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WFC Wells Fargo & Co.

Filed: 28 Jul 21, 5:19pm
WELLS FARGO & COMPANY/MN0000072971false2021Q212/31NYSE5.85% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series Q6.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series R1.66661.6666The Parent fully and unconditionally guarantees the payment of principal, interest, and any other amounts that may be due on securities that its 100% owned finance subsidiary, Wells Fargo Finance LLC, may issue.0.1080.6591.5100.8990.5162.6800.6550.412.16.57.212.18.02.03.32.80.110.95.00If issued, preference shares would be limited to one vote per shareNaNNaN0000072971us-gaap:CustomerRelationshipsMember2021-06-300000072971us-gaap:USStatesAndPoliticalSubdivisionsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2021-06-300000072971wfc:TrailingCommissionMember2020-04-012020-06-30






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, 2021
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)
Registrant’s telephone number, including area code: 1-866-249-3302
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 $1-2/3WFC
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 OWFC.PRONYSE
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 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
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series AAWFC.PRANYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series CCWFC.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
July 19, 2021
Common stock, $1-2/3 par value4,106,410,513







FORM 10-Q
CROSS-REFERENCE INDEX
PART IFinancial Information
Item 1.Financial StatementsPage
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Financial Statements  
Summary of Significant Accounting Policies
Trading Activities
Available-for-Sale and Held-to-Maturity Debt Securities
Loans and Related Allowance for Credit Losses
Leasing Activity
Equity Securities
Other Assets
Securitizations and Variable Interest Entities
Mortgage Banking Activities
10 Intangible Assets
11 Guarantees and Other Commitments
12 Pledged Assets and Collateral
13 Legal Actions
14 Derivatives
15 Fair Values of Assets and Liabilities
16 Preferred Stock
17 Revenue from Contracts with Customers
18 Employee Benefits and Other Expenses
19 Restructuring Charges
20 Earnings and Dividends Per Common Share
21 Other Comprehensive Income
22 Operating Segments
23 Regulatory Capital Requirements and Other Restrictions
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)
Summary Financial Data
Overview
Earnings Performance
Balance Sheet Analysis
Off-Balance Sheet Arrangements
Risk Management
Capital Management
Regulatory Matters
Critical Accounting Policies
Current Accounting Developments
Forward-Looking Statements
Risk Factors 
Glossary of Acronyms
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4.Controls and Procedures
PART IIOther Information
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.Exhibits
Signature
Wells Fargo & Company1







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 %11 $38,802 36,459 %
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 
Diluted average common shares outstanding (3)4,156.1 4,171.0 4,105.5 — 4,164.6 4,105.2 
Book value per common share (4)$41.74 40.27 38.31 
Tangible book value per common share (4)(5)34.95 33.49 31.52 11 
Selected Equity Data (period-end)
Total equity193,127 188,034 178,635 
Common stockholders' equity171,453 166,748 157,835 
Tangible common equity (5)143,577 138,702 129,842 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 1,414,765 1,362,309 
Selected Balance Sheet Data (period-end)
Debt securities533,565 505,826 472,580 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 — 
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 (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 (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.
2Wells Fargo & Company


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, 2020 (2020 Form 10-K).
 
When we refer to “Wells Fargo,” “the Company,” “we,” “our,” or “us” in this Report, we mean Wells Fargo & Company and Subsidiaries (consolidated). When we refer to the “Parent,” we mean Wells Fargo & Company. See the Glossary of Acronyms for definitions of terms used throughout this Report. 
Financial Review
Overview
Wells Fargo & Company is a leading financial services company that has approximately $1.9 trillion in assets, proudly serves one in three U.S. households and more than 10% of small businesses in the 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 our four reportable operating segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management. Wells Fargo ranked No. 37 on Fortune’s 2021 rankings of America’s largest corporations. We ranked fourth in assets and third in the market value of our common stock among all U.S. banks at June 30, 2021. 
Wells Fargo’s top priority remains meeting its regulatory requirements to build the right foundation for all that lies ahead. The Company is subject to a number of consent orders and other regulatory actions, which may require the Company, among other things, to undertake certain changes to its business, operations, products and services, and risk management 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, the Company is committed to devoting the resources necessary to operate with strong business practices and controls, maintain the highest level of integrity, and have an appropriate culture in place.

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, 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 2020 Form 10-K and Note 13 (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 probable and estimable remediation costs related to our rebuilding trust efforts, which amounts may change based on additional facts and information, as well as ongoing reviews and communications with our regulators.
As our ongoing reviews continue, it is possible that in the future we may identify additional items or areas of potential concern. To the extent issues are identified, we will continue to assess any customer harm and provide remediation as appropriate. For additional information, including related legal and regulatory risk, see the “Risk Factors” section in our 2020 Form 10-K and Note 13 (Legal Actions) to Financial Statements in this Report.

