1Q24 Financial Results

April 12, 2024

© 2024 Wells Fargo Bank, N.A. All rights reserved.

1Q24 results

  • Net income of $4.6 billion, or $1.20 per diluted common share, included:
    • ($284) million, or ($0.06) per share, of additional expense for the estimated Federal Deposit Insurance Corporation (FDIC) special assessment3

Financial Results

ROE: 10.5%

ROTCE: 12.3%1

Efficiency ratio: 69%2

Credit Quality

Capital and Liquidity

CET1 ratio: 11.2%7

LCR: 126%8

TLAC ratio: 25.1%9

  • Revenue of $20.9 billion, up 1%
    • Net interest income of $12.2 billion, down 8%
    • Noninterest income of $8.6 billion, up 17%
  • Noninterest expense of $14.3 billion, up 5%
  • Pre-taxpre-provision profit4 of $6.5 billion, down 7%
  • Effective income tax rate of 17.3%5
  • Average loans of $928.1 billion, down 2%
  • Average deposits of $1.3 trillion, down 1%
  • Provision for credit losses6 of $938 million
    • Total net loan charge-offs of $1.1 billion, up $545 million, with net loan charge-offs of 0.50% of average loans (annualized)
    • Allowance for credit losses for loans of $14.9 billion, up $1.2 billion
  • Common Equity Tier 1 (CET1) capital7 of $136.7 billion
  • CET1 ratio7 of 11.2% under the Standardized Approach and 12.4% under the Advanced Approach
  • Liquidity coverage ratio (LCR)8 of 126%

Comparisons in the bullet points are for 1Q24 versus 1Q23, unless otherwise noted. Endnotes are presented starting on page 17.

1Q24 Financial Results

2

1Q24 earnings

Quarter ended

$ Change from

$ in millions, except per share data

1Q24

4Q23

1Q23

4Q23

1Q23

Net interest income

$12,227

12,771

13,336

($544)

(1,109)

Noninterest income

8,636

7,707

7,393

929

1,243

Total revenue

20,863

20,478

20,729

385

134

Net charge-offs

1,157

1,258

564

(101)

593

Change in the allowance for credit losses

(219)

24

643

(243)

(862)

Provision for credit losses1

938

1,282

1,207

(344)

(269)

Noninterest expense

14,338

15,786

13,676

(1,448)

662

Pre-tax income

5,587

3,410

5,846

2,177

(259)

Income tax expense (benefit)

964

(100)

966

1,064

(2)

Effective income tax rate (%)

17.3

%

(3.0)

16.2

2,026

bps

105

Net income

$4,619

3,446

4,991

$1,173

(372)

Diluted earnings per common share

$1.20

0.86

1.23

$0.34

(0.03)

Diluted average common shares (# mm)

3,600.1

3,657.0

3,818.7

(57)

(219)

Return on equity (ROE)

10.5 %

7.6

11.7

286

bps

(127)

Return on average tangible common equity (ROTCE)2

12.3

9.0

14.0

336

(170)

Efficiency ratio

69

77

66

(836)

275

Endnotes are presented starting on page 17.

1Q24 Financial Results

3

Net interest income

Net Interest Income ($ in millions)

13,336

3.20%

13,163

3.09%

13,105

3.03%

12,771

2.92%

12,227

2.81%

  • Net interest income down $1.1 billion, or 8%, from 1Q23 due to the impact of higher interest rates on funding costs, including the impact of customer migration to higher yielding deposit products, as well as lower loan balances, partially offset by higher yields on earning assets
  • Net interest income down $544 million, or 4%, from 4Q23 driven by higher funding costs, including the impact of customer migration to higher yielding deposit products, lower loan balances, as well as one fewer day in the quarter, partially offset by higher cash balances
  • 2024 net interest income is expected to be ~7-9% lower than the full year 2023 level of $52.4 billion, unchanged from prior guidance

1Q23

2Q23

3Q23

4Q23

1Q24

Net Interest Margin (NIM) on a taxable-equivalent basis1

Endnotes are presented starting on page 17.

1Q24 Financial Results

4

Loans and deposits

Average Loans Outstanding ($ in billions)

Average Deposits ($ in billions)

