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Investment Profile

Fourth Quarter 2014

Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.7 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,700 locations, 12,500 ATMs, and the internet (wellsfargo.com), and has offices in 36 countries to support customers who conduct business in the global economy. With approximately 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune’s 2014 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.

December 31, 2014

  • $1.7 trillion in assets, 4th largest in United States
  • $1.4 trillion in retail brokerage client assets, 3rd largest U.S. retail brokerage firm

Summary fourth quarter 2014 results

Net income $5.7 billion
Diluted EPS $1.02
Total revenue $21.4 billion
Pre-tax pre-provision profit $8.8 billion
Net interest margin 3.04%
Return on assets 1.36%
Return on equity 12.84%
Allowance for loan losses $12.3 billion

Financial Results

Continued strong financial results; Strong loan and deposit growth Show Details
  • Net income of $5.7 billion, up 2% from fourth quarter 2013
  • Diluted earnings per share (EPS) of $1.02, up 2% from fourth quarter 2013
  • Revenue of $21.4 billion, up 4% from fourth quarter 2013
  • Pre-tax pre-provision profit (PTPP)1 of $8.8 billion, up 3% from fourth quarter 2013
  • Total average loans of $849.4 billion, up $36.1 billion, or 4%, from fourth quarter 2013
  • Quarter-end loans of $862.6 billion, up $40.3 billion, or 5%, from fourth quarter 2013
  • Total average deposits of $1.1 trillion, up $89.4 billion, or 8%, from fourth quarter 2013
Continued improvement in credit quality Show Details
  • Net charge-offs, or loan losses, of $735 million, or 0.34% (annualized), of fourth quarter 2014 average loans
  • Nonaccrual loans down $2.8 billion, or 18%, from fourth quarter 2013
  • Provision for credit losses was $250 million lower than net loan charge-offs
Maintained strong capital levels and continued share repurchasesShow Details
  • Common Equity Tier 1 ratio under Basel III (General Approach) of 11.04% at December 31, 20142
  • Estimated Common Equity Tier 1 ratio under Basel III (Advanced Approach, fully phased-in) of 10.44%2
  • Period-end common shares outstanding down 44.7 million from third quarter 2014
  • Returned $3.9 billion to shareholders through common stock dividends and net share repurchases

Business Updates

Strong provider of credit to the U.S. economyShow Details
  • Continued commitment to helping our consumers and businesses grow, including $44 billion in originations of residential first mortgage loans, with an unclosed pipeline of $26 billion at the end of fourth quarter 2014. Continued to serve our customers who are experiencing financial difficulties; since the beginning of 2009, we have helped homeowners with over one million active trial or completed mortgage modifications, and provided nearly 9.8 million new low-rate loans to customers for home purchases or refinancing.
Nationwide, diversified financial services companyShow Details
  • #1 total locations (more than 8,700 locations)
  • #1 banking stores (Approximately 6,200 Wells Fargo stores in 39 states and Washington, D.C.)
  • #3 retail brokerage provider (more than 15,000 Financial Advisors nationwide)
  • A leading mortgage lending presence with approximately 1,600 locations including standalone mortgage stores and other business-partner sites
  • A leading internet bank (24.8 million active online customers)3
  • A leading contact center channel (500 million customer contacts annually)
  • 14.1 million active mobile customers3
  • #3 ATM network (more than 12,500 ATMs)
All data as of December 31, 2014, unless otherwise noted
1 Pre-tax, pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.
2 Capital ratios at 12/31/2014 were preliminary upon release of the fourth quarter earnings report. Additional information regarding our capital ratios is included on pages 38-39 of the Fourth Quarter earnings release. Finalized data will be reported in Wells Fargo's Form 10-K.
3 As of November 2014
This Investment Profile contains forward-looking statements about our future financial performance. For information that could cause actual results to differ materially from expectations, please review the Forward-Looking Statements discussion on pages 13-14 of the fourth quarter earnings release (PDF)*.
Quarter ended  12/31/2014  9/30/2014  12/31/13
($ in millions, except per share amounts)      
Earnings and per share data   
Net income $5,709 5,729 5,610
Net income applicable to common stock  5,382 5,408 5,369
Total revenue  21,443 21,213 20,665
Pre-tax pre-provision profit (PTPP)1  8,796 8,965 8,580
Diluted earnings per common share 1.02 1.02 1.00
Dividends declared per common share 0.35 0.35 0.30
Key performance measures   
Profitability ratios (annualized)      
Return on assets (ROA)2  1.36%1.40 1.48
Return on equity (ROE) 12.84 13.10 13.81
Net interest margin2  3.04 3.06 3.27
Efficiency ratio3  59.0 57.7 58.5
Period-end balances   
Investment Securities$312,925 289,009 264,353
Loans2  862,551 838,883 822,286
Allowance for loan losses  12,319 12,681 14,502
Assets2  1,687,155 1,636,855 1,523,502
Core deposits4  1,054,348 1,016,478 980,063
Stockholders’ equity  184,394 182,481 170,142
Total equity  185,262 182,990 171,008
Asset quality ratios   
Nonperforming assets/Total loans2  1.79%1.93 2.38
Allowance/Total loans2  1.43 1.51 1.76
Allowance/Nonaccrual loans  96 95 93
Net charge-offs/Average total loans (annualized)2  0.34 0.32 0.47
Capital ratios   
Risk-based capital       
Tier 1 capital5  12.45%12.55 12.33
Total capital5  15.54 15.58 15.43
Tier 1 leverage5  9.45 9.64 9.60
Common Equity Tier 1 (General Approach)5  11.04%11.11 10.82
Net income (loss) by operating segment6   
Community Banking $ 3,435  3,470 3,222
Wholesale Banking  1,970 1,920 2,111
Wealth Brokerage and Retirement Services  514 550 491
Other7  (210) (211)  (214)
Common stock price   
High $ 55.95 53.80 45.64
Low  46.44 49.47 40.07
Period end  54.82 51.87 45.40
1 Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company's ability to generate capital to cover credit losses through a credit cycle.
2 Financial information for certain periods prior to 2014 was revised to reflect our determination that certain factoring arrangements did not qualify as loans. Accordingly, we revised our commercial loan balances for year-end 2012 and each of the quarters in 2013 in order to present the Company’s lending trends on a comparable basis over this period. This revision, which resulted in a reduction to total commercial loans and a corresponding decrease to other liabilities, did not impact the Company’s consolidated net income or total cash flows. We reduced our commercial loans by $3.5 billion, $3.2 billion, $2.1 billion, $1.6 billion, and $1.2 billion at December 31, September 30, June 30, and March 31, 2013, and December 31, 2012, respectively, which represented less than 1% of total commercial loans and less than 0.5% of our total loan portfolio. Other affected financial information, including financial guarantees and financial ratios, has been appropriately revised to reflect this revision.
3 The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
4 Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances).
5 Capital ratios at 12/31/2014 were preliminary upon release of the fourth quarter earnings report. Additional information regarding our capital ratios is included on pages 38-39 of the Fourth Quarter earnings release. Finalized data will be reported in Wells Fargo's Form 10-K.
6 The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment.
7 Includes corporate items not specific to a business segment and the elimination of certain items that are included in more than one business segment, substantially all of which represents products and services for wealth management customers provided in Community Banking stores.
For complete information on fourth quarter 2014 earnings, please visit the investor relations section of our website at www.wellsfargo.com/invest_relations/investor_relations. This Investment Profile contains forward-looking statements about our future financial performance. For information that could cause actual results to differ materially from expectations, please review the Forward-Looking Statements discussion on pages 13-14 of the fourth quarter earnings release.
Three charts depict Wells Fargo's balance of earnings from "spread" or interest income and from "fee" or noninterest income; a loan portfolio balanced between consumer and commercial loans; and diversified sources of fee income.
 