Recent Developments
Change in Accounting Policies
In second quarter 2021, we retroactively changed the accounting for certain tax-advantaged investments to better align the financial statement presentation with the economic impact of these investments.
Specifically, we elected to change our accounting for low-income housing tax credit investments from the equity method of accounting to the proportional amortization method. Under the proportional amortization method, the amortization of the investments and the related tax impacts are recognized in income tax expense. Previously, we recognized the amortization of the investments in other noninterest income and the related tax impacts were recognized in income tax expense.
Also, we elected to change the presentation of investment tax credits related to solar energy investments. We reclassified the investment tax credits on our consolidated balance sheet from accrued expenses and other liabilities to a reduction of the carrying value of the investment balances. We also reclassified the investment tax credits from income tax expense to interest income for solar energy leases or noninterest income for solar energy equity investments.
These changes had a nominal impact on net income and retained earnings on an annual basis; however, our quarterly results were affected in both the second and third quarters of
2020 due to the impact of these changes on the estimated annual effective income tax rate applied to each quarter. These changes also improved our efficiency ratio and generally increased our effective income tax rate from what was previously reported.
Prior period financial statement line items have been revised to conform with the current period presentation. Prior period risk-based capital and certain other regulatory related metrics were not revised. For additional information, including the financial statement line items impacted by these changes, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

COVID-19 Pandemic
In response to the COVID-19 pandemic, we have been working diligently to protect employee safety while continuing to carry out Wells Fargo’s role as a provider of essential services to the public. We have taken comprehensive steps to help customers, employees and communities.
We have strong levels of capital and liquidity, and we remain focused on delivering for our customers and communities to get through these unprecedented times.

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

LIBOR Transition
The London Interbank Offered Rate (LIBOR) is a widely-referenced benchmark rate, which is published in five currencies and a range of tenors, and seeks to estimate the cost at which banks can borrow on an unsecured basis from other banks. On March 5, 2021, the Financial Conduct Authority and the administrator of LIBOR announced that LIBOR will no longer be published on a representative basis after December 31, 2021, with the exception of the most commonly used tenors of U.S. dollar (USD) LIBOR which will no longer be published on a representative basis after June 30, 2023. Federal banking agencies have issued guidance strongly encouraging banking organizations to cease using USD LIBOR as a reference rate in new contracts as soon as practicable and in any event by December 31, 2021.
For information on the amount of our LIBOR-linked assets and liabilities, as well as initiatives created by our LIBOR Transition Office in an effort to mitigate the 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 Factors” section in our 2020 Form 10-K.

Capital Actions and Restrictions
In June 2021, the Company completed the 2021 Comprehensive Capital Analysis and Review (CCAR) stress test process. We expect our stress capital buffer (SCB) for the period October 1, 2021, through September 30, 2022, to be 3.10%. The FRB has indicated it will publish our final SCB by August 31, 2021.
On July 27, 2021, the Board approved an increase to the Company's third quarter 2021 common stock dividend to $0.20 per share. Additionally, our capital plan includes gross common share repurchases of approximately $18 billion for the four-quarter period beginning third quarter 2021 through second quarter 2022.
For additional information about capital planning, see the “Capital Management – Capital Planning and Stress Testing” section in this Report.
In June 2021, we redeemed the remaining $350 million of our Non-Cumulative Perpetual Class A Preferred Stock, Series N. In July 2021, we issued $1.25 billion of our Preferred Stock, Series DD.

Business and Portfolio Divestitures
On February 23, 2021, we announced an agreement to sell Wells Fargo Asset Management for a purchase price of $2.1 billion. As part of the transaction, we will own a 9.9% equity interest and continue to serve as a client and distribution partner. On March 23, 2021, we announced an agreement to sell our Corporate Trust Services business for a purchase price of $750 million. Both transactions are expected to close in the second half of 2021, subject to customary closing conditions.
In the first half of 2021, we completed substantially all of the previously announced sale of our student loan portfolio, which 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 
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 deposits 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; and
average deposits increased driven by growth in consumer deposits in the Consumer Banking and Lending and Wealth and Investment Management (WIM) operating segments due to higher levels of liquidity and savings for consumer customers reflecting government stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the COVID-19 pandemic, partially offset by actions taken to manage under the asset cap which reduced deposits in the Corporate and Investment Banking operating segment and Corporate.

