 Total
 Commercial
 Consumer
 Total
Quarter ended June 30,           
Balance, beginning of period$5,279
 6,743
 12,022
 6,428
 4,393
 10,821
Provision for credit losses6,999
 2,566
 9,565
 46
 457
 503
Interest income on certain loans (1)(12) (26) (38) (14) (25) (39)
Loan charge-offs(647) (724) (1,371) (231) (802) (1,033)
Loan recoveries45
 213
 258
 66
 314
 380
Net loan charge-offs(602) (511) (1,113) (165) (488) (653)
Other5
 (5) —
 3
 (32) (29)
Balance, end of period$11,669
 8,767
 20,436
 6,298
 4,305
 10,603
Six months ended June 30,           
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, adjusted3,384
 5,743
 9,127
 6,417
 4,290
 10,707
Provision for credit losses9,239
 4,159
 13,398
 210
 1,138
 1,348
Interest income on certain loans (3)(26) (50) (76) (25) (53) (78)
Loan charge-offs(1,040) (1,569) (2,609) (431) (1,665) (2,096)
Loan recoveries114
 473
 587
 121
 627
 748
Net loan charge-offs(926) (1,096) (2,022) (310) (1,038) (1,348)
Other(2) 11
 9
 6
 (32) (26)
Balance, end of period$11,669
 8,767
 20,436
 6,298
 4,305
 10,603

(1)
(1)Represents the overall decrease in our allowance for credit lossesRepresents the overall decrease in our ACL for loans as a result of our adoption of CECL on January 1, 2020.
(2)Represents the allowance estimated for PCI loans that automatically became PCD loans with the adoption of CECL. For more information, see Note 1 (Summary of Significant Accounting Policies).
(3)Loans with an allowance measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in allowance attributable to the passage of time as interest income.
Table 6.7 disaggregates our allowance for credit losses for loans and recorded investment in loans by impairment methodology. This information 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.
(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.
Wells Fargo & Company83
Table 6.7:
Note 4: Loans and Related Allowance for Credit Losses for Loans by Impairment Methodology(continued)
 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)Represents non-impaired loans evaluated collectively for impairment.
(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 allowanceACL 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 March 31, 2020. 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).
2021.

COMMERCIAL CREDIT QUALITY INDICATORSWe manage a consistent process for assessing commercial loan credit quality. Generally, commercial
Commercial loans are generally subject to individual risk assessment using our internal borrower and collateral quality ratings, 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 includingsegmented among special mention, substandard, doubtful and loss categories.
Table 6.84.7 provides a breakdownthe outstanding balances of outstandingour commercial loansloan portfolio by risk category. In connection with our adoption of CECL, creditCredit 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 June 30, 2020,2021, we had $475.0$442.6 billion and $38.2$33.8 billion of pass and criticized commercial loans, respectively.

Table 6.8:4.7: Commercial LoansLoan Categories by Risk Categories and Vintage(1)
Term loans by origination yearRevolving loansRevolving loans converted to term loansTotal
(in millions)20212020201920182017Prior
June 30, 2021
Commercial and industrial
Pass$37,051 25,171 28,385 11,075 5,582 12,341 183,360 341 303,306 
Criticized729 1,317 1,325 1,594 826 1,078 7,443 0 14,312 
Total commercial and industrial37,780 26,488 29,710 12,669 6,408 13,419 190,803 341 317,618 
Real estate mortgage
Pass14,713 18,977 21,983 15,350 9,245 20,321 4,478 1 105,068 
Criticized1,664 2,450 3,444 2,679 1,286 3,665 422 0 15,610 
Total real estate mortgage16,377 21,427 25,427 18,029 10,531 23,986 4,900 1 120,678 
Real estate construction
Pass2,800 4,995 6,148 3,607 775 359 1,138 2 19,824 
Criticized354 501 746 418 442 120 1 0 2,582 
Total real estate construction3,154 5,496 6,894 4,025 1,217 479 1,139 2 22,406 
Lease financing
Pass2,244 3,545 3,180 1,752 1,107 2,555 0 0 14,383 
Criticized145 293 374 254 129 142 0 0 1,337 
Total lease financing2,389 3,838 3,554 2,006 1,236 2,697 0 0 15,720 
Total commercial loans$59,700 57,249 65,585 36,729 19,392 40,581 196,842 344 476,422 
Term loans by origination yearRevolving loansRevolving loans converted to term loansTotal
20202019201820172016Prior
December 31, 2020
Commercial and industrial
Pass$56,915 34,040 15,936 7,274 4,048 4,738 177,107 997 301,055 
Criticized1,404 1,327 1,357 972 672 333 11,534 151 17,750 
Total commercial and industrial58,319 35,367 17,293 8,246 4,720 5,071 188,641 1,148 318,805 
Real estate mortgage
Pass22,444 26,114 18,679 11,113 11,582 14,663 5,152 6 109,753 
Criticized2,133 2,544 1,817 1,287 1,625 2,082 479 0 11,967 
Total real estate mortgage24,577 28,658 20,496 12,400 13,207 16,745 5,631 6 121,720 
Real estate construction
Pass5,242 6,574 4,771 1,736 477 235 1,212 3 20,250 
Criticized449 452 527 4 113 10 0 0 1,555 
Total real estate construction5,691 7,026 5,298 1,740 590 245 1,212 3 21,805 
Lease financing
Pass3,970 3,851 2,176 1,464 1,199 1,924 0 0 14,584 
Criticized308 433 372 197 108 85 0 0 1,503 
Total lease financing4,278 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
 
June 30, 2020                 
Commercial and industrial                 
Pass$46,042
 46,198
 20,195
 10,082
 6,048
 6,347
 189,019
 215
 324,146
Criticized1,461
 1,886
 2,170
 1,367
 592
 510
 17,863
 121
 25,970
Total commercial and industrial47,503
 48,084
 22,365
 11,449
 6,640
 6,857
 206,882
 336
 350,116
Real estate mortgage                 
Pass12,781
 29,006
 21,842
 13,270
 13,973
 18,728
 5,134
 104
 114,838
Criticized789
 1,609
 1,440
 1,306
 1,217
 2,358
 410
 —
 9,129
Total real estate mortgage13,570
 30,615
 23,282
 14,576
 15,190
 21,086
 5,544
 104
 123,967
Real estate construction                 
Pass2,970
 6,823
 5,319
 2,432
 879
 396
 1,592
 8
 20,419
Criticized26
 329
 500
 144
 265
 10
 1
 —
 1,275
Total real estate construction2,996
 7,152
 5,819
 2,576
 1,144
 406
 1,593
 8
 21,694
Lease financing                 
Pass2,068
 4,626
 2,786
 2,063
 1,595
 2,480
 —
 —
 15,618
Criticized178
 562
 485
 264
 174
 129
 —
 —
 1,792
Total lease financing2,246
 5,188
 3,271
 2,327
 1,769
 2,609
 —
 —
 17,410
Total commercial loans$66,315
 91,039
 54,737
 30,928
 24,743
 30,958
 214,019
 448
 513,187
         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)84Disclosure 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

Note 6: Loans and Related Allowance for Credit Losses (continued)


Table 6.94.8 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 maycould 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
June 30, 2021
By delinquency status:
Current-29 days past due (DPD) and still accruing$315,279 118,719 22,329 15,350 471,677 
30-89 DPD and still accruing483 256 25 155 919 
90+ DPD and still accruing165 105 7 0 277 
Nonaccrual loans1,691 1,598 45 215 3,549 
Total commercial loans$317,618 120,678 22,406 15,720 476,422 
December 31, 2020
By delinquency status:
Current-29 DPD and still accruing$315,493 119,561 21,532 15,595 472,181 
30-89 DPD and still accruing575 347 224 233 1,379 
90+ DPD and still accruing39 38 1 0 78 
Nonaccrual loans2,698 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
June 30, 2020         
By delinquency status:         
Current-29 days past due (DPD) and still accruing$346,680
 122,136
 21,580
 17,045
 507,441
30-89 DPD and still accruing439
 570
 80
 227
 1,316
90+ DPD and still accruing101
 44
 —
 —
 145
Nonaccrual loans2,896
 1,217
 34
 138
 4,285
Total commercial loans$350,116
 123,967
 21,694
 17,410
 513,187
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 accruing423
 253
 53
 252
 981
90+ DPD and still accruing47
 31
 —
 —
 78
Nonaccrual loans1,545
 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 familyresidential mortgage loans are the primary credit quality indicators that we monitor and utilize in our evaluation of the appropriateness of the allowance for credit lossesACL for the consumer loan portfolio segment.
Many of our loss estimation techniques used for the allowanceACL for credit lossesloans rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality andin the establishment of our allowanceACL for credit losses.consumer loans.

Table 6.104.9 provides the outstanding balances of our consumer loan portfolio by delinquency status. Payment deferral activities instituted in response to the COVID-19 pandemic maycould 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, creditCredit 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.


Wells Fargo & Company85

Note 4: Loans and Related Allowance for Credit Losses (continued)
Table 6.10:4.9: Consumer Loan Categories by Delinquency Status and Vintage (1)
Term loans by origination yearRevolving loansRevolving loans converted to term loans
(in millions)20212020201920182017PriorTotal
June 30, 2021
Residential mortgage – first lien
By delinquency status:
Current-29 DPD$30,494 47,246 32,078 10,137 17,647 76,251 5,989 1,598 221,440 
30-59 DPD28 33 52 21 34 604 15 30 817 
60-89 DPD1 11 1 3 3 187 8 18 232 
90-119 DPD2 8 3 1 7 64 6 11 102 
120-179 DPD0 12 6 3 3 85 16 23 148 
180+ DPD0 204 12 10 21 809 100 245 1,401 
Government insured/guaranteed
loans (1)
3 193 364 566 635 18,470 0 0 20,231 
Total residential mortgage – first lien30,528 47,707 32,516 10,741 18,350 96,470 6,134 1,925 244,371 
Residential mortgage – junior lien
By delinquency status:
Current-29 DPD13 22 34 35 28 909 12,913 4,680 18,634 
30-59 DPD0 0 1 0 0 15 28 40 84 
60-89 DPD0 0 0 0 0 7 16 29 52 
90-119 DPD0 0 0 0 0 3 11 22 36 
120-179 DPD0 0 0 0 0 6 37 49 92 
180+ DPD0 0 0 0 0 32 215 492 739 
Total residential mortgage – junior lien13 22 35 35 28 972 13,220 5,312 19,637 
Credit cards
By delinquency status:
Current-29 DPD0 0 0 0 0 0 34,201 226 34,427 
30-59 DPD0 0 0 0 0 0 135 7 142 
60-89 DPD0 0 0 0 0 0 90 6 96 
90-119 DPD0 0 0 — 0 0 80 7 87 
120-179 DPD0 0 0 0 0 0 182 2 184 
180+ DPD0 0 0 0 0 0 0 0 0 
Total credit cards0 0 0 0 0 0 34,688 248 34,936 
Auto
By delinquency status:
Current-29 DPD14,445 15,920 11,321 4,644 2,309 1,677 0 0 50,316 
30-59 DPD33 143 148 81 52 85 0 0 542 
60-89 DPD8 42 44 24 14 25 0 0 157 
90-119 DPD3 17 17 8 5 8 0 0 58 
120-179 DPD0 0 0 0 0 0 0 0 0 
180+ DPD0 0 0 0 0 0 0 0 0 
Total auto14,489 16,122 11,530 4,757 2,380 1,795 0 0 51,073 
Other consumer
By delinquency status:
Current-29 DPD982 990 994 335 155 173 22,011 150 25,790 
30-59 DPD1 2 3 2 1 2 8 3 22 
60-89 DPD0 2 2 1 1 1 5 1 13 
90-119 DPD0 1 2 1 0 0 4 1 9 
120-179 DPD0 0 0 0 0 0 8 2 10 
180+ DPD0 0 0 0 0 2 4 11 17 
Total other consumer983 995 1,001 339 157 178 22,040 168 25,861 
Total consumer loans$46,013 64,846 45,082 15,872 20,915 99,415 76,082 7,653 375,878 
 Term loans by origination year Revolving loans
 Revolving loans converted to term loans
  
(in millions)2020
 2019
 2018
 2017
 2016
 Prior
   Total
June 30, 2020                 
Real estate 1-4 family first mortgage                 
By delinquency status:                 
Current-29 DPD$30,155
 54,199
 21,265
 32,823
 38,466
 76,491
 7,644
 1,994
 263,037
30-59 DPD25
 37
 30
 26
 60
 771
 23
 39
 1,011
60-89 DPD1
 2
 6
 8
 14
 370
 14
 25
 440
90-119 DPD—
 —
 1
 4
 6
 166
 8
 15
 200
120-179 DPD—
 —
 —
 2
 3
 127
 9
 20
 161
180+ DPD—
 —
 3
 6
 9
 482
 9
 125
 634
Government insured/guaranteed loans (2)5
 73
 206
 334
 669
 11,175
 —
 —
 12,462
Total real estate 1-4 family first mortgage30,186
 54,311
 21,511
 33,203
 39,227
 89,582
 7,707
 2,218
 277,945
Real estate 1-4 family junior mortgage                 
By delinquency status:                 
Current-29 DPD12
 39
 47
 42
 36
 1,382
 18,052
 6,730
 26,340
30-59 DPD1
 1
 —
 —
 —
 26
 47
 79
 154
60-89 DPD—
 2
 2
 4
 2
 13
 23
 49
 95
90-119 DPD—
 —
 —
 —
 —
 8
 12
 30
 50
120-179 DPD—
 —
 —
 —
 —
 4
 10
 34
 48
180+ DPD1
 —
 —
 1
 1
 14
 13
 122
 152
Total real estate 1-4 family junior mortgage14
 42
 49
 47
 39
 1,447
 18,157
 7,044
 26,839
Credit cards                 
By delinquency status:                 
Current-29 DPD—
 —
 —
 —
 —
 —
 35,008
 253
 35,261
30-59 DPD—
 —
 —
 —
 —
 —
 180
 11
 191
60-89 DPD—
 —
 —
 —
 —
 —
 137
 10
 147
90-119 DPD—
 —
 —
 —
 —
 —
 127
 10
 137
120-179 DPD—
 —
 —
 —
 —
 —
 267
 8
 275
180+ DPD—
 —
 —
 —
 —
 —
 6
 1
 7
Total credit cards—
 —
 —
 —
 —
 —
 35,725
 293
 36,018
Automobile                 
By delinquency status:                 
Current-29 DPD11,407
 17,980
 8,151
 4,802
 4,051
 1,538
 —
 —
 47,929
30-59 DPD30
 171
 122
 92
 136
 76
 —
 —
 627
60-89 DPD8
 46
 37
 28
 43
 25
 —
 —
 187
90-119 DPD3
 19
 12
 10
 13
 8
 —
 —
 65
120-179 DPD—
 —
 —
 —
 —
 —
 —
 —
 —
180+ DPD—
 —
 —
 —
 —
 —
 —
 —
 —
Total automobile11,448
 18,216
 8,322
 4,932
 4,243
 1,647
 —
 —
 48,808
Other revolving credit and installment                 
By delinquency status:                 
Current-29 DPD1,386
 3,262
 1,980
 1,343
 1,195
 5,383
 17,293
 179
 32,021
30-59 DPD2
 8
 11
 13
 11
 60
 16
 4
 125
60-89 DPD1
 6
 7
 8
 9
 60
 9
 6
 106
90-119 DPD—
 4
 5
 4
 5
 31
 8
 2
 59
120-179 DPD—
 1
 1
 2
 3
 12
 13
 3
 35
180+ DPD—
 —
 —
 —
 —
 1
 2
 9
 12
Total other revolving credit and installment1,389
 3,281
 2,004
 1,370
 1,223
 5,547
 17,341
 203
 32,358
Total consumer loans$43,037
 75,850
 31,886
 39,552
 44,732
 98,223
 78,930
 9,758
 421,968

(continued on following page)

86Wells Fargo & Company
Note 6: Loans and Related Allowance for Credit Losses (continued)


(continued from previous page)

Term loans by origination yearRevolving loansRevolving loans converted to term loans
(in millions)20202019201820172016PriorTotal
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 DPD111 76 36 67 79 750 52 66 1,237 
60-89 DPD88 10 6 12 13 305 56 68 558 
90-119 DPD232 11 5 8 7 197 26 33 519 
120-179 DPD3 4 1 3 5 151 17 29 213 
180+ DPD3 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 lien53,950 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 DPD22 39 39 37 31 1,115 15,366 5,434 22,083 
30-59 DPD0 0 1 1 0 22 113 160 297 
60-89 DPD0 0 1 0 0 11 154 271 437 
90-119 DPD0 0 0 1 0 7 45 84 137 
120-179 DPD0 0 0 0 0 9 36 77 122 
180+ DPD0 0 0 0 1 25 29 155 210 
Total residential mortgage – junior lien22 39 41 39 32 1,189 15,743 6,181 23,286 
Credit cards
By delinquency status:
Current-29 DPD0 0 0 0 0 0 35,612 255 35,867 
30-59 DPD0 0 0 0 0 0 243 12 255 
60-89 DPD0 0 0 0 0 0 167 10 177 
90-119 DPD0 0 0 0 0 0 144 10 154 
120-179 DPD0 0 0 0 0 0 208 3 211 
180+ DPD0 0 0 0 0 0 0 0 0 
Total credit cards0 0 0 0 0 0 36,374 290 36,664 
Auto
By delinquency status:
Current-29 DPD19,625 14,561 6,307 3,459 2,603 697 0 0 47,252 
30-59 DPD120 183 114 80 107 46 0 0 650 
60-89 DPD32 60 36 25 35 16 0 0 204 
90-119 DPD13 26 14 9 12 6 0 0 80 
120-179 DPD0 1 0 0 0 0 0 0 1 
180+ DPD0 0 0 0 0 0 0 0 0 
Total auto19,790 14,831 6,471 3,573 2,757 765 0 0 48,187 
Other consumer
By delinquency status:
Current-29 DPD1,406 1,383 577 261 59 193 20,246 162 24,287 
30-59 DPD2 7 5 2 1 3 19 10 49 
60-89 DPD1 5 3 1 1 1 10 6 28 
90-119 DPD1 4 2 1 0 1 8 3 20 
120-179 DPD0 0 0 0 0 0 10 4 14 
180+ DPD0 0 0 0 0 2 3 6 11 
Total other consumer1,410 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 
       
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)      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)Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled $6.1 billion and $11.1 billion at June 30, 2021, and December 31, 2020, respectively.
(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 Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled $8.9 billion at June 30, 2020, compared with $6.4 billion at December 31, 2019.
(3)
26% of the adjusted unpaid principal balance for consumer PCI loans was 30+ DPD at December 31, 2019.
Of the $1.8$2.9 billion of consumer loans not government insured/guaranteed that are 90 days or more past due at June 30, 2020, $6722021, $460 million was accruing, compared with $1.9
$2.7 billion past due and $855$612 million accruing at December 31, 2019.2020.
Wells Fargo & Company87

Note 4: Loans and Related Allowance for Credit Losses (continued)
Table 6.114.10 provides a breakdownthe 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 $9.5$15.9 billion and $9.1$13.2 billion at June 30, 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 yearRevolving loansRevolving loans converted to term loans
(in millions)20212020201920182017PriorTotal
June 30, 2021
By FICO:
Residential mortgage – first lien
800+$14,373 29,351 21,113 6,709 12,245 47,225 2,973 453 134,442 
760-79911,864 12,539 7,250 2,017 3,200 12,684 1,229 257 51,040 
720-7593,281 4,024 2,566 857 1,343 7,473 771 243 20,558 
680-719794 1,103 788 363 603 4,188 463 215 8,517 
640-679129 294 222 107 143 2,117 213 135 3,360 
600-63930 47 75 37 51 1,234 109 93 1,676 
< 6007 11 28 16 32 1,303 139 145 1,681 
No FICO available47 145 110 69 98 1,776 237 384 2,866 
Government insured/guaranteed loans (1)3 193 364 566 635 18,470 0 0 20,231 
Total residential mortgage – first lien30,528 47,707 32,516 10,741 18,350 96,470 6,134 1,925 244,371 
Residential mortgage – junior lien
800+0 0 0 0 0 236 6,715 1,612 8,563 
760-7990 0 0 0 0 142 2,588 906 3,636 
720-7590 0 0 0 0 169 1,721 891 2,781 
680-7190 0 0 0 0 143 1,022 719 1,884 
640-6790 0 0 0 0 82 396 405 883 
600-6390 0 0 0 0 52 189 232 473 
< 6000 0 0 0 0 53 195 267 515 
No FICO available13 22 35 35 28 95 394 280 902 
Total residential mortgage – junior lien13 22 35 35 28 972 13,220 5,312 19,637 
Credit card
800+0 0 0 0 0 0 3,987 1 3,988 
760-7990 0 0 0 0 0 5,561 8 5,569 
720-7590 0 0 0 0 0 7,825 30 7,855 
680-7190 0 0 0 0 0 8,437 57 8,494 
640-6790 0 0 0 0 0 5,122 56 5,178 
600-6390 0 0 0 0 0 1,929 39 1,968 
< 6000 0 0 0 0 0 1,819 56 1,875 
No FICO available0 0 0 0 0 0 8 1 9 
Total credit card0 0 0 0 0 0 34,688 248 34,936 
Auto
800+2,576 2,329 2,157 941 509 271 0 0 8,783 
760-7992,505 2,698 2,145 850 390 216 0 0 8,804 
720-7592,430 2,721 1,999 825 387 251 0 0 8,613 
680-7192,518 2,965 1,968 772 358 259 0 0 8,840 
640-6792,267 2,548 1,400 527 257 222 0 0 7,221 
600-6391,418 1,519 822 333 178 190 0 0 4,460 
< 600775 1,313 993 498 288 362 0 0 4,229 
No FICO available0 29 46 11 13 24 0 0 123 
Total auto14,489 16,122 11,530 4,757 2,380 1,795 0 0 51,073 
Other consumer
800+253 250 204 59 18 60 1,839 19 2,702 
760-799265 225 186 59 15 31 943 22 1,746 
720-759190 184 175 67 19 26 829 28 1,518 
680-719115 125 147 61 19 21 711 26 1,225 
640-67947 52 74 34 12 11 343 19 592 
600-6399 14 24 13 5 6 122 11 204 
< 6003 13 27 16 6 7 121 14 207 
No FICO available101 132 164 30 63 16 1,197 29 1,732 
FICO not required0 0 0 0 0 0 15,935 0 15,935 
Total other consumer983 995 1,001 339 157 178 22,040 168 25,861 
Total consumer loans$46,013 64,846 45,082 15,872 20,915 99,415 76,082 7,653 375,878 
 Term loans by origination year Revolving loans
 Revolving loans converted to term loans
  
(in millions)2020
 2019
 2018
 2017
 2016
 Prior
   Total
June 30, 2020                 
By FICO:                 
Real estate 1-4 family first mortgage                 
800+$15,684
 35,804
 14,694
 24,108
 28,853
 46,203
 3,855
 531
 169,732
760-79910,373
 12,379
 3,925
 5,095
 5,444
 11,147
 1,424
 280
 50,067
720-7593,008
 4,014
 1,587
 2,231
 2,550
 7,491
 944
 272
 22,097
680-719827
 1,312
 667
 884
 1,025
 4,888
 602
 249
 10,454
640-679163
 350
 236
 298
 325
 2,655
 270
 176
 4,473
600-63940
 77
 47
 64
 99
 1,555
 144
 103
 2,129
< 6009
 33
 50
 62
 88
 2,315
 200
 215
 2,972
No FICO available77
 269
 99
 127
 174
 2,153
 268
 392
 3,559
Government insured/guaranteed loans (2)5
 73
 206
 334
 669
 11,175
 —
 —
 12,462
Total real estate 1-4 family first mortgage30,186
 54,311
 21,511
 33,203
 39,227
 89,582
 7,707
 2,218
 277,945
Real estate 1-4 family junior lien mortgage                 
800+—
 —
 —
 —
 —
 350
 9,233
 1,984
 11,567
760-799—
 —
 —
 —
 —
 206
 3,308
 1,117
 4,631
720-759—
 —
 —
 —
 —
 251
 2,407
 1,182
 3,840
680-719—
 —
 —
 —
 —
 226
 1,485
 1,016
 2,727
640-679—
 —
 —
 —
 —
 125
 620
 568
 1,313
600-639—
 —
 —
 —
 —
 76
 289
 342
 707
< 600—
 —
 —
 —
 —
 111
 336
 538
 985
No FICO available14
 42
 49
 47
 39
 102
 479
 297
 1,069
Total real estate 1-4 family junior lien mortgage14
 42
 49
 47
 39
 1,447
 18,157
 7,044
 26,839
Credit card                 
800+—
 —
 —
 —
 —
 —
 3,778
 1
 3,779
760-799—
 —
 —
 —
 —
 —
 5,103
 7
 5,110
720-759—
 —
 —
 —
 —
 —
 7,650
 25
 7,675
680-719—
 —
 —
 —
 —
 —
 8,786
 54
 8,840
640-679—
 —
 —
 —
 —
 —
 5,588
 60
 5,648
600-639—
 —
 —
 —
 —
 —
 2,281
 48
 2,329
< 600—
 —
 —
 —
 —
 —
 2,533
 97
 2,630
No FICO available—
 —
 —
 —
 —
 —
 6
 1
 7
Total credit card—
 —
 —
 —
 —
 —
 35,725
 293
 36,018
Automobile                 
800+1,639
 3,112
 1,547
 1,002
 716
 256
 —
 —
 8,272
760-7991,697
 3,185
 1,414
 787
 550
 191
 —
 —
 7,824
720-7591,890
 3,086
 1,403
 801
 613
 224
 —
 —
 8,017
680-7192,150
 3,133
 1,388
 762
 622
 230
 —
 —
 8,285
640-6792,032
 2,502
 1,005
 549
 498
 194
 —
 —
 6,780
600-6391,269
 1,521
 612
 361
 389
 161
 —
 —
 4,313
< 600770
 1,647
 946
 655
 830
 373
 —
 —
 5,221
No FICO available1
 30
 7
 15
 25
 18
 —
 —
 96
Total automobile11,448
 18,216
 8,322
 4,932
 4,243
 1,647
 —
 —
 48,808
Other revolving credit and installment                 
800+464
 1,027
 612
 452
 456
 2,129
 2,723
 30
 7,893
760-799365
 752
 400
 260
 242
 1,094
 1,212
 18
 4,343
720-759257
 592
 346
 217
 199
 888
 1,001
 27
 3,527
680-719144
 407
 265
 166
 149
 650
 877
 30
 2,688
640-67952
 186
 136
 89
 82
 362
 445
 22
 1,374
600-63914
 56
 49
 35
 36
 172
 178
 15
 555
< 6007
 48
 56
 42
 42
 182
 190
 25
 592
No FICO available86
 213
 140
 109
 17
 70
 1,205
 36
 1,876
FICO not required—
 —
 —
 —
 —
 —
 9,510
 —
 9,510
Total other revolving credit and installment1,389
 3,281
 2,004
 1,370
 1,223
 5,547
 17,341
 203
 32,358
Total consumer loans$43,037
 75,850
 31,886
 39,552
 44,732
 98,223
 78,930
 9,758
 421,968

(continued on nextfollowing page)
88Wells Fargo & Company
Note 6: Loans and Related Allowance for Credit Losses (continued)


(continued from priorprevious page)

Term loans by origination yearRevolving loansRevolving loans converted to term loans
(in millions)20202019201820172016PriorTotal
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 
760-79917,154 9,866 2,908 4,380 4,955 10,843 1,361 274 51,741 
720-7595,274 3,290 1,189 1,829 2,106 7,001 879 265 21,833 
680-7191,361 1,084 490 678 831 4,403 520 221 9,588 
640-679376 287 148 192 226 2,385 241 154 4,009 
600-63955 56 44 56 92 1,429 127 106 1,965 
< 60014 29 36 44 66 1,789 162 175 2,315 
No FICO available136 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 lien53,950 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 
760-7990 0 0 0 0 177 3,005 1,032 4,214 
720-7590 0 0 0 0 207 2,093 1,034 3,334 
680-7190 0 0 0 0 183 1,233 854 2,270 
640-6790 0 0 0 0 103 503 493 1,099 
600-6390 0 0 0 0 67 241 299 607 
< 6000 0 0 0 0 76 254 374 704 
No FICO available22 39 41 39 32 83 441 276 973 
Total residential mortgage – junior lien22 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 
760-7990 0 0 0 0 0 5,438 7 5,445 
720-7590 0 0 0 0 0 7,897 29 7,926 
680-7190 0 0 0 0 0 8,854 60 8,914 
640-6790 0 0 0 0 0 5,657 64 5,721 
600-6390 0 0 0 0 0 2,242 46 2,288 
< 6000 0 0 0 0 0 2,416 82 2,498 
No FICO available0 0 0 0 0 0 10 1 11 
Total credit card0 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 
760-7993,036 2,662 1,122 579 349 81 0 0 7,829 
720-7593,162 2,514 1,095 576 395 98 0 0 7,840 
680-7193,534 2,542 1,066 545 400 105 0 0 8,192 
640-6793,381 1,948 763 395 334 94 0 0 6,915 
600-6392,208 1,165 479 274 276 87 0 0 4,489 
< 6001,581 1,357 730 463 533 186 0 0 4,850 
No FICO available13 37 5 10 18 10 0 0 93 
Total auto19,790 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 
760-799342 279 93 29 10 34 1,110 16 1,913 
720-759262 258 107 35 11 30 915 26 1,644 
680-719156 213 99 36 11 24 798 31 1,368 
640-67971 112 59 21 7 10 415 23 718 
600-63918 36 22 9 4 8 151 13 261 
< 60013 41 30 12 5 7 161 18 287 
No FICO available195 173 83 88 3 16 1,248 43 1,849 
FICO not required0 0 0 0 0 0 13,249 0 13,249 
Total other consumer1,410 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:                 
800+      $165,460
 11,851
 4,037
 7,900
 7,585
 196,833
760-799      61,559
 5,483
 5,648
 7,624
 4,915
 85,229
720-759      27,879
 4,407
 8,376
 7,839
 4,097
 52,598
680-719      12,844
 3,192
 9,732
 7,871
 3,212
 36,851
640-679      5,068
 1,499
 6,626
 6,324
 1,730
 21,247
600-639      2,392
 782
 2,853
 4,230
 670
 10,927
< 600      3,264
 1,164
 3,373
 6,041
 704
 14,546
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.
Wells Fargo & Company89

Note 4: Loans and Related Allowance for Credit Losses (continued)
Table 6.124.11 shows the most updated LTV and CLTV distribution of the real estate 1-4 familyresidential 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 yearRevolving loansRevolving loans converted to term loans
(in millions)20212020201920182017PriorTotal
June 30, 2021
Residential mortgage – first lien
By LTV:
0-60%$9,789 18,204 14,733 5,341 11,884 66,680 4,604 1,567 132,802 
60.01-80%20,654 27,433 15,773 4,339 5,369 10,096 1,071 256 84,991 
80.01-100%40 1,720 1,498 416 382 801 304 68 5,229 
100.01-120% (1)0 35 52 19 16 101 72 17 312 
> 120% (1)0 21 17 6 7 50 30 6 137 
No LTV available42 101 79 54 57 272 53 11 669 
Government insured/guaranteed loans (2)3 193 364 566 635 18,470 0 0 20,231 
Total residential mortgage – first lien30,528 47,707 32,516 10,741 18,350 96,470 6,134 1,925 244,371 
Residential mortgage – junior lien
By CLTV:
0-60%0 0 0 0 0 496 8,124 3,558 12,178 
60.01-80%0 0 0 0 0 254 3,718 1,178 5,150 
80.01-100%0 0 0 0 0 123 1,051 424 1,598 
100.01-120% (2)0 0 0 0 0 31 225 92 348 
> 120% (2)0 0 0 0 0 8 78 28 114 
No CLTV available13 22 35 35 28 60 24 32 249 
Total residential mortgage – junior lien13 22 35 35 28 972 13,220 5,312 19,637 
Total$30,541 47,729 32,551 10,776 18,378 97,442 19,354 7,237 264,008 
Term loans by origination yearRevolving loansRevolving loans converted to term loans
20202019201820172016PriorTotal
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 available110 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 lien53,950 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 available22 39 41 39 32 45 25 38 281 
Total residential mortgage – junior lien22 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
June 30, 2020                 
Real estate 1-4 family first mortgage                 
By LTV/CLTV:                 
0-60%$9,292
 16,664
 7,380
 14,769
 22,978
 62,108
 5,289
 1,632
 140,112
60.01-80%19,968
 31,417
 11,884
 16,671
 14,609
 14,001
 1,587
 382
 110,519
80.01-100%851
 5,908
 1,861
 1,245
 787
 1,605
 544
 141
 12,942
100.01-120% (2)2
 98
 83
 75
 57
 281
 165
 36
 797
> 120% (2)—
 55
 25
 28
 31
 124
 66
 13
 342
No LTV/CLTV available68
 96
 72
 81
 96
 288
 56
 14
 771
Government insured/guaranteed loans (3)5
 73
 206
 334
 669
 11,175
 —
 —
 12,462
Total real estate 1-4 family first mortgage30,186
 54,311
 21,511
 33,203
 39,227
 89,582
 7,707
 2,218
 277,945
Real estate 1-4 family junior lien mortgage                 
By LTV/CLTV:                 
0-60%—
 —
 —
 —
 —
 603
 9,127
 3,921
 13,651
60.01-80%—
 —
 —
 —
 —
 409
 6,279
 1,887
 8,575
80.01-100%—
 —
 —
 —
 —
 260
 1,996
 878
 3,134
100.01-120% (2)—
 —
 —
 —
 —
 90
 525
 240
 855
> 120% (2)—
 —
 —
 —
 —
 29
 205
 74
 308
No LTV/CLTV available14
 42
 49
 47
 39
 56
 25
 44
 316
Total real estate 1-4 family junior lien mortgage14
 42
 49
 47
 39
 1,447
 18,157
 7,044
 26,839
Total$30,200
 54,353
 21,560
 33,250
 39,266
 91,029
 25,864
 9,262
 304,784
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)90Disclosure 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
(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: Loans and Related Allowance for Credit Losses (continued)


NONACCRUAL LOANSTable 6.134.12 provides loans on nonaccrual status. In connection with our adoption of CECL, nonaccrual loans may have an allowance for credit lossesACL 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 maycould 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 costRecognized interest income
Nonaccrual loansNonaccrual loans without related allowance for credit losses (1)Six months ended June 30,
(in millions)Jun 30,
2021		Dec 31,
2020		Jun 30,
2021		Dec 31,
2020		20212020
Commercial:
Commercial and industrial$1,691 2,698 464 382 45 30 
Real estate mortgage1,598 1,774 201 93 33 17 
Real estate construction45 48 13 15 1 5 
Lease financing215 259 40 16 0 0 
Total commercial3,549 4,779 718 506 79 52 
Consumer:
Residential mortgage- first lien2,852 2,957 1,949 1,908 56 81 
Residential mortgage- junior lien713 754 463 461 25 28 
Auto221 202 0 0 17 7 
Other consumer36 36 0 0 1 1 
Total consumer3,822 3,949 2,412 2,369 99 117 
Total nonaccrual loans$7,371 8,728 3,130 2,875 178 169 
(1)Nonaccrual loans may not have an allowance for credit losses if the loss expectations are zero given solid collateral value.
 Amortized cost Six months ended June 30, 2020
(in millions)Nonaccrual loans
 Nonaccrual loans without related allowance for credit losses (2)
 Recognized interest income
June 30, 2020     
Commercial:     
Commercial and industrial$2,896
 661
 30
Real estate mortgage1,217
 71
 17
Real estate construction34
 2
 5
Lease financing138
 8
 —
Total commercial4,285
 742
 52
Consumer:     
Real estate 1-4 family first mortgage2,393
 1,330
 81
Real estate 1-4 family junior lien mortgage753
 424
 28
Automobile129
 —
 7
Other revolving credit and installment45
 —
 1
Total consumer3,320
 1,754
 117
Total nonaccrual loans$7,605
 2,496
 169
December 31, 2019     
Commercial:     
Commercial and industrial$1,545
    
Real estate mortgage573
    
Real estate construction41
    
Lease financing95
    
Total commercial2,254
   

Consumer:     
Real estate 1-4 family first mortgage2,150
    
Real estate 1-4 family junior lien mortgage796
    
Automobile106
    
Other revolving credit and installment40
    
Total consumer3,092
   

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.
LOANS IN PROCESS OF FORECLOSUREOur recorded investment in consumer mortgage loans collateralized by residential real estate property that are in process of foreclosure was $2.5 billion$939 million and $3.5$2.1 billion at June 30, 2020,2021, and December 31, 2019,2020, respectively, which included $2.0 billion$650 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 familyresidential 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.


Wells Fargo & Company91


Note 4: Loans and Related Allowance for Credit Losses (continued)
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 familyresidential mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due.
Table 6.144.13 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)Jun 30,
2021		Dec 31,
2020
Total:$4,703 7,041 
Less: FHA insured/VA guaranteed (1)3,966 6,351 
Total, not government insured/guaranteed$737 690 
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial$165 39 
Real estate mortgage105 38 
Real estate construction7 1 
Total commercial277 78 
Consumer:
Residential mortgage – first lien73 135 
Residential mortgage – junior lien12 19 
Credit card271 365 
Auto43 65 
Other consumer61 28 
Total consumer460 612 
Total, not government insured/guaranteed$737 690 
(in millions)Jun 30, 2020
 Dec 31, 2019
Total:$9,739
 7,285
Less: FHA insured/VA guaranteed (1)8,922
 6,352
Total, not government insured/guaranteed$817
 933
By segment and class, not government insured/guaranteed:   
Commercial:   
Commercial and industrial$101
 47
Real estate mortgage44
 31
Total commercial145
 78
 Consumer:   
Real estate 1-4 family first mortgage93
 112
Real estate 1-4 family junior lien mortgage19
 32
Credit card418
 546
Automobile54
 78
Other revolving credit and installment88
 87
Total consumer672
 855
Total, not government insured/guaranteed$817
 933
(1)
Represents loans whose repayments are predominantlyRepresents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.


Note 6: Loans and Related Allowance for Credit Losses (continued)


IMPAIRED LOANS In connection with our adoption of CECL, we no longer provide information on impaired loans. We have retained impaired loans information for the period ended December 31, 2019. Table 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 mortgage1,137
 974
 803
 110
Real estate construction81
 51
 41
 11
Lease financing131
 105
 105
 35
Total commercial4,141
 3,133
 2,852
 467
Consumer:       
Real estate 1-4 family first mortgage8,107
 7,674
 4,433
 437
Real estate 1-4 family junior lien mortgage1,586
 1,451
 925
 144
Credit card520
 520
 520
 209
Automobile138
 81
 42
 8
Other revolving credit and installment178
 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 mortgage1,067
 59
Real estate construction52
 6
Lease financing93
 1
Total commercial3,362
 195
Consumer:   
 Real estate 1-4 family first mortgage9,031
 506
Real estate 1-4 family junior lien mortgage1,586
 99
Credit card488
 64
Automobile84
 12
Other revolving credit and installment162
 13
Total consumer11,351
 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 $12.0$12.5 billion and $11.8$14.5 billion at June 30, 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 and the Interagency Statement. For moreadditional 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 $442$344 million and $500$489 million at June 30, 2020,2021, and December 31, 2019,2020, respectively.

Note 6: Loans and Related Allowance for Credit Losses (continued)


Table 6.174.14 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 payare 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.
92Wells Fargo & Company


Table 6.17:4.14: TDR Modifications
Primary modification type (1)Financial effects of modifications
($ in millions)Principal forgivenessInterest
rate
reduction		Other concessions (2)TotalCharge-
offs (3)		Weighted
average
interest
rate
reduction		Recorded
investment
related to
interest rate
reduction (4)
Quarter ended June 30, 2021
Commercial:
Commercial and industrial$0 1 330 331 14 1.22 %$1 
Real estate mortgage41 5 86 132 0 1.15 5 
Real estate construction0 0 2 2 0 0 0 
Lease financing0 0 1 1 0 0 0 
Total commercial41 6 419 466 14 1.17 6 
Consumer:
Residential mortgage – first lien0 8 353 361 1 1.26 8 
Residential mortgage – junior lien0 2 9 11 0 2.51 2 
Credit card0 24 0 24 0 19.02 24 
Auto1 1 72 74 30 3.93 1 
Other consumer0 4 0 4 0 12.02 4 
Trial modifications (5)0 0 2 2 0 0 0 
Total consumer1 39 436 476 31 13.24 39 
Total$42 45 855 942 45 11.68 %$45 
Quarter ended June 30, 2020
Commercial:
Commercial and industrial$0 17 948 965 38 0.79 %$17 
Real estate mortgage0 5 98 103 0 1.75 5 
Real estate construction0 0 0 0 0 0 0 
Lease financing0 0 1 1 0 0 0 
Total commercial0 22 1,047 1,069 38 1.00 22 
Consumer:
Residential mortgage – first lien0 14 288 302 1 1.84 14 
Residential mortgage – junior lien0 3 24 27 0 2.39 3 
Credit card0 62 0 62 0 12.79 62 
Auto1 2 44 47 28 4.42 2 
Other consumer0 3 6 9 0 5.90 3 
Trial modifications (5)0 0 (13)(13)0 0 0 
Total consumer1 84 349 434 29 10.09 84 
Total$1 106 1,396 1,503 67 8.17 %$106 
 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 June 30, 2020             
Commercial:             
Commercial and industrial$—
 17
 948
 965
 38
 0.79% $17
Real estate mortgage—
 5
 98
 103
 —
 1.75
 5
Real estate construction—
 —
 —
 —
 —
 —
 —
Lease financing—
 —
 1
 1
 —
 —
 —
Total commercial—
 22
 1,047
 1,069
 38
 1.00
 22
Consumer:             
Real estate 1-4 family first mortgage20
 3
 279
 302
 1
 1.84
 14
Real estate 1-4 family junior lien mortgage3
 2
 22
 27
 —
 2.39
 3
Credit card—
 62
 —
 62
 —
 12.79
 62
Automobile1
 2
 44
 47
 28
 4.42
 2
Other revolving credit and installment—
 3
 6
 9
 —
 5.90
 3
Trial modifications (6)—
 —
 (13) (13) —
 —
 —
Total consumer24
 72
 338
 434
 29
 10.09
 84
Total$24
 94
 1,385
 1,503
 67
 8.17% $106
Quarter ended June 30, 2019             
Commercial:             
Commercial and industrial$—
 34
 180
 214
 26
 0.34% $34
Real estate mortgage—
 24
 95
 119
 —
 0.49
 24
Real estate construction13
 —
 13
 26
 —
 —
 —
Lease financing—
 —
 —
 —
 —
 —
 —
Total commercial13
 58
 288
 359
 26
 0.40
 58
Consumer:             
Real estate 1-4 family first mortgage28
 2
 181
 211
 —
 1.83
 19
Real estate 1-4 family junior lien mortgage1
 11
 21
 33
 1
 2.39
 11
Credit card—
 89
 —
 89
 —
 13.35
 89
Automobile2
 3
 14
 19
 8
 4.13
 3
Other revolving credit and installment—
 12
 1
 13
 —
 7.67
 12
Trial modifications (6)—
 —
 5
 5
 —
 —
 —
Total consumer31
 117
 222
 370
 9
 10.06
 134
Total$44
 175
 510
 729
 35
 7.17% $192


(continued on following page)


(continued from previous page)

 Primary modification type (1)  Financial effects of modifications 
($ in millions)Principal (2)
 
Interest
rate
reduction

 
Other
concessions (3)

 Total
 
Charge-
offs (4)

 
Weighted
average
interest
rate
reduction

 
Recorded
investment
related to
interest rate
reduction (5)

Six months ended June 30, 2020             
Commercial:             
Commercial and industrial$18
 32
 1,262
 1,312
 82
 0.73% $32
Real estate mortgage—
 18
 250
 268
 —
 1.17
 18
Real estate construction—
 —
 6
 6
 —
 2.49
 —
Lease financing—
 —
 1
 1
 —
 —
 —
Total commercial18
 50
 1,519
 1,587
 82
 0.90
 50
Consumer:             
Real estate 1-4 family first mortgage41
 6
 445
 492
 1
 1.73
 31
Real estate 1-4 family junior lien mortgage4
 8
 36
 48
 —
 2.38
 9
Credit card—
 157
 —
 157
 —
 12.51
 157
Automobile3
 4
 54
 61
 34
 4.56
 4
Other revolving credit and installment—
 15
 8
 23
 —
 7.71
 15
Trial modifications (6)—
 —
 (11) (11) —
 —
 —
Total consumer48
 190
 532
 770
 35
 10.04
 216
Total$66
 240
 2,051
 2,357
 117
 8.30% $266
Six months ended June 30, 2019             
Commercial:             
Commercial and industrial$—
 45
 734
 779
 39
 0.42% $45
Real estate mortgage—
 26
 168
 194
 —
 0.54
 26
Real estate construction13
 —
 16
 29
 —
 —
 —
Lease financing—
 —
 —
 —
 —
 —
 —
Total commercial13
 71
 918
 1,002
 39
 0.47
 71
Consumer:             
Real estate 1-4 family first mortgage63
 5
 475
 543
 1
 1.89
 38
Real estate 1-4 family junior lien mortgage3
 22
 46
 71
 2
 2.34
 23
Credit card—
 186
 —
 186
 —
 13.27
 186
Automobile4
 4
 26
 34
 14
 4.55
 4
Other revolving credit and installment—
 23
 4
 27
 —
 7.63
 23
Trial modifications (6)—
 —
 5
 5
 —
 —
 —
Total consumer70
 240
 556
 866
 17
 10.17
 274
Total$83
 311
 1,474
 1,868
 56
 8.18% $345
(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 Wells Fargo & Company$221 million and $323 million for the quarters ended June 30, 2020 and 2019, respectively, and $484 million and $683 million for the first half of 2020 and 2019, respectively.
93
(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 $3 million and $3 million for the quarters ended June 30, 2020 and 2019, respectively, and $32 million and $6 million for the first half 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.
Note 6:4: Loans and Related Allowance for Credit Losses (continued)
(continued from previous page)

Primary modification type (1)Financial effects of modifications
($ in millions)Principal forgivenessInterest
rate
reduction		Other
concessions (2)		TotalCharge-
offs (3)		Weighted
average
interest
rate
reduction		Recorded
investment
related to
interest rate
reduction (4)
Six months ended June 30, 2021
Commercial:
Commercial and industrial$0 2 560 562 20 1.10 %$2 
Real estate mortgage41 9 186 236 0 1.04 9 
Real estate construction0 0 3 3 0 0 0 
Lease financing0 0 4 4 0 0 0 
Total commercial41 11 753 805 20 1.05 11 
Consumer:
Residential mortgage – first lien0 15 885 900 1 1.53 15 
Residential mortgage – junior lien0 7 22 29 1 2.44 7 
Credit card0 56 0 56 0 18.93 56 
Auto1 2 86 89 37 3.90 2 
Other consumer0 11 1 12 0 12.14 11 
Trial modifications (5)0 0 2 2 0 0 0 
Total consumer1 91 996 1,088 39 13.67 91 
Total$42 102 1,749 1,893 59 12.31 %$102 
Six months ended June 30, 2020
Commercial:
Commercial and industrial$18 32 1,262 1,312 82 0.73 %$32 
Real estate mortgage0 18 250 268 0 1.17 18 
Real estate construction0 0 6 6 0 2.49 0 
Lease financing0 0 1 1 0 0 0 
Total commercial18 50 1,519 1,587 82 0.90 50 
Consumer:
Residential mortgage – first lien0 31 461 492 1 1.73 31 
Residential mortgage – junior lien0 9 39 48 0 2.38 9 
Credit card0 157 0 157 0 12.51 157 
Auto3 4 54 61 34 4.56 4 
Other consumer0 15 8 23 0 7.71 15 
Trial modifications (5)0 0 (11)(11)0 0 0 
Total consumer3 216 551 770 35 10.04 216 
Total$21 266 2,070 2,357 117 8.30 %$266 
(1)Amounts represent the recorded investment in loans after recognizing the effects of the TDR, if any. TDRs may have multiple types of concessions, but are presented only once in the first modification type based on the order presented in the table above. The reported amounts include loans remodified of $202 million and $221 million for the quarters ended June 30, 2021 and 2020, respectively, and $458 million and $484 million for the first half of 2021 and 2020, respectively.
(2)Other concessions include loans with payment (principal and/or interest) deferral, loans discharged in bankruptcy, loan renewals, term extensions and other interest and noninterest adjustments, but exclude modifications that also forgive principal and/or reduce the contractual interest rate. The reported amounts include COVID-related payment deferrals that are new TDRs and exclude COVID-related payment deferrals previously reported as TDRs given limited current financial effects other than payment deferral.
(3)Charge-offs include write-downs of the investment in the loan in the period it is contractually modified. The amount of charge-off will differ from the modification terms if the loan has been charged down prior to the modification based on our policies. In addition, there may be cases where we have a charge-off/down with no legal principal modification.
(4)Recorded investment related to interest rate reduction reflects the effect of reduced interest rates on loans with an interest rate concession as one of their concession types, which includes loans reported as a principal primary modification type that also have an interest rate concession.
(5)Trial modifications are granted a delay in payments due under the original terms during the trial payment period. However, these loans continue to advance through delinquency status and accrue interest according to their original terms. Any subsequent permanent modification generally includes interest rate related concessions; however, the exact concession type and resulting financial effect are usually not known until the loan is permanently modified. Trial modifications for the period are presented net of previously reported trial modifications that became permanent in the current period.