All data as of December 31, 2014
1 Other noninterest income includes net gains on debt securities available for sale, net gains from equity investments, lease income, life insurance investment income and all other noninterest income.
This Investment Profile contains forward-looking statements about our future financial performance. For information that could cause actual results to differ materially from expectations, please review the Forward-Looking Statements discussion on pages 13-14 of the fourth quarter earnings release (PDF)*.
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The sum of net interest income, noninterest income (includes fee income), net of noninterest expense, the provision for credit losses, income tax expense, and income or loss from noncontrolling interests.
 
 
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Diluted EPS

 
Diluted earnings per share (EPS) includes the effects of common stock equivalents (stock options, restricted share rights, convertible debentures, and warrants) that are dilutive.
 
 
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Pre-tax pre-provision profit

 
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.
 
 
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Tier 1 common equity

 
Tier 1 common equity is a non-generally accepted accounting principle (GAAP) financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews Tier 1 common equity along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the corresponding reconciliation to total equity, because of current interest in such information on the part of market participants. Data is preliminary upon release of earnings. Table on page 40 of the fourth quarter earnings release (PDF*) has more information on Tier 1 common equity.
 
 
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Pre-tax pre-provision (PTPP)

 
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.
 
 
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Efficiency ratio

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

 
Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances).
 
 
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Tier 1 capital

 
Capital ratios at 12/31/2012 were preliminary upon release of the fourth quarter earnings report. Additional information regarding Tier 1 common equity is included on page 40 of the Fourth Quarter earnings release. Finalized data will be reported in Wells Fargo's Annual Report on Form 10-K.
 
 
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Total capital

 
Capital ratios at 12/31/2012 were preliminary upon release of the fourth quarter earnings report. Additional information regarding Tier 1 common equity is included on page 40 of the Fourth Quarter earnings release. Finalized data will be reported in Wells Fargo's Annual Report on Form 10-K.
 
 
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Tier 1 leverage

 
Capital ratios at 12/31/2012 were preliminary upon release of the fourth quarter earnings report. Additional information regarding Tier 1 common equity is included on page 40 of the Fourth Quarter earnings release. Finalized data will be reported in Wells Fargo's Annual Report on Form 10-K.
 
 
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Other

 
Includes Wachovia integration expenses and the elimination of items that are included in both Community Banking and Wealth, Brokerage and Retirement, largely representing wealth management customers serviced and products sold in the stores.
 
 
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Total revenue

 
The sum of net interest income and noninterest income.
 
 
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Non-strategic/liquidating portfolios

 
Non-strategic/liquidating portfolios include Pick-a-Pay, liquidating home equity, legacy Wells Fargo Financial indirect auto and debt consolidation, education finance government loans and other purchased credit-impaired loans. See table on page 6of the fourth quarter 2012 earnings release for more information.
 
 
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Return on equity

 
Net income applicable to common stock as a percentage of average common stockholders’ equity.
 
 
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Return on assets

 
Net income as a percentage of average total assets.
 
 
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Net interest margin

 
The average yield on earning assets minus the average interest rate paid for deposits and other sources of funding.
 
 
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Allowance for loan losses

 
The allowance for loan losses represents management’s estimate of loan losses inherent in the loan portfolio at the balance sheet date (excluding loans carried at fair value.)
 
 
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Operating Segment

 
The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment. In first quarter 2012, we modified internal funds transfer rates and the allocation of funding. Prior periods have been revised to reflect these changes.
 
 
 
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