Capital and Liquidity
We maintained a strong capital position in the first half of 2021, with total equity of $193.1 billion at June 30, 2021, compared with $185.7 billion at December 31, 2020. Our liquidity and regulatory capital ratios remained strong at June 30, 2021, including:
our liquidity coverage ratio (LCR) was 123%, which continued to exceed the regulatory minimum of 100%;
our Common Equity Tier 1 (CET1) ratio was 12.07%, which continued to exceed both the regulatory requirement of 9% and our current internal target; and
our eligible external total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets was 25.11%, compared with the regulatory requirement of 21.50%.
See the “Capital Management” and the “Risk Management – Asset/Liability Management – Liquidity Risk and Funding” sections in this Report for additional information regarding our capital and liquidity, including the calculation of our regulatory capital and liquidity amounts.
Credit Quality
Credit quality reflected the improving economic environment.
The allowance for credit losses (ACL) for loans of $16.4 billion at 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 income for second quarter 2021 was $6.0 billion ($1.38 diluted EPS), compared with a net loss of $3.8 billion ($1.01 diluted loss per common share) in the same period a year ago. Net income increased in second quarter 2021, compared with the same period a year ago, predominantly due to a $10.8 billion decrease in provision for credit losses, a $3.1 billion increase in noninterest income, and a $1.2 billion decrease in noninterest expense, partially offset by a $3.4 billion increase in income tax expense and a $1.1 billion decrease in net interest income.
Net income for the first half of 2021 was $10.7 billion ($2.40 diluted EPS), compared with a net loss of $2.9 billion ($0.94 diluted loss per common share) in the same period a year ago. Net income increased in the first half of 2021, compared with the same period a year ago, predominantly due to a $15.8 billion decrease in provision for credit losses 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.
Net Interest Income
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 ended June 30, 2021 and 2020.
For additional information about net interest income and net interest margin, see the “Earnings Performance – Net Interest Income” section in our 2020 Form 10-K.
6Wells Fargo & Company


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 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 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)
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.


8Wells Fargo & Company


Noninterest Income

Table 2: Noninterest Income
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 — %
Lending-related fees362 323 39 12 723 673 50 
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 1,216 1,227 (11)(1)
Investment banking fees570 547 23 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

Second quarter 2021 vs. second quarter 2020

Deposit-related fees increased driven by:
lower 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; and
higher treasury management fees on commercial accounts driven by an increase in transaction service volumes and repricing.

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.

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

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

Net gains on mortgage loan originations/sales increased
driven by:
higher gains related to the re-securitization of loans we purchased from Government National Mortgage Association (GNMA) loan securitization pools in 2020; and
higher residential real estate held for sale (HFS) origination volumes in our retail production channel;
partially offset by:
lower HFS origination volumes in our correspondent production channel; and
lower margins in our retail and correspondent production channels.

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

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

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

Net gains (losses) from equity securities increased driven by:
higher unrealized gains on nonmarketable equity securities from our affiliated venture capital and private equity businesses; and
higher realized gains on the sales of equity securities;
partially offset by:
lower gains 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 gains on the sales of residential mortgage loans which were reclassified to held for sale in 2019; and
higher valuation losses related to the retained litigation risk, including the timing and amount of final settlement, associated with shares of Visa Class B common stock that
Wells Fargo & Company9


Earnings Performance (continued)
we sold. For additional information, see the “Risk Management – Asset/Liability Management – Market 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 9 (Mortgage Banking Activities) to Financial Statements in this Report.
Net gains from trading activities decreased reflecting:
lower client trading activity for interest rate products, equities, and commodities;
partially offset by:
higher client trading activity for asset-backed finance products.

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

Net gains (losses) from equity securities increased driven by:
higher unrealized gains on nonmarketable equity securities from our affiliated venture capital and private equity businesses;
lower impairment on equity securities due to the market impact of the COVID-19 pandemic in first quarter 2020;
higher realized gains on the sales of equity securities; and
higher gains 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 gains on the sales of residential mortgage loans which were reclassified to held for sale in 2019; and
higher valuation losses related to the retained litigation risk, including the timing and amount of final settlement, associated with shares of Visa Class B common stock that we sold. For additional information, see the “Risk Management – Asset/Liability Management – Market Risk – Equity Securities” section in our 2020 Form 10-K;
partially offset by:
a gain on the sale of substantially all of our 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 %
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 — NM
Other866 816 50 1,753 1,517 236 16 
Total$13,341 14,551 (1,210)(8)$27,330 27,599 (269)(1)
NM – Not meaningful
(1)Represents expenses for assets we lease to customers.
Second 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

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

Table 3a presents results for our deferred compensation plan and related hedges. In second quarter 2020, we entered into arrangements to transition our economic hedges of the deferred compensation plan liabilities from equity securities to derivative instruments. As a result of this transition, changes in fair value of derivatives used to economically hedge the deferred compensation plan are reported in personnel expense rather than in net gains (losses) from equity securities within noninterest income. For additional information on the derivatives used in the economic hedges, see Note 14 (Derivatives) to Financial Statements in this Report.
Table 3a: Deferred Compensation and Related Hedges
Quarter ended June 30,Six months ended June 30,
(in millions)2021202020212020
Net interest income$ $ 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.