94Wells Fargo & Company


Table 6.184.15 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 June 30,  Six months ended June 30, 
(in millions)2020
 2019
 2020
 2019
Commercial:       
Commercial and industrial$37
 25
 222
 48
Real estate mortgage81
 5
 102
 33
Real estate construction—
 —
 —
 3
Total commercial118
 30
 324
 84
Consumer:       
Real estate 1-4 family first mortgage8
 13
 18
 24
Real estate 1-4 family junior lien mortgage6
 4
 8
 9
Credit card19
 21
 45
 42
Automobile1
 4
 3
 7
Other revolving credit and installment2
 1
 3
 3
Total consumer36
 43
 77
 85
Total$154
 73
 401
 169

Recorded investment of defaults
Quarter ended June 30,Six months ended June 30,
(in millions)2021202020212020
Commercial:
Commercial and industrial$84 37 125 222 
Real estate mortgage9 81 25 102 
Real estate construction0 0 0 0 
Lease financing0 0 0 0 
Total commercial93 118 150 324 
Consumer:
Residential mortgage – first lien2 8 5 18 
Residential mortgage – junior lien0 6 1 8 
Credit card6 19 16 45 
Auto12 1 23 3 
Other consumer0 2 1 3 
Total consumer20 36 46 77 
Total$113 154 196 401 


Wells Fargo & Company95

Note 7:5:  Leasing Activity
The information below provides a summary of our leasing activities as a lessor and lessee. See Note 7 (Leasing5
(Leasing Activity) in our 20192020 Form 10-K for additional information about our leasing activities.

As a Lessor
Noninterest income on leases, which is presented in Table 7.1 presents5.1, is included in other noninterest income on our consolidated statement of income. Lease expense, included in other noninterest expense on our consolidated statement of income, was $226 million and $244 million for the compositionquarters ended June 30, 2021 and 2020, respectively, and $452 million and $504 million for the first half of our leasing revenue.2021 and 2020, respectively.

Table 7.1:5.1: Leasing Revenue
Quarter ended June 30,Six months ended June 30,
(in millions)2021202020212020
Interest income on lease financing (1)$172 208 353 437 
Other lease revenues:
Variable revenues on lease financing25 26 51 54 
Fixed revenues on operating leases254 294 514 608 
Variable revenues on operating leases18 12 36 25 
Other lease-related revenues (2)16 3 27 1 
Noninterest income on leases313 335 628 688 
Total leasing revenue$485 543 981 1,125 
(1)    In second quarter 2021, we elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
(2)    Predominantly includes net gains (losses) on disposition of assets leased under operating leases or lease financings.
 Quarter ended June 30, 
Six months ended June 30, 
(in millions)2020

2019

2020

2019
Interest income on lease financing$196
 224
 $407
 447
Other lease revenues:       
Variable revenues on lease financing26
 26
 53
 50
Fixed revenues on operating leases294
 357
 608
 730
Variable revenues on operating leases11
 14
 24
 32
Other lease-related revenues (1)3
 27
 1
 55
Lease income334
 424
 686
 867
Total leasing revenue$530
 648
 $1,093
 1,314
(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 7.25.2 presents balances for our operating leases.

Table 7.2:5.2: Operating Lease Right of Use (ROU) Assets and Lease Liabilities
(in millions)Jun 30, 2020
Dec 31, 2019
ROU assets$4,548
4,724
Lease liabilities5,125
5,297


(in millions)Jun 30, 2021Dec 31, 2020
ROU assets$4,053 4,306 
Lease liabilities4,705 4,962 
Table 7.35.3 provides the composition of our lease costs, which are predominantly included in net occupancy expense.

Table 7.3:5.3: Lease Costs
Quarter ended June 30,Six months ended June 30,
(in millions)2021202020212020
Fixed lease expense – operating leases$265 292 530 583 
Variable lease expense69 80 147 146 
Other (1)(28)(42)(31)(56)
Total lease costs$306 330 646 673 
(1)Predominantly includes gains recognized from sale leaseback transactions and sublease rental income.
 Quarter ended June 30,  Six months ended June 30, 
(in millions)2020
 2019
 2020
 2019
Fixed lease expense – operating leases$292
 291
 $583
 588
Variable lease expense80
 80
 146
 153
Other (1)(42) (9) (56) (17)
Total lease costs$330
 362
 $673
 724
(1)96Predominantly includes gains recognized from sale leaseback transactions and sublease rental income.Wells Fargo & Company




Note 8: Equity Securities (
continued)

Note 8:6:  Equity Securities
Table 8.16.1 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).method.
Table 8.1:6.1: Equity Securities
(in millions)Jun 30,
2021		Dec 31,
2020
Held for trading at fair value:
Marketable equity securities (1)$23,701 23,032 
Not held for trading:
Fair value:
Marketable equity securities1,624 1,564 
Nonmarketable equity securities (2)10,006 9,413 
Total equity securities at fair value11,630 10,977 
Equity method:
Private equity2,897 2,960 
Tax-advantaged renewable energy (3)3,853 3,481 
New market tax credit and other378 409 
Total equity method7,128 6,850 
Other methods :
Low-income housing tax credit investments (3)11,439 11,353 
Federal Reserve Bank stock and other at cost (4)3,585 3,588 
Private equity (5)7,064 4,208 
Total equity securities not held for trading40,846 36,976 
Total equity securities$64,547 60,008 
(in millions)Jun 30,
2020
 Dec 31,
2019
Held for trading at fair value:   
Marketable equity securities$12,591
 27,440
Not held for trading:   
Fair value:   
Marketable equity securities (1)6,426
 6,481
Nonmarketable equity securities8,322
 8,015
Total equity securities at fair value14,748
 14,496
Equity method:   
Low-income housing tax credit investments11,294
 11,343
Private equity3,351
 3,459
Tax-advantaged renewable energy3,940
 3,811
New market tax credit and other377
 387
Total equity method18,962

19,000
Other:   
Federal Reserve Bank stock and other at cost (2)3,794
 4,790
Private equity (3)2,399
 2,515
Total equity securities not held for trading39,903
 40,801
Total equity securities$52,494
 68,241
(1)
Includes $191 million and $3.8 billion at June 30, 2020, and December 31, 2019, respectively, related to(1)    Represents securities held as economic hedges of our deferred compensation plan liabilities. In second quarter 2020, we entered into arrangements to transition our economic hedges of our deferred compensation plan liabilities from equity securities to derivative instruments.
(2)
Includes $3.8 billion and $4.8 billion at June 30, 2020, and December 31, 2019, respectively, related to investments in Federal Reserve Bank and Federal Home Loan Bank stock.
(3)Represents nonmarketable equity securities accounted for under the measurement alternative.

Equity Securities Held for Trading
Equity securities held for trading purposes are marketable equity securities traded on organized exchanges. These securities are held as part of our customer accommodation trading activities. For moreadditional 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 VALUEMarketable equity securities held for purposes other than trading consist of exchange-traded equity funds held to economically hedge obligations related to our deferred compensation plans, as well as other holdings of publicly traded equity securities held for investment purposes. We account for certain nonmarketable equity securities under the fair value method, and substantially(2)    Substantially all of these securities are economically hedged with equity derivatives.

EQUITY METHODOur equity(3)    In second quarter 2021, we elected to change our accounting method investments consist of tax credit and private equity investments, the majority of which are ourfor low-income housing tax credit (LIHTC)investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
(4)    Substantially all relates to investments in Federal Reserve Bank stock at both June 30, 2021, and December 31, 2020.
(5)    Represents nonmarketable equity securities accounted for under the measurement alternative, which were predominantly securities associated with our affiliated venture capital business.
Low-Income Housing Tax Credit Investments
We invest in affordable housing projects that qualify for the LIHTC,low-income housing tax credit (LIHTC), which are designed to promote private development of low-income housing. These investments typically generate a return mostly through the realization of federal tax creditcredits and other tax benefits. InTable 6.2 summarizes the second quarteramortization of the investments and first half of 2020, we recognized pre-tax losses of $340 millionthe related tax credits and $679 million, respectively, related to our LIHTC investments, compared with $298 million and $571 million, respectively, for the same periods a year ago. These losses wereother tax benefits that are recognized in other noninterestincome tax expense/(benefit) on our consolidated statement of income. We also recognized total tax benefits of $401 million and $799 million in the second quarter and first half of 2020, respectively, which included tax credits recorded to income taxes of $317 million and $631 million for the same periods, respectively. In the second quarter and first half of 2019, total tax benefits were $376 million and $746 million, respectively, which included tax credits of $303 million and $605 million for the same periods, respectively. We are
periodically required to provide additional financial support during the investment period. A liability is recognized for unfunded commitments that are both legally binding and probable of funding. These commitments are predominantly funded within three years of initial investment. Our liability for these unfunded commitments was $4.2 billion at both June 30, 2020,2021, and $4.3 billion at December 31, 2019.2020. This liability for unfunded commitments is included in long-term debt.

OTHERThe remaining portion ofdebt on our nonmarketable equity securities portfolio consists of securities accounted for using the cost or measurement alternative.consolidated balance sheet.

Table 6.2: LIHTC Investments (1)
Quarter ended June 30,Six months ended June 30,
(in millions)2021202020212020
Proportional amortization of investments$382 352 764 703 
Tax credits and other tax benefits(431)(401)(875)(797)
Net expense/(benefit) recognized within income tax expense$(49)(49)(111)(94)
(1)Excludes the impact of the estimated annual effective income tax rate applied to each period.
Wells Fargo & Company97

Note 6: Equity Securities (continued)

Realized Gains and Losses Not Held for Trading
Table 8.26.3 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 fromon trading activities.


and securities.
Table 8.2:6.3: Net Gains (Losses) from Equity Securities Not Held for Trading
Quarter ended June 30,Six months ended June 30,
(in millions)2021202020212020
Net gains (losses) from equity securities carried at fair value:
Marketable equity securities$74 394 $134 (409)
Nonmarketable equity securities893 1,424 535 320 
Total equity securities carried at fair value967 1,818 669 (89)
Net gains (losses) from nonmarketable equity securities not carried at fair value (1):
Impairment write-downs(42)(106)(57)(1,041)
Net unrealized gains related to measurement alternative observable transactions2,037 24 2,262 246 
Net realized gains on sale496 199 551 199 
Total nonmarketable equity securities not carried at fair value2,491 117 2,756 (596)
Net losses from economic hedge derivatives (2)(762)(1,402)(337)(183)
Total net gains (losses) from equity securities not held for trading$2,696 533 $3,088 (868)
(1)Includes impairment write-downs and net realized gains on sale related to private equity and venture capital investments in consolidated portfolio companies, which are not reported in equity securities on our consolidated balance sheet.
(2)Includes net gains (losses) on derivatives not designated as hedging instruments.
 Quarter ended June 30,  Six months ended June 30, 
(in millions)2020
 2019
 2020
 2019
Net gains (losses) from equity securities carried at fair value:       
Marketable equity securities$394
 264
 $(409) 641
Nonmarketable equity securities1,424
 732
 320
 1,668
Total equity securities carried at fair value1,818
 996
 (89) 2,309
Net gains (losses) from nonmarketable equity securities not carried at fair value:       
Impairment write-downs(106) (31) (1,041) (67)
Net unrealized gains related to measurement alternative observable transactions24
 146
 246
 331
Net realized gains on sale199
 169
 199
 406
Total nonmarketable equity securities not carried at fair value117
 284
 (596) 670
Net gains (losses) from economic hedge derivatives (1)(1,402) (658) (183) (1,543)
Total net gains (losses) from equity securities not held for trading$533
 622
 $(868) 1,436
(1)Includes net gains (losses) on derivatives not designated as hedging instruments.
Measurement Alternative
Table 8.36.4 provides additional information about the impairment write-downs and observable price adjustments related to
nonmarketable equity securities accounted for under the measurement alternative. Gains and losses related to these adjustments are also included in Table 8.2.6.3.
Table 8.3:6.4: Net Gains (Losses) from Measurement Alternative Equity Securities
Quarter ended June 30,  Six months ended June 30, Quarter ended June 30,Six months ended June 30,
(in millions)2020
 2019
 2020
 2019
(in millions)2021202020212020
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$24
 157
 $246
 342
Gross unrealized gains due to observable price changes$2,037 24 $2,262 246 
Gross unrealized losses due to observable price changes—
 (11) —
 (11)
Impairment write-downs(58) (11) (412) (33)Impairment write-downs(38)(58)(50)(412)
Realized net gains from sale11
 102
 13
 125
Realized net gains from sale195 11 195 13 
Total net gains (losses) recognized during the period$(23) 237
 $(153) 423
Total net gains recognized during the periodTotal net gains recognized during the period$2,194 $(23)$2,407 (153)
Table 8.46.5 presents cumulative carrying value adjustments to nonmarketable equity securities accounted for under the measurement alternative that were still held at the end of each reporting period presented.

Table 8.4:6.5: Measurement Alternative Cumulative Gains (Losses)
(in millions)Jun 30,
2021		Dec 31,
2020
Cumulative gains (losses):
Gross unrealized gains due to observable price changes$4,577 2,356 
Gross unrealized losses due to observable price changes(25)(25)
Impairment write-downs(1,008)(969)
(in millions)Jun 30,
2020
 Dec 31,
2019
Cumulative gains (losses):   
Gross unrealized gains due to observable price changes$1,109
 973
Gross unrealized losses due to observable price changes(43) (42)
Impairment write-downs(522) (134)



98Wells Fargo & Company

Note 9:7: Other Assets
Table 9.17.1 presents the components of other assets.
Table 9.1:7.1: Other Assets
(in millions)Jun 30, 2021Dec 31, 2020
Corporate/bank-owned life insurance$20,488 20,380 
Accounts receivable24,372 38,116 
Interest receivable:
AFS and HTM debt securities1,366 1,368 
Loans2,224 2,838 
Trading and other482 415 
Customer relationship and other amortized intangibles287 328 
Foreclosed assets:
Residential real estate49 73 
Other80 86 
Operating lease assets (lessor)6,773 7,391 
Operating lease ROU assets (lessee)4,053 4,306 
Due from customers on acceptances144 268 
Other12,135 11,768 
Total other assets$72,453 87,337 
(in millions)Jun 30,
2020
 Dec 31,
2019
Corporate/bank-owned life insurance$20,227
 20,070
Accounts receivable (1)31,794
 29,137
Interest receivable:   
AFS and HTM debt securities1,506
 1,729
Loans3,046
 3,099
Trading and other492
 758
Customer relationship and other amortized intangibles375
 423
Foreclosed assets:   
Residential real estate:   
Government insured/guaranteed (1)31
 50
Non-government insured/guaranteed107
 172
Other57
 81
Operating lease assets (lessor)7,930
 8,221
Operating lease ROU assets (lessee)4,548
 4,724
Due from customers on acceptances173
 253
Other15,325
 10,200
Total other assets$85,611
 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 & Company2019 Form 10-K.
99




Note 10:8: Securitizations and Variable Interest Entities
Involvement with Special PurposeVariable 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 involvementconsolidated balance sheet to a VIE in connection with SPEs, see Note 10 (Securitizationsa securitization, we typically receive cash and Variable Interest Entities)sometimes other interests in our 2019 Form 10-K.
Table 10.1 provides the classifications ofVIE as proceeds for the assets we transfer. In certain transactions with VIEs, we may retain the right to service the transferred assets and liabilities inrepurchase 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.
Table 10.1:Balance Sheet Transactions with VIEs
(in millions)
VIEs that we
do not
consolidate

 
VIEs
that we
consolidate

Transfers that
we account
for as secured
borrowings
  Total
June 30, 2020     
Cash and due from banks$—
 26
 —
 26
Interest-earning deposits with banks—
 —
 —
 —
Debt securities (1):       
Trading debt securities1,670
 257
 —
 1,927
Available-for-sale debt securities1,554
 298
 —
 1,852
Held-to-maturity debt securities1,156
 —
 —
 1,156
Loans1,890
 11,579
 74
 13,543
Mortgage servicing rights7,499
 —
 —
 7,499
Derivative assets269
 1
 —
 270
Equity securities11,351
 71
 —
 11,422
Other assets974
 215
 —
 1,189
Total assets26,363
 12,447
 74
 38,884
Short-term borrowings—
 501
 —
 501
Derivative liabilities2
 1
 —
 3
Accrued expenses and other liabilities  
239
 212
 —
 451
Long-term debt  
4,201
 225
 73
 4,499
Total liabilities4,442
 939
 73
 5,454
Noncontrolling interests—
 36
 —
 36
Net assets$21,921
 11,472
 1
 33,394
December 31, 2019       
Cash and due from banks$—
 16
 —
 16
Interest-earning deposits with banks—
 284
 —
 284
Debt securities (1):       
Trading debt securities792
 339
 —
 1,131
Available-for-sale debt securities1,696
 201
 —
 1,897
Held-to-maturity debt securities791
 —
 —
 791
Loans2,127
 13,170
 80
 15,377
Mortgage servicing rights11,884
 —
 —
 11,884
Derivative assets142
 1
 —
 143
Equity securities11,401
 118
 —
 11,519
Other assets1,268
 239
 —
 1,507
Total assets30,101
 14,368
 80
 44,549
Short-term borrowings—
 401
 —
 401
Derivative liabilities1
 3
 —
 4
Accrued expenses and other liabilities189
 235
 —
 424
Long-term debt4,817
 587
 79
 5,483
Total liabilities5,007
 1,226
 79
 6,312
Noncontrolling interests—
 43
 —
 43
Net assets$25,094
 13,099
 1
 38,194
(1)Excludes certain debt securities related to loans serviced for the Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and Government National Mortgage Association (GNMA).
Transactions with Unconsolidated VIEs
Our transactions with unconsolidated VIEs include predominantly securitizations of residential and commercial mortgage loans, and investments in tax credit structures. Wesecuritization 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.
Note 10: Securitizations and Variable Interest Entities (VIEs;continued)

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).
Table 10.2:•Unconsolidated VIEsacting 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

June 30, 2020           
Residential mortgage loan securitizations:           
Conforming (2)$1,042,774
 1,884
 7,291
 —
 (248) 8,927
Other/nonconforming5,184
 1
 34
 —
 —
 35
Commercial mortgage loan securitizations (2)175,912
 2,484
 1,148
 195
 (33) 3,794
Tax credit structures38,839
 13,037
 —
 —
 (4,159) 8,878
Other asset-based finance structures1,277
 167
 —
 72
 —
 239
Other1,146
 48
 —
 —
 —
 48
Total$1,265,132
 17,621
 8,473
 267
 (4,440) 21,921
   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)  $1,853
 7,291
 —
 1,335
 10,479
Other/nonconforming  1
 34
 —
 —
 35
Commercial mortgage loan securitizations (2)  2,473
 1,148
 195
 12,108
 15,924
Tax credit structures  13,037
 —
 —
 1,327
 14,364
Other asset-based finance structures  167
 —
 76
 71
 314
Other  48
 —
 —
 157
 205
Total  $17,579
 8,473
 271
 14,998
 41,321
            
   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/nonconforming5,178
 6
 152
 —
 —
 158
Commercial mortgage loan securitizations (2)169,736
 2,239
 1,069
 80
 (43) 3,345
Tax credit structures39,091
 12,826
 —
 —
 (4,260) 8,566
Other asset-based finance structures1,355
 157
 —
 61
 (20) 198
Other1,167
 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)  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.
(1)
Includes total equity interests of $11.4 billion at both June 30, 2020, and December 31, 2019. Also includes debt interests in the form of both loans and securities. Excludes certain debt securities held related to loans serviced for FNMA, FHLMC and GNMA.

(2)
Carrying values include assets and related liabilities of $42 million and $556 million at June 30, 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 residential and multifamily loan securitizations. These amounts are excluded from maximum exposure to loss as we are not obligated to exercise the options.
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 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. We repurchased loans of $1.0 billion and $2.9 billion, during the second quarter and first half of 2021, respectively, and $3.6 billion and $5.1 billion during the second quarter and first half of 2020, respectively, which predominantly represented repurchases of government insured loans. We recorded assets and related liabilities of $128 million and $176 million at June 30, 2021, and December 31, 2020, respectively, where we did not exercise our option to repurchase eligible loans.
Upon transfers of loans, we also provide indemnification for losses incurred due to material breaches of contractual representations and warranties, as well as other recourse arrangements. At June 30, 2021, and December 31, 2020, our liability associated with these provisions was $201 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 salesright to service the loans and may continue to hold other beneficial interests in
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.

the transferred financial assets. WHOLE LOAN SALE TRANSACTIONS We may also provide liquiditysell whole loans to investorsVIEs where we have continuing involvement in the beneficial interests and credit enhancements. Throughform of financing. We account for these transfers as sales, and do not consolidate the VIEs as we may be exposeddo not have the power to liability under limited amountsdirect the most significant activities of recourse as well as standard representations and warranties we make to purchasers and issuers.the VIEs.

Table 10.38.1 presents information about transfers of assets during the period 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 related to various representations and warranties for the loans transferred. Each of these interests are initially measured at fair value. Servicing rights are classified as Level 3 measurements, and generally securities are initially classified as Level 2.
Sales with continuing involvement include securitizations of conforming residential mortgages that are sold to the government-sponsored entities (GSEs) or GNMA.loans. Substantially all transfers were related to these entitiesresidential mortgage securitizations with the GSEs or GNMA and resulted in no gain or loss because the loans were already measured at fair value on a recurring basis. Each of these interests are initially measured at fair value.
100Wells Fargo & Company

Servicing rights are classified as Level 3 measurements, and generally securities are classified as Level 2.
Table 10.3:8.1: Transfers Withwith Continuing Involvement
20212020
(in millions)Residential mortgagesCommercial mortgagesResidential mortgagesCommercial mortgages
Quarter ended June 30,
Assets sold$45,903 5,173 43,602 2,505 
Proceeds from transfer (1)46,230 5,227 43,605 2,569 
Net gains (losses) on sale327 54 3 64 
Continuing involvement (2):
Servicing rights recognized$487 24 443 48 
Securities recognized (3)6,171 39 590 12 
Loans recognized0 0 0 0 
Six months ended June 30,
Asset balances sold$86,489 8,364 81,987 5,233 
Proceeds from transfer (1)86,921 8,509 82,025 5,366 
Net gains (losses) on sale432 145 38 133 
Continuing involvement (2):
Servicing rights recognized$894 71 889 82 
Securities recognized (3)16,394 68 590 74 
Loans recognized926 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 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 $11.2 billion and $18.0 billion during the second quarter and first half of 2021, respectively, and $9.4 billion and $17.1 billion during the second quarter and first half of 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. We received cash flows of $3.0 billion and $3.1 billion during the second quarter and first half of 2021, respectively, and $44 million and $117 million during the second quarter and first half of 2020, respectively, related to principal and interest payments on these securities and loans.
(in millions)  2020
   2019
Quarter ended June 30,Residential mortgages
 Commercial mortgages
 Residential mortgages
 Commercial mortgages
Net gains (losses) on sale$—
 64
 46
 74
Asset balances sold63,584
 2,505
 36,672
 3,358
Servicing rights recognized443
 48
 387
 33
Securities recognized (1)(263) 12
 2,482
 —
Liability for repurchase losses recognized4
 —
 5
 —
Six months ended June 30,       
Net gains (losses) on sale$52
 133
 60
 121
Asset balances sold111,441
 5,233
 70,775
 6,060
Servicing rights recognized889
 82
 707
 59
Securities recognized (1)2,050
 74
 3,394
 —
Liability for repurchase losses recognized7
 —
 8
 —
(1)Includes securities retained upon initial transfer and subsequent sales during the periods presented, which may result in a net reduction of securities recognized.
Table 10.48.2 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
20212020
Quarter ended June 30,
Prepayment speed (1)13.4 %15.0 
Discount rate6.1 7.0 
Cost to service ($ per loan) (2)$91 97 
Six months ended June 30,
Prepayment speed (1)13.8 %14.0 
Discount rate6.0 6.8 
Cost to service ($ per loan) (2)$87 94 
 
Residential mortgage
servicing rights
 
 2020
 2019
Quarter ended June 30,   
Prepayment speed (1)15.0% 13.5
Discount rate7.0
 7.5
Cost to service ($ per loan) (2)$97
 121
Six months ended June 30,   
Prepayment speed (1)14.0% 13.5
Discount rate6.8
 7.7
Cost to service ($ per loan) (2)$94
 109
(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 paiddrivers 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 optionunreimbursed foreclosure costs, which can vary period to purchase out of GNMA pools. These loans are insured by the FHA or guaranteed by the VA.
Note 10: Securitizations and Variable Interest Entities (continued)

Table 10.5:Cash Inflows (Outflows) From Sales and Securitization Activity
 Mortgage loans 
(in millions)2020
 2019
Quarter ended June 30,   
Proceeds from securitizations and whole loan sales$65,009
 39,697
Fees from servicing rights retained663
 786
Cash flows from other interests held192
 133
Repurchases of assets/loss reimbursements:   
Non-agency securitizations and whole loan transactions(1) (1)
Government insured loans(3,594) (1,246)
Agency securitizations(35) (27)
Servicing advances, net of recoveries (1)(93) 54
Six months ended June 30,   
Proceeds from securitizations and whole loan sales$115,238
 76,204
Fees from servicing rights retained1,419
 1,566
Cash flows from other interests held359
 244
Repurchases of assets/loss reimbursements:   
Non-agency securitizations and whole loan transactions(1) (1)
Government insured loans(5,034) (3,188)
Agency securitizations(61) (44)
Servicing advances, net of recoveries (1)(60) 93
(1)Cash flows from servicing advances includes principal and interest payments to investors required by servicing agreements.

Retained Interests from Unconsolidated VIEs
Table 10.6 provides key economicperiod due to changes in model assumptions and the sensitivitymix of the current fair value of residential MSRs and other interests held relatedmodified 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 the second quarter and first half of 2021, we sold $3.9 billion and $9.5 billion of student loans, servicing-released, respectively. For the same periods, we received $4.0 billion and $9.8 billion in proceeds from the sales, respectively, and recognized $147 million and $355 million of gains, respectively, which are included in other noninterest income on our consolidated statement of income. In connection with the sales, we provided $1.6 billion and $3.8 billion of collateralized loan financing to a third-party sponsored VIE in the second quarter and first half of 2021, respectively. The loans are measured at amortized cost and are 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.

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. Residentialthat 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 throughby the GSEs or GNMA, are excluded
fromGNMA. 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 includedshare in the table. Subordinateddecision-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:Retained Interests from Unconsolidated VIEs
Wells Fargo & Company101
   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 June 30, 2020$6,819
 982
 273
Expected weighted-average life (in years)3.9
 7.0
 6.6
Key economic assumptions:     
Prepayment speed assumption18.5%    
Decrease in fair value from:     
10% adverse change$470
    
25% adverse change1,089
    
Discount rate assumption6.8% 5.4
 1.8
Decrease in fair value from:     
100 basis point increase$255
 57
 15
200 basis point increase490
 109
 30
Cost to service assumption ($ per loan)152
    
Decrease in fair value from:     
10% adverse change234
    
25% adverse change583
    
Credit loss assumption  4.5% —
Decrease in fair value from:     
10% higher losses  $36
 —
25% higher losses  40
 —
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 assumption11.9%    
Decrease in fair value from:     
10% adverse change$537
    
25% adverse change1,261
    
Discount rate assumption7.2% 4.0
 2.9
Decrease in fair value from:     
100 basis point increase$464
 53
 16
200 basis point increase889
 103
 32
Cost to service assumption ($ per loan)102
    
Decrease in fair value from:     
10% adverse change253
    
25% adverse change632
    
Credit loss assumption  3.1% —
Decrease in fair value from:     
10% higher losses  $1
 —
25% higher losses  4
 —

In addition to residential MSRs included in the previous table, we have a small portfolio of commercial MSRs, which are carried at the lower of cost or fair value (LOCOM), with a fair value of
$1.4 billion and $1.9 billion at June 30, 2020, and December 31, 2019, respectively. Prepayment assumptions do not significantly impact values of commercial MSRs and commercial mortgage
Note 10:8: Securitizations and Variable Interest Entities  (continued)(continued)

Table 8.3:Transfers to Resecuritization VIEs
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 borne 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 of our commercial MSRs to a hypothetical immediate adverse 25% change in the assumption about interest earned on deposit balances at June 30, 2020, and December 31, 2019, would result in a decrease in fair value of $94 million and $205 million, respectively. See Note 11 (Mortgage Banking Activities) for further information on our commercial MSRs.
(in millions)
20212020
Quarter ended June 30,
Assets sold$7,873 19,982 
Securities recognized(99)153 
Six months ended June 30,
Assets sold$25,302 29,454 
Securities recognized915 815 
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 independentlyTable 8.4:Resecuritization VIEs
(in millions)Jun 30, 2021Dec 31, 2020
Total VIE assets$125,543 130,446 
Carrying value of securities1,137 1,461 
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 10.78.5 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 onlygenerally 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 loansDelinquent loans and foreclosed assets (1)Six months ended June 30,
(in millions)Jun 30, 2021Dec 31, 2020Jun 30, 2021Dec 31, 202020212020
Commercial$116,704 114,134 2,363 2,217 122 83 
Residential738,698 818,886 20,869 29,962 12 59 
Total off-balance sheet sold or securitized loans (3)$855,402 933,020 23,232 32,179 134 142 
         Net charge-offs (2) 
 Total loans  
Delinquent loans
and foreclosed assets (1)
  Six months ended Jun 30, 
(in millions)Jun 30, 2020
 Dec 31, 2019
 Jun 30, 2020
 Dec 31, 2019
 2020
 2019
Commercial:           
Real estate mortgage$114,057
 112,507
 791
 776
 83
 89
Total commercial114,057
 112,507
 791
 776
 83
 89
Consumer:           
Real estate 1-4 family first mortgage942,481
 1,008,446
 53,282
 6,664
 59
 110
Real estate 1-4 family junior lien mortgage11
 13
 2
 2
 —
 —
Total consumer942,492
 1,008,459
 53,284
 6,666
 59
 110
Total off-balance sheet sold or securitized loans (3)$1,056,549
 1,120,966
 54,075
 7,442
 142
 199
(1)Includes $203 million and $394 million of commercial foreclosed assets and $163 million and $204 million of residential foreclosed assets at June 30, 2021, and December 31, 2020, respectively.
(1)
Includes $319
(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 June 30, 2021, and December 31, 2020, the table includes total loans of $784.3 billion and $864.8 billion, delinquent loans of $19.8 billion and $28.5 billion, and foreclosed assets of $124 million and $152 million, and $492 million of commercial foreclosed assets and $294 million and $356 million of consumer foreclosed assets at June 30, 2020, and December 31, 2019, respectively.
(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 June 30, 2020, and December 31, 2019, the table includes total loans of $1.0 trillion at both dates, delinquent loans of $51.3 billion and $5.2 billion, respectively, and foreclosed assets of $224 million and $251 million, respectively, for FNMA, FHLMC and GNMA.

Transactions with Unconsolidated VIEs
MORTGAGE LOAN SECURITIZATIONS Table 8.6 includes nonconforming mortgage loan securitizations where we originate and transfer the loans to the unconsolidated securitization VIEs that we sponsor. For additional information about these VIEs, see the “Loan Sales and Securitization Activity” section within this Note. Nonconforming mortgage loan securitizations also include commercial mortgage loan securitizations sponsored by third parties where we did not originate or transfer the loans but serve as master servicer and invest in securities that could be potentially significant to the VIE.
Conforming loan securitization and resecuritization transactions involving the GSEs and GNMA are excluded from Table 8.6 because we are not the sponsor or we do not have power over the activities most significant to the VIEs. Additionally, due to the nature of the guarantees provided by the GSEs and the FHA and VA, our credit risk associated with these VIEs is limited. For additional information about conforming mortgage loan securitizations and resecuritizations, see the “Loan Sales and Securitization Activity” and "Resecuritization Activities" sections within this Note.

TAX CREDIT STRUCTURESWe co-sponsor and make investments in affordable housing 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.
102Wells Fargo & Company

Table 8.6 provides a summary of our exposure to the unconsolidated VIEs described above, which includes investments in securities, loans, guarantees, liquidity agreements, commitments and certain derivatives. We exclude certain transactions with unconsolidated VIEs when our continuing involvement is temporary or administrative in nature or insignificant in size.
In Table 8.6, “Total VIE assets” represents the remaining principal balance of assets held by unconsolidated VIEs using the most current information available. 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 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 		LoansDebt
securities (1)		Equity securitiesAll other
assets (2)		Debt and other liabilitiesNet assets 
June 30, 2021
Nonconforming mortgage loan securitizations$134,023 0 2,401 0 663 0 3,064 
Tax credit structures41,058 1,875 0 11,448 0 (4,218)9,105 
Commercial real estate loans5,366 5,357 0 0 8 0 5,365 
Other6,541 1,888 0 57 52 (1)1,996 
Total$186,988 9,120 2,401 11,505 723 (4,219)19,530 
Maximum exposure to loss
LoansDebt
securities (1)		Equity securitiesAll other
assets (2)		Debt, guarantees,
and other commitments		Total exposure 
Nonconforming mortgage loan securitizations$0 2,401 0 663 31 3,095 
Tax credit structures1,875 0 11,448 0 3,023 16,346 
Commercial real estate loans5,357 0 0 8 712 6,077 
Other1,888 0 57 52 230 2,227 
Total$9,120 2,401 11,505 723 3,996 27,745 
Carrying value – asset (liability)

(in millions)
Total
VIE assets		LoansDebt
securities (1)		Equity
securities		All other
assets (2		Debt and other liabilitiesNet assets 
December 31, 2020
Nonconforming mortgage loan securitizations$127,717 0 2,303 0 606 0 2,909 
Tax credit structures (3)41,125 1,760 0 11,362 0 (4,202)8,920 
Commercial real estate loans0 0 0 0 0 0 0 
Other1,991 89 0 51 62 (1)201 
Total$170,833 1,849 2,303 11,413 668 (4,203)12,030 
Maximum exposure to loss
LoansDebt
securities (1)		Equity
securities		All other
assets (2)		Debt,
guarantees,
and other commitments		Total exposure
Nonconforming mortgage loan securitizations$0 2,303 0 607 34 2,944 
Tax credit structures (3)1,760 0 11,362 0 3,108 16,230 
Commercial real estate loans0 0 0 0 0 0 
Other89 0 51 62 230 432 
Total$1,849 2,303 11,413 669 3,372 19,606 
(1)Includes $317 million and $310 million of securities classified as trading at June 30, 2021, and December 31, 2020, respectively.
(2)All other assets includes mortgage servicing rights, derivative assets, and other assets (predominantly servicing advances).
(3)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).


Wells Fargo & Company103

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 Secured Borrowingsleases 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 10.88.7 presents a summary of financial assets and liabilities for asset transfers accounted for as secured borrowingsof our consolidated VIEs. The carrying value represents assets and involvements withliabilities 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 notional amount of the derivative is included in “Total VIE assets.”
On theour 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 		LoansDebt
securities (1)		All other
assets (2)		Long-term debtAll other liabilities (3)
June 30, 2021
Commercial and industrial loans and leases$6,981 3,623 0 238 0 (183)
Commercial real estate loans (4)0 0 0 0 0 0 
Other1,138 452 518 96 (178)(404)
Total consolidated VIEs$8,119 4,075 518 334 (178)(587)
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 
Other1,627 507 967 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
June 30, 2020         
Secured borrowings:         
Residential mortgage securitizations$74
 74
 (73) —
 1
Total secured borrowings74
 74
 (73) —
 1
Consolidated VIEs:         
Commercial and industrial loans and leases6,970
 5,838
 (210) (12) 5,616
Nonconforming residential mortgage loan securitizations652
 565
 (225) —
 340
Commercial real estate loans5,387
 5,387
 —
 —
 5,387
Municipal tender option bond securitizations501
 500
 (500) —
 —
Other157
 157
 (4) (24) 129
Total consolidated VIEs13,667
 12,447
 (939) (36) 11,472
Total secured borrowings and consolidated VIEs$13,741
 12,521
 (1,012) (36) 11,473
December 31, 2019         
Secured borrowings:         
Residential mortgage securitizations$81
 80
 (79) —
 1
Total secured borrowings81
 80
 (79) —
 1
Consolidated VIEs:         
Commercial and industrial loans and leases8,054
 8,042
 (529) (16) 7,497
Nonconforming residential mortgage loan securitizations935
 809
 (290) —
 519
Commercial real estate loans4,836
 4,836
 —
 —
 4,836
Municipal tender option bond securitizations401
 402
 (401) —
 1
Other279
 279
 (6) (27) 246
Total consolidated VIEs14,505
 14,368
 (1,226) (43) 13,099
Total secured borrowings and consolidated VIEs$14,586
 14,448
 (1,305) (43) 13,100
(1)Includes $117 million and $269 million of securities classified as trading at June 30, 2021, and December 31, 2020, respectively.

(2)All other assets includes cash and due from banks, Interest-earning deposits with banks, derivative assets, equity securities, and other assets.
(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 $692$381 million and $2.1 billion$704 million at June 30, 2020,2021, and December 31, 2019,2020, respectively. During firstIn second quarter 2020,2021, 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$332 million 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 0 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 $22 million and $33 millioninsignificant in the second quarter and first half of 2020, respectively, compared with $10 millionboth 2021 and $20 million for the same periods a year ago.
2020.
Note 11: Mortgage Banking Activities (continued)

104Wells 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 $1.5 billion and $1.4 billion at June 30, 2021, and June 30, 2020, respectively. Table 11.19.1 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 June 30,Six months ended June 30,
(in millions)2021202020212020
Fair value, beginning of period$7,536 8,126 6,125 11,517 
Servicing from securitizations or asset transfers (1)485 462 891 923 
Sales and other (2)(7)(1)(8)(32)
Net additions478 461 883 891 
Changes in fair value:
Due to valuation inputs or assumptions:
Mortgage interest rates (3)(529)(600)1,101 (3,622)
Servicing and foreclosure costs (4)0 (349)9 (422)
Discount rates160 0 207 27 
Prepayment estimates and other (5)(440)(182)(535)(371)
Net changes in valuation inputs or assumptions(809)(1,131)782 (4,388)
 Changes due to collection/realization of expected cash flows (6)(488)(637)(1,073)(1,201)
Total changes in fair value(1,297)(1,768)(291)(5,589)
Fair value, end of period$6,717 6,819 6,717 6,819 
(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 June 30,  Six months ended June 30, 
(in millions)2020
 2019
 2020
 2019
Fair value, beginning of period$8,126
 13,336
 $11,517
 14,649
Servicing from securitizations or asset transfers (1)462
 400
 923
 741
Sales and other (2)(1) (1) (32) (282)
Net additions461
 399
 891
 459
Changes in fair value:       
Due to valuation inputs or assumptions:       
Mortgage interest rates (3)(600) (1,153) (3,622) (2,093)
Servicing and foreclosure costs (4)(349) (22) (422) (10)
Discount rates—
 (109) 27
 (9)
Prepayment estimates and other (5)(182) 206
 (371) 143
Net changes in valuation inputs or assumptions(1,131) (1,078) (4,388) (1,969)
Changes due to collection/realization of expected cash flows (6)(637) (561) (1,201) (1,043)
Total changes in fair value(1,768) (1,639) (5,589) (3,012)
Fair value, end of period$6,819
 12,096
 $6,819
 12,096
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)Jun 30, 2021Dec 31, 2020
Fair value of interests held$6,717 6,125 
Expected weighted-average life (in years)4.23.7
Key economic assumptions:
Prepayment speed assumption17.2 %19.9 
Impact on fair value from 10% adverse change$417 434 
Impact on fair value from 25% adverse change967 1,002 
Discount rate assumption5.4 %5.8 
Impact on fair value from 100 basis point increase$274 229 
Impact on fair value from 200 basis point increase525 440 
Cost to service assumption ($ per loan)111 130 
Impact on fair value from 10% adverse change171 181 
Impact on fair value from 25% adverse change427 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 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.Wells Fargo & Company105
(2)Includes sales and transfers of MSRs, which can result in an increase in MSRs if related to portfolios with servicing liabilities.
(3)Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates.
(4)Includes costs to service and unreimbursed foreclosure costs.
(5)Represents other changes in valuation model inputs or assumptions including prepayment speed estimation changes that are independent of mortgage interest rate changes.
(6)Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.
Table 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 June 30,  Six months ended June 30, 
(in millions)2020
 2019
 2020
 2019
Balance, beginning of period$1,406
 1,427
 $1,430
 1,443
Purchases7
 16
 15
 40
Servicing from securitizations or asset transfers48
 33
 82
 59
Amortization (1)(100) (69) (166) (135)
Balance, end of period$1,361
 1,407
 $1,361
 1,407
Fair value of amortized MSRs:       
Beginning of period$1,490
 2,149
 $1,490
 2,288
End of period1,401
 1,897
 1,401
 1,897
(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 a $30 million impairment and associated valuation allowance recorded in the second quarter and first half of 2020 on the commercial amortized MSRs.


We present the components of our managed servicing portfolio in Table 11.39.3 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)Jun 30, 2021Dec 31, 2020
Residential mortgage servicing:
Serviced and subserviced for others$771 859 
Owned loans serviced284 323 
Total residential servicing1,055 1,182 
Commercial mortgage servicing:
Serviced and subserviced for others584 583 
Owned loans serviced123 123 
Total commercial servicing707 706 
Total managed servicing portfolio$1,762 1,888 
Total serviced for others, excluding subserviced for others$1,344 1,431 
MSRs as a percentage of loans serviced for others0.60 %0.52 
Weighted average note rate (mortgage loans serviced for others)3.93 4.03 
(in billions)Jun 30, 2020
 Dec 31, 2019
Residential mortgage servicing:   
Serviced and subserviced for others$992
 1,065
Owned loans serviced335
 343
Total residential servicing1,327
 1,408
Commercial mortgage servicing:   
Serviced and subserviced for others578
 575
Owned loans serviced125
 124
Total commercial servicing703
 699
Total managed servicing portfolio$2,030
 2,107
Total serviced for others, excluding subserviced for others$1,558
 1,629
Ratio of MSRs to related loans serviced for others0.52% 0.79

At both June 30, 2020,2021, and December 31, 2019,2020, we had servicer advances, net of an allowance for uncollectible amounts, of $2.1 billion and $2.0 billion, respectively.$3.4 billion. 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 11.49.4 presents the components of mortgage banking noninterest income.