948.7

395.5

5.69%

553.2

945.9

392.9

5.99%

553.0

943.2

391.7

6.23%

551.5

938.0

389.7

6.35%

548.3

928.1

386.0

6.38%

542.1

Commercial

Loans

Consumer

Loans

Total Average

Loan Yield

1,356.7

1,347.4

1,340.3

1,340.9

1,341.6

60.7

84.7

113.9

122.9

119.6

126.6

112.4

Corporate

107.5

102.1

101.5

157.6

160.3

Wealth and

157.2

173.1

183.3

Investment

170.5

166.7

160.6

163.3

164.0

Management

Corporate and

Investment

Banking

841.3

823.3

801.1

779.5

773.2

Commercial

Banking

Consumer Banking

and Lending

1Q23

2Q23

3Q23

4Q23

1Q24

  • Average loans down $20.6 billion, or 2%, year-over-year (YoY) driven by declines in most loan categories, partially offset by higher credit card loans
  • Total average loan yield of 6.38%, up 69 bps YoY reflecting the impact of higher interest rates and up 3 bps from 4Q23
  • Period-endloans of $922.8 billion, down $25.2 billion, or 3%, YoY, and down $13.9 billion from 4Q23

Period-End Loans Outstanding ($ in billions)

1Q24

vs 4Q23

vs 1Q23

Commercial

$

538.3

(2)%

(3)%

Consumer

384.5

(1)

(2)

Total Loans

$

922.8

(1)%

(3)%

1Q23

2Q23

3Q23

4Q23

1Q24

  • Average deposits down $15.1 billion, or 1%, YoY reflecting customer migration to higher yielding alternatives and consumer and small business deposit outflows
  • Period-enddeposits up $20.5 billion, or 2%, YoY, and up 2% from 4Q23

Period-End Deposits ($ in billions)

1Q24

vs 4Q23

vs 1Q23

Consumer Banking and Lending

$

794.1

2

%

(7)%

Commercial Banking

168.5

4

(1)

Corporate and Investment Banking

196.0

6

24

Wealth and Investment Management

102.5

(1)

(13)

Corporate

122.0

(2)

86

Total deposits

$

1,383.1

2 %

2 %

Average deposit cost

1.74 %

0.16

0.91

1Q24 Financial Results

5

Noninterest income

Noninterest Income ($ in millions)

8,636

7,393

7,370

7,752

7,707

2,957

2,733

2,733

2,791

2,788

1,597

1,504

1,517

1,551

1,568

1,454

1,342

1,122

1,265

1,070

627

455

492

326

376

1,061

1,027

1,098

1,098

1,033

455

524

555

799

940

1Q23

2Q23

3Q23

4Q23

1Q24

Investment advisory fees and

Deposit and lending-related fees

Net gains from trading activities

brokerage commissions

1

Investment banking fees

Card fees

All other2

Endnotes are presented starting on page 17. 1Q24 Financial Results

  • Noninterest income increased $1.2 billion, or 17%, from 1Q23
    • Investment advisory fees and brokerage commissions1 up $224 million, or 8%, as higher market valuations drove higher asset-based fees
    • Deposit and lending-related fees up $93 million, or 6%, driven by higher treasury management fees and one additional business day
    • Net gains from trading activities up $112 million, or 8%, reflecting market conditions, as well as investments in our Markets business
    • Investment banking fees up $301 million, or 92%, on increased activity across all products
    • All other2 up $485 million primarily driven by higher net gains from equity securities on improved results in our affiliated venture capital business on lower impairments
  • Noninterest income up $929 million, or 12%, from 4Q23
    • Investment advisory fees and brokerage commissions1 up $169 million, or 6%, as higher market valuations drove higher asset-basedfees
    • Net gains from trading activities up $384 million, or 36%, on higher trading activity across most asset classes
    • Investment banking fees up $172 million, or 38%, on increased activity across most products
    • All other2 up $141 million

6

Noninterest expense

Noninterest Expense ($ in millions)

15,786

13,676

355

14,338

1,931

12,987

13,113

633

267

232

329

9691

284

9,415

8,606

8,627

8,2121

9,492

3,994

4,149

4,157

4,319

3,929

1Q23

2Q23

3Q23

4Q23

1Q24

Operating Losses

FDIC Special Assessment

Personnel Expense

Non-personnel Expense

Headcount (Period-end, '000s)

1Q23

2Q23

3Q23

4Q23

1Q24

236

234

227

226

225

Endnotes are presented starting on page 17. 1Q24 Financial Results

  • Noninterest expense up $662 million, or 5%, from 1Q23
    • Operating losses up $366 million driven by customer remediation accruals for historical matters
    • 1Q24 FDIC special assessment2 expense of $284 million
    • Personnel expense up $77 million predominantly reflecting higher revenue-related compensation expense predominantly in Wealth and Investment Management, partially offset by the impact of efficiency initiatives
    • Non-personnelexpense down $65 million, or 2%, driven by lower professional and outside services expense
  • Noninterest expense down $1.4 billion, or 9%, from 4Q23
    • Operating losses up $278 million driven by customer remediation accruals
    • 1Q24 FDIC special assessment2 expense of $284 million, compared with $1.9 billion in 4Q23
    • Personnel expense up $311 million on seasonal personnel expense, higher incentive compensation and annual merit increases, partially offset by lower severance expense
    • Non-personnelexpense down $390 million, or 9%, with declines driven by lower professional and outside services expense and lower advertising and promotion expense
  • 2024 noninterest expense is expected to be ~$52.6 billion, unchanged from prior guidance
    • Excludes the 1Q24 FDIC special assessment2 expense of $284 million
    • Equity markets have outperformed our expectations and if they remain at current levels we would expect higher revenue-related compensation expense
    • As previously disclosed, we have outstanding litigation, regulatory, and customer remediation matters that could impact operating losses