Wells Fargo & Company11


Earnings Performance (continued)
Occupancy expense decreased driven by:
lower rent expense; and
lower cleaning fees, supplies, and equipment expenses compared with a first half of 2020 that included higher expenses due to the COVID-19 pandemic.

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

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

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

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

Other expenses increased driven by:
a write-down of goodwill in the first half of 2021 related to the sale of substantially all of our student loan portfolio;
higher charitable donations expense driven by the donation of PPP processing fees; and
higher Federal Deposit Insurance Corporation (FDIC) deposit assessment expense driven by a higher assessment rate;
partially offset by:
a reduction in business travel and company events due to the impact of the COVID-19 pandemic.

Income Tax Expense
Income tax expense was $1.4 billion in second quarter 2021, compared with an income tax benefit of $2.0 billion in the same period a year ago. The effective income tax rate was 19.3% for second quarter 2021, compared with 34.2% for the same period a year ago.
Income tax expense was $2.3 billion in the first half of 2021, compared with an income tax benefit of $1.6 billion in the same period a year ago. The effective 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 2021, compared with the same periods a year ago, was driven by higher pre-tax income, including the impact of the changes in accounting policy for certain tax-advantaged investments. For additional information on the changes in accounting policy, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.


Operating Segment Results
Our management reporting is organized into four reportable operating segments: Consumer Banking and Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment Management. All other business activities that are not included in the reportable operating segments have been included in Corporate. For additional information, see Table 4. We define our reportable operating segments by type of product and customer segment, and their results are based on our management reporting process. The management reporting process measures the performance of the reportable operating segments based on the Company’s management structure, and the results are regularly reviewed by our Chief Executive Officer and Operating Committee. The management reporting process is based on U.S. GAAP and includes specific adjustments, such as funds transfer pricing for asset/liability management, shared revenues and expenses, and taxable-equivalent adjustments to consistently reflect income from taxable and tax-exempt sources, which allows management to assess performance consistently across the operating segments.
In March 2021, we announced an agreement to sell our Corporate Trust Services business and, in second quarter 2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. This change did not impact the previously reported consolidated financial results of the Company.
In second quarter 2021, we elected to change our accounting method for low-income housing tax credit (LIHTC) investments and elected to change the presentation of investment tax credits related to solar energy investments. These accounting policy changes had a nominal impact on reportable operating segment results. Prior period financial statement line items for the Company, as well as for the reportable operating segments, have been revised to conform with the current period presentation. Our LIHTC investments are included in 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 4: 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 information, see Note 22 (Operating Segments) to Financial Statements in this Report.

Wells Fargo & Company13


Earnings Performance (continued)
Table 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$5,717 1,554 1,963 719 60 (121)9,892 
Noninterest income1,891 797 2,096 2,487 1,318 (195)8,394 
Total revenue7,608 2,351 4,059 3,206 1,378 (316)18,286 
Provision for credit losses3,102 2,295 3,756 255 126 — 9,534 
Noninterest expense6,933 1,580 2,044 2,743 1,251 — 14,551 
Income (loss) before income tax expense (benefit)(2,427)(1,524)(1,741)208 (316)(5,799)
Income tax expense (benefit)(650)(379)(408)52 (300)(316)(2,001)
Net income (loss) before noncontrolling interests(1,777)(1,145)(1,333)156 301 — (3,798)
Less: Net income from noncontrolling interests— — — 47 — 48 
Net income (loss)$(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$11,719 3,287 3,984 1,557 939 (264)21,222 
Noninterest income4,538 1,409 3,483 4,919 1,303 (415)15,237 
Total revenue16,257 4,696 7,467 6,476 2,242 (679)36,459 
Provision for credit losses4,671 3,336 4,881 263 388 — 13,539 
Noninterest expense13,190 3,153 3,914 5,400 1,942 — 27,599 
Income (loss) before income tax expense (benefit)(1,604)(1,793)(1,328)813 (88)(679)(4,679)
Income tax expense (benefit)(445)(442)(307)204 21 (679)(1,648)
Net income (loss) before noncontrolling interests(1,159)(1,351)(1,021)609 (109)— (3,031)
Less: Net income (loss) from noncontrolling
interests
— — — (103)— (101)
Net income (loss)$(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.
14Wells Fargo & Company