Table 11.4:9.4: Mortgage Banking Noninterest Income
Quarter ended June 30,Six months ended June 30,
(in millions)2021202020212020
Servicing fees:
Contractually specified servicing fees, late charges and ancillary fees$692 749 1,416 1,614 
Unreimbursed direct servicing costs (1)(90)(105)(214)(212)
Servicing fees602 644 1,202 1,402 
Amortization (2)(33)(100)(98)(166)
Changes due to collection/realization of expected cash flows (3)(A)(488)(637)(1,073)(1,201)
Net servicing fees81 (93)31 35 
Changes in fair value of MSRs due to valuation inputs or assumptions (4)(B)(809)(1,131)782 (4,388)
Net derivative gains (losses) from economic hedges (5)707 535 (933)3,935 
Market-related valuation changes to MSRs, net of hedge results(102)(596)(151)(453)
Total servicing income, net(21)(689)(120)(418)
Net gains on mortgage loan originations/sales (6)1,357 1,006 2,782 1,114 
Total mortgage banking noninterest income$1,336 317 2,662 696 
Total changes in fair value of MSRs carried at fair value(A)+(B)$(1,297)(1,768)(291)(5,589)
(1)Includes costs associated with foreclosures, unreimbursed interest advances to investors, and other interest costs.
(2)Includes a $37 million reversal of impairment recorded in the second quarter and first half of 2021, on the commercial amortized MSRs. Also, includes $30 million impairment recorded in the second quarter and first half of 2020, on the commercial amortized MSRs.
(3)Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.
(4)Refer to the analysis of changes in fair value MSRs presented in Table 9.1 in this Note for more detail.
(5)See Note 14 (Derivatives) for additional discussion and detail on economic hedges.
(6)Includes net gains (losses) of $(420) million and $845 million in the second quarter and first half of 2021, respectively, and $(393) million and $(1.3) billion in the second quarter and first half of 2020, respectively, related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments.

 Quarter ended June 30,  Six months ended June 30, 
(in millions) 2020
 2019
 2020
 2019
Servicing fees:        
Contractually specified servicing fees, late charges and ancillary fees $749
 914
 $1,614
 1,825
Unreimbursed direct servicing costs (1) (105) (84) (212) (154)
Servicing fees 644
 830
 1,402
 1,671
Amortization (2) (100) (69) (166) (135)
Changes due to collection/realization of expected cash flows (3)(A)(637) (561) (1,201) (1,043)
Net servicing fees (93) 200
 35
 493
Changes in fair value of MSRs due to valuation inputs or assumptions (4)(B)(1,131) (1,078) (4,388) (1,969)
Net derivative gains from economic hedges (5) 535
 1,155
 3,935
 2,117
Market-related valuation changes to MSRs, net of hedge results (596) 77
 (453) 148
Total servicing income (loss), net (689) 277
 (418) 641
Net gains on mortgage loan origination/sales activities (6) 1,006
 481
 1,114
 825
Total mortgage banking noninterest income $317
 758
 696
 1,466
Total changes in fair value of MSRs carried at fair value(A)+(B)$(1,768) (1,639) (5,589) (3,012)
(1)106Includes costs associated with foreclosures, unreimbursed interest advances to investors, and other interest costs.Wells Fargo & Company

(2)
Includes a $30 millionNote 10:  impairment and associated valuation allowance recorded in the second quarter and first half of 2020 on the commercial amortized MSRs.
(3)Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.
(4)Refer to the analysis of changes in fair value MSRs presented in Table 11.1 in this Note for more detail.
(5)See Note 15 (Derivatives) for additional discussion and detail on economic hedges.
(6)
Includes net losses of $393 million and $1.3 billion in the second quarter and first half of 2020, respectively, and $283 million and $434 million in the second quarter and first half of 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 12.110.1 presents the gross carrying value of intangible assets and accumulated amortization.
Table 12.1:10.1: Intangible Assets
June 30, 2021December 31, 2020
(in millions)Gross carrying valueAccumulated amortizationNet carrying valueGross carrying valueAccumulated amortization Net carrying value
Amortized intangible assets (1):
MSRs (2)$4,690 (3,398)1,292 4,612 (3,300)1,312 
Customer relationship and other intangibles879 (592)287 879 (551)328 
Total amortized intangible assets$5,569 (3,990)1,579 5,491 (3,851)1,640 
Unamortized intangible assets:
MSRs (carried at fair value)$6,717 6,125 
Goodwill26,194 26,392 
Trademark14 14 
 June 30, 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)$4,519
 (3,158) 1,361
 4,422
 (2,992) 1,430
Customer relationship and other intangibles879
 (504) 375
 947
 (524) 423
Total amortized intangible assets$5,398
 (3,662) 1,736
 5,369
 (3,516) 1,853
Unamortized intangible assets:           
MSRs (carried at fair value) (2)$6,819
     11,517
    
Goodwill26,385
     26,390
    
Trademark14
     14
    
(1)Balances are excluded commencing in the period following full amortization.
(1)Balances are excluded commencing in the period following full amortization.
(2)
(2)Includes a $5 million and $37 million valuation allowance recorded for amortized MSRs at June 30, 2021, and December 31, 2020, respectively. See Note 9 (Mortgage Banking Activities) for additional information on MSRs.

$30 million impairment and associated valuation allowance recorded in the second quarter and first half of 2020 on the commercial amortized MSRs. See Note 11 (Mortgage Banking Activities) for additional information on MSRs.

Table 12.210.2 provides the current year and estimated future amortization expense for amortized intangible assets. We based our projections of amortization expense shown below on existing
asset balances at June 30, 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
Six months ended June 30, 2020 (actual) $166
 48
 214
Estimate for the remainder of 2020 $130
 47
 177
Estimate for year ended December 31,      
2021 235
 81
 316
2022 210
 68
 278
2023 182
 59
 241
2024 157
 48
 205
2025 132
 39
 171

(in millions)Amortized MSRs Customer relationship and other intangiblesTotal 
Six months ended June 30, 2021 (actual)$98 41 139 
Estimate for the remainder of 2021$127 40 167 
Estimate for year ended December 31,
2022232 68 300 
2023203 59 262 
2024177 48 225 
2025152 39 191 
2026117 32 149 
In the first half of 2021, we announced agreements to sell Wells Fargo Asset Management and Corporate Trust Services and transferred the associated goodwill from the Wealth and Investment Management operating segment and the Commercial Banking operating segment, respectively, to
Corporate. Also in the first half of 2021, we recognized goodwill write-downs related to sales of the student loan portfolio and our Canadian equipment finance business. Table 12.310.3 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)Consumer Banking and LendingCommercial BankingCorporate and Investment BankingWealth and Investment ManagementCorporateConsolidated Company
December 31, 2020$16,418 3,018 5,375 1,276 305 26,392 
Divestitures0 0 0 0 (201)(201)
Foreign currency translation0 3 0 0 0 3 
Transfers of goodwill0 (80)0 (932)1,012 0 
June 30, 2021$16,418 2,941 5,375 344 1,116 26,194 
(in millions)
Community
Banking

 
Wholesale
Banking

 Wealth and Investment Management
 
Consolidated
Company

December 31, 2018$16,685
 8,450
 1,283

26,418
Reclassification of goodwill held for sale to other assets—
 —
 (7) (7)
Foreign currency translation—
 4
 —
 4
June 30, 2019$16,685
 8,454
 1,276
 26,415
December 31, 2019$16,685
 8,429
 1,276
 26,390
Foreign currency translation—
 (5) —
 (5)
June 30, 2020$16,685
 8,424
 1,276
 26,385



Wells Fargo & Company107

Note 13:11:  Guarantees Pledged Assets and Collateral, and Other Commitments
Guarantees are contracts that contingently require us to make payments to a guaranteed party based on an event or a change in an underlying asset, liability, rate or index. Guarantees are generally in the form of standby and direct pay letters of credit,
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 13.111.1 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 lessExpires after one year through three yearsExpires after three years through five yearsExpires after five yearsTotal Non-investment grade
June 30, 2021
Standby letters of credit
$132 12,639 4,838 1,927 457 19,861 6,873 
Direct pay letters of credit10 1,927 2,544 368 43 4,882 1,140 
Written options (1)(548)12,943 6,278 723 58 20,002 13,666 
Loans and LHFS sold with recourse (2)30 89 826 3,010 9,323 13,248 11,216 
Exchange and clearing house guarantees0 0 0 0 5,243 5,243 0 
Other guarantees and indemnifications (3)1 629 3 0 239 871 570 
Total guarantees$(375)28,227 14,489 6,028 15,363 64,107 33,465 
December 31, 2020
Standby letters of credit$156 11,977 4,962 1,897 433 19,269 7,528 
Direct pay letters of credit18 2,256 2,746 531 39 5,572 1,102 
Written options (1)(538)12,735 7,972 889 58 21,654 13,394 
Loans and LHFS sold with recourse (2)33 177 819 1,870 9,723 12,589 10,332 
Exchange and clearing house guarantees0 0 0 0 5,510 5,510 0 
Other guarantees and indemnifications (3)0 734 1 1 1,414 2,150 590 
Total guarantees$(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

June 30, 2020             
Standby letters of credit$178
 12,171
 4,447
 2,051
 426
 19,095
 7,689
Direct pay letters of credit72
 1,846
 3,475
 971
 39
 6,331
 1,224
Written options (1)(49) 15,916
 10,481
 2,495
 357
 29,249
 19,223
Loans and MLHFS sold with recourse (2)31
 122
 722
 1,714
 9,957
 12,515
 10,363
Exchange and clearing house guarantees—
 —
 —
 —
 5,296
 5,296
 —
Other guarantees and indemnifications (3)1
 444
 1
 1
 1,389
 1,835
 426
Total guarantees$233
 30,499
 19,126
 7,232
 17,464
 74,321
 38,925
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.
(1)Written options, which are in the form
(2)Represents recourse provided, all to the GSEs, on loans sold under various programs and arrangements.
(3)Includes indemnifications provided to certain third-party clearing agents. Estimated maximum exposure to loss was $210 million and $1.4 billion with related collateral of $2.1 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.
(2)
Represent recourse provided, predominantly to the GSEs, on loans sold under various programs and arrangements.
(3)
Includes indemnifications provided to certain third-party clearing agents. Outstanding customer obligations under these arrangements were $77 million and $80 million with related collateral of $1.3 billion and $696 million at June 30, 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 13.111.1 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 the 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 forin 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 the sponsored merchant processing servicers. We generally have a low likelihood of loss sincein connection with our merchant processing services because most products and services are delivered when purchased and amounts are generally refunded when items are returned to the merchant. In addition, we may reduce our risk in connection with these transactions by withholding future payments and requiring cash or other collateral. For the first half of 2020,2021, we processed card transaction volume of $608.3$790.2 billion as a merchant acquiring bank, and related losses, including those from our joint venture entity, were immaterial.
108Wells 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 $2.4$1.6 billion and $1.6$2.3 billion at June 30, 20202021, and December 31,
Note 13: Guarantees, Pledged Assets and Collateral, and Other Commitments (continued)

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 June 30, 2021, and December 31, 2020, we had commitments to purchase debt securities of $18 million and commitments to purchase equity securities of $3.2 billion.
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 $12.9 billion and $12.0 billion as of June 30, 2021, and December 31, 2020, respectively.
Given the nature of these commitments, they are excluded from Table 4.4 (Unfunded Credit Commitments) in Note 4 (Loans and Related Allowance for Credit Losses).
Wells Fargo & Company109


Note 12:  Pledged Assets and Collateral
Pledged Assets
Table 13.212.1 provides the carrying amount of on-balance sheet pledged assets and the fair value of other pledged collateral. Other pledged collateral is collateral we have received from third parties, have the right to repledge and is not recognized on our consolidated balance sheet.

TRADING RELATED ACTIVITYOur trading businesses may pledge debt and equity securities in connection with securities sold under agreements to repurchase (repurchase agreements) and securities lending arrangements. The collateral that we pledge related to our trading activities may include our own collateral as well as collateral that we have received from third parties and have the right to repledge. All of the collateral we pledge related to trading activity 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 FRBthe 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
(in millions)Jun 30,
2020
 Dec 31,
2019
Related to trading activities:   
Repledged third-party owned debt and equity securities$41,952
 60,083
Trading debt securities and other22,847
 51,083
Equity securities971
 1,379
Total pledged assets related to trading activities65,770
 112,545
Related to non-trading activities:   
Loans406,496
 406,106
Debt securities:   
Available-for-sale54,455
 61,126
Held-to-maturity2,826
 3,685
Mortgage loans held for sale181
 2,266
Total pledged assets related to non-trading activities463,958
 473,183
Related to VIEs:   
Consolidated VIE assets12,447
 14,368
VIEs accounted for as secured borrowings74
 80
Loans eligible for repurchase from GNMA securitizations54
 568
   Total pledged assets related to VIEs12,575
 15,016
Total pledged assets$542,303
 600,744


(in millions)Jun 30,
2021		Dec 31,
2020
Related to trading activities:
Repledged third-party owned debt and equity securities$37,134 44,765 
Trading debt securities and other18,362 19,572 
Equity securities704 470 
Total pledged assets related to trading activities56,200 64,807 
Related to non-trading activities:
Loans308,551 344,220 
Debt securities:
Available-for-sale59,512 57,289 
Held-to-maturity11,552 17,290 
Other financial assets531 230 
Total pledged assets related to non-trading activities380,146 419,029 
Related to VIEs:
Consolidated VIE assets4,927 12,146 
Loans eligible for repurchase from GNMA securitizations130 179 
Total pledged assets related to VIEs5,057 12,325 
Total pledged assets$441,403 496,161 
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. 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 13.312.2 presents resale and repurchase agreements subject to master repurchase agreements (MRA) and securities borrowing and lending agreements subject to master securities lending agreements (MSLA). 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. MostSubstantially 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
110Wells Fargo & Company

the balance sheet. The following table includes the amount of collateral pledged or received related to exposures subject to enforceable MRAs or MSLAs. While these agreements

are typically over-collateralized, U.S. GAAP requires disclosure in this table to limit the reported amount of such collateral to the
amount of the related recognized asset or liability for each counterparty.
In addition to the amounts included in Table 13.3,12.2, we also have balance sheet netting related to derivatives that is disclosed in Note 1514 (Derivatives).
Table 13.3:12.2: Offsetting – Securities Financing Activities
(in millions)
Jun 30,
2021		Dec 31,
2020
Assets:
Resale and securities borrowing agreements
Gross amounts recognized$101,027 92,446 
Gross amounts offset in consolidated balance sheet (1)(13,845)(11,513)
Net amounts in consolidated balance sheet (2)87,182 80,933 
Collateral not recognized in consolidated balance sheet (3)(86,453)(80,158)
Net amount (4)$729 775 
Liabilities:
Repurchase and securities lending agreements
Gross amounts recognized$47,281 57,622 
Gross amounts offset in consolidated balance sheet (1)(13,844)(11,513)
Net amounts in consolidated balance sheet (5)33,437 46,109 
Collateral pledged but not netted in consolidated balance sheet (6)(33,177)(45,819)
Net amount (4)$260 290 
(in millions)Jun 30,
2020
 Dec 31,
2019
Assets:   
Resale and securities borrowing agreements   
Gross amounts recognized$110,900
 140,773
Gross amounts offset in consolidated balance sheet (1)(13,640) (19,180)
Net amounts in consolidated balance sheet (2)97,260
 121,593
Collateral not recognized in consolidated balance sheet (3)(96,541) (120,786)
Net amount (4)$719
 807
Liabilities:   
Repurchase and securities lending agreements   
Gross amounts recognized$63,028
 111,038
Gross amounts offset in consolidated balance sheet (1)(13,640) (19,180)
Net amounts in consolidated balance sheet (5)49,388
 91,858
Collateral pledged but not netted in consolidated balance sheet (6)(49,147) (91,709)
Net amount (4)$241
 149
(1)Represents recognized amount of resale and repurchase agreements with counterparties subject to enforceable MRAs that have been offset in the consolidated balance sheet.
(1)Represents recognized amount of resale and repurchase agreements with counterparties subject to enforceable MRAs that have been offset in the consolidated balance sheet.
(2)Includes $79.3 billion and $102.1 billion classified on our consolidated balance sheet in federal funds sold and securities purchased under resale agreements at June 30, 2020, and December 31, 2019, respectively. Also includes securities purchased under long-term resale agreements (generally one year or more) classified in loans, which totaled $18.0 billion and $19.5 billion, at June 30, 2020, and December 31, 2019, respectively.
(3)Represents the fair value of collateral we have received under enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized asset due from each counterparty. At June 30, 2020, and December 31, 2019, we have received total collateral with a fair value of $122.5 billion and $150.9 billion, respectively, all of which we have the right to sell or repledge. These amounts include securities we have sold or repledged to others with a fair value of $41.1 billion at June 30, 2020, and $59.1 billion at December 31, 2019.
(4)Represents the amount of our exposure (assets) or obligation (liabilities) that is not collateralized and/or is not subject to an enforceable MRA or MSLA.
(5)Amount is classified in short-term borrowings on our consolidated balance sheet.
(6)Represents the fair value of collateral we have pledged, related to enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized liability owed to each counterparty. At June 30, 2020, and December 31, 2019, we have pledged total collateral with a fair value of $64.3 billion and $113.3 billion, respectively, substantially all of which may be sold or repledged by the counterparty.
(2)Includes $70.1 billion and $65.6 billion classified on our consolidated balance sheet in federal funds sold and securities purchased under resale agreements at June 30, 2021, and December 31, 2020, respectively. Also includes securities purchased under long-term resale agreements (generally one year or more) classified in loans, which totaled $17.1 billion and $15.3 billion, at June 30, 2021, and December 31, 2020, respectively.
(3)Represents the fair value of collateral we have received under enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized asset due from each counterparty. At June 30, 2021, and December 31, 2020, we have received total collateral with a fair value of $118.9 billion and $108.5 billion, respectively, all of which we have the right to sell or repledge. These amounts include securities we have sold or repledged to others with a fair value of $34.5 billion and $36.1 billion at June 30, 2021, and December 31, 2020, respectively.
(4)Represents the amount of our exposure (assets) or obligation (liabilities) that is not collateralized and/or is not subject to an enforceable MRA or MSLA.
(5)Amount is classified in short-term borrowings on our consolidated balance sheet.
(6)Represents the fair value of collateral we have pledged, related to enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized liability owed to each counterparty. At June 30, 2021, and December 31, 2020, we have pledged total collateral with a fair value of $48.5 billion and $59.2 billion, respectively, substantially all of which may be sold or repledged by the counterparty.
REPURCHASE AND SECURITIES LENDING AGREEMENTS Securities sold under repurchase agreements and securities lending arrangements are effectively short-term collateralized borrowings. In these transactions, we receive cash in exchange for transferring securities as collateral and recognize an obligation to reacquire the securities for cash at the transaction’s maturity. These types of transactions create risks, including (1) the counterparty may fail to return the securities at maturity, (2) the fair value of the securities transferred may decline below the amount of our obligation to reacquire the securities, and therefore create an obligation for us to pledge additional amounts, and (3) the counterparty may accelerate the maturity on demand, requiring us to reacquire the security prior to contractual maturity. We attempt to mitigate these risks in various ways. Our collateral primarily consists of highly liquid securities. In addition, we underwrite and monitor the financial strength of our counterparties, monitor the fair value of collateral pledged relative to contractually required repurchase amounts, and monitor that our collateral is properly returned through the clearing and settlement process in advance of our cash repayment. Table 13.412.3 provides the gross amounts recognized on the consolidated balance sheet (before the effects of offsetting) of our liabilities for repurchase and securities lending agreements disaggregated by underlying collateral type.
Wells Fargo & Company111

Note 13: Guarantees,12:  Pledged Assets and Collateral and Other Commitments (continued)(continued)

Table 13.4:12.3: Gross Obligations by Underlying Collateral Type
(in millions)Jun 30,
2021		Dec 31,
2020
Repurchase agreements:
Securities of U.S. Treasury and federal agencies$19,730 22,922 
Securities of U.S. States and political subdivisions24 4 
Federal agency mortgage-backed securities8,029 15,353 
Non-agency mortgage-backed securities860 1,069 
Corporate debt securities10,047 9,944 
Asset-backed securities1,262 1,054 
Equity securities892 1,500 
Other783 336 
Total repurchases41,627 52,182 
Securities lending arrangements:
Securities of U.S. Treasury and federal agencies42 64 
Federal agency mortgage-backed securities31 23 
Corporate debt securities45 79 
Equity securities (1)5,422 5,189 
Other114 85 
Total securities lending5,654 5,440 
Total repurchases and securities lending$47,281 57,622 
(in millions) Jun 30,
2020
 Dec 31,
2019
Repurchase agreements:    
Securities of U.S. Treasury and federal agencies $33,757
 48,161
Securities of U.S. States and political subdivisions 54
 104
Federal agency mortgage-backed securities 9,751
 44,737
Non-agency mortgage-backed securities 1,103
 1,818
Corporate debt securities 9,273
 7,126
Asset-backed securities 1,008
 1,844
Equity securities 1,399
 1,674
Other 363
 705
Total repurchases 56,708
 106,169
Securities lending arrangements:    
Securities of U.S. Treasury and federal agencies 38
 163
Federal agency mortgage-backed securities 18
 —
Corporate debt securities 97
 223
Equity securities (1) 6,164
 4,481
Other 3
 2
Total securities lending 6,320
 4,869
Total repurchases and securities lending $63,028
 111,038
(1)Equity securities are generally exchange traded and represent collateral received from third parties that has been repledged. We received the collateral through either margin lending agreements or contemporaneous securities borrowing transactions with other counterparties.
(1)Equity securities are generally exchange traded and represent collateral received from third parties that has been repledged. We received the collateral through either margin lending agreements or contemporaneous securities borrowing transactions with other counterparties.
Table 13.512.4 provides the contractual maturities of our gross obligations under repurchase and securities lending agreements.
Table 13.5:12.4: Contractual Maturities of Gross Obligations
(in millions)Overnight/continuousUp to 30 days30-90 days>90 daysTotal gross obligation
June 30, 2021
Repurchase agreements$28,584 3,093 4,765 5,185 41,627 
Securities lending arrangements4,853 200 601 0 5,654 
Total repurchases and securities lending (1)$33,437 3,293 5,366 5,185 47,281 
December 31, 2020
Repurchase agreements$36,946 5,251 5,100 4,885 52,182 
Securities lending arrangements4,690 400 350 0 5,440 
Total repurchases and securities lending (1)$41,636 5,651 5,450 4,885 57,622 
(1)Securities lending is executed under agreements that allow either party to terminate the transaction without notice, while repurchase agreements have a term structure to them that technically matures at a point in time. The overnight/continuous repurchase agreements require election of both parties to roll the trade rather than the election to terminate the arrangement as in securities lending.
(in millions)Overnight/continuous
 Up to 30 days
 30-90 days
 >90 days
 Total gross obligation
June 30, 2020         
Repurchase agreements$44,823
 3,430
 4,970
 3,485
 56,708
Securities lending arrangements5,771
 —
 549
 —
 6,320
Total repurchases and securities lending (1)$50,594
 3,430
 5,519
 3,485
 63,028
December 31, 2019 
Repurchase agreements$79,793
 17,681
 4,825
 3,870
 106,169
Securities lending arrangements4,724
 —
 145
 —
 4,869
Total repurchases and securities lending (1)$84,517
 17,681
 4,970
 3,870
 111,038
(1)112Securities lending is executed under agreements that allow either party to terminate the transaction without notice, while repurchase agreements have a term structure to them that technically matures at a point in time. The overnight/continuous repurchase agreements require election of both parties to roll the trade rather than the election to terminate the arrangement as in securities lending.Wells Fargo & Company
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 June 30, 2020, and December 31, 2019, we had commitments to purchase debt securities of $18 million in both periods and commitments to purchase equity securities of $3.3 billion and $2.7 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 Other guarantees and indemnifications in
Table 13.1.
Also, we have commitments to purchase loans and securities under resale agreements from certain counterparties, including central clearing organizations. The amount of our unfunded contractual commitments was $14.1 billion and $7.5 billion as of June 30, 2020, and December 31, 2019, respectively.
Given the nature of these commitments, they are excluded from Table 6.4 (Unfunded Credit Commitments) in Note 6 (Loans and Related Allowance for Credit Losses).


Note 14:13:  Legal Actions
Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory, governmental, arbitration, and other proceedings or investigations concerning matters arising from the conduct of our business activities, and many of those proceedings and investigations expose Wells Fargo to potential financial loss. These proceedings and investigations include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate-related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.
Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant legal actions pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. We establish accruals for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. For such accruals, we record the amount we consider to be the best estimate within a range of potential losses that are both probable and estimable; however, if we cannot determine a best estimate, then we record the low end of the range of those potential losses. The actual costs of resolving legal actions may be substantially higher or lower than the amounts accrued for those actions.
ATM ACCESS FEE LITIGATIONIn October 2011, plaintiffs filed a putative class action, Mackmin, et al. v. Visa, Inc. et al., against Wells Fargo & Company, Wells Fargo Bank, N.A., Visa, MasterCard, and several other banks in the United States District Court for the District of Columbia. Plaintiffs allege that the Visa and MasterCard requirement that if an ATM operator charges an access fee on Visa and MasterCard transactions, then that fee cannot be greater than the access fee charged for transactions on other networks, violates antitrust rules. Plaintiffs seek treble damages, restitution, injunctive relief, and attorneys’ fees where available under federal and state law. Two other antitrust cases that make similar allegations were filed in the same court, but these cases did not name Wells Fargo as a defendant. On February 13, 2013, the district court granted defendants’ motions to dismiss the 3 actions. Plaintiffs appealed the dismissals and, on August 4, 2015, the United States Court of Appeals for the District of Columbia Circuit vacated the district court’s decisions and remanded the 3 cases to the district court for further proceedings. On June 28, 2016, the United States Supreme Court granted defendants’ petitions for writ of certiorari to review the decisions of the United States Court of Appeals for the District of Columbia. On November 17, 2016, the United States Supreme Court dismissed the petitions as improvidently granted, and the 3 cases returned to the district court for further proceedings. On March 18, 2020, theThe Company reached a settlement in principlehas entered into an agreement pursuant to which the Company will pay $20.8 million to resolve the cases, subject to final documentation of the settlement agreement.court approval.
AUTOMOBILE LENDING MATTERS On April 20, 2018, the Company entered into consent orders with the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB) to resolve, among other things, investigations by
the agencies into the Company’s compliance risk management program and its past practices involving certain automobile collateral protection insurance (CPI) policies and certain mortgage interest rate lock extensions. The consent orders require remediation to customers and the payment of a total of $1.0 billion in civil money penalties to the agencies. In July 2017, the Company announced a plan to remediate customers who may have been financially harmed due to issues related to automobile CPI policies purchased through a third-party vendor on their behalf. Multiple putative class action casesactions alleging, among other things, unfair and deceptive practices relating to these CPI policies, have beenwere filed against the Company and consolidated into 1 multi-district litigation in the United States District Court for the Central District of California. TheAs previously disclosed, the Company has reached an agreemententered into a settlement to resolve the multi-district litigation pursuant to which the Company has agreed to pay, consistent with its remediation obligations under the consent orders, approximately $609 million in remediation to customers with CPI policies placed between October 15, 2005, and September 30, 2016. The settlement amount is not incremental to the Company’s remediation obligations under the consent orders, but instead encompasses those obligations, including remediation payments to date. The settlement amount is subject to change as the Company finalizes its remediation activity under the consent orders. In addition, the Company has agreed to contribute $1 million to a common fund for the class. The district court granted final approval of the settlement on November 21, 2019. A putative class of shareholderslitigation. Shareholders also filed a putative securities fraud class action against the Company and its executive officers alleging material misstatements and omissions of CPI-related information in the Company’s public disclosures. In January 2020, the court dismissed this action as to all defendants except the Company and a former executive officer and limited the action to two alleged misstatements. In addition, the Company is subject to a class action lawsuit in the United States District Court for the Central District of California alleging that customers are entitled to refunds related to the unused portion of guaranteed automobile protection (GAP) waiver or insurance agreements between the customer and dealer and, by assignment, the lender. In June 2021, the court granted preliminary approval of an agreement pursuant to which the Company will pay $45 million and make certain changes to its GAP refund practices in order to settle the action. Allegations related to the CPI and GAP programs are among the subjects of a shareholder derivative lawsuitslawsuit pending in federal and state court inthe United States District Court for the Northern District of California. The court dismissed the state court action in September 2018, but plaintiffs filed an amended complaint in November 2018. The parties to the state court action have entered into an agreement to resolve the action pursuant to which the Company will pay plaintiffs’ attorneys’ fees and undertake certain business and governance practices. The state court granted final approval of the settlement on January 15, 2020, and a notice of appeal has been filed. These and other issues related to the origination, servicing, and collection of consumer automobileauto loans, including related insurance products, have also subjected the Company to formal or informal inquiries, investigations, or examinations from federal and state government agencies. In December 2018,agencies, including the CFPB. As previously disclosed, the Company entered into an agreement with all 50to resolve investigations by the state Attorneys Generalattorneys general.
COMMERCIAL LENDING SHAREHOLDER LITIGATION In October and November 2020, plaintiffs filed two putative securities fraud class actions in the United States District Court for the Northern District of California alleging that the Company and certain of its former executive officers made false and misleading statements or omissions regarding, among other things, the Company’s commercial lending underwriting practices, the credit quality of its commercial credit portfolios, and the Districtvalue of Columbia to resolve an investigation into the Company’s retail sales practices, CPIits commercial loans, collateralized loan obligations and GAP, and mortgage interest rate lock matters, pursuant to which the Company paid $575 million.commercial mortgage-backed securities.
Wells Fargo & Company113

Note 13:  Legal Actions (continued)
CONSENT ORDER DISCLOSURE LITIGATION Wells Fargo shareholders have brought a putative securities fraud class actionsaction in the
Note 14: Legal Actions (continued)

United States District CourtsCourt for the Northern District of California and the Southern District of New York alleging that the Company and certain of its current and former executive officers and directors made false or misleading statements regarding itsthe Company’s efforts to comply with the February 2018 consent order with the FRBFederal Reserve Board and the April 2018 consent orders with the CFPB and OCC. Allegations related to the Company’s efforts to comply with these three consent orders are also among the subjects of a shareholder derivative lawsuit pending in the United States District Court for the Northern District of California.
CONSUMER DEPOSIT ACCOUNT RELATED REGULATORY INVESTIGATIONINVESTIGATIONS The CFPB is conducting an investigation into whether customers were unduly harmed by the Company’s historical practices associated with the freezing (and, in many cases, closing) of consumer deposit accounts after the Company detected suspected fraudulent activity (by third parties or account holders) that affected those accounts.
CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY ACT/PAYCHECK PROTECTION PROGRAMPlaintiffs have filed putative class actions in various federal courts against the Company. The actions seek damages and injunctive relief related to the Company’s offering of Paycheck Protection Program (PPP) loans under the Coronavirus Aid, Relief, and Economic Security Act, as well as claims for fees by purported agents who allegedly assisted customers with preparing PPP loan applications submitted to the Company. The Company hasCFPB is also received formal and informal inquiries from federal and state governmental agencies regarding its offering of PPP loans.
FIDUCIARY AND CUSTODY ACCOUNT FEE CALCULATIONS Federal government agencies are conducting formal or informal inquiries, investigations, or examinations regarding fee calculations withininvestigating certain fiduciary and custody accounts in the Company’s investment and fiduciary services business, which is part of the wealth management business withinCompany's past disclosures to customers regarding the Wealth and Investment Management (WIM) operating segment. The Company has determined that there have been instancesminimum qualifying debit card usage required for customers to receive a waiver of incorrectmonthly service fees being applied toon certain assets and accounts, resulting in both overcharges and undercharges to customers.consumer deposit accounts.
FOREIGN EXCHANGE BUSINESS The United States Department of Justice (Department of Justice) is investigating certain activities in the Company’s foreign exchange business, including whether customers may have received pricing inconsistent with commitments made to those customers. Previous investigations by other federal government agencies have been resolved.
INTERCHANGE LITIGATION Plaintiffs representing a putative class of merchants have filed putative class actions, and individual merchants have filed individual actions, against Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A., and Wachovia Corporation regarding the interchange fees associated with Visa and MasterCard payment card transactions. Visa, MasterCard, and several other banks and bank holding companies are also named as defendants in these actions. These actions have been consolidated in the United States District Court for the Eastern District of New York. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard, and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012,
Visa, MasterCard, and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve the consolidated class action and reached a separate settlement in principle of the consolidated individual actions. The settlement payments to be made by all defendants in the consolidated class and individual actions totaled approximately $6.6 billion before reductions applicable to certain merchants opting out of the settlement. The class settlement also provided for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months. The district court granted final
approval of the settlement, which was appealed to the United States Court of Appeals for the Second Circuit by settlement objector merchants. Other merchants opted out of the settlement and are pursuing several individual actions. On June 30, 2016, the Second Circuit vacated the settlement agreement and reversed and remanded the consolidated action to the United States District Court for the Eastern District of New York for further proceedings. On November 23, 2016, prior class counsel filed a petition to the United States Supreme Court, seeking review of the reversal of the settlement by the Second Circuit, and the Supreme Court denied the petition on March 27, 2017. On November 30, 2016, the district court appointed lead class counsel for a damages class and an equitable relief class. The parties have entered into a settlement agreement to resolve the money damages class claims pursuant to which defendants will pay a total of approximately $6.2 billion, which includes approximately $5.3 billion of funds remaining from the 2012 settlement and $900 million in additional funding. The Company’s allocated responsibility for the additional funding is approximately $94.5 million. The court granted final approval of the settlement on December 13, 2019, which was appealed to the United States Court of Appeals for the Second Circuit by settlement objector merchants. Several of the opt-out and direct action litigations have been settled while others remain pending. Discovery is proceeding in the opt-out litigations and the equitable relief class case.
LOW INCOME HOUSING TAX CREDITS Federal government agencies have undertaken formal or informal inquiries or investigations regarding the manner in which the Company purchased, and negotiated the purchase of, certain federal low income housing tax credits in connection with the financing of low income housing developments.
MOBILE DEPOSIT PATENT LITIGATIONMORTGAGE LENDING MATTERS The Company is a defendant in 2 separate cases brought by United Services Automobile Association (USAA) in the United States District Court for the Eastern District of Texas alleging claims of patent infringement regarding mobile deposit capture technology patents held by USAA. Trial in the first case commenced on October 30, 2019, and resulted in a $200 million verdict against the Company. Trial in the second case commenced on January 6, 2020, and resulted in a $102.7 million verdict against the Company. The Company has filed post-trial motions to, among other things, vacate the verdicts, and USAA has filed post-trial motions seeking future royalty payments and damages for willful infringement.
MORTGAGE LOAN MODIFICATION LITIGATION Plaintiffs representing a putative class of mortgage borrowers have filed separate putative class actions, Hernandez v. Wells Fargo, et al., Coordes v. Wells Fargo, et al., Ryder v. Wells Fargo, Liguori v. Wells Fargo, and Dore v. Wells Fargo, against Wells Fargo Bank, N.A., in the United States District Court for the Northern District

of California, the United States District Court for the District of Washington, the United States District Court for the Southern District of Ohio, the United States District Court for the Southern District of New York, and the United States District Court for the Western District of Pennsylvania, respectively. Plaintiffs allege that Wells Fargo improperly denied mortgage loan modifications or repayment plans to customers in the foreclosure process due to the overstatement of foreclosure attorneys’ fees that were included for purposes of determining whether a customer in the foreclosure process qualified for a mortgage loan modification or repayment plan. The district court in the Hernandez case certified a nationwide breach of contract class for foreclosed borrowers and denied certification on claims pertaining to other impacted borrowers. In March 2020, the Company entered into an agreement pursuant to which the Company will paypaid $18.5 million to resolve the claims of the initial certified class in the Hernandez case.
MORTGAGE-RELATED REGULATORY INVESTIGATIONScase, which was approved by the district court in October 2020. The Federal and state government agencies, includingHernandez settlement has been reopened to include additional borrowers who the Department of Justice,Company determined should have been investigating or examining certain mortgage related activitiesincluded in the settlement class because the Company identified a population of Wells Fargo and predecessor institutions. Wells Fargo,additional borrowers during the relevant class period whose loans had not previously been reviewed for itself and for predecessor institutions, has responded, or continues to respond, to requests from these agencies seeking information regardinginclusion in the origination, underwriting, and securitizationoriginal population of residential mortgages, including sub-prime mortgages. These agencies have advanced theories of purported liability with respect to certain of these activities. Animpacted customers. In June 2021, the Company entered into an agreement pursuant to which the Company paid $2.09 billion, was reached in August 2018will pay an additional approximately $22 million to resolve the Department of Justice investigation, which related to certain 2005-2007 residential mortgage-backed securities activities.Hernandez case. In addition,July 2021, the Company reachedentered into an agreement within the Attorney General of the State of Illinois in November 2018Ryder case pursuant to which the Company paid $17will pay $12 million to cover other impacted borrowers who were not included in restitution to certain Illinois state pension fundsthe Hernandez case. The Dore and reached an agreement with the Attorney General of the State of Maryland in June 2020 pursuant to which the Company agreed to pay $20 million in restitution, in each case to resolve claims relating to certain residential mortgage-backed securities activities. Other financial institutionsCoordes cases have entered into similar settlements withbeen voluntarily dismissed. In addition, federal banking regulators and other government agencies have undertaken formal or informal
114Wells Fargo & Company

inquiries or investigations regarding these agencies, the nature of which related to the specific activities of those financial institutions, including the imposition of significant financial penalties and remedial actions.other mortgage servicing matters.

NOMURA/NATIXIS MORTGAGE-RELATED LITIGATION In August 2014 and August 2015, Nomura Credit & Capital Inc. (Nomura) and Natixis Real Estate Holdings, LLC (Natixis) filed a total of 7 third-party complaints against Wells Fargo Bank, N.A., in New York state court. In the underlying first-party actions, Nomura and Natixis have been sued for alleged breaches of representations and warranties made in connection with residential mortgage-backed securities sponsored by them. In the third-party actions, Nomura and Natixis allege that Wells Fargo, as master servicer, primary servicer or securities administrator, failed to notify Nomura and Natixis of their own breaches, failed to properly oversee the primary servicers, and failed to adhere to accepted servicing practices. Natixis additionally alleges that Wells Fargo failed to perform default oversight duties. Wells Fargo has asserted counterclaims alleging that Nomura and Natixis failed to provide Wells Fargo notice of their representation and warranty breaches.
OFAC RELATED INVESTIGATION The Company has self-identified an issue whereby certain foreign banks utilized a Wells Fargo software-based solution to conduct import/export trade-related financing transactions with countries and entities prohibited by
the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury. We do not believe any funds related to these transactions flowed through accounts at Wells Fargo as a result of the aforementioned conduct. The Company has made voluntary self-disclosures to OFAC and is cooperating with an inquiry from the Department of Justice.
ORDER OF POSTING LITIGATIONPlaintiffs filed a series of putative class actions against Wachovia Bank, N.A., and Wells Fargo Bank, N.A., as well as many other banks, challenging the “high to low” order in which the banks post debit card transactions to consumer deposit accounts. Most of these actions were consolidated in multi-district litigation proceedings (MDL proceedings) in the United States District Court for the Southern District of Florida. The court in the MDL proceedings has certified a class of putative plaintiffs, and Wells Fargo moved to compel arbitration of the claims of unnamed class members. The court denied the motions to compel arbitration in October 2016, and Wells Fargo appealed this decision to the United States Court of Appeals for the Eleventh Circuit. In May 2018, the Eleventh Circuit ruled in Wells Fargo’s favor and found that Wells Fargo had not waived its arbitration rights and remanded the case to the district court for further proceedings. On September 26, 2019, the district court entered an order granting Wells Fargo’s motion and dismissed the claims of unnamed class members in favor of arbitration. Plaintiffsarbitration, which was appealed this decisionby plaintiffs to the United States Court of Appeals for the Eleventh Circuit. In April 2021, the Eleventh Circuit upheld the district court's decision.
RETAIL SALES PRACTICES MATTERS A number of bodies or entities, including (a) federal, state, and local government agencies, including the Department of Justice, the United States Securities and Exchange Commission (SEC), and the United States Department of Labor, (b) state attorneys general, including the New York Attorney General, and (c) Congressional committees, have undertaken formal or informal inquiries, investigations, or examinations arising out of certain retail sales practices of the Company that were the subject of settlements with the CFPB, the OCC, and the Office of the Los Angeles City
Attorney announced by the Company on September 8, 2016. These matters are at varying stages. The Company has responded and continues to respond, to requests from certain of the foregoing. In October 2018,As previously disclosed, the Company entered into an agreementagreements to resolve the New York Attorney General’s investigation pursuant to which the Company paid $65 million to the State of New York. In December 2018, the Company entered into an agreement with all 50 state Attorneys General and the District of Columbia to resolve an investigation into the Company’s retail sales practices, CPI and GAP, and mortgage interest rate lock matters, pursuant to which the Company paid $575 million.attorneys general investigations. On February 21, 2020,, the Company entered into an agreement with the Department of Justice to resolve the Department of Justice’s criminal investigation into the Company’s retail sales practices, as well as a separate agreement to resolve the Department of Justice’s civil investigation. As part of the Department of Justice criminal settlement, no charges will be filed against the Company provided the Company abides by all the terms of the agreement. The Department of Justice criminal settlement also includes the Company’s agreement that the facts set forth in the settlement document constitute sufficient facts for the finding of criminal violations of statutes regarding bank records and personal information. On February 21, 2020,, the Company also entered into an order to resolve the SEC’s investigation arising out of the Company’s retail sales practices. The SEC order contains a finding, to which
Note 14: Legal Actions (continued)

the Company consented, that the facts set forth include violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. As part of the resolution of the Department of Justice and SEC investigations, the Company has agreed to makemade payments totaling $3.0 billion. In addition, as part of the settlements and included in the $3.0 billion amount, the Company has agreed to the creation of a $500 million Fair Fund for the benefit of investors who were harmed by the conduct covered in the SEC settlement.
In addition, a number of lawsuits have beenwere filed by non-governmental parties seeking damages or other remedies related to these retail sales practices. First, various class plaintiffs, purporting to represent consumers who allege that they received products or services without their authorization or consent, have brought separate putative class actions againstAs previously disclosed, the Company in the United States District Court for the Northern District of California and various other jurisdictions. On June 14, 2018, the district court granted final approval of a settlement entered into by the Company in the first-filed action, Jabbari v. Wells Fargo Bank, N.A., pursuant to which the Company will pay $142 million to resolve claims regarding certain products or services provided without authorization or consent for the time period May 1, 2002 to April 20, 2017. On July 20, 2020, the United States Court of Appeals for the Ninth Circuit affirmed the district court's order granting final approval of the settlement. Second, the Company was subject to a consolidated securities fraud class action alleging certain misstatements and omissions in the Company’s disclosures related to sales practices matters. The Company entered into a settlement agreementvarious settlements to resolve this matter pursuant to which the Company paid $480 million. Third, Wells Fargo shareholders have brought numerous shareholder derivative lawsuits asserting breach of fiduciary duty claims against, among others, current and former directors and officers for their alleged involvement with and failure to detect and prevent sales practices issues. These actions are currently pending in the United States District Court for the Northern District of California and California state court as consolidated or coordinated proceedings. The parties have entered into settlement agreements to resolve the shareholder derivative lawsuits pursuant to which insurance carriers will pay the Company approximately $240 million for alleged damage to the Company, and the Company will pay plaintiffs’ attorneys’ fees. The federal court granted final approval of the settlement for its action on April 7, 2020. The state court granted final approval of the settlement for its action on January 15, 2020. Fourth, a purported Employee Retirement Income Security Act (ERISA) class action was filed in the United States District Court for the District of Minnesota on behalf of 401(k) plan participants. The district court dismissed the action, and on July 27, 2020, the United States Court of Appeals for the Eighth Circuit affirmed the dismissal.these lawsuits.