7

Credit quality: net loan charge-offs

Provision for Credit Losses1 and Net Loan Charge-offs($ in millions)

1,713

• Commercial net loan charge-offs down $131 million to 25 bps of average loans

(annualized) reflecting a $190 million decrease in commercial real estate (CRE) net

loan charge-offs, partially offset by $58 million of higher net loan charge-offs in

commercial & industrial loans

1,207

604

0.26%

1,197

1,282

1,252

1,149

850

938

764

0.53%

0.50%

0.32%

0.36%

- CRE net loan charge-offs of $187 million, or 50 bps of average loans

(annualized), predominantly driven by CRE office net loan charge-offs

• Consumer net loan charge-offs up $28 million to 84 bps of average loans

(annualized) reflecting a $57 million increase in credit card net loan charge-offs,

partially offset by $18 million of lower auto net loan charge-offs

• Nonperforming assets of $8.2 billion, down $203 million, or 2%, driven by lower

commercial real estate nonaccruals

- CRE nonaccrual loans of $3.9 billion, down $275 million driven by a $221 million

decrease in CRE office nonaccruals reflecting losses and paydowns in the quarter

1Q23

2Q23

3Q23

4Q23

1Q24

Provision for Credit Losses1

Net Loan Charge-offs

Net Loan Charge-off Ratio

Comparisons in the bullet points are for 1Q24 versus 4Q23. Endnotes are presented starting on page 17.

1Q24 Financial Results

8

Credit quality: allowance for credit losses for loans

Allowance for Credit Losses for Loans ($ in millions)

• Allowance for credit losses for loans (ACL) down modestly driven by a lower ACL for commercial real estate loans and auto loans, partially offset by a higher ACL for credit card loans

13,705

14,786

15,064

15,088

14,862

6,705

6,754

6,676

6,545

6,481

1.45%

1.56%

1.60%

1.61%

1.61%

7,224

8,081

8,310

8,412

8,317

1

1Q231

2Q23

3Q23

4Q23

1Q24

Commercial

Consumer

Allowance coverage for total loans

  • CRE Office ACL of $2.4 billion, down $76 million
    • CRE Office ACL as a % of loans of 7.9%, stable compared with 4Q23
      • Corporate and Investment Banking (CIB) CRE Office ACL as a % of loans of 11.0%, stable compared with 4Q23

CRE Allowance for Credit Losses (ACL) and Nonaccrual Loans, as of 3/31/24

Allowance for

Loans

ACL as a %

Nonaccrual

($ in millions)

Credit Losses

Outstanding

of Loans

Loans

CIB CRE Office

$

2,181

19,795

11.0%

$

3,024

All other CRE Office

227

10,682

2.1

112

Total CRE Office

2,408

30,477

7.9

3,136

All other CRE

1,374

118,309

1.2

777

Total CRE

$

3,782

148,786

2.5%

$

3,913

Comparisons in the bullet points are for 1Q24 versus 4Q23. Endnotes are presented starting on page 17.

1Q24 Financial Results

9

Capital and liquidity

Common Equity Tier 1 Ratio under the Standardized Approach1

10.8%

11.0%

11.4%

11.2%

10.7%

8.9%

Regulatory

Minimum

and Buffers2

1Q23 2Q23 3Q23 4Q23 1Q24 Estimated

Capital Position

  • Common Equity Tier 1 (CET1) ratio1 of 11.2% at March 31, 2024 remained above our regulatory minimum and buffers of 8.9%2

Capital Return

  • $6.1 billion in gross common stock repurchases, or 112.5 million shares, in 1Q24 with period-end common shares outstanding down 261.5 million, or 7%, from 1Q23
  • $1.2 billion in common stock dividends paid in 1Q24 with a common stock dividend of $0.35 per share

Total Loss Absorbing Capacity (TLAC)

  • As of March 31, 2024, our TLAC as a percentage of total risk-weighted assets3 was 25.1% compared with the required minimum of 21.5%

Liquidity Position

  • Strong liquidity position with a 1Q24 LCR4 of 126% which remained above our regulatory minimum of 100%

Endnotes are presented starting on page 17.

1Q24 Financial Results

10

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

Wells Fargo & Company published this content on 11 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 April 2024 11:19:03 UTC.