Consumer Banking and Lending offers diversified financial products and services for consumers and small businesses with annual sales generally up to $5 million. These financial products and services include checking and savings accounts, credit and
debit cards, as well as home, auto, personal, and small business lending. Table 5a and Table 5b provide additional information for Consumer Banking and Lending.
Table 5a: Consumer Banking and Lending – Income Statement and Selected Metrics
Quarter ended June 30,Six months ended June 30,
($ in millions, unless otherwise noted)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 
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 $9,264 9,262 — 
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 
Auto415 388 27 818 768 50 
Personal Lending122 146 (24)(16)250 303 (53)(17)
Total revenue$8,686 7,608 1,078 14 $17,340 16,257 1,083 
Selected Metrics
Consumer Banking and Lending:
Return on allocated capital (1)17.3 %(15.5)17.2 %(5.5)
Efficiency ratio (2)71 91 72 81 
Headcount (#) (period-end)116,185 133,876 (13)116,185 133,876 (13)
Retail bank branches (#)4,878 5,300 (8)4,878 5,300 (8)
Digital active customers (# in millions) (3)32.6 31.1 32.6 31.1 
Mobile active customers (# in millions) (3)26.8 25.2 26.8 25.2 
Consumer and Small Business Banking:
Deposit spread (4)1.5 %1.8 1.6 %1.9 
Debit card purchase volume ($ in billions) (5)$122.0 93.1 28.9 31 $230.5 183.7 46.8 25 
Debit card purchase transactions (# in millions) (5)2,504 2,027 24 4,770 4,222 13 

(continued on following page)

Wells Fargo & 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)Return on allocated capital is segment net income (loss) applicable to common stock divided by segment average allocated capital. Segment net income (loss) applicable to common stock is segment net income (loss) less allocated preferred stock dividends.
(2)Efficiency ratio is segment noninterest expense divided by segment total revenue (net interest income and noninterest income).
(3)Digital and mobile active customers is the number of consumer and small business customers who have logged on via a digital or mobile device, respectively, in the prior 90 days. Digital active customers includes both online and mobile customers.
(4)Deposit spread is (i) the internal funds transfer pricing credit on segment deposits minus interest paid to customers for segment deposits, divided by (ii) average segment deposits.
(5)Debit card purchase volume and transactions reflect combined activity for both consumer and business debit card purchases.
(6)Excludes residential mortgage loans subserviced for others.
(7)Excludes residential mortgage loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) and loans held for sale.
(8)Beginning in second quarter 2020, customer payment deferral activities instituted in response to the COVID-19 pandemic may have delayed the recognition of delinquencies for those customers who would have otherwise moved into past due status.
(9)Excludes certain private label new account openings.
Second quarter 2021 vs. second quarter 2020
Revenue increased driven by:
higher mortgage banking noninterest income due to higher gains related to the re-securitization of loans we purchased from GNMA loan securitization pools in 2020, as well as 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 a second quarter 2020 that included elevated fee waivers due to our actions to support customers during the COVID-19 pandemic;
partially offset by:
lower net interest income reflecting the lower interest rate environment and lower loan balances; and
lower other income driven by lower gains on loan sales.

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

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


First half of 2021 vs. first half of 2020

Revenue increased driven by:
higher mortgage banking noninterest income due to higher retail HFS origination volumes and margins, and higher income from MSR valuation changes and related hedges; and
higher card fees reflecting higher interchange fees, net of rewards, driven by increased purchase and transaction volumes, partially offset by lower late fees due to higher payment rates;
partially offset by:
lower net interest income reflecting the lower interest rate environment and lower loan balances;
lower other income driven by lower gains on loan sales; and
lower deposit-related fees driven by higher fee waivers and reversals, as well as higher average consumer deposit account balances due to the economic slowdown associated with the COVID-19 pandemic.