RMBS TRUSTEE LITIGATION In NovemberDecember 2014, a group of institutional investors (Institutional Investor Plaintiffs), including funds affiliated with BlackRock, Inc.,Phoenix Light SF Limited and certain related entities and the National Credit Union Administration (NCUA) filed a putative class actioncomplaints in the United States District Court for the Southern District of New York against Wells Fargo Bank, N.A., alleging claims against the Company in its capacity as trustee for a number of residential mortgage-backed securities (RMBS) trusts (Federal Court Complaint). Similar complaintstrusts. Complaints raising similar allegations have been filed against other trustees in various courts, includingby Commerzbank AG in the Southern District of New York and by IKB International and IKB Deutsche Industriebank in New York state court, and in other states, by RMBS investors. The Federal Court Complaint allegedcourt. In each case, the plaintiffs allege that Wells Fargo Bank, N.A., as trustee, caused losses to investors, and assertedplaintiffs assert causes of action based upon, among other things, the trustee’s
alleged failure to notify and enforce repurchase obligations of mortgage loan sellers for purported breaches of representations and warranties, notify investors of alleged events of default, and abide by appropriate standards of care following alleged events of default. Plaintiffs sought money damagesThe Company previously settled 2 class actions with similar allegations that were filed in an unspecified amount, reimbursement of expenses, and equitable relief. In DecemberNovember 2014 and December 2015, certain other2016 by institutional investors filed additional complaints alleging similar claims against Wells Fargo Bank, N.A., in the Southern District of New York (Related Federal Cases). In January 2016, the Southern District of New York entered an order in connection with the Federal Court Complaint dismissing claims related to certain of the trusts at issue (Dismissed Trusts). The Company’s subsequent motion to dismiss the Federal Court Complaint and the complaints for the Related Federal Cases was granted in part and denied in part in March 2017. In May 2017, the Company filed third-party complaints against certain investment advisors affiliated with the Institutional Investor Plaintiffs seeking contribution with respect to claims alleged in the Federal Court Complaint (Third-Party Claims).
In December 2016, the Institutional Investor Plaintiffs filed a new putative class action complaint in New York state court, in respect of 261 RMBS trusts, including the Dismissed Trusts, for which Wells Fargo Bank, N.A., serves or served as trustee (State Court Action). A complaint raising similar allegations to those in the Federal Court Complaint was filed in May 2016 in New York state court by IKB International and IKB Deutsche Industriebank (IKB Action).
respectively. In July 2017, certain of the plaintiffs from the State Court Action filed a civil complaint relating to Wells Fargo Bank, N.A.’s setting aside reserves for legal fees and expenses in connection with the liquidation of 11 RMBS trusts at issue in the State Court Action (Declaratory Judgment Action). The complaint sought, among other relief, declarations thatMarch 2021, the Company is not entitled to indemnification, the advancement of funds, or the taking of reserves from trust funds for legal fees and expenses it incurs in defending the claims in the State Court Action.
In May 2019, the New York state court approved a settlemententered into an agreement among the Institutional Investor Plaintiffs and the Company pursuant to which, among other terms, the Company paid $43 million to resolve the Federal Court Complaint andcase filed by the State Court Action. The settlement also resolved the Third Party Claims and the Declaratory Judgment Action. The settlement did not affect the Related Federal Cases or the IKB Action, which remain pending.NCUA.

SEMINOLE TRIBE TRUSTEE LITIGATION The Seminole Tribe of Florida filed a complaint in Florida state court alleging that Wells Fargo, as trustee, charged excess fees in connection with the administration of a minor’s trust and failed to invest the assets of the trust prudently. The complaint was later amended to include 3 individual current and former beneficiaries as plaintiffs and to remove the Tribe as a party to the case. In December 2016, the Company filed a motion to dismiss the amended complaint on the grounds that the Tribe is a necessary party and that the individual beneficiaries lack standing to bring
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Note 13:  Legal Actions (continued)
claims. The motion was denied in June 2018. The case is pending trial.
WHOLESALE BANKING CONSENT ORDER INVESTIGATIONOn November 19, 2015, the Company entered into a consent order with the OCC, pursuant to which the Wholesale Banking group was required to implement customer due diligence standards that include collection of current beneficial ownership information for certain business customers. The Company is responding to

inquiries from various federal government agencies regarding potentially inappropriate conduct in connection with the collection of beneficial ownership information.
OUTLOOK As described above, the Company establishes accruals for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. The high end of the range of reasonably possible potential losses in excess of the Company’s accrual for probable and estimable losses was approximately $2.3$2.8 billion as of June 30, 2020.2021. The outcomes of legal actions are unpredictable and subject to significant uncertainties, and it is inherently difficult to determine whether any loss is probable or even possible. It is also inherently difficult to estimate the amount of any loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Accordingly, actual losses may be in excess of the established accrual or the range of reasonably possible loss. Wells Fargo is unable to determine whether the ultimate resolution of the retail sales practices matters will have a material adverse effect on its consolidated financial condition. Based on information currently available, advice of counsel, available insurance coverage, and established reserves, Wells Fargo believes that the eventual outcome of otherthe actions against Wells Fargo and/or its subsidiaries will not, individually or in the aggregate, have a material adverse effect on Wells Fargo’s consolidated financial condition. However, it is possible that the ultimate resolution of a matter, if unfavorable, may be material to Wells Fargo’s results of operations for any particular period.

Note 15: Derivatives (continued)

116Wells Fargo & Company

Note 15:14:  Derivatives
We use derivatives to manage exposure to market risk, including interest rate risk, credit risk and foreign currency risk, and to assist customers with their risk management objectives. We designate certain derivatives as hedging instruments in qualifying hedge accounting relationships (fair value or cash flow hedges). Our remaining derivatives consist of economic hedges that do not qualify for hedge accounting and derivatives held for customer accommodation trading or other purposes. For moreadditional information on our derivative activities, see Note 1816 (Derivatives) in our 20192020 Form 10-K.
Table 15.114.1 presents the total notional or contractual amounts and fair values for our derivatives. Derivative transactions can be measured in terms of the notional amount, but this amount is not recorded on theour consolidated balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. The notional amount is generally not exchanged, but is used only as the basis on which interest and other payments are determined.

Table 15.1:14.1: Notional or Contractual Amounts and Fair Values of Derivatives
 June 30, 2020  December 31, 2019 
 
Notional or
contractual
amount

   Fair value
 
Notional or
contractual
amount

   Fair value
(in millions) 
Derivative
assets

 
Derivative
liabilities

  Derivative
assets
 Derivative
liabilities
Derivatives designated as hedging instruments           
Interest rate contracts$192,835
 3,701
 2,035
 182,789
 2,595
 1,237
Foreign exchange contracts34,459
 281
 1,220
 32,386
 341
 1,170
Total derivatives designated as qualifying hedging instruments  3,982
 3,255
   2,936
 2,407
Derivatives not designated as hedging instruments           
Economic hedges:           
Interest rate contracts313,604
 556
 374
 235,810
 207
 160
Equity contracts22,616
 1,294
 100
 19,263
 1,126
 224
Foreign exchange contracts52,349
 1,062
 196
 26,595
 118
 286
Credit contracts – protection purchased99
 35
 —
 1,400
 27
 —
Subtotal  2,947
 670
   1,478
 670
Customer accommodation trading and other derivatives:           
Interest rate contracts11,254,860
 44,355
 34,055
 11,117,542
 21,245
 17,969
Commodity contracts77,608
 2,039
 3,741
 79,737
 1,421
 1,770
Equity contracts303,271
 9,375
 11,986
 272,145
 7,410
 10,240
Foreign exchange contracts302,847
 5,088
 6,043
 364,469
 4,755
 4,791
Credit contracts – protection sold15,513
 10
 58
 12,215
 12
 65
Credit contracts – protection purchased25,695
 85
 15
 24,030
 69
 18
Subtotal  60,952
 55,898
   34,912
 34,853
Total derivatives not designated as hedging instruments  63,899
 56,568
   36,390
 35,523
Total derivatives before netting  67,881
 59,823
   39,326
 37,930
Netting  (45,105) (48,455)   (25,123) (28,851)
Total  $22,776
 11,368
   14,203
 9,079



June 30, 2021December 31, 2020
Notional or Fair value Notional or Fair value 
contractual DerivativeDerivativecontractual DerivativeDerivative
(in millions)amount assetsliabilitiesamount assetsliabilities
Derivatives designated as hedging instruments
Interest rate contracts$166,843 2,428 529 184,090 3,212 789 
Foreign exchange contracts39,001 1,143 504 47,331 1,381 607 
Total derivatives designated as qualifying hedging instruments3,571 1,033 4,593 1,396 
Derivatives not designated as hedging instruments
Economic hedges:
Interest rate contracts231,356 251 161 261,159 341 344 
Equity contracts27,740 1,582 392 25,997 1,363 490 
Foreign exchange contracts53,396 372 1,292 47,106 331 1,515 
Credit contracts72 26 0 73 31 0 
Subtotal2,231 1,845 2,066 2,349 
Customer accommodation trading and other derivatives:
Interest rate contracts9,256,224 24,068 18,785 7,947,941 32,510 25,169 
Commodity contracts76,612 7,234 2,309 65,790 2,036 1,543 
Equity contracts322,733 17,697 21,126 280,195 17,522 21,516 
Foreign exchange contracts415,458 6,177 4,505 412,879 6,891 6,034 
Credit contracts36,179 49 50 34,329 64 58 
Subtotal55,225 46,775 59,023 54,320 
Total derivatives not designated as hedging instruments57,456 48,620 61,089 56,669 
Total derivatives before netting61,027 49,653 65,682 58,065 
Netting(35,612)(35,102)(39,836)(41,556)
Total$25,415 14,551 25,846 16,509 
Table 15.214.2 provides information on the gross fair values of derivative assets and liabilities, the balance sheet netting adjustments and the resulting net fair value amount recorded on our consolidated balance sheet, as well as the non-cash collateral associated with such arrangements. We execute substantially all of our derivative transactions under master netting arrangements and reflect all derivative balances and related cash collateral subject to enforceable master netting arrangements on a net basis within the consolidated balance sheet. The “Gross amounts recognized” column in the following table includes $59.6$52.9 billion and $54.7$44.7 billion of gross derivative assets and liabilities, respectively, at June 30, 2020,2021, and $33.7$54.6 billion and $33.5$50.1 billion, respectively, at December 31, 2019,2020, with counterparties subject to enforceable master netting arrangements that are eligible for balance sheet netting adjustments. The majority of these amounts are interest rate contracts executed in over-the-counter (OTC) markets. The remaining gross derivative assets and liabilities of $8.3$8.1 billion and $5.1$5.0 billion, respectively, at June 30, 2020,2021, and $5.6$11.1 billion
and $4.4$8.0 billion, respectively, at December 31, 2019,2020, include those with counterparties subject to master netting arrangements for which we have not assessed the enforceability because they are with counterparties where we do not currently have positions to offset, those subject to master netting arrangements where we have not been able to confirm the enforceability and those not subject to master netting arrangements. As such, we do not net derivative balances or collateral within the consolidated balance sheet for these counterparties. Cash collateral receivables and payables that have not been offset against our derivatives were $1.2$2.6 billion and $1.4 billion,$828 million, respectively, at June 30, 2020,2021, and $6.3$1.8 billion and $1.4 billion,$984 million, respectively, at December 31, 2019.2020.
We determine the balance sheet netting adjustments based on the terms specified within each master netting arrangement. We disclose the balance sheet netting amounts within the column titled “Gross amounts offset in consolidated balance sheet.” Balance sheet netting adjustments are determined at the counterparty level for which there may be multiple contract
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Note 14: Derivatives (continued)
types. For disclosure purposes, we allocate these netting adjustments to the contract type for each counterparty proportionally based upon the “Gross amounts recognized” by counterparty. As a result, the net amounts disclosed by contract type may not represent the actual exposure upon settlement of the contracts.
We do not net non-cash collateral that we receive and pledge on theour consolidated balance sheet. For disclosure purposes, we present the fair value of this non-cash collateral in the column titled “Gross amounts not offset in consolidated balance sheet (Disclosure-only netting)” within the table. We determine and allocate the Disclosure-only netting amounts in the same manner as balance sheet netting amounts.
The “Net amounts” column within Table 15.214.2 represents the aggregate of our net exposure to each counterparty after
considering the balance sheet and Disclosure-only netting adjustments. We manage derivative exposure by monitoring the credit risk associated with each counterparty using counterparty specificcounterparty-specific credit risk limits, using master netting arrangements and obtaining collateral. Derivative contracts executed in OTC markets include bilateral contractual arrangements that are not cleared through a central clearing organization but are typically subject to master netting arrangements. OtherThe proportion of these derivative contracts thatrelative to our total derivative assets and liabilities are settled through a central clearing organization whether OTC or exchange-traded, are excluded from that percentage.presented in the “Percent exchanged in over-the-counter market” column in Table 14.2. In addition to the netting amounts included in the table, we also have balance sheet netting related to resale and repurchase agreements that are disclosed within Note 13 (Guarantees, Pledged12 (Pledged Assets and Collateral, and Other Commitments)Collateral).
Note 15: Derivatives (continued)

Table 15.2:14.2: Gross Fair Values of Derivative Assets and Liabilities
(in millions)Gross amounts recognizedGross amounts offset in consolidated balance sheet (1)Net amounts in consolidated balance sheetGross amounts not offset in consolidated balance sheet (Disclosure-only netting)Net amountsPercent exchanged in over-the-counter market
June 30, 2021
Derivative assets
Interest rate contracts$26,747 (16,711)10,036 (680)9,356 97 %
Commodity contracts7,234 (1,481)5,753 (14)5,739 92 
Equity contracts19,279 (11,488)7,791 (766)7,025 69 
Foreign exchange contracts7,692 (5,892)1,800 (28)1,772 100 
Credit contracts75 (40)35 (1)34 90 
Total derivative assets$61,027 (35,612)25,415 (1,489)23,926 
Derivative liabilities
Interest rate contracts$19,475 (16,453)3,022 (1,524)1,498 96 %
Commodity contracts2,309 (1,086)1,223 (17)1,206 50 
Equity contracts21,518 (12,956)8,562 (749)7,813 79 
Foreign exchange contracts6,301 (4,574)1,727 (423)1,304 100 
Credit contracts50 (33)17 (3)14 90 
Total derivative liabilities$49,653 (35,102)14,551 (2,716)11,835 
December 31, 2020
Derivative assets
Interest rate contracts$36,063 (21,968)14,095 (1,274)12,821 96 %
Commodity contracts2,036 (940)1,096 (4)1,092 84 
Equity contracts18,885 (10,968)7,917 (737)7,180 74 
Foreign exchange contracts8,603 (5,887)2,716 (141)2,575 100 
Credit contracts95 (73)22 (1)21 90 
Total derivative assets$65,682 (39,836)25,846 (2,157)23,689 
Derivative liabilities
Interest rate contracts$26,302 (21,934)4,368 (2,219)2,149 95 %
Commodity contracts1,543 (819)724 0 724 69 
Equity contracts22,006 (12,283)9,723 (837)8,886 78 
Foreign exchange contracts8,156 (6,481)1,675 (529)1,146 100 
Credit contracts58 (39)19 (3)16 91 
Total derivative liabilities$58,065 (41,556)16,509 (3,588)12,921 
(1)Represents amounts with counterparties subject to enforceable master netting arrangements that have been offset in the consolidated balance sheet, including related cash collateral and portfolio level counterparty valuation adjustments. Counterparty valuation adjustments related to derivative assets were $299 million and $399 million and debit valuation adjustments related to derivative liabilities were $145 million and $201 million as of June 30, 2021, and December 31, 2020, respectively. Cash collateral totaled $5.4 billion and $5.1 billion, netted against derivative assets and liabilities, respectively, at June 30, 2021, and $5.5 billion and $7.5 billion, respectively, at December 31, 2020.

(in millions)
Gross
amounts
recognized

 
Gross amounts
offset in
consolidated
balance
sheet (1)

 
Net amounts in
consolidated
balance
sheet

 
Gross amounts
not offset in
consolidated
balance sheet
(Disclosure-only
netting)

 
Net
amounts

 
Percent
exchanged in
over-the-counter
market

June 30, 2020           
Derivative assets           
Interest rate contracts$48,612
 (31,539) 17,073
 (1,318) 15,755
 97%
Commodity contracts2,039
 (1,495) 544
 (3) 541
 73
Equity contracts10,669
 (7,076) 3,593
 (650) 2,943
 67
Foreign exchange contracts6,431
 (4,920) 1,511
 (4) 1,507
 100
Credit contracts – protection sold10
 (8) 2
 —
 2
 68
Credit contracts – protection purchased120
 (67) 53
 (2) 51
 89
Total derivative assets$67,881
 (45,105) 22,776
 (1,977) 20,799
  
Derivative liabilities           
Interest rate contracts$36,464
 (33,777) 2,687
 (637) 2,050
 96%
Commodity contracts3,741
 (1,404) 2,337
 (2) 2,335
 86
Equity contracts12,086
 (7,361) 4,725
 (242) 4,483
 73
Foreign exchange contracts7,459
 (5,855) 1,604
 (59) 1,545
 100
Credit contracts – protection sold58
 (54) 4
 —
 4
 95
Credit contracts – protection purchased15
 (4) 11
 —
 11
 84
Total derivative liabilities$59,823
 (48,455) 11,368
 (940) 10,428
  
December 31, 2019           
Derivative assets           
Interest rate contracts$24,047
 (14,878) 9,169
 (445) 8,724
 95%
Commodity contracts1,421
 (888) 533
 (2) 531
 80
Equity contracts8,536
 (5,570) 2,966
 (69) 2,897
 65
Foreign exchange contracts5,214
 (3,722) 1,492
 (22) 1,470
 100
Credit contracts – protection sold12
 (9) 3
 —
 3
 84
Credit contracts – protection purchased96
 (56) 40
 (1) 39
 97
Total derivative assets$39,326
 (25,123) 14,203
 (539) 13,664
  
Derivative liabilities           
Interest rate contracts$19,366
 (16,595) 2,771
 (545) 2,226
 94%
Commodity contracts1,770
 (677) 1,093
 (2) 1,091
 82
Equity contracts10,464
 (6,647) 3,817
 (319) 3,498
 81
Foreign exchange contracts6,247
 (4,866) 1,381
 (169) 1,212
 100
Credit contracts – protection sold65
 (60) 5
 (3) 2
 98
Credit contracts – protection purchased18
 (6) 12
 —
 12
 93
Total derivative liabilities$37,930
 (28,851) 9,079
 (1,038) 8,041
  
(1)118
Represents amounts with counterparties subject to enforceable master netting arrangements that have been offset in the consolidated balance sheet, including related cash collateral and portfolio level counterparty valuation adjustments. Counterparty valuation adjustments related to derivative assets were Wells Fargo & Company$600 million and $231 million and debit valuation adjustments related to derivative liabilities were $229 million and $100 million at June 30, 2020, and December 31, 2019, respectively. Cash collateral totaled $7.3 billion and $11.0 billion, netted against derivative assets and liabilities, respectively, at June 30, 2020, and $2.9 billion and $6.8 billion, respectively, at December 31, 2019.

Fair Value and Cash Flow Hedges
For fair value hedges, we use interest rate swaps to convert certain of our fixed-rate long-term debt and time certificates of deposit to floating rates to hedge our exposure to interest rate risk. We also enter into cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge our exposure to foreign currency risk and interest rate risk associated with the issuance of non-U.S. dollar denominated long-term debt. In addition, we use interest rate swaps, cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge against changes in fair value of certain investments in available-for-sale debt securities due to changes in interest rates, foreign currency rates, or both. We also use interest rate swaps to hedge against changes in fair value for certain mortgage loans held for sale. For certain fair value hedges of foreign currency risk, changes in fair value of cross-currency swaps attributable to
changes in cross-currency basis spreads are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income. See Note 2621 (Other Comprehensive Income) for the amounts recognized in other comprehensive income.
For cash flow hedges, we use interest rate swaps to hedge the variability in interest payments received on certain floating-ratefloating-
rate commercial loans and paid on certain floating-rate debt due to changes in the contractually specified interest rate. We also use cross-currency swaps to hedge variability in interest payments on fixed-rate foreign currency-denominated long-term debt due to changes in foreign exchange rates.
We estimate $203$76 million pre-tax of deferred net losses related to cash flow hedges in OCI at June 30, 2020,2021, will be reclassified into net interest income during the next twelve months. The deferred losses expected to be reclassified into net

interest income are predominantly related to discontinued hedges of floating rate loans. For cash flow hedges as of June 30, 2020,2021, we are hedging our foreign currency exposure to the variability of future cash flows for all forecasted transactions for a maximum of 109 years. For moreadditional information on our accounting
hedges, see Note 1 (Summary of Significant Accounting Policies) and Note 18 (Derivatives) in our 2019 Form 10-K..
Table 15.314.3 and Table 15.414.4 show the net gains (losses) by income statement line item impacted, related to derivatives in fair value and cash flow hedging relationships, respectively.

Table 15.3:14.3: Gains (Losses) Recognized on Fair Value Hedging Relationships
Net interest incomeNoninterest incomeTotal recorded in net incomeTotal recorded in OCI
(in millions)Debt securitiesDepositsLong-term debtOtherDerivative gains (losses)Derivative gains (losses)
Quarter ended June 30, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income$2,199 (92)(712)692 N/A37 
Interest contracts
Amounts related to interest settlements on derivatives(68)74 541 0 547 
Recognized on derivatives(468)(61)2,453 0 1,924 0 
Recognized on hedged items452 62 (2,402)0 (1,888)
Total gains (losses) (pre-tax) on interest rate contracts(84)75 592 0 583 0 
Foreign exchange contracts
Amounts related to interest settlements on derivatives15 0 4 0 19 
Recognized on derivatives2 0 (42)202 162 (14)
Recognized on hedged items(1)0 44 (203)(160)
Total gains (losses) (pre-tax) on foreign exchange contracts16 0 6 (1)21 (14)
Total gains (losses) (pre-tax) recognized on fair value hedges$(68)75 598 (1)604 (14)
Quarter ended June 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income$2,946 (585)(1,237)912 N/A3 
Interest contracts
Amounts related to interest settlements on derivatives(93)152 428 0 487 
Recognized on derivatives(21)(86)549 0 442 0 
Recognized on hedged items63 77 (618)0 (478)
Total gains (losses) (pre-tax) on interest rate contracts(51)143 359 0 451 0 
Foreign exchange contracts
Amounts related to interest settlements on derivatives11 0 (46)0 (35)
Recognized on derivatives(1)0 117 709 825 (57)
Recognized on hedged items1 0 (70)(684)(753)
Total gains (losses) (pre-tax) on foreign exchange contracts11 0 1 25 37 (57)
Total gains (losses) (pre-tax) recognized on fair value hedges$(40)143 360 25 488 (57)
 Net interest income  Noninterest income
Total recorded in net income
Total recorded in OCI
(in millions)Debt securities
Mortgage loans held for sale
Deposits
Long-term debt
 Other
Derivative gains (losses)
Derivative gains (losses)
Quarter ended June 30, 2020        
Total amounts presented in the consolidated statement of income and other comprehensive income$2,946
230
(585)(1,237) 97
N/A
3
         
Interest contracts:        
Amounts related to interest settlements on derivatives(93)—
152
428
 —
487
 
Recognized on derivatives(21)(3)(86)549
 —
439
—
Recognized on hedged items63
4
77
(618) —
(474) 
Total gains (losses) (pre-tax) on interest rate contracts(51)1
143
359
 —
452
—
Foreign exchange contracts:        
Amounts related to interest settlements on derivatives11
—
—
(46) —
(35) 
Recognized on derivatives(1)—
—
117
 709
825
(57)
Recognized on hedged items1
—
—
(70) (684)(753) 
Total gains (losses) (pre-tax) on foreign exchange contracts11
—
—
1
 25
37
(57)
Total gains (losses) (pre-tax) recognized on fair value hedges$(40)$1
$143
$360
 25
489
(57)
Six months ended June 30, 2020        
Total amounts presented in the consolidated statement of income and other comprehensive income$6,418
427
(2,327)(2,477) 564
N/A
185
         
Interest contracts:        
Amounts related to interest settlements on derivatives(139)—
222
602
 —
685
 
Recognized on derivatives(1,892)(53)444
10,324
 —
8,823
—
Recognized on hedged items1,919
54
(434)(10,044) —
(8,505) 
Total gains (losses) (pre-tax) on interest rate contracts(112)1
232
882
 —
1,003
—
Foreign exchange contracts:        
Amounts related to interest settlements on derivatives17
—
—
(131) —
(114) 
Recognized on derivatives(2)—
—
224
 (76)146
87
Recognized on hedged items3
—
—
(244) 80
(161) 
Total gains (losses) (pre-tax) on foreign exchange contracts18
—
—
(151) 4
(129)87
Total gains (losses) (pre-tax) recognized on fair value hedges$(94)1
232
731
 4
874
87

(continued on following page)

Wells Fargo & Company119

Note 15:14: Derivatives (continued)(continued)

(continued from previous page)
 Net interest income  Noninterest income
Total recorded in net income
Total recorded in OCI
(in millions)Debt securities
Mortgage loans held for sale
Deposits
Long-term debt
 Other
Derivative gains (losses)
Derivative gains (losses)
Quarter ended June 30, 2019        
Total amounts presented in the consolidated statement of income and other comprehensive income$3,781
195
(2,213)(1,900) 837
N/A
136
         
Interest contracts:        
Amounts related to interest settlements on derivatives14
—
(7)7
 —
14
 
Recognized on derivatives(1,089)(25)351
2,947
 —
2,184
—
Recognized on hedged items1,096
24
(343)(2,890) —
(2,113) 
Total gains (losses) (pre-tax) on interest rate contracts21
(1)1
64
 —
85
—
Foreign exchange contracts:        
Amounts related to interest settlements on derivatives10
—
—
(128) —
(118) 
Recognized on derivatives(5)—
—
205
 326
526
56
Recognized on hedged items4
—
—
(186) (315)(497) 
Total gains (losses) (pre-tax) on foreign exchange contracts9
—
—
(109) 11
(89)56
Total gains (losses) (pre-tax) recognized on fair value hedges$30
(1)1
(45) 11
(4)56
Six months ended June 30, 2019        
Total amounts presented in the consolidated statement of income and other comprehensive income$7,722
347
(4,239)(3,827) 1,507
N/A
180
         
Interest contracts:        
Amounts related to interest settlements on derivatives30
—
(30)—
 —
—
 
Recognized on derivatives(1,903)(33)558
4,933
 —
3,555
—
Recognized on hedged items1,913
31
(533)(4,837) —
(3,426) 
Total gains (losses) (pre-tax) on interest rate contracts40
(2)(5)96
 —
129
—
Foreign exchange contracts:        
Amounts related to interest settlements on derivatives20
—
—
(270) —
(250) 
Recognized on derivatives(9)—
—
497
 (76)412
30
Recognized on hedged items9
—
—
(452) 76
(367) 
Total gains (losses) (pre-tax) on foreign exchange contracts20
—
—
(225) —
(205)30
Total gains (losses) (pre-tax) recognized on fair value hedges$60
(2)(5)(129) —
(76)30


Net interest incomeNoninterest incomeTotal recorded in net incomeTotal recorded in OCI
(in millions)Debt securitiesDepositsLong-term debtOtherDerivative gains (losses)Derivative gains (losses)
Six months ended June 30, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income$4,511 (204)(1,738)1,674 N/A84 
Interest contracts
Amounts related to interest settlements on derivatives(135)165 1,091 0 1,121 
Recognized on derivatives826 (184)(4,618)0 (3,976)0 
Recognized on hedged items(806)181 4,542 0 3,917 
Total gains (losses) (pre-tax) on interest rate contracts(115)162 1,015 0 1,062 0 
Foreign exchange contracts
Amounts related to interest settlements on derivatives43 0 3 0 46 
Recognized on derivatives3 0 (269)509 243 11 
Recognized on hedged items(2)0 238 (520)(284)
Total gains (losses) (pre-tax) on foreign exchange contracts44 0 (28)(11)5 11 
Total gains (losses) (pre-tax) recognized on fair value hedges$(71)162 987 (11)1,067 11 
Six months ended June 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income$6,418 (2,327)(2,477)2,213 N/A185 
Interest contracts
Amounts related to interest settlements on derivatives(139)222 602 0 685 
Recognized on derivatives(1,892)444 10,324 0 8,876 0 
Recognized on hedged items1,919 (434)(10,044)0 (8,559)
Total gains (losses) (pre-tax) on interest rate contracts(112)232 882 0 1,002 0 
Foreign exchange contracts
Amounts related to interest settlements on derivatives17 0 (131)0 (114)
Recognized on derivatives(2)0 224 (76)146 87 
Recognized on hedged items3 0 (244)80 (161)
Total gains (losses) (pre-tax) on foreign exchange contracts18 0 (151)4 (129)87 
Total gains (losses) (pre-tax) recognized on fair value hedges$(94)232 731 4 873 87 


120Wells Fargo & Company

Table 15.4:14.4: Gains (Losses) Recognized on Cash Flow Hedging Relationships
Net interest incomeTotal recorded in net incomeTotal recorded in OCI
(in millions)LoansLong-term debtDerivative gains (losses)Derivative gains (losses)
Quarter ended June 30, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income$7,095 (712)N/A37 
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income(39)— (39)39 
Net unrealized gains (losses) (pre-tax) recognized in OCIN/AN/AN/A10 
Total gains (losses) (pre-tax) on interest rate contracts(39)0 (39)49 
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income0 (1)(1)1 
Net unrealized gains (losses) (pre-tax) recognized in OCIN/AN/AN/A1 
Total gains (losses) (pre-tax) on foreign exchange contracts0 (1)(1)2 
Total gains (losses) (pre-tax) recognized on cash flow hedges$(39)(1)(40)51 
Quarter ended June 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income$8,460 (1,237)N/A3 
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income(53)1 (52)52 
Net unrealized gains (losses) (pre-tax) recognized in OCIN/AN/AN/A0 
Total gains (losses) (pre-tax) on interest rate contracts(53)1 (52)52 
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income0 (3)(3)3 
Net unrealized gains (losses) (pre-tax) recognized in OCIN/AN/AN/A5 
Total gains (losses) (pre-tax) on foreign exchange contracts0 (3)(3)8 
Total gains (losses) (pre-tax) recognized on cash flow hedges$(53)(2)(55)60 
Six months ended June 30, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income$14,296 (1,738)N/A84 
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income(91)— (91)91 
Net unrealized gains (losses) (pre-tax) recognized in OCIN/AN/AN/A(10)
Total gains (losses) (pre-tax) on interest rate contracts(91)0 (91)81 
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income0 (2)(2)2 
Net unrealized gains (losses) (pre-tax) recognized in OCIN/AN/AN/A(10)
Total gains (losses) (pre-tax) on foreign exchange contracts0 (2)(2)(8)
Total gains (losses) (pre-tax) recognized on cash flow hedges$(91)(2)(93)73 
Six months ended June 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income$18,543 (2,477)N/A185 
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income(109)1 (108)108 
Net unrealized gains (losses) (pre-tax) recognized in OCIN/AN/AN/A0 
Total gains (losses) (pre-tax) on interest rate contracts(109)1 (108)108 
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income0 (5)(5)5 
Net unrealized gains (losses) (pre-tax) recognized in OCIN/AN/AN/A(15)
Total gains (losses) (pre-tax) on foreign exchange contracts0 (5)(5)(10)
Total gains (losses) (pre-tax) recognized on cash flow hedges$(109)(4)(113)98 
 Net interest Income  Total recorded in net income
Total recorded in OCI
(in millions)Loans
Long-term debt
 Derivative gains (losses)
Derivative gains (losses)
Quarter ended June 30, 2020     
Total amounts presented in the consolidated statement of income and other comprehensive income$8,448
(1,237) N/A
3
Interest rate contracts:     
Realized gains (losses) (pre-tax) reclassified from OCI into net income(53)1
 (52)52
Net unrealized gains (losses) (pre-tax) recognized in OCIN/A
N/A
 N/A
—
Total gains (losses) (pre-tax) on interest rate contracts(53)1
 (52)52
Foreign exchange contracts:     
Realized gains (losses) (pre-tax) reclassified from OCI into net income—
(3) (3)3
Net unrealized gains (losses) (pre-tax) recognized in OCIN/A
N/A
 N/A
5
Total gains (losses) (pre-tax) on foreign exchange contracts—
(3) (3)8
Total gains (losses) (pre-tax) recognized on cash flow hedges$(53)$(2) (55)60
Six months ended June 30, 2020     
Total amounts presented in the consolidated statement of income and other comprehensive income$18,513
(2,477) N/A
185
Interest rate contracts:     
Realized gains (losses) (pre-tax) reclassified from OCI into net income(109)1
 (108)108
Net unrealized gains (losses) (pre-tax) recognized in OCIN/A
N/A
 N/A
—
Total gains (losses) (pre-tax) on interest rate contracts(109)1
 (108)108
Foreign exchange contracts:     
Realized gains (losses) (pre-tax) reclassified from OCI into net income—
(5) (5)5
Net unrealized gains (losses) (pre-tax) recognized in OCIN/A
N/A
 N/A
(15)
Total gains (losses) (pre-tax) on foreign exchange contracts—
(5) (5)(10)
Total gains (losses) (pre-tax) recognized on cash flow hedges$(109)(4) (113)98
Quarter ended June 30, 2019     
Total amounts presented in the consolidated statement of income and other comprehensive income$11,316
(1,900) N/A
136
Interest rate contracts:     
Realized gains (losses) (pre-tax) reclassified from OCI into net income(77)1
 (76)76
Net unrealized gains (losses) (pre-tax) recognized in OCIN/A
N/A
 N/A
—
Total gains (losses) (pre-tax) on interest rate contracts(77)1
 (76)76
Foreign exchange contracts:     
Realized gains (losses) (pre-tax) reclassified from OCI into net income—
(3) (3)3
Net unrealized gains (losses) (pre-tax) recognized in OCIN/A
N/A
 N/A
1
Total gains (losses) (pre-tax) on foreign exchange contracts—
(3) (3)4
Total gains (losses) (pre-tax) recognized on cash flow hedges$(77)(2) (79)80
Six months ended June 30, 2019     
Total amounts presented in the consolidated statement of income and other comprehensive income$22,670
(3,827) N/A
180
Interest rate contracts:     
Realized gains (losses) (pre-tax) reclassified from OCI into net income(155)1
 (154)154
Net unrealized gains (losses) (pre-tax) recognized in OCIN/A
N/A
 N/A
—
Total gains (losses) (pre-tax) on interest rate contracts(155)1
 (154)154
Foreign exchange contracts:     
Realized gains (losses) (pre-tax) reclassified from OCI into net income—
(4) (4)4
Net unrealized gains (losses) (pre-tax) recognized in OCIN/A
N/A
 N/A
(8)
Total gains (losses) (pre-tax) on foreign exchange contracts—
(4) (4)(4)
Total gains (losses) (pre-tax) recognized on cash flow hedges$(155)(3) (158)150
Wells Fargo & Company121

Note 15:14: Derivatives (continued)(continued)


Table 15.514.5 shows the carrying amount and associated cumulative basis adjustment related to the application of hedge
accounting that is included in the carrying amount of hedged assets and liabilities in fair value hedging relationships.



Table 15.5:14.5: Hedged Items in Fair Value Hedging Relationship
Hedged Items Currently DesignatedHedged Items No Longer Designated (1)
(in millions)Carrying Amount of Assets/(Liabilities) (2)(4)
Hedge Accounting
Basis Adjustment
Assets/(Liabilities) (3)
Carrying Amount of Assets/(Liabilities) (4)Hedge Accounting Basis Adjustment
Assets/(Liabilities)
June 30, 2021
Available-for-sale debt securities (5)$28,655 (35)16,792 994 
Deposits(14,206)(295)0 0 
Long-term debt(148,673)(7,312)(5,248)2 
December 31, 2020
Available-for-sale debt securities (5)$29,538 827 17,091 1,111 
Deposits(22,384)(477)0 0 
Long-term debt(156,907)(12,466)(14,468)31 
(1)Represents hedged items no longer designated in qualifying fair value hedging relationships for which an associated basis adjustment exists at the balance sheet date.
(2)Does not include the carrying amount of hedged items where only foreign currency risk is the designated hedged risk. The carrying amount excluded for debt securities is $12.0 billion and for long-term debt is $(2.8) billion as of June 30, 2021, and $17.6 billion for debt securities and $(4.7) billion for long-term debt as of December 31, 2020.
(3)The balance includes $188 million and $160 million of debt securities and long-term debt cumulative basis adjustments as of June 30, 2021, respectively, and $205 million and $130 million of debt securities and long-term debt cumulative basis adjustments as of December 31, 2020, respectively, on terminated hedges whereby the hedged items have subsequently been re-designated into existing hedges.
(4)Represents the full carrying amount of the hedged asset or liability item as of the balance sheet date, except for circumstances in which only a portion of the asset or liability was designated as the hedged item in which case only the portion designated is presented.
(5)Carrying amount represents the amortized cost.

 Hedged Items Currently Designated  Hedged Items No Longer Designated (1) 
(in millions)Carrying Amount of Assets/(Liabilities) (2)(4)
Hedge Accounting
Basis Adjustment
Assets/(Liabilities) (3)

 Carrying Amount of Assets/(Liabilities) (4)
Hedge Accounting
Basis Adjustment
Assets/(Liabilities)

June 30, 2020     
Available-for-sale debt securities (5)$29,585
2,560
 8,952
269
Mortgage loans held for sale233
10
 —
—
Deposits(35,247)(761) —
—
Long-term debt(166,000)(16,022) (21,254)92
December 31, 2019     
Available-for-sale debt securities (5)$36,896
1,110
 9,486
278
Mortgage loans held for sale961
(12) —
—
Deposits(43,716)(324) —
—
Long-term debt(127,423)(5,827) (25,750)173
(1)122Represents hedged items no longer designated in qualifying fair value hedging relationships for which an associated basis adjustment exists at the balance sheet date.
Wells Fargo & Company
(2)
Does not include the carrying amount of hedged items where only foreign currency risk is the designated hedged risk. The carrying amount excluded $5.2 billion for debt securities and $(4.3) billion for long-term debt as of June 30, 2020, and $1.2 billion for debt securities and $(5.2) billion for long-term debt as of December 31, 2019.

(3)
The balance includes $548 million and $143 million of debt securities and long-term debt cumulative basis adjustments, respectively, as of June 30, 2020, and $790 million and $109 million of debt securities and long-term debt cumulative basis adjustments, respectively, as of December 31, 2019, on terminated hedges whereby the hedged items have subsequently been re-designated into existing hedges.
(4)Represents the full carrying amount of the hedged asset or liability item as of the balance sheet date, except for circumstances in which only a portion of the asset or liability was designated as the hedged item in which case only the portion designated is presented.
(5)Carrying amount represents the amortized cost.

Derivatives Not Designated as Hedging Instruments
Derivatives not designated as hedging instruments include economic hedges and derivatives entered into for customer accommodation trading purposes.
We use economic hedge derivativesto manage our exposure to interest rate risk, equity price risk, foreign currency risk, and credit risk. We also use economic hedge derivatives to mitigate the periodic earnings volatility caused by mismatches between the changes in fair value of the hedged item and hedging instrument recognized on our fair value accounting hedges. In second quarter 2020, we entered into arrangements to transition
transition the economic hedges of our deferred compensation plan liabilities from equity securities to derivative instruments. Changes in the fair values of derivatives used to economically hedge the deferred compensation plan are reported in personnel expense.
For moreadditional information on economic hedges and other derivatives, see Note 1814 (Derivatives) to Financial Statements in our 20192020 Form 10-K.
Table 15.614.6 shows the net gains (losses), recognized by income statement lines, related to derivatives not designated as hedging instruments.

Table 15.6:14.6: Gains (Losses) on Derivatives Not Designated as Hedging Instruments
Noninterest incomeNoninterest expense
(in millions)Mortgage bankingNet gains (losses) on trading and securitiesOtherTotalPersonnel expense
Quarter ended June 30, 2021
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)$287 0 14 301 0 
Equity contracts0 (762)(4)(766)(239)
Foreign exchange contracts0 0 (90)(90)0 
Credit contracts0 0 (5)(5)0 
Subtotal287 (762)(85)(560)(239)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts482 (594)0 (112)0 
Commodity contracts0 (36)0 (36)0 
Equity contracts0 (922)(304)(1,226)0 
Foreign exchange contracts0 (24)0 (24)0 
Credit contracts0 (43)0 (43)0 
Subtotal482 (1,619)(304)(1,441)0 
Net gains (losses) recognized related to derivatives not designated as hedging instruments$769 (2,381)(389)(2,001)(239)
Quarter ended June 30, 2020
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)$142 0 (74)68 0 
Equity contracts0 (1,402)(6)(1,408)(141)
Foreign exchange contracts0 0 (55)(55)0 
Credit contracts0 0 1 1 0 
Subtotal142 (1,402)(134)(1,394)(141)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts546 676 0 1,222 0 
Commodity contracts0 (224)0 (224)0 
Equity contracts0 (2,348)(145)(2,493)0 
Foreign exchange contracts0 155 0 155 0 
Credit contracts0 (134)0 (134)0 
Subtotal546 (1,875)(145)(1,474)0 
Net gains (losses) recognized related to derivatives not designated as hedging instruments$688 (3,277)(279)(2,868)(141)
 Noninterest income  Noninterest Expense
(in millions)Mortgage banking
Net gains (losses) from equity securities
Net gains (losses) from trading activities
Other
Total
 Personnel expense
Quarter ended June 30, 2020       
Net gains (losses) recognized on economic hedges derivatives:       
Interest contracts (1)$142
—
—
(74)68
 —
Equity contracts—
(1,402)—
(6)(1,408) (141)
Foreign exchange contracts—
—
—
(55)(55) —
Credit contracts—
—
—
1
1
 —
Subtotal142
(1,402)—
(134)(1,394) (141)
Net gains (losses) recognized on customer accommodation trading and other derivatives:       
Interest contracts546
—
676
—
1,222
 —
Commodity contracts—
—
(224)—
(224) —
Equity contracts—
—
(2,348)(145)(2,493) —
Foreign exchange contracts—
—
155
—
155
 —
Credit contracts—
—
(134)—
(134) —
Subtotal546
—
(1,875)(145)(1,474) —
Net gains (losses) recognized related to derivatives not designated as hedging instruments$688
(1,402)(1,875)(279)(2,868) (141)
Six months ended June 30, 2020       
Net gains (losses) recognized on economic hedges derivatives:       
Interest contracts (1)$2,613
—
—
(45)2,568
 —
Equity contracts—
(183)—
(34)(217) (141)
Foreign exchange contracts—
—
—
572
572
 —
Credit contracts—
—
—
17
17
 —
Subtotal2,613
(183)—
510
2,940
 (141)
Net gains (losses) recognized on customer accommodation trading and other derivatives:       
Interest contracts1,099
—
(1,787)—
(688) —
Commodity contracts—
—
(112)—
(112) —
Equity contracts—
—
2,401
(72)2,329
 —
Foreign exchange contracts—
—
(402)—
(402) —
Credit contracts—
—
147
—
147
 —
Subtotal1,099
—
247
(72)1,274
 —
Net gains (losses) recognized related to derivatives not designated as hedging instruments$3,712
(183)247
438
4,214
 (141)


(continued on following page)
Wells Fargo & Company123

Note 15:14: Derivatives (continued)(continued)

(continued from previous page)
Noninterest incomeNoninterest expense
(in millions)Mortgage bankingNet gains (losses) on trading and securitiesOtherTotalPersonnel expense
Six months ended June 30, 2021
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)$(88)0 (6)(94)0 
Equity contracts0 (337)1 (336)(399)
Foreign exchange contracts0 0 (19)(19)0 
Credit contracts0 0 (5)(5)0 
Subtotal(88)(337)(29)(454)(399)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts(49)1,330 0 1,281 0 
Commodity contracts0 44 0 44 0 
Equity contracts0 (2,085)(393)(2,478)0 
Foreign exchange contracts0 440 0 440 0 
Credit contracts0 (71)0 (71)0 
Subtotal(49)(342)(393)(784)0 
Net gains (losses) recognized related to derivatives not designated as hedging instruments$(137)(679)(422)(1,238)(399)
Six months ended June 30, 2020
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)$2,613 0 (45)2,568 0 
Equity contracts0 (183)(34)(217)(141)
Foreign exchange contracts0 0 572 572 0 
Credit contracts0 0 17 17 0 
Subtotal2,613 (183)510 2,940 (141)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts1,099 (1,787)0 (688)0 
Commodity contracts0 (112)0 (112)0 
Equity contracts0 2,401 (72)2,329 0 
Foreign exchange contracts0 (402)0 (402)0 
Credit contracts0 147 0 147 0 
Subtotal1,099 247 (72)1,274 0 
Net gains (losses) recognized related to derivatives not designated as hedging instruments$3,712 64 438 4,214 (141)
(1)Mortgage banking amounts for the second quarter and first half of 2021 are comprised of gains (losses) of $707 million and $(933) million, respectively, related to derivatives used as economic hedges of MSRs measured at fair value offset by gains (losses) of $(420) million and $845 million related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments. The corresponding amounts for the second quarter and first half of 2020 are comprised of gains (losses) of $535 million and $3.9 billion offset by gains (losses) of $(393) million and $(1.3) billion, respectively.

  
 Noninterest income 
(in millions)Mortgage banking
Net gains (losses) from equity securities
Net gains (losses) from trading activities
Other
Total
Quarter ended June 30, 2019     
Net gains (losses) recognized on economic hedges derivatives:     
Interest contracts (1)$872
—
—
2
874
Equity contracts—
(658)—
(7)(665)
Foreign exchange contracts—
—
—
164
164
Credit contracts—
—
—
(5)(5)
Subtotal872
(658)—
154
368
Net gains (losses) recognized on customer accommodation trading and other derivatives:     
Interest contracts179
—
(222)—
(43)
Commodity contracts—
—
27
—
27
Equity contracts—
—
(1,110)(133)(1,243)
Foreign exchange contracts—
—
(83)—
(83)
Credit contracts—
—
(16)—
(16)
Subtotal179
—
(1,404)(133)(1,358)
Net gains (losses) recognized related to derivatives not designated as hedging instruments$1,051
(658)(1,404)21
(990)
Six months ended June 30, 2019     
Net gains (losses) recognized on economic hedges derivatives:     
Interest contracts (1)$1,683
—
—
7
1,690
Equity contracts—
(1,543)—
—
(1,543)
Foreign exchange contracts—
—
—
140
140
Credit contracts—
—
—
10
10
Subtotal1,683
(1,543)—
157
297
Net gains (losses) recognized on customer accommodation trading and other derivatives:     
Interest contracts297
—
(506)—
(209)
Commodity contracts—
—
78
—
78
Equity contracts—
—
(3,259)(406)(3,665)
Foreign exchange contracts—
—
(69)—
(69)
Credit contracts—
—
(60)—
(60)
Subtotal297
—
(3,816)(406)(3,925)
Net gains (losses) recognized related to derivatives not designated as hedging instruments$1,980
(1,543)(3,816)(249)(3,628)
(1)124
Mortgage banking amounts for the second quarter and Wells Fargo & Companyfirst half of 2020 are comprised of gains of $535 million and $3.9 billion, respectively, related to derivatives used as economic hedges of MSRs measured at fair value offset by gains (losses) of $(393) million and $(1.3) billion, respectively, related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments. The corresponding amounts for the second quarter and first half of 2019 are comprised of gains of $1.2 billion and $2.1 billion offset by gains (losses) of $(283) million and $(434) million, respectively.