Provision for credit losses decreased driven by an improving economic environment.
Noninterest expense decreased driven by:
lower operating losses due to lower expense for litigation accruals and customer remediation accruals;
lower personnel expense driven by a first half of 2020 that included additional payments for certain customer-facing and support employees and for back-up child care services, as well as lower branch staffing expense in the first half of 2021 related to 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 50,143 49,552 591 
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 51,784 49,924 1,860 
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 28 642 599 43 
Lending-related fees135 125 10 271 253 18 
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 1003 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 8,454 190,984 175,929 15,055 
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 14,376 197,461 183,085 14,376 
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 5f provide 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 16 543 518 25 
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 $927 921 
Treasury Management and Payments353 403 (50)(12)723 901 (178)(20)
Investment Banking407 444 (37)(8)823 805 18 
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 8,673 8,213
NM – Not meaningful
Second quarter 2021 vs. second quarter 2020
Revenue decreased driven by:
lower net gains from trading activities reflecting fewer gains in asset-backed finance and credit products due to limited credit spread movement compared with a second quarter 2020 that reflected gains driven by volatility in credit spreads from the impact of the COVID-19 pandemic; and
lower net interest income reflecting the lower interest rate environment, lower deposit balances, and lower trading-related assets;
partially offset by:
higher other noninterest income driven by higher mortgage banking income due to higher servicing income, reflecting a reversal of an impairment of commercial MSRs in second quarter 2021, compared with the related impairment recorded in second quarter 2020, as well as higher gains on 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 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 lower spending due to efficiency initiatives;
lower professional and outside services expense reflecting decreased project-related expense; and
a reduction in business travel and company events due to the impact of the COVID-19 pandemic;
partially offset by:
higher personnel expense driven by higher incentive compensation.
Wells Fargo & 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 84,606 81,357 3,249 
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 86,290 83,715 2,575 
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 $92,758 91,093 1,665 
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 6,313 516,518 510,205 6,313 
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 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 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. Table 5g and Table 5h provide additional information for Wealth and Investment Management.
Table 5g: Wealth and Investment Management
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 1,068 1,063 — 
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 
Net charge-offs(6)(7)NM(6)(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 5,919 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 $81,314 77,987 3,327 
Total deposits174,980 165,103 9,877 174,333 155,246 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 $82,783 78,101 4,682 
Total deposits174,267 168,249 6,018 174,267 168,249 6,018 
NM – Not meaningful
(1)Represents annualized segment total revenue divided by average total financial and wealth advisors for the period.
Second quarter 2021 vs. second quarter 2020
Revenue increased driven by:
higher investment advisory and other asset-based fees due to higher market valuations on WIM advisory assets;
partially offset by:
lower deferred compensation plan investment results included in other noninterest income (largely offset by 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 Private 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;
partially offset by:
lower professional and outside services expense driven by efficiency initiatives to reduce our spending on consultants and contractors.
Total deposits (average and period-end) increased primarily due to growth in customer balances in both The Private Bank and Wells Fargo Advisors.

WIM Advisory Assets In addition to transactional accounts, WIM offers advisory account relationships to brokerage 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. Advisory accounts include assets that are financial advisor-directed and separately managed by third-party managers, as well as certain client-directed brokerage assets where we earn a fee for advisory and other services, but do not have investment discretion.
WIM also manages personal trust and other assets for high net worth clients, with fee income earned based on a percentage of the market value of these assets. Table 5h presents advisory assets activity by WIM line of business for 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 2021 and 2020, the average fee rate by account type ranged from 50 to 120 basis points.
Table 5h: 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, 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.
(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 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 $1,051 (6)1,057 NM
Selected Metrics
Headcount (#) (period-end) (2)87,702 82,852 87,702 82,852 
Wells Fargo Asset Management assets under management ($ in billions)$603 578 25 $603 578 25 
NM – Not meaningful
(1)Reflects results attributable to noncontrolling interests predominantly associated with the Company’s consolidated venture capital investments.
(2)Beginning in first quarter 2021, employees who were notified of displacement remained as headcount in their respective operating segment rather than included in Corporate.
Second quarter 2021 vs. second quarter 2020
Revenue increased driven by:
higher gains on equity securities in our affiliated venture capital and private equity businesses; and
a gain on the sale of a portion of our student loan portfolio and a modest gain on the sale of our Canadian equipment finance business;
partially offset by:
lower net interest income reflecting the lower interest rate environment and lower loan balances;
lower gains on debt securities due to fewer sales; and
lower gains on deferred compensation plan investments (largely offset by personnel expense).

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

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

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

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

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 $248,784 236,219 12,565 
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 13,142 12,546 596 
Total loans10,593 21,948 (11,355)(52)10,593 21,948 (11,355)(52)
Total assets761,915 713,309 48,606 761,915 713,309 48,606 
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.