Credit Derivatives
Credit derivative contracts are arrangements whose value is derived from the transfer of credit risk of a reference asset or entity from one party (the purchaser of credit protection) to another party (the seller of credit protection). We use credit derivatives to assist customers with their risk management objectives. We may also use credit derivatives in structured product transactions or liquidity agreements written to special purpose vehicles. The maximum exposure of sold credit derivatives is managed through posted collateral, purchased credit derivatives and similar products in order to achieve our desired credit risk profile. This credit risk management provides
an ability to recover a significant portion of any amounts that
would be paid under the sold credit derivatives. We would be
required to perform under the sold credit derivatives in the event of default by the referenced obligors. Events of default include events such as bankruptcy, capital restructuring or lack of principal and/or interest payment. In certain cases, other triggers may exist, such as the credit downgrade of the referenced obligors or the inability of the special purpose vehicle for which we have provided liquidity to obtain funding.
Table 15.714.7 provides details of sold and purchased credit derivatives.
Table 15.7:14.7: Sold and Purchased Credit Derivatives
Notional amount
(in millions)Fair value assetFair value liabilityProtection sold (A)Protection sold – non-investment gradeProtection purchased with identical underlyings (B)Net protection sold (A)-(B)Other protection purchasedRange of maturities
June 30, 2021
Credit default swaps on:
Corporate bonds$5 3 4,724 1,236 3,130 1,594 3,582 2021 - 2031
Structured products0 4 16 16 12 4 82 2034 - 2047
Credit protection on:
Default swap index1 0 1,760 698 924 836 3,765 2021 - 2030
Commercial mortgage-backed securities index2 15 283 29 258 25 134 2047 - 2072
Asset-backed securities index0 7 41 41 40 1 1 2045 - 2046
Other0 2 6,300 6,206 0 6,300 11,199 2021 - 2040
Total credit derivatives$8 31 13,124 8,226 4,364 8,760 18,763 
December 31, 2020
Credit default swaps on:
Corporate bonds$7 2 3,767 971 2,709 1,058 3,012 2021 - 2029
Structured products0 5 20 20 19 1 84 2034 - 2047
Credit protection on:
Default swap index0 0 1,582 731 559 1,023 3,925 2021 - 2030
Commercial mortgage-backed securities index3 21 297 42 272 25 75 2047 - 2072
Asset-backed securities index0 7 41 41 40 1 1 2045 - 2046
Other0 4 6,378 6,262 0 6,378 11,621 2021 - 2040
Total credit derivatives$10 39 12,085 8,067 3,599 8,486 18,718 
    Notional amount   
(in millions)Fair value asset
Fair value
liability

 
Protection
sold (A)

 
Protection
sold –
non-
investment
grade

 
Protection
purchased
with
identical
underlyings (B)

 
Net
protection
sold
(A) - (B)

 
Other
protection
purchased

 
Range of
maturities
June 30, 2020              
Credit default swaps on:              
Corporate bonds$7
2
 3,433
 827
 2,508
 925
 2,971
 2020 - 2029
Structured products—
9
 30
 31
 29
 1
 110
 2034 - 2047
Credit protection on:              
Default swap index1
1
 5,084
 1,759
 2,610
 2,474
 3,874
 2020 - 2029
Commercial mortgage-backed securities index2
27
 317
 59
 292
 25
 75
 2047 - 2072
Asset-backed securities index—
8
 40
 41
 41
 (1) 1
 2045 - 2046
Other—
11
 6,609
 6,441
 —
 6,609
 13,283
 2020 - 2040
Total credit derivatives$10
58
 15,513
 9,158
 5,480
 10,033
 20,314
  
December 31, 2019              
Credit default swaps on:              
Corporate bonds$8
1
 2,855
 707
 1,885
 970
 2,447
 2020 - 2029
Structured products—
25
 74
 69
 63
 11
 111
 2022 - 2047
Credit protection on:              
Default swap index1
—
 2,542
 120
 550
 1,992
 8,105
 2020 - 2029
Commercial mortgage-backed securities index3
26
 322
 67
 296
 26
 50
 2047 - 2058
Asset-backed securities index—
8
 41
 41
 41
 —
 1
 2045 - 2046
Other—
5
 6,381
 5,738
 —
 6,381
 11,881
 2020 - 2049
Total credit derivatives$12
65
 12,215
 6,742
 2,835
 9,380
 22,595
  

Protection sold represents the estimated maximum exposure to loss that would be incurred under an assumed hypothetical circumstance, where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. We believe this hypothetical circumstance to be an extremely remote possibility and accordingly, this required disclosure is not an indication of expected loss. The amounts under non-investment grade represent the notional amounts of those credit derivatives on which we have a higher risk of being required to perform under the terms of the credit derivative and are a function of the underlying assets.
We consider the risk of performance to be high if the underlying assets under the credit derivative have an external rating that is below investment grade or an internal credit default grade that is equivalent thereto. We believe the net protection sold, which is representative of the net notional amount of protection sold and purchased with identical underlyings, in combination with other protection purchased, is more representative of our exposure to loss than either non-investment grade or protection sold. Other protection purchased represents additional protection, which may offset the exposure to loss for protection sold, that was not purchased with an identical underlying of the protection sold.

Note 15: Derivatives (continued)

Credit-Risk Contingent Features
Certain of our derivative contracts contain provisions whereby if the credit rating of our debt were to be downgraded by certain major credit rating agencies, the counterparty could demand additional collateral or require termination or replacement of derivative instruments in a net liability position. Table 15.814.8 illustrates our exposure to such derivativesOTC bilateral derivative contracts with credit-risk contingent features, collateral we have posted, and the additional collateral we would be required to post if the credit rating of our debt was downgraded below investment grade.

Table 15.8:14.8: Credit-Risk Contingent Features
(in billions)Jun 30,
2021		Dec 31,
2020
Net derivative liabilities with credit-risk contingent features$10.4 10.5 
Collateral posted9.4 9.0 
Additional collateral to be posted upon a below investment grade credit rating (1)1.0 1.5 
(1)Any credit rating below investment grade requires us to post the maximum amount of collateral.

(in billions)Jun 30,
2020
Dec 31,
2019
Net derivative liabilities with credit-risk contingent features$15.2
10.4
Collateral posted13.4
9.1
Additional collateral to be posted upon a below investment grade credit rating (1)1.8
1.3
(1)Any credit rating below investment grade requires us to post the maximum amount of collateral.Wells Fargo & Company125



Note 16:15:  Fair Values of Assets and Liabilities

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Assets and liabilities recorded at fair value on a recurring basis, such as derivatives, residential MSRs, and trading or AFS debt securities, are presented in Table 16.215.1 in this Note. FromAdditionally, from time to time, we may be required to record fair value adjustments on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application of LOCOMlower of cost or fair value (LOCOM) accounting, write-downs of individual assets or application of the measurement alternative for nonmarketable equity securities. Assets recorded at fair value on a nonrecurring basis are presented in Table 16.1315.4 in this Note.
We provide in Table 16.19 includes15.8 estimates of fair value for financial instruments that are not recorded at fair value.value, such as loans and debt liabilities carried at amortized cost.
See Note 1 (Summary of Significant Accounting Policies) in our 20192020 Form 10-K for discussion of how we determine fair value. For descriptions of the valuation methodologies we use for assets and liabilities recorded at fair value on a recurring or nonrecurring basis, and for estimating fair value for financial instruments that are not recorded at fair value, see Note 1917 (Fair Values of Assets and Liabilities) in our 20192020 Form 10-K.

FAIR VALUE HIERARCHY We classify our assets and liabilities measuredrecorded at fair value as either Level 1, Level 2, or Level 3 in the fair value hierarchy. The highest priority (Level 1) is assigned to valuations based on unadjusted quoted prices in active markets and the lowest priority (Level 3) is assigned to valuations based on significant unobservable inputs. See Note 1 (Summary of Significant Accounting Policies) in our 20192020 Form 10-K for a detailed description of the fair value hierarchy.
In the determination of the classification of financial instruments in Level 2 or Level 3 of the fair value hierarchy, we consider all available information, including observable market data, indications of market liquidity and orderliness, and our understanding of the valuation techniques and significant inputs used. For securities in inactive markets, we use a predetermined percentage to evaluate the impact of fair value adjustments
derived from weighting both external and internal indications of value to determine if the instrumentThis determination is classified as Level 2 or Level 3. Otherwise, the classification of Level 2 or Level 3 isultimately based upon the specific facts and circumstances of each instrument or instrument category and judgments are made regarding the significance of the Level 3unobservable inputs to the instruments’ fair value measurement in its entirety. If Level 3unobservable inputs are considered significant, the instrument is classified as Level 3.
We do not classify nonmarketable equity securities in the fair value hierarchy if we use the non-published net asset value (NAV) per share (or its equivalent) that has been communicated to us as an investor as a practical expedient to measure fair value. We generally use NAV per share as the fair value measurement for certain nonmarketable equity fund investments. Marketable equity securities with published NAVs are classified in the fair value hierarchy.
Fair Value Measurements from Vendors
For certain assets and liabilities, we obtain fair value measurements from vendors and we record the fair value in our financial statements. For additional information, see Note 19 (Fair Values of Assets and Liabilities) in our 2019 Form 10-K.
Table 16.1 presents fair value measurements obtained from third-party pricing services classified within the fair value hierarchy. Fair value measurements obtained from brokers and fair value measurements obtained from third-party pricing services that we have adjusted using internal models or non-vendor data to determine the fair value are excluded from
Table 16.1.
The unadjusted fair value measurements obtained from brokers for available-for-sale debt securities were $19 million in Level 2 assets and $123 million in Level 3 assets at June 30, 2020, and $45 million and $126 million at December 31, 2019, respectively.

Table 16.1:Fair Value Measurements obtained from Third-Party Pricing Services
 June 30, 2020  December 31, 2019 
(in millions)Level 1
 Level 2
 Level 3
 Level 1
 Level 2
 Level 3
Trading debt securities1,113
 291
 —
 634
 329
 —
Available-for-sale debt securities:           
Securities of U.S. Treasury and federal agencies7,983
 —
 —
 13,460
 1,500
 —
Securities of U.S. states and political subdivisions—
 32,660
 72
 —
 39,868
 34
Mortgage-backed securities—
 148,611
 61
 —
 167,172
 42
Other debt securities (1)—
 36,610
 571
 —
 38,067
 650
Total available-for-sale debt securities7,983
 217,881
 704
 13,460
 246,607
 726
Marketable equity securities—
 99
 —
 —
 110
 —
Derivative assets17
 1
 —
 12
 1
 —
Derivative liabilities(19) (1) —
 (11) (3) —
(1)126Includes corporate debt securities, collateralized loan obligations, and other debt securities.Wells Fargo & Company

Note 16: Fair Values of Assets and Liabilities (continued)


Assets and Liabilities Recorded at Fair Value on a Recurring Basis
Table 16.215.1 presents the balances of assets and liabilities recorded at fair value on a recurring basis.

Table 16.2:15.1: Fair Value on a Recurring Basis
June 30, 2021December 31, 2020
(in millions)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Trading debt securities:
Securities of U.S. Treasury and federal agencies$29,497 2,207 0 31,704 $32,060 3,197 0 35,257 
Collateralized loan obligations0 469 158 627 0 534 148 682 
Corporate debt securities0 12,062 11 12,073 0 10,696 13 10,709 
Federal agency mortgage-backed securities0 33,105 0 33,105 0 23,549 0 23,549 
Non-agency mortgage-backed securities0 1,275 22 1,297 0 1,039 12 1,051 
Other debt securities0 3,920 1 3,921 0 3,847 0 3,847 
Total trading debt securities29,497 53,038 192 82,727 32,060 42,862 173 75,095 
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies35,905 0 0 35,905 22,159 0 0 22,159 
Non-U.S. government securities0 11,201 0 11,201 0 16,813 0 16,813 
Securities of U.S. states and political subdivisions0 19,377 122 19,499 0 19,182 224 19,406 
Federal agency mortgage-backed securities0 96,534 0 96,534 0 139,070 0 139,070 
Non-agency mortgage-backed securities0 4,347 31 4,378 0 3,697 32 3,729 
Collateralized loan obligations0 12,407 0 12,407 0 9,018 0 9,018 
Other debt securities37 7,284 2,652 9,973 38 7,421 2,738 10,197 
Total available-for-sale debt securities35,942 151,150 2,805 189,897 22,197 195,201 2,994 220,392 
Loans held for sale0 17,825 1,069 18,894 0 17,572 1,234 18,806 
Mortgage servicing rights (residential)0 0 6,717 6,717 0 0 6,125 6,125 
Derivative assets (gross):
Interest rate contracts20 26,370 357 26,747 11 35,590 462 36,063 
Commodity contracts0 7,139 95 7,234 0 1,997 39 2,036 
Equity contracts4,620 12,763 1,896 19,279 4,888 12,384 1,613 18,885 
Foreign exchange contracts21 7,664 7 7,692 19 8,573 11 8,603 
Credit contracts0 36 39 75 0 45 50 95 
Total derivative assets (gross)4,661 53,972 2,394 61,027 4,918 58,589 2,175 65,682 
Equity securities:
Marketable25,138 186 1 25,325 23,995 596 5 24,596 
Nonmarketable (1)0 199 9,659 9,858 10 21 9,228 9,259 
Total equity securities25,138 385 9,660 35,183 24,005 617 9,233 33,855 
 Total assets prior to derivative netting$95,238 276,370 22,837 394,445 $83,180 314,841 21,934 419,955 
Derivative netting (2)(35,612)(39,836)
Total assets after derivative netting358,833 380,119 
Derivative liabilities (gross):
Interest rate contracts$(14)(19,418)(43)(19,475)$(27)(26,259)(16)(26,302)
Commodity contracts0 (2,216)(93)(2,309)0 (1,503)(40)(1,543)
Equity contracts(4,108)(15,089)(2,321)(21,518)(4,860)(15,219)(1,927)(22,006)
Foreign exchange contracts(14)(6,280)(7)(6,301)(10)(8,134)(12)(8,156)
Credit contracts0 (44)(6)(50)0 (49)(9)(58)
Total derivative liabilities (gross)(4,136)(43,047)(2,470)(49,653)(4,897)(51,164)(2,004)(58,065)
Short-sale trading liabilities(15,579)(6,464)0 (22,043)(15,292)(7,149)0 (22,441)
Total liabilities prior to derivative netting$(19,715)(49,511)(2,470)(71,696)$(20,189)(58,313)(2,004)(80,506)
Derivative netting (2)35,102 41,556 
Total liabilities after derivative netting(36,594)(38,950)
(1)Excludes $148 million and $154 million of nonmarketable equity securities as of June 30, 2021, and December 31, 2020, respectively, that are measured at fair value using non-published NAV per share (or its equivalent) as a practical expedient that are not classified in the fair value hierarchy.
(2)Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Note 14 (Derivatives) for additional information.
(in millions)Level 1
 Level 2
 Level 3
 Netting (1)
Total
June 30, 2020        
Trading debt securities:        
Securities of U.S. Treasury and federal agencies$30,741
 4,114
 —
 —
34,855
Securities of U.S. states and political subdivisions—
 1,868
 —
 —
1,868
Collateralized loan obligations—
 606
 128
 —
734
Corporate debt securities—
 12,609
 23
 —
12,632
Mortgage-backed securities—
 23,777
 49
 —
23,826
Other—
 741
 23
 —
764
Total trading debt securities30,741
 43,715
 223
 —
74,679
Available-for-sale debt securities:        
Securities of U.S. Treasury and federal agencies7,983
 —
 —
 —
7,983
Securities of U.S. states and political subdivisions—
 32,660
 351
 —
33,011
Mortgage-backed securities:        
Federal agencies—
 144,835
 —
 —
144,835
Residential—
 541
 —
 —
541
Commercial—
 3,498
 61
 —
3,559
Total mortgage-backed securities—
 148,874
 61
 —
148,935
Corporate debt securities35
 3,889
 1,051
 —
4,975
Collateralized loan obligations—
 24,990
 9
 —
24,999
Other—
 8,370
 626
 —
8,996
Total available-for-sale debt securities8,018
 218,783
 2,098
(2)—
228,899
Mortgage loans held for sale—
 17,893
 751
 —
18,644
Loans held for sale—
 1,194
 7
 —
1,201
Loans—
 —
 152
 —
152
Mortgage servicing rights (residential)—
 —
 6,819
 —
6,819
Derivative assets:        
Interest rate contracts37
 47,985
 590
 —
48,612
Commodity contracts—
 2,002
 37
 —
2,039
Equity contracts3,527
 5,692
 1,450
 —
10,669
Foreign exchange contracts17
 6,404
 10
 —
6,431
Credit contracts—
 60
 70
 —
130
Netting—
 —
 —
 (45,105)(45,105)
Total derivative assets3,581
 62,143
 2,157
 (45,105)22,776
Equity securities – excluding securities at NAV:        
Marketable18,822
 195
 —
 —
19,017
Nonmarketable—
 18
 8,165
 —
8,183
Total equity securities18,822
 213
 8,165
 —
27,200
Total assets included in the fair value hierarchy$61,162

343,941

20,372

(45,105)380,370
Equity securities at NAV (3)       139
Total assets recorded at fair value       380,509
Derivative liabilities:        
Interest rate contracts$(44) (36,353) (67) —
(36,464)
Commodity contracts—
 (3,705) (36) —
(3,741)
Equity contracts(3,288) (7,368) (1,430) —
(12,086)
Foreign exchange contracts(19) (7,414) (26) —
(7,459)
Credit contracts—
 (53) (20) —
(73)
Netting—
 —
 —
 48,455
48,455
Total derivative liabilities(3,351) (54,893) (1,579) 48,455
(11,368)
Short sale liabilities:        
Securities of U.S. Treasury and federal agencies(11,080) (207) —
 —
(11,287)
Mortgage-backed securities—
 (1,286) —
 —
(1,286)
Corporate debt securities—
 (5,104) —
 —
(5,104)
Equity securities(2,531) —
 —
 —
(2,531)
Other securities—
 (2) (3) —
(5)
Total short sale liabilities(13,611) (6,599) (3) —
(20,213)
Other liabilities—
 —
 (2) —
(2)
Total liabilities recorded at fair value$(16,962) (61,492) (1,584) 48,455
(31,583)
(1)Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Note 15 (Derivatives) for additional information.Wells Fargo & Company127
(2)
Largely consists of securities that are investment grade based on ratings received from the ratings agencies or internal credit grades categorized as investment grade if external ratings are not available. The securities are classified as Level 3 due to limited market activity.

(3)Consists of certain nonmarketable equity securities that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.

(continued on following page)

(continued from previous page)
(in millions)  
Level 1
 Level 2
 Level 3
 Netting (1)
Total
December 31, 2019        
Trading debt securities:        
Securities of U.S. Treasury and federal agencies$32,335
 4,382
 —
 —
36,717
Securities of U.S. states and political subdivisions—
 2,434
 —
 —
2,434
Collateralized loan obligations—
 555
 183
 —
738
Corporate debt securities—
 11,006
 38
 —
11,044
Mortgage-backed securities—
 27,712
 —
 —
27,712
Other—
 1,086
 2
 —
1,088
Total trading debt securities32,335
 47,175
 223
 —
79,733
Available-for-sale debt securities:        
Securities of U.S. Treasury and federal agencies13,460
 1,500
 —
 —
14,960
Securities of U.S. states and political subdivisions—
 39,924
 413
 —
40,337
Mortgage-backed securities:       
Federal agencies—
 162,453
 —
 —
162,453
Residential—
 827
 —
 —
827
Commercial—
 3,892
 42
 —
3,934
Total mortgage-backed securities—
 167,172
 42
 —
167,214
Corporate debt securities37
 6,159
 367
 —
6,563
Collateralized loan obligations—
 29,055
 —
 —
29,055
Other—
 4,587
 743
 —
5,330
Total available-for-sale debt securities13,497
 248,397
 1,565
(2)—
263,459
Mortgage loans held for sale—
 15,408
 1,198
 —
16,606
Loans held for sale—
 956
 16
 —
972
Loans—
 —
 171
 —
171
Mortgage servicing rights (residential)—
 —
 11,517
 —
11,517
Derivative assets:       
Interest rate contracts26
 23,792
 229
 —
24,047
Commodity contracts—
 1,413
 8
 —
1,421
Equity contracts2,946
 4,135
 1,455
 —
8,536
Foreign exchange contracts12
 5,197
 5
 —
5,214
Credit contracts—
 49
 59
 —
108
Netting—
 —
 —
 (25,123)(25,123)
Total derivative assets2,984
 34,586
 1,756
 (25,123)14,203
Equity securities – excluding securities at NAV:        
Marketable33,702
 216
 3
 —
33,921
Nonmarketable—
 22
 7,847
 —
7,869
Total equity securities33,702
 238
 7,850
 —
41,790
Total assets included in the fair value hierarchy$82,518
 346,760
 24,296
 (25,123)428,451
Equity securities at NAV (3)       146
Total assets recorded at fair value

 

 

 

428,597
Derivative liabilities:       
Interest rate contracts$(23) (19,328) (15) —
(19,366)
Commodity contracts—
 (1,746) (24) —
(1,770)
Equity contracts(2,011) (6,729) (1,724) —
(10,464)
Foreign exchange contracts(11) (6,213) (23) —
(6,247)
Credit contracts—
 (53) (30) —
(83)
Netting—
 —
 —
 28,851
28,851
Total derivative liabilities(2,045) (34,069) (1,816) 28,851
(9,079)
Short sale liabilities:       

Securities of U.S. Treasury and federal agencies(9,035) (31) —
 —
(9,066)
Mortgage-backed securities—
 (2) —
 —
(2)
Corporate debt securities—
 (5,915) —
 —
(5,915)
Equity securities(2,447) —
 —
 —
(2,447)
Other securities—
 —
 —
 —
—
Total short sale liabilities(11,482) (5,948) —
 —
(17,430)
Other liabilities—
 —
 (2) —
(2)
Total liabilities recorded at fair value$(13,527) (40,017) (1,818) 28,851
(26,511)
(1)Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Note 15 (Derivatives) for additional information.
(2)A significant portion of the balance consists of securities that are investment grade based on ratings received from the ratings agencies or internal credit grades categorized as investment grade if external ratings are not available. The securities are classified as Level 3 due to limited market activity.
(3)Consists of certain nonmarketable equity securities that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.

Note 16:15: Fair Values of Assets and Liabilities (continued)(continued)


Changes in Fair Value Levels
We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy and transfer between Level 1, Level 2, and Level 3 accordingly. Observable market data includes but is not limited to quoted prices and market transactions. Changes in economic conditions or market liquidity generally will drive changes in availability of observable market data. Changes in availability of observable market data, which also may result in
changing the valuation technique used, are generally the cause of transfers between Level 1, Level 2, and Level 3. The amounts reported as transfers represent the fair value as of the beginning of the quarter in which the transfer occurred.
The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the quarter ended June 30, 2020, are presented in Table 16.3.

Table 16.3:Changes in Level 3 Fair Value Assets and Liabilities Recorded at Fair Value on a Recurring Basis – Quarter ended June 30, 2020
   
 
Total net gains
(losses) included in
  
Purchases,
sales,
issuances
and
settlements,
net (1)

   
   
   
 Net unrealized gains (losses) related to assets and liabilities held at period end included in 
(in millions)
Balance,
beginning
of period

 
Net
income

 
Other
compre-
hensive
income

  
Transfers into
Level 3 (2)

 
Transfers
out of
Level 3 (3)

 
Balance,
end of
period

 Net income(4)Other compre-hensive income
Quarter ended June 30, 2020                         
Trading debt securities:                         
Securities of U.S. states and political subdivisions$—
 —
 —
 —
 —
 —
 —
 —
  —
Collateralized loan obligations154
 —
 —
 4
 (5) (25) 128
 (2)  —
Corporate debt securities34
 (7) —
 1
 —
 (5) 23
 1
  —
Mortgage-backed securities177
 35
 —
 (148) 4
 (19) 49
 12
  —
Other24
 5
 —
 (22) 16
 —
 23
 3
 —
Total trading debt securities389
 33
 —
 (165) 15
 (49) 223
 14
(5)—
Available-for-sale debt securities:                          
Securities of U.S. states and political subdivisions351
 1
 2
 (23) 35
 (15) 351
 —
  —
Mortgage-backed securities:                         
Residential31
 5
 —
 (25) —
 (11) —
 —
  —
Commercial154
 (2) (1) (1) 31
 (120) 61
 (2)  (1)
Total mortgage-backed securities185
 3
 (1) (26) 31
 (131) 61
 (2) (1)
Corporate debt securities1,130
 (2) 43
 (46) —
 (74) 1,051
 (2)  42
Collateralized loan obligations50
 —
 (1) —
 10
 (50) 9
 —
  —
Other696
 3
 (27) (28) 9
 (27) 626
 (1)  (28)
Total available-for-sale debt securities2,412
 5
 16
 (123) 85
 (297) 2,098
 (5)(6)13
Mortgage loans held for sale3,157
 (37) —
 (251) 80
 (2,198) 751
 (27)(7)—
Loans held for sale19
 (4) —
 (7) —
 (1) 7
 (5)(5)—
Loans160
 (2) —
 (6) —
 —
 152
 (4)(7)—
Mortgage servicing rights (residential)(8)8,126
 (1,768) —
 461
 —
 —
 6,819
 (1,131)(7)—
Net derivative assets and liabilities:                         
Interest rate contracts685
 460
 —
 (622) —
 —
 523
 291
  —
Commodity contracts(44) 15
 —
 12
 18
 —
 1
 45
  —
Equity contracts217
 (277) —
 79
 —
 1
 20
 (387)  —
Foreign exchange contracts(6) (12) —
 2
 —
 —
 (16) 2
  —
Credit contracts47
 4
 —
 (1) —
 —
 50
 —
  —
Total derivative contracts899
 190
 —
 (530) 18
 1
 578
 (49)(9)—
Equity securities:                 
Marketable3
 —
 —
 —
 —
 (3) —
 —
 —
Nonmarketable6,751
 1,414
 —
 —
 —
 —
 8,165
 1,414
 —
Total equity securities6,754
 1,414
 —
 —
 —
 (3) 8,165
 1,414
(10)—
Short sale liabilities—
 —
 —
 (3) —
 —
 (3) —
(5)—
Other liabilities(2) —
 —
 —
 —
 —
 (2) —
(7)—
(1)
See Table 16.4 for detail.
(2)All assets and liabilities transferred into level 3 were previously classified within level 2.
(3)All assets and liabilities transferred out of level 3 are classified as level 2.
(4)Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.
(5)Included in net gains from trading activities in the income statement.
(6)Included in net gains from debt securities and provision (reversal of provision) for credit losses - debt securities in the income statement.
(7)Included in mortgage banking and other noninterest income in the income statement.
(8)For more information on the changes in mortgage servicing rights, see Note 11 (Mortgage Banking Activities).
(9)Included in mortgage banking income, net gains from trading activities, net gains (losses) from equity securities and other noninterest income in the income statement.
(10)Included in net gains (losses) from equity securities in the income statement.
(continued on following page)


(continued from previous page)
Table 16.4 presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the quarter ended June 30, 2020.

Table 16.4:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Quarter ended June 30, 2020
(in millions)Purchases
 Sales
 Issuances
 Settlements
 Net
Quarter ended June 30, 2020              
Trading debt securities:              
Securities of U.S. states and political subdivisions$—
 —
 —
 —
 —
Collateralized loan obligations86
 (82) —
 —
 4
Corporate debt securities22
 (21) —
 —
 1
Mortgage-backed securities72
 (216) —
 (4) (148)
Other6
 (27) —
 (1) (22)
Total trading debt securities186
 (346) —
 (5) (165)
Available-for-sale debt securities:              
Securities of U.S. states and political subdivisions—
 —
 —
 (23) (23)
Mortgage-backed securities:              
Residential(1) (23) —
 (1) (25)
Commercial—
 —
 —
 (1) (1)
Total mortgage-backed securities(1) (23) —
 (2) (26)
Corporate debt securities6
 —
 —
 (52) (46)
Collateralized loan obligations—
 —
 —
 —
 —
Other—
 (5) —
 (23) (28)
Total available-for-sale debt securities5
 (28) —
 (100) (123)
Mortgage loans held for sale32
 (281) 62
 (64) (251)
Loans held for sale—
 (7) —
 —
 (7)
Loans—
 —
 2
 (8) (6)
Mortgage servicing rights (residential) (1)—
 (1) 462
 —
 461
Net derivative assets and liabilities:              
Interest rate contracts—
 —
 —
 (622) (622)
Commodity contracts—
 —
 —
 12
 12
Equity contracts—
 —
 —
 79
 79
Foreign exchange contracts—
 —
 —
 2
 2
Credit contracts2
 (1) —
 (2) (1)
Total derivative contracts2
 (1) —
 (531) (530)
Equity securities:         
Marketable—
 —
 —
 —
 —
Nonmarketable—
 —
 —
 —
 —
Total equity securities—
 —
 —
 —
 —
Short sale liabilities—
 (3) —
 —
 (3)
Other liabilities—
 —
 —
 —
 —
(1)For more information on the changes in mortgage servicing rights, see Note 11 (Mortgage Banking Activities).

Note 16: Fair Values of Assets and Liabilities (continued)


Table 16.515.2 presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the quarter ended June 30, 2019.basis.



Table 16.5:15.2: Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – Quarter ended June 30, 2019
Net unrealized gains (losses)
related to assets and liabilities held at period end
(in millions)Balance,
beginning
of period		Net gains/(losses) (1)Purchases (2)SalesSettlementsTransfers 
into 
Level 3 (3)		Transfers
out of
Level 3 (4)		Balance, 
end of 
period		(5)
Quarter ended June 30, 2021
Trading debt securities$192 4 123 (129)(5)15 (8)192 1 (6)
Available-for-sale debt securities3,142 28 9 0 (120)11 (265)2,805 41 (6)
Loans held for sale1,166 15 131 (231)(107)97 (2)1,069 9 (7)
Mortgage servicing rights (residential) (8)7,536 (1,297)485 (7)0 0 0 6,717 (809)(7)
Net derivative assets and liabilities:
Interest rate contracts1 458 0 0 (145)0 0 314 167 
Equity contracts(429)(158)0 0 120 (10)52 (425)(130)
Other derivative contracts56 (67)2 (1)42 0 3 35 (16)
Total derivative contracts(372)233 2 (1)17 (10)55 (76)21 (9)
Equity securities8,865 794 0 0 0 1 0 9,660 794 (6)
Quarter ended June 30, 2020
Trading debt securities$389 33 186 (346)(5)15 (49)223 14 (6)
Available-for-sale debt securities2,412 21 5 (28)(100)85 (297)2,098 8 (6)
Loans held for sale3,176 (41)94 (288)(64)80 (2,199)758 (32)(7)
Mortgage servicing rights (residential) (8)8,126 (1,768)462 (1)0 0 0 6,819 (1,131)(7)
Net derivative assets and liabilities:
Interest rate contracts685 460 0 0 (622)0 0 523 291 
Equity contracts217 (277)0 0 79 0 1 20 (387)
Other derivative contracts(3)7 2 (1)12 18 0 35 47 
Total derivative contracts899 190 2 (1)(531)18 1 578 (49)(9)
Equity securities6,754 1,414 0 0 0 0 (3)8,165 1,414 (6)
Six months ended June 30, 2021
Trading debt securities$173 20 292 (302)(5)22 (8)192 5 (6)
Available-for-sale debt securities2,994 21 24 0 (188)253 (299)2,805 16 (6)
Loans held for sale1,234 (4)260 (379)(217)178 (3)1,069 (5)(7)
Mortgage servicing rights (residential) (8)6,125 (291)891 (8)0 0 0 6,717 782 (7)
Net derivative assets and liabilities:
Interest rate contracts446 (83)0 0 (44)0 (5)314 109 
Equity contracts(314)(326)0 0 160 (37)92 (425)(236)
Other derivative contracts39 (40)2 (1)32 0 3 35 4 
Total derivative contracts171 (449)2 (1)148 (37)90 (76)(123)(9)
Equity securities9,233 429 0 (5)0 3 0 9,660 429 (6)
Six months ended June 30, 2020
Trading debt securities$223 (85)476 (439)(15)115 (52)223 (69)(6)
Available-for-sale debt securities1,565 (121)31 (33)(148)1,172 (368)2,098 (99)(6)
Loans held for sale1,214 (104)960 (358)(162)1,409 (2,201)758 (34)(7)
Mortgage servicing rights (residential) (8)11,517 (5,589)923 (33)1 0 0 6,819 (4,388)(7)
Net derivative assets and liabilities:
Interest rate contracts214 1,204 0 0 (895)0 0 523 374 
Equity contracts(269)153 0 0 152 (10)(6)20 48 
Other derivative contracts(5)(48)8 (4)72 12 0 35 33 
Total derivative contracts(60)1,309 8 (4)(671)2 (6)578 455 (9)
Equity securities7,850 313 0 0 0 7 (5)8,165 310 (6)
(1)Includes net gains (losses) included in both net income and other comprehensive income. All amounts represent net gains (losses) included in net income except for $22 million and $36 million included in other comprehensive income from available-for-sale debt securities in the second quarter and first half of 2021, respectively. The corresponding amounts for the second quarter and first half of 2020 were $16 million and $(75) million, respectively.
(2)Includes originations of mortgage servicing rights and loans held for sale.
(3)All assets and liabilities transferred into Level 3 were previously classified within Level 2.
(4)All assets and liabilities transferred out of Level 3 are classified as Level 2.
(5)Includes net unrealized gains (losses) related to assets and liabilities held at period end included in both net income and other comprehensive income. All amounts represent net unrealized gains (losses) included in net income except for $38 million and $31 million included in other comprehensive income from available-for-sale debt securities in the second quarter and first half of 2021 , respectively. The corresponding amounts for the second quarter and first half of 2020 were $13 million and $(40) million, respectively.
(6)Included in net gains on trading and securities in the consolidated statement of income.
(7)Included in mortgage banking income in the consolidated statement of income.
(8)For additional information on the changes in mortgage servicing rights, see Note 9 (Mortgage Banking Activities).
(9)Included in mortgage banking income, net gains on trading and securities, and other noninterest income in the consolidated statement of income.
  
Balance,
beginning
of period

 
Total net gains
(losses) included in
  
Purchases,
sales,
issuances
and
settlements,
net (1)

   
   
   
 Net unrealized gains (losses)included in income related to assets and liabilities held at period end
 
(in millions) 
Net
income 

 
Other
compre-
hensive
income

  
Transfers
into
Level 3 (2)

 
Transfers
out of
Level 3 (3)

 
Balance,
end of
period

 (4)
Quarter ended June 30, 2019                         
Trading debt securities:                         
Securities of U.S. states and political subdivisions$—
 —
 —
 —
 —
 —
 —
 —
  
Collateralized loan obligations275
 (2) —
 (24) —
 —
 249
 (6)  
Corporate debt securities41
 1
 —
 3
 —
 (1) 44
 1
  
Mortgage-backed securities—
 —
 —
 —
 —
 —
 —
 —
  
Other15
 (1) —
 —
 —
 —
 14
 —
  
Total trading debt securities331
 (2) —
 (21) —
 (1) 307
 (5)(5)
Available-for-sale debt securities:                         
Securities of U.S. states and political subdivisions470
 1
 2
 (33) —
 (49) 391
 —
  
Mortgage-backed securities:                       
Residential—
 —
 —
 —
 —
 —
 —
 —
  
Commercial41
 —
 —
 —
 —
 —
 41
 —
  
Total mortgage-backed securities41
 —
 —
 —
 —
 —
 41
 —
  
Corporate debt securities377
 —
 (1) 7
 —
 —
 383
 —
  
Other1,117
 7
 (6) (128) —
 —
 990
 —
  
Total available-for-sale debt securities2,005
 8
 (5) (154) —
 (49) 1,805
 —
(6)
Mortgage loans held for sale998
 37
 —
 (22) 104
 (2) 1,115
 39
(7)
Loans held for sale71
 —
 —
 (3) —
 (56) 12
 —
(5)
Loans225
 1
 —
 (24) —
 —
 202
 (2)(7)
Mortgage servicing rights (residential) (8)13,336
 (1,639) —
 399
 —
 —
 12,096
 (1,078)(7)
Net derivative assets and liabilities:                       
Interest rate contracts101
 237
 —
 (133) —
 —
 205
 141
  
Commodity contracts(18) (75) —
 64
 —
 —
 (29) (10)  
Equity contracts(162) 15
 —
 (66) (2) (13) (228) (29)  
Foreign exchange contracts(16) 3
 —
 3
 —
 —
 (10) 7
  
Credit contracts49
 (3) —
 (1) —
 —
 45
 (3)  
Total derivative contracts(46) 177
 —
 (133) (2) (13) (17) 106
(9)
Equity securities:                
Marketable—
 —
 —
 —
 —
 —
 —
 —
 
Nonmarketable6,381
 724
 —
 —
 5
 —
 7,110
 724
 
Total equity securities6,381
 724
 —
 —
 5
 —
 7,110
 724
(10)
Other liabilities(2) —
 —
 —
 —
 —
 (2) —
(7)
(1)128
See Wells Fargo & CompanyTable 16.6 for detail.
(2)All assets and liabilities transferred into level 3 were previously classified within level 2.
(3)All assets and liabilities transferred out of level 3 are classified as level 2.
(4)Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.
(5)Included in net gains from trading activities in the income statement.
(6)Included in net gains from debt securities in the income statement.
(7)Included in mortgage banking and other noninterest income in the income statement.
(8)For more information on the changes in mortgage servicing rights, see Note 11 (Mortgage Banking Activities).
(9)Included in mortgage banking income, net gains from trading activities, net gains (losses) from equity securities and other noninterest income in the income statement.
(10)Included in net gains (losses) from equity securities in the income statement.
(continued on following page)


(continued from previous page)
Table 16.6 presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the quarter ended June 30, 2019.

Table 16.6:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Quarter ended June 30, 2019
(in millions)Purchases
 Sales
 Issuances
 Settlements
 Net
Quarter ended June 30, 2019         
Trading debt securities:         
Securities of U.S. states and political subdivisions$—
 —
 —
 —
 —
Collateralized loan obligations44
 (65) —
 (3) (24)
Corporate debt securities6
 (3) —
 —
 3
Mortgage-backed securities—
 —
 —
 —
 —
Other—
 —
 —
 —
 —
Total trading debt securities50
 (68) —
 (3) (21)
Available-for-sale debt securities:         
Securities of U.S. states and political subdivisions—
 —
 6
 (39) (33)
Mortgage-backed securities:        
Residential—
 —
 —
 —
 —
Commercial—
 —
 —
 —
 —
Total mortgage-backed securities—
 —
 —
 —
 —
Corporate debt securities8
 —
 —
 (1) 7
Other—
 (2) 57
 (183) (128)
Total available-for-sale debt securities8
 (2) 63
 (223) (154)
Mortgage loans held for sale30
 (47) 54
 (59) (22)
Loans held for sale—
 (1) —
 (2) (3)
Loans—
 —
 2
 (26) (24)
Mortgage servicing rights (residential) (1)—
 (1) 400
 —
 399
Net derivative assets and liabilities:         
Interest rate contracts—
 —
 —
 (133) (133)
Commodity contracts—
 —
 —
 64
 64
Equity contracts—
 —
 —
 (66) (66)
Foreign exchange contracts—
 —
 —
 3
 3
Credit contracts2
 (3) —
 —
 (1)
Total derivative contracts2
 (3) —
 (132) (133)
Equity securities:         
Marketable—
 —
 —
 —
 —
Nonmarketable—
 —
 —
 —
 —
Total equity securities—
 —
 —
 —
 —
Other liabilities—
 —
 —
 —
 —

(1)For more information on the changes in mortgage servicing rights, see Note 11 (Mortgage Banking Activities).

Note 16: Fair Values of Assets and Liabilities (continued)


The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the six months ended June 30, 2020, are presented in Table 16.7.
Table 16.7:Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – Six months ended June 30, 2020
   
 
Total net gains
(losses) included in
  
Purchases,
sales,
issuances
and
settlements,
net (1)

   
   
   
 
Net unrealized gains (losses)
related to assets and liabilities held at period end included in
 
(in millions)
Balance,
beginning
of period

 
Net
income

 
Other
compre-
hensive
income

  
Transfers
into
Level 3 (2)

 
Transfers
out of
Level 3 (3)

 
Balance,
end of
period

 Net income
(4)
Other
compre-
hensive
income

Six months ended June 30, 2020                         
Trading debt securities:                         
Securities of U.S. states and political subdivisions$—
 —
 —
 —
 —
 —
 —
 —
  —
Collateralized loan obligations183
 (69) —
 23
 16
 (25) 128
 (62)  —
Corporate debt securities38
 (11) —
 4
 —
 (8) 23
 —
  —
Mortgage-backed securities—
 (7) —
 23
 52
 (19) 49
 (5)  —
Other2
 2
 —
 (28) 47
 —
 23
 (2) —
Total trading debt securities223
 (85) —
 22
 115
 (52) 223
 (69)(5)
—
Available-for-sale debt securities:                          
Securities of U.S. states and political subdivisions413
 1
 —
 (44) 67
 (86) 351
 —
  
—
Mortgage-backed securities:                         
Residential—
 —
 (3) 1
 13
 (11) —
 —
  
—
Commercial42
 1
 (14) (3) 155
 (120) 61
 (2)  
(2)
Total mortgage-backed securities42
 1
 (17) (2) 168
 (131) 61
 (2) (2)
Corporate debt securities367
 (54) 27
 (46) 831
 (74) 1,051
 (56)  
36
Collateralized loan obligations—
 —
 (9) —
 68
 (50) 9
 —
  
—
Other743
 6
 (76) (58) 38
 (27) 626
 (1)  
(74)
Total available-for-sale debt securities1,565
 (46) (75) (150) 1,172
 (368) 2,098
 (59)(6)(40)
Mortgage loans held for sale1,198
 (98) —
 449
 1,402
 (2,200) 751
 (30)(7)—
Loans held for sale16
 (6) —
 (9) 7
 (1) 7
 (4)(5)—
Loans171
 (2) —
 (17) —
 —
 152
 (6)(7)—
Mortgage servicing rights (residential) (8)11,517
 (5,589) —
 891
 —
 —
 6,819
 (4,388)(7)—
Net derivative assets and liabilities:                        
Interest rate contracts214
 1,204
 —
 (895) —
 —
 523
 374
  
—
Commodity contracts(16) (65) —
 70
 12
 —
 1
 18
  
—
Equity contracts(269) 153
 —
 152
 (10) (6) 20
 48
  
—
Foreign exchange contracts(18) (2) —
 4
 —
 —
 (16) (6)  
—
Credit contracts29
 19
 —
 2
 —
 —
 50
 21
  
—
Total derivative contracts(60) 1,309
 —
 (667) 2
 (6) 578
 455
(9)—
Equity securities:                 
Marketable3
 —
 —
 —
 —
 (3) —
 —
 —
Nonmarketable7,847
 313
 —
 —
 7
 (2) 8,165
 310
 —
Total equity securities7,850
 313
 —
 —
 7
 (5) 8,165
 310
(10)—
Short sale liabilities—
 —
 —
 (3) —
 —
 (3) —
(5)—
Other liabilities(2) —
 —
 —
 —
 —
 (2) —
(7)—
(1)See Table 16.8 for detail.
(2)All assets and liabilities transferred into level 3 were previously classified within level 2.
(3)All assets and liabilities transferred out of level 3 are classified as level 2.
(4)Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.
(5)Included in net gains from trading activities in the income statement.
(6)Included in net gains from debt securities and provision (reversal of provision) for credit losses - debt securities in the income statement.
(7)Included in mortgage banking and other noninterest income in the income statement.
(8)For more information on the changes in mortgage servicing rights, see Note 11 (Mortgage Banking Activities).
(9)Included in mortgage banking income, net gains from trading activities, net gains (losses) from equity securities and other noninterest income in the income statement.
(10)Included in net gains (losses) from equity securities in the income statement.
(continued on following page)

(continued from previous page)
Table 16.8 presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for six months ended June 30, 2020.