26Wells Fargo & Company


Wells Fargo Asset Management (WFAM) Assets Under Management We earn investment advisory and other asset-based fees from managing and administering assets through WFAM, which offers Wells Fargo proprietary mutual funds and manages institutional separate accounts. Generally, we earn fees from AUM where we have discretionary management authority over the investments and generate fees as a percentage of the market value of the AUM. WFAM assets under management
consist of equity, alternative, balanced, fixed income, money market, and stable value, and include client assets that are managed or sub-advised on behalf of other Wells Fargo lines of business. Table 5k presents WFAM AUM activity for the second quarter and first half of 2021 and 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 5k: 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.
Wells Fargo & Company27


Balance Sheet Analysis
At June 30, 2021, our assets totaled $1.95 trillion, down $6.9 billion from December 31, 2020.
The following discussion provides additional information about the major components of our consolidated balance sheet.
See the “Capital Management” section in this Report for information on changes in our equity.
Available-for-Sale and Held-to-Maturity Debt Securities

Table 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
(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.
(2)Available-for-sale debt securities are carried on the consolidated balance sheet at fair value.
(3)Held-to-maturity debt securities are carried on the consolidated balance sheet at amortized cost, net of the allowance for credit losses.
Table 6 presents a summary of our portfolio of investments in available-for-sale (AFS) and held-to-maturity (HTM) debt securities. See the “Balance Sheet Analysis – Available-for-Sale and Held-to-Maturity Debt Securities” section in our 2020 Form 10-K for information on our investment management objectives and practices and the “Risk Management – Asset/Liability Management” section in this Report for information on liquidity and interest rate risk.
The fair value of AFS debt securities decreased from December 31, 2020, as purchases were more than offset by runoff, sales and transfers to HTM debt securities due to actions taken to reposition the overall portfolio for capital management purposes.
The net amortized cost of HTM debt securities increased from December 31, 2020, as purchases and transfers from AFS debt securities were partially offset by runoff.
At June 30, 2021, 94% of the combined AFS and HTM debt securities portfolio was rated AA- or above. Ratings are based on external ratings where available and, where not available, based on internal credit grades.
The total net unrealized gains on AFS and HTM debt securities decreased from December 31, 2020, driven by higher interest rates, partially offset by tighter credit spreads. See
Note 3 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report for additional information on AFS and HTM debt securities, including a summary of debt securities by security type.
Loan Portfolios
Table 7 provides a summary of total outstanding loans by portfolio segment. Commercial loans were relatively flat compared with December 31, 2020. Consumer loans decreased from December 31, 2020, driven by a decrease in the residential mortgage – first lien portfolio due to paydowns and the transfer of $10.8 billion of first lien mortgage loans to loans held for sale (LHFS), substantially all of which related to the sales of loans purchased from GNMA loan securitization pools in prior periods, partially offset by originations of $30.8 billion.
Table 7: Loan Portfolios
(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 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.
See the “Balance Sheet Analysis – Loan Portfolios” section in our 2020 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 increased from December 31, 2020, reflecting:
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 resulting in declines in time deposits, such as brokered certificates of
deposit (CDs), and interest-bearing deposits in non-U.S. offices.

Table 8 provides additional information regarding deposits. Information regarding the impact of deposits on net interest income and a comparison of average deposit balances is provided in the “Earnings Performance – Net Interest Income” section and Table 1 earlier in this Report.
Table 8: Deposits
($ in millions)Jun 30,
2021
% of
total
deposits
Dec 31,
2020
% of
total 
deposits 
% Change
Noninterest-bearing demand deposits$504,108 35 %$467,068 33 %
Interest-bearing demand deposits453,277 32 447,446 32 
Savings deposits419,812 29 404,935 29 
Time deposits35,269 2 49,775 (29)
Interest-bearing deposits in non-U.S. offices28,006 2 35,157 (20)
Total deposits$1,440,472 100 %$1,404,381 100 %

Off-Balance Sheet Arrangements
In the ordinary course of business, we engage in financial transactions that are not recorded on the consolidated balance sheet, or may be recorded on the consolidated balance sheet in amounts that are different from the full contract or notional amount of the transaction. Our off-balance sheet arrangements include commitments to lend and purchase debt and equity securities, transactions with unconsolidated entities, guarantees, derivatives, and other commitments. These transactions are designed to (1) meet the financial needs of customers, (2) manage our credit, market or liquidity risks, and/or (3) diversify our funding sources.

Commitments to Lend
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 additional information, see Note 4 (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 additional information, see Note 11 (Guarantees and Other Commitments) to Financial Statements in this Report.