Table 16.8:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Six months ended June 30, 2020
(in millions)Purchases
 Sales
 Issuances
 Settlements
 Net
Six months ended June 30, 2020              
Trading debt securities:              
Securities of U.S. states and political subdivisions$—
 —
 —
 —
 —
Collateralized loan obligations171
 (138) —
 (10) 23
Corporate debt securities32
 (28) —
 —
 4
Mortgage-backed securities267
 (240) —
 (4) 23
Other6
 (33) —
 (1) (28)
Total trading debt securities476
 (439) —
 (15) 22
Available-for-sale debt securities:              
Securities of U.S. states and political subdivisions—
 —
 —
 (44) (44)
Mortgage-backed securities:              
Residential25
 (23) —
 (1) 1
Commercial—
 —
 —
 (3) (3)
Total mortgage-backed securities25
 (23) —
 (4) (2)
Corporate debt securities6
 —
 —
 (52) (46)
Collateralized loan obligations—
 —
 —
 —
 —
Other—
 (10) —
 (48) (58)
Total available-for-sale debt securities31
 (33) —
 (148) (150)
Mortgage loans held for sale55
 (350) 905
 (161) 449
Loans held for sale—
 (8) —
 (1) (9)
Loans1
 —
 4
 (22) (17)
Mortgage servicing rights (residential) (1)—
 (33) 923
 1
 891
Net derivative assets and liabilities:              
Interest rate contracts—
 —
 —
 (895) (895)
Commodity contracts—
 —
 —
 70
 70
Equity contracts—
 —
 —
 152
 152
Foreign exchange contracts—
 —
 —
 4
 4
Credit contracts8
 (4) —
 (2) 2
Total derivative contracts8
 (4) —
 (671) (667)
Equity securities:         
Marketable—
 —
 —
 —
 —
Nonmarketable—
 —
 —
 —
 —
Total equity securities—
 —
 —
 —
 —
Short sale liabilities—
 (3) —
 —
 (3)
Other liabilities—
 —
 —
 —
 —
(1)For more information on the changes in mortgage servicing rights, see Note 11 (Mortgage Banking Activities).

Note 16: Fair Values of Assets and Liabilities (continued)


The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for six months ended June 30, 2019, are presented in Table 16.9.

Table 16.9:Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis – Six months ended June 30, 2019
  
Balance,
beginning
of period

 
Total net gains
(losses) included in
  
Purchases,
sales,
issuances
and
settlements,
net (1)

   
   
   
 
Net unrealized
gains (losses)
included in
income related
to assets and
liabilities held
at period end

  
(in millions) 
Net
income 

 
Other
compre-
hensive
income

  
Transfers
into
Level 3 (2)

 
Transfers
out of
Level 3 (3)

 
Balance,
end of
period

 (4)
Six months ended June 30, 2019                         
Trading debt securities:                         
Securities of U.S. states and political subdivisions$3
 —
 —
 (2) —
 (1) —
 —
  
Collateralized loan obligations237
 (5) —
 17
 —
 —
 249
 (4)  
Corporate debt securities34
 3
 —
 7
 1
 (1) 44
 3
  
Mortgage-backed securities—
 —
 —
 —
 —
 —
 —
 —
  
Other16
 (2) —
 —
 —
 —
 14
 —
 
Total trading debt securities290
 (4) —
 22
 1
 (2) 307
 (1)(5)
Available-for-sale debt securities:                         
Securities of U.S. states and political subdivisions444
 1
 5
 (10) —
 (49) 391
 —
  
Mortgage-backed securities:                        
Residential—
 —
 —
 —
 —
 —
 —
 —
  
Commercial41
 —
 —
 —
 —
 —
 41
 —
  
Total mortgage-backed securities41
 —
 —
 —
 —
 —
 41
 —
 
Corporate debt securities370
 1
 3
 9
 —
 —
 383
 —
  
Other1,189
 13
 (11) (201) —
 —
 990
 —
  
Total available-for-sale debt securities2,044
 15
 (3) (202) —
 (49) 1,805
 —
(6)
Mortgage loans held for sale997
 52
 —
 (88) 160
 (6) 1,115
 54
(7)
Loans held for sale60
 —
 —
 8
 37
 (93) 12
 —
(5)
Loans244
 1
 —
 (43) —
 —
 202
 (4)(7)
Mortgage servicing rights (residential) (8)14,649
 (3,012) —
 459
 —
 —
 12,096
 (1,969)(7)
Net derivative assets and liabilities:                        
Interest rate contracts25
 424
 —
 (244) —
 —
 205
 220
  
Commodity contracts4
 (126) —
 91
 2
 —
 (29) (26)  
Equity contracts(17) (104) —
 (69) 7
 (45) (228) (175)  
Foreign exchange contracts(26) 10
 —
 6
 —
 —
 (10) 17
  
Credit contracts35
 5
 —
 5
 —
 —
 45
 10
  
Total derivative contracts21
 209
 —
 (211) 9
 (45) (17) 46
(9)
Equity securities:                
Marketable—
 —
 —
 —
 —
 —
 —
 —
 
Nonmarketable5,468
 1,650
 —
 (1) 5
 (12) 7,110
 1,650
 
Total equity securities5,468
 1,650
 —
 (1) 5
 (12) 7,110
 1,650
(10)
Other liabilities(2) —
 —
 —
 —
 —
 (2) —
(7)
(1)See Table 16.10 for detail.
(2)All assets and liabilities transferred into level 3 were previously classified within level 2.
(3)All assets and liabilities transferred out of level 3 are classified as level 2.
(4)Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time.
(5)Included in net gains from trading activities in the income statement.
(6)Included in net gains from debt securities in the income statement.
(7)Included in mortgage banking and other noninterest income in the income statement.
(8)For more information on the changes in mortgage servicing rights, see Note 11 (Mortgage Banking Activities).
(9)Included in mortgage banking income, net gains from trading activities, net gains (losses) from equity securities and other noninterest income in the income statement.
(10)Included in net gains (losses) from equity securities in the income statement.
(continued on following page)

(continued from previous page)

Table 16.10 presents gross purchases, sales, issuances and settlements related to the changes in Level 3 assets and liabilities measured at fair value on a recurring basis for six months ended June 30, 2019.
Table 16.10:Gross Purchases, Sales, Issuances and Settlements – Level 3 – Six months ended June 30, 2019
(in millions)Purchases
 Sales
 Issuances
 Settlements
 Net
Six months ended June 30, 2019              
Trading debt securities:              
Securities of U.S. states and political subdivisions$—
 —
 —
 (2) (2)
Collateralized loan obligations174
 (152) —
 (5) 17
Corporate debt securities11
 (4) —
 —
 7
Mortgage-backed securities—
 —
 —
 —
 —
Other—
 —
 —
 —
 —
Total trading debt securities185
 (156) —
 (7) 22
Available-for-sale debt securities:              
Securities of U.S. states and political subdivisions—
 —
 55
 (65) (10)
Mortgage-backed securities:             
Residential—
 —
 —
 —
 —
Commercial—
 —
 —
 —
 —
Total mortgage-backed securities—
 —
 —
 —
 —
Corporate debt securities11
 —
 —
 (2) 9
Other—
 (5) 123
 (319) (201)
Total available-for-sale debt securities11
 (5) 178
 (386) (202)
Mortgage loans held for sale46
 (140) 100
 (94) (88)
Loans held for sale12
 (2) —
 (2) 8
Loans2
 —
 5
 (50) (43)
Mortgage servicing rights (residential) (1)—
 (282) 741
 —
 459
Net derivative assets and liabilities:             
Interest rate contracts—
 —
 —
 (244) (244)
Commodity contracts—
 —
 —
 91
 91
Equity contracts—
 —
 —
 (69) (69)
Foreign exchange contracts—
 —
 —
 6
 6
Credit contracts8
 (3) —
 —
 5
Total derivative contracts8
 (3) —
 (216) (211)
Equity securities:         
Marketable—
 —
 —
 —
 —
Nonmarketable—
 (1) —
 —
 (1)
Total equity securities—
 (1) —
 —
 (1)
Other liabilities—
 —
 —
 —
 —
(1)For more information on the changes in mortgage servicing rights, see Note 11 (Mortgage Banking Activities).

Table 16.11 and Table 16.12 provide15.3 provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of substantially all of our Level 3 assets and liabilities measured at fair value on a recurring basis for which we use an internal model.basis.
The significant unobservable inputs for Level 3 assets and liabilities inherent in the fair values obtained from third-party vendors are not included in the table, as the specific inputs applied are not
provided by the vendor.
In addition, the table excludes the valuation techniquesvendor (for additional information on vendor-developed valuations, see Note 17 (Fair Values of Assets and significant unobservable inputs for certain classes of Level 3 assets and liabilities measured using internal models that we consider, both individually andLiabilities) in the aggregate, insignificant relative to our overall Level 3 assets and liabilities. We made this determination based upon an evaluation of each class, which considered the magnitude of the positions, nature of the unobservable inputs and potential for significant changes in fair value due to changes in those inputs.2020 Form 10-K).
Weighted averages of inputs are calculated using outstanding unpaid principal balance for cash instruments, such as loans and securities, and notional amounts for derivative instruments.
For information on how changes in significant unobservable inputs affect the fair values of Level 3 assets and liabilities, see Note 19 (Fair Values of Assets and Liabilities) in our 2019 Form 10-K. 
Note 16: Fair Values of Assets and Liabilities (continued)


Table 16.11: Valuation Techniques – Recurring Basis – June 30, 2020
($ in millions, except cost to service amounts)Fair Value Level 3
 Valuation Technique(s) 
Significant
Unobservable Inputs
 
Range of Inputs 
Positive (Negative)
   
Weighted
Average

June 30, 2020            
Trading and available-for-sale debt securities:            
Securities of U.S. states and
political subdivisions
$279
 Discounted cash flow Discount rate 0.6
-4.8
% 1.4
 72
 Vendor priced         
Collateralized loan obligations127
 Market comparable pricing Comparability adjustment (31.6)-31.0
  (12.3)
 10
 Vendor priced         
Corporate debt securities852
 Discounted cash flow Discount rate 3.6
-14.8
  4.2
 100
 Market comparable pricing Comparability adjustment (29.4)-8.8
  (22.1)
 122
 Vendor priced         
Mortgage-backed securities49
 Market comparable pricing Comparability adjustment (29.2)-(4.7)  (12.9)
 61
 Vendor priced         
Other debt securities64
 Discounted cash flow Discount rate 1.4
-3.4
  2.6
 23
 Market comparable pricing Comparability adjustment (5.4)-9.2
  (3.0)
 562
 Vendor priced         
Mortgage loans held for sale (residential)735
 Discounted cash flow Default rate 0.0
-27.8
  1.4
     Discount rate 2.5
-6.0
  5.2
     Loss severity 0.0
-32.0
  21.5
     Prepayment rate 7.6
-22.1
  14.8
 16
 Market comparable pricing Comparability adjustment (50.0)-(14.3)  (38.1)
Loans (1)152
 Discounted cash flow Discount rate 3.9
-5.6
  4.3
     Default rate 0.0
 29.6
  0.6
     Prepayment rate 8.1
-100.0
  85.3
     Loss severity 0.0
-41.9
  14.9
Mortgage servicing rights (residential)6,819
 Discounted cash flow Cost to service per loan (2) $65
-1,138
  152
     Discount rate 6.1
-9.1
% 6.8
     Prepayment rate (3) 12.7
-26.4
  18.5
Net derivative assets and (liabilities):            
Interest rate contracts215
 Discounted cash flow Default rate 0.0
-6.0
  1.6
     Loss severity 50.0
-50.0
  50.0
     Prepayment rate 2.8
-22.0
  14.7
 13
 Market comparable pricing Comparability adjustment (23.7) (21.2)  (22.2)
Interest rate contracts: derivative loan
commitments
295
 Discounted cash flow Fall-out factor 1.0
-99.0
  20.5
     Initial-value servicing (37.1)-137.0
bps 42.3
Equity contracts171
 Discounted cash flow Conversion factor (8.8)-0.0
% (7.7)
     Weighted average life 0.5
-2.5
yrs 1.1
 (151) Option model Correlation factor (77.0)-99.0
% 37.7
     Volatility factor 6.5
-83.4
  27.0
Credit contracts38
 Market comparable pricing Comparability adjustment (96.8)-477.6
  14.8
 12
 Option model Credit spread 0.0
-86.2
  2.5
     Loss severity 12.0
-60.0
  45.4
Nonmarketable equity securities8,165
 Market comparable pricing Comparability adjustment 4.2
-22.0
  13.6
             
Insignificant Level 3 assets, net of liabilities(13)           
Total level 3 assets, net of liabilities$18,788
(4)          
(1)Consists of reverse mortgage loans.
(2)
The high end of the range of inputs is for servicing modified loans. For non-modified loans the range is $65 to $273 per loan.
(3)Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.
(4)
Consists of total Level 3 assets of $20.4 billion and total Level 3 liabilities of $1.6 billion, before netting of derivative balances.


Table 16.12:15.3: Valuation Techniques – Recurring Basis –
($ in millions, except cost to service amounts)Fair Value Level 3Valuation TechniqueSignificant
Unobservable Input		Range of Inputs Weighted
Average
June 30, 2021
Trading and available-for-sale debt securities$1,926 Discounted cash flowDiscount rate0.4 -12.4 %4.4 
747 Vendor priced
193 Market comparable pricingComparability adjustment(29.1)-9.5 (6.6)
131 Market comparable pricingMultiples0.4x-12.1x6.5x
Loans held for sale1,069 Discounted cash flowDefault rate0.0 -35.7 %1.5 
Discount rate1.1 -12.5 4.6 
Loss severity0.0 -32.9 15.8 
Prepayment rate6.9 -17.6 12.9 
Mortgage servicing rights (residential)6,717 Discounted cash flowCost to service per loan (1)$57 -642 111 
Discount rate4.6 -8.3 %5.4 
Prepayment rate (2)14.2 -21.4 17.2 
Net derivative assets and (liabilities):
Interest rate contracts139 Discounted cash flowDefault rate0.0 -6.0 1.9 
Loss severity50.0 -50.0 50.0 
Prepayment rate2.8 -22.0 18.5 
Interest rate contracts: derivative loan
commitments
175 Discounted cash flowFall-out factor1.0 -99.0 20.2 
Initial-value servicing(65.9)-151.0 bps89.9 
Equity contracts239 Discounted cash flowConversion factor(9.3)-0.0 %(9.0)
Weighted average life0.0-2.5yrs1.4
(664)Option modelCorrelation factor(77.0)-99.0 %17.5 
Volatility factor6.5 -78.8 21.8 
Nonmarketable equity securities9,659 Market comparable pricingComparability adjustment(19.3)-(5.5)(15.6)
Insignificant Level 3 assets, net of liabilities36 
Total Level 3 assets, net of liabilities$20,367 (3)
December 31, 2020
Trading and available-for-sale debt securities$2,126 Discounted cash flowDiscount rate0.4 -14.7 %3.6 
759 Vendor priced
173 Market comparable pricingComparability adjustment(39.8)-0.3 (8.4)
109 Market comparable pricingMultiples7.2x-12.1x8.0x
Loans held for sale1,234 Discounted cash flowDefault rate0.0 -31.6 %1.7 
Discount rate1.3 -12.0 4.5 
Loss severity0.0 -32.3 18.4 
Prepayment rate8.3 -23.6 15.1 
Mortgage servicing rights (residential)6,125 Discounted cash flowCost to service per loan (1)$63 -712 130 
Discount rate4.9 -8.3 %5.8 
Prepayment rate (2)14.3 -22.8 19.9 
Net derivative assets and (liabilities):
Interest rate contracts206 Discounted cash flowDefault rate0.0 -6.0 1.7 
Loss severity50.0 -50.0 50.0 
Prepayment rate2.8 -22.0 18.2 
Interest rate contracts: derivative loan
commitments		240 Discounted cash flowFall-out factor1.0 -99.0 28.8 
Initial-value servicing(51.6)-268.0  bps65.5 
Equity contracts220 Discounted cash flowConversion factor(8.6)-0.0 %(8.2)
Weighted average life0.5-2.0 yrs1.0
(534)Option modelCorrelation factor(77.0)-99.0 %24.8 
Volatility factor6.5 -96.6 26.4 
Nonmarketable equity securities9,228 Market comparable pricingComparability adjustment(20.3)-(3.2)(13.8)
Insignificant Level 3 assets, net of liabilities44 
Total Level 3 assets, net of liabilities$19,930 (3)
(1)The high end of the range of inputs is for servicing modified loans. For non-modified loans the range is $57 - $239 at June 30, 2021, and $63 - $252 at December 31, 20192020.
(2)Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.
(3)Consists of total Level 3 assets of $22.8 billion and $21.9 billion and total Level 3 liabilities of $2.5 billion and $2.0 billion, before netting of derivative balances, at June 30, 2021, and December 31, 2020, respectively.
($ in millions, except cost to service amounts)Fair Value Level 3
 Valuation Technique(s) 
Significant
Unobservable Inputs
 
Range of Inputs
Positive (Negative) 
   
Weighted
Average

December 31, 2019            
Trading and available-for-sale debt securities:            
Securities of U.S. states and
political subdivisions
$379
 Discounted cash flow Discount rate 1.3
-5.4
% 2.4
 34
 Vendor priced         
Collateralized loan obligations183
 Market comparable pricing Comparability adjustment (15.0)-19.2
  1.3
Corporate debt securities220
 Discounted cash flow Discount rate 3.2
 14.9
  9.2
 60
 Market comparable pricing Comparability adjustment (19.7) 14.0
  (4.4)
 125
 Vendor priced         
Other debt securities92
 Discounted cash flow Discount rate 2.3
-3.1
  2.8
 651
 Vendor priced         
Mortgage loans held for sale (residential)1,183
 Discounted cash flow Default rate 0.0
-15.5
  0.7
     Discount rate 3.0
-5.6
  4.5
     Loss severity 0.0
-43.5
  21.7
     Prepayment rate 5.7
-15.4
  7.8
 15
 Market comparable pricing Comparability adjustment (56.3)-(6.3)  (40.3)
Loans (1)171
 Discounted cash flow Discount rate 3.9
-4.3
  4.1
     Prepayment rate 6.0
-100.0
  85.6
     Loss severity 0.0
-36.5
  14.1
Mortgage servicing rights (residential)11,517
 Discounted cash flow Cost to service per loan (2) $61
-495
  102
     Discount rate 6.0
-13.6
% 7.2
     Prepayment rate (3) 9.6
-24.4
  11.9
Net derivative assets and (liabilities):            
Interest rate contracts146
 Discounted cash flow Default rate 0.0
-5.0
  1.7
     Loss severity 50.0
-50.0
  50.0
     Prepayment rate 2.8
-25.0
  15.0
Interest rate contracts: derivative loan
commitments
68
 Discounted cash flow Fall-out factor 1.0
-99.0
  16.7
     Initial-value servicing (32.2)-149.0
bps 36.4
Equity contracts147
 Discounted cash flow Conversion factor (8.8)-0.0
% (7.7)
     Weighted average life 0.5
-3.0
yrs 1.5
 (416) Option model Correlation factor (77.0)-99.0
% 23.8
     Volatility factor 6.8
-100.0
  18.7
Credit contracts2
 Market comparable pricing Comparability adjustment (56.1)-10.8
  (16.0)
 27
 Option model Credit spread 0.0
-17.8
  0.8
     Loss severity 12.0
-60.0
  45.6
Nonmarketable equity securities7,847
 Market comparable pricing Comparability adjustment (20.2)-(4.2)  (14.6)
             
Insignificant Level 3 assets, net of liabilities27
           
Total level 3 assets, net of liabilities$22,478
(4)          
(1)Consists of reverse mortgage loans.Wells Fargo & Company129
(2)
The high end of the range of inputs is for servicing modified loans. For non-modified loans the range is $61 to $231 per loan.

Note 15: Fair Values of Assets and Liabilities (continued)
(3)Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.
(4)
Consists of total Level 3 assets of $24.3 billion and total Level 3 liabilities of $1.8 billion, before netting of derivative balances.
For additional information on the valuation techniques and significant unobservable inputs used forin the valuation of our Level 3 assets and liabilities, including how changes in these inputs affect fair value estimates, see Note 1917 (Fair ValueValues of Assets and Liabilities) in our 20192020 Form 10-K.


Note 16: Fair Values of Assets and Liabilities (continued)


Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis
We may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of LOCOM accounting, write-downs of individual
assets, or useapplication of the measurement alternative for nonmarketable equity securities.
Table 16.1315.4 provides the fair value hierarchy and fair value at the date of the nonrecurring fair value adjustment for all assets
that were still held as of June 30, 2020,2021, and December 31, 2019,2020, and for which a nonrecurring fair value adjustment was recorded during the six months ended June 30, 2020,2021, and year ended December 31, 2019.2020.
Table 16.1415.5 presents the increase (decrease) in value of certain assets held at the end of the respective reporting periods presented for which a nonrecurring fair value adjustment was recognized during the periods presented.

Table 16.13:15.4: Fair Value on a Nonrecurring Basis
June 30, 2021December 31, 2020
(in millions)Level 2 Level 3 Total Level 2 Level 3 Total 
Loans held for sale (1)2,956 1,439 4,395 2,672 2,945 5,617 
Loans:
Commercial432 0 432 1,385 0 1,385 
Consumer221 0 221 395 0 395 
Total loans653 0 653 1,780 0 1,780 
Mortgage servicing rights (commercial)0 567 567 0 510 510 
Nonmarketable equity securities3,882 85 3,967 2,397 790 3,187 
Other assets976 157 1,133 1,350 428 1,778 
Total assets at fair value on a nonrecurring basis$8,467 2,248 10,715 8,199 4,673 12,872 
 June 30, 2020  December 31, 2019 
(in millions)Level 1
 Level 2
 Level 3
 Total
 Level 1
 Level 2
 Level 3
 Total
Mortgage loans held for sale (1)$—
 981
 1,791
 2,772
 —
 2,034
 3,803
 5,837
Loans held for sale—
 29
 —
 29
 —
 5
 —
 5
Loans:                 
Commercial—
 957
 —
 957
 —
 280
 —
 280
Consumer—
 161
 —
 161
 —
 213
 1
 214
Total loans—
 1,118
 —
 1,118
 —
 493
 1
 494
Mortgage servicing rights (commercial)—
 —
 568
 568
 —
 —
 —
 —
Nonmarketable equity securities—
��726
 788
 1,514
 —
 1,308
 173
 1,481
Other assets—
 532
 439
 971
 —
 359
 27
 386
Total assets at fair value on a nonrecurring basis$—
 3,386
 3,586
 6,972
 —
 4,199
 4,004
 8,203
(1)Consists of commercial mortgages and residential real estate 1-4 family first mortgage loans.

(1)Predominantly consists of commercial mortgages and residential mortgage – first lien loans.
Nonmarketable equity securities includes impairment on private equity and venture capital investments and gains or losses under the measurement alternative. Other assets includes impairments of operating lease ROU assets, valuation losses on foreclosed real estate and other collateral owned, and impairment on private equity and venture capital investments in consolidated portfolio companies.
Table 16.14:15.5: Change in Value of Assets with Nonrecurring Fair Value Adjustment
 Six months ended June 30, 
(in millions)2020
 2019
Mortgage loans held for sale$(61) 18
Loans held for sale(16) (2)
Loans:    
Commercial(392) (106)
Consumer(128) (121)
Total loans(520) (227)
Mortgage servicing rights (commercial)(30) —
Nonmarketable equity securities(410) 264
Other assets(394) (29)
Total$(1,431) 24


Six months ended June 30,
(in millions)20212020
Loans held for sale$38 (77)
Loans:
Commercial(182)(392)
Consumer(90)(128)
Total loans(272)(520)
Mortgage servicing rights (commercial)31 (30)
Nonmarketable equity securities2,215 (410)
Other assets(56)(394)
Total$1,956 (1,431)

Table 16.1515.6 provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of our Level 3 assets that are measured at fair value on a nonrecurring basis primarilyand determined using an internal model. The table is limited to financial instruments that had nonrecurring fair value adjustments during the periods presented. Weighted averages of inputs are calculated using outstanding unpaid principal balance for cash instruments, such as loans, and carrying value prior to the nonrecurring fair value measurement for nonmarketable equity securities.

We have excluded from the table valuation techniques and significant unobservable inputs for certain classes of Level 3
assets we consider both individually and in the aggregate, insignificant relative to our overall Level 3 nonrecurring measurements. We made this determination based upon an evaluation of each class that considered the magnitude of the positions, nature of the unobservable inputs and potential for significant changes in fair value due to changes in those inputs.
130Wells Fargo & Company

Table 16.15:15.6: Valuation Techniques – Nonrecurring Basis
($ in millions)Fair Value
Level 3
Valuation
Technique (1)
Significant
Unobservable Input (1)		Range of Inputs
Positive (Negative)		Weighted
Average
June 30, 2021
Loans held for sale (2)$1,269 Discounted cash flowDefault rate(3)0.8 -80.2 %30.3 
Discount rate0.6 -12.63.1 
Loss severity0.3 -51.05.9 
Prepayment rate(4)4.2 -100.041.3 
170 Market comparable pricingComparability adjustment(5.9)-(1.4)(5.0)
Mortgage servicing rights (commercial)567 Discounted cash flowCost to service per loan$150 -3,3812,773 
Discount rate4.0 -4.2 %4.0 
Prepayment rate0.0 -20.65.5 
Nonmarketable equity securities15 Market comparable pricingMultiples2.0x-3.3x2.8x
65 Market comparable pricingComparability Adjustment(100.0)-(5.3)%(50.0)
5 Discounted cash flowDiscount rate10.5 -10.510.5 
Other assets157 Discounted cash flowDiscount rate0.3 -4.42.9 
Total$2,248 
December 31, 2020
Loans held for sale (2)$1,628 Discounted cash flowDefault rate(3)0.3 -85.5 %31.5 
Discount rate0.6 -11.93.0 
Loss severity0.4 -45.08.1 
Prepayment rate(4)8.3 -100.042.5 
1,317 Market comparable pricingComparability adjustment(11.6)-(1.8)(3.1)
Mortgage servicing rights (commercial)510 Discounted cash flowCost to service per loan$150 -3,3772,779 
Discount rate1.9 -1.9 %1.9 
Prepayment rate0.0 -20.05.4 
Nonmarketable equity securities (5)844 Market comparable pricingMultiples0.1x-10.9x5.0x
188 Market comparable pricingComparability adjustment(100.0)-(20.0)%(61.4)
76 OtherCompany risk factor(100.0)-(20.0)(57.7)
91 Discounted cash flowDiscount rate10.0 -20.011.5 
Company risk factor(62.6)-0.0(30.3)
Crude oil prices ($/barrel)$42 -4847 
Natural gas prices ($/MMBtu)2 -22 
Insignificant Level 3 assets19 
Total$4,673 
($ in millions)
Fair Value
Level 3

 
Valuation
Technique(s) (1)
 
Significant
Unobservable Inputs (1)
 
Range of Inputs
Positive (Negative)
 
Weighted
Average 

June 30, 2020           
Residential mortgage loans held for sale$1,791
(2)Discounted cash flow Default rate(3)0.6
—65.0 % 26.4
     Discount rate 0.7
—8.5
 4.3
     Loss severity 1.0
—83.9
 8.7
     Prepayment rate(4)3.4
—100.0
 42.5
Mortgage servicing rights (commercial)568
 Discounted cash flow Cost to service per loan $150
—3,369
 2,771
     Discount rate 3.0
—3.0 % 3.0
     Prepayment rate 5.0
—20.0
 6.4
Nonmarketable equity securities (5)674
 Market comparable pricing Multiples 0.1x
—11.6x
 5.1x
 353
 Market comparable pricing Comparability adjustment (100.0)—(6.0)% (44.3)
 110
 Other Company risk factor (100.0)—(20.0) (43.4)
 87
 Discounted cash flow Discount rate 10.0
—20.0
 11.3
     Company risk factor (64.5)—0.0
 (26.6)
     Crude oil prices ($/barrel) $48
—48
 48
     Natural gas prices ($/MMBtu) 2
—2
 2
Insignificant level 3 assets3
          
Total$3,586
          
December 31, 2019           
Residential mortgage loans held for sale$3,803
(2)Discounted cash flow Default rate(3)0.3
—48.3 % 4.6
     Discount rate 1.5
—9.4
 4.3
     Loss severity 0.4
—100.0
 23.4
     Prepayment rate(4)4.8
—100.0
 23.2
Insignificant level 3 assets201
          
Total$4,004
          
(1)See Note 17 (Fair Values of Assets and Liabilities) in our 2020 Form 10-K for additional information on the valuation technique(s) and significant unobservable inputs used in the valuation of Level 3 assets.
(1)Refer to Note 19 (Fair Value of Assets and Liabilities) in our 2019 Form 10-K for a definition of the valuation technique(s) and significant unobservable inputs used in the valuation of residential mortgage loans held for sale, mortgage servicing rights, and certain nonmarketable equity securities.
(2)
(2)Consists of approximately $1.2 billion and $2.6 billion of government insured/guaranteed loans purchased from GNMA-guaranteed mortgage securitizations at June 30, 2021, and December 31, 2020, respectively, and approximately $200 million and $300 million of other mortgage loans that are not government insured/guaranteed at June 30, 2021, and December 31, 2020.
(3)$1.3 billion of government insured/guaranteed loans purchased from GNMA-guaranteed mortgage securitizations at both June 30, 2020 and December 31, 2019, and approximately $500 million and $2.5 billion, respectively, of other mortgage loans that are not government insured/guaranteed.
(3)Applies only to non-government insured/guaranteed loans.
(4)Includes the impact on prepayment rate of expected defaults for government insured/guaranteed loans, which impact the frequency and timing of early resolution of loans.
(5)
Includes $439 million of private equity and venture capital investments in consolidated portfolio companies classified in other assets on the balance sheet.
We typically use a market approach to estimatenon-government insured/guaranteed loans.
(4)Includes the fair valueimpact on prepayment rate of our nonmarketableexpected defaults for government insured/guaranteed loans, which impact the frequency and timing of early resolution of loans.
(5)Includes $417 million of private equity and venture capital investments in consolidated portfolio companies. The market approach basescompanies classified in other assets on the fair value measurement on market data (for example, use of market comparable pricing techniques) that are used to derive the enterprise value of the portfolio company. Market comparable pricing techniques include utilization of financial metrics of comparable public companies (multiples), such as ratios of enterprise value or market value of equity to revenue, EBITDA, net income or book value. Comparable company valuation multiples are evaluated and adjusted as necessary to reflect the comparative operational, financial or marketability differences between the public company and subject portfolio company in estimating its fair value. Market comparable pricing
consolidated balance sheet at December 31, 2020.
techniques also use recent or anticipated transactions (for example, a financing round, merger, acquisition or bankruptcy) involving the subject portfolio company, or participants in its industry or related industries. Based upon these recent or anticipated transactions, current market conditions and other factors specific to the issuer, we make adjustments to estimate the enterprise value of the portfolio company. As a result of the recent market environment, we also utilized other valuation techniques. These techniques included the use of company risk factors in the estimation of the fair value of certain nonmarketable equity securities. The company risk factors are based upon entity-specific considerations including the debt and liquidity profile, projected cash flow or funding issues as well as other factors that may affect the company’s outlook.

Note 16: Fair Values of Assets and Liabilities (continued)


Fair Value Option
The fair value option is an irrevocable election, generally only permitted upon initial recognition of financial assets or liabilities, to measure eligible financial instruments at fair value with changes in fair value reflected in earnings. We may elect the fair value option to align the measurement model with how the financial assets or liabilities are managed or to reduce complexity
or accounting asymmetry. Following is a discussion of the portfolios for which we elected the fair value option. For moreadditional information, including the basis for our fair value
option elections, see Note 1917 (Fair Values of Assets and Liabilities) in our 20192020 Form 10-K.
Table 16.1615.7 reflects differences between the fair value carrying amount of the assets for which we have elected the fair value option and the contractual aggregate unpaid principal amount at maturity. Nonaccrual loans and loans 90 days or more past due and still accruing included in LHFS for which we have elected the fair value option were insignificant at June 30, 2021, and December 31, 2020.

Table 16.16:15.7: Fair Value Option
June 30, 2021December 31, 2020
(in millions)Fair value carrying amountAggregate unpaid principalFair value carrying amount less aggregate unpaid principalFair value carrying amountAggregate unpaid principalFair value carrying amount less aggregate
unpaid
principal
Loans held for sale$18,894 18,526 368 18,806 18,217 589 
 June 30, 2020  December 31, 2019 
(in millions)
Fair value
carrying
amount

 
Aggregate
unpaid
principal

 Fair value carrying amount less aggregate unpaid principal
 
Fair value
carrying
amount

 
Aggregate
unpaid
principal

 
Fair value
carrying amount less aggregate unpaid principal

Mortgage loans held for sale:           
Total loans$18,644
 17,923
 721
 16,606
 16,279
 327
Nonaccrual loans134
 165
 (31) 133
 157
 (24)
Loans 90 days or more past due and still accruing140
 152
 (12) 8
 10
 (2)
Loans held for sale:           
Total loans1,201
 1,329
 (128) 972
 1,020
 (48)
Nonaccrual loans15
 49
 (34) 21
 29
 (8)
Loans:           
Total loans152
 183
 (31) 171
 201
 (30)
Nonaccrual loans118
 149
 (31) 129
 159
 (30)
Wells Fargo & Company131

Note 15: Fair Values of Assets and Liabilities (continued)
The changes in fair value related to initial measurement and subsequent changes in fair value included in earnings for these assets measured atLHFS accounted for under the fair value are shownoption were $823 million and $1.2 billion in Table 16.17 bythe second quarter and first half of 2021, respectively, and $773 million and $1.1 billion in the second quarter and first half of 2020, respectively. Substantially all of these amounts were included in the mortgage banking noninterest income
line of the consolidated statement line item. Amounts recorded as interest income are excluded from Table 16.17.
Table 16.17:Fair Value Option – Changes in Fair Value Included in Earnings
 2020  2019 
(in millions)Mortgage banking noninterest income
 
Net gains
(losses)
from
trading
activities

 
Other
noninterest
income

 
Mortgage
banking
noninterest
income

 
Net gains (losses)
from
trading
activities

 
Other
noninterest
income

Quarter ended June 30,           
Mortgage loans held for sale$749
 —
 —
 379
 —
 —
Loans held for sale—
 24
 —
 —
 (4) —
Loans—
 —
 (2) —
 —
 1
Six months ended June 30,           
Mortgage loans held for sale$1,097
 —
 —
 593
 —
 —
Loans held for sale—
 11
 —
 —
 10
 1
Loans—
 —
 (2) —
 —
 1

of income. For performing loans, instrument-specific credit risk gains or losses were derived principally by determining the change in fair value of the loans due to changes in the observable or implied credit spread. Credit spread is the market yield on the loans less the relevant risk-free benchmark interest rate. For
nonperforming loans, we attribute all changes in fair value to instrument-specific credit risk. Table 16.18 shows the estimated gainsGains and losses from earnings attributable to instrument-specific credit risk related to assets accounted for under the fair value option.
option in the second quarter and first half of both 2021 and 2020 were insignificant.
Table 16.18:Fair Value Option – Gains/Losses Attributable to Instrument-Specific Credit Risk
 Quarter ended June 30,  Six months ended June 30, 
(in millions)2020
 2019
 2020
 2019
Gains (losses) attributable to instrument-specific credit risk:  
   
    
Mortgage loans held for sale$(35) 16
 $(217) 12
Loans held for sale26
 (3) 14
 11
Total$(9) 13
 $(203) 23



Disclosures about Fair Value of Financial Instruments
Table 16.1915.8 presents a summary of fair value estimates for financial instruments that are not carried at fair value on a recurring basis. Some financial instruments are excluded from the scope of this table, such as certain insurance contracts, certain nonmarketable equity securities, and leases. This table also excludes assets and liabilities that are not financial instruments such as the value of the long-term relationships with our deposit, credit card and trust customers, MSRs, premises and equipment, goodwill and deferred taxes.
Loan commitments, standby letters of credit and commercial and similar letters of credit are not included in
Table 16.19.15.8. A reasonable estimate of the fair value of these instruments is the carrying value of deferred fees plus the allowance for unfunded credit commitments, which totaled $1.7$1.4 billion and $1.0 billion at both June 30, 20202021, and December 31, 2019,2020, respectively.
The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying fair value of the Company.

Table 16.19:15.8: Fair Value Estimates for Financial Instruments
Estimated fair value 
(in millions)Carrying amountLevel 1 Level 2 Level 3 Total
June 30, 2021
Financial assets
Cash and due from banks (1)$25,304 25,304 0 0 25,304 
Interest-earning deposits with banks (1)248,869 248,686 183 0 248,869 
Federal funds sold and securities purchased under resale agreements (1)70,149 0 70,149 0 70,149 
Held-to-maturity debt securities260,941 28,028 235,075 984 264,087 
Loans held for sale6,700 0 5,259 1,669 6,928 
Loans, net (2)821,774 0 59,140 781,652 840,792 
Nonmarketable equity securities (cost method)3,585 0 0 3,647 3,647 
Total financial assets$1,437,322 302,018 369,806 787,952 1,459,776 
Financial liabilities
Deposits (3)$35,964 0 18,823 17,368 36,191 
Short-term borrowings45,635 0 45,635 0 45,635 
Long-term debt (4)179,625 0 186,681 1,282 187,963 
Total financial liabilities$261,224 0 251,139 18,650 269,789 
December 31, 2020
Financial assets
Cash and due from banks (1)$28,236 28,236 0 0 28,236 
Interest-earning deposits with banks (1)236,376 236,258 118 0 236,376 
Federal funds sold and securities purchased under resale agreements (1)65,672 0 65,672 0 65,672 
Held-to-maturity debt securities205,720 48,597 162,777 933 212,307 
Loans held for sale17,578 0 14,952 3,419 18,371 
Loans, net (2)853,595 0 56,270 817,827 874,097 
Nonmarketable equity securities (cost method)3,588 0 0 3,632 3,632 
Total financial assets$1,410,765 313,091 299,789 825,811 1,438,691 
Financial liabilities
Deposits (3)$52,807 0 33,321 19,940 53,261 
Short-term borrowings58,999 0 58,999 0 58,999 
Long-term debt (4)212,922 0 219,321 1,381 220,702 
Total financial liabilities$324,728 0 311,641 21,321 332,962 
   Estimated fair value 
(in millions)Carrying amount
 Level 1
 Level 2
 Level 3
 Total
June 30, 2020         
Financial assets         
Cash and due from banks (1)$24,704
 24,704
 —
 —
 24,704
Interest-earning deposits with banks (1)237,799
 237,583
 216
 —
 237,799
Federal funds sold and securities purchased under resale agreements (1)79,289
 —
 79,289
 —
 79,289
Held-to-maturity debt securities, net169,002
 50,504
 125,483
 895
 176,882
Mortgage loans held for sale13,711
 —
 11,987
 2,321
 14,308
Loans held for sale138
 —
 139
 —
 139
Loans, net (2)899,347
 —
 55,225
 854,436
 909,661
Nonmarketable equity securities (cost method)3,794
 —
 —
 3,838
 3,838
Total financial assets$1,427,784
 312,791
 272,339
 861,490
 1,446,620
Financial liabilities         
Deposits (3)$83,654
 —
 58,313
 26,287
 84,600
Short-term borrowings60,485
 —
 60,486
 —
 60,486
Long-term debt (4)230,891
 —
 230,563
 1,395
 231,958
Total financial liabilities$375,030
 —
 349,362
 27,682
 377,044
December 31, 2019         
Financial assets         
Cash and due from banks (1)$21,757
 21,757
 —
 —
 21,757
Interest-earning deposits with banks (1)119,493
 119,257
 236
 —
 119,493
Federal funds sold and securities purchased under resale agreements (1)102,140
 —
 102,140
 —
 102,140
Held-to-maturity debt securities153,933
 46,138
 109,933
 789
 156,860
Mortgage loans held for sale6,736
 —
 2,939
 4,721
 7,660
Loans held for sale5
 —
 5
 —
 5
Loans, net (2)933,042
 —
 54,125
 891,714
 945,839
Nonmarketable equity securities (cost method)4,790
 —
 —
 4,823
 4,823
Total financial assets$1,341,896
 187,152
 269,378
 902,047
 1,358,577
Financial liabilities         
Deposits (3)$118,849
 —
 87,279
 31,858
 119,137
Short-term borrowings104,512
 —
 104,513
 —
 104,513
Long-term debt (4)228,159
 —
 231,332
 1,720
 233,052
Total financial liabilities$451,520
 —
 423,124
 33,578
 456,702
(1)Amounts consist of financial instruments for which carrying value approximates fair value.
(2)Excludes lease financing with a carrying amount of $15.2 billion and $15.4 billion at June 30, 2021, and December 31, 2020, respectively.
(3)Excludes deposit liabilities with no defined or contractual maturity of $1.4 trillion at both June 30, 2021, and December 31, 2020, respectively.
(4)Excludes capital lease obligations under capital leases of $28 million at both June 30, 2021, and December 31, 2020, respectively.
(1)132Amounts consist of financial instruments for which carrying value approximates fair value.Wells Fargo & Company

(2)
Excludes lease financing with a carrying amount of $16.7 billionNote 16:  and $19.5 billion at June 30, 2020 and December 31, 2019, respectively.
(3)
Excludes deposit liabilities with no defined or contractual maturity of $1.3 trillion and $1.2 trillion at June 30, 2020 and December 31, 2019, respectively.
(4)
Excludes capital lease obligations under capital leases of $30 million and $32 million at June 30, 2020 and December 31, 2019, respectively.


Note 17: Preferred Stock (continued)

Note 17: Preferred Stock
We are authorized to issue 20 million shares of preferred stock and 4 million shares of preference stock, both without par value. Preferred shares outstanding rank senior to common shares both as to dividends and liquidation preference but have no general voting rights. We have not issued any preference shares under this authorization. If issued, preference shares would be limited to
1 vote per share. Our total authorized, issued and outstanding preferred stock is presented in the following two tables along with the Employee Stock Ownership Plan (ESOP) Cumulative Convertible Preferred Stock. All classes
In January 2021, we issued $3.5 billion of preferred stock, except the Dividend Equalization Preferred Shares and the ESOP Cumulative Convertibleour Preferred Stock, qualify as Tier 1 capital.Series BB, and in February 2021, we issued $1.05 billion of our Preferred Stock, Series CC. In March 2021, we redeemed our Preferred Stock Series I, Series P and Series W, and partially redeemed our Preferred Stock, Series N, for an aggregate cost of $4.5 billion. In June 2021, we redeemed the remaining outstanding shares of our Preferred Stock, Series N, for a cost of $350 million. In July 2021, we issued $1.25 billion of our Preferred Stock, Series DD.

Table 17.1:16.1: Preferred Stock Shares
June 30, 2021December 31, 2020
Liquidation
 preference
 per share		Shares
 authorized
and designated		Liquidation
 preference
 per share		Shares
 authorized
 and designated
DEP Shares
Dividend Equalization Preferred Shares (DEP)$10 97,000 $10 97,000 
Series I (1)
Floating Class A Preferred Stock0 0 100,000 25,010 
Series L (2)
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock1,000 4,025,000 1,000 4,025,000 
Series N (3)
5.20% Non-Cumulative Perpetual Class A Preferred Stock0 0 25,000 30,000 
Series O
5.125% Non-Cumulative Perpetual Class A Preferred Stock25,000 27,600 25,000 27,600 
Series P (3)
5.25% Non-Cumulative Perpetual Class A Preferred Stock0 0 25,000 26,400 
Series Q
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock25,000 69,000 25,000 69,000 
Series R
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock25,000 34,500 25,000 34,500 
Series S
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock25,000 80,000 25,000 80,000 
Series U
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock25,000 80,000 25,000 80,000 
Series W (3)
5.70% Non-Cumulative Perpetual Class A Preferred Stock0 0 25,000 40,000 
Series X
5.50% Non-Cumulative Perpetual Class A Preferred Stock25,000 46,000 25,000 46,000 
Series Y
5.625% Non-Cumulative Perpetual Class A Preferred Stock25,000 27,600 25,000 27,600 
Series Z
4.75% Non-Cumulative Perpetual Class A Preferred Stock25,000 80,500 25,000 80,500 
Series AA
4.70% Non-Cumulative Perpetual Class A Preferred Stock25,000 46,800 25,000 46,800 
Series BB
3.90% Fixed-Reset Non-Cumulative Perpetual Class A Preferred Stock25,000 140,400 0 0 
Series CC
4.375% Non-Cumulative Perpetual Class A Preferred Stock25,000 46,000 0 0 
ESOP (4)
Cumulative Convertible Preferred Stock0 822,242 0 822,242 
Total5,622,642 5,557,652 
(1)Series I preferred stock issuance relates to trust preferred securities. See Note 8 (Securitizations and Variable Interest Entities) for additional information. This issuance has a floating interest rate that is the greater of three-month London Interbank Offered Rate (LIBOR) plus 0.93% and 5.56975%. In first quarter 2021, Preferred Stock, Series I, was redeemed.
(2)Preferred Stock, Series L, may be converted at any time, at the option of the holder, into 6.3814 shares of our common stock, plus cash in lieu of fractional shares, subject to anti-dilution adjustments.
(3)In first quarter 2021, 16,000 shares of Preferred Stock, Series N, were redeemed and Preferred Stock, Series P and Series W were fully redeemed; in second quarter 2021, the remaining 14,000 shares of Preferred Stock, Series N, were redeemed.
(4)See the “ESOP Cumulative Convertible Preferred Stock” section in this Note for additional information about the liquidation preference for the ESOP Cumulative Convertible Preferred Stock.
 June 30, 2020  December 31, 2019 
 
Liquidation
preference
per share

 
Shares
authorized
and designated

 
Liquidation
preference
per share

 
Shares
authorized
and designated

DEP Shares       
Dividend Equalization Preferred Shares (DEP)$10
 97,000
 $10
 97,000
Series I       
Floating Class A Preferred Stock (1)100,000
 25,010
 100,000
 25,010
Series K       
Floating Non-Cumulative Perpetual Class A Preferred Stock (2)—
 —
 1,000
 3,500,000
Series L       
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock (3)1,000
 4,025,000
 1,000
 4,025,000
Series N       
5.20% Non-Cumulative Perpetual Class A Preferred Stock25,000
 30,000
 25,000
 30,000
Series O       
5.125% Non-Cumulative Perpetual Class A Preferred Stock25,000
 27,600
 25,000
 27,600
Series P       
5.25% Non-Cumulative Perpetual Class A Preferred Stock25,000
 26,400
 25,000
 26,400
Series Q       
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock25,000
 69,000
 25,000
 69,000
Series R       
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock25,000
 34,500
 25,000
 34,500
Series S       
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock25,000
 80,000
 25,000
 80,000
Series T       
6.00% Non-Cumulative Perpetual Class A Preferred Stock (4)25,000
 32,200
 25,000
 32,200
Series U       
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock25,000
 80,000
 25,000
 80,000
Series V       
6.00% Non-Cumulative Perpetual Class A Preferred Stock25,000
 40,000
 25,000
 40,000
Series W       
5.70% Non-Cumulative Perpetual Class A Preferred Stock25,000
 40,000
 25,000
 40,000
Series X       
5.50% Non-Cumulative Perpetual Class A Preferred Stock25,000
 46,000
 25,000
 46,000
Series Y       
5.625% Non-Cumulative Perpetual Class A Preferred Stock25,000
 27,600
 25,000
 27,600
Series Z       
4.750% Non-Cumulative Perpetual Class A Preferred Stock25,000
 80,500
 —
 —
ESOP       
Cumulative Convertible Preferred Stock (5)—
 822,242
 —
 1,071,418
Total  5,583,052
   9,251,728
(1)Preferred Stock, Series I, relates to trust preferred securities. See Note 10 (Securitizations and Variable Interest Entities) for additional information. This issuance has a floating interest rate that is the greater of three-month London Interbank Offered Rate (LIBOR) plus 0.93% and 5.56975%.Wells Fargo & Company133
(2)
Floating rate for Preferred Stock, Series K, is three-month LIBOR plus 3.77%. In first quarter 2020, the remaining $1.8 billion of Preferred Stock, Series K, was redeemed.

Note 16: Preferred Stock (continued)
(3)
Preferred Stock, Series L, may be converted at any time, at the option of the holder, into 6.3814 shares of our common stock, plus cash in lieu of fractional shares, subject to anti-dilution adjustments.
(4)
In first quarter 2020, $669 million of Preferred Stock, Series T, was redeemed.
(5)See the ESOP Cumulative Convertible Preferred Stock section in this Note for additional information about the liquidation preference.

Table 17.2:16.2: Preferred Stock – Shares Issued and Carrying Value
June 30, 2020  December 31, 2019 June 30, 2021December 31, 2020
(in millions, except shares)
Shares
issued and
outstanding

 
Liquidation preference
value

 
Carrying
value

 Discount
 
Shares
issued and
outstanding

 
Liquidation preference
value

 
Carrying
value

 Discount
(in millions, except shares)Shares issued and outstandingLiquidation preference valueCarrying
value 		Discount Shares
issued and outstanding		Liquidation preference valueCarrying valueDiscount 
DEP Shares               DEP Shares
Dividend Equalization Preferred Shares (DEP)96,546
 $—
 —
 —
 96,546
 $—
 —
 —
Dividend Equalization Preferred Shares (DEP)96,546 $0 0 0 96,546 $0 0 0 
Series I (1)
               
Series I (1)
Floating Class A Preferred Stock25,010
 2,501
 2,501
 —
 25,010
 2,501
 2,501
 —
Floating Class A Preferred Stock0 0 0 0 25,010 2,501 2,501 0 
Series K (2)
               
Floating Non-Cumulative Perpetual Class A Preferred Stock—
 —
 —
 —
 1,802,000
 1,802
 1,546
 256
Series L (3)
               
Series L (2)
Series L (2)
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock3,967,995
 3,968
 3,200
 768
 3,967,995
 3,968
 3,200
 768
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock3,967,995 3,968 3,200 768 3,967,995 3,968 3,200 768 
Series N               
Series N (3)
Series N (3)
5.20% Non-Cumulative Perpetual Class A Preferred Stock30,000
 750
 750
 —
 30,000
 750
 750
 —
5.20% Non-Cumulative Perpetual Class A Preferred Stock0 0 0 0 30,000 750 750 0 
Series O               Series O
5.125% Non-Cumulative Perpetual Class A Preferred Stock26,000
 650
 650
 —
 26,000
 650
 650
 —
5.125% Non-Cumulative Perpetual Class A Preferred Stock26,000 650 650 0 26,000 650 650 0 
Series P               
Series P (3)
Series P (3)
5.25% Non-Cumulative Perpetual Class A Preferred Stock25,000
 625
 625
 —
 25,000
 625
 625
 —
5.25% Non-Cumulative Perpetual Class A Preferred Stock0 0 0 0 25,000 625 625 0 
Series Q               Series Q
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock69,000
 1,725
 1,725
 —
 69,000
 1,725
 1,725
 —
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock69,000 1,725 1,725 0 69,000 1,725 1,725 0 
Series R               Series R
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock33,600
 840
 840
 —
 33,600
 840
 840
 —
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock33,600 840 840 0 33,600 840 840 0 
Series S               Series S
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock80,000
 2,000
 2,000
 —
 80,000
 2,000
 2,000
 —
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock80,000 2,000 2,000 0 80,000 2,000 2,000 0 
Series T (4)
               
6.00% Non-Cumulative Perpetual Class A Preferred Stock5,280
 131
 131
 —
 32,000
 800
 800
 —
Series U               Series U
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock80,000
 2,000
 2,000
 —
 80,000
 2,000
 2,000
 —
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock80,000 2,000 2,000 0 80,000 2,000 2,000 0 
Series V               
6.00% Non-Cumulative Perpetual Class A Preferred Stock40,000
 1,000
 1,000
 —
 40,000
 1,000
 1,000
 —
Series W               
Series W (3)
Series W (3)
5.70% Non-Cumulative Perpetual Class A Preferred Stock40,000
 1,000
 1,000
 —
 40,000
 1,000
 1,000
 —
5.70% Non-Cumulative Perpetual Class A Preferred Stock0 0 0 0 40,000 1,000 1,000 0 
Series X               Series X
5.50% Non-Cumulative Perpetual Class A Preferred Stock46,000
 1,150
 1,150
 —
 46,000
 1,150
 1,150
 —
5.50% Non-Cumulative Perpetual Class A Preferred Stock46,000 1,150 1,150 0 46,000 1,150 1,150 0 
Series Y               Series Y
5.625% Non-Cumulative Perpetual Class A Preferred Stock27,600
 690
 690
 —
 27,600
 690
 690
 —
5.625% Non-Cumulative Perpetual Class A Preferred Stock27,600 690 690 0 27,600 690 690 0 
Series Z               Series Z
4.750% Non-Cumulative Perpetual Class A Preferred Stock80,500
 2,013
 2,013
 —
 —
 —
 —
 —
4.750% Non-Cumulative Perpetual Class A Preferred Stock80,500 2,013 2,013 0 80,500 2,013 2,013 0 
ESOP               
Series AASeries AA
4.70% Non-Cumulative Perpetual Class A Preferred Stock4.70% Non-Cumulative Perpetual Class A Preferred Stock46,800 1,170 1,170 0 46,800 1,170 1,170 0 
Series BBSeries BB
3.90% Fixed-Reset Non-Cumulative Perpetual Class A Preferred Stock3.90% Fixed-Reset Non-Cumulative Perpetual Class A Preferred Stock140,400 3,510 3,510 0 0 0 0 0 
Series CCSeries CC
4.375% Non-Cumulative Perpetual Class A Preferred Stock4.375% Non-Cumulative Perpetual Class A Preferred Stock42,000 1,050 1,050 0 0 0 0 0 
ESOP (4)
ESOP (4)
Cumulative Convertible Preferred Stock822,242
 823
 823
 —
 1,071,418
 1,072
 1,072
 —
Cumulative Convertible Preferred Stock822,242 822 822 0 822,242 822 822 0 
Total5,494,773
 $21,866
 21,098
 768
 7,492,169
 $22,573
 21,549
 1,024
Total5,558,683 $21,588 20,820 768 5,496,293 $21,904 21,136 768 
(1)Floating rate for Preferred Stock, Series I, is the greater of three-month London Interbank Offered Rate (LIBOR) plus 0.93% and 5.56975%. In first quarter 2021, Preferred Stock, Series I, was redeemed.
(2)Preferred Stock, Series L, may be converted at any time, at the option of the holder, into 6.3814 shares of our common stock, plus cash in lieu of fractional shares, subject to anti-dilution adjustments.
(3)In first quarter 2021, $400 million of Preferred Stock, Series N, was redeemed and Preferred Stock, Series P and Series W were fully redeemed; in second quarter 2021, the remaining $350 million of Preferred Stock, Series N, was redeemed.
(4)See the “ESOP Cumulative Convertible Preferred Stock” section in this Note for additional information about the liquidation preference for the ESOP Cumulative Convertible Preferred Stock.
(1)134Floating rate for Preferred Stock, Series I, is the greater of three-month LIBOR plus 0.93% and 5.56975%.
Wells Fargo & Company
(2)
Floating rate for Preferred Stock, Series K, is three-month LIBOR plus 3.77%. In first quarter 2020, the remaining $1.8 billion of Preferred Stock, Series K, was redeemed.
(3)
Preferred Stock, Series L, may be converted at any time, at the option of the holder, into 6.3814 shares of our common stock, plus cash in lieu of fractional shares, subject to anti-dilution adjustments.
(4)
In first quarter 2020, $669 million of Preferred Stock, Series T, was redeemed.
Note 17: Preferred Stock (continued)

ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCKAll shares of our ESOP Cumulative Convertible Preferred Stock (ESOP Preferred Stock) were issued to a trustee acting on behalf of the Wells Fargo & Company 401(k) Plan (the 401(k) Plan). Dividends on the ESOP Preferred Stock are cumulative from the date of initial issuance and are payable quarterly at annual rates based upon the year of issuance. Each share of ESOP Preferred Stock released from the unallocated reserve of the 401(k) Plan is converted into shares of our common stock based on the stated
value of the ESOP Preferred Stock and the then current market price of our common stock. The ESOP Preferred Stock is also convertible at the option of the holder at any time, unless previously redeemed. We have the option to redeem the ESOP Preferred Stock at any time, in whole or in part, at a redemption price per share equal to the higher of (a) $1,000 per share plus accrued and unpaid dividends or (b) the fair market value, as defined in the Certificates of Designation for the ESOP Preferred Stock.

Table 17.3:16.3: ESOP Preferred Stock
Shares issued and outstandingCarrying value Adjustable dividend rate
(in millions, except shares)Jun 30,
2021		Dec 31,
2020		Jun 30,
2021		Dec 31,
2020		Minimum Maximum 
ESOP Preferred Stock
$1,000 liquidation preference per share
2018221,945 221,945 $222 222 7.00 %8.00 %
2017163,210 163,210 163 163 7.00 8.00 
2016162,450 162,450 162 162 9.30 10.30 
201592,904 92,904 93 93 8.90 9.90 
201499,151 99,151 99 99 8.70 9.70 
201361,948 61,948 62 62 8.50 9.50 
201220,634 20,634 21 21 10.00 11.00 
Total ESOP Preferred Stock (1)822,242 822,242 $822 822 
Unearned ESOP shares (2)$(875)(875)
(1)At both June 30, 2021, and December 31, 2020, additional paid-in capital included $53 million related to ESOP preferred stock.
(2)We recorded a corresponding charge to unearned ESOP shares in connection with the issuance of the ESOP Preferred Stock. The unearned ESOP shares are reduced as shares of the ESOP Preferred Stock are committed to be released.
 Shares issued and outstanding  Carrying value  Adjustable dividend rate 
(in millions, except shares)Jun 30,
2020
 Dec 31,
2019
 Jun 30,
2020
 Dec 31,
2019
 Minimum
 Maximum
ESOP Preferred Stock           
$1,000 liquidation preference per share           
2018221,945
 254,945
 222
 255
 7.00% 8.00%
2017163,210
 192,210
 163
 192
 7.00
 8.00
2016162,450
 197,450
 163
 198
 9.30
 10.30
201592,904
 116,784
 93
 117
 8.90
 9.90
201499,151
 136,151
 99
 136
 8.70
 9.70
201361,948
 97,948
 62
 98
 8.50
 9.50
201220,634
 49,134
 21
 49
 10.00
 11.00
2011—
 26,796
 —
 27
 9.00
 10.00
Total ESOP Preferred Stock (1)822,242
 1,071,418
 $823
 1,072
    
Unearned ESOP shares (2)    $(875) (1,143)    
(1)
At Wells Fargo & CompanyJune 30, 2020, and December 31, 2019, additional paid-in capital included $52 million and $71 million, respectively, related to ESOP preferred stock.
135
(2)We recorded a corresponding charge to unearned ESOP shares in connection with the issuance of the ESOP Preferred Stock. The unearned ESOP shares are reduced as shares of the ESOP Preferred Stock are committed to be released.



Note 18:17: Revenue from Contracts with Customers

Our revenue includes net interest income on financial instruments and noninterest income. Table 18.117.1 presents our revenue by operating segment. The “Other” segment for each of the tables below includes the elimination of certain items that are included in more than one business segment, most of which represents
products and services for WIM customers served through Community Banking distribution channels. For additional description of our
operating segments, including additional financial information and the underlying management reportingaccounting process, see
Note 22 (Operating Segments).

Table 18.1: 17.1:Revenue by Operating Segment

(in millions)
Consumer Banking and LendingCommercial BankingCorporate and Investment BankingWealth and Investment ManagementCorporateReconciling
Items (1)		Consolidated
Company
Quarter ended June 30, 2021
Net interest income (2)$5,618 1,202 1,783 610 (304)(109)8,800 
Noninterest income:
Deposit-related fees732 325 277 7 1 0 1,342 
Lending-related fees (2)36 135 190 2 (1)0 362 
Investment advisory and other asset-based fees (3)0 2 12 2,382 398 0 2,794 
Commissions and brokerage services fees0 0 68 513 (1)0 580 
Investment banking fees(2)9 580 (1)(16)0 570 
Card fees:
Card interchange and network revenues (4)896 49 11 1 0 0 957 
Other card fees (2)121 0 0 0 (1)0 120 
Total card fees1,017 49 11 1 (1)0 1,077 
Mortgage banking (2)1,158 0 181 (3)0 0 1,336 
Net gains (losses) from trading activities (2)0 (1)30 6 (14)0 21 
Net gains on debt securities (2)0 0 0 0 0 0 0 
Net gains from equity securities (2)0 32 46 6 2,612 0 2,696 
Lease income (2)0 173 0 0 140 0 313 
Other (2)127 182 160 13 209 (312)379 
Total noninterest income3,068 906 1,555 2,926 3,327 (312)11,470 
Total revenue$8,686 2,108 3,338 3,536 3,023 (421)20,270 
Quarter ended June 30, 2020
Net interest income (2)$5,717 1,554 1,963 719 60 (121)9,892 
Noninterest income:
Deposit-related fees575 297 261 6 3 0 1,142 
Lending-related fees (2)33 125 163 2 0 0 323 
Investment advisory and other asset-based fees (3)0 8 24 1,835 387 0 2,254 
Commissions and brokerage services fees0 0 79 470 1 0 550 
Investment banking fees(1)26 588 1 (67)0 547 
Card fees:
Card interchange and network revenues (4)650 36 11 1 0 0 698 
Other card fees (2)99 0 0 0 0 0 99 
Total card fees749 36 11 1 0 0 797 
Mortgage banking (2)256 0 65 (3)(1)0 317 
Net gains (losses) from trading activities (2)1 1 809 9 (13)0 807 
Net gains on debt securities (2)6 0 0 0 206 0 212 
Net gains (losses) from equity securities (2)0 (28)8 150 403 0 533 
Lease income (2)0 189 5 0 141 0 335 
Other (2)272 143 83 16 258 (195)577 
Total noninterest income1,891 797 2,096 2,487 1,318 (195)8,394 
Total revenue$7,608 2,351 4,059 3,206 1,378 (316)18,286 
Six months ended June 30, 2021
Net interest income (2)$11,233 2,456 3,562 1,267 (694)(216)17,608 
Noninterest income:
Deposit-related fees1,393 642 543 14 5 0 2,597 
Lending-related fees (2)76 271 373 4 (1)0 723 
Investment advisory and other asset-based fees (3)0 7 34 4,688 821 0 5,550 
Commissions and brokerage services fees0 0 149 1,068 (1)0 1,216 
Investment banking fees(8)22 1,191 (2)(65)0 1,138 
Card fees:
Card interchange and network revenues (4)1,674 94 21 2 0 0 1,791 
Other card fees (2)235 0 0 0 0 0 235 
Total card fees1,909 94 21 2 0 0 2,026 
Mortgage banking (2)2,417 0 251 (6)0 0 2,662 
Net gains (losses) from trading activities (2)1 1 361 12 (6)0 369 
Net gains on debt securities (2)0 0 0 0 151 0 151 
Net gains from equity securities (2)34 45 121 6 2,882 0 3,088 
Lease income (2)0 347 1 0 280 0 628 
Other (2)285 304 335 27 678 (583)1,046 
Total noninterest income6,107 1,733 3,380 5,813 4,744 (583)21,194 
Total revenue$17,340 4,189 6,942 7,080 4,050 (799)38,802 
(continued on following page)
 Quarter ended June 30, 
 Community
Banking		 Wholesale
Banking		 Wealth and
Investment
Management		 Other Consolidated
Company		 
(in millions)2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Net interest income (1)$5,699
7,066
3,891
4,535
736
1,037
(446)(543)9,880
12,095
Noninterest income:          
Service charges on deposit accounts419
704
511
502
4
4
(4)(4)930
1,206
Trust and investment fees:          
Brokerage advisory, commissions and other fees433
480
79
74
2,039
2,248
(434)(484)2,117
2,318
Trust and investment management174
199
130
117
568
687
(185)(208)687
795
Investment banking(67)(18)614
475
1
(1)(1)(1)547
455
Total trust and investment fees540
661
823
666
2,608
2,934
(620)(693)3,351
3,568
Card fees732
929
65
95
1
2
(1)(1)797
1,025
Other fees:          
Lending related charges and fees (1)36
65
267
284
2
2
(2)(2)303
349
Cash network fees88
117
—
—
—
—
—
—
88
117
Commercial real estate brokerage commissions—
—
—
105
—
—
—
—
—
105
Wire transfer and other remittance fees60
71
38
49
2
2
(1)(1)99
121
All other fees (1)63
82
25
26
—
—
—
—
88
108
Total other fees247
335
330
464
4
4
(3)(3)578
800
Mortgage banking (1)253
655
65
104
(3)(3)2
2
317
758
Net gains (losses) from trading activities (1)6
(11)794
226
6
13
1
1
807
229
Net gains (losses) on debt securities (1)123
15
89
5
—
—
—
—
212
20
Net gains (losses) from equity securities (1)388
471
(16)116
161
35
—
—
533
622
Lease income (1)—
—
334
424
—
—
—
—
334
424
Other (1)(2)359
980
(323)(72)143
24
(82)(95)97
837
Total noninterest income3,067
4,739
2,672
2,530
2,924
3,013
(707)(793)7,956
9,489
Revenue$8,766
11,805
6,563
7,065
3,660
4,050
(1,153)(1,336)17,836
21,584
 Six months ended June 30, 
 
Community
Banking
 
Wholesale
Banking
 
Wealth and
Investment
Management
 Other Consolidated
Company		 
(in millions)2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Net interest income (1)$12,486
14,314
8,027
9,069
1,603
2,138
(924)(1,115)21,192
24,406
Noninterest income:          
Service charges on deposit accounts1,119
1,314
1,019
985
9
8
(8)(7)2,139
2,300
Trust and investment fees:          
Brokerage advisory, commissions and other fees951
929
169
152
4,436
4,372
(957)(942)4,599
4,511
Trust and investment management368
409
261
231
1,150
1,363
(391)(422)1,388
1,581
Investment banking(166)(38)1,104
887
2
4
(2)(4)938
849
Total trust and investment fees1,153
1,300
1,534
1,270
5,588
5,739
(1,350)(1,368)6,925
6,941
Card fees1,541
1,787
148
181
2
3
(2)(2)1,689
1,969
Other fees:          
Lending related charges and fees (1)86
130
545
566
4
4
(4)(4)631
696
Cash network fees194
226
—
—
—
—
—
—
194
226
Commercial real estate brokerage commissions—
—
1
186
—
—
—
—
1
186
Wire transfer and other remittance fees126
135
81
97
4
4
(2)(2)209
234
All other fees (1)126
176
49
52
—
—
—
—
175
228
Total other fees532
667
676
901
8
8
(6)(6)1,210
1,570
Mortgage banking (1)593
1,296
105
172
(6)(6)4
4
696
1,466
Net gains (losses) from trading activities (1)35
(6)835
559
(1)32
2
1
871
586
Net gains (losses) on debt securities (1)317
52
132
93
—
—
—
—
449
145
Net gains (losses) from equity securities (1)(640)1,072
(111)193
(117)171
—
—
(868)1,436
Lease income (1)—
—
686
867
—
—
—
—
686
867
Other (1)(2)1,126
1,759
(671)(114)289
36
(180)(174)564
1,507
Total noninterest income5,776
9,241
4,353
5,107
5,772
5,991
(1,540)(1,552)14,361
18,787
Revenue$18,262
23,555
12,380
14,176
7,375
8,129
(2,464)(2,667)35,553
43,193
(1)136These revenues are related to financial assets and liabilities, including loans, leases, securities and derivatives, with additional details included in other footnotes to our financial statements.
Wells Fargo & Company
(2)In second quarter 2020, insurance income was reclassified to other noninterest income. Prior period balances have been revised to conform with the current period presentation.

Note 18: Revenue from Contracts
(continued from previous page)

(in millions)
Consumer Banking and LendingCommercial BankingCorporate and Investment BankingWealth and Investment ManagementCorporateReconciling
Items (1)		Consolidated
Company
Six months ended June 30, 2020
Net interest income (2)$11,719 3,287 3,984 1,557 939 (264)21,222 
Noninterest income:
Deposit-related fees1,454 599 518 13 5 0 2,589 
Lending-related fees (2)81 253 335 4 0 0 673 
Investment advisory and other asset-based fees (3)0 16 40 3,908 796 0 4,760 
Commissions and brokerage services fees0 0 169 1,063 (5)0 1,227 
Investment banking fees(2)39 1,065 2 (166)0 938 
Card fees:
Card interchange and network revenues (4)1,307 88 29 2 2 0 1,428 
Other card fees (2)261 0 0 0 0 0 261 
Total card fees1,568 88 29 2 2 0 1,689 
Mortgage banking (2)598 0 105 (6)(1)0 696 
Net gains (losses) from trading activities (2)1 (4)844 8 22 0 871 
Net gains on debt securities (2)6 0 0 0 443 0 449 
Net gains (losses) from equity securities (2)0 (222)124 (111)(659)0 (868)
Lease income (2)0 387 6 0 295 0 688 
Other (2)832 253 248 36 571 (415)1,525 
Total noninterest income4,538 1,409 3,483 4,919 1,303 (415)15,237 
Total revenue$16,257 4,696 7,467 6,476 2,242 (679)36,459 
(1)Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax credits for low-income housing and renewable energy investments are included in noninterest income, in each case with Customers (continued)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.


We provide services to customers which have related performance obligations that we complete to recognize revenue. Our(2)These revenues are generally recognized either immediately uponrelated to financial assets and liabilities, including loans, leases, securities and derivatives, with additional details included in other footnotes to our financial statements.
(3)We earned trailing commissions of $300 million and $598 million for the completionsecond quarter and first half of our service or over time as we perform services. Any services performed over time generally require that we render services each period2021, respectively, and therefore we measure our progress in completing these services based upon$257 million and $532 million for the passagesecond quarter and first half of time.

2020, respectively.
SERVICE CHARGES ON DEPOSIT ACCOUNTS (4)The cost of credit card rewards and rebates of $373 million and $683 million for the second quarter and first half of 2021, respectively, and $266 million and $651 million for the second quarter and first half of 2020, respectively, are earned on depository accounts for commercial and consumer customers
and include fees for account and overdraft services. Account charges include fees for periodic account maintenance activities and event-driven services such as stop payment fees. Our obligation for event-driven services is satisfied atpresented net against the time of the event when the service is delivered, while our obligation for maintenance services is satisfied over the course of each month. Our obligation for overdraft services is satisfied at the time of the overdraft.
Table 18.2 presents our service charges on deposit accounts by operating segment.
Table 18.2: Service Charges on Deposit Accounts by Operating Segment
 Quarter ended June 30, 
 
Community
Banking
 
Wholesale
Banking
 Wealth and Investment Management Other Consolidated
Company		 
(in millions)2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Overdraft fees$243
496
1
1
—
1
—
—
244
498
Account charges176
208
510
501
4
3
(4)(4)686
708
Service charges on deposit accounts$419
704
511
502
4
4
(4)(4)930
1,206
 Six months ended June 30, 
 Community
Banking		 Wholesale
Banking		 Wealth and
Investment
Management		 Other Consolidated
Company		 
(in millions)2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Overdraft fees$727
913
2
2
—
1
—
—
729
916
Account charges392
401
1,017
983
9
7
(8)(7)1,410
1,384
Service charges on deposit accounts$1,119
1,314
1,019
985
9
8
(8)(7)2,139
2,300

related revenues.
BROKERAGEINVESTMENT ADVISORY COMMISSIONS AND OTHER ASSET-BASED FEES are earned for providing full-service and discount brokerage services predominantly to retail brokerage clients. These revenues include fees earned on asset-based and transactional accounts and other brokerage advisory, asset management and trust services.
Asset-based revenuesFees from advisory account relationships with brokerage customers are charged based on a percentage of the market value of the client’s assets. The servicesServices and obligations related obligations associated with certain of these revenues, which includeto providing investment advice, active management of client assets, orand assistance with selecting and engaging a third-party advisory manager are generally satisfied over a month or quarter. The remaining revenues include trailingTrailing commissions which are earned for selling shares to investors. Ourinvestors and our obligation associated with earning trailing commissions is satisfied at the time shares are sold. However, these fees are received and recognized over time during the period the customer owns the shares and we remain the broker of record. The amount of trailing commissions is variable based on the length of time the customer holds the shares and on changes in the value of the underlying assets.
Transactional revenues are earned for executing transactions at the client’s direction. Our obligation is generally satisfied upon the execution of the transaction and the fees are based on the size and number of transactions executed.
Other revenues earned from other brokerage advisory services include omnibus and networking fees received from mutual fund companies in return for providing record keeping and other administrative services, and annual account maintenance fees charged to customers.
Table 18.3 presents our brokerage advisory, commissions and other fees by operating segment.


Table 18.3: Brokerage Advisory, Commissions and Other Fees by Operating Segment
 Quarter ended June 30, 
 Community
Banking		 Wholesale
Banking		 Wealth and Investment Management Other Consolidated
Company		 
(in millions)2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Asset-based revenue (1)$342
369
—
—
1,568
1,698
(343)(369)1,567
1,698
Transactional revenue78
94
2
10
343
390
(79)(98)344
396
Other revenue13
17
77
64
128
160
(12)(17)206
224
Brokerage advisory, commissions and other fees$433
480
79
74
2,039
2,248
(434)(484)2,117
2,318
 Six months ended June 30, 
 Community
Banking		 Wholesale
Banking		 Wealth and Investment Management Other Consolidated
Company		 
(in millions)2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Asset-based revenue (1)$740
712
—
—
3,373
3,278
(741)(712)3,372
3,278
Transactional revenue180
183
5
26
775
777
(186)(196)774
790
Other revenue31
34
164
126
288
317
(30)(34)453
443
Brokerage advisory, commissions and other fees$951
929
169
152
4,436
4,372
(957)(942)4,599
4,511
(1)
We earned trailing commissions of $257 million and $532 million for the second quarter and first half of 2020, respectively, and $289 million and $569 million for the second quarter and first half of 2019, respectively.
TRUST AND INVESTMENT MANAGEMENT FEES are earned for providing trust, investment management and other related services.
InvestmentAsset management services include managing and administering assets, including mutual funds, and institutional separate accounts. Fees for these services are generally determined based on a tiered scale relative to the market value of assets under management (AUM). In addition to AUM, we have client assets under administration (AUA) that earn various administrative fees which are generally based on the extent of the services provided to administer the account. Services with AUM and AUA-based fees are generally performedsatisfied over time.
Trust services include acting as a trustee or agent for corporate trust, personal trust, and agency assets. Obligations for trust services are generally satisfied over time, whiletime; however, obligations for activities that are transactionaltransitional in nature are satisfied at the time of the transaction.
Other related services include the custody and safekeeping of accounts. Our obligation for these services is generally satisfied over time.
Table 18.4 presents our trust and investment management fees by operating segment.
Table 18.4: Trust and Investment Management Fees by Operating Segment
 Quarter ended June 30, 
 Community
Banking		 Wholesale
Banking		 Wealth and Investment Management Other Consolidated
Company		 
(in millions)2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Investment management fees$—
(1)—
—
474
501
—
—
474
500
Trust fees175
200
81
83
101
175
(185)(208)172
250
Other revenue(1)—
49
34
(7)11
—
—
41
45
Trust and investment management fees$174
199
130
117
568
687
(185)(208)687
795
 Six months ended June 30, 
 Community
Banking		 Wholesale
Banking		 Wealth and Investment Management Other Consolidated
Company		 
(in millions)2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Investment management fees$—
—
—
—
963
978
—
—
963
978
Trust fees369
409
170
165
203
343
(391)(422)351
495
Other revenue(1)—
91
66
(16)42
—
—
74
108
Trust and investment management fees$368
409
261
231
1,150
1,363
(391)(422)1,388
1,581

INVESTMENT BANKING FEES are earned for underwriting debt and equity securities, arranging loan syndications and performing other advisory services. Our obligation for these services is generally satisfied at closing of the transaction. Substantially all of these fees are in the Wholesale Banking operating segment.
CARD FEES include credit and debit card interchange and network revenues and various card-related fees. Credit and debit card interchange and network revenues are earned on credit and debit card transactions conducted through payment networks such as Visa, MasterCard, and American Express. Our obligation is satisfied concurrently with the delivery of services on a daily basis.
Note 18: Revenue from Contracts with Customers (continued)


Table 18.5 presents our card fees by operating segment.

Table 18.5: Card Fees by Operating Segment
 Quarter ended June 30, 
 Community
Banking		 Wholesale
Banking		 Wealth and Investment Management Other Consolidated
Company		 
(in millions)2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Credit card interchange and network revenues (1)$154
209
65
95
1
2
(1)(1)219
305
Debit card interchange and network revenues479
546
—
—
—
—
—
—
479
546
Late fees, cash advance fees, balance transfer fees, and annual fees99
174
—
—
—
—
—
—
99
174
Card fees$732
929
65
95
1
2
(1)(1)797
1,025
 Six months ended June 30, 
 Community
Banking		 Wholesale
Banking		 Wealth and Investment Management Other Consolidated
Company		 
(in millions)2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Credit card interchange and network revenues (1)$288
398
148
181
2
3
(2)(2)436
580
Debit card interchange and network revenues992
1,053
—
—
—
—
—
—
992
1,053
Late fees, cash advance fees, balance transfer fees, and annual fees261
336
—
—
—
—
—
—
261
336
Card fees$1,541
1,787
148
181
2
3
(2)(2)1,689
1,969
(1)
The cost of credit card rewards and rebates of $266 million and $651 million for the second quarter and first half of 2020, respectively, and $375 million and $729 million for the second quarter and first half of 2019, respectively, are presented net against the related revenues.
CASH NETWORKCOMMISSIONS AND BROKERAGE SERVICES FEES are earned for processing ATM transactions.providing brokerage services.
Commissions from transactional accounts with brokerage customers are earned for executing transactions at the client’s direction. Our obligation is completed daily upon settlement of ATM transactions. All of these fees are included in the Community Banking operating segment.

COMMERCIAL REAL ESTATE BROKERAGE COMMISSIONS are earned for assisting customers in the sale of real estate property. Our obligation isgenerally satisfied upon the successful brokeringexecution of a transaction. Feesthe transaction and the fees are based on a fixed percentagethe size and number of the sales price. All of thesetransactions executed.
Fees earned from other brokerage services include securities clearance, omnibus and networking fees are includedreceived from mutual fund companies in the Wholesale Banking operating segment. In October 2019, we sold our commercial real estate brokerage business (Eastdil).
WIRE TRANSFER AND OTHER REMITTANCE FEES consist of fees earnedreturn for funds transferproviding record keeping and other administrative services, and issuing cashier’s checks and money orders.annual account maintenance fees charged to customers. Our obligation is satisfied at the time we provide the service which is generally at the time of the funds transfer services or upon issuancetransaction.

For a description of the cashier’s check or money order. Substantially all of these fees are includedour other revenues, see Note 20 (Revenue from Contracts with Customers) in in the Community Banking and Wholesale Banking operating segments.

ALL OTHER FEES include various types of fees for products or services such as merchant payment services, safe deposit boxes, and loan syndication agency services. These fees are generally recognized over time as we perform the services. Most of these fees are included in the Community Banking operating segment.

our 2020 Form 10-K.


Wells Fargo & Company137

Note 19:18: Employee Benefits and Other Expenses
Pension and Postretirement Plans
We sponsor a frozen noncontributory qualified defined benefit retirement plan, the Wells Fargo & Company Cash Balance Plan (Cash Balance Plan), which covers eligible employees of Wells Fargo. The Cash Balance Plan was frozen on July 1, 2009, and 0 new benefits have accruedaccrue after that date. For additional information on our pension and postretirement plans, including plan assumptions, investment strategy and asset allocation, projected benefit payments, and valuation methodologies used for assets measured at fair value, see Note 2321 (Employee Benefits and Other Expenses) in our 20192020 Form 10-K.
We recognize settlement losses for our Cash Balance Plan based on an assessment of whether lump sum benefit payments will, in aggregate for the year, exceed the sum of its annual service and interest cost.cost (threshold). Settlement losses of $62 million and $70 million were recognized during second quarter 2021 and 2020, respectively, representing the pro rata portion of the net loss in cumulative other comprehensive income
based on the percentage reduction in the Cash Balance
Plan’s projected benefit obligation attributable to lump sum benefit payments during the first half of both 2021 and 2020. As a result of the settlement losses, we re-measured the Cash Balance Plan obligation and plan assets as of both June 30, 2021 and 2020, and used a discount rate of 2.80% and 2.75%, respectively, based on our consistent methodology of determining our discount rate using a yield curve with maturity dates that closely match the estimated timing of the expected benefit payments. The result of the settlement losses and re-measurementremeasurement increased the Cash Balance Plan asset by $347 million and other comprehensive income (pre-tax) by $409 million in second quarter 2021, and increased the Cash Balance Plan liability by $674 million and decreased other comprehensive income (pre-tax) by $604 million (pre tax) in second quarter 2020.
Table 19.118.1 presents the components of net periodic benefit cost. Service cost is reported in personnel expense and all other components of net periodic benefit cost are reported in other noninterest expense on the consolidated statement of income.

Table 19.1:18.1: Net Periodic Benefit Cost
20212020
Pension benefits Pension benefits 
(in millions)Qualified 
Non- 
qualified 
Other 
benefits 
Qualified 
Non- 
qualified 
Other 
benefits 
Quarter ended June 30,
Service cost$5 0 0 4 0 0 
Interest cost71 3 3 86 4 4 
Expected return on plan assets(154)0 (4)(149)0 (5)
Amortization of net actuarial loss (gain)38 3 (5)35 3 (4)
Amortization of prior service credit0 0 (3)0 0 (3)
Settlement loss62 0 0 70 0 0 
Net periodic benefit cost$22 6 (9)46 7 (8)
Six months ended June 30,
Service cost$9 0 0 7 0 0 
Interest cost142 6 6 172 8 8 
Expected return on plan assets(306)0 (9)(297)0 (11)
Amortization of net actuarial loss (gain)75 7 (10)71 7 (9)
Amortization of prior service credit0 0 (5)0 0 (5)
Settlement loss62 2 0 70 3 0 
Net periodic benefit cost$(18)15 (18)23 18 (17)

Other Expenses
Regulatory Charges and Assessments expense, which is included in other noninterest expense, was $192 million and $409 million in the second quarter and first half of 2021, respectively, compared with $211 million and $374 million in the same periods a year ago, and primarily consisted of Federal Deposit Insurance Corporation (FDIC) deposit assessment expense.
138Wells Fargo & Company

Note 19:  Restructuring Charges
The Company began pursuing various initiatives to reduce expenses and create a more efficient and streamlined organization in third quarter 2020. Actions from these initiatives may include (i) reorganizing and simplifying business processes and structures to improve internal operations and the customer experience, (ii) reducing headcount, (iii) optimizing third-party spending, including for our technology infrastructure, and (iv) rationalizing our branch and administrative locations, which may include consolidations and closures.
Restructuring charges are recorded as a component of noninterest expense on our consolidated statement of income.
The following costs associated with these initiatives are included in restructuring charges.
•Personnel costs – Severance costs associated with headcount reductions with payments made over time in accordance with our severance plan, as well as payments for other employee benefit costs such as incentive compensation.
•Facility closure costs – Write-downs and acceleration of depreciation and amortization of owned or leased assets for branch and administrative locations, as well as related decommissioning costs.
•Other – Impairment of other assets and costs associated with our technology infrastructure.

Table 19.1 provides details on our restructuring charges.

Table 19.1:Accruals for Restructuring Charges
(in millions)Personnel costsFacility closure costsOtherTotal
Quarter ended June 30, 2021
Balance, beginning of period$1,010 0 44 1,054 
Restructuring charges155 3 0 158 
Payments and utilization(213)4 (37)(246)
Changes in estimates (1)(148)(7)(7)(162)
Balance, end of period$804 0 0 804 
Six months ended June 30, 2021
Balance, beginning of period$1,170 0 44 1,214 
Restructuring charges285 18 0 303 
Payments and utilization(370)(11)(38)(419)
Changes in estimates (1)(281)(7)(6)(294)
Balance, end of period$804 0 0 804 
Year ended December 31, 2020
Balance, beginning of year$0 0 0 0 
Restructuring charges1,371 80 144 1,595 
Payments and utilization(105)(80)(100)(285)
Changes in estimates (1)(96)0 0 (96)
Balance, end of year$1,170 0 44 1,214 
 2020  2019 
 Pension benefits    Pension benefits   
(in millions)Qualified
 Non-qualified
 
Other
benefits

 Qualified
 Non-qualified
 
Other
benefits

Quarter ended June 30,       
Service cost$4
 —
 —
 3
 —
 —
Interest cost86
 4
 4
 104
 5
 6
Expected return on plan assets(149) —
 (5) (142) —
 (7)
Amortization of net actuarial loss (gain)35
 3
 (4) 37
 3
 (4)
Amortization of prior service credit—
 —
 (3) —
 —
 (3)
Settlement loss70
 —
 —
 —
 —
 —
Net periodic benefit cost$46
 7
 (8) 2
 8
 (8)
Six months ended June 30,   
Service cost$7
 —
 —
 6
 —
 —
Interest cost172
 8
 8
 209
 11
 11
Expected return on plan assets(297) —
 (11) (284) —
 (14)
Amortization of net actuarial loss (gain)71
 7
 (9) 74
 5
 (8)
Amortization of prior service credit—
 —
 (5) —
 —
 (5)
Settlement loss70
 3
 —
 —
 2
 —
Net periodic benefit cost$23
 18
 (17) 5
 18
 (16)
(1)Represents reduction of expense for changes in previously estimated amounts based on refinements of assumptions.

Other Expenses
Table 19.2 separately presents other expenses exceeding 1% of the sum of net interest income and total noninterest income in any of the periods presented.

Table 19.2:Other Expenses
 Quarter ended June 30,  Six months ended June 30, 
(in millions)2020
 2019
 2020
 2019
Operating losses$1,219
 247
 $1,683
 485
Outside professional services758
 821
 1,485
 1,499
Contract services (1)634
 590
 1,219
 1,120
Leases (2)244
 311
 504
 597
Advertising and promotion137
 329
 318
 566
Other1,028
 1,146
 1,983
 2,287
Total other noninterest expense$4,020
 3,444
 $7,192
 6,554
(1)In second quarter 2020, expenses for cloud computing services were reclassified from contract services expense to technology and equipment expense. Prior period balances have been revised to conform with the current period presentation.Wells Fargo & Company139
(2)Represents expenses for assets we lease to customers.



Note 20: Earnings and Dividends Per Common Share
Table 20.1 shows earnings per common share and diluted earnings per common share and reconciles the numerator and denominator of both earnings per common share calculations.
See Note 1 (Summary of Significant Accounting Policies) for discussion on share repurchases.

Table 20.1: Earnings Per Common Share Calculations
Quarter ended June 30,Six months ended June 30,
(in millions, except per share amounts)2021202020212020
Wells Fargo net income (loss) (1)$6,040 $(3,846)$10,676 (2,930)
Less: Preferred stock dividends and other (2)297 314 677 926 
Wells Fargo net income (loss) applicable to common stock (numerator) (1)$5,743 (4,160)$9,999 (3,856)
Earnings per common share
Average common shares outstanding (denominator)4,124.6 4,105.5 4,132.9 4,105.2 
Per share$1.39 (1.01)$2.42 (0.94)
Diluted earnings per common share
Average common shares outstanding4,124.6 4,105.5 4,132.9 4,105.2 
Add: Restricted share rights (3)31.5 0 31.7 0 
Diluted average common shares outstanding (denominator)4,156.1 4,105.5 4,164.6 4,105.2 
Per share$1.38 (1.01)$2.40 (0.94)
(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).
 Quarter ended June 30,  Six months ended June 30, 
(in millions, except per share amounts)2020
 2019
 2020
 2019
Wells Fargo net income (loss)$(2,379) 6,206
 $(1,726) 12,066
Less: Preferred stock dividends and other (1)315
 358
 926
 711
Wells Fargo net income (loss) applicable to common stock (numerator)$(2,694) 5,848
 $(2,652) 11,355
Earnings (loss) per common share       
Average common shares outstanding (denominator)4,105.5
 4,469.4
 4,105.2
 4,510.2
Per share$(0.66) 1.31
 $(0.65) 2.52
Diluted earnings (loss) per common share       
Average common shares outstanding4,105.5
 4,469.4
 4,105.2
 4,510.2
Add:  Stock options (2)—
 0.1
 —
 1.4
Restricted share rights (2)—
 25.5
 —
 28.5
Diluted average common shares outstanding (denominator)4,105.5
 4,495.0
 4,105.2
 4,540.1
Per share$(0.66) 1.30
 $(0.65) 2.50

(2)The quarter ended June 30, 2021, balance included$4 million, and the six months ended June 30, 2021 and 2020, includes $48 million and $272 million, respectively, from the elimination of discounts or issuance costs associated with redemptions of preferred stock.
(1)
The six months ended June 30, 2020, balance includes $272 million from the elimination of discounts or issuance costs associated with redemptions of preferred stock.
(3)Calculated using the treasury stock method. In the second quarter and first half of 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.
(2)Calculated using the treasury stock method. In the second quarter and first half of 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.
Table 20.2 presents the outstanding securities that were anti-dilutive and therefore not included in the calculation of diluted earnings per common share.

Table 20.2: Outstanding Anti-Dilutive Securities
Weighted-average shares
Quarter ended June 30,Six months ended June 30,
(in millions)2021202020212020
Convertible Preferred Stock, Series L (1)25.3 25.3 25.3 25.3 
Restricted share rights (2)0.2 35.9 0.1 0.9 
 Weighted-average shares 
 Quarter ended June 30,  Six months ended June 30, 
(in millions)2020
 2019
 2020
 2019
Convertible Preferred Stock, Series L (1)25.3
 25.3
 25.3
 25.3
Restricted share rights (2)35.9
 —
 0.9
 —
(1)    Calculated using the if-converted method.
(1)Calculated using the if-converted method.
(2)
(2)    Calculated using the treasury stock method. Since we had net losses attributable to common shareholders for the second quarter and first half of 2020, all RSRs outstanding were anti-dilutive. Weighted average RSRs outstanding were 50.7 million and 54.7 million for the second quarter and first half of 2020, respectively.
Calculated using the treasury stock method. Since we had net losses attributable to common shareholders for the second quarter and first half of 2020, all RSRs outstanding were anti-dilutive. Weighted average RSRs outstanding were 50.7 million and 54.7 million for the second quarter and first half of 2020, respectively.

Table 20.3 presents dividends declared per common share.
Table 20.3: Dividends Declared Per Common Share
Quarter ended June 30,Six months ended June 30,
2021202020212020
Per common share$0.10 $0.51 $0.20 1.02 
 Quarter ended June 30,  Six months ended June 30, 
 2020
 2019
 2020
 2019
Per common share$0.51
 0.45
 $1.02
 0.90


140Wells Fargo & Company

Note 21: Other Comprehensive Income
Table 21.1 provides the components of OCI,other comprehensive income (OCI), reclassifications to net income by income statement line item, and the related tax effects.