Derivatives
We use derivatives to manage exposure to market risk, including interest rate risk, credit risk and foreign currency risk, and to assist customers with their risk management objectives. Derivatives are recorded on the consolidated balance sheet at fair value, and volume can be measured in terms of the notional amount, which is generally not exchanged, but is used only as the basis on which interest and other payments are determined. The notional amount is not recorded on the consolidated balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. For additional information, see Note 14 (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 additional information about how we manage risk, see the “Risk Management” section in our 2020 Form 10-K. The discussion that follows supplements our discussion of the management of certain risks contained in the “Risk Management” section in our 2020 Form 10-K.
Credit Risk Management
We define credit risk as the risk of loss associated with a borrower or counterparty default (failure to meet obligations in accordance with agreed upon terms). Credit risk exists with many of our assets and exposures such as debt security holdings, certain derivatives, and loans.
The Board’s Risk Committee has primary oversight responsibility for credit risk. A Credit Subcommittee of the Risk Committee assists the Risk Committee in providing oversight of credit risk. At the management level, Credit Risk, which is part of IRM, has oversight responsibility for credit risk. Credit Risk reports to the CRO and supports periodic reports related to credit risk provided to the Board’s Risk Committee or its Credit Subcommittee.

Loan Portfolio
Our loan portfolios represent the largest component of assets on our consolidated balance sheet for which we have credit risk. Table 9 presents our total loans outstanding by portfolio segment and class of financing receivable.

Table 9: Total Loans Outstanding by Portfolio Segment and Class of Financing Receivable
(in millions)Jun 30, 2021Dec 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 
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 including: 
Loan concentrations and related credit quality;
Counterparty credit risk;
Economic and market conditions;
Legislative or regulatory mandates;
Changes in interest rates;
Merger and acquisition activities; and
Reputation risk.

Our credit risk management oversight process is governed centrally, but provides for direct management and accountability by our lines of business. Our overall credit process includes comprehensive credit policies, disciplined credit underwriting, frequent and detailed risk measurement and modeling, extensive credit training programs, and a continual loan review and audit process.
A key to our credit risk management is adherence to a well-controlled underwriting process, which we believe is appropriate for the needs of our customers as well as investors who purchase the loans or securities collateralized by the loans.
Credit Quality Overview  Credit quality in second quarter 2021 reflected continued improvement in the economic environment. 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 second quarter and first half of 2021, respectively, compared with $9.6 billion and $13.4 billion for the same periods a year ago.
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.

Additional information on our loan portfolios and our credit quality trends follows.
30Wells Fargo & Company


COVID-Related Lending Accommodations During 2020, we provided accommodations to customers in response to the COVID-19 pandemic, including payment deferrals, and other expanded assistance for mortgage, credit card, auto, small business, personal and commercial lending customers. With the exception of residential mortgage-related accommodation programs, the COVID-related lending accommodations instituted during 2020 were no longer offered as of December 31, 2020. Residential mortgage accommodation programs, which continued during the first half of 2021, offered payment deferrals for up to a total of 18 months. Table 10 summarizes the unpaid principal balance (UPB) of consumer loans that received accommodations under loan modification programs established to assist customers with the economic impact of the COVID-19 pandemic (COVID-related modifications) and that remained in a deferral period as of June 30, 2021.
Based on guidance in the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) issued by federal banking regulators in April 2020 (the Interagency Statement), both of which we elected to apply, loan modifications related to COVID-19 and that meet certain other criteria are exempt from troubled debt restructuring (TDR) classification. Additionally, our election to apply the TDR relief provided by the CARES Act and the Interagency Statement impacts our regulatory capital ratios as these loan modifications
related to COVID-19 are not adjusted to a higher risk-weighting normally required with TDR classification. At June 30, 2021, substantially all residential mortgage loans that were in a deferral period, excluding those that were government insured/guaranteed, met the criteria for TDR relief and were therefore not classified as TDRs. For additional information regarding the TDR relief provided by the CARES Act and the clarifying TDR accounting guidance from the Interagency Statement, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.
Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of net charge-offs, delinquencies, and nonaccrual status for those customers who would have otherwise moved into past due or nonaccrual status. Customer loans that are not further modified upon exit from the deferral period may be placed on nonaccrual status or charged-off in accordance with our policies if customers are unable to resume making payments in accordance with the contractual terms of their agreement. As of June 30, 2021, substantially all of our consumer loans were current after exiting the deferral period. For additional information about our COVID-related modifications, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.
Table 10: Consumer Loan Modifications Related to COVID-19
($ in millions)
Unpaid principal
balance of modified
loans still in deferral period at Jun 30, 2021
% of loan class (1)
% current at
Jun 30, 2021 after exit from deferral period (2)
Consumer:
Residential mortgage – first lien (3)$6,810 %96 
Residential mortgage – junior lien (3)997 90 
All other consumer (4)29