Table 21.1: Summary of Other Comprehensive Income
Quarter ended June 30,Six months ended June 30,
2021202020212020
(in millions)Before 
 tax 		Tax 
 effect 		Net of 
 tax 		Before 
 tax 		Tax 
 effect 		Net of 
 tax 		Before 
 tax 		Tax 
 effect 		Net of 
 tax 		Before 
 tax 		Tax 
 effect 		Net of 
 tax 
Debt securities:
Net unrealized gains (losses) arising during the period$272 (68)204 1,596 (395)1,201 (1,740)432 (1,308)1,486 (373)1,113 
Reclassification of net (gains) losses to net income:
Interest income on debt securities (1)134 (33)101 123 (31)92 271 (67)204 189 (47)142 
Net gains on debt securities0 0 0 (212)63 (149)(151)35 (116)(449)111 (338)
Other noninterest income(2)1 (1)(1)0 (1)(2)1 (1)(2)0 (2)
Subtotal reclassifications to net income132 (32)100 (90)32 (58)118 (31)87 (262)64 (198)
Net change404 (100)304 1,506 (363)1,143 (1,622)401 (1,221)1,224 (309)915 
Derivatives and hedging activities:
Fair Value Hedges:
Change in fair value of excluded components on fair value hedges (2)(14)3 (11)(57)13 (44)11 (3)8 87 (22)65 
Cash Flow Hedges:
Net unrealized gains (losses) arising during the period on cash flow hedges11 (3)8 5 (1)4 (20)5 (15)(15)4 (11)
Reclassification of net (gains) losses to net income:
Interest income on loans39 (10)29 53 (12)41 91 (23)68 109 (26)83 
Interest expense on long-term debt1 0 1 2 0 2 2 0 2 4 (1)3 
Subtotal reclassifications to net income40 (10)30 55 (12)43 93 (23)70 113 (27)86 
Net change37 (10)27 3 0 3 84 (21)63 185 (45)140 
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period347 (85)262 (674)167 (507)357 (88)269 (671)166 (505)
Reclassification of amounts to noninterest expense (3):
Amortization of net actuarial loss36 (9)27 34 (9)25 72 (18)54 69 (17)52 
Settlements and other59 (14)45 67 (16)51 59 (13)46 68 (16)52 
Subtotal reclassifications to noninterest expense95 (23)72 101 (25)76 131 (31)100 137 (33)104 
Net change442 (108)334 (573)142 (431)488 (119)369 (534)133 (401)
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period23 (1)22 51 0 51 36 (3)33 (144)2 (142)
Net change23 (1)22 51 0 51 36 (3)33 (144)2 (142)
Other comprehensive income (loss)$906 (219)687 987 (221)766 (1,014)258 (756)731 (219)512 
Less: Other comprehensive income (loss) from noncontrolling interests, net of tax1 0 2 (1)
Wells Fargo other comprehensive income (loss), net of tax$686 766 (758)513 
(1)Represents net unrealized gains and losses amortized over the remaining lives of securities that were transferred from the available-for-sale portfolio to the held-to-maturity portfolio.
(2)Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income.
(3)These items are included in the computation of net periodic benefit cost (see Note 18 (Employee Benefits and Other Expenses) for additional information).
 Quarter ended June 30,  Six months ended June 30, 
 2020  2019  2020  2019 
(in millions)
Before
tax

 
Tax
effect

 
Net of
tax

 
Before
tax

 
Tax
effect

 
Net of
tax

 
Before
tax

 
Tax
effect

 
Net of
tax

 
Before
tax

 
Tax
effect

 
Net of
tax

Debt securities:                       
Net unrealized gains arising during the period$1,596
 (395) 1,201
 1,709
 (422) 1,287
 1,486
 (373) 1,113
 4,540
 (1,117) 3,423
Reclassification of net (gains) losses to net income:          

            
Interest income on debt securities (1)123
 (31) 92
 61
 (15) 46
 189
 (47) 142
 106
 (26) 80
Net gains on debt securities(212) 63
 (149) (20) 5
 (15) (449) 111
 (338) (145) 36
 (109)
Other noninterest income(1) —
 (1) (2) 1
 (1) (2) —
 (2) (3) 1
 (2)
Subtotal reclassifications to net income(90)
32

(58) 39
 (9) 30
 (262) 64
 (198) (42) 11
 (31)
Net change1,506

(363)
1,143
 1,748
 (431) 1,317
 1,224
 (309) 915
 4,498
 (1,106) 3,392
Derivative and hedging activities:                       
Fair Value Hedges:                       
Change in fair value of excluded components on fair value hedges (2)(57) 13
 (44) 56
 (14) 42
 87
 (22) 65
 30
 (7) 23
Cash Flow Hedges:                       
Net unrealized gains (losses) arising during the period on cash flow hedges5
 (1) 4
 1
 —
 1
 (15) 4
 (11) (8) 2
 (6)
Reclassification of net losses to net income on cash flow hedges:          

            
Interest income on loans53
 (12) 41
 77
 (19) 58
 109
 (26) 83
 155
 (38) 117
Interest expense on long-term debt2
 —
 2
 2
 (1) 1
 4
 (1) 3
 3
 (1) 2
Subtotal reclassifications to net income55

(12)
43

79

(20)
59

113

(27)
86

158

(39)
119
Net change3

—

3
 136
 (34) 102
 185

(45)
140
 180

(44)
136
Defined benefit plans adjustments:                       
Net actuarial and prior service losses arising during the period(674) 167
 (507) —
 —
 —
 (671) 166
 (505) (4) 1
 (3)
Reclassification of amounts to non interest expense (3):                       
Amortization of net actuarial loss34
 (9) 25
 36
 (9) 27
 69
 (17) 52
 71
 (17) 54
Settlements and other67
 (16) 51
 (3) 2
 (1) 68
 (16) 52
 (3) 2
 (1)
Subtotal reclassifications to non interest expense101

(25)
76
 33
 (7) 26
 137
 (33) 104
 68
 (15) 53
Net change(573)
142

(431) 33
 (7) 26
 (534) 133
 (401) 64
 (14) 50
Foreign currency translation adjustments:                       
Net unrealized gains (losses) arising during the period51
 —
 51
 14
 (1) 13
 (144) 2
 (142) 56
 (3) 53
Net change51

—

51
 14
 (1) 13
 (144) 2
 (142) 56
 (3) 53
Other comprehensive income$987

(221) 766
 1,931

(473)
1,458
 731
 (219) 512
 4,798
 (1,167) 3,631
Less: Other comprehensive loss from noncontrolling interests, net of tax    —
     —
     (1)     —
Wells Fargo other comprehensive income, net of tax    $766
     1,458
     513
     3,631
(1)Represents net unrealized gains and losses amortized over the remaining lives of securities that were transferred from the available-for-sale portfolio to the held-to-maturity portfolio.Wells Fargo & Company141
(2)Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of effectiveness recorded in other comprehensive income.
(3)These items are included in the computation of net periodic benefit cost (see Note 19 (Employee Benefits) for more information).


Note 21: Other Comprehensive Income (continued(continued))

Table 21.2 provides the cumulative OCI balance activity on an after-tax basis.


Table 21.2: Cumulative OCI Balances
(in millions)Debt
securities		Fair value hedges (1)Cash flow hedges (2)
Defined 
 benefit 
 plans 
 adjustments 
Foreign 
 currency 
 translation 
adjustments 
Cumulative 
 other 
comprehensive 
 income (loss)
Quarter ended June 30, 2021
Balance, beginning of period$1,514 (185)(108)(2,369)(102)(1,250)
Net unrealized gains (losses) arising during the period204 (11)8 262 22 485 
Amounts reclassified from accumulated other comprehensive income100 0 30 72 0 202 
Net change304 (11)38 334 22 687 
Less: Other comprehensive income from noncontrolling interests1 0 0 0 0 1 
Balance, end of period$1,817 (196)(70)(2,035)(80)(564)
Quarter ended June 30, 2020
Balance, beginning of period$1,324 (71)(270)(2,193)(354)(1,564)
Net unrealized gains (losses) arising during the period1,201 (44)4 (507)51 705 
Amounts reclassified from accumulated other comprehensive income(58)0 43 76 0 61 
Net change1,143 (44)47 (431)51 766 
Less: Other comprehensive income from noncontrolling interests0 0 0 0 0 0 
Balance, end of period$2,467 (115)(223)(2,624)(303)(798)
Six months ended June 30, 2021
Balance, beginning of period$3,039 (204)(125)(2,404)(112)194 
Net unrealized gains (losses) arising during the period(1,308)8 (15)269 33 (1,013)
Amounts reclassified from accumulated other comprehensive income87 0 70 100 0 257 
Net change(1,221)8 55 369 33 (756)
Less: Other comprehensive income from noncontrolling interests1 0 0 0 1 2 
Balance, end of period$1,817 (196)(70)(2,035)(80)(564)
Six months ended June 30, 2020
Balance, beginning of period$1,552 (180)(298)(2,223)(162)(1,311)
Net unrealized gains (losses) arising during the period1,113 65 (11)(505)(142)520 
Amounts reclassified from accumulated other comprehensive income(198)0 86 104 0 (8)
Net change915 65 75 (401)(142)512 
Less: Other comprehensive loss from noncontrolling interests0 0 0 0 (1)(1)
Balance, end of period$2,467 (115)(223)(2,624)(303)(798)
(1)Substantially all of the amounts for fair value hedges are foreign exchange contracts.
(2)Majority of the amounts for cash flow hedges are interest rate contracts.
(in millions)
Debt
securities

 Fair value hedges (1)
 Cash flow hedges (2)
 
Defined
benefit
plans
adjustments

 
Foreign
currency
translation
adjustments

 
Cumulative
other
comprehensive
income

Quarter ended June 30, 2020           
Balance, beginning of period$1,324
 (71) (270) (2,193) (354) (1,564)
Net unrealized gains (losses) arising during the period1,201
 (44) 4
 (507) 51
 705
Amounts reclassified from accumulated other comprehensive income(58) —
 43
 76
 —
 61
Net change1,143
 (44) 47
 (431) 51
 766
Less: Other comprehensive loss from noncontrolling interests—
 —
 —
 —
 —
 —
Balance, end of period$2,467
 (115) (223) (2,624) (303) (798)
Quarter ended June 30, 2019           
Balance, beginning of period(566) (197) (454) (2,272) (193) (3,682)
Net unrealized gains arising during the period1,287
 42
 1
 —
 13
 1,343
Amounts reclassified from accumulated other comprehensive income30
 —
 59
 26
 —
 115
Net change1,317
 42
 60
 26
 13
 1,458
Balance, end of period$751
 (155) (394) (2,246) (180) (2,224)
Six months ended June 30, 2020           
Balance, beginning of period$1,552
 (180) (298) (2,223) (162) (1,311)
Net unrealized gains (losses) arising during the period1,113
 65
 (11) (505) (142) 520
Amounts reclassified from accumulated other comprehensive income(198) —
 86
 104
 —
 (8)
Net change915
 65
 75
 (401) (142) 512
Less: Other comprehensive loss from noncontrolling interests—
 —
 —
 —
 (1) (1)
Balance, end of period$2,467
 (115) (223) (2,624) (303) (798)
Six months ended June 30, 2019           
Balance, beginning of period$(3,122) (178) (507) (2,296) (233) (6,336)
Transition adjustment (3)481
 —
 —
 —
 —
 481
Balance, January 1, 2019(2,641) (178) (507) (2,296) (233) (5,855)
Net unrealized gains (losses) arising during the period3,423
 23
 (6) (3) 53
 3,490
Amounts reclassified from accumulated other comprehensive income(31) —
 119
 53
 —
 141
Net change3,392
 23
 113
 50
 53
 3,631
Balance, end of period$751
 (155)��(394) (2,246) (180) (2,224)

(1)142Substantially all of the beginning and end of period amounts for fair value hedges are foreign exchange contracts.Wells Fargo & Company

(2)Substantially all of the beginning and end of period amounts for cash flow hedges are interest rate contracts.
(3)
The transition adjustment relates to the adoption of ASU 2017-08 –Note 22:  Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. For more information see Note 1 (Summary of Significant Accounting Policies) in our 2019 Form 10-K.



Note 22: Operating Segments
As of June 30, 2020, we were organized forOur management reporting purposesis organized into 34 reportable operating segments: CommunityConsumer Banking and Lending; Commercial Banking; WholesaleCorporate and Investment Banking; and Wealth and Investment Management (WIM). TheseManagement. All other business activities that are not included in the reportable operating segments are definedhave been included in Corporate. We define our reportable operating segments by type of product type and customer segment, and their results are based on our management 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 withand includes specific adjustments, such as for funds transfer pricing for asset/liability management, for shared revenues and expenses, and tax-equivalenttaxable-equivalent adjustments to consistently reflect income from taxable and tax-exempt sources. On February 11, 2020,sources, which allows management to assess performance consistently across the operating segments.
In March 2021, we announced a new organizational structurean agreement to sell our Corporate Trust Services business and, in second quarter 2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with 5 principal lines of business: Consumer and Small Business Banking; Consumer Lending; Commercial Banking;
Corporate and Investment Banking; and Wealth and Investment Management.the current period presentation. This new organizational structure is intended to help drive operating, control, and business performance. In July 2020, the Company completed the transition to this new organizational structure, including finalizing leadership for 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. Accordingly,
In second quarter 2021, we will updateelected to change our accounting method for low-income housing tax credit (LIHTC) investments and elected to change the presentation of investment tax credits related to solar energy investments. These accounting policy changes had a nominal impact on reportable operating segment disclosures, including comparativeresults. Prior period financial results, in third quarter 2020. For a description of ourstatement line items for the Company, as well as for the reportable operating segments, have been revised to conform with the current period presentation. Our LIHTC investments are included in the Corporate and Investment Banking operating segment and our solar energy investments are included in the Commercial Banking operating segment. For additional information, see Note 27 (Operating Segments)1 (Summary of Significant Accounting Policies).

Consumer Banking and Lending offers diversified financial products and services for consumers and small businesses with annual sales generally up to $5 million. These financial products and services include checking and savings accounts, credit and debit cards, as well as home, auto, personal, and small business lending.

Commercial Banking provides financial solutions to private, family owned and certain public companies. Products and services include banking and credit products across multiple industry sectors and municipalities, secured lending and lease products, and treasury management.

Corporate and Investment Banking delivers a suite of capital markets, banking, and financial products and services to corporate, commercial real estate, government and institutional clients globally. Products and services include corporate banking, investment banking, treasury management, commercial real estate lending and servicing, equity and fixed income solutions, as well as sales, trading, and research capabilities.
Wealth and Investment Management provides personalized wealth management, investment and retirement products and services to clients across U.S.-based businesses including Wells Fargo Advisors and The Private Bank. We serve clients’ brokerage needs, and deliver financial planning, private banking, credit, and fiduciary services to high-net worth and ultra-high-net worth individuals and families.

Corporate includes corporate treasury and enterprise functions, net of allocations (including funds transfer pricing, capital, liquidity and certain expenses), in support of the reportable operating segments, as well as our 2019 Form 10-K.investment portfolio and affiliated venture capital and private equity businesses. In addition, Corporate includes all restructuring charges related to our efficiency initiatives. See Note 19 (Restructuring Charges) for additional information on restructuring charges. Corporate also includes certain lines of business that management has determined are no longer consistent with the long-term strategic goals of the Company, as well as results for previously divested businesses.

Basis of Presentation
FUNDS TRANSFER PRICING Corporate treasury manages a funds transfer pricing methodology that considers interest rate risk, liquidity risk, and other product characteristics. Operating segments pay a funding charge for their assets and receive a funding credit for their deposits, both of which are included in net interest income. The net impact of the funding charges or credits is recognized in corporate treasury.

REVENUE AND EXPENSE SHARING When lines of business jointly serve customers, the line of business that is responsible for providing the product or service recognizes revenue or expense with a referral fee paid or an allocation of cost to the other line of business based on established internal revenue-sharing agreements.
When a line of business uses a service provided by another line of business or enterprise function (included in Corporate), expense is generally allocated based on the cost and use of the service provided.

TAXABLE-EQUIVALENT ADJUSTMENTS Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax credits for low-income housing and renewable energy investments are included in noninterest income, in each case with corresponding impacts to income tax expense (benefit). Adjustments are included in Corporate, Commercial Banking, and Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial results.
Wells Fargo & Company143

Note 22: Operating Segments (continued)
Table 22.1 presents our results by operating segment.
Table 22.1: Operating Segments

(in millions)
Consumer Banking and LendingCommercial BankingCorporate and Investment BankingWealth and Investment ManagementCorporateReconciling Items (1)Consolidated
Company
Quarter ended June 30, 2021
Net interest income (2)$5,618 1,202 1,783 610 (304)(109)8,800 
Noninterest income3,068 906 1,555 2,926 3,327 (312)11,470 
Total revenue8,686 2,108 3,338 3,536 3,023 (421)20,270 
Provision for credit losses(367)(382)(501)24 (34)0 (1,260)
Noninterest expense6,202 1,443 1,805 2,891 1,000 0 13,341 
Income (loss) before income tax expense (benefit)2,851 1,047 2,034 621 2,057 (421)8,189 
Income tax expense (benefit)713 261 513 156 223 (421)1,445 
Net income before noncontrolling interests2,138 786 1,521 465 1,834 0 6,744 
Less: Net income (loss) from noncontrolling interests0 2 (2)0 704 0 704 
Net income$2,138 784 1,523 465 1,130 0 6,040 
Quarter ended June 30, 2020
Net interest income (2)$5,717 1,554 1,963 719 60 (121)9,892 
Noninterest income1,891 797 2,096 2,487 1,318 (195)8,394 
Total revenue7,608 2,351 4,059 3,206 1,378 (316)18,286 
Provision for credit losses3,102 2,295 3,756 255 126 0 9,534 
Noninterest expense6,933 1,580 2,044 2,743 1,251 0 14,551 
Income (loss) before income tax expense (benefit)(2,427)(1,524)(1,741)208 1 (316)(5,799)
Income tax expense (benefit)(650)(379)(408)52 (300)(316)(2,001)
Net income (loss) before noncontrolling interests(1,777)(1,145)(1,333)156 301 0 (3,798)
Less: Net income from noncontrolling interests0 1 0 0 47 0 48 
Net income (loss)$(1,777)(1,146)(1,333)156 254 0 (3,846)
Six months ended June 30, 2021
Net interest income (2) $11,233 2,456 3,562 1,267 (694)(216)17,608 
Noninterest income6,107 1,733 3,380 5,813 4,744 (583)21,194 
Total revenue17,340 4,189 6,942 7,080 4,050 (799)38,802 
Provision for credit losses(786)(781)(785)(19)63 0 (2,308)
Noninterest expense12,469 3,073 3,638 5,919 2,231 0 27,330 
Income (loss) before income tax expense (benefit)5,657 1,897 4,089 1,180 1,756 (799)13,780 
Income tax expense (benefit)1,415 473 1,013 296 (52)(799)2,346 
Net income before noncontrolling interests4,242 1,424 3,076 884 1,808 0 11,434 
Less: Net income (loss) from noncontrolling interests0 3 (2)0 757 0 758 
Net income$4,242 1,421 3,078 884 1,051 0 10,676 
Six months ended June 30, 2020
Net interest income (2)$11,719 3,287 3,984 1,557 939 (264)21,222 
Noninterest income4,538 1,409 3,483 4,919 1,303 (415)15,237 
Total revenue16,257 4,696 7,467 6,476 2,242 (679)36,459 
Provision for credit losses4,671 3,336 4,881 263 388 0 13,539 
Noninterest expense13,190 3,153 3,914 5,400 1,942 0 27,599 
Income (loss) before income tax expense (benefit)(1,604)(1,793)(1,328)813 (88)(679)(4,679)
Income tax expense (benefit)(445)(442)(307)204 21 (679)(1,648)
Net income (loss) before noncontrolling interests(1,159)(1,351)(1,021)609 (109)0 (3,031)
Less: Net income (loss) from noncontrolling interests0 2 0 0 (103)0 (101)
Net income (loss)$(1,159)(1,353)(1,021)609 (6)0 (2,930)
(continued on following page)
 Community
Banking 		  
Wholesale
Banking
  
Wealth and
Investment
Management
  Other (1)  
Consolidated
Company
 
(income/expense in millions, average balances in billions)2020
 2019
 2020
 2019
 2020
 2019
 2020
 2019
 2020
 2019
Quarter ended June 30,                   
Net interest income (2)$5,699
 7,066
 3,891
 4,535
 736
 1,037
 (446) (543) 9,880
 12,095
Provision (reversal of provision) for credit losses3,378
 479
 6,028
 28
 257
 (1) (129) (3) 9,534
 503
Noninterest income3,067
 4,739
 2,672
 2,530
 2,924
 3,013
 (707) (793) 7,956
 9,489
Noninterest expense8,346
 7,212
 3,963
 3,882
 3,153
 3,246
 (911) (891) 14,551
 13,449
Income (loss) before income tax expense (benefit)(2,958) 4,114
 (3,428) 3,155
 250
 805
 (113) (442) (6,249) 7,632
Income tax expense (benefit) (3)(2,666) 838
 (1,286) 365
 63
 201
 (28) (110) (3,917) 1,294
Net income (loss) before noncontrolling interests(292) 3,276
 (2,142) 2,790
 187
 604
 (85) (332) (2,332) 6,338
Less: Net income (loss) from noncontrolling interests39
 129
 1
 1
 7
 2
 —
 —
 47
 132
Net income (loss)$(331) 3,147
 (2,143) 2,789
 180
 602
 (85) (332) (2,379) 6,206
                    
Average loans$449.3
 457.7
 504.3
 474.0
 78.7
 75.0
 (61.0) (59.2) 971.3
 947.5
Average assets1,059.8
 1,024.8
 863.2
 852.2
 87.7
 83.8
 (61.8) (60.2) 1,948.9
 1,900.6
Average deposits848.5
 777.6
 441.2
 410.4
 171.8
 143.5
 (74.8) (62.5) 1,386.7
 1,269.0
Six months ended June 30,                   
Net interest income (2)$12,486
 14,314
 8,027
 9,069
 1,603
 2,138
 (924) (1,115) 21,192
 24,406
Provision (reversal of provision) for credit losses5,096
 1,189
 8,316
 162
 265
 3
 (138) (6) 13,539
 1,348
Noninterest income5,776
 9,241
 4,353
 5,107
 5,772
 5,991
 (1,540) (1,552) 14,361
 18,787
Noninterest expense15,462
 14,901
 7,726
 7,720
 6,256
 6,549
 (1,845) (1,805) 27,599
 27,365
Income (loss) before income tax expense (benefit)(2,296) 7,465
 (3,662) 6,294
 854
 1,577
 (481) (856) (5,585) 14,480
Income tax expense (benefit) (3)(2,022) 1,262
 (1,832) 734
 216
 393
 (120) (214) (3,758) 2,175
Net income (loss) before noncontrolling interests(274) 6,203
 (1,830) 5,560
 638
 1,184
 (361) (642) (1,827) 12,305
Less: Net income (loss) from noncontrolling interests(98) 233
 2
 1
 (5) 5
 —
 —
 (101) 239
Net income (loss)$(176) 5,970
 (1,832) 5,559
 643
 1,179
 (361) (642) (1,726) 12,066
                    
Average loans$456.0
 457.9
 494.4
 475.2
 78.6
 74.7
 (60.8) (59.1) 968.2
 948.7
Average assets1,049.5
 1,020.1
 874.1
 848.4
 87.9
 83.5
 (61.7) (60.1) 1,949.8
 1,891.9
Average deposits823.5
 771.6
 448.9
 410.1
 161.6
 148.3
 (71.7) (64.5) 1,362.3
 1,265.5
(1)144Includes the elimination of certain items that are included in more than one business segment, most of which represents products and services for WIM customers served through Community Banking distribution channels. Wells Fargo & Company

(continued from previous page)

Consumer Banking and LendingCommercial BankingCorporate and Investment BankingWealth and Investment ManagementCorporateReconciling Items (1)Consolidated
Company
Quarter ended June 30, 2021
Loans (average)$331,892 178,572 252,422 81,784 10,077 0 854,747 
Assets (average)388,617 195,453 513,414 87,766 754,629 0 1,939,879 
Deposits (average)835,752 192,586 190,810 174,980 41,696 0 1,435,824 
Six months ended June 30, 2021
Loans (average)$342,428 180,845 249,302 81,314 10,152 0 864,041 
Assets (average)398,530 197,396 512,476 87,562 741,203 0 1,937,167 
Deposits (average)812,723 190,984 192,645 174,333 44,080 0 1,414,765 
Loans (period-end)326,760 178,905 253,259 82,783 10,593 0 852,300 
Assets (period-end)382,464 196,421 516,518 88,678 761,915 0 1,945,996 
Deposits (period-end)840,434 197,461 188,219 174,267 40,091 0 1,440,472 
Quarter ended June 30, 2020
Loans (average)$369,631 228,423 273,587 78,091 21,534 0 971,266 
Assets (average)427,065 243,762 535,298 85,438 655,617 0 1,947,180 
Deposits (average)715,144 184,132 239,637 165,103 82,640 0 1,386,656 
Six months ended June 30, 2020
Loans (average)$376,096 226,641 265,915 77,987 21,517 0 968,156 
Assets (average)433,226 243,293 543,455 85,538 642,513 0 1,948,025 
Deposits (average)683,925 175,929 252,902 155,246 94,307 0 1,362,309 
Loans (period-end)368,753 210,779 255,574 78,101 21,948 0 935,155 
Assets (period-end)432,100 226,735 510,205 84,699 713,309 0 1,967,048 
Deposits (period-end)746,602 183,085 236,620 168,249 76,155 0 1,410,711 
(1)Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax credits for low-income housing and renewable energy investments are included in noninterest income, in each case with corresponding impacts to income tax expense (benefit). Adjustments are included in Corporate, Commercial Banking, and Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial results.
(2)Net interest income is interest earned on assets minus the interest paid on liabilities to fund those assets. Segment interest earned includes actual interest income on segment assets as well as a funding credit for their deposits. Segment interest paid on liabilities includes actual interest expense on segment liabilities as well as a funding charge for their assets.
(2)Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets as well as interest credits for any funding of a segment available to be provided to other segments. The cost of liabilities includes actual interest expense on segment liabilities as well as funding charges for any funding provided from other segments.Wells Fargo & Company145

(3)
Income tax expense (benefit) for our Wholesale Banking operating segment included income tax credits related to low-income housing and renewable energy investments of $465 millionNote 23:  and $956 million for the second quarter and first half of 2020, respectively, and $423 million and $850 million for the second quarter and first half of 2019, respectively.


Note 23: Regulatory and Agency Capital Requirements and Other Restrictions
Regulatory Capital Requirements
The Company and each of its subsidiary banks are subject to regulatory capital adequacy requirements promulgated by federal banking regulators. The Federal ReserveFRB establishes capital requirements for the consolidated financial holding company, and the OCC has similar requirements for the Company’s national banks, including Wells Fargo Bank, N.A. (the Bank).
Table 23.1 presents regulatory capital information for Wells Fargo & Company and the Bank in accordance with Basel III capital requirements. We must reportOur capital adequacy is assessed based on the lower of our Common Equity Tier 1 (CET1), tier 1 and totalrisk-based capital ratios calculated under the Standardized Approach and under the Advanced Approach in the assessment of our capital adequacy.Approach. The Standardized Approach applies assigned risk weights to broad risk categories, while the calculation of risk-weighted assets (RWAs) under the Advanced Approach differs by requiring
applicable banks to utilize a risk-sensitive methodology, which relies upon the use of internal credit models, and includes an operational risk component. The
Basel III capital requirements for calculating CET1Common Equity Tier 1 (CET1) and tier 1 capital, along with RWAs, are fully phased-in. However, the requirements for determining tier 2 and total capital are still in accordance with Transition Requirementstransition requirements and are scheduled to be fully phased-in by the end of 2021. Accordingly, the information presented below reflects fully phased-in CET1 capital, tier 1 capital, and RWAs, but reflects total capital still in accordance with Transition Requirements.transition requirements.
At June 30, 2020,2021, the Bank and our other insured depository institutions were considered well-capitalized under the requirements of the Federal Deposit Insurance Act.
The Bank is an approved seller/servicer of mortgage loans and is required to maintain minimum levels of shareholders’ equity, as specified by various agencies, including the United States Department of Housing and Urban Development, GNMA, FHLMC and FNMA. At June 30, 2020, the Bank met these requirements.

Table 23.1: Regulatory Capital Information(1)
 Wells Fargo & Company Wells Fargo Bank, N.A.
 June 30, 2020   December 31, 2019   June 30, 2020   December 31, 2019
(in millions, except ratios)Advanced Approach
 
Standardized
Approach

  Advanced Approach
 Standardized
Approach
  Advanced Approach
 Standardized
Approach
  Advanced Approach
 Standardized
Approach
 
Regulatory capital:                  
Common equity tier 1$133,055
 133,055
  138,760
 138,760
  147,774
 147,774
  145,149
 145,149
 
Tier 1152,871
 152,871
  158,949
 158,949
  147,774
 147,774
  145,149
 145,149
 
Total182,831
 192,619
  188,333
 196,223
  162,657
 172,031
  158,615
 166,056
 
Assets:                   
Risk-weighted assets (2)$1,195,423
 1,213,062
  1,165,079
 1,245,853
  1,050,496
 1,106,875
  1,047,054
 1,152,791
 
Adjusted average assets (3)1,922,429
 1,922,429
  1,913,297
 1,913,297
  1,750,476
 1,750,476
  1,695,807
 1,695,807
 
Regulatory capital ratios:                   
Common equity tier 1 capital (2)11.13% 10.97
* 11.91
 11.14
* 14.07
 13.35
* 13.86
 12.59
*
Tier 1 capital (2)12.79
 12.60
* 13.64
 12.76
* 14.07
 13.35
* 13.86
 12.59
*
Total capital (2)15.29
*15.88
  16.16
 15.75
* 15.48
*15.54
  15.15
 14.40
*
Tier 1 leverage (3)7.95
 7.95
  8.31
 8.31
  8.44
 8.44
  8.56
 8.56
 
 Wells Fargo & Company   Wells Fargo Bank, N.A.  
 June 30, 2020   December 31, 2019   June 30, 2020   December 31, 2019  
Supplementary leverage (4):                   
Total leverage exposure$2,032,249   2,247,729   2,057,422   2,006,180  
Supplementary leverage ratio7.52%  7.07   7.18   7.24  
Wells Fargo & CompanyWells Fargo Bank, N.A.
June 30, 2021December 31, 2020June 30, 2021December 31, 2020
(in millions, except ratios)Advanced ApproachStandardized
Approach		Advanced ApproachStandardized
Approach		Advanced ApproachStandardized
Approach		Advanced ApproachStandardized
Approach
Regulatory capital:
Common Equity Tier 1$143,442 143,442 138,297 138,297 151,121 151,121 150,168 150,168 
Tier 1162,999 162,999 158,196 158,196 151,121 151,121 150,168 150,168 
Total190,173 200,156 186,934 196,660 165,154 174,641 164,412 173,719 
Assets:
Risk-weighted assets (2)1,126,535 1,188,727 1,158,355 1,193,744 988,692 1,087,876 1,012,751 1,085,599 
Adjusted average assets1,911,654 1,911,654 1,900,258 1,900,258 1,752,195 1,752,195 1,735,406 1,735,406 
Regulatory capital ratios:
Common Equity Tier 1 capital12.73 % 12.07 *11.94  11.59 *15.28  13.89 *14.83  13.83 *
Tier 1 capital14.47  13.71 *13.66  13.25 *15.28  13.89 *14.83  13.83 *
Total capital16.88  16.84 *16.14 *16.47  16.70  16.05 *16.23  16.00 *
Wells Fargo & CompanyWells Fargo Bank, N.A.
June 30, 2021December 31, 2020June 30, 2021December 31, 2020
Regulatory leverage:
Total leverage exposure (3)$2,300,416 1,963,971 2,117,710 2,041,952 
Supplementary leverage ratio (SLR) (3)(4)7.09 %8.05 7.14 7.35 
Tier 1 leverage ratio (5)8.53 8.32 8.62 8.65 
*Denotes the lowest capitalbinding ratio as determinedbased on the lower calculation under the Advanced and Standardized Approaches.
(1)
In second quarter 2020, the Company elected to apply a modified
(1)At June 30, 2021, the impact of the CECL transition provision issued by federal banking regulators in March 2020 related to the impact of CECL on regulatory capital. The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the ACL under CECL for each period until December 31, 2021, followed by a three-year phase-out of the benefits. The impact of the CECL transition provision on the regulatory capital of the Company was an increase in capital of $879 million, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $7.5 billion increase in our ACL under CECL from January 1, 2020, through June 30, 2021. The impact of the CECL transition provision on the regulatory capital of the Bank at June 30, 2021, was an increase in capital of $879 million.
(2)June 30, 2020, was an increase in capital of $1.9 billion, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $11.4 billion increase in our ACL under CECL from January 1, 2020, through June 30, 2020. The impact of the CECL transition provision on the regulatory capital of the Bank at June 30, 2020, was an increase in capital of $1.8 billion.
(2)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.
RWAs for the Company and the Bank includeincluded an increase of $1.5$547 million under the Standardized Approach and a decrease of $1.4 billion under both the Advanced Approach and Standardized Approach related to the impact of the CECL transition provision on the excess allowance for credit losses as of June 30, 2020.
(3)The leverage ratio consists of Tier 1 capital divided by total average assets, excluding goodwill and certain other items.
(4)The supplementary leverage ratio (SLR) consists of Tier 1 capital divided by total leverage exposure. Total leverage exposure consists of total average assets, less goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities), plus certain off-balance sheet exposures.

2021.

(3)The SLR consists of tier 1 capital divided by total leverage exposure. Total leverage exposure consists of total average assets, less goodwill and other permitted tier 1 capital deductions (net of deferred tax liabilities), plus certain off-balance sheet exposures.
(4)In 2020, the FRB issued an interim final rule that temporarily allowed the exclusion for on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of total leverage exposure in the denominator of the SLR. The Company adopted this interim final rule, but the Bank did not elect to apply these exclusions. The interim final rule expired on April 1, 2021.
(5)The tier 1 leverage ratio consists of tier 1 capital divided by total average assets, excluding goodwill and certain other items as determined under the rule.
At June 30, 2021, under transition requirements, the CET1, tier 1 and total capital ratio requirements for the Company included a global systemically important bank (G-SIB) surcharge of 2.00%. The G-SIB surcharge is not applicable to the Bank. In addition, the CET1, tier 1 and total capital ratio requirements for the Company and the Bank included a stress capital buffer of 2.50% under the Standardized Approach and a capital conservation buffer of 2.50% under the Advanced Approach. The Company is required to maintain these risk-based capital ratios and to maintain an SLR of at least 5.00% (comprised of a 3.00% minimum requirement plus a supplementary leverage buffer of 2.00%) to avoid restrictions on capital distributions and discretionary bonus payments. The Bank is required to maintain an SLR of at least 6.00% to be considered well-capitalized under applicable regulatory capital adequacy rules. Table 23.2 presents the minimum required regulatoryrisk-based capital ratiosand leverage requirements under Transition Requirementstransition requirements to which the Company and
the Bank
were subject as of June 30, 2020,2021, and
December 31, 2019.



2020, which were the same under both the Standardized and Advanced Approaches.
Table 23.2: Minimum Required RegulatoryRisk-Based Capital and Leverage Ratios – Transition Requirements (1)
Wells Fargo & CompanyWells Fargo Bank, N.A.
Jun 30, 2021Jun 30, 2021
and Dec 31, 2020and Dec 31, 2020
Common Equity Tier 1 capital9.00 %7.00 
Tier 1 capital10.50 8.50 
Total capital12.50 10.50 
Tier 1 leverage4.00 4.00 
Supplementary leverage5.00 6.00 
 Wells Fargo & Company Wells Fargo Bank, N.A.
 June 30, 2020
 December 31, 2019 June 30, 2020 December 31, 2019
Regulatory capital ratios:       
Common equity tier 1 capital9.000% 9.000 7.000 7.000
Tier 1 capital10.500
 10.500 8.500 8.500
Total capital12.500
 12.500 10.500 10.500
Tier 1 leverage4.000
 4.000 4.000 4.000
Supplementary leverage (2)5.000
 5.000 6.000 6.000
(1)146
At Wells Fargo & CompanyJune 30, 2020, under transition requirements, the CET1, tier 1 and total capital minimum ratio requirements for the Company include a capital conservation buffer of 2.500% and a global systemically important bank (G-SIB) surcharge of 2.000%. Only the 2.500% capital conservation buffer applies to the Bank at June 30, 2020. Effective October 1, 2020, the 2.500% capital conservation buffer will be replaced under the Standardized Approach by a stress capital buffer that is calculated annually as part of the FRB's supervisory stress test and related Comprehensive Capital Analysis and Review (CCAR).

Capital Planning Requirements
The FRB’s capital plan rule establishes capital planning and other requirements that govern capital distributions, including dividends and share repurchases, by certain large bank holding companies (BHCs), including Wells Fargo. The FRB conducts an annual Comprehensive Capital Analysis and Review exercise and has also published guidance regarding its supervisory expectations for capital planning, including capital policies regarding the process relating to common stock dividend and repurchase decisions in the FRB’s SR Letter 15-18. The Parent’s ability to make certain capital distributions is subject to the requirements of the capital plan rule and is also subject to the Parent meeting or exceeding certain regulatory capital minimums.
On March 25, 2021, the FRB announced that it was extending measures it previously announced limiting large BHCs, including Wells Fargo, from making any capital 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 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 to expensed employee compensation; and (iii) redeem and make scheduled payments on additional tier 1 and tier 2 capital instruments. These limitations on capital distributions ended on June 30, 2021.
Loan and Dividend Restrictions
Federal law restricts the amount and the terms of both credit and non-credit transactions between a bank and its nonbank affiliates. Additionally, federal laws and regulations limit the dividends that a national bank may pay.
Our nonbank subsidiaries are also limited by certain federal and state statutory provisions and regulations covering the amount of dividends that may be paid in any given year. In addition, under a Support Agreement dated June 28, 2017, as amended and restated on June 26, 2019, among Wells Fargo & Company, the parent holding company (the “Parent”), WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), Wells Fargo Bank, N.A., Wells Fargo Securities, LLC, Wells Fargo Clearing Services, LLC, and certain other subsidiaries of the Parent designated from time to time as material entities for resolution planning purposes or identified from time to time as related support entities in our resolution plan, the IHC may be restricted from making dividend payments to the Parent if certain liquidity and/or capital metrics fall below defined triggers or if the Parent’s board of directors authorizes it to file a case under the U.S. Bankruptcy Code.
For additional information on loan and dividend restrictions, see Note 28 (Regulatory Capital Requirements and Other Restrictions) in our 2020 Form 10-K.

Cash Restrictions
Cash and cash equivalents may be restricted as to usage or withdrawal. Table 23.3 provides a summary of restrictions on cash and cash equivalents.
Table 23.3:Nature of Restrictions on Cash and Cash Equivalents
(in millions)Jun 30,
2021		Dec 31,
2020
Reserve balance for non-U.S. central banks$199 243 
Segregated for benefit of brokerage customers under federal and other brokerage regulations878 957 
(2)
TheWells Fargo & Company is required to maintain a SLR of at least 5.000% (comprised of a 3.000% minimum requirement plus a supplementary leverage buffer of 2.000%) to avoid restrictions on capital distributions and discretionary bonus payments. The Bank is required to maintain a SLR of at least 6.000% to be considered well-capitalized under applicable regulatory capital adequacy guidelines.
147



Glossary of Acronyms
Glossary of Acronyms
ACL
ACLAllowance for credit lossesLCRHTMHeld-to-maturity
AFSAvailable-for-saleLCRLiquidity coverage ratio
AFSALCOAvailable-for-saleAsset/Liability CommitteeLHFSLoans held for sale
ALCOARMAsset/Liability Management CommitteeAdjustable-rate mortgageLIBORLondon Interbank Offered Rate
ARM ASCAdjustable-rate mortgageAccounting Standards CodificationLIHTCLow incomeLow-income housing tax credit
ASCASUAccounting Standards CodificationUpdateLOCOMLower of cost or fair value
ASUAUAAccounting Standards UpdateLTVLoan-to-value
AUAAssets under administrationMBSLTVMortgage-backed securityLoan-to-value
AUMAssets under managementMLHFSMBSMortgage loans held for saleMortgage-backed security
AVMAutomated valuation modelMSRMortgage servicing right
BCBSBasel Committee on BankBanking SupervisionNAVNet asset value
BHCBank holding companyNPANonperforming asset
CCARComprehensive Capital Analysis and ReviewNSFRNet stable funding ratio
CDCertificate of depositOCCOffice of the Comptroller of the Currency
CDSCECLCredit default swapsOCIOther comprehensive income
CECLCurrent expected credit lossOTCOCIOver-the-counterOther comprehensive income
CET1Common Equity Tier 1OTTIOTCOther-than-temporary impairmentOver-the-counter
CFPBConsumer Financial Protection BureauPCDOTTIPurchased credit-deterioratedOther-than-temporary impairment
CLOCollateralized loan obligationPCIPCDPurchased credit-impairedcredit-deteriorated
CLTVCombined loan-to-valuePTPPPCIPurchased credit-impaired
CPICollateral protection insurancePTPPPre-tax pre-provision profit
CPICRECollateral protection insuranceRBCRisk-based capital
CRECommercial real estateRMBSResidential mortgage-backed securities
DPDDays past dueROAWells Fargo net income toReturn on average total assets
ESOPEmployee Stock Ownership PlanROEWells Fargo net income applicable to common stockReturn on average equity
FASBFinancial Accounting Standards BoardROTCEto average Wells Fargo common stockholders’ equity
FDICFederal Deposit Insurance CorporationROTCEReturn on average tangible common equity
FHAFDICFederal Deposit Insurance CorporationRWAsRisk-weighted assets
FHAFederal Housing AdministrationRWAsSECRisk-weighted assetsSecurities and Exchange Commission
FHLBFederal Home Loan BankSECS&PSecurities and Exchange CommissionStandard & Poor’s Ratings Services
FHLMCFederal Home Loan Mortgage CorporationS&PSLRStandard & Poor’s Global RatingsSupplementary leverage ratio
FICOFair Isaac Corporation (credit rating)SLRSOFRSupplementary leverage ratioSecured Overnight Financing Rate
FNMAFederal National Mortgage AssociationSOFRSPESecured Overnight Financing RateSpecial purpose entity
FRBBoard of Governors of the Federal Reserve SystemSPETDRSpecial purpose entityTroubled debt restructuring
GAAPGenerally accepted accounting principlesTDRTLACTroubled debt restructuringTotal Loss Absorbing Capacity
GNMAGovernment National Mortgage AssociationTLACVATotal Loss Absorbing Capacity
GSEGovernment-sponsored entityVADepartment of Veterans Affairs
G-SIBGSEGovernment-sponsored entityVaRValue-at-Risk
G-SIBGlobal systemically important bankVaRVIEValue-at-RiskVariable interest entity
HQLAHigh-quality liquid assetsVIEWIMVariable interest entity
HTMHeld-to-maturityWIMWealth and Investment Management



148Wells Fargo & Company

PART II – OTHER INFORMATION

Item 1.    Legal Proceedings
 
Information in response to this item can be found in Note 1413 (Legal Actions) to Financial Statements in this Report which information is incorporated by reference into this item.

Item 1A.    Risk Factors
 
Information in response to this item can be found under the “Financial Review – Risk Factors” section in this Report which information is incorporated by reference into this item. 

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
 
The following table shows Company repurchases of its common stock for each calendar month in the quarter ended June 30, 2020.2021.

Calendar monthTotal number
of shares
repurchased (1)		Weighted average
price paid per share		Maximum number of
shares that may yet
be repurchased under
the authorizations
April20,075,596 $43.60 629,954,518 
May10,893,389 46.11 619,061,129 
June4,354,796 43.08 614,706,333 
Total35,323,781 
(1)All shares were repurchased under an authorization covering up to 350 million shares of common stock approved by the Board of Directors and publicly announced by the Company on July 23, 2019. In second quarter 2020, share repurchases were limited to repurchases in connection withaddition, the Wells Fargo & Company Stock Purchase Plan and Wells Fargo's deferred compensation plans.publicly announced on January 15, 2021, that the Board of Directors authorized the repurchase of an additional 500 million shares of common stock. Unless modified or revoked by the Board, these authorizations do not expire.

Calendar monthTotal number
of shares
repurchased (1)
 Weighted-average
price paid per share
 Maximum number of
shares that may yet
be repurchased under
the authorization
April9,065
 $29.00
 167,539,651
May12,280
 25.50
 167,527,371
June24,521
 28.46
 167,502,850
Total45,866
    
      
(1)
All shares were repurchased under an authorization covering up to Wells Fargo & Company350 million shares of common stock approved by the Board of Directors and publicly announced by the Company on July 23, 2019. Unless modified or revoked by the Board, this authorization does not expire.
149



Item 6.    Exhibits
Item 6.Exhibits
 
A list of exhibits to this Form 10-Q is set forth below.
 
The Company’s SEC file number is 001-2979. On and before November 2, 1998, the Company filed documents with the SEC under the name Norwest Corporation. The former Wells Fargo & Company filed documents under SEC file number 001-6214.

Exhibit
Number
Description Location 
Filed herewith.
Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 1, 2018.
4(a)See Exhibits 3(a) and 3(b).
4(b)The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.
Filed herewith.
AmendmentIncorporated by reference to Supplemental 401(k) Plan, effective January 1,Exhibit 22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.Filed herewith.
Filed herewith.
31(a)
Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
Filed herewith.
Furnished herewith.
Furnished herewith.
101.INSInline XBRL Instance DocumentThe instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema DocumentFiled herewith.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentFiled herewith.
101.DEFInline XBRL Taxonomy Extension Definitions Linkbase DocumentFiled herewith.
101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentFiled herewith.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentFiled herewith.
104Cover Page Interactive Data FileFormatted as Inline XBRL and contained in Exhibit 101.

150Wells Fargo & Company

SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Dated: August 4, 2020                                                        July 28, 2021     WELLS FARGO & COMPANY
 
 
By:/s/ MUNEERA S. CARR
Muneera S. Carr
Muneera S. Carr
Executive Vice President,
Chief Accounting Officer and Controller
(Principal Accounting Officer)


172
Wells Fargo & Company151